Scott v. US, Civ. No. 92-00011 ACK.

Decision Date04 June 1992
Docket NumberCiv. No. 92-00011 ACK.
Citation795 F. Supp. 1028
CourtU.S. District Court — District of Hawaii
PartiesNicholas T. SCOTT, Plaintiff, v. UNITED STATES of America, et al., Defendants.

Nicholas T. Scott, pro se.

Daniel Bent, Michael Chun, U.S. Attorney's Office, Honolulu, Hawaii, for defendants.


KAY, Chief Judge.


This case presents an issue of first impression in the Ninth Circuit. The major issue presented is whether the time limit restrictions for filing a tax refund claim are subject to the doctrine of equitable tolling. Based upon the following analysis of the relevant authorities, the Court holds that tax refund claims are subject to equitable tolling and that a plaintiff's mental incompetency operates to toll the limitations period for the time that the plaintiff was mentally incompetent.


In 1984, Plaintiff Nicholas Scott's ("Plaintiff") father timely filed a tax return on Plaintiff's behalf for that year. Plaintiff claims that his father overpaid the amount of taxes due in 1984, which were paid in piecemeal installments in 1984 and 1985. Plaintiff seeks to have a portion of the alleged 1984 overpayment applied to his tax liabilities for the years 1985, 1986, and 1988. Plaintiff admits that he filed his returns for the 1984-1988 years on November 28, 1989. On January 8, 1992, after the IRS disallowed his refund claim for the $30,096.00 overpaid in the 1984 tax year, Plaintiff filed a complaint seeking to apply the amount of his overpaid taxes to his liabilities for the 1984, 1986, and 1988 tax years.1

Both of the parties agree that the statute of limitation for filing such a return has expired. See, Complaint at 2 ("Plaintiff contends that the time limitations contained in 26 U.S.C. Section 6511(a) are subject to the doctrine of Equitable Tolling"); see also, Plaintiff's Response at 2 (arguing that the statute of limitations should be tolled). 26 U.S.C. § 6511(a) provides that a claim for credit or refund must be filed within three years of the time the return was filed or two years from the date the tax was paid.

In this case, Plaintiff made his last payment in 1985. Plaintiff filed his refund return on November 28, 1989, four years after the tax was paid. Under the statute, Plaintiff is precluded from pursuing his claim because he filed his refund more than two years after the 1984 taxes were paid and more than three years after the date of the 1984 return.

Defendant the United States America ("United States" or "the government") moves to dismiss on the grounds that this Court lacks subject matter jurisdiction to hear a refund claim filed after the statutory period under § 6511(a) has elapsed or for failure to state a claim upon which relief can be granted or in the alternative, for summary judgment. Plaintiff opposes, claiming that the doctrine of equitable tolling applies to vest this Court with jurisdiction. Plaintiff claims that as a result of severe and continuous alcoholism, he was mentally incompetent for the period of time 1984-1990 warranting application of the equitable tolling doctrine. Because the only issues presented by the instant motions are ones of law, and not of fact, the Court construes the government's motions as a single motion to dismiss.

The narrow issue presented by this case, then, is whether the time period for filing a claim for refund under § 6511(a) may be extended under the doctrine of equitable tolling. Since the doctrine does apply to such claims, the Court must also determine if mental incompetency may toll the statute of limitations. Because the parties have not raised or briefed the issue, the Court withholds ruling on the question of whether Defendant was in fact mentally incompetent for the relevant time period. Likewise, the Court also expresses no opinion as to whether, as a matter of law, alcoholism may give rise to mental incompetency.


Under Fed.R.Civ.P. 12, this Court must accept as true the plaintiff's allegations contained in the complaint and view them in a light most favorable to the plaintiff. See, Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Wileman Bros. & Elliott, Inc. v. Giannini, 909 F.2d 332, 334 (9th Cir.1990); Shah v. County of Los Angeles, 797 F.2d 743, 745 (9th Cir.1986). Thus, the complaint must stand unless it appears beyond doubt that the plaintiff has alleged no facts that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957); Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.1990). A complaint may be dismissed as a matter of law for two reasons: (1) lack of a cognizable legal theory or (2) insufficient facts under a cognizable legal theory. Balistreri, 901 F.2d at 699; Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir.1984).

In essence, as the Ninth Circuit has stated, "the issue is not whether a plaintiff's success on the merits is likely but rather whether the claimant is entitled to proceed beyond the threshold in attempting to establish his claims." De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir.), cert. denied, 441 U.S. 965, 99 S.Ct. 2416, 60 L.Ed.2d 1072 (1979). The Court must determine whether or not it appears to a certainty under existing law that no relief can be granted under any set of facts that might be proved in support of plaintiffs' claims. Id.

In his complaint and moving papers Plaintiff claims to have been mentally incompetent as a result of his severe alcoholism to such an extent that he could not manage his business or day-to-day affairs. Accordingly, the Court accepts as true, for the purposes of this motion only, Plaintiff's allegation that he was completely and continuously mentally incompetent for the relevant time period.

1. Tax Refund Claims are Subject to Equitable Tolling.

The government contends that statutes of limitations covering suits against the United States are prerequisites to federal court jurisdiction. E.g., United States v. Mottaz, 476 U.S. 834, 106 S.Ct. 2224, 2229, 90 L.Ed.2d 841 (1986) (statute of limitations defines extent of court's jurisdiction). While this contention is true as a general proposition, the Supreme Court has recognized exceptions to strict application of time-bar rules. In support of its motion to dismiss, the government cites numerous cases all of which pre-date the Supreme Court's recent decision in Irwin v. Veterans Admin., 498 U.S. 89, 111 S.Ct. 453, 112 L.Ed.2d 435 (1990). The Irwin Court recognized that the statute of limitations may be equitably tolled even where the statute of limitations is a prerequisite to federal court jurisdiction, rendering the cases cited by the government inapplicable.

In Irwin, the plaintiff filed an untimely civil action under Title VII based on a claim that the Veterans Administration unlawfully discharged plaintiff because of his race and physical disability. The plaintiff, Irwin, failed to file suit within 30 days of receiving the EEOC's notice rejecting his claim. Irwin claimed that he failed to file because the EEOC letter was sent to his attorney's office while his attorney was on vacation. As a result of his late receipt of the letter, Irwin filed suit 44 days after the letter arrived at his attorney's office.

After finding that Irwin's complaint was untimely, the Court considered whether his error may be excused under equitable tolling principles. The Court viewed this case as an opportunity to adopt "a general rule to govern the applicability of equitable tolling in suits against the Government." Irwin, 111 S.Ct. at 457. The Court stated:

Once Congress has made such a waiver of sovereign immunity to allow suits by citizens against the government, we think that making the rule of equitable tolling applicable to suits against the Government, in the same way that it is applicable to private suits, amounts to little, if any, broadening of the congressional waiver.

Id. The Court then held "that the same rebuttable presumption of equitable tolling applicable to suits against private defendants should also apply to suits against the United States." Id.

The Court went on to state that federal courts have used equitable tolling only "sparingly." Id. The Court then offered two non-exhaustive examples of where the Court has previously recognized equitable tolling: where the claimant has actively pursued his judicial remedies but has filed a defective pleading and where claimant has been induced or tricked by his adversary into allowing the filing deadline to pass. Id. at 457-8.

The Court held that Irwin's failure to timely file was a result of excusable neglect. Id. at 458 ("The principles of equitable tolling ... do not extend to what is at best a garden variety claim of excusable neglect.").

While Irwin involved an untimely Title VII claim, the reasoning in that decision applies with equal force to untimely tax claims. As in tax cases, the statute of limitations applicable to Title VII cases has been interpreted as a prerequisite to federal court jurisdiction. See, Irwin at 455. In Irwin, the Court held that such late-filed claims are not jurisdictionally barred when the doctrine of equitable tolling applies.

A recent District Court opinion from the Second Circuit has applied Irwin to facts similar to the instant case. In Johnsen v. United States, 758 F.Supp. 834 (E.D.N.Y. 1991), the Court held that under Irwin, the plaintiff's mental incompetency equitably tolled the statute of limitation on a tax refund claim.

In 1983, the Multzmans overpaid their taxes by approximately $25,000. They did not file a return as the result of mental incompetency.2 After Plaintiff Johnsen was appointed as Mrs. Multzman's representative, Johnsen filed a return on Mrs. Multzman's behalf and subsequently in 1989 filed an action for refund...

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