Kaufmann v. US

840 F. Supp. 641

Harry C. KAUFMANN; Eileen M. Kaufmann; Harry Kaufmann Motor Cars, Inc.; and Kaufmann-Campbell Leasing, Inc., Plaintiffs, v. The UNITED STATES of America; Neil Saari, personally and in his official capacity; John T. Ader, personally and in his official capacity; Michael J. Murphy, personally and in his official capacity; Larry Kaiser, personally and in his official capacity; Peter K. Nunez, personally and in his official capacity; Bruce R. Juppe, personally and in his official capacity; Mel S. Johnson, personally and in his official capacity; James Ansier, personally and in his official capacity; Thomas Schafer, personally and in his official capacity; Greg Myre, personally and in his official capacity; Richard Ahern, personally and in his official capacity; and Diane Svoboda, personally and in her official capacity; Defendants.

No. 93-C-482.

United States District Court, E.D. Wisconsin.

December 22, 1993.

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Peterson, Johnson & Murray by Terry E. Johnson and Michael P. Crooks, Milwaukee, WI, for plaintiffs.

Thomas P. Schneider, U.S. Atty. by James L. Santelle, Asst. U.S. Atty., Milwaukee, WI, for defendants.

DECISION and ORDER

MYRON L. GORDON, Senior District Judge.

On May 13, 1993, the plaintiffs commenced this action against the United States of America and twelve individual defendants in both their official and personal capacities. Presently before the court are four motions. The motions consist of: (1) a motion to dismiss the plaintiffs' complaint and action motion # 1 filed by the United States government the government on behalf of all the individual defendants except Thomas Schafer collectively, the individual federal defendants and the United States; (2) a motion to stay all discovery motion # 2 filed by the government on behalf of the United States and the individual federal defendants; (3) a motion to dismiss the plaintiffs' complaint and action motion # 3 filed by the government on behalf of Mr. Schafer; and (4) a motion to stay all discovery motion # 4 filed by the government on behalf of Mr. Schafer.

Motions # 3 and # 4 were filed after, and thus separately from, motions # 1 and # 2 because at the time the government filed motions # 1 and # 2 it had not yet agreed to undertake representation of Mr. Schafer. However, the government subsequently agreed to represent Mr. Schafer and, upon undertaking that representation, it filed motions # 3 and # 4 on his behalf.

The aspect of motion # 1 requesting the dismissal of the plaintiffs' complaint against the United States and the individual federal defendants in their official and personal capacities will be granted in part and denied in part as follows: (1) the court will dismiss, with prejudice, counts I through V against the United States and the individual federal defendants in their official capacities; (2) the court will dismiss, with prejudice, counts VI and VII against the individual federal defendants in their official and personal capacities; (3) the court will dismiss, without prejudice, counts I through V against the individual federal defendants in their personal capacities; (4) the court will not dismiss counts VI and VII against the United States; and (5) the court will not rule on the plaintiffs' request for attorneys fees which they designated as a claim for relief in their complaint (i.e. "count VIII").

The portion of motion # 3 seeking the dismissal of the plaintiffs' complaint against Mr. Schafer in his official and personal capacities will be granted. Specifically: (1) the court will dismiss, with prejudice, counts I through V against Mr. Schafer in his official capacity; (2) the court will dismiss, with prejudice, counts VI and VII against Mr. Schafer in his official and personal capacity; (3) the court will dismiss, without prejudice, counts I through V against Mr. Schafer in his personal capacity; and (4) the court will not rule on the plaintiffs' request for attorneys fees which they designated as a claim for relief in their complaint (i.e. "count VIII").

Because the court will not dismiss counts VI and VII of the plaintiffs' complaint against the United States, nor dismiss, with prejudice, counts I through V of the plaintiffs' complaint against the individual federal defendants or Mr. Schafer in their personal capacities, the court will not dismiss this action as requested by the government in motions # 1 and # 3. Thus, to that extent, motions # 1 and 3 will be denied. Finally, motions # 2 and # 4 to stay discovery will be dismissed as moot.

I. BACKGROUND

In the aftermath of the federal criminal prosecution of Harry C. Kaufmann, see United States v. Kaufmann, 985 F.2d 884 (7th Cir.1993) (affirming conviction on one of five counts), cert. denied, ___ U.S. ___, 113 S.Ct. 2350, 124 L.Ed.2d 259 (1993), the plaintiffs filed this civil action for damages. In a complaint laced with the phrase "on information and belief," the plaintiffs make the following allegations.

Plaintiffs Harry Kaufmann and his wife Eileen Kaufmann are citizens of Milwaukee. Plaintiffs Harry Kaufmann Motor Cars, Inc. KMC and Kaufmann-Campbell Leasing, Inc. Kaufmann-Campbell are both Wisconsin corporations. At all times relevant to this complaint, Mr. Saari, Mr. Kaiser, Mr. Ansier, Mr. Myre, and Mr. Ahern were agents of the Internal Revenue Service IRS; Ms. Svoboda was chief of the Criminal Investigation Division of the IRS; Mr. Ader was a director of the Wisconsin division of the IRS; Mr. Murphy was the senior deputy commissioner of the IRS Criminal Investigation Division; Mr. Nunez was assistant secretary of enforcement for the Department of Treasury; Mr. Juppe was an United States probation department employee; Mr. Johnson was an assistant United States attorney; and Mr. Schafer was an informant, agent and employee of the United States government.

On September 11, 1990, a federal grand jury indicted Mr. Kaufmann on four counts of money laundering in violation of 18 U.S.C. § 1956(a)(1)(B) and one count of attempted money laundering in violation of 18 U.S.C. § 1956(a)(3)(B). The indictment also "called for the forfeiture of any property, real or personal, involved in the offense, or any property traceable to such property, including Kaufmann's interest in KMC and in all assets of that corporation, pursuant to 18 U.S.C. § 982(a)." Complaint at ¶ 20. On September 12, 1990, United States Magistrate Judge Aaron Goodstein issued search and seizure warrants for the KMC premises. Federal agents executed those warrants the next day and "seized all inventory, records, and assets of the KMC business, including 99 automobiles." Id.

The plaintiffs allege that "on information and belief the indictment against Mr. Kaufmann had no basis in fact or law and was obtained through the presentation of evidence to the grand jury which was either untrue or gained through improper methods by investigative and law enforcement officers of the United States Government." Id. at ¶ 22. The plaintiffs aver that those defendants involved with the gathering and presentation of false and/or illegally obtained evidence to the grand jury included Mr. Saari, Mr. Ansier, Mr. Myre, Mr. Ahern, Mr. Kaiser, Ms. Svoboda, Mr. Murphy and Mr. Johnson. The plaintiffs also allege that these eight defendants, along with Mr. Nunez, were involved in the seizure of KMC assets on September 13, 1990, and that "on information and belief the seizure of the assets had no basis in fact or law and was achieved through the presentation of untrue evidence or evidence gained through improper investigation." Id. at ¶ 23.

The plaintiffs also allege "on information and belief, despite knowing that no basis in fact or law existed for prosecuting Mr. Kaufmann on some or all counts," that Mr. Johnson, aided by the investigative activities of Mr. Saari, Mr. Ansier, Mr. Kaiser and Mr. Schafer, prosecuted Mr. Kaufmann. Id. at ¶ 24. The jury acquitted Mr. Kaufmann on counts one and two, deadlocked on counts three and four (these counts were subsequently dismissed by the government), and convicted Mr. Kaufmann on count five. The plaintiffs aver that "on information and belief, the conviction was achieved through the presentation of improperly gathered and untrue evidence and was a result of a desire to put Mr. Kaufmann out of business." Id. at ¶ 25.

Mr. Kaufmann was sentenced to almost four years in prison and $30,000 in fines. The plaintiffs charge that his sentence "was based, at least in part, upon the report of defendant Juppe, who skewed the same in an attempt to achieve a harsh sentence for Mr. Kaufmann." Id. at ¶ 26. The plaintiffs also aver that the United States "has placed tax liens on Mr. Kaufmann's home and rental property under the guise of attempting to protect its interest in collecting the $30,000 fine." Id. at ¶ 27.

As a result of the alleged improper investigation and unlawful conduct by law enforcement officers and the agencies of the United States, the plaintiffs allege that Mr. and Mrs. Kaufmann "were forced to spend in excess of $250,000.00 to defend against the government's allegations and suffered loss of income, emotional damages and other personal injuries." Id. at ¶ 28. Furthermore, the plaintiffs charge that "KMC and Kaufmann-Campbell KCL sustained loss of profits, depreciation of assets, additional accounting fees and increased operating expenses" as a result of the actions of the United States and the other defendants. Id.

As relief, the plaintiffs request compensatory and punitive damages against the individual federal defendants and Mr. Schafer collectively, the individual defendants and compensatory damages against the United States. The plaintiffs also seek attorneys fees from the United States and the individual defendants.

The plaintiffs allege seven substantive claims for relief in their complaint: (1) "Violation of Plaintiffs' 4th Amendment Rights Actionable Under Bivens" count I; (2) "Violation of Plaint...