Gust v. US Airways, Inc.

Filing 15

ORDER granting 2 Motion to Dismiss and this action is hereby DISMISSED with prejudice; and Plaintiff's Objections to the Magistrate Judge's Memorandum and Recommendation are hereby REJECTED. Signed by District Judge Martin Reidinger on 12/16/11. (Pro se litigant served by US Mail.)(nll)

THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 1:11cv133

THOMAS E. GUST,
Plaintiff,
vs.
US AIRWAYS and US AIRWAYS
PAYROLL/GARNISHMENTS SERVICES,
Defendants.

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ORDER

THIS MATTER is before the Court on the Defendant US Airways, Inc.’s
Motion to Dismiss [Doc. 2].
Pursuant to 28 U.S.C. § 636(b) and the Standing Orders of Designation
of this Court, United States Magistrate Judge Dennis L. Howell was
designated to consider the motion and to submit recommendations for its
disposition.

On September 6, 2011, the Magistrate Judge filed a

Memorandum and Recommendation in which he recommended granting the
motion to dismiss. [Doc. 12]. The Plaintiff timely filed objections to that
recommendation. [Doc. 13].

PROCEDURAL HISTORY
On April 29, 2011, the Plaintiff, proceeding pro se, initiated an action
against the Defendants in state court. [Doc. 1-2]. In the Complaint, which is
not artfully pled, the Plaintiff claims that the Defendants unlawfully complied
with a tax levy and garnished the Plaintiff’s wages in order to so comply. The
Defendants, he claims, should have known that his wages were exempt from
garnishment and that the Notice of Levy they received from the Internal
Revenue Service (IRS) was invalid. [Id.]. The Defendants timely removed the
action to this Court on June 2, 2011 on the basis of both federal question and
diversity jurisdiction. [Doc. 1].
The Defendants then moved to dismiss this action for failure to state
claims on which relief may be granted. [Doc. 2]. On June 27, 2011, the
Plaintiff was instructed by Notice of the burden he carried in responding to the
motion and was provided ample time within which to do so. [Doc. 7]. In the
meantime, the Plaintiff moved to remand the case, a motion denied on August
30, 2011. [Doc. 6; Doc. 11].
As noted, the Plaintiff has timely objected to the Magistrate Judge’s
recommendation that the Motion to Dismiss be granted and the case
dismissed.

2

STANDARD OF REVIEW
A district court reviews specific objections to a Memorandum and
Recommendation under a de novo standard. 28 U.S.C. §636(b). "Parties
filing objections must specifically identify those findings objected to." Battle
v. United States Parole Commission, 834 F.2d 419, 421 (5th Cir.1987),
overruled on other grounds Douglass v. United Ervs. Auto. Ass’n, 79 F.3d
1415 (5 th Cir. 1996). If a party makes only general objections, de novo review
is not required.

Wells v. Shriners Hospital, 109 F.3d 198, 200 (4th Cir.

1997)(boilerplate objections will not avoid the consequences of failing to
object altogether).

“Section 636(b)(1) does not countenance a form of

generalized objection to cover all issues addressed by the magistrate judge;
it contemplates that a party’s objection to a magistrate judge’s report be
specific and particularized, as the statute directs the district court to review
only those portions of the report or specified proposed findings or
recommendations to which objection is made.” United States v. Midgette, 478
F.3d 616, 621 (4 th Cir. 2007), cert. denied 551 U.S. 1157, 127 S.Ct. 3032, 168
L.Ed.2d 749 (2007) (emphasis in original). Likewise, merely reiterating the
same arguments made in the pleading submitted to the Magistrate Judge
does not warrant de novo review. Id.; Veney v. Astrue, 539 F.Supp.2d 841,
846 (W.D.Va. 2008). “Allowing a litigant to obtain de novo review of her entire
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case by merely reformatting an earlier brief as an objection ‘mak[es] the initial
reference to the magistrate useless.’” Id. In order “to preserve for appeal an
issue in a magistrate judge’s report, a party must object to the finding or
recommendation on that issue with sufficient specificity so as reasonably to
alert the district court of the true ground for the objection.” Midgette, 478 F.3d
at 622.
DISCUSSION
The Magistrate Judge first recommended the dismissal of US Airways
Payroll/Garnishment Services as a defendant. [Doc. 12 at 4]. The Plaintiff
filed no objection to that recommendation and the Court having reviewed the
same, finds it is correct. The claims against US Airways Payroll/Garnishment
Services will, therefore, be dismissed.
The Magistrate Judge next noted that 26 U.S.C. §6332(e) provides that
any employer which complies with a Notice of Levy issued by the IRS by
garnishing wages is immune from liability to the employee for its conduct in
complying with that levy. [Id. at 5]. The Plaintiff concedes that this is, in fact,
the law and states that he expected the motion “as sure as the sun comes up
in the morning.” [Doc. 13 at 1].

His claim, he argues, is based on the

negligence of US Airways because it complied with an invalid tax levy issued
by the IRS and garnished exempt wages. [Id.]. “While it may be true that the
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claimed levy would have taken effect even if Defendant(s) had done
everything right, that is irrelevant because the levy itself is not the core
issue[.]” [Id. at 5]. According to the Plaintiff’s argument, then, an employer
has an obligation to test the validity of a tax levy it receives from the IRS as
well as to challenge the status of the wages being garnished.
26 U.S.C. §6332 provides in pertinent part:
[A]ny person in possession of ... property ... subject to levy upon
which a levy has been made shall, upon demand of the [IRS]
surrender such property[.]
...
Any person in possession of ... property ... subject to levy upon
which a levy has been made who, upon demand by the [IRS]
surrenders such property ... to the [IRS] ... shall be discharged
from any obligation or liability to the delinquent taxpayer ... with
respect to such property or rights to property arising from such
surrender or payment.
26 U.S.C. §6332(a) & (e).
Under this statute, any entity in possession of property subject to the
IRS levy which refuses to honor it is subject to being held personally liable to
the IRS. 26 U.S.C. §6332(d)(1). Moreover, “the validity of the levy and
competing claims to the ownership of the funds are not valid reasons for
refusing to honor a levy.” United States v. Moskowitz, Passman & Edelman,
603 F.3d 162, 166 (2 nd Cir. 2010) (quoting United States v. Daccarett, 6 F.3d
37, 59 (2 nd Cir. 1993), cert. denied sub nom Creaciones Viviana Ltda. v.
United States, 510 U.S. 1191, 114 S.Ct. 1294, 127 L.Ed.2d 648 (1994)).
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Indeed, the Plaintiff has acknowledged in the Complaint that his relief lies in
bringing an action against the IRS for wrongful levy, an action which he claims
to have brought in the District of Columbia. [Doc. 1-2 at 1]. See Daccarett,
6 F.3d at 59 (“Since the validity of the levy and competing claims to the
ownership of the funds are not valid reasons for refusing to honor a levy,” the
taxpayer’s only relief lay in an action for wrongful levy against the IRS.).
The Plaintiff’s Complaint is based on an allegation that US Airways, as
an employer bound to comply with the levy, was negligent because it failed to
ensure the levy was valid and paid exempt funds to the IRS. The Plaintiff’s
“broad allegation that [US Airways] was negligent in executing the lev[y] does
not change” its entitlement to immunity. Clavizzao v. United States, 706
F.Supp.2d 342, 349-50 (S.D.N.Y. 2009). US Airways had no duty to ensure
that the Plaintiff had received process or even that the levy was valid. Id.
“Once the IRS served a Notice of Levy on [US Airways], [it] had a legal
obligation under §6332(a) to turn over to the IRS [the wages]; [it] could not
challenge the validity of the levy.” Moore v. General Motors Pension Plans,
91 F.3d 848, 951 (7 th Cir. 1996). The fact that the Plaintiff may challenge the
validity of the levy in no manner altered the Defendant’s obligation to comply
with it. Id. Indeed, US Airways had no standing to legally challenge its validity
and thus, it “cannot be held liable for having failed to do what it could not
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legally do.” Id.
The Plaintiff’s conclusory allegations of negligence, moreover, are
insufficient to state claims.

Clavizzao, 706 F.Supp.2d at 350.

“Section

6332(e) has been ‘consistently interpreted to be valid’ and ‘unambiguously ...
protect[s] parties who comply with an IRS notice of levy from facing liability.’”
Id. (quoting Dietz v. Trustco Bank, 572 F.Supp.2d 296, 298 (N.D.N.Y. 2008));
McNeil v. Whipple, 720 F.Supp.2d 73, 76 (D.D.C. 2010). The “statute is not
limited to levies which survive challenges to their validity.” Moore, 91 F.3d at
851; Rice v. Norfolk Southern R.R., 2001 WL 965502 (W.D.N.C. 2001). “This
broad grant of immunity applies not only to federal law claims, but also
preempts any state law claims,” such as the negligence claim the Plaintiff
attempts to state here. Brunwasser v. Black, 2011 W L 284126 **3 (W.D.Pa.
2011).
To the extent that the Plaintiff claims the Defendant failed to honor his
wages as exempt, he fares no better. “[C]ourts have held ‘that an employer
cannot be made liable for failing to honor an employee’s W-4 form when it has
been directed to do so [to so ignore] by the Internal Revenue Service.’” Purk
v. United States, 747 F.Supp. 1243, 1250 (S.D.Oh. 1989) (quoting Benz v.
United Parcel Service, 815 F.2d 75 (6 th Cir. 1987)); Bellospirito v. Byrne, 2009
WL 302989 (C.D.Cal. 2009). For the same reasons that an employer must
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honor an IRS tax levy, it must also comply with an IRS demand for the
garnishment of wages despite the taxpayer’s designation of those wages as
exempt.
The Court therefore finds that US Airways is immune from liability in
connection with its conduct in honoring the IRS levy and garnishing the
Plaintiff’s wages.1
ORDER
IT IS, THEREFORE, ORDERED that the Plaintiff’s Objections to the
Magistrate Judge’s Memorandum and Recommendation are hereby
REJECTED.
IT IS FURTHER ORDERED that the Defendant US Airways, Inc.’s
Motion to Dismiss [Doc. 2] is hereby GRANTED and this action is hereby
DISMISSED with prejudice.

Signed: December 16, 2011

1

The Court has reviewed the case of United States v. Triangle Oil, 277 F.3d 1251
(10th Cir.2002), cited by the Plaintiff in support of his position. The case is factually
inapposite, involving the pre-levy claims of two parties to a joint venture against each
other. Indeed, the Court applied the immunity of §6332(e) to protect the entity which
complied with the IRS tax levy. Id. at 1259. It went on to note that such immunity had
nothing to do with state law claims between the parties to the venture for conduct which
occurred prior to the actual surrender of the proceeds levied by the IRS. Id. Such is not
the case at hand.
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