J. CARDENAS & SONS FARMING, INC. v. USA

Filing 78

PUBLISHED OPINION granting in part and denying in part Defendant's 73 Partial Motion to Dismiss - Rule 12(b)(1) as to certain tax years for both plaintiffs. A Joint Status Report by July 30, 2009, regarding remaining tax years at issue for both plaintiffs. Signed by Judge Christine O.C. Miller. (smg)

Download PDF
J . CARDENAS & SONS FARMING, INC. v. USA D o c . 78 In the United States Court of Federal Claims N o s. 07-350T & 07-351T (Filed July 13, 2009) *********************** J. CARDENAS & SONS FARMING, I N C ., Plaintiff, v. T H E UNITED STATES, Defendant. *********************** R IO VISTA CORPORATION, Plaintiff, v. T H E UNITED STATES, Defendant. *********************** * * * * * * * * * * * * * * * * * * * * * * * * * * T a x ; motion to dismiss pursuant to RCFC 12(b)(1), (6); refund of e m p l o ym e n t taxes imposed on re sp o n s ib le persons under 26 U .S .C . § 6672 (2006); re q u ire m e n t to file claims with In te rn a l Revenue Service as p re re q u is ite to suit in court, 26 U .S .C . § 7422(a) (2006); lim itatio n s period for filing suit f o r refund, 26 U.S.C. § 6511(a) (20 0 6 ). M a r tin A. Schainbaum, San Francisco, CA, for plaintiffs. J e n n if e r Dover Spriggs, Washington, DC, with whom was Acting Assistant Attorney G e n e ra l John A. DiCicco, for defendant. Assistant Chief, G. Robson Stewart, of counsel. M E M O R A N D U M ORDER AND OPINION M I L L E R , Judge. Dockets.Justia.com T h is case is before the court on defendant's partial motion to dismiss for lack of s u b je c t matter jurisdiction pursuant to RCFC 12(b)(1) and for failure to state a claim under R C F C 12(b)(6). J. Cardenas & Sons Farming, Inc. ("Cardenas"), and Rio Vista Corporation (" R io Vista") (collectively "plaintiffs") seek a refund of employment taxes paid pursuant to 2 6 U.S.C. (I.R.C.) § 6672 (2006), for agricultural employees (Form 943) for Cardenas for ta x years 1993, 1995, 1998, 2000 and for Rio Vista for tax years 1993, 1996, 1997, 1999, 2 0 0 1 -2 0 0 3 . Defendant moves to dismiss Rio Vista's claim for tax year 1993 for failure to state a claim and to dismiss Cardenas's claims for tax year 2000 and Rio Vista's tax years 1 9 9 7 , 1999, 2001-2002 for lack of subject matter jurisdiction due to failure to file timely c laim s. Argument is deemed unnecessary because the parties' explanations are reducible to e x p lic a tio n through charts. FACTS T h e following facts are drawn from plaintiffs' complaint, the parties' briefs, and the d o c u m e n ts attached thereto. 1/ P la in tif f s claim that during the relevant tax years they made regular payments of p a yro ll taxes through Wells Fargo Bank. In early 2004 plaintiffs first learned that some of th e employees at Wells Fargo Bank diverted a portion of their tax payments to a source u n s u b s ta n tia te d by plaintiffs. Due to the alleged diversion of tax payments, plaintiffs c o n ta c te d the Internal Revenue Service (the "IRS") inquiring whether they had any o u ts ta n d in g tax liability. Pls.' Br. filed May 1, 2009, at 2. Although the record does not re v e a l what communications, if any, plaintiffs had with the IRS regarding their tax liability, p la in tif f s, by Juan and Graciela Cardenas, signed on November 23, 2004, an installment a g re e m e n t (Form 433-D) with the IRS stipulating to a "10 month installment agreement all in c lu s iv e , Rio Vista Inc 77-0332175 & J Cardenas & Sons Inc. The payments to be applied to the oldest periods first. Full payment due September 30, 2005. Seizure to follow if you d e f au lt." Pls.' Br. filed May 1, 2009, at Ex. B (This information is listed under the box h e a d in g "Additional Conditions/Terms (To be completed by IRS.")). Juan and Graciela C a rd e n a s, owners of the farming company, were dismissed from these actions by Order e n te re d on April 3, 2009. The tax periods listed in the installment agreement are 1993, 1995-2001, and 2003, an d the employer identifications numbers are 77-0332175 (Rio Vista as identified in Third 1/ In evaluating a motion made pursuant to RCFC 12(b)(1), the court can go beyond th e pleadings to determine whether jurisdiction exists. Reynolds v. Army & Air Force Exch. S erv ., 846 F.2d 746, 747 (Fed. Cir. 1988). 2 A m . Compl. ¶ 18) and 77-0121198 (Cardenas as identified in Third Am. Compl. ¶ 2). The c o p y of the installment agreement submitted by plaintiffs was not signed by the IRS. The in sta llm e n t agreement contains two handwritten amendments, initialed by Juan and Graciela C a rd e n a s, stipulating that the penalties are disputed. C a rd e n a s states that, as of 2004, its employment tax returns (Form 943) estimated the c o rp o ra tio n 's liability for tax years 1993, 1995, 1998, 2000 as $219,967.00; Cardenas e stim a te d that it had paid a total of $253,118.37 in employment taxes; and the IRS's records ref lect that Cardenas paid a total of $245,888.89. Similarly, Rio Vista's tax returns (Form 9 4 3 ) calculated its total liability for tax years 1993, 1996, 1997, 1999, 2001-2003 as $ 7 8 2 ,2 7 6 .5 9 ; corporate records estimated that it paid $744,776.48 in employment taxes; and th e IRS recorded total payments as $456,769.55. Plaintiffs assert that, pursuant to the installment agreement, they paid "at least $ 3 4 0 ,0 0 0 " in tax liabilities, penalties, and interest between the periods of August 2004 and e a rly 2009. Pls.' Br. filed May 1, 2009, at 4, Ex. B at E27. Plaintiffs claim that they directed p a ym e n ts to be applied to the "tax for the earliest period," not to penalties or interest. Id. at 4 , Ex. C at E30 (a "sample" letter from Martin A. Schainbaum, Esq. (plaintiffs' counsel of re c o rd ), to the IRS). Plaintiffs maintain that they expected that any payments submitted w ith o u t explicit instructions would be applied according to the terms of the installment a g re e m e n t. C o n tr a ry to their expectations, the IRS unilaterally misapplied plaintiffs' payments, th e r e b y causing plaintiffs to incur deficiencies, penalties, and interest. It is plaintiffs' p o s itio n that the IRS's erroneous application of plaintiffs' payments, coupled with the " e m bezzlem ent/diversio n of payments by [p]laintiffs' then-bookkeeping service and [] Wells F a rg o Bank employee(s), agent(s), or representative(s)" absolve plaintiffs of their duty to pay a ll or some of the penalties and interest assessed against them. Pls.' Br. filed May 1, 2009, a t 4-5. O n or about September 10, 2006, Cardenas submitted a Claim for Refund and Request f o r Abatement (Form 843) seeking refunds in the amounts of $909.70, $4,857.50, $708.58, a n d $3,050.34 for tax years 1993, 1995, 1998, and 2000, respectively. Third Am. Compl. ¶ ¶ 11-14; see also Decl. of Steven Pybrum, C.P.A., Mar. 1, 2008, ¶ 4 (date not on the forms b u t sworn to in declaration). On or about September 1, 2009, Rio Vista submitted Form 843 to the IRS seeking refund for tax periods 1993, 1996, 1997, 1999, and 2001-2003 in the a m o u n ts of $9.64, $9.64, $51.84, $1,529.20, $11,685.81, $4,853.32, and $3,784.21, re sp e c tiv e ly. Am. Compl. ¶¶ 27-33; see also Pybrum Decl. ¶ 6 (date not on the forms but sw o rn to in declaration). 3 D e f e n d a n t disputes much of the evidence that plaintiffs submit in support of their c la im s . According to defendant, the checks submitted by plaintiffs evidencing payment of ta x liabilities "consist[] of only four checks" paid on behalf of Cardenas, but not Rio Vista. D e f .'s Br. filed May 20, 2009, at 3 (citing Pls.' Br. filed May 1, 2009, at Ex. 1). The checks d o not indicate which "tax, period, or taxpayer the payment is for." Id. at 3. The Declaration o f Steven Pybrum, C.P.A., Mar. 1, 2008, ¶¶ 3, 5-6, defendant characterizes as merely p ro v id in g unsupported assertions that the checks were paid on behalf of both parties and for th e tax periods relevant to this litigation. 2/ The installment agreement, moreover, was e x e cu te d only by Juan and Graciela Cardenas, not Rio Vista, and defendant also contends th a t plaintiffs have not provided any evidence supporting whether the IRS agreed to the terms o f the installment payments. D e f en d a n t shows that the checks issued by plaintiffs that are relevant to this litigation w ere applied by the IRS to the following taxpayer and tax year: Plaintiff Cardenas Cardenas Cardenas Cardenas Check Number 5524 5567 5650 5733 Check Date Check Amount 2/22/2006 $8,000.00 3/21/2006 $8,000.00 4/24/2006 $8,000.00 5/23/2006 $8,000.00 Tax Year Applied 1998 1998 1998 1995 D e f .' s Br. filed May 20, 2009, at 3-4. While not controverting the application of payments, p la in tif f s argue that the IRS erroneously applied the payments to the incorrect taxpayer and tax year. O n June 4, 2007, plaintiffs filed Complaint No. 07-350T on behalf of plaintiff J. C a rd e n a s & Sons Farming, Inc, and Complaint No. 07-351T naming Rio Vista Corporation a s the sole plaintiff. Both complaints sought a refund/abatement of penalties for employment taxe s assessed pursuant to I.R.C. § 6672, which imposes liability on "responsible person[s]" f o r failure to pay taxes on behalf of a corporate employer. On November 7, 2007, plaintiffs filed an Amended Complaint in each action that ad d ed as individual plaintiffs Juan and Graciela Cardenas. The amended complaints were id e n tic a l except insofar as ¶ 10 of the Complaint in No. 07-350T names J. Cardenas & Sons F a rm in g , Inc., while ¶ 10 in No. 07-351T names Rio Vista Corporation. Following d e f en d a n t's motion in each action on November 30, 2007, for a more definite statement 2/ In the "memo" section of check numbers 5524, 5567, 5650, and 5733, Rio Vista's a n d Cardenas's employer identification numbers and Juan Cardenas's and Graciela C a rd e n a s's social security numbers were identified on each check. 4 u n d e r RCFC 12(e), the court consolidated the cases, RCFC 42(a), and ordered that the a m e n d e d complaint include all information required when pleading a claim for a tax refund, R C F C 9(m). See Order entered Jan. 14, 2008, at 3, ¶ 1 (order citing former rule (RCFC 9 (h )( 6 )) for tax refund claims). Plaintiffs filed a Second Amended Complaint on January 25, 2008. On February 26, 2 0 0 8 , defendant moved to dismiss pursuant to RCFC 12(b)(1). Briefing was completed on A p r il 16, 2008. The court denied defendant's motion without prejudice to renewal at the te r m in a t io n of the parties' endeavors to resolve all the accounting issues alleged by plaintiffs. T h e court also required that the IRS deliver to defense counsel, for submission to plaintiffs, a n official accounting of all payments by check alleged and documented by plaintiffs to help c la rif y how the payments were applied to plaintiffs' outstanding tax liabilities. See Order e n te re d on May 5, 2008, at 2. O n November 3, 2008, the court granted defendant's motion to dismiss from the S e c o n d Amended Complaint, for lack of subject matter jurisdiction, the claims of the in d iv id u a l plaintiffs Juan and Graciela Cardenas. The individual plaintiffs had been added t o the Second Amended Complaint in contravention of I.R.C. § 6532(a)(1), because they f ile d their November 7, 2007 amended complaints for refund in the United States Court of F e d e ra l Claims earlier than six months after they submitted their claim to the Commissioner o f the IRS on December 20, 2007. On December 12, 2008, the corporate and individual p la in tif f s filed their Third Amended Complaint. On February 10, 2009, defendant filed a partial motion to dismiss plaintiffs' Third A m e n d e d Complaint on the same ground as its last motion against the individual plaintiffs f o r failure to comply with I.R.C. § 6532(a)(1). The court granted defendant's motion on A p ril 3, 2009, dismissing plaintiffs Juan and Graciela Cardenas (in their individual c a p a c itie s ) from the Third Amended Complaint. On April 21, 2009, defendant moved partially to dismiss Cardenas's refund claim for tax year 2000, and partially to dismiss Rio Vista's refund claim for tax year 1993 for failure to state a claim, as well as its refund claims for tax years 1997, 1999, 2001-2002, for lack of s u b je c t matter jurisdiction. Briefing was completed on May 20, 2009. D IS C U S S IO N I. Standard of review and jurisdiction J u ris d ic tio n must be established before the court may proceed to the merits of a case. S te e l Co. v. Citizens for a Better Env't, 523 U.S. 83, 88-89 (1998). Any party may challenge, 5 o r the court may raise sua sponte, subject matter jurisdiction at any point in a proceeding, ev e n upon appeal. Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006). Once the court's s u b je c t matter jurisdiction is put into question, it is "incumbent upon [the plaintiff] to come f o rw a rd with evidence establishing the court's jurisdiction. . . . [The plaintiff] bears the b u rd e n of establishing subject matter jurisdiction by a preponderance of the evidence." R e yn o ld s v. Army and Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988); see also M c N u tt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1369 (Fed. Cir. 2002). Although federal c o u rts are presumed to lack jurisdiction unless the record affirmatively indicates the opposite. R e n n e v. Geary, 501 U.S. 312, 316 (1991), the court must accept as true any undisputed a lle g a tio n s of fact made by the plaintiff, see Reynolds, 846 F.2d at 747. Upon challenge to the court's subject matter jurisdiction, however, it is "incumbent u p o n [the plaintiff] to come forward with evidence establishing the court's jurisdiction. [The p la in tif f ] bears the burden of establishing subject matter jurisdiction by a preponderance of th e evidence." Id. at 748; see also McNutt, 298 U.S. at 189 (holding that "[i]f [plaintiff's] alleg atio n s of jurisdictional facts are challenged by his adversary in any appropriate manner, h e must support them by competent proof"). In its examination of jurisdiction, the court is n o t limited to the complaint; instead, the "court may consider relevant evidence in order to re so lv e the factual dispute." Reynolds, 846 F.2d at 747; see also Moyer v. United States, 190 F .3 d 1314, 1318 (Fed. Cir. 1999) (holding that "[f]act-finding is proper when considering a motion to dismiss where the jurisdictional facts in the complaint . . . are challenged"). " B e c au s e it is a sovereign, the United States may be sued only to the extent that it has co n sen ted to suit by statute, and the terms of that consent define the jurisdiction of the court to hear those suits." Shore v. United States, 9 F.3d 1524, 1525 (Fed. Cir. 1993) (citing U n ite d States v. Testan, 424 U.S. 392, 399 (1976)). The Tucker Act, 28 U.S.C. § 1491(a)(1) (20 0 6 ), defines the jurisdictional reach of the Court of Federal Claims and "confers ju ris d ic tio n upon the Court of Federal Claims over the specified categories of actions brought a g a i n s t the United States, and . . . waives the Government's sovereign immunity for those a c tio n s ." Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc); see also E m e ry Worldwide Airlines, Inc. v. United States, 49 Fed. Cl. 211, 220, aff'd, 264 F.3d 1071, 1 0 8 0 (Fed. Cir. 2001). The Tucker Act grants the court jurisdiction over "any claim against th e United States founded either upon the Constitution, or any Act of Congress or any re g u la tio n of an executive department, or upon any express or implied contract with the U n ite d States, or for liquidated or unliquidated damages in cases not sounding in tort." 28 U .S .C . § 1491(a)(1). Congress has manifested the requisite consent and enacted a money-mandating statute w ith respect to suits involving the refund of federal tax payments in 28 U.S.C. § 1346(a) 6 (2 0 0 6 ). In conjunction with the Tucker Act, section 1346(a)(1) establishes jurisdiction in the C o u rt of Federal Claims over "[a]ny civil action against the United States for the recovery o f any internal-revenue tax alleged to have been erroneously or illegally assessed or c o lle c te d . . . ." However, pursuant to the Supreme Court's full-payment rule, full payment o f all taxes assessed is a jurisdictional prerequisite. See Flora v. United States, 362 U.S. 145, 1 7 7 (1960); see also Shore, 9 F.3d at 1527 ("The Flora full payment rule requires that ta x p a ye rs prepay the tax principal before the Court of Federal Claims will have subject m a tte r jurisdiction over their tax refund action under § 1491."); Rodewald v. United States, 2 3 1 Ct. Cl. 962, 963-64 (1982) ("Plaintiff makes the specific request for monetary relief, but d o e s not contend that he has fully paid the taxes. Until he does so, we cannot hear his claim fo r a refund."). 1 . Jurisdiction under I.R.C. §§ 7422(a) and 6511 A taxpayer seeking refund of unlawfully assessed taxes is required to file a claim for re f u n d with the IRS, pursuant to I.R.C. § 7422(a) before filing suit against the Government. U n ited States v. Clintwood Elkhorn Mining Co., __ U.S. __, 128 S. Ct. 1511, 1515 (2008). I .R .C . § 7422(a) (2006), provides: N o suit prior to filing claim for refund. No suit or proceeding shall be m a in tain e d in any court for the recovery of any internal revenue tax alleged to h a v e been erroneously or illegally assessed or collected, or of any penalty c laim e d to have been collected without authority, or of any sum alleged to h a v e been excessive or in any manner wrongfully collected, until a claim for re f u n d or credit has been duly filed with the Secretary, according to the p rov isio n s of law in that regard, and the regulations of the Secretary e sta b lis h e d in pursuance thereof. A lth o u g h the Tucker Act generally provides for a six-year statute of limitations, C o n g re s s imposed a less liberal limitations period for claims seeking refunds of taxes, I.R.C. § 6511(a) (2006); see Clintwood Elkhorn Mining, 128 S. Ct. at 1515, 1517. Section 6511(a) m a n d a te s that refund suits must "be filed by the taxpayer within 3 years from the time the re tu rn was filed or 2 years from the time the tax was paid, whichever of such periods expires th e later . . . ." These statutes must be read in the conjunctive: § 7422(a) requires that a re f u n d claim duly is filed before the taxpayer brings suit, and § 6511(a) provides the time f ra m e in which this administrative claim must be filed. See Clintwood Elkhorn Mining, 128 S . Ct. at 1515. It is plaintiffs' burden to provide the facts supporting jurisdiction under these s ta tu te s. McNutt, 298 U.S. at 189. 7 2 . Dismissal of Rio Vista's claims for tax years 1997, 1999, 2001, and 2002 for lack of subject matter jurisdiction D e f en d a n t submits that the court lacks jurisdiction to entertain Rio Vista's refund c la im s for tax years 1997, 1999, 2001-2002 because Rio Vista failed timely to file its claims: e a c h claim was filed more than three years after the tax return was filed and more than two yea rs after the most recent tax was paid for the specific tax year. See I.R.C. § 6511(a). P la in tif f s stipulate to the refund claims dates, and defendant's recompilation of the remaining re lev a n t dates is set forth in the following chart: Year 1997 1999 2001 2002 Date Tax Return Filed 1/31/1998 12/16/2001 1/31/2002 1/31/2003 Date of Most Recent Payment 5/21/1998 1/3/2000 none 12/24/2002 Date of Refund Claim 9/1/2006 9/1/2006 9/1/2006 9/1/2006 D e f .'s Br. filed Apr. 22, 2009, at 8, Ex. 15 at A77 (1997); Ex. 4 at A25 (1999); Ex. 16 at A91 (1 9 9 9 ); Ex. 17 at A97 (2001); Ex. 18 at A107 (2002). 3/ Plaintiffs explain that they issued checks each in the amount of $8,000.00 on April 24, 2 0 0 6 , for tax years 1997 and 1999; on March 21, 2006, for tax year 2001; and on February 2 2 , 2006, for tax year 2002. Instead of applying the money to Rio Vista for years 1997, 1 9 9 7 , 2001, and 2002, plaintiffs assert that the IRS "arbitrarily applied" the payments to C a rd e n a s for tax year 1998. Pls.' Br. filed May 1, 2009, at 8-10 (citing Ex. 1 at E7-E9 (copy o f checks)). With respect to each year, plaintiffs "intended for as much of th[ese] payments a s necessary to be applied, according to the installment agreement and the understanding b e tw e e n the parties, to the earliest alleged outstanding tax liability." Id. at 8. T h e installment agreement submitted by plaintiffs lists Rio Vista's and Cardenas's e m p lo ye r tax identification numbers and lists Juan Cardenas's and Graciela Cardenas's social s e c u rity numbers. The document directs that payments are applied to both Rio Vista and C a rd e n a s and that the payments should be applied to "the oldest periods first." Pls.' Br. filed 3/ Defendant challenge plaintiffs' alleged refund claims dates for failure to s u b s ta n tia te the dates by competent evidence. The Claim for Refund and Request for A b atem en t Forms (843) attached to and cited in plaintiffs' brief are undated. See Pls.' Br. f ile d May 1, 2009, at 8-11 (citing Ex. 3 at E21 (1997 no date provided); Ex. 4 at E22 (1999 n o date provided); Ex. 4 at E23 (2001 no date provided); Ex. 4 at E24 (2002 no date p ro v id e d )). Nevertheless, any issue concerning this defect is moot because the u n su b stan tiated dates are after the expiration of the statute of limitations under § 6511(a). 8 M a y 1, 2009, at Ex. B at E27. Although it appears that the IRS completed the terms of the in s ta llm e n t agreement and then submitted it to plaintiffs, plaintiffs tendered a counteroffer th ro u g h their handwritten amendments of the terms, such as rendering the amount owed as " d is p u te d , including penalties" and adding "as agreed to by parties, penalties in dispute" after th e "Amount of Increase (or decrease)" column. Id. Plaintiffs, however, have not e sta b li s h e d that the IRS executed or agreed to the terms of the installment agreement as p r o p o s e d by plaintiffs. T h e faces of the checks themselves do not show that plaintiffs directed payments to a certain entity or a specific tax year. All the checks cited as payments made for Rio Vista f o r tax years 1997, 1999, 2001-2002 are signed by Juan Cardenas; the memorandum on the c h e ck s contains Rio Vista's and Cardenas's employer tax identification numbers and Juan C a rd e n a s's and Graciela Cardenas's social security numbers; and all the checks are issued b y J. Cardenas & Sons Farming, Inc. Pls.' Br. filed May 1, 2009, Ex. 1 at E7 (check issued F e b . 22, 2006), E8 (check issued Mar. 21, 2006), and E9 (check issued Apr. 24, 2006). Even if the IRS duly executed the installment agreement, plaintiffs provided no instruction on e ith e r the installment agreement or on the checks drawn to the IRS as to how the IRS should a p p ly the payments. As observed by defendant, plaintiffs cannot "retroactively shift[] p aym en ts" in order to establish jurisdiction under I.R.C. §§ 7422(a) and 6511(a). Def.'s Br. f ile d May 20, 2009, at 9. 3 . Dismissal of Cardenas's claim for tax year 2000 for lack of subject matter jurisdiction D e f en d a n t argues that Cardenas's claim for tax year 2000 similarly should be d is m is s e d because plaintiffs failed to file their Claim for Refund and Request for Abatement (F o r m 843) within the prescribed limitations period, pursuant to I.R.C. § 6511(a): 1) 2000 ta x year return was filed on January 31, 2001, Def.'s Br. filed Apr. 22, 2009, Ex. 1 at A6; 2) m o s t recent tax payment was made on November 19, 2003, id.; and 3) Form 843 for tax year 2 0 0 0 was filed on October 4, 2006, id. at Ex. 7 at A43. Plaintiffs contend that they paid the IRS $8,000.00 on April 24, 2006, and on May 23, 2 0 0 6 , "as part of the installment agreement." Pls.' Br. filed May 1, 2009, at 6, Ex. 1 at E9 (A p ril check), E10 (May check). Although plaintiffs expected the payments to be applied to tax year 2000, i.e., the year with earliest outstanding tax liability, id. at 7 (citing Def.'s Br. f ile d May 1, 2009, Ex. 1 at A6), the IRS applied the April 24, 2006 check to Cardenas's 1998 ta x year, which had a balance of only "penalties and additional taxes assessed . . . ," and the M a y 23, 2006 payment for Cardenas's 1995 tax year that allegedly had a "balance of zero at th a t time," id. at 7 (citing Ex. E at E57). 9 P lain tiff s do not contest that the April 24 and May 23, 2006 checks were applied to C a rd e n a s for tax years 1998 and 1995, respectively. The statute of limitations runs either th re e years from the date on which the return in question was filed or two years from the date o n which the subject tax was paid. In this case plaintiffs neither filed their return within th re e years of their claim for refund nor within two years of the time the tax was paid. See I.R .C . § 6511(a). P la in tif f s cannot satisfy the jurisdictional requirement imposed by I.R.C. § 6511(a) b y shifting the same payments to satisfy the liabilities of different tax years and taxpayers. F u rth e rm o re , plaintiffs' evidence in support of their claim that the IRS misapplied their p a ym e n ts to the incorrect taxpayer and/or incorrect year is belied by the selfsame evidence. P lain tiff s repeatedly submit the same checks as evidence of payment for different taxpayers a n d tax years. The "memo" lines on checks relevant to defendant's motion display c o n f lic tin g information. Most of the documents are unsigned or undated, i.e., the installment a g re e m e n t and all of the forms for Claim for Refund and Abatement. The document that a c tu a lly reflects plaintiffs' desired application of tax payments is a "sample" cover letter that a p p a re n tly is a duplicate of a letter submitted to the IRS. Yet, this letter is unsigned, is s ta m p e d "received" by plaintiffs, and bears no indication that it was ever mailed to or re c eiv e d by the IRS. See Pls.' Br. filed May 1, 2009, at Ex. 2 at E12. P la in t if f s have failed to establish the jurisdictional facts in support of their claims. M c N u tt, 298 U.S. at 189. II. Failure to state a claim upon which relief can be granted Th e court's task in considering a motion to dismiss for failure to state a claim is not to determine whether a plaintiff will ultimately prevail, but "`whether the claimant is entitled to offer evidence to support the claims.'" Chapman Law Firm Co. v. Greenleaf Constr. Co., 490 F.3d 934, 938 (Fed. Cir. 2007) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the United States Supreme Court clarified the standard enunciated in Conley v. Gibson, 355 U.S. 41 (1957), with respect to what a plaintiff must plead to survive a Rule 12(b)(6) motion. 4/ The Court circumscribed the standard, stating: "[A]ny statement revealing the theory of the claim will suffice unless 4/ The Conley standard, abrogated by Twombly, stated "that a complaint should not b e dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can p ro v e no set of facts in support of his claim which would entitle him to relief." Conley, 355 U .S . at 45-46. Twombly retired the literal interpretation of Conley's "no set of facts" lan g u a g e "as an incomplete, negative gloss on an accepted pleading standard: once a claim h a s been stated adequately, it may be supported by showing any set of facts consistent with th e allegations in the complaint." Twombly, 550 U.S. at 563. 10 its factual impossibility may be shown from the face of the pleadings . . . ." Twombly, 550 U.S. at 561; see also McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1356 n.4 (Fed. Cir. 2007) (Dyk, J., dissenting). Accordingly, the court must assess whether the complaint adequately states a claim and whether plaintiffs can allege any facts that, if proven, would entitle them to the relief sought. See Twombly, 550 U.S. at 563; McZeal, 501 F.3d at 136162; see also May v. United States, 293 Fed. App'x 775, 2008 WL 4097476, at * 2 (Fed. Cir. Sep. 4, 2008) (per curiam) (stating that factual allegations in complaint did not rise to level of cognizable claim against Government). Although plaintiffs' factual allegations need not be "detailed," they "must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Twombly, 550 U.S. at 555 (internal citation omitted). The court thus "`accept[s] as true all factual allegations in the complaint, and . . . indulge[s] all reasonable inferences in favor of the non-movant,'" to evaluate whether plaintiffs have stated a claim upon which relief can be granted. Chapman Law Firm, 490 F.3d at 938 (omission in original) (quoting Sommers Oil Co. v. United States, 241 F.3d 1375, 1378 (Fed. Cir. 2001)). Rule 12(b)(6) authorizes the defendant to move, before filing a responsive pleading, for dismissal of the complaint. A motion made under Rule 12(b)(6) challenges the legal theory of the complaint, not the sufficiency of any evidence that might be adduced. The purpose of the rule is to allow the court to eliminate actions that are fatally flawed in their legal premises and destined to fail and thus to spare litigants the burdens of unnecessary pretrial and trial activity. Neitzke v. Williams, 490 U.S. 319, 326-27 (1989). Defendant argues that Rio Vista's 1993 tax refund claim should be dismissed for failure to state a claim because Rio Vista "failed to establish that the amount sought in the 1993 claim for refund was not previously refunded or abated." Def.'s Br. filed Apr. 22, 2 0 0 9 , at 8. Defendant challenges plaintiffs to provide any facts supporting their claim that the $9.43 sought for tax year 1993 was not included in the $1,038.34 "failure to pay tax penalty" abatement that Rio Vista received on December 11, 2006, for tax year 1993. Def.'s B r. filed Apr. 22, 2009, at 8, Ex. 2 at A16. P la in tif f s do not counter defendant's argument or controvert its evidence that the a m o u n t sought for Rio Vista's 1993 tax year was included in the $1,038.34 abated on D e c em b e r 11, 2006. Plaintiffs repeat their prior incantations that the IRS misapplied the A p ril 24, 2006 check to Cardenas's 1998 tax year, which allegedly was intended for Rio V is ta 's 1993 tax year. Therefore, plaintiffs cannot overcome defendant's 12(b)(6) motion when they have not submitted factual allegations that raise their "right to relief above the speculative level." Twombly, 550 U.S. at 555. 11 C O N C L U SIO N A c c o rd in g ly, based on the foregoing, IT IS ORDERED, as follows: 1 . Defendant's partial motion to dismiss for lack of subject matter, pursuant to RCFC 1 2 (b )(1 ), for claims relating to tax year 2000 for J. Cardenas & Sons Farming, Inc., and tax ye a rs 1997, 1999, 2001, and 2002 for Rio Vista Corporation, is granted. 2. Defendant's partial motion to dismiss for failure to state a claim, under RCFC 1 2 (b )( 6 ), tax year 1993 for Rio Vista Corporation, is granted. 3. The parties shall file a Joint Status Report by July 30, 2009, proposing a course of f u rth e r proceedings for the remaining tax years in the Third Amended Complaint ­ Cardenas f o r tax years 1993, 1995, and 1998 and Rio Vista for tax years 1996 and 2003. s/ Christine O.C. Miller ________________________________ C h r is tin e Odell Cook Miller Judge 12

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?