Supermail Cargo, Inc. v. U.S.

• Decision Date: 24 October 1995
• Docket Number: No. 94-55316,94-55316
• Citation: 68 F.3d 1204
• Parties: -7085, 95-2 USTC P 50,575, 95 Cal. Daily Op. Serv. 8263, 95 Daily Journal D.A.R. 14,258 SUPERMAIL CARGO, INC., Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1204

68 F.3d 1204

76 A.F.T.R.2d 95-7085, 95-2 USTC P 50,575,

95 Cal. Daily Op. Serv. 8263,

95 Daily Journal D.A.R. 14,258

SUPERMAIL CARGO, INC., Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.

No. 94-55316.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Aug. 9, 1995.

Decided Oct. 24, 1995.

Michael P. Maxwell, Los Angeles, California, for plaintiff-appellant.

Janet A. Bradley, Tax Div., Appellate Section, United States Department of Justice, Washington, DC, for defendant-appellee.

Appeal from the United States District Court for the Central District of California.

Before: BROWNING, NORRIS, and REINHARDT, Circuit Judges.

REINHARDT, Circuit Judge:

In this case, the Internal Revenue Service ("IRS") levied upon funds due to a company without notifying the company that it had done so. The debt that the IRS was attempting to collect was owed by the company's former lawyers, not the company, as the IRS knew. In fact, the company owed no money to the IRS at all. When the company finally discovered what had happened to its funds and tried to file a request, the IRS first ignored its efforts and, later, erroneously told the company that it had filed with the wrong office. After the company filed with the office the IRS told it to file with, the IRS said that the filing was too late. Now that the company has filed a lawsuit, the IRS argues that the time to sue expired because it ran not from the time the company filed with the office the IRS told it to file with, but from the time of the filing the IRS had said was invalid. Those, at least, are the allegations of the complaint, and thus the facts we are required to assume for purposes of the appeal before us. It should come as no surprise, therefore, that we reverse the district court's dismissal of the company's complaint.

FACTS AND PROCEDURAL HISTORY

Supermail Cargo, Inc. ("Supermail") brought this action under 26 U.S.C. Sec. 7426, alleging that the IRS wrongfully levied upon customs refunds owed to Supermail. The district court granted the government's motion to dismiss on the ground that the action was barred by the statute of limitations contained in 26 U.S.C. Sec. 6532(c). For purposes of this appeal, and thus for purposes of this opinion, we assume that the allegations contained in the complaint are true and view those allegations in the light most favorable to the plaintiff. In other words, any references in this opinion to "facts" are to the facts alleged in the complaint as construed in the manner we are required to construe them, and any factual statements in this opinion are based on the assumption that the allegations in the complaint are true.

Supermail is a clothing importer and seller. Each time it imports a shipment, Supermail pays an estimated duty to the United States Customs Service ("Customs"). An importer who disagrees with the estimated duty may seek a refund by filing a "protest" with Customs, pursuant to 19 U.S.C. Sec. 1514. If the protest is granted, Customs refunds the amount by which the estimated duty exceeded the actual duty. Supermail employed the law firm Mandel, Resti, Pollack and Borakove ("Mandel, Resti") to file protests with Customs on its behalf.

Sometime in 1988, the IRS determined that Mandel, Resti owed a substantial tax liability. In August 1988, the New York IRS office inquired as to whether there was any relationship between Supermail and Mandel, Resti. Supermail informed the IRS, both orally and in writing, that their sole relationship had been that of attorney and client and there was no current relationship between Supermail and the law firm. Nevertheless, in order to satisfy Mandel, Resti's tax obligation, the New York IRS office placed levies Neither the IRS nor Customs informed Supermail (or for that matter Mandel, Resti) of the levies. Only the Customs Service received the IRS notices. Supermail, which had a number of protests pending, continued to inquire unsuccessfully of Customs about the status of its refunds. Over two years after the levies were made, Customs incorrectly informed Supermail that the refunds had been delayed inadvertently but would eventually be paid. Two weeks later, on February 24, 1992, Customs finally advised Supermail that the IRS had levied on its refunds and, therefore, that Supermail would not receive them after all.

on some of the refunds that Customs owed to Supermail. On October 25, 1989 and on December 14, 1989, the IRS issued notices of the levies to Customs. Both notices specifically stated: "This levy attaches to refunds due Supermail Cargo Inc."

On June 9, 1992, Supermail filed a request for the return of its property with the New York IRS office. The IRS initially ignored it. Later, when Supermail inquired as to the status of the request, the acting manager of the New York IRS office asked that additional information be submitted. Supermail promptly complied. However, on October 21, 1992, the acting manager of the New York office informed Supermail that it must file its request with the Fresno, California IRS office. Again, Supermail promptly complied with the IRS's instructions by filing a request for the return of its property with that office on October 29, 1992.

For the next several months, the IRS failed to issue a decision. On April 8, 1993, Supermail again wrote to the IRS, threatening to file a civil action unless the IRS responded to its request. The IRS told Supermail that it would act on its request if additional information were provided. Yet again, Supermail promptly complied, forwarding the requested information to the Los Angeles, California IRS office. Finally, on July 26, 1993, the Los Angeles, California IRS office denied Supermail's request for the return of its property on the ground that the request had not been timely filed. ¹

On October 8, 1993, Supermail filed this action in federal district court under 26 U.S.C. Sec. 7426, alleging that the IRS had wrongfully levied upon its property. The district court granted the government's motion to dismiss, concluding that Supermail had not filed suit within the limitations period set forth in 26 U.S.C. Sec. 6532(c).

DISCUSSION

The sole question on appeal is whether the district court was correct in holding that this action is time-barred. Viewing the complaint's allegations in the manner that we are required to view them, we conclude that Supermail could prove a set of facts that would establish that equitable tolling applies and that the action was timely. We therefore hold that dismissal was improper. ²

Because the applicability of the equitable tolling doctrine often depends on matters outside the pleadings, it "is not generally amenable to resolution on a Rule 12(b)(6) motion." Cervantes v. City of San Diego, 5 F.3d 1273, 1276 (9th Cir.1993). A motion to dismiss based on the running of the statute of limitations period may be granted only "if the assertions of the complaint, read with the required liberality, would not permit the plaintiff to prove that the statute was tolled." Jablon v. Dean Witter & Co., 614 F.2d 677 Here, notwithstanding the government's vigorous arguments, we conclude that Supermail may be able to prove a set of facts under which this action would be timely. The government raises two timeliness objections, both of which Supermail must overcome in order to prevail in its action. First, the government argues that Supermail was required to file its request with the IRS within nine months of the dates that levy notices were received by Customs, and that it failed to do so. ³ In light of the doctrine of equitable tolling, we cannot say that Supermail will be unable to overcome the government's first objection.

682 (9th Cir.1980). In fact, a complaint cannot be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts that would establish the timeliness of the claim. Id. (citing Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). For this reason, we have reversed dismissals where the applicability of the equitable tolling doctrine depended upon factual questions not clearly resolved in the pleadings. See Cervantes, 5 F.3d at 1277; Emrich v. Touche Ross & Co., 846 F.2d 1190, 1199 (9th Cir.1988); Donoghue v. Orange County, 848 F.2d 926, 931 (9th Cir.1987). Similarly, we must reverse if the factual and legal issues are not sufficiently clear to permit us to determine with certainty whether the doctrine could be successfully invoked.

Until recently, the law of this circuit was that equitable tolling could not be applied to extend the period in which to file an action against the government. See Capital Tracing, Inc. v. United States, 63 F.3d 859, 861 n. 4 (9th Cir.1995) (citing cases). However, in Irwin v. Department of Veterans Affairs, 498 U.S. 89, 111 S.Ct. 453, 112 L.Ed.2d 435 (1990), the Supreme Court held that "the same rebuttable presumption of equitable tolling applicable to suits against private defendants should also apply to suits against the United States." Irwin, at 96, 111 S.Ct. at 457; see also Fadem v. United States, 52 F.3d 202, 205 (9th Cir.1995) (the Court in Irwin "intended to create a general rule that equitable tolling was a defense to all federal statutes of limitations, unless Congress provided otherwise."). Our recent decision in Capital Tracing specifically holds that equitable tolling may be applied to extend the period for bringing a wrongful levy claim against the government under 26 U.S.C. Sec. 7426. 63 F.3d at 860.

Reading the allegations in the complaint with the required liberality, we cannot say that Supermail will be unable to establish that the nine-month limitations period was tolled up to the date that it learned of the IRS's levy on its property. Among the circumstances to which courts may look in determining the applicability of equitable tolling is "whether the complainant has been induced or tricked by his adversary's misconduct into allowing the...