Fairfield v. United States
| Decision Date | 31 May 2018 |
| Docket Number | CIVIL ACTION NO. 2:17-CV-1064-KOB |
| Parties | FAIRFIELD, AL, CITY OF Plaintiff, v. UNITED STATES OF AMERICA, Defendant. |
| Court | U.S. District Court — Northern District of Alabama |
Before the court is the City of Fairfield's second amended complaint. (Doc. 19). This court has the United States's "Motion to Dismiss Amended Complaint" (doc. 20); the City's motion to amend its second amended complaint (doc. 23); the United States's "Motion to Strike" the City's response to its motion to dismiss (doc. 26); and the City's "Motion to Exclude Exhibit B" (doc. 27).
The City filed its first complaint, styled as a petition to quash summons, on June 23, 2017. The United States moved to dismiss the first complaint for lack of subject-matter jurisdiction, contending that the City had failed to plead any valid waiver of the United States's sovereign immunity. This court granted the United States's motion and dismissed the City's first complaint without prejudice, granting the City leave to file the second amended complaint now before the court.
The United States now moves to dismiss the City's second amended complaint, arguing that the City again fails to establish a waiver of the United States's sovereign immunity relevant to the City's allegations. (Doc. 22). The United States also argues that the City fails to plead exhaustion of administrative remedies under 26 U.S.C. § 7433, which provides a limited waiver of the United States's sovereign immunity.
The City responded to the United States's latest motion to dismiss, and, in a separate filing, asks the court to allow it to amend its second amended complaint. (Docs. 22, 23). The City's proposed amendment is before the court. The City also moves to strike "Exhibit B" (doc. 23-2), which is a tax document the City avers it accidentally filed alongside its motion to amend its complaint. (Doc. 27).
The United States, for its part, moves to strike the City's response to the motion to dismiss, which looks like an independent attempt to amend the City's second amended complaint outside the City's formal request. (Doc. 26).
The court will DENY the United States's motion (doc. 26) to strike the City's response (doc. 22). However, amending a complaint through a response to a motion to dismiss is inappropriate and confusing. See Fed. R. Civ. P. 8(a)(2) (). Accordingly, the court considers the City's filing (doc. 22) only as a response to the United States's motion to dismiss and nothing more.
The court will DENY the City's motion to amend its second amended complaint. (Doc. 23). The City's proposed addition to its complaint does not add anything of substance to the second amended complaint nor does it cure the second amended complaint's defects. The court will GRANT the City's motion to strike "Exhibit B" because it was inadvertently filed. (Doc. 27; Doc. 23-2).
Finally, the court will GRANT the United States's motion to dismiss the second amended complaint. The court will DISMISS the City's complaint without leave to amend. After addressing the United States's first motion to dismiss, this court gave the City an opportunity tocorrect the first complaint's myriad deficiencies. The City squandered that opportunity. The second amended complaint is woeful; it contains even more deficiencies than the first complaint and adds patently frivolous legal allegations to the mix. The court will accordingly DIRECT the Clerk of Court to close this case.
As with the City's first complaint, the court takes the allegations in the City's second amended complaint (doc. 19) as true for purposes of examining its subject-matter jurisdiction. See Lawrence v. Dunbar, 919 F.2d 1525, 1528-29 (11th Cir. 1990). In addition to arguing that the court lacks jurisdiction, the United States asserts that the City's second amended complaint fails to state a claim upon which relief can be granted under Fed. R. Civ. P. 12(b)(6). A Rule 12(b)(6) motion to dismiss attacks the legal sufficiency of the complaint. Generally, the Federal Rules of Civil Procedure require only that the complaint provide "'a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957) (quoting Fed. R. Civ. P. 8(a)). A plaintiff must provide the grounds of his entitlement, but Rule 8 generally does not require "detailed factual allegations." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley, 355 U.S. at 47).
The Supreme Court explained that "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (). To be plausible on its face, the claim must contain enough facts that "allow[ ] the court to draw the reasonable inference that the defendant is liable for themisconduct alleged." Iqbal, 556 U.S. at 678. If the court determines that well-pleaded facts, accepted as true, do not state a claim that is plausible, the claim must be dismissed. Id.
As with its first complaint, the City's second amended complaint contains few coherent facts and provides insufficient background. The court makes its best attempt at piecing together the City's allegations and claims.
The City admits that it owes the IRS significant sums of unpaid taxes. The City cannot immediately pay all of what it owes, so it has looked to alternative methods of payment. To that end, City officials had a conference call with an IRS officer on November 16, 2016.
The City appears or attempts to incorporate three affidavits by reference into its second amended complaint. City officials Ed May, Dianne Cain, and Frank Woodson each aver that on November 15, 2016,1 they participated in a conference call with the IRS officer about the City's unpaid taxes. (Doc. 19-1; Doc. 19-2; Doc. 19-3). During this conference call, the IRS officer indicated that the IRS would not take action to collect the City's unpaid taxes. Furthermore, the officer said that the IRS would work with the City on a payment plan or other relief. The City's complaint lacks allegations about whether it took any steps immediately after the November conference call to submit to the IRS an offer-in-compromise or installment plan agreement in writing.
In March 2017, the IRS notified the City that it intended to levy on funds in the City's bank accounts. (Doc. 19 ¶ 11). The City states that, at that time, the IRS had not yet notified theCity that the relief proposed2 in the November 2016 conference call would not suffice. The IRS began levying on the City's bank accounts, and, in total, garnished an amount "in excess of $42,311.23." (Doc. 19 ¶¶ 13, 19). On May 1, 2017, the City submitted an offer-in-compromise to the IRS. (Id. ¶ 15).
The Internal Revenue Code provides administrative review mechanisms that a litigant must exhaust before bringing a claim in federal court. See 26 C.F.R. § 301.6330-1(f). The City alleges that on March 24, 2017, it appealed "the installment agreement rejection through the [IRS's] Collection Appeals Program (CAP) and requested a return of the wrongfully levied proceeds through the CAP proceeding." (Doc. 19 ¶ 14). The City does not indicate the outcome of its appeal or whether it had any hearing as part of the appeal.
The City also attaches to its complaint several documents, including the IRS's notice of levy. The notice is dated March 7, 2017, and notifies the City that the IRS has sent a request to Compass Bank to levy $42,311.23 from the City's accounts. (Doc. 19-4). Another document is a June 6, 2017, notification to the City of an IRS summons to Compass Bank. (Doc. 19-7). The last document is the summons itself, which compels Compass Bank to provide to the IRS information about the City's bank accounts by July 7, 2017.
The City appears to complain primarily that the IRS's notice of levy and/or summons lacked valid Office of Management and Budget ("OMB") "control numbers." (See doc. 19 ¶¶ 23-24, 33, 36). From there, the City concludes that the IRS's levy of funds from the City's accounts was unauthorized. The City's contention is akin to a "fruit of the poisonous tree" argument: because the IRS improperly notified the City and improperly obtained its bank recordsusing documents without OMB control numbers, the IRS's subsequent levy of the City's funds using that information and relying on those notifications was, in the City's view, improper. The City's second amended complaint contains four counts, plus an unnumbered "Legal Claim."
In its first count, the City alleges that the IRS violated the Paperwork Reduction Act, 44 U.S.C. § 3512, which the City argues prohibits the IRS from issuing documents without an OMB control number. The City calls the IRS's violation of the Paperwork Reduction Act a "systemic" and "pervasive" scheme that "has no bounds." It adds that "this scheme must be stopped immediately" because, in the City's view, the IRS's "abuse of power" "threatens to make a mockery of our democratic systems." (Doc. 19 ¶¶ 26, 28). And the City affirmatively states that "[t]his is not an isolated incident." (Id.). But the City's complaint lacks factual allegations about the other alleged incidents in which the IRS violated the Paperwork Reduction Act in the same way.
In the second count, the City alleges that the IRS violated the Privacy Act, 5 U.S.C. § 552a, by collecting information with unauthorized documents (i.e., the documents without an OMB control number) and then providing that information to Compass Bank. (Doc. 19 ¶ 32). In the third count, the City states that the IRS violated the Fourth Amendment by using unauthorized documents to seize the City's money. In...
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