Morell v. U.S.

• Decision Date: 27 March 2000
• Docket Number: No. Civ. 98-1033(DRD).,Civ. 98-1033(DRD).
• Citation: 91 F.Supp.2d 451
• Parties: Rafael O. MORELL, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of Puerto Rico

91 F.Supp.2d 451

Rafael O. MORELL, Plaintiff, v. UNITED STATES of America, Defendant.

No. Civ. 98-1033(DRD).

United States District Court, D. Puerto Rico.

March 27, 2000.

Francisco Fernandez-Alvarez, Hato Rey, PR, for plaintiff.

Beatriz T. Saiz, U.S. Department of Justice, Tax Division, Washington, DC, for defendant.

OPINION AND ORDER

DOMINGUEZ, District Judge.

Plaintiff Rafael Morell and former Co-plaintiff Mabel Campos filed the instant complaint on January 23, 1998, seeking compensation for damages allegedly caused by the Internal Revenue Service founded on violations to several sections of the Internal Revenue Code. (Docket No. 1). Plaintiff subsequently filed a First Amended Complaint on June 30, 1998 (Docket No. 11), and a Second Amended Complaint on January 19, 1999 (Docket No. 22). Co-plaintiff Mabel Campos filed a voluntary motion to dismiss her Claim on April 23, 1999 (Docket No. 34), which motion was granted by the Court on May 6, 1999 (Docket No. 35).

In essence, Plaintiff's Second Amendment Complaint seeks damages for unauthorized disclosure of return information, 26 U.S.C. § 7431; for reckless and intentional failure to release liens, 26 U.S.C. § 7432; and for reckless and intentional unlawful collection activities, 26 U.S.C. § 7433. First, through his section 7433 claim, Plaintiff alleges that Defendant's officer, Agent Norberto Ruiz, recklessly, intentionally, and deliberately engaged in unauthorized collection activities without complying with the statutory requirement of Notice and Demand of 26 U.S.C. § 6303(a) and based on assessments made after the three (3) year statute of limitations of 26 U.S.C. § 6501. Second, under his section 7432 cause of action, Plaintiff alleges that Defendant executed a lien without complying with the statutorily required Notice and Demand and then failed to release the lien despite repeated attempts by Plaintiff placing Defendant on notice of the violation. And third, under his section 7431 cause of action, Plaintiff alleges that by letter dated February 16, 1996. Agent Ruiz knowingly and intentionally disregarded Internal Revenue Code rules when he disclosed to a private party Plaintiff's tax information without prior thereto obtaining his consent. Finally, Plaintiff avers that Defendant issued and executed thirty-two (32) levies without the "Notice of Intent to Levy" required by 26 U.S.C. § 6331(d), thereby engaging in further violations of the prohibition against unauthorized disclosures.

Both Defendant and Plaintiff have filed Motions for Summary Judgment. (Docket Nos. 38 & 39). On the one hand, Plaintiff argues that summary judgment should be entered as to his causes of action under sections 7431 and 7433 because there are no genuine issues as to material facts. On the other hand, Defendant argues that all of Plaintiff's claims are time barred; Plaintiff's section 7432 cause of action is barred for failure to exhaust administrative remedies; and Plaintiff's section 7433 cause of action fails to state a claim. Further, Defendant questions Plaintiff's statement of uncontested facts, including his allegation that the IRS failed to issue a Notice and Demand letter prior to issuing the thirty two (32) levies.

I. Standards for motion for summary judgment

The function of summary judgment is "to pierce the boilerplate of the pleadings and examine the parties' proof to determine whether a trial is actually necessary." Vega-Rodriguez v. P.R.T.C., 110 F.3d 174, 178 (1st Cir.1997). Accordingly, federal courts will grant summary judgment where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c). See also Cortes-Irizarry v. Corporacion Insular, 111 F.3d 184, 187 (1st Cir.1997) (summary judgment will be denied where there is a "a trial worthy issue as to some material facts.") A fact is deemed "material" if the same "potentially affect[s] the suit's determination." Garside v. Osco Drug Inc., 895 F.2d 46, 48 (1st Cir.1990). "An issue concerning such a fact is `genuine' if a reasonable factfinder, examining the evidence and drawing all reasonable inferences helpful to the party resisting summary judgment, could resolve the dispute in that party's favor." Cortes-Irizarry, 111 F.3d at 187. Nonetheless, "speculation and surmise, even when coupled with effervescent optimism that something definite will materialize further down the line, are impuissant on the face of a properly documented summary judgment motion." Ayala-Gerena v. Bristol Myers-Squibb Co., 95 F.3d 86, 95 (1st Cir.1996) (citations omitted).

The movant for summary judgment, of course, must not only show that there is "no genuine issue of material facts," but also, that he is "entitled to judgment as a matter of law." Vega-Rodriguez, 110 F.3d at 178. Further, the court is required to examine the record "drawing all reasonable inferences helpful to the party resisting summary judgment." Cortes-Irizarry, 111 F.3d at 187. There is "no room for credibility determinations, no room for the measured weighing of conflicting evidence such as the trial process entails, no room for the judge to superimpose his own ideas of probability and likelihood ..." Greenburg v. Puerto Rico Maritime Shipping Auth., 835 F.2d 932, 936 (1st Cir.1987).

"We believe that summary judgment procedures should be used sparingly ... where the issues of motive and intent play leading roles ... It is only when the witnesses are present and subject to cross-examination that their credibility and the weight to be given their testimony can be appraised. Trial by affidavit is no substitute for trial by jury which so long has been the hallmark of `even handed justice.'" Poller v. Columbia Broad. Sys., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962); cf. Pullman-Standard v. Swint, 456 U.S. 273, 288-90, 102 S.Ct. 1781, 1790-1791, 72 L.Ed.2d 66 (1982) (discriminatory intent is a factual matter for the trier of fact); see also William Coll v. PB Diagnostic Sys., Inc., 50 F.3d 1115, 1121 (1st Cir.1995); Oliver v. Digital Equip. Corp., 846 F.2d 103, 107 (1st Cir. 1988); Lipsett v. University of P.R., 864 F.2d at 895. "Under such circumstances, jury judgments about credibility are typically thought to be of special importance." Stepanischen v. Merchants Despatch Transp. Corp., 722 F.2d 922, 928 (1st Cir.1983). However, "even in cases where elusive concepts such as motive or intent are at issue, summary judgment may be appropriate if the nonmoving party rests merely upon conclusory allegations, improbable inferences, and unsupported speculation." Ayala-Gerena v. Bristol Myers-Squibb Co., 95 F.3d 86, 95 (1st Cir.1996).

When adjudicating a motion for summary judgment the facts must be examined under the above criteria because on a potential appeal the appellate court examines "the undisputed facts in the light most congenial to the appellants and adopts their version of any contested facts which are material to our consideration of the issues." Vega-Rodriguez v. Puerto Rico Tel. Co., 110 F.3d 174, 178 (1st Cir.1997).

II. Application of standards

At the outset, the Court denies Plaintiff's request for summary judgment on his Section 7433 cause of action for unlawful collection activities.¹ Plaintiff's claim is fraught with issues of motive and intent requires determinations of credibility not susceptible to disposition via summary judgment.² (Docket No. 39). For example, Plaintiff's motion advances that agent Ruiz "intentionally and fraudelently blacked out the words ... in an effort to conceal his illegal activities," Docket 39 at pg. 6; "IRS continued to engage in unlawful collection activities knowing full well that such collections were illegal," Docket No. 39 at pg. 12; "Defendant recklessly or intentionally disregarded the provisions of Code Section 6303;" Docket No. 39 at pg. 12; and "Defendants recklessly or intentionally disregarded the provisions of Code Section 6331(d)," Docket No. 39 at 14. (Emphasis added). Clearly, all of these allegations require the Court to examine Defendant's mental state and summary judgment is not a proper mechanism to dispose of matters involving motive and intent. Dominguez-Cruz v. Suttle Caribe, Inc., 202 F.3d 424, 432 (1st Cir.2000).

Plaintiff's request for summary judgment on his Section 7431 claim for unauthorized disclosure of return information warrants more detailed analysis and is discussed below in conjunction with the Court's disposition of Defendant's Motion for Summary Judgment.

A. Claim for unauthorized disclosure of return information—26 U.S.C. § 7431

Plaintiff's cause of action under section 7431 of the Internal Revenue Code is based on two separate incidents of alleged unauthorized disclosures of return information. First, Plaintiff alleges that on February 16, 1996, Defendant gave Ms. María Alejandro Quiñones, a private citizen who had brought an unrelated claim against Morell, a letter disclosing important tax information of taxpayer Morell without taxpayer Morell's consent. Second, Plaintiff alleges that Defendant issued and executed against Plaintiff Morell thirty two (32) levies without the prior "Notice of Intent to Levy" required by section 6331(d)(4)(2). Under section 6331(d)(2) and Schrambling Accountancy Corp. v. U.S., 689 F.Supp. 1001 (N.Cal.1988), said disclosures were unauthorized and, thus, entitle Plaintiff to compensation of damages.

Defendant responds to Plaintiff's claims with a motion for summary judgment wherein the Government avers, first, that Plaintiff's claim based on the letter issued on February 16, 1996, is time barred because the claim was not timely raised within two years after Plaintiff had discovered the disclosure. See 26 U.S.C. § 7431(d).³ Specifically, Defendant states that Plaintiff knew of the disclosure on February 16, 1996. Not...