Nyamusevya v. Internal Revenue Serv. (In re Nyamusevya)

• Decision Date: 31 March 2023
• Docket Number: 19-52868,Adv. Pro. 19-2109
• Parties: In re: LEONARD NYAMUSEVYA, SR., Debtor. v. Internal Revenue Service, Defendant. Leonard Nyamusevya, Sr., Plaintiff,
• Court: United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Southern District of Ohio

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In re: LEONARD NYAMUSEVYA, SR., Debtor.

Leonard Nyamusevya, Sr., Plaintiff, v. Internal Revenue Service, Defendant.

No. 19-52868

Adv. Pro. No. 19-2109

United States Bankruptcy Court, S.D. Ohio, Eastern Division

March 31, 2023

OPINION AND ORDER (1) GRANTING THE UNITED STATES' MOTION TO DISMISS FIRST AMENDED COMPLAINT AND (2) DENYING THE DEBTOR'S MOTION TO FILE SECOND AMENDED COMPLAINT

John E. Hoffman United States Bankruptcy Judge.

I. Introduction

Leonard Nyamusevya, Sr., the debtor in this Chapter 7 case, contends that the Internal Revenue Service ("IRS") harmed him by filing proofs of claim in his bankruptcy case and that the damage can be repaired if the United States pays him either half a million dollars or more than one million dollars. A recovery of half a million dollars was premised on the theory in his first amended complaint that the filing of the proofs of claim violated statutes criminalizing the making of false oaths and claims, filing a false claim in a bankruptcy case, or engaging in bankruptcy fraud. This Court lacks subject-matter jurisdiction over those claims for several reasons, and the United States' motion to dismiss the first amended complaint is therefore granted for lack of subject-matter jurisdiction.

After the United States pointed out this jurisdictional defect in its motion to dismiss the adversary proceeding, Nyamusevya pivoted and moved to amend the first amended complaint to seek a recovery of more than one million dollars based on his allegations that the IRS's filing of the proofs of claim were tortious acts and violated the Fair Debt Collection Practices Act ("FDCPA"). But because the Court lacks subject-matter jurisdiction over those claims, and because the second amended complaint fails to state a claim upon which relief can be granted, amendment of the complaint would be futile, and Nyamusevya's motion to file the second amended complaint is therefore denied.

II. Factual and Procedural Background

Although Nyamusevya has filed two bankruptcy cases and the IRS filed proofs of claim in both, Nyamusevya's allegations that the IRS filed unlawful proofs of claim relate only to the proofs of claim filed in the second case, the currently pending case, Case No. 19-52868. Proceeding pro se, Nyamusevya initially filed this case under Chapter 13 of the Bankruptcy Code, but he voluntarily converted it to a Chapter 7 case two months later. See Notice of Voluntary Conversion to Chapter 7 (Doc. 59).^[1] The IRS filed a proof of claim (Claim No. 4-1) and an amended proof of claim (Claim No. 4-2), ultimately asserting a secured claim of $12,549.70 for income taxes, penalties and interest owing for tax years 2008, 2009 and 2010, and an unsecured nonpriority claim of $824.83 for income tax for tax year 2013. The IRS filed these proofs of claim while this bankruptcy case was a pending Chapter 13 case and before Nyamusevya converted the case to Chapter 7.

A month after he converted his case to Chapter 7, Nyamusevya filed the complaint commencing this adversary proceeding ("Original Complaint") (Adv. Doc. 1). The Original Complaint contained one count alleging that the filing of Claim No. 4-1 was a "willful and fraudulent violation of 18 U.S.C. §§ 152 and 157." Nyamusevya asserted that the IRS owed him a "fine under 18 U.S.C. § 3571, in the amount of $500,000.00" for "filing on May 20, 2019 its fraudulent Proof of Claim No. 4-1." Original Compl. at 3. After the United States failed to respond to the Original Complaint, Nyamusevya filed a motion for default judgment (Adv. Doc. 8). But service of the Original Complaint and summons was deficient, so the Court denied Nyamusevya's motion and afforded him more time to properly effect service. See Order (A) Denying Motion for Default Judgment and (B) Directing the Plaintiff to Properly Serve the Complaint and Summons and File Proof of Service or Face Dismissal of the Adversary Proceeding Without Prejudice (Adv. Doc. 9).

Nyamusevya then filed an amended complaint ("First Amended Complaint") (Adv. Doc. 11) and served it properly. See Debtor-Plaintiff's Amended Certificate for Service for Amended Complaint Against the Internal Revenue Service (IRS) (Adv. Doc. 13) and Debtor-Plaintiff's Notice of Proof of Service of Adversary Proceeding Complaint Against the Internal Revenue Service (IRS) (Adv. Doc. 14).

Nyamusevya alleges in the First Amended Complaint that Claim No. 4-1 and Claim No. 4-2 both were unlawful. The First Amended Complaint consists of six counts. The manner in which Nyamusevya labeled them and the grounds on which he asserts each count are as follows:

Count One: Malicious and Willful and Fraudulent Disregard of Federal and Bankruptcy Law in Bad Faith

• Asserts claims under 18 U.S.C. §§ 152, 157 and 3571;

Count Two: Willful and Fraudulent Withholding and Concealment of Information in Violation of 18 U.S.C. § 152

• Asserts claim under 18 U.S.C. § 152;

Count Three: Willful and Fraudulent Filing [of] False Proof of Claims in Violation of 18 U.S.C. §§ 152 and §§ 157 Against the Debtor's Estate

• Asserts claims under 18 U.S.C. §§ 152, 157 and 3571;

Count Four: Willful Negligence and Infliction of Serious Emotional Distress and Mental Anguishes to Harm the Debtor

• Asserts claims under 18 U.S.C. §§ 152, 157 and 3571;

Count Five: Willfully and Negligently and Knowingly and Fraudulently Making a False Oath and Account in Relation to the Debtor's Case under Title 11

• Asserts claim under 18 U.S.C. § 152; and

Count Six: Knowingly and Fraudulently Making a False Declaration, Verification, or Statement under Penalty of Perjury under 28 U.S.C. § 1746 or in Relation to a Case under Title 11

• Asserts claims under 18 U.S.C. § 152 and 28 U.S.C. § 1746.

First Am. Compl. at 7-23.

In each of these claims for relief, Nyamusevya relies on 18 U.S.C. § 152 and/or § 157, which relate to bankruptcy crimes. He also relies on 18 U.S.C. § 3571, which is a schedule of fines for criminal violations, and on 28 U.S.C. § 1746, which governs unsworn declarations under penalty of perjury.

The United States filed a motion to dismiss ("Dismissal Motion") (Adv. Doc. 17) the First Amended Complaint under Rule 12(b) of the Federal Rules of Civil Procedure ("Civil Rule(s)"), made applicable in this adversary proceeding by Rule 7012 of the Federal Rules of Bankruptcy Procedure ("Bankruptcy Rule(s)"). Nyamusevya filed a response to the Dismissal Motion ("Nyamusevya Response") (Adv. Doc. 19), and the IRS filed a reply (Adv. Doc. 20).

Because Nyamusevya amended the Original Complaint once as a matter of course, he must seek leave of court to amend a second time, Civil Rule 15(a)(2), and he has done so. He filed a motion to amend the First Amended Complaint ("Motion to Amend") (Adv. Doc. 21) as well as a proposed second amended complaint (Adv. Doc. 22) ("Second Amended Complaint").

In the Second Amended Complaint, Nyamusevya asserts claims under some of the same statutes on which he relied in the First Amended Complaint, but he also brings new claims under the FDCPA and tort law. The manner in which Nyamusevya labeled the counts in the Second Amended Complaint and the grounds on which he asserts each count are as follows:

Count One: Malicious and Willful and Fraudulent Disregard of Federal and Bankruptcy Law in Bad Faith

•Asserts claims under 18 U.S.C. § 3571, 11 U.S.C. § 105(a) and 28 U.S.C. § 1651;

Count Two: Willful and Fraudulent Abusive and Deceptive and Unfair Debt Collection in Violation of 15 U.S.C. § 1692a of the FDCPA: 15 U.S.C. § 1692

•Asserts claim under the FDCPA; Count Three: Willful and Fraudulent Abusive and Deceptive and Unfair Debt Collection in Violation of 15 U.S.C. § 1692d(1) and (2) of the FDCPA: 15 U.S.C. § 1692

•Asserts claim under the FDCPA;

Count Four: Willful and Fraudulent Filing of Unenforceable Proofs of Claim in Violation of 15 U.S.C. § 1692e of the FDCPA: 15 U.S.C. § 1692

•Asserts claim under the FDCPA;

Count Five: Willful and Fraudulent Violation by Filing False and Unenforceable Proofs of Claim in Violation of 15 U.S.C. § 1692f of the FDCPA: 15 U.S.C. § 1692

•Asserts claim under the FDCPA;

Count Six: Civil Liability to Debtor-Plaintiff in an Amount Equal to Actual Sustained Damages under 15 U.S.C. § 1692k(a)(1) of the FDCPA that Is in Excess of $1,000,000.00

•Asserts claim under the FDCPA;

Count Seven: Willful and Fraudulent Abuse of Bankruptcy Process in Violation of Federal Law that are Sanctionable and Punishable under 11 U.S.C. §§ 105 and 28 U.S.C. § 1651

•Asserts claims under 11 U.S.C. § 105 and 28 U.S.C. § 1651; and

Count Eight: Willful Negligence and Infliction of Serious Emotional Distress and Mental Anguishes to Harm the Debtor

•Asserts claims under the Restatement of the Law (2d) of Torts and Restatement of the Law (3d) of Torts.

Second Am. Compl. at 8-26.

In its response (Adv. Doc. 25), the United States argues that Nyamusevya's Motion to Amend must be denied because amendment would be futile.

III. Legal Analysis

A. The Proper Defendant

The First Amended Complaint names the IRS as the defendant, but the United States, not the IRS, is the proper defendant. See Benedith v. IRS., No. CV 19-9740-CBM-SK(x), 2020 WL 6064009, at *1 (C.D. Cal. Aug. 10, 2020) ("The Court . . . dismisses the IRS from this action and grants Defendant's request to substitute the United States as the proper defendant."); Szanto v. IRS (In re Szanto), 574 B.R. 862, 867 (Bankr. D. Or. 2017) (holding that the United States was the correct defendant because adversary complaint went "well beyond defeating [the IRS's] proof of claim" and "assert[ed] numerous affirmative claims for relief and seeks money damages"). Although no request has been made to substitute the United States as the defendant here, because Nyamusevya is a pro se litigant the Court may...