Kerger et al v. United States of America et al
Opinion and Order. Defendant's Motion to Dismiss (Related doc # 13 ) is granted. The Court's dismissal is without prejudice and subject to refiling a Complaint properly supported with facts over which this Court may exercise subject matter jurisdiction. Judge Christopher A. Boyko on 3/9/2017. (H,CM)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
RICHARD M. KERGER, ET AL.,
UNITED STATES OF AMERICA,
JUDGE CHRISTOPHER A. BOYKO
OPINION AND ORDER
CHRISTOPHER A. BOYKO, J:
This matter is before the Court on Defendant United States of America’s Motion
to Dismiss (ECF # 13). For the following reasons, the Court grants Defendant’s Motion.
According to their Complaint, husband and wife Richard and Jessica Kerger
purchased a home at 1972 Potomac Drive, Toledo, Ohio in 1993. Defendant United
States through the Internal Revenue Service (“IRS”) has attempted to collect on back
taxes owed that were discharged in bankruptcy on September 23, 2010. The IRS sent
notice to Plaintiffs informing them their taxes were not subject to the bankruptcy
discharge and instituted levying actions on assests of the Kergers sporadically.
Sometime in 2014 the Kergers had to sell the home due to mold. Through their
attorney, they contacted the IRS for an accounting of all the liabilities and liens on the
property. They were informed that they owed no money for the years in question, that
many of the liens were beginning to drop off and those remaining would drop off. When
the Kergers’ attorney contacted an IRS appellate officer, that officer confirmed there
were no tax liabilities for the years in question. The Kergers sold their home at auction,
obtaining approximately $34,000 more than they paid for the property. On September
10, 2015, Jessica Kerger received certified mailings from the IRS indicating the back
taxes were still owed on the property despite what they had previously been told. When
they inquired further, the IRS represented that when the bankruptcy was filed, the IRS
zeroed out Plaintiffs’ joint liability making the Kergers individually liable for the debt
Plaintiffs ask for Declaratory Judgment that they owe no back taxes to the IRS or
move alternatively to equitably estop Defendant from collecting on the alleged liabilities.
Plaintiffs further request injunctive relief.
Defendant United States of America seeks dismissal of Plaintiffs’ Declaratory
Judgment claim, contending that the Court lacks subject matter jurisdiction over the
claim and the Court cannot grant Injunctive Relief against the Government under the
Anti-Injunction Act. Plaintiffs subsequently withdrew their claim for injunctive relief
and the Court will proceed solely on Plaintiffs’ claim for Declaratory Relief.
According to Defendant, Plaintiffs’ claim for Declaratory Judgment is barred by
the Declaratory Judgment Act which prohibits suits for Declaratory Judgment with
respect to federal taxes. Defendant acknowledges that a claim seeking a determination
whether a tax debt was discharged may not be barred by the DJA however, Plaintiffs’
Complaint does not seek such a determination. At paragraph 3 of the Complaint,
Plaintiffs allege “there is no issue as to the discharge raised in this Complaint” and on
that basis asks the Court “to retain jurisdiction and not refer this case to the Bankruptcy
Court.” Defendant contends there is a dispute over whether some of Plaintiffs’ tax
liabilities were discharged in bankruptcy but because Plaintiffs have chosen not to
proceed on the discharge claim their Declaratory Judgment claim must be dismissed per
In the alternative, Defendant moves under Fed. R. Civ. P. 12(b)(6) for dismissal
for failure to state a claim. According to Defendant, Plaintiffs’ Complaint utterly fails to
assert sufficient facts to render their claims plausible under the Federal Rules of Civil
Procedure. The Complaint fails to allege the nature of the alleged tax liabilities at issue,
the dates they were incurred, the amounts at issue, whether Plaintiffs filed returns, the
dates of the returns or any other information on the alleged tax liabilities.
In their Opposition, Plaintiffs clarify that while the language of paragraph 3 of the
Complaint “confused matters” they are in fact seeking a determination that their tax
liabilities were discharged in the Chapter 7 bankruptcy. Therefore, the DJA tax
exception does not apply as discharge determinations are within the Court’s subject
Plaintiffs further contend they did not need to specify the particular tax debts at
issue because they are moving for a determination that the bankruptcy discharge did in
fact dismiss all tax obligations.
LAW AND ANALYSIS
Standard of Review
Fed. R. Civ. P. 12(b)(1) states in pertinent part:
Every defense to a claim for relief in any pleading must be asserted in the
responsive pleading if one is required. But a party may assert the following
defenses by motion: (1) lack of subject-matter jurisdiction...
When challenged on a motion to dismiss, it is plaintiff’s burden to prove the existence
of subject matter jurisdiction. Rogers v. Stratton Indus., 798 F.2d 913, 915 (6th Cir.1986).
Such challenges are brought by two different methods: (1) facial attacks and (2) factual
attacks. See, e.g., United States v. Ritchie, 15 F.3d 592, 598 (6th Cir.1994).
“A facial attack is a challenge to the sufficiency of the pleading itself. On such a
motion, the court must take the material allegations of the petition as true and construed in the
light most favorable to the nonmoving party.” Walters v. Leavitt, 376 F.Supp.2d 746, 752
(E.D. Mich 2005), citing Scheuer v. Rhodes, 416 U.S. 232, 235-37 (1974). “A factual attack,
on the other hand, is not a challenge to the sufficiency of the pleading’s allegations, but a
challenge to the factual existence of subject matter jurisdiction. On such a motion, no
presumptive truthfulness applies to the factual allegations, . . . and the court is free to weigh
the evidence and satisfy itself as to the existence of its power to hear the case.” Walters at
752. Defendants’ Motion presents an attack on the sufficiency of the allegations and is
therefore, a facial attack.
Plaintiffs’ Complaint seeks a determination by the Court on Plaintiffs’ federal tax
liabilities and the Court agrees with Defendant that the DJA prohibits just such a
determination. The DJA applies to actual controversies “ except with respect to Federal
taxes...” 28 U.S.C. § 2201(a).
The courts within this jurisdiction that have considered this
section have held “this exemption for disputes relating to federal taxes “acts to deprive district
courts of jurisdiction where § 2201 otherwise would apply, the only exception being those
cases in which suit is brought by a party other than the taxpayer whose taxes lie at the heart of
the controversy.” Hart v. United States, 291 F. Supp. 2d 635, 643 (N.D. Ohio 2003), citing
Hill v. I.R.S., 991 F.2d 795, 1993 WL 94001 at *1 (6th Cir.1993). Plaintiffs’ Complaint
expressly requests “declaratory judgment that the Kergers do not owe any amounts for back
taxes.” (Complaint at pg. 11). When read in conjunction with paragraph three of their
Complaint expressly stating that “there is no issue as to the discharge raised in this
Complaint,” it is clear Plaintiffs want a determination on federal taxes. This is precisely the
kind of declaratory relief the DJA prohibits. By disclaiming any relation to the bankruptcy
discharge, Plaintiffs Complaint asserts no basis for this Court to exercise jurisdiction over
their claims. “Absent the application of an exception to the statutory prohibition, the
Declaratory Judgment Act plainly bars the district court from declaring that [plaintiffs] owe
no additional federal taxes.”
Sterling Consulting Corp. v. United States, 245 F.3d 1161, 1166 (10th Cir. 2001).
Therefore, the Court holds it lacks jurisdiction to determine Plaintiffs’ federal tax liability.
Even were the Court to construe Plaintiffs’ Complaint to enter a declaratory judgment
holding Plaintiffs’ tax obligations discharged in bankruptcy, the Complaint fails to allege
sufficient facts supporting such a claim. Although plainly contradicted by the paragraph 3 of
the Complaint and in its Prayer for Relief, the Complaint at Count One does state “Plaintiffs
seek a declaratory judgment confirming the discharge order of the Bankruptcy Court,
especially as it relates to the Kergers’ taxes at issue.” It continues “alternatively, it is the
position of the Plaintiffs that the conduct of Defendant’s agents, subsequent to the bankruptcy
discharge, was grossly negligent, if not willfully so, that the doctrine of equitable estoppel
should prevent Defendant from collecting against the Plaintiffs for any of the tax obligations
at issue.” However, the Complaint is entirely devoid of facts concerning the nature of the
taxes owed, the years owed and when the taxes were assessed. It fails to state how much is
owed and seeks a broad declaration that no back taxes are owed.
In deciding a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the court must accept
as true all of the factual allegations contained in the complaint. Erickson v. Pardus, 551 U.S.
89, 93-94 (2007). The court need not, however, accept conclusions of law as true:
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a
“short and plain statement of the claim showing that the pleader is entitled to
relief.” As the Court held in [Bell Atlantic v.] Twombly, 550 U.S. 544, 127 S.
Ct. 1955 [(2007)], the pleading standard Rule 8 announces does not require
“detailed factual allegations,” but it demands more than an unadorned,
the-Defendant-unlawfully-harmed-me accusation. Id. at 555. A pleading that
offers “labels and conclusions” or “a formulaic recitation of the elements of a
cause of action will not do.” Id. at 555. Nor does a complaint suffice if it
tenders “naked assertion[s]” devoid of “further factual enhancement.” Id. at
To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to “state a claim to relief that is plausible on its face.”
Id. at 570. A claim has facial plausibility when the Plaintiff pleads factual
content that allows the court to draw the reasonable inference that the
Defendant is liable for the misconduct alleged. Id. at 556. The plausibility
standard is not akin to a “probability requirement,” but it asks for more than a
sheer possibility that a Defendant has acted unlawfully. Id. Where a
complaint pleads facts that are “merely consistent with” a Defendant’s liability,
it “stops short of the line between possibility and plausibility of ‘entitlement to
relief.’” Id. at 557.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
According to the Sixth Circuit, the standard described in Twombly and Iqbal “obliges
a pleader to amplify a claim with some factual allegations in those contexts where such
amplification is needed to render the claim plausible.” Weisbarth v. Geauga Park Dist., 499
F.3d 538, 541 (6th Cir. 2007) (quoting Iqbal v. Hasty, 490 F.3d 143, 157-58 (2nd Cir. 2007)).
That is, “Iqbal interpreted Twombly to require more concrete allegations only in those
instances in which the complaint, on its face, does not otherwise set forth a plausible claim for
relief.” Weisbarth, 499 F.3d at 542. A complaint should be dismissed when it fails to allege
“enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at
Without some basic factual information on the nature of the tax liabilities, the years at
issue, the amounts in contention and additional information on whether the debts were listed
as such in the Bankruptcy case such that the Bankruptcy Court considered the tax debts when
it entered its discharge order, Plaintiffs’ Complaint fails to allege sufficient facts rendering its
claim plausible. Therefore, even if this Court were to determine it had jurisdiction, the
Complaint fails to state a claim upon which relief may be granted.
Therefore, for the foregoing reasons, the Court dismisses Plaintiffs’ Complaint.
However, the Court’s dismissal is without prejudice and subject to refiling a Complaint
properly supported with facts over which this Court may exercise subject matter jurisdiction.1
IT IS SO ORDERED.
Plaintiffs are also cautioned that under 28 U.S.C. § 157(b)(2)(I), complaints
seeking debt discharge determinations are core proceedings subject to bankruptcy
court referral. See In re Swain, 437 B.R. 549, 555 (Bankr. E.D. Mich. 2010)
“[c]ore proceedings include, but are not limited to—... (I) determinations as to the
dischargeability of particular debts.” Thus, any future attempts to plead around
bankruptcy court referral may indeed be fruitless.
s/ Christopher A. Boyko
CHRISTOPHER A. BOYKO
United States District Judge
Dated: March 9, 2017
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