Zhou v. U.S. Internal Revenue Serv.
| Decision Date | 22 January 2019 |
| Docket Number | Case No. 5:18-cv-03755-EJD |
| Parties | JIANGLIN ZHOU, Plaintiff, v. UNITED STATES INTERNAL REVENUE SERVICE, Defendant. |
| Court | U.S. District Court — Northern District of California |
Mr. Jianglin Zhou ("Plaintiff"), appearing pro se, initiated this suit against Defendant United States ("IRS") seeking a refund of funds the IRS seized from Plaintiff's brokerage account to satisfy a tax debt. Dkt. No. 27 ("FAC"). Presently before the Court is the IRS's motion to dismiss for lack of subject matter jurisdiction and failure to state a claim for relief under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Dkt. No. 33. The motion has been fully briefed. See Dkt. Nos. 33-35.1 The Court finds it appropriate to take the motion under submission for decision without oral argument pursuant to Civil Local Rule 7-1(b). For the reasons set forth below, the IRS's motion to dismiss is GRANTED without LEAVE TO AMEND.
On August 6, 2012, the IRS issued a "Final Notice of Intent to Levy and Notice of Your Right to a Hearing" ("Notice").2 FAC ¶ 7, Ex. A. The Notice advised Plaintiff of the IRS's intentto levy on [Plaintiff's] property or [Plaintiff's] right to property "30 days after the date of this letter." FAC, Ex. A. The IRS levied Plaintiff's brokerage account on August 17, 2012, only eleven days after the Notice date. FAC ¶ 8.
The IRS initially levied $21,428.95 from Plaintiff's brokerage account, but ultimately retained $12,298.25. FAC ¶ 9, Ex. B. Between 2012 through 2014, Plaintiff called multiple times and wrote three letters to the IRS requesting a "refund" of the $12,298.25. FAC ¶ 10. On or about May 20, 2014, Plaintiff filed two 843 Forms seeking a refund of the $12,298.25. Id. ¶ 1, Ex. C. In the 843 Forms, Plaintiff essentially asserted that he did not owe the IRS $12,298.25. Plaintiff contacted Defendant repeatedly in writing and by telephone to "follow up" on his Forms. Id. ¶ 12. As of the filing this action, Plaintiff has only received letters from the IRS requesting more time to consider his 843 Forms. Id. The IRS has not issued a formal decision on the 843 Forms. Id.
Plaintiff alleges that the IRS failed to provide 30-days' notice before levying as required by 26 U.S.C. § 6330, and therefore Plaintiff seeks damages pursuant to 26 U.S.C. §§ 7422 () and 7433 (civil damages for unauthorized collection actions), as well as costs and fees pursuant to 26 U.S.C. § 7430. Id. ¶ 14. Plaintiff also alleges that his rights to due process and to be free from unreasonable searches and seizures under the Fourteenth and Fourth Amendments have been violated. Id. ¶ 15-16. Plaintiff seeks damages for the alleged constitutional violations pursuant to 42 U.S.C § 1983 and in accordance with Bivens v. Six Unknown Named Agents, 403 U.S. 388 (1971). Id. Plaintiff seeks relief in the form of: (1) compensatory damages in the amount of $12,298.25 plus interest, (2) reimbursement for expenses, (3) Plaintiff's compensation for "losses due to the forced sale and excessive levy of Plaintiff's property," namely the brokerage account, (4) damages in the amount of $214,289.50 for the alleged constitutional violations, and (5) injunctive relief. Id. ¶¶ 18-22.
A motion to dismiss under Rule 12(b)(1) challenges subject matter jurisdiction and may be either facial or factual. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). A facial Rule 12(b)(1) motion involves an inquiry confined to the allegations in the complaint. Thus, it functions like a limited-issue motion under Rule 12(b)(6); all material allegations in the complaint are assumed true, and the court must determine whether lack of federal jurisdiction appears from the face of the complaint itself. Thornhill Publ'g Co. v. General Tel. Elec., 594 F.2d 730, 733 (9th Cir. 1979).
Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient specificity to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). A complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). "Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). Moreover, the factual allegations "must be enough to raise a right to relief above the speculative level" such that a claim "is plausible on its face." Twombly, 550 U.S. at 555, 570.
When deciding whether to grant a motion to dismiss, the court generally "may not consider any material beyond the pleadings." Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). The court must accept as true all "well-pleaded factual allegations." Ashcroft v. Iqbal, 556 U.S. 662 (2009). The court must also construe the alleged facts in the light most favorable to the plaintiff. Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1998). But "courts are not bound to accept as true a legal conclusion couched as a factual allegation." Twombly, 550 U.S. at 555. "[M]aterial which is properly submitted as part of the complaint may be considered." Hal Roach Studios, 896 F.2d at 1555 n.19.
Where, as here, the pleading at issue is filed by a plaintiff proceeding pro se, it must be construed liberally. Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). In doing so, the "court need not give a plaintiff the benefit of every conceivable doubt" but "is required only to draw every reasonable or warranted factual inference in the plaintiff's favor." McKinney v. De Bord, 507 F.2d 501, 504 (9th Cir. 1974). The court "should use common sense in interpreting the frequently diffuse pleadings of pro se complainants." Id. But pro se parties must still abide by the rules of the court in which they litigate. Carter v. Commissioner, 784 F.2d 1006, 1008 (9th Cir. 1986). A pro se complaint should not be dismissed unless the court finds it "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Haines v. Kerner, 404 U.S. 519, 521, 92 S. Ct. 594, 30 L. Ed. 2d 652 (1972).
Defendant contends that this Court lacks subject matter jurisdiction because the United States does not waive its sovereign immunity. Dkt. No. 33 at 4-11.
"It is well settled that the United States is a sovereign, and, as such, is immune from suit unless it has expressly waived such immunity and consented to be sued." Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985). Any waiver of sovereign immunity must be "unequivocally expressed," and will be strictly construed in favor of the sovereign. United States v. Nordic Vill. Inc., 503 U.S. 30, 34, 112 S. Ct. 1011, 117 L. Ed. 2d 181 (1992). "Where a suit has not been consented to by the United States, dismissal of the action is required." Gilbert, 756 F.2d at 1458 (citing Hutchinson v. United States, 677 F.2d 1322, 1327 (9th Cir. 1982)). Here, the IRS has not waived sovereign immunity for claims based upon alleged constitutional violations. See Gilbert v. Da Grossa, 756 F.2d 1455, 1458 (9th Cir. 1985). Therefore, Plaintiff's claims based upon alleged constitutional violations by the IRS is barred. Id.; see also Reese v. I.R.S., 167 Fed. App'x. 625 (9th Cir. 2006); Gillings v. U.S. I.R.S., 138 Fed. App'x. 990 (9th Cir. 2005); Quansah v. U.S., No. 94-20197 RMW (N.D. Cal. Feb. 13, 1995).
In response, Plaintiff argues this Court has jurisdiction because Defendant is the United States and because the district courts "have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. §§ 1331, 1340.
Sections 1331 and 1340 are general jurisdictional statutes that do not on their own waive sovereign immunity. See Hughes v. United States, 903 F.2d 531, 539 n.5 (9th Cir. 1992) citing Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985).
Plaintiff's reliance on Bivens v. Six Unknown Named Agents, 403 U.S. 388 (1971) is unavailing. In Bivens, the United States Supreme Court held that in appropriate cases federal government officials may be liable for violations of a citizen's constitutional rights committed in their official capacity. Id. at 396-97. Plaintiff has named only the IRS as a defendant, and not any federal government official. Plaintiff acknowledges that he has only sued the IRS and implies he would seek to amend his complaint to allege his claims against the Commissioner of the IRS. Dkt. No. 34 at 4. The proposed amendment is futile. The Ninth Circuit has held that Bivens remedies are not available to compensate plaintiffs for alleged constitutional violations committed by federal officials in the assessment of taxes. Adams v. Johnson, 355 F.3d 1179, 1186 (9th Cir. 2004). This is because Congress has provided considerable avenues of protection through the Internal Revenue Code. Id. at 1186; see also Schwarz v. United States, 234 F.3d 428, 434 (9th Cir. 2000); Wages v. IRS, 915 F.2d 1230, 1235 (9th Cir. 1990), cert. denied, 498 U.S. 1096 (1991); Ghaffari v. Internal Revenue Service, No. 14-2927 PSG, 2015 WL 3630217 (N.D. Cal. June 10, 2015).
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