Mercado Arocho v. U.S., Civil No. 05-1204 (DRD).

• Decision Date: 15 September 2006
• Docket Number: Civil No. 05-1204 (DRD).
• Citation: 455 F.Supp.2d 15
• Parties: Israel MERCADO AROCHO, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of Puerto Rico

455 F.Supp.2d 15

Israel MERCADO AROCHO, Plaintiff, v. UNITED STATES of America, Defendant.

Civil No. 05-1204 (DRD).

United States District Court, D. Puerto Rico.

September 15, 2006.

Amarilys Arocho-Maldonado, Arocho Maldonado Law Office, Utuado, PR, for Plaintiff.

Agnes I. Cordero, United States Attorney's Office, San Juan, PR, Jennifer L. Vozne, U.S. Department of Justice, Tax Division Ben Franklin Station, Washington, DC, for Defendant.

OPINION AND ORDER

DOMINGUEZ, District Judge.

Pending before the Court is the United States' Motion To Dismiss filed by the defendant on September 14, 2005 (Docket No. 6); Plaintiffs Opposition To Motion To Dismiss (Docket No. 7), and the United States' Reply In Support Of Its Motion To Dismiss (Docket No. 8). For the reasons set forth below, the defendant's motion to dismiss is GRANTED.

Factual and Procedural Background

On February 22, 2005, Israel Mercado Arocho filed the instant complaint against the United States of America ("United States"), under 26 U.S.C. § 7433. Plaintiff alleges that the United States has "seized" his bank checking account twice, pursuant to certain Notices of Levy. According to Plaintiffs allegations, the amount of $1,200.92 was attached on or about February 20, 2003, and the amount of $386.43 was attached on or about August 8, 2003. The attachments were made, notwithstanding that Plaintiff had allegedly made two (2) payments to the United States Treasury during the year of 2002. Plaintiffs alleged payments were made on March 16, 2002 in the amount of $1,500.00, and on July 29, 2002 in the amount of $1,087.44. Plaintiff also alleges that, on or about February 28, 2003, he advised the defendant of the wrongful tax-attachment. On January 29, 2004, Plaintiff through counsel, submitted Form 8546 Claim For Reimbursement Of Bank Charges Incurred Due To The Erroneous Service Levy Or Misplaced Payment Check ("Form 8546"),¹ claiming "defamation of credit reputation, wrongful abuse of process, mental anguish and conversion of personal property." Complaint ¶ 8 (Docket No. 1). Plaintiff further alleges that he has exhausted all the administrative remedies required under 26 U.S.C. § 7433, and claims damages in the amount of $50,000.00. Lastly, Plaintiff claims that the United States "has expressly consent to this suit by waiver of sovereign immunity." See Complaint ¶ 3 (Docket No. 1).

The United States moved to dismiss the instant complaint on September 14, 2005 (Docket No. 6), on the grounds that: (a) "Plaintiff has failed to exhaust the administrative remedies in this unauthorized collection case," (b) the Court does not have jurisdiction to entertain this matter; and (c) Plaintiff is barred from claiming damages under 26 U.S.C. § 7433 unless the taxpayer has exhausted the available administrative remedies. Docket No. 6 at p. 5.

On September 27, 2005, Plaintiff filed an opposition to defendant's motion to dismiss (Docket No. 7), on the grounds that: (a) the United States has moved to dismiss the instant action under Rule 12(b)(6) of the Federal Rules of Civil Procedure ("Fed.R.Civ.P."), that is, the complaint fails to state a claim upon which relief can be granted; (b) Plaintiff has exhausted the administrative remedies by filing Form 8546, even if the claim was submitted under the wrong form.

On October 7, 2005, the United States filed a reply in support of its dismissal request (Docket No. 8), and reinstated that the Court lacks jurisdiction in this case, as Plaintiff has not exhausted the administrative remedies. The United States alleges that Plaintiff failed to exhaust the administrative remedies, inasmuch as Plaintiff used the wrong claim form; filed the claim with an office outside Puerto Rico, and Plaintiff failed to include in Form 8546 the facts supporting his claim. Defendant admits that there is no statutorily determined form for this type of claim, however, the form submitted by Plaintiff fails to comply with the requirements to exhaust the administrative remedies pursuant to 26 U.S.C. § 7433. Lastly, the United States argues that, in the event the Court finds that Plaintiff has exhausted the administrative remedies, that the amount of damages be limited to $386.43, since a finding larger than this amount is contrary to 26 C.F.R. 301.7433-1(f).²

Applicable Law and Discussion

A. The Motion to Dismiss Standard under Rules 12(b)(1) and 12(b)(6).

The United States has moved the Court to dismiss the instant complaint under Rule 12(b)(1) of the Federal Rules of Civil Procedure ("Fed.R.Civ.P."), that is, lack of jurisdiction over the subject matter. It is well settled that a "party invoking the jurisdiction of a federal court carries the burden of proving its existence." Murphy v. U.S., 45 F.3d 520, 522 (1st Cir.1995). Plaintiff shall meet the "burden of establishing the factual predicates of jurisdiction by a preponderance of the evidence" (citations omitted). Lindsey v. U.S., 448 F.Supp.2d 37, 42-43 (D.D.C.2006). See also Negrón Ramos v. Internal Revenue Service, 351 F.Supp.2d 5, 11 (N.D. New York 2004). Under Fed.R.Civ.P. 12(b)(1), as opposed to the standard under Fed. R.Civ.P. 12(b)(6), the court may consider documents outside the pleadings, such as exhibits and affidavits attached to the motion to dismiss, and the opposition. Gonzalez v. U.S., 284 F.3d 281, 288 (1st Cir. 2002). See also White v. Commissioner of Internal Revenue, 899 F.Supp. 767, 771 (D.Mass.1995), wherein the Court stated that "[t]he Court can look beyond the pleadings—to affidavits and depositions— in order to determine jurisdiction."

When considering a motion to dismiss under Fed.R.Civ.P. 12(b)(1), the court will look at the facts of the case as a "facial or a factual challenge." Reynolds v. Nelson, et als., 2006 WL 2404364 (D.Ariz., July 17, 2006). See also Lindsey, 448 F.Supp.2d at 42-44. In Reynolds, the defendant moved the Court to dismiss the complaint on the grounds that plaintiff failed to exhaust the administrative remedies under 26 U.S.C. § 7433. As to the legal standard to dismiss a complaint, the Court held that:

A Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction may be either a facial or a factual challenge. When the moving party challenges jurisdiction based on the allegations in the complaint, the court must consider all the allegations in the complaint as true, and will not look beyond the face of the complaint to determine jurisdiction. See Mortensen v. First Fed. Say. & Loan Ass'n, 549 F.2d 884, 891 (3rd Cir.1977). On the other hand, when a court reviews a complaint under a factual challenge, the allegations have no presumptive truthfulness, Ritza v. International Longshoremen's and Warehousemen's Union, 837 F.2d 365, 369 (9th Cir.1988) (quoting Mortensen, 549 F.2d at 891), and the court is not limited to the allegations in the pleadings if the "jurisdictional issue is separable from the merits of [the] case." Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir.1987). Rather, the court that must weigh the evidence has discretion to allow affidavits, documents, and even a limited evidentiary hearing to resolve disputed jurisdictional facts. See Valdez v. United States, 837 F.Supp. 1065, 1067 (E.D.Cal.1993), aff'd, (9th Cir.1995), Mortensen, 549 F.2d at 891.

The facts in Reynolds are quite similar to the facts of the case at bar. Reynolds filed a claim under section 7433, however, the claim was filed through a letter instead of the proper form, and the letter was addressed to the Commissioner instead of the Area Director. Reynolds, however, failed to include a copy of the Commissioner's letter with the complaint. The Court in Reynolds granted the motion to dismiss under Fed.R.Civ.P. 12(b)(1), as plaintiff failed to exhaust the administrative remedies required under 26 U.S.C. § 7433 and Treasury Regulation § 301.7433-1.

In the instant case, Mercado Arocho opposed the United States' motion to dismiss, under the Fed.R.Civ.P. 12(b)(6), instead of Fed.R.Civ.P. 12(b)(1). Thus, a review of the standard under Rule 12(b)(6) is mandated. In Murphy, the First. Circuit held that the standard of review of a motion to dismiss for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) is "similar to that accorded a dismissal for failure to state a claim pursuant to Fed. R.Civ.P. 12(b)(6)." 45 F.3d at 522. When considering a Fed.R.Civ.P. 12(b)(6) motion, the court will "construe the complaint liberally and treat all well-pleaded facts as true, according the plaintiff the, benefit of all reasonable inferences. Murphy, 45 F.3d at 522. Therefore, plaintiff "may not merely rest on 'unsupported conclusions or interpretations of law.'" Id. See also Lindsey, 448 F.Supp.2d 37; Grant v. United States, 289 F.Supp.2d 1361, 1364 (S.D.Fla. 2003) ("A motion to dismiss should not be granted unless it appears beyond doubt that the [plaintiffs] could prove no set of facts in support of their claim which would entitle them to relief'); Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). "Dismissal of a claim on the basis of barebone pleadings is a precarious disposition with a high mortality rate." Grant, 289 F.Supp.2d at 1364 (quoting from International Erectors, Inc. v. Wilhoit Steel Erectors & Rental Service, 400 F.2d 465, 471 (5th Cir.1968)). In Grant, the Court found that under Fed.R.Civ.P. 9(c), the complaint pled with specificity that plaintiffs had filed an "administrative claim with the Chief, Special Procedures Function of the Internal Revenue Service (`IRS') pursuant to 26 C.F.R. §§ 301.7433-1(d)(1) and (2), 301.6343-1(c), 301.6343-2(b)," hence, the Court found that plaintiffs had complied with the requirement to exhaust the administrative remedies. 289 F.Supp.2d at 1364-65.

Under the motion to dismiss standard of Fed.R.Civ.P. 12(b)(6), the court's "[c]onsideration is limited to the complaint, written instruments that are attached to the complaint as exhibits, statements or documents that are incorporated in the complaint...