Cranford v. U.S.

• Decision Date: 14 January 2005
• Docket Number: No. CV F 04-6025 AWIDLB.,CV F 04-6025 AWIDLB.
• Citation: 359 F.Supp.2d 981
• Parties: Bernice K. CRANFORD, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Eastern District of California

359 F.Supp.2d 981

Bernice K. CRANFORD, Plaintiff, v. UNITED STATES of America, Defendant.

No. CV F 04-6025 AWIDLB.

United States District Court, E.D. California.

January 14, 2005.

COPYRIGHT MATERIAL OMITTED

David C Johnston, Law Offices of David C Johnston, Modesto, CA, for Plaintiff.

Paul S. Ham, United States Department of Justice, District of Columbia, CA, for Defendant.

MEMORANDUM OPINION AND ORDER GRANTING MOTION TO DISMISS

ISHII, District Judge.

BACKGROUND

On July 28, 2004, Plaintiff Bernice K. Cranford filed a petition to quash summons pursuant to 26 U.S.C. § 7609(b)(2)(A). The petition alleges that on June 10, 2004, the United States, through the Commissioner of the Internal Revenue issued a summons addressed to American Express Travel Related Services ("American Express") in the matter of taxpayer Leonard Lloyd Morris relating to tax periods 1987 through 1995. The petition alleges that the summons sought documents relating to a credit card issued to and used by Plaintiff, not the taxpayer. While Plaintiff was formerly married to the taxpayer, the petition alleges they had a prenuptial agreement and at the time of the taxpayer's death, Plaintiff and the taxpayer were separated. The summons was not served on Plaintiff. The petition alleges that the IRS does not seek the American Express credit card records at issue in good faith or for a legitimate purpose, they are irrelevant to the deceased taxpayer's tax obligations, and the summons invades Plaintiff's privacy.

On November 16, 2004, Defendant United States filed a motion to dismiss the petition to quash. The United States contends that the court lacks jurisdiction over the United States because the United States was never properly served pursuant to Rule 4(i) of the Federal Rules of Civil Procedure. The United States also contends that it has not waived its sovereign immunity and jurisdiction regarding the petition because Plaintiff was not identified in the summons and the summons was issued to aid in the collection of an already assessed tax liability.

Plaintiff did not file an opposition or otherwise oppose the United State's motion to dismiss.

LEGAL STANDARDS

A. Service

"A federal court does not have jurisdiction over a defendant unless the defendant has been served properly under Fed.R.Civ.P. 4." Direct Mail Specialists v. Eclat Computerized Techs., Inc., 840 F.2d 685, 688 (9th Cir.1988). While Rule 4 is a flexible rule that should be liberally construed so long as a party receives sufficient notice of the complaint, United Food & Commercial Workers Union v. Alpha Beta Co., 736 F.2d 1371, 1382 (9th Cir.1984), "neither actual notice nor simply naming the defendant in the complaint will provide personal jurisdiction" absent substantial compliance with its requirements. Benny v. Pipes, 799 F.2d 489, 492 (9th Cir.1986). Both Rule 12(b)(4) and Rule 12(b)(5) of the Federal Rules of Civil Procedure allow a motion to dismiss for insufficiency of process. Rule 12(b)(4) was designed to challenge irregularities in the contents of a summons. Chilicky v. Schweiker, 796 F.2d 1131, 1136 (1986), reversed on other grounds by 487 U.S. 412, 108 S.Ct. 2460, 101 L.Ed.2d 370 (1988). Rule 12(b)(5) permits a defendant to challenge the method of service attempted by the plaintiff.

Where the validity of service is contested, the burden is on the party claiming proper service has been effected to establish validity of service. Grand Entertainment Group, Ltd. v. Star Media Sales, Inc., 988 F.2d 476, 488 (3d Cir.1993). The court may weigh and determine disputed issues of fact on a Rule 12(b)(5) motion. Rutter, Cal. Practice Guide: Fed.Civ.Pro. Before Trial, § 9:152 (2004). Where service of process is insufficient, the court has broad discretion to dismiss the action or to retain the case but quash the service that has been made on defendant. Montalbano v. Easco Hand Tools, Inc. 766 F.2d 737, 740 (2nd Cir.1985).

B. Jurisdiction

Rule 12(b)(1) of the Federal Rules of Civil Procedure allows a motion to dismiss for lack of subject matter jurisdiction. It is a fundamental precept that federal courts are courts of limited jurisdiction. Limits upon federal jurisdiction must not be disregarded or evaded. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978). The plaintiff has the burden to establish that subject matter jurisdiction is proper. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). This burden, at the pleading stage, must be met by pleading sufficient allegations to show a proper basis for the court to assert subject matter jurisdiction over the action. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936); Fed.R.Civ.P. 8(a)(1). When a defendant challenges jurisdiction "facially," all material allegations in the complaint are assumed true, and the question for the court is whether the lack of federal jurisdiction appears from the face of the pleading itself. Thornhill Publ'g Co. v. General Tel. Elec., 594 F.2d 730, 733 (9th Cir.1979); Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977); Cervantez v. Sullivan, 719 F.Supp. 899, 903 (E.D.Cal.1989), rev'd on other grounds, 963 F.2d 229 (9th Cir.1992). A defendant may also attack the existence of subject matter jurisdiction apart from the pleadings. Mortensen, 549 F.2d at 891. In such a case, the court may rely on evidence extrinsic to the pleadings and resolve factual disputes relating to jurisdiction. St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir.1989); Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir.1987); Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir.1983).

DISCUSSION

A. Service

Rule 12(b)(5) allows a defendant to move to dismiss an action where the service of process of a summons and complaint is insufficient. Under Rule 4(i), a party seeking to serve the United States must serve a copy of the summons and complaint (1) personally on the United States Attorney for the district in which the action is brought and (2) by certified or registered mail to the United States Attorney General. Fed.R.Civ.P. 4(i); McGuckin v. United States, 918 F.2d 811, 813 (9th Cir.1990). If proper service is not accomplished within 120 days after the complaint is filed and the party on whose behalf service was required cannot show good cause why such service was not made, the action must be dismissed. Fed.R.Civ.P. 4(m); Hart v. United States, 817 F.2d 78, 80-81 (9th Cir.1987). In the Ninth Circuit, dismissals due to technical noncompliance with Rule 4(i) may be excused if (1) the party to be served personally received notice, (2) the defendant would suffer no prejudice from the service defect, (3) there is justifiable excuse or good cause for the failure to serve properly, and (4) the plaintiff would be severely prejudiced if his complaint was dismissed. Borzeka v. Heckler, 739 F.2d 444, 447 (9th Cir.1984). If good cause is not shown, dismissal is required. See Wei v. Hawaii, 763 F.2d 370, 372 (9th Cir.1985).

The United States moves to dismiss Plaintiff's action for insufficiency of service of process alleging that, although Plaintiff personally served IRS Officer Randy Reece with a copy of her Petition, Plaintiff failed to serve either the United States Attorney for the Eastern District of California or the United States Attorney General as required by Rule 4(i). Plaintiff has not filed an opposition to the United States' motion. As such, it is difficult to apply the Borzeka test and determine if technical service should be excused. Plaintiff appears to meet parts 1 and 2 of the Borzeka test because the United States did receive actual notice and it does not appear the United States would suffer prejudice from the service defect. Given Plaintiff's failure to file an opposition, it is unclear if Plaintiff would be severely prejudiced if this action were dismissed; a showing that is required to meet part 4 of the Borzeka test. Regardless, Plaintiff has failed to meet part 3 of the Borzeka test because Plaintiff has provided no excuse for her failure to comply with Rule 4(i). Plaintiff's failure to serve properly or provide an explanation for her failure can only be attributed to inadvertent error or ignorance of the governing rules, neither of which constitute good cause. See Townsel v. County of Contra Costa, 820 F.2d 319, 320 (9th Cir.1987); Wei, 763 F.2d at 372. Because Plaintiff failed to properly serve the United States Attorney for the Eastern District of California and the United States Attorney General within the 120-day period or to provide good cause for her failure, the court must dismiss Plaintiff's action.

B. Standing

The United States also challenges the court's jurisdiction by asserting that the United States has not waived its sovereign immunity to be sued under 26 U.S.C. § 7609. "The United States, as sovereign, `is immune from suit save as it consents to be sued ... and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit.'" United States v. Testan, 424 U.S. 392, 399, 96 S.Ct. 948, 47 L.Ed.2d 114 (1976), (quoting United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 85 L.Ed. 1058 (1941)). A court cannot imply sovereign immunity by the United States and it must be unequivocally expressed in statutory text. Lane v. Pena, 518 U.S. 187, 192, 116 S.Ct. 2092, 135 L.Ed.2d 486 (1996) (citations omitted). The Ninth Circuit has addressed the issue of whether a person has standing to challenge an IRS summons as an issue of subject matter jurisdiction. See Ip v. United States 205 F.3d 1168, 1171 (9th Cir.2000).

The IRS has broad investigatory powers under the Internal Revenue Code. See 26 U.S.C. §§ 7601-7613. Under section 7602(a)(1), the IRS is empowered to issue a summons to compel examination of "books, papers, records or other data which may be relevant or material" to an inquiry for...