Zappone v. United States

• Decision Date: 07 September 2017
• Docket Number: No. 16-4111.,16-4111.
• Citation: 870 F.3d 551
• Parties: Todd N. ZAPPONE; Carrie M. Zappone; Dustin A. Zappone; SNZ; DNZ, Plaintiffs–Appellants, v. UNITED STATES of America, et al., Defendants–Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

870 F.3d 551

Todd N. ZAPPONE; Carrie M. Zappone; Dustin A. Zappone; SNZ; DNZ, Plaintiffs–Appellants,

v.UNITED STATES of America, et al., Defendants–Appellees.

No. 16-4111.

United States Court of Appeals, Sixth Circuit.

Argued: July 27, 2017

Decided and Filed: September 7, 2017

COUNSEL ARGUED: William T. Whitaker, William T. Whitaker Co. LPA, Akron, Ohio, for Appellants. Sherra Wong, United States Department of Justice, Washington, D.C., for Appellees. ON BRIEF: William T. Whitaker, William T. Whitaker Co. LPA, Akron, Ohio, for Appellants. Bruce R. Ellisen, Robert J. Branman, United States Department Of Justice, Washington, D.C., for Appellees.

Before: BATCHELDER, GIBBONS, and COOK, Circuit Judges.

OPINION

COOK, Circuit Judge.

Todd N. and Carrie M. Zappone ("Zappones") sued the United States and several IRS agents ("Defendants"), alleging state-law and constitutional torts stemming from a search of the Zappones' business and a seizure of cash from their company safe. The district court granted summary judgment in favor of the Defendants, concluding that the claims were time barred. We AFFIRM.

I.

The Zappones own Ohio Scrap Corporation ("OSC"), a scrap-metal recycling business in Delta, Ohio. On November 8, 2012, IRS Special Agents executed search-and-seizure warrants on OSC's offices and the Zappones' home in the course of investigating alleged tax evasion and illegal restructuring. During the search, the Special Agents arrested the Zappones and seized their computers, cell phones, business records, and a large quantity of cash from the company safe. When the Special Agents took the money to The Brink's Company after the search, the security company "counted [it] and issued a receipt ... in the amount of $1,264,000." But the Zappones maintain that the safe contained significantly more—$3,150,000 in total—and that the Special Agents pocketed the excess cash.

In April 2013, the United States brought a civil-forfeiture proceeding against the $1,264,000. See United States v. $1,264,000 in U.S. Currency , No. 3:13–cv-00905 (N.D. Ohio Apr. 22, 2013). Shortly thereafter, the Zappones asserted claims against the currency for that amount. In June, however, they filed amended claims alleging that the amount of the defendant currency "is understated with the true value at approximately Three Million One Hundred Fifty Thousand Dollars ($3,150,000)."

Alongside the civil-forfeiture case, the Zappones pursued other avenues for retrieving the Special Agents' purportedly ill-gotten gains. In July 2014, the Zappones and OSC submitted administrative claims to the IRS seeking $1,886,000, the difference between the amount of currency allegedly seized and the amount that was then the res of the civil-forfeiture action. The claims arrived under a cover letter from attorney Michael T. Arnold, dated July 21, 2014. In addition to the claims, the Zappones submitted executed power-of-attorney forms that identified their counsel as Arnold, Robert J. Fedor, and Benjamin C. Heidinger and listed their counsel's address. The IRS received these materials in August 2014.

On February 11, 2015, the IRS mailed letters denying the claims via certified mail to Fedor and Arnold. The letters advised the lawyers that their "client[s] may contest this determination and bring suit against the United States in the appropriate United States district court no later than six months after the date of the mailing of this notification." The attorneys received the denials two days later. By this time, however, the Zappones had switched counsel. But they had not notified the IRS of Arnold and Fedor's withdrawal of representation; nor is there record of the denial letters being returned to the IRS as undeliverable.

On October 14, 2015, the Zappones¹ filed the complaint in this case against twelve IRS employees and one IRS subcontractor, alleging both state-law torts (conversion, invasion of privacy, intentional infliction of emotional distress, and civil conspiracy) and constitutional claims (violation of their due process rights and unreasonable search and seizure). These claims stemmed from the IRS Special Agents' execution of the search-and-seizure warrants on the Zappones' property and the purported misappropriation of their cash. The district court later substituted the United States for the individual defendants with respect to the state-law claims.

After a status conference, the district court directed the Defendants to file a motion on the threshold issue of whether the applicable statutes of limitations barred the state-law and constitutional claims. Thereafter, the Defendants moved to dismiss all claims, and the Zappones opposed the motion. Recognizing that it would have to consider matters outside the complaint to address the parties' statute-of-limitations arguments, the district court treated the motion to dismiss as one for summary judgment. The court decided in favor of the Defendants, concluding that the Zappones had filed their state-law and constitutional claims outside the appropriate limitations periods and rejecting their requests for equitable tolling. The Zappones appealed.

II.

We review de novo the district court's determination that the applicable statutes of limitations barred the Zappones' state-law and constitutional claims. Banks v. City of Whitehall , 344 F.3d 550, 553 (6th Cir. 2003) (citing Tolbert v. Ohio Dep't of Transp. , 172 F.3d 934, 938 (6th Cir. 1999) ). We also review de novo the district court's "decision on the application of equitable tolling where the facts underlying the equitable tolling are undisputed." Chavez v. Carranza , 559 F.3d 486, 493 (6th Cir. 2009) (citation omitted). "When the facts are in dispute, we apply an abuse of discretion standard." Id. (citation omitted).

A.

We address the timeliness of the Zappones' state-law claims against the United States first. The district court concluded that the statute of limitations under the Federal Tort Claims Act ("FTCA" or the "Act") barred these allegations because the Zappones filed their complaint over six months after the IRS mailed notices denying their administrative claims. The court also rejected the Zappones' argument for equitable tolling, concluding that their circumstances did not entitle them to relief under the doctrine. We agree with the district court with respect to both determinations.

Although sovereign immunity generally shields the government from suit, Dep't of the Army v. Blue Fox, Inc. , 525 U.S. 255, 260, 119 S.Ct. 687, 142 L.Ed.2d 718 (1999) (citation omitted), the FTCA, 28 U.S.C. § 2671, et seq. , waives that immunity for certain tort claims. Specifically, it allows a plaintiff to sue the federal government for personal injury or property damage "caused by the negligent or wrongful act or omission" of government employees acting within the scope of their employment. Id. § 1346(b)(1); see also Chomic v. United States , 377 F.3d 607, 609 (6th Cir. 2004). But in order to benefit from the FTCA's waiver, a plaintiff must comply with two limitations periods. First, he must present an administrative claim "in writing to the appropriate Federal agency within two years after such claim accrues." 28 U.S.C. § 2401(b). Second, he must bring the FTCA claim "within six months after the date of mailing, by certified or registered mail, of notice of final denial of the claim by the agency to which it was presented." Id. If he fails to meet either of these time constraints, his "tort claim against the United States shall be forever barred." Id.

No party disputes that the Zappones did not satisfy the second of the two FTCA limitations periods. After the IRS mailed its denial notice for their administrative claims on February 11, 2015, the Zappones had until August 11, 2015, to bring their state-law claims. See id . The Zappones failed to sue, however, until October 14, 2015—as the district court summed up, "two months too late."

Hoping to save their claims, the Zappones point to United States v. Kwai Fun Wong , in which the Supreme Court held that a court may equitably toll the time bar for FTCA claims filed outside the Act's two statute-of-limitations periods.

––– U.S. ––––, 135 S.Ct. 1625, 1638, 191 L.Ed.2d 533 (2015). They contend that the district court erred in declining to apply the equitable-tolling doctrine to their state-law claims. We disagree.

1. The Equitable–Tolling Standard.

In general, equitable tolling is available "when a litigant's failure to meet a legally-mandated deadline unavoidably arose from circumstances beyond that litigant's control." Jackson v. United States , 751 F.3d 712, 718 (6th Cir. 2014) (quoting Robertson v. Simpson , 624 F.3d 781, 783 (6th Cir. 2010) ). Although "equitable tolling may be applied in suits against the government, courts will only do so sparingly, and not when there has only been a garden variety claim of excusable neglect." Id. (quoting Chomic , 377 F.3d at 615 ). A litigant "carr[ies] the burden of establishing [his] entitlement to equitable tolling." Id. at 718–19 (citation omitted).

Historically, this court has considered five factors in evaluating whether to apply equitable tolling to a late claim. See, e.g. , Jackson , 751 F.3d at 719 ; Chomic , 377 F.3d at 609. These factors are: "(1) the plaintiff's lack of notice of the filing requirement; (2) the plaintiff's lack of constructive knowledge of the filing requirement; (3) the plaintiff's diligence in pursuing her rights; (4) an absence of prejudice to the defendant; and (5) the plaintiff's reasonableness in remaining ignorant of the particular legal requirement." Jackson , 751 F.3d at 719 (citing Truitt v. Cty. of Wayne , 148 F.3d 644, 648 (6th Cir. 1998) ).

But this court has also recognized limitations to this approach, casting doubt on the need for strict adherence to it. In Graham–Humphreys v. Memphis Brooks Museum of Art , for example, we observed that the five factors are neither comprehensive nor material in all cases. 209 F.3d 552, 560–61 (6th Cir. 2000) (citing...