Wattleton v. Mnuchin

DAVID EARL WATTLETON, Plaintiff, v. STEVEN T. MNUCHIN, et al., Defendants.

Civil Action No.: 19-1893 (BAH)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

July 30, 2020

Chief Judge Beryl A. Howell

MEMORANDUM OPINION

Plaintiff David Earl Wattleton filed this lawsuit seeking a refund of his federal income taxes, pursuant to 26 U.S.C. § 7422, which governs actions "for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected" or "of any sum alleged to have been excessive[.]" He sues the United States and Steven T. Mnuchin, in his official capacity as the United States Secretary of Treasury. Defendants now move for dismissal, pursuant to Federal Rule of Civil Procedure 12(b)(1), for lack of subject matter jurisdiction or, alternatively, to dismiss or transfer this matter for improper venue, pursuant to Federal Rule of Civil Procedure 12(b)(3) or 28 U.S.C. § 1406(a). Defs.' Mot. to Dismiss ("Defs.' MTD"), ECF No. 6; Defs.' Mem. Supp. of MTD ("Defs.' MTD Mem."), ECF No. 6-1. Plaintiff has partially opposed this motion, Pl.'s Opposition ("Pl.'s Opp'n"), ECF No. 8, and requested leave to substitute parties and amend the complaint, Combined Mot. for Leave to Amend ("Pl.'s Mot. to Amend"), ECF Nos. 9, 10.

For the reasons discussed below, defendants' motion to dismiss is granted as to all claims against the Secretary of Treasury. This motion is denied, without prejudice, as to the tax-refund claim against the United States, which claim will be transferred in the interest of justice to the United States District Court for the Northern District of Georgia. Plaintiff's motion for leave to amend and substitute is denied as moot.

I. BACKGROUND

In 1999, plaintiff was indicted in the United States District Court for the Northern District of Georgia for telephonic threats in violation of 18 U.S.C. § 844(e). See United States v. Wattleton, 110 F. Supp. 2d 1380, 1381 (2002), aff'd, 296 F.3d 1184 (11th Cir. 2002). He entered a plea of not guilty and filed a notice of an insanity defense pursuant to Fed. R. Crim. P. 12.2. Wattleton, 296 F.3d at 1187-88. Experts for both parties agreed that plaintiff was legally insane at the time of the alleged offense but that he was competent to stand trial. Id. at 1188. During the ensuing proceedings, plaintiff was diagnosed with delusional disorder, persecutory type, which his doctor described "as a major mental illness that's very severe." Id. at 1190-91. The jury ultimately rendered a verdict of not guilty only by reason of insanity on all four counts of the indictment. Id. at 1192.

A post-verdict hearing was held pursuant to 18 U.S.C. § 4243. Id. Following the hearing, the court determined that plaintiff should be committed to the custody of the Attorney General, pursuant to 18 U.S.C. § 4243(e), where he currently remains. Id. at 1194; see Pl.'s Opp'n ¶ II. Plaintiff attests that he is "currently [and] indefinitely committed" for psychiatric treatment and he is presently designated to the Federal Medical Center located in Rochester, Minnesota. Pl.'s Opp'n ¶ II.

Plaintiff filed this lawsuit in pursuit of a refund of his federal income tax for the taxable years of 1993 through 1999. Compl. ¶ 4. He indicates that he contacted the Internal Revenue Service ("IRS") in May of 2019 regarding this refund, but that his claim was denied. Id. at 1; see Pl.'s IRS Claim Request (undated and unsigned), Compl. Ex. 1, ECF No. 1-1. In the complaint, he alleges that he "suffers from a financial disability" that rendered him "unable to deal with financial matters from 1993 to 1999." Id. at introduction, p. 1. He additionally alleges that, from 1993 to date, his mental health conditions and resulting financial impairment have been continuous and permanent. Pl.'s Opp'n ¶ II; Pl.'s Resp. to Defs.' Reply, at 2-4, ECF No. 14.¹ In support, plaintiff states that his diagnosis of delusional disorder has been reaffirmed subsequent to his trial by his treating physician. Pl.'s Resp. at 2; see 6/25/01 BOP Mental Health Evaluation ("BOP Med. Eval."), attached as Ex. 1 to Pl.'s Resp., at 6.

II. STANDARD OF REVIEW

A. Motion to Dismiss for Lack of Subject Matter Jurisdiction

"Article III of the Constitution prescribes that '[f]ederal courts are courts of limited subject-matter jurisdiction' and 'ha[ve] the power to decide only those cases over which Congress grants jurisdiction.'" Bronner v. Duggan, 962 F.3d 596, 602 (D.C. Cir. 2020) (alterations in original) (quoting Al-Zahrani v. Rodriguez, 669 F.3d 315, 317 (D.C. Cir. 2012)); see Gunn v. Minton, 568 U.S. 251, 256 (2013) ("'Federal courts are courts of limited jurisdiction,' possessing 'only that power authorized by Constitution and statute.'" (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994))). Federal courts therefore have a corresponding "independentobligation to ensure that they do not exceed the scope of their jurisdiction" and "must raise and decide jurisdictional questions that the parties either overlook or elect not to press." Henderson v. Shinseki, 562 U.S. 428, 434 (2011). Absent subject-matter jurisdiction over a case, the court must dismiss it. See Arbaugh v. Y & H Corp., 546 U.S. 500, 506-07 (2006) (citing Kontrick v. Ryan, 540 U.S. 443, 455 (2004)); FED. R. CIV. P. 12(h)(3).

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1), the plaintiff bears the burden of demonstrating the court's subject-matter jurisdiction over the claim at issue. Arpaio v. Obama, 797 F.3d 11, 19 (D.C. Cir. 2015); see also Hertz Corp. v. Friend, 559 U.S. 77, 96-7 (2010); Thomson v. Gaskill, 315 U.S. 442, 446 (1942). When considering a motion to dismiss under Rule 12(b)(1), the court must accept as true all uncontroverted material factual allegations contained in the complaint and "'construe the complaint liberally, granting plaintiff the benefit of all inferences that can be derived from the facts alleged' and upon such facts determine jurisdictional questions." Am. Nat'l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir. 2011) (citations omitted) (quoting Thomas v. Principi, 394 F.3d 970, 972 (D.C. Cir. 2005)). The court need not accept inferences drawn by the plaintiff, however, if those inferences are unsupported by facts alleged in the complaint or amount merely to legal conclusions. See Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002).

B. Motion to Dismiss, or Alternatively to Transfer, for Improper Venue

Under Federal Rule of Civil Procedure 12(b)(3), a party may move to dismiss a case for improper venue. Similarly, the federal venue statute, 28 U.S.C. § 1406(a), requires that a district court "dismiss, or if it be in the interest of justice, transfer" a case, which is filed "in the wrong division or district." Together, "Section 1406(a) and Rule 12(b)(3) allow dismissal only when venue is 'wrong' or 'improper' . . . in the forum in which [the case] was brought." Atl. MarineConstr. Co. v. U.S. Dist. Court, 571 U.S. 49, 50 (2013). "Whether venue is 'wrong' or 'improper' depends exclusively on whether the court in which the case was brought satisfies the requirements of federal venue laws[.]" Id.

The moving party objecting to venue must provide "sufficient specificity to put the plaintiff on notice of the defect" that the case fails to fall within one of the three categories set out in section 1391(b). 14D Charles Alan Wright, et al., FED. PRACTICE AND PROCEDURE § 3826 at 496 (4th ed. 2013). Nonetheless, the burden remains on the plaintiff to establish that venue is proper since it is " 'the plaintiff's obligation to institute the action in a permissible forum . . .' " Williams v. GEICO Corp., 792 F. Supp. 2d 58, 62 (D.D.C. 2011) (quoting Freeman v. Fallin, 254 F. Supp. 2d 52, 56 (D.D.C. 2003)); see also Ananiev v. Wells Fargo Bank, N.A., 968 F. Supp. 2d 123, 129 (D.D.C. 2013) (citing14D Charles Alan Wright, et al., FED. PRACTICE AND PROCEDURE § 382, at 502, 505-06) ("[W]hen [an] objection has been raised, the burden is on the plaintiff to establish that the district he [or she] chose is a proper venue [,] . . . consistent with the plaintiff's threshold obligation to show that the case belongs to the particular district court in which the suit has been instituted.")).

In assessing a motion for improper venue, the court "'accepts the plaintiff's well-pled factual allegations regarding venue as true, draws all reasonable inferences from those allegations in the plaintiff's favor and resolves any factual conflicts in the plaintiff's favor.'" McCain v. Bank of Am., 13 F. Supp. 3d 45, 51 (D.D.C. 2014), aff'd sub nom., McCain v. Bank of Am. N.A., 602 Fed. Appx. 836 (D.C. Cir. 2015) (quoting Wilson v. Obama, 770 F. Supp. 2d 188, 190 (D.D.C. 2011)) (other citations omitted); see also Darby v. U.S. Dep't of Energy, 231 F. Supp. 2d 274, 276 (D.D.C. 2002)). "The Court, however, need not accept the plaintiff's legal conclusions as true, and may consider material outside the pleadings, including undisputed facts evidenced in the record, to determine whether it has jurisdiction in the case." Ananiev, 968 F. Supp. 2d at 129 (quotingEbron v. Dep't of Army, 766 F. Supp. 2d 54, 57 (D.D.C. 2011) (citing Jerome Stevens Pharm., Inc. v. Food & Drug Admin., 402 F.3d 1249, 1253 (D.C. Cir. 2005); Coal. for Underground Expansion v. Mineta, 333 F.3d 193, 198 (D.C. Cir. 2003); Herbert, 974 F.2d at 197; Haley v. Astrue, 667 F. Supp. 2d 138, 140 (D.D.C. 2009))).

III. DISCUSSION

Defendants contend that sovereign immunity bars all claims in this matter. Defs.' MTD Mem. at 2-5. The doctrine of sovereign immunity proscribes lawsuits for money damages against the United States, its agencies, and its employees in their official capacity, absent a specific waiver by the federal government. Block v. North Dakota ex rel. Bd. of Univ. & Sch. Lands, 461 U.S. 273, 287 (1983); see also FDIC v. Meyer, 510 U.S. 471, 475 (1994) ("Absent a waiver, sovereign immunity shields the Federal Government and its...