234 F.3d 428 (9th Cir. 2000), 99-55618, Shwarz v. United States
|Citation:||234 F.3d 428|
|Party Name:||JOSEPH SHWARZ, husband; BETH SHWARZ, wife; AMERICAN BOILER WORKS, INC., a California corporation, Plaintiffs-Appellants, v. UNITED STATES OF AMERICA; INTERNAL REVENUE SERVICE; UNITED STATES ATTORNEY, for the Central District of California; NORA M. MANELLA; STEVE HADLEY; AL BRYANT, Defendants-Appellees.|
|Case Date:||December 08, 2000|
|Court:||United States Courts of Appeals, Court of Appeals for the Ninth Circuit|
Argued and Submitted October 11, 2000--Pasadena, California
[Copyrighted Material Omitted]
COUNSEL: Robert S. Schriebman, Rolling Hills Estates, California, for the plaintiffs-appellants. John A. Dudeck, Jr., Tax Division, U.S. Department of Justice, Washington, D.C., for the defendants-appellees.
Appeal from the United States District Court for the Central District of California Lourdes G. Baird, District Judge, Presiding
D.C. No.CV 97-8706 LGB
Before: A. Wallace Tashima and Richard Tallman, Circuit Judges, and William Alsup, District Judge[*]
Opinion by Judge Tashima
TASHIMA, Circuit Judge:
Plaintiffs-Appellants Joseph and Beth Shwarz, and the corporation they own, American Boiler Works, Inc. (ABW), brought suit against Defendants-Appellees the United States, the Internal Revenue Service (IRS), and two IRS agents, Steve Hadley and Al Bryant, for unauthorized disclosure of tax return information under 5 U.S.C. S 552a and 26 U.S.C. SS 6103 and 7431, unauthorized tax collection actions under 26 U.S.C. S 7433, and violations of Fourth and Fifth Amendment rights under Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971). On Appellees' motion, the district court dismissed all but the S 552a claim, as to which the court subsequently granted Appellees' motion for summary judgment. We have jurisdiction over this timely appeal pursuant to 28 U.S.C.S 1291, and we affirm.
Joseph and Beth Shwarz are the sole shareholders of ABW, which repairs steam boilers for dry cleaners. Steve Hadley and Al Bryant are employees of the IRS. Bryant was at all relevant times Hadley's supervisor.
At some time before September 1994, the IRS assessed a Trust Fund Recovery Penalty of $47,011 against Joseph Shwarz (Shwarz) for the period ending December 31, 1991,pursuant to 26 U.S.C. S 6672(a). It also assessed federal employment, unemployment, and withholding taxes of approximately $212,548 against ABW, for the years 1989, 1990, and 1991.
In September 1994, ABW submitted an offer in compromise of $22,075 for the 1989-1991 taxes owed by it and the trust fund penalty owed by Shwarz. The offer called for a onetime payment of $2,500, followed by monthly payments of $816, until the balance and interest were paid in full. The IRS accepted the offer.
Between November, 1994, and April, 1995, Shwarz caused ABW to pay a total of $5,800 to the IRS towards satisfaction of the offer in compromise. Shwarz also believed, based on a letter from his accountant, that the cash value of a life insurance policy that Shwarz owned that the IRS had levied on would be applied to the offer in compromise. At the time, the policy's cash value was approximately $19,000.
In April 1995, Shwarz stopped making payments to the IRS, believing that the $5,800 in payments, plus the $19,000 cash value of the insurance policy (i.e., a total of $24,800), had fully paid the offer in compromise of $22,075, plus accrued interest of approximately $3,500 (i.e. , a total of $25,575 due).
In April 1997, Hadley informed Shwarz that ABW's offer in compromise was in
default. Shwarz told Hadley that he and ABW could not pay the amounts demanded, that ABW was current in its tax compliance, and requested an installment payment arrangement. Hadley "threatened" Shwarz with enforced collection in the form of closing down ABW and selling its assets. Appellants then submitted a new offer in compromise and also filed a Collection Appeal Request, but the IRS did not process the new offer.
The IRS then made an application in federal district court to enter the private business premises of ABW to effect a levy. Attached to the application was a supporting declaration from Hadley, dated June 19, 1997. In paragraph 4 of his declaration, Hadley asserted that on June 3, 1997, he requested Shwarz's consent to enter ABW's premises to effect the levy, but Shwarz refused. Because Hadley did not speak to Shwarz on June 3, 1997, this statement was false.1
The district court issued the Order for Entry. In describing the basis for the order, Judge Dean Pregerson stated that "[t]he Internal Revenue Service has sent notices and demands to the taxpayer, but the taxpayer has neglected or refused to pay the taxes owed," citing paragraph 4 and two other paragraphs of the declaration in support of this statement. Judge Pregerson did not refer to Hadley's having requested or Shwarz's having refused consent to enter ABW's premises.
Shortly thereafter, the IRS made a second application in district court, this time to enter the private personal and business premises of Shwarz to effect a levy. Attached to the application was a supporting declaration from Hadley, dated July 1, 1997. In paragraph 3 of the declaration, Hadley claimed that: (1) On June 3, 1997, he had visited Shwarz's business premises and observed several vehicles; (2) Shwarz stated that he owned the vehicles (the date on which Shwarz allegedly made this statement is not explicitly given); and (3) On April 17, 1997, Hadley "confirmed" with the California Department of Motor Vehicles that Shwarz owned the vehicles. Appellants again claim that some of this is false: They claim that Hadley did not observe the vehicles on June 3, 1997, and that Shwarz did not on that date tell Hadley that he owned them. In paragraph 4 of the declaration, Hadley again claimed that on June 3, 1997, he requested Shwarz's consent to enter to effect the levy, but Shwarz refused. This statement is false -Appellants assert, and Appellees apparently concede, that Hadley did not speak to Shwarz on June 3.
The district court issued the Order for Entry. In describing the basis for the order, Judge Tevrizian referred to Hadley's claims in paragraph 3 of the July 1, 1997, declaration. He also cited paragraph 4 in precisely the same manner as Judge Pregerson had, and he did not refer to Hadley's...
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