Hurt v. US

• Decision Date: 14 February 1996
• Docket Number: 2:95-1053.,Civil Action No. 2:95-0075
• Citation: 914 F. Supp. 1346
• Court: U.S. District Court — Southern District of West Virginia
• Parties: Charles E. HURT, et al., Plaintiffs, v. UNITED STATES of America, et al., Defendants. Charles E. HURT, et al., Plaintiffs, v. UNITED STATES of America, et al., Defendants.

914 F. Supp. 1346

Charles E. HURT, et al., Plaintiffs, v. UNITED STATES of America, et al., Defendants.

Charles E. HURT, et al., Plaintiffs, v. UNITED STATES of America, et al., Defendants.

Civil Action Nos. 2:95-0075, 2:95-1053.

United States District Court, S.D. West Virginia, Charleston Division.

February 14, 1996.

COPYRIGHT MATERIAL OMITTED

Charles E. Hurt, Charleston, WV, pro se.

Gerald A. Role, U.S. Dept. of Justice, Washington, DC, Rebecca A. Betts, U.S. Attorney, Stephen M. Horn, Assistant U.S. Attorney, Southern District of W.Va., Charleston, WV, for defendants.

MEMORANDUM OPINION AND ORDER

HADEN, Chief Judge.

Pending are (1) Defendants' motion to dismiss, or in the alternative for summary judgment, in Civil Action 2:95-1053; and (2) Defendants' motion to dismiss in Civil Action 2:95-0075. For the reasons detailed below, the Court GRANTS in part and DENIES in part Defendants' motions.

I. INTRODUCTION

On February 1, 1995 Plaintiffs commenced Civil Action 2:95-0075 against the United States and the Commissioner of Internal Revenue seeking injunctive relief and monetary damages. Plaintiffs alleged the Commissioner engaged in a pattern of harassment against them in retaliation for Mr. Hurt's legal representation of clients in civil actions filed against the IRS in 1973. Plaintiffs contended the IRS audited their tax returns each year from 1973 to present and asserted also the IRS illegally applied a payment made by them to their tax debt owed for tax year 1986 rather than 1993, even though their tax debt for 1986 had been satisfied.¹

The United States moved to dismiss in April 1995. In a June 21, 1995 Memorandum Opinion, this Court held, inter alia, (1) Plaintiffs could not seek injunctive relief; (2) Plaintiffs could not maintain an action under the Federal Tort Claims Act (FTCA), given their failure to first file an administrative claim; but (3) Plaintiffs could assert a claim under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), given their allegations of "a pattern of retaliatory and harassing auditing and crediting practices used by the IRS against them." Hurt v. United States, 889 F.Supp. 248, 252 (S.D.W.Va.1995).

Then on September 12, 1995 the United States moved for summary judgment. This motion engendered a flurry of briefing and miscellaneous motions. To illustrate: Plaintiffs filed several motions seeking to amend their complaint to state an FTCA claim following the IRS' denial of Plaintiffs' administrative claim on October 23, 1995. The Court declined to rule on the United States' summary judgment motion given the seemingly meritorious motions to amend. Also, in an abundance of caution, the Court did not permit Plaintiffs to amend their complaint to add an FTCA claim, given the suggestion in McNeil v. United States, 508 U.S. 106, 113 S.Ct. 1980, 124 L.Ed.2d 21 (1993) that FTCA plaintiffs may not exhaust their administrative remedies during the pendency of their lawsuit challenging the tortious conduct. Id. at 112-13, 113 S.Ct. at 1984.

In an attempt to sort the tangle, the Court entered a Case Management Order (CMO) on November 20, 1995 designed to achieve a fair and orderly disposition in one proceeding of all claims Plaintiffs might have against the United States and its agents. The CMO permitted Plaintiffs (1) to amend their complaint in Civil Action 2:95-0075 to clarify their causes of action under Bivens and 26 U.S.C. § 7433; and (2) to file no later than December 10, 1995 a separate civil action asserting an FTCA claim. The Court further observed that, after Defendants filed their responsive pleadings in the two cases, the actions would be consolidated pursuant to Rule 42(a), Federal Rules of Civil Procedure.

Plaintiffs filed their amended complaint in Civil Action 2:95-0075 on November 24, 1995 and their FTCA claim, Civil Action 2:95-1053, on November 29, 1995. The United States immediately responded with the instant dispositive motions.

Defendants assert the FTCA claim is barred because (1) it falls within the confines of 28 U.S.C. § 2680(c), the tax collection exception to the FTCA; (2) Plaintiffs failed to file a proper FTCA claim; and (3) Plaintiffs' claim is untimely under the FTCA's limitations period. As to the Bivens and § 7433 claims, Defendants argue (1) Plaintiffs cannot assert all claims against all named Defendants; (2) Plaintiffs fail to state a Bivens claim against the Commissioner of Internal Revenue and the District Director; (3) all individually named Defendants are entitled to qualified immunity; (4) the Bivens claim is untimely; and (5) the Court lacks jurisdiction over the § 7433 claim, which is alleged to be untimely as well.

Initially, the Court determines these two actions contain common questions of law and fact. Accordingly, pursuant to Rule 42(a), the Court ORDERS Civil Actions 2:95-0075 and 2:95-1053 consolidated for all further proceedings. Civil Action 2:95-0075 is designated as the lead case.

II. LAW AND ANALYSIS

A. Is Plaintiffs' FTCA Claim Barred by § 2680(c):

Defendants assert the Court lacks jurisdiction over Plaintiffs' FTCA claim because the United States has not waived sovereign immunity. Defendants specifically claim 28 U.S.C. § 2680(c) prevents the FTCA action.

Section 2680(c) provides, in pertinent part, as follows:

The provisions of this chapter and section 1346(b) of this title shall not apply to — (c) Any claim arising in respect of the assessment or collection of any tax or customs duty....

Id. Defendants rely heavily on the recent decision of the United States Court of Appeals for the Fourth Circuit in Perkins v. United States, 55 F.3d 910 (4th Cir.1995). In Perkins, the Court of Appeals restated some well-settled principles governing FTCA claims:

As sovereign, the United States enjoys immunity from suits for damages at common law. The FTCA is a limited statutory waiver of this immunity. It gives jurisdiction to the federal district courts to hear civil actions against the United States for money damages for injuries caused by the negligent or wrongful acts or omissions of government employees while acting within the scope of their employment, subject to several exceptions. One of these exceptions exempts `any claim arising in respect of the assessment or collection of any tax or customs duty' from the application of the provisions of the FTCA. The assessment and collection exemption, as with all provisions of the FTCA, `must be strictly construed in favor of the sovereign.'

Perkins, 55 F.3d at 913 (citations omitted).

In Perkins, the Court first discussed the general contours of § 2680(c):

The opinions decided under section 2680(c) also interpret the section to encompass a broad scope of activities by IRS agents. The Fifth Circuit has explained

Congress retained the United States' sovereign immunity for any claim in respect of the assessment or collection of taxes. This language is broad enough to encompass any activities of an IRS agent even remotely related to his or her official duties.

Capozzoli v. Tracey, 663 F.2d 654, 658 (5th Cir.1981) (second emphasis added). See also Kosak v. United States, 465 U.S. 848, 852-55, 104 S.Ct. 1519, 1522-24, 79 L.Ed.2d 860 (1984)....

It is well established that regulatory violations and torts committed by agents are within the scope of the exception if they were committed during the course of a tax assessment or collection effort....

Perkins, 55 F.3d at 913-14 (final emphasis added).

Despite this broad interpretation, however, the Court of Appeals nevertheless observed the "breadth of section 2680(c)'s operation is not unlimited." Id. at 914. The court's observations are worth quoting at length:

Capozzoli leaves a window open for a claimant to show that her claim falls within the FTCA but without the exception; that is, that an IRS agent harmed her by an act done within his scope of employment generally, but not within the narrower scope of his tax assessment and collection duties.

The burden is on a claimant to establish that an IRS agent's actions were within that window....

Whether a case falls within the window is determined by whether a specific tax collection is at issue or whether the more general purposes of the agency are being pursued. In cases in which a specific tax debt of a specific taxpayer is at issue, the exemption immunizes the IRS from suit for activities that are even remotely related to the tax assessment or collection....

The rule therefore emerges that the exemption applies to protect illegal acts or torts committed by IRS agents only when they are related, however remotely, to a bona fide effort to assess or collect a particular tax debt. The governing inquiry is not how egregious the agent's actions were, but whether the actions were related to a particular tax assessment or collection effort or merely served the general purposes of the IRS (or no legitimate purpose at all). In the present case, Agent Smyth's actions, wrongful or not, were all related to a specific tax collection effort, namely the seizure of Marcus Coal's tax debt. Thus, they fall into the category of activities immunized because they are sufficiently related to an assessment or collection effort.

Perkins, 55 F.3d at 915-16.

Defendants proffer an impressive list of authorities and ultimately assert even if Plaintiffs' returns were audited every year since 1973, such examinations are permitted under the Internal Revenue Code. The Court does not disagree. What Defendants (perhaps intentionally) fail to comprehend, however, is Plaintiffs are not challenging a specific tax assessment or collection, but rather the Defendants' motivations for engaging in the assessment or collection actions in the first place. In other words, Plaintiffs challenge the bona fides of the Defendants' assessment and collection activities and whether they served any legitimate purpose. Under Perkins, this is sufficient to sidestep § 2680(...