Simon v. Muschell et al

Filing 51

OPINION AND ORDER GRANTING 47 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM by Defendant United States of America. The Clerk is directed to dismiss the United States as a party in this case. Signed by Senior Judge James T Moody on 2/24/2015. (lhc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
JAMES A. SIMON, et al.,

)
)
Plaintiffs,
)
)
v.
)
)
SPECIAL AGENT PAUL MUSCHELL, )
et al.,
)
)
)
Defendants.
)

No. 1:09 CV 301

OPINION AND ORDER
On November 6, 2007, Internal Revenue Service (“IRS”) agents searched the
home of plaintiffs James Simon, Denise Simon,1 and R.S. (“plaintiffs”). As a result of this
search, plaintiffs filed two suits. First, in suit 1:09-cv-00301, plaintiffs sued several IRS
special agents alleging that the agents had violated the Fourth and Fifth Amendments
to the United States Constitution when they executed the search warrant.
(1:09-cv-00301, DE # 1.) Plaintiffs then sued the United States in case 1:10-cv-00058,
alleging claims for intentional infliction of emotional distress, negligent infliction of
emotional distress, negligence, trespass, invasion of privacy, and wrongful death, all
under the Federal Tort Claims Act (“FTCA”). (1:10-cv-00058, DE # 1.)
In October 2010, the court consolidated these two cases into case 1:09-cv-00301
and stayed the case pending the outcome of plaintiff James Simon’s criminal trial.
(1:09-cv-00301, DE # 40.) In 2014, the court lifted the stay in order for the United States

1

Mrs. Simon has since deceased, and her estate is now a plaintiff in this case.

to file a motion to dismiss plaintiffs’ claims against it. (1:09-cv-00301, DE # 45.) After the
stay was lifted, the United States2 filed the present motion to dismiss. (1:09-cv-00301,
DE # 47.) Plaintiffs have filed a response (1:09-cv-00301, DE # 48), and defendant has
filed a reply (1:09-cv-00301, DE # 49). For the following reasons, defendant’s motion is
granted.
I.

Facts3
As early as January 2007, the IRS began investigating plaintiff James Simon for

violations of the Internal Revenue Code. (1:10-cv-00058, DE # 1 at ¶ 15.) In November
2007, IRS agent Paul Muschell signed a probable cause affidavit in an effort to obtain a
search warrant to search plaintiffs’ home. (Id. at ¶¶ 17-18.) On November 2, 2007 the
United States District Court for the Northern District of Indiana reviewed the affidavit
submitted by Muschell and issued a search warrant to search plaintiffs’ home. (Id. at
¶ 20.)
According to the allegations in plaintiffs’ complaint, which the court accepts as
true for purposes of ruling on defendant’s motion, defendant, through Muschell,
intentionally or negligently made false and/or misleading statements in the affidavit in
support of the request for a search warrant of plaintiffs’ home. (Id. at ¶ 21.) These false

2

Although there are several defendants in this case, the United States is the only
defendant to have filed a motion to dismiss. The court will therefore refer to the United
States as “defendant” for the remainder of this opinion.
3

The following facts are taken from plaintiffs’ complaint in 1:10-cv-58, unless
otherwise noted.
2

and/or misleading statements misled the judge that reviewed the request for a search
warrant. (Id. at ¶ 22.) The affidavit was negligently reviewed and/or approved by
Muschell and other IRS agents prior to being submitted to the court. (Id. at ¶ 23.)
Several government tax offices failed to review the affidavit for completeness and
accuracy. (Id. at ¶ 25.) Defendant improperly, unlawfully, and negligently tendered the
request for a search warrant, including Muschell’s affidavit, when it knew or should
have known there was no probable cause to support a search warrant. (Id. at ¶ 26.)
Additionally, defendant failed to follow several internal IRS regulations during the
acquisition and execution of the search warrant for plaintiffs’ home. (Id. at ¶ 27.)
On November 6, 2007, defendant, through Muschell and other IRS agents and
employees, searched plaintiffs’ residence pursuant to the search warrant. (Id. at ¶ 29.)
At the initiation of the search warrant, only R.S. and Denise Simon were at the Simon
residence. (Id. at ¶ 31.) Plaintiff James Simon was not in the United States at that time.
(Id.) Despite the fact that neither James Simon nor Denise Simon owned a gun, several
IRS agents executing the search warrant wore bulletproof vests and had their guns
visible during the search of plaintiffs’ home. (Id. at ¶¶ 32-33.) The IRS agents executing
the search warrant violated IRS procedures by putting R.S., who was ten years old at
the time, in harm’s way. (Id. at ¶ 34.)
During the search, IRS agent Linda Porter made comments to Denise Simon
implying violations of law not addressed in the affidavit or warrant, causing emotional
stress and harm to Mrs. Simon. (Id. at ¶ 35.) On November 9, 2007, three days after the

3

execution of the search warrant, Denise Simon committed suicide. (Id. at ¶ 38.) Several
hours before her death, Denise Simon wrote a letter expressing her concern regarding
the armed IRS agents coming into her home, her concern for her children’s safety after
the search, and her distrust of the federal government. (Id. at ¶ 39.) As a result of
defendant’s investigation into the Simons and the subsequent search of the Simons’
home, plaintiff filed the current suit against defendant, alleging intentional infliction of
emotional distress, negligent infliction of emotional distress, negligence in obtaining the
search warrant, negligence in executing the search warrant, trespass, invasion of
privacy, and wrongful death. (1:10-cv-00058, DE # 1 at 12-18.) Defendant has now
moved to dismiss plaintiffs’ complaint. (1:09-cv-00301, DE # 47.)
Before moving on to addressing the arguments made in the parties’ briefs, it is
important to note what took place in plaintiff James Simon’s criminal trial.4 In
3:10-cr-00056, a grand jury returned a twenty-three count indictment against James
Simon, as a result of the IRS’s investigation into the Simons’ finances. (3:10-cr-00056,
DE # 1.) At trial, a jury convicted Mr. Simon of 19 out of 23 counts, including four
counts of filing false federal income tax returns. (3:10-cr-00056, DE # 1; DE # 128;
DE # 160.) As a result of his convictions, Mr. Simon was sentenced to 72 months

4

“Taking judicial notice of matters of public record need not convert a motion to
dismiss into a motion for summary judgment.” Ennenga v. Starns, 677 F.3d 766, 773 (7th Cir.
2012). “A court may take judicial notice of facts that are (1) not subject to reasonable
dispute and (2) either generally known within the territorial jurisdiction or capable of
accurate and ready determination through sources whose accuracy cannot be questioned.”
Id. at 773-74.
4

imprisonment, and was also ordered to make restitution to several entities, including
the IRS. (3:10-cr-00056, DE # 160.) Mr. Simon appealed his conviction, and the United
States Court of Appeals for the Seventh Circuit affirmed the judgment of the district
court. (3:10-cr-00056, DE # 189); United States v. Simon, 727 F.3d 682, 700 (7th Cir. 2013).
II.

Legal Standard
Defendant has moved to dismiss plaintiffs’ claims under RULE 12(b)(6) of the

FEDERAL RULES OF CIVIL PROCEDURE for failure to state a claim upon which relief may be
granted. RULE 8 of the FEDERAL RULES OF CIVIL PROCEDURE sets forth the pleading
standard for complaints filed in federal court; specifically, that rule requires that a
complaint contain “a short and plain statement of the claim showing that the pleader is
entitled to relief.” FED. R. CIV. P. 8. “The RULE reflects a liberal notice pleading regime,
which is intended to focus litigation on the merits of a claim rather than on
technicalities that might keep plaintiffs out of court.” Brooks v. Ross, 578 F.3d 574, 580
(7th Cir. 2009) (internal quotation marks omitted). “While the federal pleading standard
is quite forgiving . . . ‘the complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.’” Ray v. City of Chicago, 629 F.3d
660, 662-63 (7th Cir. 2011) (quoting Bonte v. U.S. Bank, N.A., 624 F.3d 461, 463 (7th Cir.
2010)); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007).
For purposes of deciding defendant’s RULE 12(b)(6) motion, the court accepts
plaintiffs’ factual allegations as true. Pardus, 551 U.S. at 93.

5

III.

Analysis5
In its motion to dismiss, defendant argues that the dismissal of plaintiffs’ FTCA

claims against it is appropriate in this case. “The FTCA permits suits against the United
States for personal injuries caused by the wrongful acts of federal employees acting
within the scope of their employment under circumstances in which a private person
would be liable to the plaintiff.” Reynolds v. United States, 549 F.3d 1108, 1112 (7th Cir.
2008). “The FTCA provides both a jurisdictional grant and a waiver of sovereign
immunity[.]” Clark v. United States, 326 F.3d 911, 912-13 (7th Cir. 2003) “Although the
FTCA’s waiver of sovereign immunity is broad, Congress has excepted certain claims
from its purview,” Reynolds, 549 F.3d at 1112 , including “[a]ny claim arising in respect
of the assessment or collection of any tax . . . .” 28 U.S.C. § 2680(c).
Defendant, therefore, argues that plaintiffs’ FTCA claims must be dismissed
under 28 U.S.C. § 2680(c), which “exempts the government from tort liability for
tax-related claims.”Clark, 326 F.3d at 912; (DE # 46 at 3.) Defendant argues that
plaintiffs’ claims in this case – negligent infliction of emotional distress, negligence,
trespass, invasion of privacy, and wrongful death – all arise out of the assessment or
collection of plaintiffs’ taxes. (DE # 46 at 8-9.)
In response, plaintiffs argue that § 2680(c) does not apply in this case because the
investigation into plaintiffs’ finances and the IRS agents’ search of plaintiffs’ home was

5

From this point forward, any docket citation will refer to case number
1:09-cv-00301, unless otherwise noted.
6

“purely criminal in nature, and, on its face, devoid of intent or effort to ultimately
assess or collect taxes from Mr. Simon.” (DE # 48 at 6.) Plaintiffs go on to argue that
§ 2680(c) does not apply in this case because the search of plaintiffs’ home violated
internal IRS policies, and therefore, was not for the purpose of assessing or collecting
taxes. (Id. at 7.) Finally, plaintiffs argue that the tort claims brought by R.S. and the
Estate of Denise Simon do not arise from the collection or assessment of any taxes.
(Id. at 8.)
In Clark v. United States, the Seventh Circuit discussed, but ultimately did not
determine, the breadth of § 2680(c)’s exemption for tax-related claims:
This court has not yet addressed the scope of § 2680(c)’s tax-related
exemption in a published opinion, but the Fifth Circuit has stated, “[I]n
enacting Section 2680(c) of the FTCA, Congress intended to insulate the IRS
from tort liability stemming from any of its revenue-raising activities.”
Capozzoli v. Tracey, 663 F.2d 654, 657 (5th Cir. 1981). And, other circuits have
held that a wide range of activity by the IRS “arises in respect of” its
collection or assessment of taxes, see Jones v. United States, 16 F.3d 979, 980–81
(8th Cir. 1994) (§ 2680(c) applies to overzealous IRS investigation into
plaintiff’s tax practices); Murray v. United States, 686 F.2d 1320, 1323–24 (8th
Cir. 1982) (tort claim based on IRS’s refusal to allow redemption of property
seized for non-payment of taxes was claim “arising in respect of the
collection of a tax” under § 2680(c)); Am. Assoc. of Commodity Traders v. Dep’t
of Treasury, 598 F.2d 1233, 1235 (1st Cir. 1979) (suit seeking damages for
denial of tax-exempt status falls within § 2680(c)), including the payment of
tax refunds, see Aetna Cas. & Sur. Co. v. United States, 71 F.3d 475, 477–78 (2d
Cir. 1995). See also Kosak v. United States, 465 U.S. 848, 854, 104 S.Ct. 1519, 79
L.Ed.2d 860 (1984) (reading phrase “arising in respect of” in § 2680(c) to
mean any claim “arising out of” the detention of goods).
326 F.3d at 913. The court ultimately did not resolve the plaintiff’s claim on § 2680(c)
grounds. Id. at 914.

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As the parties recognize in their respective briefs, other courts of appeals have
also addressed the extent of § 2680(c)’s reach. (DE # 46 at 7; DE # 48 at 5.) For example,
in Jones v. United States, a case cited by defendant, the plaintiffs contended that during
the course of an IRS criminal investigation,
the IRS (1) failed to use reasonable efforts to obtain reliable and accurate
information; (2) failed to use less drastic remedies in aid of the investigation;
(3) improperly relied upon inaccurate and false information; and (4) failed to
comply with provisions of the internal revenue laws, regulations and the
internal revenue manual.
16 F.3d at 980. The United States argued that § 2680(c) barred the plaintiffs’ action, but
the plaintiffs argued that it did not because “several years [had] passed without any
criminal prosecution or any attempted assessment or collection of taxes or penalties.”
Id.
The Eighth Circuit first noted that “the investigation [of the plaintiffs] was in a
criminal status, as opposed to being an administrative or civil matter[,]” but that fact
made “no difference to the outcome of [the] dispute.” Id. The court went on to conclude
that § 2680(c) barred the plaintiffs’ claims: “The United States retains its sovereign
immunity under section 2680(c) from claims arising in respect to tax assessment or
collection even when, as here, the claims encompass torts and constitutional violations.”
Id. at 980-81; see also Perkins v. United States, 55 F.3d 910, 913-16 (4th Cir. 1995) (“The rule
therefore emerges that the exemption applies to protect illegal acts or torts committed
by IRS agents only when they are related, however remotely, to a bona fide effort to
assess or collect a particular tax debt.”); Capozzoli, 663 F.2d at 658 (“Congress retained

8

the United States’ sovereign immunity for any claim in respect of the assessment or
collection of taxes. This language is broad enough to encompass any activities of an IRS
agent even remotely related to his or her official duties. . . . Section 2680(c) has been
interpreted broadly by the courts to preclude suits for damages arising out of the
allegedly tortious activities of IRS agents when those activities were in any way related
to the agents’ official duties.”).
In contrast, plaintiffs direct the court to several cases that hold that § 2680(c) is
not applicable to the torts committed by IRS agents during the course of attempting to
impose criminal penalties and not assessing or collecting taxes. Wright v. United States,
719 F.2d 1032, 1035-36 (9th Cir. 1983) (malicious prosecution claim against IRS agent not
barred by § 2680(c)), abrogation recognized in Gasho v. United States, 39 F.3d 1420, 1435
(9th Cir. 1994); Kaufmann v. United States, 840 F. Supp. 641, 658 (E.D. Wis. 1993) (holding
that § 2680(c) did not bar claim against defendants because “the alleged acts of the
United States and its agents were undertaken to complete a criminal prosecution under
18 U.S.C. § 1956(a)(1)(B) & (a)(3)(B) for money laundering and not primarily for the
collection of taxes.”(emphasis in original)).
Several Courts of Appeals have discussed, in detail, the line between claims
arising out of the collection or assessment of taxes (and therefore barred by § 2680(c))
and claims that are not be barred by § 2680(c). For example, in Capozzoli v. Tracey, the
Fifth Circuit explained:
Where an IRS employee commits a tort wholly unrelated to his or her official
duties of assessing or collecting taxes, the sovereign immunity retained
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under 28 U.S.C. s 2680(c) would not apply. Of course, a tort committed under
circumstances wholly unrelated to an IRS agent’s official duties may also be
so far beyond the agent’s scope of employment as to preclude vicarious
liability on the part of the United States. See, e. g., Bettis v. United States, 635
F.2d 1144, 1146-1147 (5th Cir. 1981) (State laws of respondeat superior define
the United States’ liability under the FTCA for torts of its employees.).
However, it is conceivable that an IRS agent could engage in tortious conduct
sufficiently removed from the agent’s official duties of assessing or collecting
taxes as to be beyond the scope of Section 2680(c), and at the same time
sufficiently within the scope of his employment as to give rise to an action
against the United States.
663 F.2d at 658.
In Perkins v. United States, the Fourth Circuit expanded on the Fifth Circuit’s
earlier analysis:
[The Capozzoli] decision leaves a window open for a claimant to show that
her claim falls within the FTCA but without the exception; that is, that an IRS
agent harmed her by an act done within his scope of employment generally,
but not within the narrower scope of his tax assessment and collection duties.
The burden is on a claimant to establish that an IRS agent’s actions were
within that window. . . .
Whether a case falls within the window is determined by whether a specific
tax collection is at issue or whether the more general purposes of the agency
are being pursued. In cases in which a specific tax debt of a specific taxpayer
is at issue, the exemption immunizes the IRS from suit for activities that are
even remotely related to the tax assessment or collection. For instance, in
Capozzoli, an IRS agent was supposed to be inspecting a vacant lot to
determine the extent of damage that was the basis of a casualty loss claim by
a taxpayer, but was instead photographing the taxpayer’s nearby residence
while she was within it wearing only a nightgown. 663 F.2d 654. The court
held that the photography was remotely but sufficiently related to the
agent’s assessment of her taxes to fall within the section 2680(c) exception,
even though the casualty loss claim did not involve the residence and even
if the photography constituted an unauthorized tortious invasion of privacy.
See also Murray, 686 F.2d 1320; Broadway Open Air Theatre, 208 F.2d 257.

10

In contrast, where a specific tax assessment or collection effort is not served
by the agent’s activities, section 2680(c) may not immunize the IRS. . . .
55 F.3d at 915-16. The Fourth Circuit went on to discuss a case in which § 2680(c) was
not found to be a bar to the plaintiff’s claims id. at 915; see also Johnson v. Sawyer, 980
F.2d 1490 (5th Cir. 1992) (claim alleging IRS agents issued press release regarding
plaintiff’s tax conviction despite agreement not to do so was “not ‘sufficiently related’
to assessing or collecting taxes to be immune from responsibility under § 2680(c).”),
vacated on rehearing in 4 F.3d 369 (1993), before reaching its ultimate conclusion on the
reach of § 2680(c):
The rule therefore emerges that the exemption applies to protect illegal acts
or torts committed by IRS agents only when they are related, however
remotely, to a bona fide effort to assess or collect a particular tax debt. The
governing inquiry is not how egregious the agent’s actions were, but
whether the actions were related to a particular tax assessment or collection
effort or merely served the general purposes of the IRS (or no legitimate
purpose at all).
Perkins, 55 F.3d at 915-16 (emphasis in original).
In this case, the court has no trouble concluding that § 2680(c) bars plaintiffs’
claims. Although it is undisputed that the primary focus of defendant’s investigation
into plaintiffs was criminal in nature (DE # 49 at 2), several aspects of the IRS’s
investigation into plaintiffs’ taxes reveal that the investigation and search of plaintiffs’
home, which gave rise to plaintiffs’ current claims, arose out of “the assessment or
collection of” plaintiffs’ taxes. 28 U.S.C. § 2680(c).
First, as plaintiffs’ complaint and the affidavit in support of the search warrant
issued for plaintiffs’ home make clear, the search of plaintiffs’ home and the
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investigation leading up to the search were conducted because the IRS believed that the
Simons were evading taxes that plaintiffs owed to the United States government.6
(1:10-cv-00058, DE # 1 at ¶ 15; DE # 46-2 at 8-9, 18-19.) Thus, the court concludes that
the investigation into plaintiffs’ taxes and the subsequent search of plaintiffs’ home
“clearly were in furtherance of the IRS’s duty to investigate, assess and attempt to
collect outstanding federal tax obligations.” Rayes v. United States, 967 F. Supp. 1162,
1165 (D. Ariz. 1997); see also Barrow v. United States, No. 97-1830, 1998 WL 791849, at *1
(6th Cir. Nov. 4. 1998) (§ 2680(c) barred plaintiff’s claim that IRS conducted negligent
criminal investigation into his taxes because the “calculation of [plaintiff’s] taxes falls
squarely within the official duties of an IRS agent.”); Jones, 16 F.3d at 980-81; Capozzoli,
663 F.2d at 658 (“Congress retained the United States’ sovereign immunity for any claim
in respect of the assessment or collection of taxes. This language is broad enough to
encompass any activities of an IRS agent even remotely related to his or her official
duties. . . . Section 2680(c) has been interpreted broadly by the courts to preclude suits
for damages arising out of the allegedly tortious activities of IRS agents when those
activities were in any way related to the agents’ official duties.”); Stoffels v. United States,
No. 10–cv–00840, 2011 WL 4018000, at *2 (D. Colo. Sept. 9, 2011) (concluding that claims
arising out of tax investigation that included execution of search warrant and

6

“Documents attached to a motion to dismiss are considered part of the pleadings
if they are referred to in the plaintiff’s complaint and are central to his claim.” Burke v. 401
N. Wabash Venture, LLC, 714 F.3d 501, 505 (7th Cir. 2013) (citations and quotations omitted).
Plaintiffs reference the search warrant in their complaint, and it is central to their claims.
12

subsequent prosecution were barred by § 2680(c)); Pace v. Platt, No. 3:01–CV–471, 2002
WL 32098709, at *4 (N.D. Fla. Sept. 10, 2002) (“Plaintiff’s amended complaint raises
claims that arise out of an IRS criminal tax investigation and his subsequent
prosecution. Such claims ‘arise in respect to the assessment or collection of any
tax . . . .’” (quoting 28 U.S.C.A. § 2680(c)).
Furthermore, the investigation into plaintiffs’ taxes, the search of plaintiffs’
home, and the subsequent prosecution of plaintiff James Simon show that this entire
process involved the assessment and collection of plaintiffs’ taxes. As noted earlier, as a
result of the investigation and search of plaintiffs’ home, plaintiff James Simon was
convicted of 19 federal offenses, ranging from filing a false federal income tax return to
fraud involving federal financial aid. (3:10-cr-00056, DE # 160.) The sentence plaintiff
James Simon received at trial was based, in part, on the amount of unpaid taxes that
Simon owed to the IRS. See U.S. SENTENCING GUIDELINES MANUAL § 2T4.1 (2014); (see
also 3:10-cr-00056, DE # 148 at 23; DE # 174 at 41). Additionally, as part of his sentence,
plaintiff James Simon was ordered to make restitution to the IRS for $886,901.69
(3:10-cr-00056, DE # 160 at 7), which is the amount of taxes that Mr. Simon failed to pay
to the IRS (see 3:10-cr-00056; DE # 156 at 12-14.)
Finally, the only appellate case that plaintiffs cite in support of their argument
that their claims are not barred by § 2680(c) is distinguishable. In Wright v. United States,
the plaintiff filed suit after he was indicted for making false statements on income tax
returns. 719 F.2d at 1033. The indictments against plaintiff were dismissed, after which

13

the government abandoned its prosecution of the plaintiff. Id. The plaintiff then filed
suit under the FTCA against several defendants, including the United States, alleging
that the indictments against him had amounted to a malicious prosecution. Id.
The government argued that the plaintiff’s claims were barred by § 2680(c). Id. at
1035. The court noted that it would not “strain precedent” to hold that the actions of the
IRS agent involved in prosecuting plaintiff fell within § 2680(c)’s reach, but ultimately
concluded that § 2680(c) did not bar the plaintiff’s claims because 28 U.S.C. § 2680(h)
allows for malicious prosecution claims under the FTCA in certain circumstances:
In providing that malicious prosecution claims may be brought under the
FTCA when they are based on acts of “investigative or law enforcement
officers,” 28 U.S.C. § 2680(h), Congress appears to have authorized the kind
of claim [the plaintiff] has asserted here. While the legislative history is not
very illuminating, neither it nor the language of the proviso suggests that
malicious tax prosecutions are to be treated differently from other malicious
prosecutions. We need not hold, however, that the 1974 amendments
partially repealed § 2680(c). Our duty in construing the tax collection and
assessment exception of § 2680(h) and the later law enforcement proviso of
§ 2680(c) is to reconcile them and give meaning to both if we are able. This
goal can be accomplished by construing the tax assessment and collection
exception not to apply to [the IRS agent’s] actions in carrying out the criminal
prosecution against plaintiff, insofar as those acts are alleged to constitute
malicious prosecution. We so construe § 2680(c).
Id. at 1035-36 (emphasis added).
As defendant correctly points out in its reply brief, however, none of the
plaintiffs have alleged a malicious prosecution claim against the United States. (DE # 49
at 5.) And, had plaintiff James Simon, the only plaintiff that was prosecuted, brought a
malicious prosecution claim against the United States, it would have failed given that
Mr. Simon was convicted at trial. See Reynolds v. United States, 549 F.3d at 1114-15 (“In
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order to prevail on a claim of malicious prosecution in Indiana, a plaintiff must
establish that the defendant, acting with malice and without probable cause, instituted
or caused to be instituted a prosecution that terminated in the plaintiff’s favor.”(emphasis
added)). Wright, therefore, is distinguishable from the case at hand.
In sum, the court concludes that the investigation into plaintiffs’ taxes and the
search of plaintiffs’ home arose out of “the assessment or collection of” the Simons’
taxes. 28 U.S.C. § 2680(c). Plaintiffs, however, make two additional arguments as to why
their case should not be dismissed. The court will address each in turn.
First, plaintiffs argue that the search of their home violated the IRS’s internal
policies, and therefore, the search was not for the purpose of assessing or collecting
taxes. (DE # 48 at 7.) The problem with this argument, as defendant correctly points out
in its reply brief (DE # 49 at 5), is that plaintiffs fail to cite any authority indicating that
courts should consider whether the IRS violated its own internal policies when
considering whether a claim arises out of “the assessment or collection of” taxes, as set
out in 28 U.S.C. § 2680(c). In fact, in the only cases the court could find on this issue, the
courts have rejected this same argument. Perkins, 55 F.3d at 914 (“[W]e hold that the fact
that [the IRS agent’s] activities may have violated various state and federal regulations
does not mean that they were outside the scope of his official tax assessment and
collection duties.”); see also Barrow, 1998 WL 791849, at *1 (“Furthermore, § 2680(c) bars
[plaintiff’s] suit, even though the IRS agents were conducting a criminal investigation

15

and even if the IRS agents did not conduct the investigation according to IRS
regulations.”). Plaintiffs’ argument on this point therefore fails.
Plaintiffs next argue that the tort claims of the Estate of Denise Simon and R.S.,
the minor child of James and Denise Simon, are not barred by § 2680(c) because
“nothing in the Complaint or record to show how the Defendant’s actions would be
considered assessment or collection of tax regarding” the Estate of Denise Simon and
R.S.. (DE # 48 at 8.) Once again, however, plaintiffs fail to cite any authority for their
position, and there are several cases that have addressed and rejected this same
argument. Perkins, 55 F.3d at 913 (“The opinions interpreting section 2680(c) clarify that
the exemption applies not only to actions by persons against whom the tax collection
efforts are directed, but also to actions by third parties injured by tax collection
efforts. . . . Thus, section 2680(c) bars Mrs. Perkins’s action if her injuries were caused by
[the IRS agent’s] tax collection efforts even though neither she nor her husband were the
subject taxpayer.”); see also Murray, 686 F.2d at 1323-24 (§ 2680(c) “clearly applies to
taxpayers and third parties alike.”); Broadway Open Air Theatre v. United States, 208 F.2d
257, 259 (4th Cir. 1953) (rejecting plaintiffs’ argument that § 2680(c) “does not apply
when the controversy is over wrongful conversion and is unrelated to any alleged tax
liability between the parties to the suit.”).
In this case, the allegations in plaintiffs’ complaint make clear that each of the
claims asserted by the Estate of Denise Simon and R.S. arise out of the IRS’s tax
investigation into James and Denise Simon, the IRS’s subsequent acquisition of a search

16

warrant to search the Simons’ home, and the actual search of the Simons’ home.
(1:10-cv-00058, DE # 1.) These claims therefore arise out of the “the assessment or
collection of” the Simons’ taxes, 28 U.S.C. § 2680(c), and the fact that neither the Estate
of Denise Simon nor R.S. were the subject of this investigation does not save these
claims from § 2680(c). See, e.g., Perkins, 55 F.3d at 913. Plaintiffs’ argument on this point
therefore fails.
IV.

Request to Amend Complaint
Plaintiffs also request an opportunity to amend their complaint. (DE # 48 at 9.)

Plaintiffs assert that they would use this opportunity to include additional allegations:
Any such filing will not be futile as it would give the Plaintiffs a chance to
expand on Special Agent Muschell’s concession in his Affidavit that there
were other facts that were “known to law enforcement with regard to this
investigation” but were not included in his Affidavit. Exhibit B to
Defendant’s Memorandum, p. 2 of Affidavit. It would also give the Plaintiffs
a chance to add details to what Agent Porter said during the search that was
outside an assessment or collection of tax context.
(Id.) In response, defendant argues that plaintiffs’ request should be denied because
plaintiffs have not explained “how a complaint that was amended in this manner
would withstand a motion to dismiss based on 28 U.S.C. § 2680(c).” (DE # 49 at 7-8.)
Plaintiffs request to amend their complaint under FED. R. CIV. P. 15(a)(2), which
states, in part: “[A] party may amend its pleading only with the opposing party’s
written consent or the court’s leave. The court should freely give leave when justice so
requires.” FED. R. CIV. P. 15(a)(2) “Leave to amend need not be granted, however, if it is
clear that any amendment would be futile.” Bogie v. Rosenberg, 705 F.3d 603, 608 (7th

17

Cir. 2013). The Seventh Circuit has “often held that a district court may deny leave to
amend when the plaintiff does not submit a proposed amended complaint, at least
where the substance of the proposed amendment is not clear.” Parker v. Scheck
Mechanical Corp., 772 F.3d 502, 506 (7th Cir. 2014). “A court need not decide in the
abstract whether a proposed amendment would be sufficient or futile[,]” but “[a]
request for leave to amend may be acceptable so long as it puts the opposing party on
notice of the content of the amendment[.]” Id. (citations and quotations omitted).
In this case, plaintiffs have not included a proposed amended complaint with
their request to amend their complaint. (See DE # 48.) Thus, the court is left with the
brief description, quoted above (DE # 48 at 9), of how plaintiffs’ plan to amend their
complaint, as the only indication of how an amended complaint would differ from the
original complaint. Plaintiffs’ two proposed changes – expanding on Special Agent
Muschell’s statement in his affidavit that there were other facts known to law
enforcement that were not included in the affidavit (see Affidavit p. 2, attached to
DE # 46)7 and including allegations regarding statements Agent Porter made during the
execution of the search warrant – do not give the court any indication as to how the
amended complaint would survive a motion to dismiss pursuant to § 2680(c). Plaintiffs
have not provided the court with either the substance of these additional allegations or

7

The statement in the affidavit to which plaintiffs are referring reads as follows:
“This affidavit contains only those facts necessary to establish probable cause for the
issuance of a search warrant. It does not contain all facts known to law enforcement with
regard to this investigation.” (See Affidavit p. 2, attached to DE # 46.)
18

any sort of argument as to how these allegations would prevent the amended complaint
from being dismissed under § 2680(c). Without additional information, the court cannot
determine whether an amended complaint would be “sufficient or futile[,]” and
plaintiffs’ request to file an amended complaint will therefore be denied. Scheck
Mechanical Corp., 772 F.3d at 506.
V.

Conclusion
For the foregoing reasons, defendant the United States of America’s motion to

dismiss plaintiffs James Simon, the Estate of Denise Simon, and R.S.’s complaint
(DE # 47) is GRANTED. The Clerk is directed to dismiss the United States as a party in
this case.
SO ORDERED.

Date: February 24, 2015
s/James T. Moody
JUDGE JAMES T. MOODY
UNITED STATES DISTRICT COURT