Gengler v. Internal Revenue Service et al

Filing 23

ORDER signed by Judge J P Stadtmueller on 12/29/10 as follows: denying 4 plaintiff's Motion to Remand to State Court; granting 8 United States' Motion to Dismiss; denying as moot 2 Internal Revenue Service's Motion for Extension of Time to Answer or Respond to Complaint; denying as moot 10 plaintiff's Motion for Extension of Time to respond to motion to dismiss; denying as moot 14 plaintiff's Motion to Strike defendant's reply to plaintiff's objection to motion to dismiss; denying as moot 15 plaintiff's Motion to take judicial notice of law in the federal statutes of subtitle A; DISMISSING plaintiff's complaint. (cc: plaintiff, all counsel) (nm)

G e n g l e r v. Internal Revenue Service et al

D o c . 23

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN
____________________________________________ M IC H A E L L. GENGLER, P l a i n t if f , v. IN T E R N A L REVENUE SERVICE and DEBRA K. HURST, D e fe n d a n ts . ____________________________________________ Case No. 10-CV-689

ORDER
O n July 22, 2010, plaintiff Michael Gengler ("Gengler") filed a complaint in the W a u k e s h a County Circuit Court seeking a temporary restraining order, a preliminary in ju n c tio n , and money damages for the sum of amounts shown on three notices of fe d e ra l tax lien filed against his property. Gengler claims the notices were forged a n d without legal foundation. The notices apparently reflect the unpaid balance of fe d e ra l income tax liabilities assessed against Gengler for 2003, 2004 and 2005, as w e ll as the unpaid civil penalties assessed him under 26 U.S.C. § 6702 for filing frivo lo u s tax returns for 2001, 2003, 2004, and 2005. (United States' Mem. in Supp. o f Mot. to Dismiss 1). On August 13, 2010, on behalf of the named defendants, the United States re m o ve d the action under 28 U.S.C. § 1444, which permits the United States to re m o ve any action brought against it in state court or federal district court under 28 U .S .C . § 2410. The United States also cited 28 U.S.C. § 1442(a)(1) as a basis for re m o va l. Gengler then filed a motion to remand the case to state court. (Docket #4).

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H e argues that the case was improperly removed because the complaint presents o n ly state law claims and no federal law claims, and, therefore, this court has no ju ris d ic tio n . The United States has subsequently filed a motion to dismiss plaintiff's c la im s . (Docket #8). D IS C U S S I O N I. P r o p e r Party Defendant A s an initial matter, the court notes that the Internal Revenue Service ("IRS") a n d Debra Hurst, the defendants named by the plaintiff in his complaint, are not p ro p e r parties. First, an executive department of the United States or one of its a g e n c ie s may only be sued in its own name if the authority to be sued has been e xp re s s ly conferred by Congress. Blackmar v. Guerre, 342 U.S. 512, 514-15, 72 S .C t. 410, 411-12, 96 L.Ed. 534 (1952). "[C]ongress has not constituted the

T re a s u ry Department or any of its divisions or bureaus as a body corporate and has n o t authorized either or any of them to be sued eo nominee." Castleberry v. Alcohol, T o b a c c o and Firearms Division of the Treasury Department of the United States, et a l., 530 F.2d 672, 673 n. 3 (5th Cir. 1976); see Deleeuq v. IRS, et al., 681 F. Supp. 4 0 2 , 404 (E.D. Mich. 1987). Where taxpayers are authorized to sue on matters a ris in g out of IRS actions, the United States is the proper party. Devries v. Internal R e v e n u e Service, 359 F.Supp.2d 988, 991-92 (E.D.Ca. 2005). Plaintiff also improperly named Debra Hurst as a defendant. Plaintiff likely did s o because her name appears in the signature block of the notices of federal tax lie n . Yet, "a suit against IRS employees in their official capacities is essentially a suit -2-

a g a in s t the United States." Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985) (c itin g Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 688 (1949)). T h e instant action arises out of a dispute as to the validity of the federal tax liens on p la in tiff's property and relates to actions allegedly taken by the IRS and its e m p lo ye e s . Therefore, this action may be maintained, if at all, against the United S tate s only. Neither the IRS nor Debra Hurst are proper defendants. Consequently, th e court shall proceed as if the complaint named the United States as a proper d e fe n d a n t. II. R e m o va l and Remand T h e plaintiff now moves for remand of the case to state court. He appears to a r g u e that removal was not proper because the court does not have federal subject m a tte r jurisdiction. His main contention is that his pleading simply alleges a state la w claim and, thus, the "well-pleaded complaint" rule, under which "a defendant may n o t remove a case to federal court unless the plaintiff's complaint establishes that the case `arises under' federal law," Franchise Tax Bd. of Cal. v. Construction L a b o re rs Vacation Trust for Southern Cal., 463 U.S. 1, 10, 103 S.Ct. 2841 (1983) (e m p h a s is deleted), allows him to avoid removal merely by relying exclusively on the s ta te law claim. (Mot. to Remand 4). However, the plaintiff's arguments are unavailing because he has overlooked th e specific removal statutes the defendant relied upon as its basis for removal. The d e fe n d a n t's notice of removal cited two applicable statutory provisions as the basis fo r removal ­ 28 U.S.C. § 1442(a)(1) and 28 U.S.C. § 1444. Federal statute 28 -3-

U .S .C . § 1442(a)(1) allows removal of cases in which the United States is a d e fe n d a n t and is being sued for any act "under color of such office."1 This statute a llo w s suits against the federal government to be removed "`despite the non-federal c a s t of the complaint'" and reflects a congressional policy that the federal g o ve rn m e n t requires the protection of a federal forum. Kircher v. Putnam Funds T ru s t, 547 U.S. 633, 644 n. 12, 126 S.Ct. 2145, 2156 (2006) (quoting Jefferson C o u n ty v. Acker, 527 U.S. 423, 431, 119 S.Ct. 2069 (1999)). The government's fe d e ra l defense "need only be colorable to assure the federal court that it has ju ris d ic tio n to adjudicate the case." Id. Thus, § 1442(a) is an exception to the "wellp le a d e d complaint" rule. The government's principal defense is that the tax liens are va lid and Gengler has failed to state a claim for relief. The court finds this to be a c o lo r a b le defense and, therefore, this court has jurisdiction to adjudicate this case a n d removal is proper. Removal is also likely proper under 28 U.S.C. § 1444 which expressly allows fo r removal of cases brought under the quiet-title act, or 28 U.S.C. § 2410. Though th e plaintiff argues otherwise, the United States contends that the relief Gengler

1

Section 1442 provides:

(a) A civil action . . . commenced in a State court against any of the following may be removed by them to the district court of the United States for the district and division embracing the place wherein it is pending: (1) The United States or any agency thereof or any officer (or any person acting under that officer) of the United States or of any agency thereof, sued in an official or individual capacity for any act under color of such office or on account of any right, title or authority claimed under any Act of Congress for . . . the collection of the revenue.

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s e e k s is consistent, if not identical, to an action under 28 U.S.C. § 2410(a). Under 2 8 U.S.C. § 2410(a), the United States may be named a party in any civil action or s u it in any District Court, or in any State Court having jurisdiction of the subject m a tte r, to "quiet title to, . . . real . . . property on which the United States has or c la im s a mortgage or other lien."2 In analyzing plaintiff's pleadings, it appears that the relief he seeks and the n a tu re of his complaint could be characterized as an action under § 2410. For in s ta n c e , at issue in this case are three notices of federal tax lien filed against p la in tiff's property. (Compl. 8-10)(Docket #1-2). Thus, the United States has or c la im s a lien on plaintiff's property. Gengler's action appears to challenge the va lid ity of the federal tax lien ­ based on an allegedly forged signature on the notices ­ and requests that the IRS be enjoined from maintaining the lien on his property. T h is fits squarely within the definition of a quiet-title action. For instance, an action to quiet title is defined as "[a] proceeding to establish a plaintiff's title to land by c o m p e llin g the adverse claimant to establish a claim or be forever estopped from a s s e rtin g it." Black's Law Dictionary (9th ed. 2009). Plaintiff's request for injunctive

2

Section 2410(a) provides as follows:

Under the conditions prescribed in this section and section 1444 of this title for the protection of the United States, the United States may be named a party in any civil action or suit in any district court, or in any state court having jurisdiction of the subject matter­ (1) to quiet title to, (2) to foreclose a mortgage or other lien upon, (3) to partition, (4) to condemn, or (5) of interpleader or in the nature of interpleader with respect to, real or personal property on which the United States has or claims a mortgage or other lien.

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re lie f is also telling, as that is the relief typically sought in a quiet title action. Plaintiff c o u n te rs that his cause of action simply states a state law forgery claim. Leaving a s id e the issue of whether such an action exists under W is c o n s in law, plaintiff's c h a ra c te riz a tio n of his claims as such does nothing to change the substance of his u n d e rlyin g allegation ­ namely, that the forgery of a signature on the notices of fe d e ra l tax lien renders the lien invalid.3 Cf. Macklin v. United States, 300 F.3d 814 (7 th Cir. 2002) (plaintiff alleging that "numerous defects in the lien and lien filing p ro c e d u re s " rendered the tax lien on his property invalid brought an action under 28 U .S .C . § 2410 to quiet title to his real property). On the other hand, it is conceivable that plaintiff's complaint is really a c h a lle n g e to his tax liability and the tax assessment that motivated the lien, rather th a n a challenge merely to the means for enforcing that liability. Indeed, Gengler's c o m p la in t requests money damages for the sum of amounts shown on the three n o tic e s of federal tax lien filed against his property. According to the defendant, t h e s e liens reflect the unpaid balance of federal income tax liabilities assessed a g a in s t Gengler for 2003, 2004 and 2005, as well as the unpaid civil penalties a s s e s s e d him under 26 U.S.C. § 6702 for filing frivolous tax returns for 2001, 2003, 2 0 0 4 , and 2005. Thus, it is quite possible that Gengler's action is simply an action c h a lle n g in g his tax liability in disguise. If construed in this way, Gengler's action w o u ld fall outside the scope of the quiet-title act. However, removal of the cause of

"Forgery" is defined in Black's Law Dictionary (9th ed. 2009) as "the act of fraudulently making a false document or altering a real one to be used as if genuine."

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a c tio n by the United States would be proper pursuant to 28 U.S.C. § 1442(a)(1) b e c a u s e the United States is still a defendant. Accordingly, no matter how plaintiff's c o m p la in t is construed, removal by the federal government was proper and, th e re fo re , the court will deny plaintiff's motion to remand to state court. III. M o t io n to Dismiss T h e United States has moved to dismiss the complaint for lack of jurisdiction a n d for failure to state a claim upon which relief may be granted. The court has fo u n d that Gengler's complaint effectively seeks to void a federal tax lien and, th e re fo re , may be construed as a quiet-title action under 28 U.S.C. § 2410. It is well s e ttle d that the United States is a sovereign and, as such, is immune from suit u n le s s it has expressly waived such immunity and consented to be sued. United S ta te s v. Shaw, 309 U.S. 495, 500-01, 60 S.Ct. 659, 661 (1940). Where a suit has n o t been expressly consented to by the United States, it must be dismissed. H u tc h in s o n v. United States, 677 F.2d 1322, 1327 (9th Cir. 1982). Even though 28 U .S .C . § 2410 constitutes a waiver of sovereign immunity for purposes of a quiet-title a c tio n naming the United States as a party, the waiver is subject to the terms of 28 U .S .C . § 2410(b). In order to invoke the waiver of sovereign immunity in 28 U.S.C. § 2410, the plaintiff must first satisfy the pleading requirements of § 2410(b) by in c lu d in g the name and address of the taxpayer whose liability created the lien and, if a notice of tax lien was filed, the identity of the internal revenue office which filed th e notice. Further, the plaintiff must plead with specificity the property allegedly d a m a g e d by the Notices of which he complains. 28 U.S.C. § 2410(b). The present -7-

c o m p la in t does not supply these items and, by failing to provide them, the plaintiff h a s not properly shown that the sovereign's immunity has been waived. A c c o r d in g ly, the complaint should be dismissed. See Dahn v. United States, 127 F .3 d 1249, 1251 (10th Cir. 1997) (holding that a complaint that does not comply with the mandatory pleading requirements of § 2410(b) "does not invoke the statutory w a ive r of sovereign immunity and, consequently, cannot state a claim upon which re lie f could be granted").4 A lte rn a tive ly, Gengler's complaint should be dismissed for its failure to state a claim. Federal Rule of Civil Procedure 12(b)(6) permits a defendant to make a m o tio n to dismiss a complaint for failure to state a claim upon which relief can be g ra n te d . To survive a 12(b)(6) motion to dismiss, the plaintiff's complaint must only "c o n ta in sufficient factual matter, accepted as true, to `state a claim to relief that is p la u s ib le on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell A tla n tic Corp. v. Twombly, 550 U.S. 544, 555-57, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2 0 0 7 )) (emphasis added). "A claim has facial plausibility when the plaintiff pleads fa c tu a l content that allows the court to draw the reasonable inference that the

The court recognizes the issues that arise by its recharacterization of plaintiff's complaint as an action under § 2410 and subsequent finding that plaintiff's failure to strictly comply with the pleading requirements of that same statute is grounds for dismissal of the complaint. However, as the court will discuss, no matter how Gengler's complaint is construed, grounds for dismissal abound. Therefore, the court does not find it improper to base its dismissal, at least in part, on Gengler's failure to comply with the pleading requirements of § 2410.

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d e fe n d a n t is liable for the misconduct alleged."5 Iqbal, 129 S. Ct. at 1949. W h e n the p la in tiff's allegations "do not permit the court to infer more than the mere possibility o f misconduct," the complaint does not satisfy the minimal pleading burden of Rule 8 of the Federal Rules of Civil Procedure. Id. at 1950. Gengler's complaint does not meet this minimal pleading burden. His

c o m p la in t alleges that the signature of R.A. Mitchell on his notices of federal tax lien h a s been forged. Gengler sheds more light on this allegation in his objection to the m o tio n to dismiss. (Docket #11). According to his objection, Gengler appears to c la im that the facsimile signatures of R.A. Mitchell are not permitted on notices of fe d e ra l tax lien. (Objection 10). Yet, this allegation is incorrect. First the court notes that, contrary to plaintiff's arguments, federal law ­ s p e c ific a lly provisions of the federal Internal Revenue Code and accompanying re g u la tio n s ­ dictates the form and content of a federal tax lien. See United States v . Union Cent. Life Ins. Co., 368 U.S. 291, 294-95, 82 S.Ct. 349 (1961); Griswold v. U n ite d States, 59 F.3d 1571, 1578 n. 15 (11th Cir. 1995); TKB Int'l, Inc. v. United S ta te s , 995 F.2d 1460, 1464 (9th Cir. 1993). Federal statute 26 U.S.C. § 6323

The court is also guided by the Seventh Circuit recent synthesis of the Supreme Court's case law on Fed. R. Civ. P. 12(b)(6): So, what do we take away from Twombly, Erickson, and Iqbal? First, a plaintiff must provide notice to defendants of her claims. Second, courts must accept a plaintiff's factual allegations as true, but some factual allegations will be so sketchy or implausible that they fail to provide sufficient notice to defendants of the plaintiff's claim. Third, in considering the plaintiff's factual allegations, courts should not accept as adequate abstract recitations of the elements of a cause of action or conclusory legal statements. Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009).

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s ta te s that notices of federal tax lien shall be valid notwithstanding any other p ro vis io n of law regarding the form or content of a notice of lien. The United States S u p r e m e Court has held that a State may not prescribe the form or content of a n o tic e of a federal lien. United States v. Union Central Life Insurance Co., 368 U.S. 2 9 1 , 294-296, 82 S.Ct. 349 (1961). Therefore, it is irrelevant whether the notices of lie n in this case conform to W isc o n s in law. Pursuant to § 6323(f)(3), the Secretary of the Treasury has promulgated 26 C .F .R . § 301.6323(f)-1(d), which provides that the notice of a federal tax lien shall b e filed on Form 668. Section 5.12.2.6 of the Internal Revenue Manual provides that a notice of federal tax lien does not require a signature, however, documents g e n e ra te d by the Automated Lien System application have facsimile signatures. The n o tic e s of lien in this case, which are attached as exhibits to the plaintiff's complaint, w e re filed on Form 668, so that they conform to § 6323(f)(3). In addition, they were s ig n e d by facsimile signature of Revenue Officer R.A. Mitchell. Consequently, the n o tic e s of lien are properly certified pursuant to federal tax law, and there is no d e fe c t in the notices because they were signed by facsimile signature. See Krueger v . Kennedy, 1998 W L 641985 at *2 (W .D . Mich. 1998) (notice of federal tax lien s ig n e d by facsimile signature proper under federal tax law). Therefore, plaintiff does n o t state a claim upon which relief may be granted and the court must dismiss his c o m p la in t. Lastly, if the court were to construe Gengler's complaint as a request to enjoin th e collection of the plaintiff's federal tax liabilities, the Anti-Injunction Act bars his -10-

re q u e s te d injunctive relief. Section 7421(a) of the Internal Revenue Code prohibits, w ith some exceptions not relevant here, suits by any person in any court for the p u rp o s e of "restraining the assessment or collection of any tax." § 7421(a).6 A c c o rd in g ly, IT IS SO ORDERED that plaintiff's motion to remand to state court (Docket # 4 ) be and the same is hereby DENIED; IT IS FURTHER ORDERED that the United States' motion to dismiss (Docket # 8 ), on behalf of the named defendants, be and the same is hereby GRANTED; IT IS FURTHER ORDERED that the Internal Revenue Service's motion for e xte n s io n of time to answer or respond to complaint (Docket #2) be and the same is hereby DENIED as moot; IT IS FURTHER ORDERED that plaintiff's motion for extension of time to re s p o n d to motion to dismiss (Docket #10) be and the same is hereby DENIED as m o o t; IT IS FURTHER ORDERED that plaintiff's motion to strike defendant's reply to plaintiff's objection to motion to dismiss (Docket #14) be and the same is hereby D E N IE D as moot; 26 U.S.C.

The court also notes that plaintiff's complaint is such that it may warrant a finding of frivolousness, which provides an independent basis for dismissal of this case. Harrell v. United States, 13 F.3d 232, 235-236 (7th Cir. 1993) (citing Ricketts v. Midwest National Bank, 874 F.2d 1177, 1180 (7th Cir. 1989)). Because there are numerous and other adequate grounds for dismissal, however, the court will refrain from such a finding.

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IT IS FURTHER ORDERED that plaintiff's motion to take judicial notice of law in the federal statutes of subtitle A (Docket #15) be and the same is hereby DENIED a s moot; and IT IS FURTHER ORDERED that plaintiff's complaint be and the same is h e re b y DISMISSED. T h e clerk is directed to enter judgment accordingly. Dated at Milwaukee, W is c o n s in , this 29th day of December, 2010. BY THE COURT:

J .P . Stadtmueller U .S . District Judge

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