Hybertson v. United States
| Decision Date | 24 March 2016 |
| Docket Number | CIV. 15-5040-JLV |
| Parties | ROBERT EUGENE HYBERTSON, CHRISTOPHER RHODES CHAPMAN, ROBERT ORTH, RICHARD BOGGS, JOHN HOWARD ALEXANDER, MARK PETERS, LELDON OATES, THEODORE HAMMOND, ROBERT E. BUTLER, CARRIE J. BUTLER, JAMES DAVIS, LEE C. PRYMMER, JAMES A. LORING, RANDOLPH PHILLIP FRODSHAM, JOHN ADRIAN VAN ROSSEM, DIANE GRIFFITH, OTTO KROUPA, and TODD KEITH DUMAS, Plaintiffs pro se, v. UNITED STATES, DEPARTMENT OF TREASURY, INTERNAL REVENUE SERVICE, and IRS C.I.D. AGENT GREG M. FLYNN, Defendants. |
| Court | U.S. District Court — District of South Dakota |
Before the court is a motion to dismiss made by defendants, United States, Department of Treasury, the Internal Revenue Service ("IRS") and IRS Criminal Investigation Agent Greg M. Flynn (collectively referred to as "the government"). (Docket 21). The government's motion to dismiss is made pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction. Id. The government separately asserts all claims against Agent Flynn must be dismissed pursuant to Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction. Id. The government argues plaintiffs should not be granted leave to amend their complaint because their claims are frivolous and any amendment would be futile. Id. Mr. Hybertson filed an opposition to the motion to dismiss and, if necessary, requests he be granted leave to amend the complaint. (Docket 25). The government filed a reply brief. (Docket 26).
Mr. Hybertson filed a pro se complaint on behalf of himself and four co-plaintiffs, Christopher Chapman, Robert Orth, Charles Sorensen and Timothy Taylor. (Docket 1 at p. 1 (case caption), pp. 4-5 ()).1 Only Mr. Hybertson signed the complaint. Id. at 20. At various times during the pendency of Mr. Hybertson's suit the above-captioned plaintiffs filed either "affirmation of co-plaintiff status" (Dockets 7 & 8) or "affidavit[s] of joinder." (Dockets 12, 13, 15, 16, 17, 20, 23, 24, 33, 35, 37, 38, 39 & 42). To date, neither Mr. Sorensen nor Mr. Taylor have sought to join in Mr. Hybertson's complaint.
With regard to Mr. Hybertson, the complaint alleges he received threatening correspondence from Agent Flynn alluding to a potential criminal prosecution and that Agent Flynn contacted an associate of Mr. Hybertson's and quizzed him about Mr. Hybertson's affairs. Id. at 4; see also Docket 3-3 at pp. 8-9 ().
With regard to Mr. Chapman, the complaint alleges he appeared under subpoena before a grand jury convened by the government for violations of Title 26. Id. at 4. Mr. Chapman alleges he served the grand jury and Department of Justice counsel with a complaint to Congress which was filed on December 28, 2005, on matters pertaining to in personam jurisdiction. Id. The complaint asserts Mr. Chapman never received a response. Id.
With regard to Mr. Orth, the complaint alleges he received correspondence from the IRS and the IRS did not consider all relevant statutes in reaching its conclusion that he owed money for taxes. Id. The complaint also alleges Mr. Orth was threatened with criminal charges. Id.
With regard to Mr. Sorensen, the complaint alleges he is an employee with a large corporation and he risks losing his employment if he inquires about how his company's payroll department interprets and applies federal tax laws. Id.
With regard to Mr. Taylor, the complaint alleges funds were taken from his bank account by the IRS without prior notice and without satisfaction of the necessary protocol. Id. at 5.
Based on these factual allegations, plaintiffs make eight separate claims all seeking declaratory relief and all reaching the same end, namely that plaintiffs should not be taxed. First, plaintiffs allege "Treasury Regulation 26 CFR [§] 1.1-1 [which imposes an income tax on every individual who is acitizen or resident of the United States] is an undue addition to 26 USC § 1 and stands in violation of the 16th [Amendment] to the U.S. Constitution that authorizes only Congress to lay and collect taxes." Id. at 7. Second, plaintiffs allege the government does not properly apply 26 U.S.C. § 83(a) because the IRS does not consider a person to have a basis in their labor equivalent to the fair market value of the services rendered. Id. at 8-9. Third, plaintiffs allege the government's authority to assess taxes is an unlawful extension of their original statutory power, which was limited to stamp taxes. Id. at 9. Fourth, plaintiffs allege 26 U.S.C. Chapter 75, which deals with crimes, other tax offenses and forfeitures, see 26 U.S.C. §§ 7201-7344, does not apply to self-employed people. Id. at 10. Fifth, plaintiffs assert the IRS unlawfully seized the contents of Mr. Taylor's bank account.2 Id. at 10-11. Sixth, plaintiffs claim the government's use of terms such as "sovereign citizens" and "tax protestor" disparages them and violates their due process rights. Id. at 11-12. Seventh, plaintiffs assert Title 26 is void for vagueness and that they:
[D]o not believe . . . they have any of the least of duties provided for under 26 USC, that 26 USC imposes any taxes upon them or their compensation for personal [services] actually performed or their capital gains, that they have any duty to file income tax returns or that criminal sanctions in 26 USC apply to them.
Id. at 13 (emphasis in original).
Eighth, plaintiffs claim they do not believe the tax code applies to them and, therefore, their actions cannot be characterized as "willful" for purposes of criminal offenses. Id. at 15.
Because Mr. Hybertson filed the complaint pro se and because of the large number of other pro se plaintiffs seeking to join the action, the court provided the plaintiffs with notice "that although each plaintiff is entitled to represent himself in this action, no plaintiff is permitted to prosecute the claims of another plaintiff." (Docket 18 at p. 4).
The government moved to dismiss the complaint pursuant to Rule 12(b)(1) as to all defendants and under Rule 12(b)(2) with regard to Agent Flynn only. (Docket 21). Mr. Hybertson filed an opposition to the motion. (Docket 25). Several of the plaintiffs filed a joinder to the opposition of the government's motion to dismiss. See Dockets 27, 28, 29, 30, 31, 32, 33, 34, 36, 38 & 42. The government filed a reply brief.3 (Docket 26).
I. Rule 12(b)(1) Motion to Dismiss
"A court deciding a motion under Rule 12(b)(1) must distinguish between a 'facial attack' and a 'factual attack.' " Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990) (). In a facial attack, "the court restricts itself to the face of the pleadings . . . and the non-moving party receives the same protections as it would defending against a motion brought under Rule 12(b)(6)." Id. (citations omitted) (further citations omitted). "A 'facial attack' on the complaint requires the court merely to look and see if plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion." Menchaca, 613 F.2d at 511 (citing Mortensen v. First Federal Savings & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)).4 "The general rule is that a complaint should not be dismissed 'unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.' " Osborn, 918 F.2d at 729 n.6 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)) (internal quotation marks and further citations omitted).
The government's Rule 12(b)(1) motion to dismiss is a facial challenge to the court's subject matter jurisdiction. (Docket 22 at p. 9). The court restricts its analysis to the face of the pleadings and affords plaintiffs' complaint Rule 12(b)(6) protections in determining whether plaintiffs have sufficiently alleged a basis for the court's subject matter jurisdiction.
"Federal courts are not courts of general jurisdiction and have only the power that is authorized by Article III of the Constitution and statutes enacted by Congress pursuant thereto." Winnebago Tribe of Nebraska v. Babbitt, 915 F. Supp. 157, 162 (D.S.D. 1996) (internal quotation marks omitted) (quoting Marine Equipment Management Co. v. United States, 4 F.3d 643, 646 (8th Cir. 1993)). "The threshold inquiry in every federal case is whether the court has jurisdiction[,] and the [United States Court of Appeals for the] Eighth Circuit has admonished district judges to be attentive to a satisfaction of jurisdictional requirements in all cases." Id. (internal quotation marks omitted) (quoting Rock Island Millwork Co. v. Hedges-Gough Lumber Co., 337 F.2d 24, 26-27 (8th Cir. 1964). "The burden of proving subject matter jurisdiction falls on the plaintiff." V S Ltd. P'ship v. Dep't of Hous. & Urban Dev., 235 F.3d 1109, 1112 (8th Cir. 2000) (citations omitted). The United States Supreme Court recognized that "since the jurisdiction of the court to hear the case may depend . . . upon the decision which it ultimately reaches on the merits, it is necessary that theplaintiff set out in his complaint the statutory limitation on which he relies." Larson v. Domestic and Foreign Commerce Corp., 337 U.S. 682, 690 (1949).
Plaintiffs assert the court is vested with subject matter jurisdiction pursuant to 28 U.S.C. § 1331—commonly referred to as federal question jurisdiction, the Fourth and Fifth Amendments to the United States Constitution and the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701-06. (Dockets 1 at p. 3; 25 at pp. 2-3). The government asserts plaintiffs have...
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