Davis v. U.S.

Page 91

569 F.Supp.2d 91

Carl R. DAVIS et al., Plaintiffs, v. UNITED STATES et al., Defendants.

Civil Action No. 07-1749 (RMU).

United States District Court, District of Columbia.

August 5, 2008.

COPYRIGHT MATERIAL OMITTED

Carl Roger Davis, Branson, MO, pro se.

Jo Elaine Davis, Branson, MO, pro se.

Daniel John Healy, U.S. Department of Justice, Washington, DC, for Defendants.

MEMORANDUM OPINION

GRANTING THE DEFENDANTS' MOTION TO DISMISS; DENYING THE PLAINTIFFS' MOTION FOR JUDICIAL NOTICE; DENYING AS MOOT THE PLAINTIFFS' MOTIONS FOR A FAIR AND IMPARTIAL HEARING, TRIAL OR RULING; ORDERING THE PLAINTIFFS TO SEEK LEAVE OF COURT BEFORE FILING FURTHER COMPLAINTS

RICARDO M. URBINA, District Judge.

I. INTRODUCTION

The plaintiffs Carl Roger Davis and Jo Elaine Davis are suing the United States, the Department of the Treasury, the Internal Revenue Service ("IRS"), the Department of Justice, James "Tony" Strother, Timothy Noonan, Does 1 though 5 and three sections of the Internal Revenue Code ("IRC").¹ Before the court are the defendants' motion to dismiss and the plaintiffs' motions for judicial notice, for a fair and impartial hearing, trial or ruling and to expedite ruling. Because the court lacks jurisdiction to grant declaratory or injunctive relief regarding the enforcement of the IRC, the court dismisses those claims seeking such relief. Additionally, because the statute of limitations bars the plaintiffs' claims seeking monetary damages, the court dismisses those claims. The court denies the plaintiffs' motion for judicial notice because the pendency of bills in Congress is irrelevant to these proceedings. As there is no additional relief the court can grant the plaintiffs, their motions for a fair and impartial hearing, trial or ruling and to expedite ruling are moot. The court further orders the plaintiffs to seek leave of the court before filing any additional complaints regarding the enforcement of the IRC or the actions of the IRS.

II. FACTUAL & PROCEDURAL BACKGROUND

The plaintiffs allege that between October 2000 and January 2005, the IRS, through Special Agents Noonan and Strother and Does 1 through 5, conducted a series of investigatory activities regarding the plaintiffs' taxes from 1992-2000. First Am. Compl. ¶¶ 1-20. On September 28, 2007, the plaintiffs filed this action, their fourth essentially identical suit, attacking the validity of several section of the IRC and the IRS. They seek to enjoin the defendants from continuing this investigation and ask the court to declare various sections of the IRC unconstitutional. Id. ¶¶ 33, 40, 47, 71, 93, 108, 119, 123. The defendants filed a motion to dismiss in early December, after which the plaintiffs filed their first amended complaint. The defendants filed a new motion to dismiss on January 2, 2008. The plaintiffs timely filed an opposition and the defendants replied.

In February, the plaintiffs filed proposed findings of fact largely reiterating the allegations in their complaint. On March 3, they filed a "mandatory judicial notice" which the defendants promptly opposed. In late March, the plaintiffs filed a "motion for fair and impartial rulings." On April 4, the federal government initiated criminal proceedings against the plaintiffs for tax evasion, and the plaintiffs filed a "motion to expedite ruling" in this court on June. 2. The court now addresses the pending motions.

III. ANALYSIS

A. The Court Lacks Jurisdiction to Grant Declaratory or Injunctive Relief

1. Legal Standard for Rule 12(b)(1) Motion to Dismiss

Federal courts are courts of limited jurisdiction and the law presumes that "a cause lies outside this limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 82 L.Ed. 845 (1938); see also Gen. Motors Corp. v. Envtl. Prot. Agency, 363 F.3d 442, 448 (D.C.Cir.2004) (noting that "[a]s a court of limited jurisdiction, we begin, and end, with an examination of our jurisdiction"). Because "subject-matter jurisdiction is an `Art. III as well as a statutory requirement[,] no action of the parties can confer subject-matter jurisdiction upon a federal court.'" Akinseye v. District of Columbia, 339 F.3d 970, 971 (D.C.Cir.2003) (quoting Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982)). On a motion to dismiss for lack of subject-matter jurisdiction pursuant to Rule 12(b)(1), the plaintiff bears the burden of establishing by a preponderance of the evidence that the court has subject-matter jurisdiction. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). The court may dismiss a complaint for lack of subject-matter jurisdiction only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Empagran S.A. v. F. Hoffman-LaRoche, Ltd., 315 F.3d 338, 343 (D.C.Cir.2003) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).

Because subject-matter jurisdiction focuses on the court's power to hear the claim, however, the court must give the plaintiffs factual allegations closer scrutiny when resolving a Rule 12(b)(1) motion than would be required for a Rule 12(b)(6) motion for failure to state a claim. Macharia v. United States, 334 F.3d 61, 64, 69 (D.C.Cir.2003); Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F.Supp.2d 9, 13 (D.D.C.2001). Thus, the court is not limited to the allegations contained in the complaint. Hohri v. United States, 782 F.2d 227, 241 (D.C.Cir.1986), vacated on other grounds, 482 U.S. 64, 107 S.Ct. 2246, 96 L.Ed.2d 51 (1987). When necessary, the court may consider the complaint supplemented by undisputed facts evidenced in the record, or the complaint supplemented by undisputed facts plus the court's resolution of disputed facts. Herbert v. Nat'l Acad. of Scis., 974 F.2d 192, 197 (D.C.Cir.1992).

2. The Court Cannot Issue Injunctive or Declaratory Relief Because the AIA & DJA Override the APA

The plaintiffs assert that the Administrative Procedures Act ("APA"), 5 U.S.C. §§ 701 et seq., provides jurisdiction for their claims. First Am. Compl. at 4, 8-9. The defendants argue that the APA is inapplicable here and, therefore, the plaintiffs have failed to establish jurisdiction. Defs.' Mot. at 5-6. Specifically, they contend that the APA cannot provide jurisdiction because it does not waive sovereign immunity in tax cases. This is because the Anti Injunction Act ("AIA"), 26 U.S.C. § 7421, and the Declaratory Judgment Act ("DJA"), 28 U.S.C. § 2201, override the APA's waiver of immunity and deny district courts the ability to issue injunctive and declaratory relief. Id. at 7. In response, the plaintiffs argue that they raise their claims under the APA, which is absolute. Pls.' Opp'n at 9, 15-16. They also maintain that their claims fall within the statutory exceptions to the AIA found in 26 U.S.C. §§ 6212-13. Id. at 9, 20. Finally, they assert that because they have no alternative remedy, the AIA does not apply to them. Id. at 16.

The APA generally provides for judicial review when a "person suffer[s a] legal wrong because of agency action." 5 U.S.C. § 702. This general grant of jurisdiction is, however, inapplicable to situations in which "statutes preclude judicial review." Id. § 701(a)(1). The AIA is one such statute that makes clear: "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person" with limited exceptions. 26 U.S.C. § 7421(a). Furthermore, it is well accepted that "assessment and collection of taxes" includes preliminary investigatory measures the IRS takes to determine whether an individual owes taxes. Debt Buyers' Ass'n v. Snow, 481 F.Supp.2d 1, 9 (D.D.C.2006) (listing cases). The DJA is equally clear: courts may grant declaratory relief "except with respect to Federal taxes." 28 U.S.C. § 2201(a). In interpreting the relationship among these statutes, the D.C. Circuit recognizes that "Congress has preserved the immunity of the United States from declaratory and injunctive relief with respect to all tax controversies except those pertaining to the classification of organizations under § 501(c)." The APA is consequently insufficient to establish jurisdiction over claims regarding the assessment and collection of federal taxes. Murphy v. Internal Revenue Serv., 493 F.3d 170, 174 (D.C.Cir.2007).

Here, the plaintiffs seek injunctive and declaratory relief in each of their claims as well as in their general prayer for relief. First Am. Compl. ¶¶ 33, 40, 47, 71, 93, 108, 119, 123. This is quite plainly an action regarding the assessment and collection of Federal taxes as the plaintiffs' claims seek to prevent the defendants from investigating and assessing tax liability. See id. First, because the DJA provides no exceptions and, by its terms, applies in this case, the court denies the plaintiffs' request for declaratory relief. See 28 U.S.C. § 2201(a). Second, whether the AIA prevents the plaintiffs from seeking injunctive relief depends on the applicability of the AIA's limited exceptions. 26 U.S.C. § 7421(a). Specifically, the exceptions in §§ 6212 and 6213 allow taxpayers to request relief in the Tax Court regarding deficiencies assessed. Id. §§ 6212-13. As the plaintiffs acknowledge in this case however, the IRS has made no assessment. Pls.' Opp'n at 20. Accordingly, because the defendants have not initiated collection proceedings or levied the plaintiffs' property, and because none of the other statutory exemptions are relevant, the AIA, on its face, applies. See 26 U.S.C. § 7421(a). An additional narrow, judicially created exception to the AIA potentially allows jurisdiction. In South Carolina v. Regan the Supreme Court held that an injunction may issue when the party seeking the...