LaPaglia v. USA

Filing 17

ORDER: For the reasons set forth in the attached Ruling, Defendant United States of America's Motion to Dismiss (Doc. No. 16 ) is hereby GRANTED. This case is dismissed. The Clerk shall close this case. Signed by Judge Alvin W. Thompson on 3/7/17. (Rafferty, M.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
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:
JOHN ANGELO LAPAGLIA,
:
:
Plaintiff,
:
:
v.
:
:
UNITED STATES OF AMERICA,
:
:
Defendant.
:
:
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Case No. 3:16-CV-465 (AWT)

RULING ON MOTION TO DISMISS
For the reasons set forth below, the United States of
America’s motion to dismiss is being granted.
I.

Legal Standard
“The function of a motion to dismiss is ‘merely to assess

the legal feasibility of the complaint, not to assay the weight
of the evidence which might be offered in support thereof.’”
Mytych v. May Dept. Store Co., 34 F. Supp. 2d 130, 131 (D. Conn.
1999) (quoting Ryder Energy Distrib. v. Merrill Lynch
Commodities, Inc., 748 F.2d 774, 779 (2d Cir. 1984)).

A claim

is properly dismissed for lack of subject matter jurisdiction
under Fed. R. Civ. P. 12(b)(1) when the court lacks the
statutory or constitutional power to adjudicate the claim.
Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1187
(2d Cir. 1996).

On a Rule 12(b)(1) motion to dismiss, the party

asserting subject matter jurisdiction “bears the burden of

proving subject matter jurisdiction by a preponderance of the
evidence.”

Aurecchione v. Schoolman Transp. Sys., Inc., 426

F.3d 635, 638 (2d Cir. 2005).
When deciding a motion to dismiss under Rule 12(b)(1), the
court must accept as true all material factual allegations in
the complaint.

Scheuer v. Rhodes, 416 U.S. 232, 236 (1974).

However, the court is “not to draw inferences from the complaint
favorable to the plaintiffs.”

J.S. v. Attica Cent. Sch., 386

F.3d 107, 110 (2d Cir. 2004).

Rather, “jurisdiction must be

shown affirmatively, and that showing is not made by drawing
from the pleadings inferences favorable to the party asserting
it.”

Shipping Fin. Servs. Corp. v. Drakos, 140 F.3d 129, 131

(2d Cir. 1998) (citing Norton v. Larney, 266 U.S. 511, 515
(1925)).
When interpreting the allegations in a pro se complaint,
the court applies “less stringent standards than [those applied
to] formal pleadings drafted by lawyers.”

Haines v. Kerner, 404

U.S. 519, 520 (1972); see also Branham v. Meachum, 77 F.3d 626,
628-29 (2d Cir. 1996).

Furthermore, the court should interpret

the plaintiff’s complaint “to raise the strongest arguments [it]
suggest[s].”

Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir.

1994).

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II.

Discussion
The statutory waiver of sovereign immunity that allows a

taxpayer to bring a tax refund suit is 28 U.S.C. § 1346, which
provides that:
The district courts shall have original jurisdiction,
concurrent with the United States Court of Federal
Claims, of: (1) Any civil action against the United
States for the recovery of any internal-revenue tax
alleged to have been erroneously or illegally assessed
or collected, or any penalty claimed to have been
collected without authority or any sum alleged to have
been excessive or in any manner wrongfully collected
under the internal-revenue laws[.]
28 U.S.C. § 1346(a)(1) (emphasis added).

This waiver of

sovereign immunity is limited by 26 U.S.C. § 7422, which
provides that:
[n]o suit or proceeding shall be maintained by any party
for the recovery of any internal revenue tax alleged to
have been erroneously or illegally assessed or
collected, or of any penalty claimed to have been
collected without authority . . . until a claim for a
refund or credit has been duly filed.
26 U.S.C. § 7422(a).
Attached to the complaint is a letter from the Internal
Revenue Service to Pleasure Circuit Corporation, which serves as
“legal notice that [its] claim is fully disallowed,” and
instructs: “If you wish to bring suit or proceedings for the
recovery of any tax, penalties or other moneys for which this
disallowance notice is issued, you may do so by filing such a
suit with the United States District Court . . . .”

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Compl. at

17.

This letter is prima facie evidence that Pleasure Circuit

Corporation complied with the administrative exhaustion
requirements of § 7422.
The government argues that because the tax was assessed
against Pleasure Circuit Corporation, not the plaintiff in his
individual capacity, only the corporation is a “taxpayer” for
purposes of § 7422(a).

However, the government’s argument

ignores the Supreme Court’s analysis in United States v.
Williams, 514 U.S. 527, 534 (1995) (“To read the term ‘taxpayer’
as implicitly limiting administrative relief to the party
assessed is inconsistent with other provisions of the refund
scheme, which expressly contemplate refunds to parties other
than the one assessed.”).

In Williams, the Court held that “28

U.S.C. § 1346(a)(1) clearly allows one from whom taxes are
erroneously or illegally collected to sue for a refund of those
taxes.”

Id. at 536.

Here, the complaint alleges the plaintiff was the victim of
identity fraud and that the alleged overpayment was made via
check, unauthorized by the plaintiff, and with the plaintiff’s
signature forged, and it appears the check was drawn on the
plaintiff’s personal bank account.

Although the holding in

Williams was quite narrow and specifically did “not decide the
circumstances, if any, under which a party who volunteers to pay
a tax assessed against someone else may seek a refund under
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§ 1346(a),” the analysis is not as simple as the government
suggests.

Id. at 540.

Nevertheless, the court need not address whether the
plaintiff in his individual capacity may seek a refund as a
party “from whom taxes [we]re erroneously or illegally
collected,” a question left open by Williams, because the
plaintiff in his individual capacity did not comply with the
administrative exhaustion requirements under § 7422.
Pleasure Circuit Corporation appears to have complied.

Rather,
Thus,

while the corporation may be able to bring suit for the recovery
of the taxes alleged to be erroneously or illegally assessed
against it, the plaintiff cannot, for he has failed to exhaust
his administrative remedies as required by § 7422(a), and the
court lacks jurisdiction to order the IRS to issue a refund.
III. Conclusion
Defendant United States of America’s Motion to Dismiss
(Doc. No. 16) is hereby GRANTED.

This case is dismissed.

The Clerk shall close this case.
It is so ordered.
Signed this 7th day of March, 2017, at Hartford, Connecticut.

___ /s/ AWT_________________
Alvin W. Thompson
United States District Judge

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