Farr v. U.S.

• Decision Date: 04 February 1993
• Docket Number: No. 91-36317,91-36317
• Citation: 990 F.2d 451
• Parties: -1312, 93-1 USTC P 50,229 Patricia B. FARR, Plaintiff-Appellant, v. UNITED STATES of America; United Air Lines, Inc., Defendants-Appellees. . Submitted *
• Court: U.S. Court of Appeals — Ninth Circuit

Page 451

990 F.2d 451

71 A.F.T.R.2d 93-1312, 93-1 USTC P 50,229

Patricia B. FARR, Plaintiff-Appellant, v. UNITED STATES of America; United Air Lines, Inc.,

Defendants-Appellees.

No. 91-36317.

United States Court of Appeals,

Ninth Circuit.

Submitted ^* Feb. 4, 1993.

Decided March 29, 1993.

Patricia B. Farr, Laclede, ID, pro se.

Gary R. Allen, Charles E. Brookhart, and Joel A. Rabinovitz, U.S. Dept. of Justice, Washington, DC, for defendant-appellee U.S.

Debra L. Boyd and Robert A. Siegel, O'Melveny & Myers, Los Angeles, CA, for defendant-appellee United Air Lines, Inc.

Appeal from the United States District Court for the District of Idaho.

Before TANG, KOZINSKI, and FERNANDEZ, Circuit Judges.

FERNANDEZ, Circuit Judge:

Patricia B. Farr brought this action against her employer, United Air Lines, Inc. (United) and against the United States after the Internal Revenue Service (IRS) levied upon her wages. The IRS claimed that Farr had unpaid federal income tax liabilities and United turned over certain monies that it was holding on her behalf. She asserts defects in the levy procedures and also asserts that United improperly turned over exempt funds. The district court dismissed her action. We affirm in part and reverse in part.

BACKGROUND

The IRS determined that Farr had not filed federal income tax returns for the years 1979 to 1982 and that she had tax deficiencies for those years. In due course, the IRS issued Notices of Levy which it served upon her employer, United. United duly sent funds it was holding on her behalf to the IRS, but her tax debt has not been fully discharged, so the levy on her wages remains.

Farr brought this action against the United States claiming, among other things, that the levies upon her wages were procedurally invalid and that the IRS had improperly disclosed taxpayer information. She also sued United. In that part of her action, she claimed that United had improperly turned over workmen's compensation benefits to which she was entitled in addition to her wages. She asserted, in effect, that United had converted those benefits. United has admitted for purposes of this appeal that it did, indeed, turn over workmen's compensation benefits.

The United States filed a motion to dismiss for lack of jurisdiction and for failure to state a claim. Fed.R.Civ.P. 12(b)(1) and 12(b)(6). In the alternative, it asked for summary judgment. Fed.R.Civ.P. 56. In support of its motions it submitted copies of the "Certificates of Assessment and Payments" (certificates). The district court granted the motion on grounds that Farr had not stated a claim upon which relief could be granted. While it relied upon the certificates, it did not grant the motion for summary judgment.

United also moved to dismiss on grounds that pursuant to 26 U.S.C. § 6332(e) it was immune from actions brought by disgruntled taxpayers like Farr, whose property had been turned over to the United States pursuant to a levy. The district court granted that motion also.

Farr then appealed the dismissal of her action.

JURISDICTION

"The existence of subject matter jurisdiction is a question of law reviewed de novo." Hughes v. United States, 953 F.2d 531, 535 (9th Cir.1992). However, "[t]he district court's factual findings on jurisdictional issues must be accepted unless clearly erroneous." Id.

A. United.

From the record before us, it appears that the district court did have jurisdiction over the conversion action against United upon, at least, diversity grounds. 28 U.S.C. § 1332. We, however, do not intend to make that the law of the case if the district court, upon remand, shall determine that the facts are otherwise.

B. United States.

It is clear that the district court did not have jurisdiction to entertain Farr's action to the extent that she sought an injunction or declaratory relief against the IRS. See Hughes, 953 F.2d at 535-37. It is true that an injunction may sometimes issue where there are no circumstances under which the government could prevail on the merits and the taxpayer will suffer irreparable harm. Id. at 535. Nothing in the facts of this case even hints that those conditions could be fulfilled. Purely and simply, Farr did not pay her income taxes, or even file returns, despite the fact that she was earning significant amounts of income during the years in question.

We have held, however, that pursuant to 28 U.S.C. § 2410(a) there can be jurisdiction over an action to quiet title to personal property when the IRS has imposed a lien and the taxpayer seeks to contest the procedural validity of that lien. Hughes, 953 F.2d at 537-38. Farr has made just such an assertion. However, as to amounts that have already come into the hands of the IRS, no quiet title action will lie. Id. at 538. The United States argues that not even the continuing levy can support a quiet title action. We have held to the contrary. In Hughes we said that the taxpayer "can only use § 2410 to challenge the continued collection of taxes through the garnishment of ... wages." Id. at 538. See also James v. United States, 970 F.2d 750, 755-56 n. 11 (10th Cir.1992).

Fortunately for Farr, that slight opening may be enough to allow her to squeeze through the otherwise closed jurisdictional gate.

As the district court stated, in her complaint Farr merely made the unsupported assertion that the IRS liens were procedurally invalid. The IRS, for its part, then filed the certificates, which indicated that the necessary procedures had been taken and that the notices had been mailed. The certificates showed Farr's address. Those certificates were proper evidence of the propriety of the assessment proceedings in all particulars. Hughes, 953 F.2d at 539-40. However, although they were proper evidence, they were not necessarily conclusive evidence. Id. See Keado v. United States, 853 F.2d 1209, 1213-14 (5th Cir.1988) (introduction of mailing certificate, mailing log book and affidavit supporting mailing of notices sufficient to prove actual mailing of IRS notices). But see United States v. Wright, 658 F.Supp. 1, 2 (D.Alaska 1986) (date-stamped copy of IRS notice and memorandum discussing it not sufficient evidence to prove mailing). Farr did submit a declaration that she never received the required notices. Given that declaration, if evidence outside the pleadings was going to be considered, Farr should have at least been given the opportunity to conduct some discovery before judgment was entered against her. Indeed, the district court did recognize the fairness of allowing discovery and suggested that it was unlikely that it would preclude Farr from having discovery if the merits of her claim were in question.

The district court said it was granting the government's motion to dismiss because Farr had not stated a claim upon which relief could be granted. That is an indication that the government's motion under Rule 12(b)(6) was granted. But in ruling, the district court relied upon the certificates. However, evidence outside the pleadings, such as the certificates, cannot normally be considered in deciding a 12(b)(6) motion. See Baker v. McNeil Island Corrections Ct., 859 F.2d 124, 127 (9th Cir.1988) (review for failure to state a claim limited to complaint). Given Farr's pleading alone, it cannot be said that she failed to state a claim when she alleged that the IRS did not follow the required notice procedures. Therefore, the dismissal cannot be sustained on pure 12(b)(6) grounds.

Nor can we uphold the dismissal as being one on the merits. The district court said it was not ruling on the merits and that it was specifically denying the government's summary judgment motion.

We recognize that in actions against the United States a failure to state a claim may also indicate a lack of jurisdiction. Here, the United States did also bring a motion pursuant to Rule 12(b)(1), and it is proper for the district court to consider evidence outside of the pleadings for the purpose of deciding a jurisdictional issue. ¹ See McCarthy v. United States, 850 F.2d 558, 560 (9th Cir.1988), cert. denied, 489 U.S. 1052, 109 S.Ct. 1312, 103 L.Ed.2d 581 (1989). Nevertheless, the district court did not indicate that it was granting that motion. Moreover, just as it would have been fair to permit Farr to obtain some discovery if she were faced with a summary judgment motion on the merits, it would have been equally fair to allow her to obtain some discovery when faced with a 12(b)(1) motion. See America W. Airlines, Inc. v. GPA Group, Ltd., 877 F.2d 793, 800-01 (9th Cir.1989); Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 430-31 n. 24 (9th Cir.1977).

Thus, we cannot uphold the dismissal on the alternate ground of Rule 12(b)(1). Instead, we must reverse the district court's determination that in light of the IRS certificates In any event, the district court did have jurisdiction over the separate claim that an improper disclosure of return information was made. 26 U.S.C. § 7431.

                Farr has not stated a claim upon which relief could be granted.   In so doing we do not hold that Farr did or did not receive notices, nor do we hold that the IRS procedures were or were not defective
                

DISCUSSION

Two issues remain before us. First, did the district court properly dismiss Farr's claim that there was an unauthorized disclosure of her return information? Second, is United immune? We will consider each of these in turn.

A. Disclosure of Return Information.

There can be no doubt that "returns and return information" are, generally speaking, confidential. 26 U.S.C. § 6103(a). Moreover, a violation of the confidentiality restrictions will support a civil action for damages against the United States. 26 U.S.C. § 7431(a)(1); see Maisano v. United States, 908 F.2d 408, 410 (9th Cir.1990).

While this right is important, it is not unlimited. Section 6103 provides for a number of exceptions. Among them is 6103(k)(6) which provides that the IRS may "disclose...