Terrapin Leasing, Ltd. v. United States

• Decision Date: 10 March 1978
• Docket Number: No. CIV-77-1052-E.,CIV-77-1052-E.
• Citation: 449 F. Supp. 7
• Parties: TERRAPIN LEASING, LTD., Plaintiff, v. UNITED STATES of America, Bill Lewis, Eleven Unknown Agents of the Internal Revenue Service, and the Internal Revenue Service, Defendants, City National Bank and Trust Company of Oklahoma City, a National Banking Corporation, Intervenor.
• Court: U.S. District Court — Western District of Oklahoma

449 F. Supp. 7

TERRAPIN LEASING, LTD., Plaintiff, v. UNITED STATES of America, Bill Lewis, Eleven Unknown Agents of the Internal Revenue Service, and the Internal Revenue Service, Defendants City National Bank and Trust Company of Oklahoma City, a National Banking Corporation, Intervenor.

No. CIV-77-1052-E.

United States District Court, W. D. Oklahoma.

March 10, 1978.

E. John Eagleton and Ellen M. Hamilton of Houston & Klein, Inc., Tulsa, Okl., for plaintiff.

John E. Green, Acting U. S. Atty., Oklahoma City, Okl., and William W. Guild, Atty., Tax Division, Dept. of Justice, Dallas, Tex., for defendants.

Kenneth I. Jones, Jr., Oklahoma City, Okl., for intervenor.

MEMORANDUM OPINION AND ORDER

EUBANKS, District Judge.

Complaint alleges wrongful seizure of two automobiles allegedly belonging to plaintiff by agents of the Internal Revenue Service. The automobiles were levied upon and seized to satisfy the unpaid tax liability of Tracy C. Poe and Barbara Poe, husband and wife. Tracy C. Poe is the president and sole owner of plaintiff corporation. Count I of the complaint alleges wrongful levy and seeks return of the vehicles under 26 U.S.C. § 7426. The United States of America is the only party defendant as to Count I. In Count II, plaintiff asks for damages against the Internal Revenue Service and individual agents for alleged violations of plaintiff's rights under the Fourth and Fifth Amendments to the Constitution of the United States. City National Bank and Trust Company of Oklahoma City, Oklahoma, has filed a complaint in intervention alleging security interests in the seized automobiles.

Now before the court for disposition are:

1) Motion to dismiss intervenor's complaint filed by defendants Bill Lewis and the Internal Revenue Service; and

2) Defendants' motion to dismiss plaintiff's second cause of action or for partial summary judgment.

Defendants Bill Lewis and the Internal Revenue Service move for dismissal of City National's complaint in intervention as to them on the ground that an action for wrongful levy under 26 U.S.C. § 7426 may be maintained only against the United States — not against agents or agencies of the United States. Counsel for intervenor has filed a letter advising the court that intervenor does not object to the court sustaining the motion, thereby leaving the United States of America as the only party defendant to the complaint in intervention. Therefore, the motion of defendants Lewis and the Internal Revenue Service to dismiss the complaint in intervention as to them is granted.

Defendants seek dismissal or summary judgment as to Count II of plaintiff's complaint which seeks damages for alleged constitutional violations by agents of the Internal Revenue Service. This cause of action cannot be maintained against the Internal Revenue Service. The United States may be sued only to the extent it has consented to suit by statute. United States v. Sherwood, 312 U.S. 584, 61 S.Ct. 767, 85 L.Ed. 1058 (1941). An action against the Internal Revenue Service is effectively one against the United States. Dugan v. Rank, 372 U.S. 609, 620, 83 S.Ct. 999, 10 L.Ed.2d 15 (1963); Blackmar v. Guerre, 342 U.S. 512, 72 S.Ct. 410, 96 L.Ed. 534 (1952).

However, sovereign immunity does not bar the damages claim against the individual agents of the Internal Revenue Service. Bivens v. Six Unknown Federal Narcotics Agents, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971). Defendants contend that they are immune, either absolutely or qualifiedly, from suit because the acts complained of were pursuant to instructions of a supervisor and within the scope of their duties.

Defendant Lewis obtained a warrant from this court on August 2, 1977, to enter upon the Poe residence to effect a levy upon property in satisfaction of the unpaid tax assessments.¹ On August 24, 1977, Lewis, accompanied by several other agents,² went to the Poe home and seized the automobiles on instructions from his supervisor, an attorney (Affidavit of LeRoy Boyer). Lewis had been assigned the delinquent account on the 1971 tax liability of the Poes in April, 1977, and claims to have made unsuccessful attempts to secure voluntary payment before deciding to levy on their property. He asserts that he made that decision only after determining that the Poes had no assets, other than household goods, in their own name and that assets regularly used by the Poes, including the automobiles, were titled in the name of plaintiff corporation. Lewis interpreted these facts as showing that plaintiff was the alter ego of Poe and, therefore, that the corporate assets were subject to levy to satisfy Poe's tax liability.

The doctrine of absolute immunity is inapplicable to the defendant agents' actions in executing the levy. G. M. Leasing Corp. v. United States, 560 F.2d 1011 (10th Cir. 1977). The proper inquiry is whether the agents are protected from damages liability by qualified immunity.

"In varying scope, a qualified immunity is available to officers of the executive branch of government, the variation being dependent upon the scope of discretion and responsibilities of the office and all the circumstances as they reasonably appeared at the time of the action on which liability is sought to be based. It is the existence of reasonable grounds for the belief formed at the time and in light of all the circumstances, coupled with good-faith belief, that affords a basis for qualified immunity of executive officials for acts performed in the course of official conduct." Scheuer v. Rhodes, 416 U.S. 232, 247-248, 94 S.Ct. 1683, 1692, 40 L.Ed.2d 90 (1974).³ See also Wood v. Strickland, 420 U.S. 308, 95 S.Ct. 992, 43 L.Ed.2d 214 (1975), rehearing denied, 421 U.S. 921, 95 S.Ct. 1589, 43 L.Ed.2d 790 (1975).

In G. M. Leasing Corp., supra, the Tenth Circuit Court of Appeals applied qualified immunity to Internal Revenue Service agents accused of...