Presley et al v. United States

Filing 20

ORDER granting 9 United States' Motion to Dismiss. The Clerk of the Court shall close this case. Motions Terminated: 9 MOTION to Dismiss 5 Amended Complaint, filed by United States. Signed by Judge Robin L. Rosenberg on 1/4/2017. (asl) NOTICE: If there are sealed documents in this case, they may be unsealed after 1 year or as directed by Court Order, unless they have been designated to be permanently sealed. See Local Rule 5.4 and Administrative Order 2014-69.

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF FLORIDA
WEST PALM BEACH DIVISION

MICHAEL PRESLEY et al.,
Petitioners,
v.
UNITED STATES OF AMERICA,
Respondent.

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Case No. 9:16-cv-81735-RLR

ORDER GRANTING UNITED STATES’ MOTION TO DISMISS
The United States has moved to dismiss a petition to quash brought by Michael and Cynthia
Presley, Presley Law and Associates, P.A., and BMP Family Limited Partnership (“Petitioners”). See
ECF No. 1 (petition to quash), No. 5 (amended petition to quash), No. 9 (United States’ motion to
dismiss). The dispute arises from three summonses issued by the Internal Revenue Service to Bank of
America seeking records related to Petitioners as part of examinations into their 2014 tax liabilities.
Petitioners oppose Bank of America producing records regarding the client trust and escrow accounts
of Presley Law and Associates, P.A. (“Presley Law”). They claim that, under Florida law, the clients
of Presley Law, whose financial information may be reflected in the records requested by the IRS,
have a reasonable expectation of privacy in those records.1 The United States argues that federal law
governs these proceedings, that the summonses comply with federal law, and that Florida law, to the
extent it is inconsistent with federal law, is preempted. See ECF No. 9. This Court agrees with the
United States and grants its motion to dismiss.

1

Petitioners initially appeared to rely on the Fourth Amendment and the attorney-client privilege, as
well. See ECF No. 1. However, they have since abandoned those arguments. See ECF No. 14
(Petitioners’ response to United States’ motion to dismiss).

Though Petitioners base their argument exclusively on an expectation of privacy, they
concede that the summonses satisfy the Fourth Amendment. This is so for two reasons. First, the
summonses are narrowly drawn and comply with the standards set out in United States v. Powell, 379
U.S. 48 (1964).2 For IRS summonses, that is all the Fourth Amendment requires. See United States v.
McAnlis, 721 F.2d 334, 337 (11th Cir. 1983) (“As long as the IRS complies with the Powell
requirements, it will not violate the summoned party’s [F]ourth [A]mendment rights.”). Second, even
if the summonses had not satisfied Powell, neither Petitioners nor the clients of Presley Law have
standing to raise a Fourth Amendment argument because they lack a reasonable expectation of
privacy in records maintained by a third-party bank. See United States v. Miller, 425 U.S. 435, 440
(1976).
Petitioners note that Florida law, unlike federal law, does recognize a reasonable expectation
of privacy in records held by a third-party bank,3 but state law is inapposite in these proceedings. The
IRS, a federal agency, issued the three summonses pursuant to a federal statute, 26 U.S.C. § 7602.
Under the Supremacy Clause of the U.S. Constitution, federal law determines the enforceability of
the summonses “notwithstanding” any provisions in the “Constitution or Laws of any State.” United

2

In Powell, the Supreme Court held that IRS summonses are presumptively enforceable where: 1)
“the investigation will be conducted pursuant to a legitimate purpose,” 2) “the inquiry may be
relevant to the purpose,” 3) “the information sought is not already within the [IRS’s] possession,” and
4) “the administrative steps required by the [Internal Revenue] Code have been followed.” 379 U.S.
at 57–58. Since then, an additional requirement—the lack of a Justice Department referral—has been
added. See 26 U.S.C. § 7602(d)(1). The United States submitted a declaration from an IRS revenue
agent attesting that all of these requirements are satisfied. See ECF No. 9-1.
3

The Florida Constitution provides that “[e]very natural person has the right to be let alone and free
from governmental intrusion into the person’s private life except as otherwise provided herein.” Fla.
Const. art. I, § 23. This includes, unlike under federal law, a “legitimate expectation of privacy in
financial institution records.” Winfield v. Div. of Pari-Mutuel Wagering, Dep’t of Bus. Regulation,
477 So. 2d 544, 548 (Fla. 1985).

2

States Const. art. VI, cl. 2. Thus, if “there is a conflict [between federal law and a state Constitution],
federal law prevails under the Supremacy Clause.” United States v. Fleet, 498 F.3d 1225, 1227 (11th
Cir. 2007). Because the Florida Constitution creates requirements not present under the Fourth
Amendment, it is preempted. See In re Letter of Request for Judicial Assistance from Tribunal Civil
de Port-au-Prince, Republic of Haiti, 669 F. Supp. 403, 407 (S.D. Fla. 1987) (rejecting contention
that the Florida Constitution’s privacy rights are applicable to subpoenas issued pursuant to federal
law because “[t]o the extent that state law is inconsistent, it is preempted”).4
In sum, the IRS has issued three valid and enforceable summonses, and Petitioners’ sole
argument for quashing them fails. As a result, it is ORDERED that the United States’ motion to
dismiss (ECF No. 9) is GRANTED. The petition to quash (ECF No. 1) and amended petition to
quash (ECF No. 5) are hereby DISMISSED WITH PREJUDICE. The Clerk of the Court shall
CLOSE THIS CASE.
IT IS SO ORDERED this 4th day of January, 2017.
______________________
Robin Rosenberg
United States District Judge

4

Petitioners mistakenly rely on Katz v. United States, 389 U.S. 347 (1967), in an attempt to get
around the preemption issue. In Katz, the Supreme Court endorsed states’ ability to create protections
for their citizens that go beyond what the Fourth Amendment guarantees. Id. at 350–51. This is
limited, however, to circumstances where state law supplies the rule of decision. In cases such as this
one that arise under a federal statute, federal law governs, In re Int’l Horizons, Inc., 689 F.2d 996,
1003 (11th Cir. 1982), and inconsistent state law yields under the Supremacy Clause, Fleet, 498 F.3d
at 1227.

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