Caudle v. Colandene

• Decision Date: 30 June 2015
• Docket Number: Civil Action No. 5:14–cv–00031.
• Citation: 115 F.Supp.3d 713
• Parties: Dora E. CAUDLE, Plaintiff, v. Christopher D. COLANDENE, et al., Defendants.
• Court: U.S. District Court — Western District of Virginia

115 F.Supp.3d 713

Dora E. CAUDLE, Plaintiff,

v.Christopher D. COLANDENE, et al., Defendants.

Civil Action No. 5:14–cv–00031.

United States District Court, W.D. Virginia, Harrisonburg Division.

Signed June 30, 2015.

Dora E. Caudle, Front Royal, VA, pro se.

Jamie Marie Greenzweig, Fairfax, VA, for Defendant.

MEMORANDUM OPINION

ELIZABETH K. DILLON, District Judge.

Plaintiff Dora Caudle, proceeding pro se, has asserted five causes of action against defendants, all of which relate to defendants' decision to honor an IRS tax levy and their sending her monthly retirement allowance to the IRS. Caudle claims that a portion of her benefits is exempt and not subject to the levy, and that, despite her informing defendants of this fact, they have continued to send the entirety of her monthly retirement benefits to the IRS. All of her causes of action arise from, and all of her arguments are based on, this contention.

The matter was referred to the Honorable James G. Welsh, United States Magistrate Judge, pursuant to 28 U.S.C. § 636(b)(1)(B), for proposed findings of fact and a recommended disposition as to the parties' cross-motions for summary judgment. (Dkt. Nos. 11, 20.) After briefing and oral argument, the magistrate judge filed a report and recommendation (Report) on February 27, 2015, recommending that the Doe defendants be dismissed without prejudice, that Caudle's summary judgment motion be denied, that defendants' summary judgment motion be granted, and that the case be dismissed with prejudice as to the named defendants. (Dkt. No. 33 at 3.) After seeking and receiving an extension of time to object, Caudle filed objections to the Report (Dkt. No. 36), and defendants filed a response (Dkt. No. 37).

The court has reviewed the Report, Caudle's objections, and defendants' response. For the reasons set forth herein, the court will adopt the Report in part and reject it in part, will grant defendants' summary judgment motion, deny Caudle's summary judgment motion, dismiss the Doe defendants without prejudice, and dismiss the case against the named defendants with prejudice.

I. BACKGROUND

Caudle is a retired employee of Fairfax County, Virginia, and receives certain retirement benefits, including a monthly allowance. Her allowance is administered by defendant Fairfax County Retirement Administration Agency (FCRAA), a county agency responsible for administering the county employees' retirement system. In her complaint, she names not only FCRAA as a defendant, but also two individuals in their official and individual capacities, Christopher D. Colandene and David P. Bobzien. Colandene works at FCRAA and is the primary person who communicated with Caudle regarding her concerns related to the levy. Bobzien is the Fairfax County Attorney, whose office gave legal advice to Colandene and FCRAA concerning the levy.¹ Bobzien and Colandene are both employees of Fairfax County. (Dkt. No. 12–1, ¶ 1; Dkt. No. 12–2, ¶ 4.) Caudle has also named "Does 1–20," twenty unknown FCRAA employees.

Caudle's complaint lists five causes of action: (1) a claim that she was deprived of her property without due process; (2) conversion; (3) a claim of "respondeat superior" against FCRAA based on its "policies" and failure to adequately train and supervise its employees, which she alleges resulted in the "illegal taking of exempt benefit funds"; (4) a § 1983 claim that her civil rights were violated; and (5) a civil conspiracy claim under 42 U.S.C. § 1985. (Dkt. No. 1, Compl. at 5–8.) Her complaint seeks declaratory, injunctive, and monetary relief. In her motion for summary judgment, she argues that defendants violated § 6334 of the Internal Revenue Code (IRC) ( 26 U.S.C. § 6334 )—which exempts from levy a minimum amount of wages, salary, or income—by turning over the entire monthly allowances, thereby denying her the minimum exempt amount.

Defendants, in their motion for summary judgment, have asserted multiple grounds for dismissal, but they argue "primarily that the undisputed material facts demonstrate that § 6332(e) of the IRC (26 U.S.C. § 6332(e) ), shields them from liability." (Dkt. No. 33 (Report) at 2 (citing Dkt. Nos. 11, 12).)

As noted in the Report, the facts of this case are not in dispute, and the court adopts the facts as set forth in the Report unless otherwise noted herein. (See Report at 5–8.) Briefly summarized, the parties agree that on January 30, 2014, FCRAA first received a notice of levy dated January 27, 2014, in which the IRS identified Caudle as owing tax liability and penalties for multiple years in an amount over $43,000. (Dkt. No. 12–1 at 2, 6, Colandene Decl. ¶ 7 and Ex. A.) FCRAA notified Caudle of its intent to abide by the levy and to remit her future monthly retirement allowance to the Treasury. (Id. at 2, ¶¶ 9–11 and Ex. B.)

Subsequently, Caudle contacted FCRAA by telephone and spoke with defendant Colandene. Caudle informed Colandene of her belief that FCRAA was legally barred from remitting the entire amount of her monthly retirement allowance, but Colandene nevertheless reaffirmed his agency's obligation to comply with the levy unless the IRS released it. There were additional communications between Caudle and Colandene along similar lines.

In May 2014, the IRS issued a superseding levy with a lower overall amount, apparently to account for the fact that Caudle was challenging the tax liability for several years. This second levy included an express statement in the cover letter from the IRS that "the full amount of pension is to be remitted until further written notice or until the amount shown on the new levy is paid." (Dkt. No. 12–1 at 54 (May 12, 2014 ltr. from the IRS to FCRAA).) Since it received the first levy, FCRAA has sent all, or nearly all,² of Caudle's retirement allowance to the Treasury each month. And FCRAA has stated that it intends to continue to do so until the IRS releases the levy.

The Report addresses in some detail each of Caudle's individual claims and states reasons why defendants are entitled to summary judgment as to each. The Report also concludes that defendants are entitled to immunity from suit as to all of Caudle's claims, based on the terms of 26 U.S.C. § 6332(e).

II. CONCESSIONS AND OBJECTIONS

Caudle has expressly consented to the dismissal of the Doe defendants (see Dkt. No. 32), who were not served on time. Accordingly, the court will dismiss the Doe defendants without prejudice from this action pursuant to Federal Rule of Civil Procedure 4(m).

Caudle objects to the Report on limited grounds. She lists general, conclusory objections in the introduction of her objections.³ They are loosely tied to the four specific objections in the body of her document. In her specific objections, she first claims that the Report misapplied United States v. Voelker, 175 B.R. 989, 994 (W.D.Wis.1994), because it failed to recognize the distinction set forth in Voelker between a levy and a lien. (Dkt. No. 36 at 2, 4–5.) Caudle's remaining three specific objections all relate to her argument that defendants are not entitled to immunity under 26 U.S.C. § 6332(e). Her objections primarily reiterate her argument, also raised in her briefing and at the hearing before Judge Welsh, that 26 U.S.C. § 6334(a)(9) renders a portion of her retirement allowance exempt from levy in an amount to be determined by the method of computation set forth in § 6334(d).⁴ Because a portion of her allowance was exempt from levy, her argument continues, the property was not "subject to levy" as required for immunity under § 6332(e).

In her second objection, Caudle claims that the magistrate judge "misinterpreted and omitted key elements of 26 U.S.C. § 6332(e)." (Dkt. No. 36 at 5.) In particular, she contends that defendants here did not "comply" with the levy because the property surrendered was not "subject to levy." (Id. at 5–7.)

Caudle's third objection posits that the Report "ignores the instructive case law"—and, most notably, the Ninth Circuit's decision in Farr. v. United States, 990 F.2d 451 (9th Cir.1993), which she argues has a "very similar fact pattern." (Dkt. No. 36 at 7.)

Caudle's fourth objection is that the Report misunderstands her claims. She insists that she is not challenging the validity of the levy, but "[t]he manner in which the levy [is] carried out." (Id. at 9.) She emphasizes that what she challenges is not the levy itself, but the fact that defendants surrendered amounts that she believes are exempt from levy under § 6334(a)(9).

Caudle does not object to any of the other grounds that the Report identifies as entitling defendants to summary judgment.

III. DISCUSSION

A. Standard of Review

This court must review de novo "those portions of [the Report] or specified proposed findings or recommendations to which objection has been made." 28 U.S.C. § 636(b)(1)(C). As to those portions to which there is no objection, the court "need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.’ " Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310, 315 (4th Cir.2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).

With regard to the summary judgment standard, the Report sets forth the applicable standard. (See Dkt. No. 33 at 3–5.) No party objects to the Report's statement of that standard, and the court concludes that it is correct and adopts it herein.

B. Protection From Liability Under 26 U.S.C. § 6332(e) and Exemptions Under 26 U.S.C. § 6334

The focus of Caudle's objections is whether 26 U.S.C. § 6332(e) protects defendants from her claims. The IRS has statutory authority to issue levies to obtain property belonging to a delinquent taxpayer and in the custody of a third party. The custodian of the property who receives such a notice of levy, such as FCRAA here, has an affirmative legal obligation to comply with it. A person who refuses to honor the IRS levy is subject to being held personally liable to the IRS in the...