CEARLEY v. USA

Filing 17

REPORTED OPINION and ORDER granting 14 Motion to Dismiss - Rule 12(b)(1) and (6). The Clerk is directed to enter judgment. Signed by Judge Thomas C. Wheeler. (dls) Copy to parties.

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No. 14-3827

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FILED

(Filed: December 8, 2014)

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JACKIE RAY CEARLEY,

U.S. COURT OF
FEDERALCLAIMS

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Jurisdictional Requirements for a Tax
Refund Suit; Failure to State a Claim
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* Upon Which Relief Can Be Granted;
Lack of Subject Maner Jurisdiction;
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Money-Mandating Source; prison
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* Litigation Reform Act

Plaintiff,

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THE LINITED STATES,

Defendant.
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Jackie Ray Cearley, Polkton, North Carolina pro se plaintiff
.
,

Miranda Bureau, Attomey of Record, with whom were Tamara w.
Ashford, Assistant
Attorney General, David L pincus., chief, court of Federal claims Section
, and, G.
Robson stewart, Assistant chief, Tax Division, U.s. Department
of Justice, washington,
D.C., for Defendant.

OPINIONAND ORDER
WHEELER, Judge.
This case is one of three complaints that pro se plaintiff Jackie
Ray cearley filed
in this court in 2014. In the preseni case, Mr. iearley requests
$20,024 as a tax refund
and $ 10'000 for the Govemment's alleged violations of certain
raws and executive
orders' Pl.'s compl. at 6, Dkt. No. l. Thi Government moved to
dismiss Mr. cearley,s
complaint for failure to state a claim upon which relief
can be granted and for lack of
subject matter jurisdiction. see Def.'s Mot. to Dismiss pt.'s
co]npt. at t, ntt. No. t+
('Def.'s Mot. to Dismiss"). For the reasons set forth below,
the Govemment,s motion to
dismiss is GRANTED.
Factual Background

On May 5,2014, Mr. Cearley, a North Carolina state prisoner,
filed a complaint
against the united states seeking s20,024 as a tax refund
and sio,ooo for aileeed

violations of certain laws and executive orders. Pl.'s Compl. at 6. In his complaint, Mr.
Cearley claims that on or about February 2014, he submitted a trust fund account
statement to the Internal Revenue Service ("IRS"), requesting a tax refund for 520,024.
Pl.'s compl. tf 7. Further, Mr. cearley alleges that he "established a contractual nexus"
with the united states when he submitted certain tax forms - 1040, 1096, 1099-oID, and
1040-V to the IRS and when an IRS agent, Mr. Darryl F. Krebs responded on or about
March 11, 2014. Id. fllJ 8-9, Ex. c. Plaintiff turther alleges that on or about April 20,
2014, he sent an "Affidvait of Notice, Declaration, and Demand with Fair Notice and
warning" to Mr. Krebs, to which Mr. Krebs failed to respond. pl.'s compl. 10.
fl
Finally, Mr. Cearley claims he is entitled to $10,000 because the United States violated
Executive orders 6073, 6102,6111,6260, a senate Report (93-549), and the National
Banking Emergency Relief Act of 1933, pub. L. 73-r,-48 Stat. 1, Mar.9, 1933. pr.'s
Compl. at 6.

on september 5, 2014, the Govemment filed a motion to dismiss Mr. cearley,s
complaint under Rules 12(bxt) and (6) of the Rules of the court of Federal
claims

("RCFC') for failure to state a claim for relief and for lack of subject matter jurisdiction.
Def.'s Mot. to Dismiss at r.. Specifically, the Govemment contends that
M;. cearley,s
complaint fails to state a claim for relief because it is not plausible on
its face as it is
"based on a frivolous tax defier theory." ld. at 4. Further, the
court does not have
subject matter jurisdiction over Mr. cearley's complaint because
Mr. cearief cannot
meet the jurisdictional requirements for a tax refundsuit and he
has failed to identi$, a
money-mandating source which would provide the court with jurisdiction.
See id. at 5_g.
Finally, the Govemment argues that the case should be dismissed
under the prison
Litigation Reform Act ("pLRA"), 2g u.s.c. l9l54, because it is ,.frivolous,
$
fail[s] to
state a claim for relief, and,/or request[s] a form of relief
that prainly is outside this
Court's jurisdiction." Id. at 8-9.
Discussion

I.

Jurisdiction Under Rule l2(bX6)

In deciding a Rule l2(b)(6) motion for failure to state a claim for
relief, ,.the court
must accept as true the complaint's undisputed factual allegations
and should construe
ti:lt*,|,
to.the plaintiff." CambridgJv. united states, sJs e.:o
T"*.f":lTl]. rhe complaint,
i1T
Ge!.
r,o*.u".,
utr.e.E-, piausibly
],?j]:"llr^t a showing of entitlement to
$L,zoos2.
suggesting
relief." Kam_Almaz v. t]nited States, 6g1
A"s.ptun.. I*.
:#"t;91, Pu"t J*o, t:', 2012).( quotins."quirern*1rn**8"
s83 F.3d 849, 853 (Fed. Cir. 2009)). Thi,
utGg.O A.t, Gurt U.
enough to raise a right to relief above the speculative
level, on the assu-mption thai all the

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allegations in the complaint are true." Id. (quoting Bell Atl. Corp., v. Twombly, 550 U.S'
s44, sss (2007)).
The Government argues that Plaintiff s claim is "not plausible on its face because
it is based on a frivolous tax defier theory." Def.'s Mot. to Dismiss at 4. According to
the Govemment, individuals who make claims based on this theory subscribe to the belief
that "they are not liable for the tax obligations of the 'straw man,' an entity purportedly
created by the United States govemment in place of individual taxpayers." Id. Such
individuals send frivolous documents to the IRS to "cash in on a purported secret
account." Id.
Here, even accepting as true the Form 1099-OID and other documents Mr. Cearley
attached to his complaint, Mr. Cearley has "not pled sufficient facts to support a
reasonable inference" that he is owed a tax refund. See Williams v. United States, 112
Fed. Cl. 67,78 (2013). These documents are missing basic details such as the amount of
wages Mr. Cearley earned for the year he is claiming a tax refund. Mr. Cearley does not
attach a W-2 form, Form 1099-R, or any other such form to show that he is entitled to
$20,024 as a tax refund. See Pl.'s Compl., Ex. C. (letter from IRS requesting Mr. Cearley
to submit certain forms to demonstrate he is entitled to the $20,024 he claims as a tax
refund). Thus, the Plaintiff has failed to allege the facts necessary to show he is entitled
to relief and accordingly, his claim is not plausible on its face. See Williams, 112 Fed.
cl. at 78. The court finds that Mr. cearley has failed to state a claim upon which relief
can be granted and his complaint must be dismissed.

II.

Subject Matter Jurisdiction

Even if Plaintiffs complaint could plausibly be construed to state a claim for
relief, the court does not have subject matter jurisdiction over Mr. cearley's claims. The
Tucker Act, 28 u.s.c. $ 1491, grants exclusive jurisdiction to this court over claims for
money damages against the United states that exceed $10,000. Jan's Helicopter Serv..
Inc' v. FAA, 525 F.3d 1299, 1304 (Fed. cir. 2008). However, the Tucker Act "itself does
not create a substantive cause of action." Id. at 1306. Thus, to invoke the court's
jurisdiction, a plaintiff must assert a claim "under a separate money-mandating
constitutional provision, statute, or regulation, the violation of which supports a claim for
damages against the united states." James v. caldera, 159 F.3d 573,590 (Fed. cir.
1998). Though pro se plaintiffs "are held to a less stringent standard than those of
litigants represented by counsel," the court cannot excuse a complaint's failures. Haines
v. Kerner, 404 u.s. 519, 520 (1972). Thus, even a pro se plaintiff must still
"affirmatively and distinctly" plead federal court jurisdiction in the complaint. See
Norton v. Lamey,266 u.s. 5ll, 515 (1925). The party seeking to invokJthe court's

jurisdiction bears the burden of proof. Bailey v. United States, 52 Fed. Cl. 105,

108

(2002).

A.

Plaintiff Cannot Meet the Requirements for

a Tax Refund Suit

The Court has concurrent jurisdiction with the United States district couns to
entertain tax refund suits. See 28 u.s.c. $ l3a6(a)(l). To maintain a tax refund suit in
this court, the full payment rule applies. See Ledford v. United states , 2g7 F .3d 137g,
1382 (Fed. cir.2002). Thus, before a refund suit can be brought, plaintiffmust pay the
full amount of the tax. Id. Any tax refund claim must also comply with regulations
issued by the IRS. See chi. Milwaukee corp. v. united states, 40 F.3d 3n,;74 (Fed.
cir. 199-4). _one such regulation requires the refund claim to ,,detail each claimed ground
for a refund, and provide sufficient facts to apprise the IRS of its basis." ld. at 374-75
(citing Treas. Reg. g 301.6402-2(b)(t)).

. heHere, Mr. cearley did not attach any document to his complaint to demonstrate
that
meets the jurisdictional

requiremenis for a tax refund suit. plaintiff attaches a
letter from the IRS (dated March 11,2014), but nothing in the letter
shows Mr. cearley
paid any tax or provides any information as to what Mr. cearley,s
tax withholdings were
the-y9T heis claiming ."_ryid See pl.'s compl., Ex. c. Mr. cearley
ut.o utta"t
lor
u
1
Form 1099-oID, but like the IRS letter, this fo.m do.. not demonstrat"
"s
it ut uny tax was
paid or provide any details regarding why Mr. cearley is
entitled to a refund. see id., Ex.
Refund claims which lack essential financial information n...r*.y
,Ja.termine
overpayment do not have jurisdiction in the court. S_99
Kehmeier v. United states, 95
Fed. cl. 442, 444-45 (2010).(praintin craimJi+i,zst
in- *itr,r,"ta tu,*.rffitu..a u
zero on his Form 1040 for his_ total wages, salaries, tips, etc.).
Indeed, Mr. tearley
provided even less information than the plaintiff
in retrmiier, as he did noi .u.n attach a
Form 1040 to his complaint. The documents Mr. Garley
attaches to his compiaint do
not provide sufficient detail and facts to quali$, as a validiax
..tu-. Id ut ++i-lquotlng
United states v. Moore,627 F.2d 930, g35 (7th cir. r9g0)) (there
must be ,,an honest and
reasonable intent to supply,the information required
by'tire tax.oa.;1. tli. b.urt.y
cannot meet the jurisdictionar requirements for a tax
refund suit in the court.

A.

B.

Mr' Cearley also cites to various statutes and executive orders
that he alleges were
violated bv the united States...For r!:9o|.t to have jurisdiction,
the ptui'tiir--r'rt urt.g.
a violation of a source that "can fairly be interpreied as
mandatin!
to.
damages sustained as a result of the breach of the
"o,np.nruiion
duties [it] impose[si,, niri.i,. u"it.a
States, 402 F.3d 1167, 1173.(Fed. Cir. 2005). ,.The_absence
of a money_mun;#il
source is fatal to the [C]oun,s jurisdiction undei the Tucker
Act.,, Id.

None of the statutes Mr. Cearley cited in his complaint provides the Court with
jurisdiction over his complaint. First, the National Emergency Banking Relief Act, 48
Stat. l, deals with the solvency of banks and is not a money-mandating source requiring
the Government to pay damages. Second, the Buck Act of 1940, 4 U.S.C. $$ 105-110,
that Mr. Cearley references "gives the State the power to tax income eamed in a federal
area." Jefferson Cnty. v. Acker,527 U.S. 423,456 (1999). Like the National Emergency
Banking Relief Act, it does not require payment by the United States. Finally, none of
the executive orders or the senate report that Mr. Cearley alleges were violated by the
United States are money-mandating sources that give the Court jurisdiction. Executive
Order 6073 concerned the reopening ofbanks in 1933, Executive Orders 6102 and6260
concemed the hoarding of and exporting of gotd in the United States, and Executive
Order 6111 dealt with foreign exchange transactions. Finally, senate reports can never
provide a basis for the Court's jurisdiction because such documents are not a
constitutional provision, law, or regulation within the meaning of the Tucker Act. See 28
U.S.C. $ 1a91(a)(l). The Court does not have jurisdiction over Mr. Cearley's claim
either as a tax refund suit or under a money-mandating source.

III.

The Prison Litigation Reform Act

Finally, the PLRA,28 U.S.C. g 19l5,A', provides an additional ground by which
the court can dismiss Mr. cearley's complaint. The PLRA requires courts to screen
prisoners' complaints as soon as practicable and dismiss the complaint if it is ,.frivolous,
malicious, or fails to state a claim upon which relief may be granted." 28 U.S.C. $
1915A. Mr. Cearley failed to state a claim for relief and his case is outside the Court's
subject matter jurisdiction. Under the PLRA, this circumstance constitutes sufficient
grounds for the Court to dismiss Mr. Cearley's complaint.
Conclusion

For the foregoing reasons, the Govemment's motion to dismiss plaintiffs
complaint for failure to state a claim upon which relief can be granted and for lack of
subject matter jurisdiction is GRANTED. The court directs the clerk to dismiss
Plaintiffls complaint.
IT IS SO ORDERED.

lP*,'*O ItnL
THOMAS C. WHEELER
Judge