Leavell v. Kieffer, 98-4089

Decision Date19 August 1999
Docket NumberNo. 98-4089,98-4089
Parties(7th Cir. 1999) Daniel R. Leavell and Eva L. Leavell, Plaintiffs-Appellants, v. Charles Michael Kieffer, Defendant-Appellee
CourtU.S. Court of Appeals — Seventh Circuit

Appeal from the United States District Court for the Southern District of Illinois. No. 98-4203-JPG--J. Phil Gilbert, Chief Judge. [Copyrighted Material Omitted] Before Posner, Chief Judge, and Easterbrook and Manion, Circuit Judges.

Easterbrook, Circuit Judge.

Daniel and Eva Leavell, the proprietors of several businesses, did not file their 1985 and 1986 tax returns until 1990. An audit concluded that they owed substantial additional taxes. The Tax Court fixed their tax liabilities for 1985 to 1987 at approximately $1 million, including hefty interest and penalties. Leavell v. CIR, 71 T.C.M. 2387 (1996). One reason why the Leavells lost was that they did not produce essential business documents before the record closed. After filing a notice of appeal, the Leavells (represented by counsel) received five extensions of time to file their opening brief. An application for a sixth extension was denied, and when no brief was forthcoming we dismissed the appeal for want of prosecution. Leavell v. CIR, No. 96-3864 (7th Cir. Apr. 30, 1997).

A little more than 13 months later, the Leavells struck back with this Bivens action against Charles Kieffer, who conducted the audit and presented his conclusions as a witness at the trial. See Bivens v. Six Unknown Named Agents, 403 U.S. 388 (1971). The suit has all sorts of problems. Witnesses enjoy absolute immunity for their testimony, see Briscoe v. LaHue, 460 U.S. 325 (1983), and we have held that revenue agents are not subject to Bivens suits for most out-of- court activities, given the many other judicial and administrative remedies for tax disputes. See Cameron v. IRS, 773 F.2d 126 (7th Cir. 1985). But the district court did not consider these obstacles, instead dismissing the suit for a trait that the Leavells displayed when filing tax returns, litigating in the Tax Court, and pursuing an appeal: excessive delay. Leavell v. Kieffer, 1998 U.S. Dist. Lexis 16357, 98-2 Tax Cas. para.50,806 (S.D. Ill. 1998). The period of limitations is two years, see Delgado-Brunet v. Clark, 93 F.3d 339, 342 (7th Cir. 1996), and the district court held that the Leavells' claim accrued no later than March 11, 1996, when the Tax Court released its opinion.

Kieffer moved to dismiss the complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim on which relief may be granted; the district judge wrote that he was dismissing the suit under Fed. R. Civ. P. 12(b)(1) for lack of jurisdiction. Neither rule supports the disposition. The statute of limitations is an affirmative defense. Complaints need not anticipate or plead around affirmative defenses, Gomez v. Toledo, 446 U.S. 635 (1980), so there is no problem under Rule 12(b)(6). Luckett v. Rent- A-Center, Inc., 53 F.3d 871, 873 (7th Cir. 1995); Tregenza v. Great American Communications Co., 12 F.3d 717, 718-19 (7th Cir. 1993). Neither does a statute of limitations affect the district court's jurisdiction. See, e.g., Irwin v. Department of Veterans Affairs, 498 U.S. 89 (1990); Zipes v. Trans World Airlines, Inc., 455 U.S. 385 (1982). Jurisdiction is supplied by 28 U.S.C. sec.1331, because a claim under Bivens presents a federal question. But when a complaint shows that the time for litigation has passed, judgment on the pleadings may be entered under Fed. R. Civ. P. 12(c). The Leavells had the opportunity for response that Rule 12(c) requires, and the decision does not depend on any document outside the pleadings, so the district court's disposition is not procedurally defective even though the judge should have cited Rule 12(c) rather than Rule 12(b)(1).

Federal law defines the accrual of a Bivens claim. Kronisch v. United States, 150 F.3d 112, 123 (2d Cir. 1998); Uboh v. Reno, 141 F.3d 1000 (11th Cir. 1998). Under federal law, the time begins to run when the plaintiff knows that he has been injured. United States v. Kubrick, 444 U.S. 111 (1979). For this purpose injury means both current and future harm. A person fired from his job effective in six months is injured (and the clock starts to run) on the date of the discharge, not six months later when the employment ends. Delaware State College v. Ricks, 449 U.S. 250 (1980). The possibility that internal appeals may mitigate or avoid the injury does not postpone accrual. Chardon v. Fernandez, 454 U.S. 6 (1981); Lever v. Northwestern University, 979 F.2d 552 (7th Cir. 1992). Similarly, when a city revokes a liquor license but the business does not close until appeals have been exhausted, the injury still occurs with the (supposedly wrongful) revocation, not when the cash flow of the business ends. Kelly v. Chicago, 4 F.3d 509 (7th Cir. 1993). In each of these cases knowledge of a wrong and an impending injury enables the victim to get litigation under way, which the victim must do as soon as possible, rather than waiting until the full consequences of the injury can be quantified--for understanding all consequences may take years, so that postponing accrual of the claim until the extent of the injury is certain would make statutes of limitations ineffectual.

These principles doom the Leavells' suit. They contend that Kieffer committed two wrongs: he testified falsely at a trial that occurred in January 1994 and intimidated the Leavells' accountant before trial. These steps caused immediate injury. Suppose Kieffer threatened to audit the accountant's own tax returns if he persisted in working for the Leavells. Then the Leavells either would have had to compensate the accountant for the cost of this threat, or hire a new accountant whose personal finances made him threat-proof. Either kind of expense would have been incurred before trial, though the full cost of (say) an accountant with higher hourly rates could not be determined until later, when the number of hours finally would have been known. Likewise there was immediate injury if Kieffer lied to the court. A false accusation of cheating on one's taxes is defamatory, and the Leavells would...

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