Domer L. Ishler v. Internal Revenue

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
March 13, 2007
No. 06-14233 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 05-01108-CV-5-CLS
DOMER L. ISHLER,
Plaintiff-Appellant,
versus
INTERNAL REVENUE, UNITED STATES OF AMERICA,
Commissioner,
JOHN L. RICHARDSON, Individually and
in his Official Capacity as an
Internal Revenue Service Agent,
NISSEI SANGYO AMERICA, LTD.,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(March 13, 2007)
Before ANDERSON, DUBINA and BARKETT, Circuit Judges.
PER CURIAM:
Appellant Domer Ishler appeals the dismissal of his pro se complaint
pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). Specifically, Ishler argues that the
district court erred in concluding that none of his claims for: (1) “breach of trust,”
or violation of due process; (2) declaratory relief or a tax refund; or (3) relief under
various state law theories of recovery, vested it with subject matter jurisdiction or,
alternatively, stated a claim upon which relief could be granted. In the latter
regard, Ishler challenges the district court’s determination that the government
defendants enjoyed sovereign immunity with respect to the state law claims.
I. “Breach of Trust” Claim
We review a dismissal pursuant to Fed.R.Civ.P.12(b)(1) de novo. Parise v.
Delta Airlines, Inc., 141 F.3d 1463, 1465 (11th Cir. 1998). “Pro se pleadings are
held to a less stringent standard than pleadings drafted by attorneys and will,
therefore, be liberally construed.” Hughes v. Lott, 350 F.3d 1157, 1160 (11th Cir.
2003) (citation omitted).
Federal courts are courts of limited jurisdiction. Bochese v. Town of Ponce
Inlet, 405 F.3d 964, 974 (11th Cir.), cert. denied, 126 S. Ct. 377 (2005).
Ultimately, the plaintiff bears the burden of establishing subject matter jurisdiction.
Sweet Pea Marine, Ltd. v. APJ Marine, Inc., 411 F.3d 1242, 1248 n.2 (11th Cir.
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2005).
“Attacks on subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) come in
two forms.” Lawrence v. Dunbar, 919 F.2d 1525, 1528-29 (11th Cir. 1990).
“Facial attacks” on the complaint, as here, require us “‘merely to look and see if
[the] plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the
allegations in his complaint are taken as true for the purposes of the motion.’” Id.
at 1529 (quoting Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir.
1980)). On the other hand, “factual attacks” challenge “‘the existence of subject
matter jurisdiction in fact, irrespective of the pleadings, and matters outside the
pleadings, such as testimony and affidavits, are considered.’” Id. (quoting
Menchaca, 613 F.2d at 511). We have distinguished these two types of attack as
follows:
On a facial attack, a plaintiff is afforded safeguards similar to those
provided in opposing a Rule 12(b)(6) motion - the court must consider
the allegations of the complaint to be true. Williamson v. Tucker, 645
F.2d 404, 412 (5th Cir.), cert. denied, 454 U.S. 897, 102 S. Ct. 396, 70
L. Ed. 2d 212 (1981). But when the attack is factual, the trial court
may proceed as it never could under 12(b)(6) or Fed.R.Civ.P. 56.
Because at issue in a factual 12(b)(1) motion is the trial court’s
jurisdiction - its very power to hear the case - there is substantial
authority that the trial court is free to weigh the evidence and satisfy
itself as to the existence of its power to hear the case. In short, no
presumptive truthfulness attaches to plaintiff’s allegations, and the
existence of disputed material facts will not preclude the trial court
from evaluating for itself the merits of jurisdictional claims.
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Id. (citation omitted).
The record here shows that the complaint centered on a dispute over Ishler’s
liability for federal income taxes on revenue generated in a business deal involving
a third party, Nissei Sangyo America, Ltd. (“NSA”) over a period of approximately
ten years, from 1989-1999. Ishler unsuccessfully disputed his liability for those
tax years before filing the present lawsuit.
Pursuant to 26 U.S.C. § 6330(d), “[a taxpayer] may, within thirty days of [a
determination by the IRS Office of Appeals], appeal such determination to the Tax
Court (and the Tax Court shall have jurisdiction with respect to such matter).” 26
U.S.C. § 6330(d). The Tax Court, under § 6330(d), has exclusive jurisdiction over
a challenge to a determination of federal income tax liability. See Voelker v.
Nolen, 365 F.3d 580, 581 (7th Cir. 2004) (“[A] case involving income taxes - like
this one - must be filed in the Tax Court, and the district court lacks jurisdiction”);
Marino v. Brown, 357 F.3d 143, 145 (1st Cir. 2004) (noting that Tax Court has
“jurisdiction over cases involving an underlying income tax liability”). This
exclusive jurisdiction extends to a dispute over a due process violation in the
determination of federal income tax liability. See Voelker, 365 F.3d at 581
(determining that the district court lacked subject matter jurisdiction over a due
process challenge relating to a collection due process hearing because the tax court
has jurisdiction over cases involving income taxes).
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Here, the record demonstrates that Ishler did not appeal the IRS Appeals
Office’s determination to the Tax Court. Accordingly, he waived his right to
obtain judicial review of that ruling. Although he essentially recast this issue as a
“breach of trust” claim in his present complaint, the district court properly
concluded that it lacked jurisdiction to consider the claim, which was subject to
dismissal under Fed.R.Civ.12(b)(1).
II. Declaratory Judgment Demand and Informal Claim for Tax Refund
The Declaratory Judgment Act provides, in relevant part, that:
[i]n a case of actual controversy within its jurisdiction, except with
respect to Federal taxes other than actions brought under section
7428 of the Internal Revenue Code of 1986 [involving tax-exempt
organizations] . . . any court of the United States, upon the filing of an
appropriate pleading, may declare the rights and other legal relations
of any interested party . . . .
28 U.S.C. § 2201 (emphasis and brackets added).
This Act, however, “does not, of itself, confer jurisdiction upon federal
courts,” Borden v. Katzman, 881 F.2d 1035, 1037 (11th Cir. 1989), and so it cannot
be construed as a jurisdictional bar per se. In re Leckie Smokeless Coal Co., 99
F.3d 573, 582 (4th Cir. 1996) (persuasive authority). Instead, the Declaratory
Judgment Act merely “proscribes judicial declaration of the rights and legal
relations of any interested parties in disputes involving federal taxes.” Raulerson
v. United States, 786 F.2d 1090, 1093, n.7 (11th Cir. 1986) (internal citation marks
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omitted). Thus, a lawsuit brought under the Declaratory Judgment Act “must state
some independent source of jurisdiction, such as the existence of diversity or the
presentation of a federal question.” Borden, 881 F.2d at 1037.
Where a plaintiff brings suit under a federal statute that does not provide an
independent statutory grant of federal subject matter jurisdiction, and neither
federal question jurisdiction nor diversity jurisdiction exists, the complaint is due
to be dismissed for lack of jurisdiction. See Baltin v. Alaron Trading Corp., 128
F.3d 1466, 1469-73 (11th Cir. 1997).
We have, in the past, modified a district court’s order of dismissal and
concluded that the dismissal should have been without prejudice. Boda v. U.S.,
698 F.2d 1174, 1177 (11th Cir. 1983).
We will assume that Ishler’s declaratory relief or a tax refund claim were
valid causes of action and were asserted against the proper defendants.
Nevertheless, these claims were due to be dismissed for lack of jurisdiction
pursuant to Fed.R.Civ.P. 12(b)(1).
The Declaratory Judgment Act did not itself provide a statutory source of
jurisdiction, see Borden, 881 F.2d at 1037, and federal question jurisdiction and
diversity jurisdiction were also lacking. Federal question jurisdiction did not exist
because Ishler’s only federal claim, the due process or “breach of trust” argument,
was properly dismissed for lack of jurisdiction. Diversity jurisdiction did not exist,
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because Ishler and Agent Richardson (who was sued in part in his individual
capacity) were both Alabama residents. See Univ. of S. Ala. v. Am. Tobacco Co.,
168 F.3d 405, 412 (11th Cir. 1999) (“Where jurisdiction is predicated on diversity
of citizenship, all plaintiffs must be diverse from all defendants”). Thus, the
district court was without jurisdiction to consider these claims. Baltin, 128 F.3d at
1473.
Because the court lacked jurisdiction to consider these claims, it was
unnecessary for the court to consider whether the refund claim, as asserted against
NSA, should have been dismissed under Fed.R.Civ.P. 12(b)(6). See generally
Pittsburg County Rural Water Dist. No. 7 v. City of McAlester, 358 F.3d 694, 707,
n.4 (10th Cir. 2004) (noting that the preclusion doctrines do not go to
“jurisdiction,” but rather “provide affirmative defenses once a court exercises
jurisdiction over a civil action”); Houston Bus. School Journal, Inc. v. Office of
Comptroller of Currency, U.S. Dep’t of Treasury, 86 F.3d 1208, 1211 (D.C. 1996)
(“We do not reach the issue of collateral estoppel because we conclude that the
district court lacked subject-matter jurisdiction to hear the motion to compel.”).
Nevertheless, the record supports dismissal of the claims, and we therefore
modify the order of dismissal to reflect that this claim, as asserted against NSA,
was due to be dismissed under Fed.R.Civ.P. 12(b)(1). See Cochran v. Health Care
Fin. Admin., 291 F.3d 775, 778, n.3 (11th Cir. 2002) (noting that an appellate court
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can affirm for any reason supported by the record); Boda, 698 F.2d at 1177
(modifying court’s order).
III. State Law Claims Against IRS and Agent Richardson,
In Official Capacity
We review de novo a dismissal on sovereign immunity grounds pursuant to
Fed.R.Civ.P. 12(b)(1). Parise, 141 F.3d at 1465 (discussing standard of review)
for motion to dismiss; Bennett v. United States, 102 F.3d 486, 488, n.1 (11th Cir.
1996) (noting that a dismissal on sovereign immunity grounds should be under
Fed.R.Civ.P. 12(b)(1) because no subject matter jurisdiction exists).
“The United States, as sovereign, is immune from suit save as it consents to
be sued.” United States v. Sherwood, 312 U.S. 584, 586, 61 S. Ct. 767, 769, 85 L.
Ed. 1058 (1941). “Absent a waiver, sovereign immunity shields the Federal
Government and its agencies from suit.” JBP Acquisitions, LP v. U.S. ex rel.
F.D.I.C., 224 F.3d 1260, 1263 (11th Cir. 2000) (citation omitted). Likewise, the
protection of sovereign immunity also generally extends to the employees of those
agencies sued in their official capacities. See Simons v. Vinson, 394 F.2d 732, 736
(5th Cir. 1968) (“The immunity of the sovereign, however, extends to its agencies .
. . and the officers of these agencies.”).
A waiver of sovereign immunity must be “unequivocally expressed,” and an
expressed waiver will be strictly construed. United States v. Nordic Village, Inc.,
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503 U.S. 30, 33-34, 112 S. Ct. 1011, 1014, 117 L. Ed. 2d 181 (1992) (citation
omitted). Sovereign immunity, when applicable, is “a complete bar to lawsuits”
against the United States. State of Fla., Dep’t of Business Regulation v. U.S. Dep’t
of Interior., 768 F.2d 1248, 1251 (11th Cir. 1985). With respect to the doctrine of
sovereign immunity, we have noted:
In analyzing the use of any sovereign immunity defense, the first
question is whether the doctrine applies at all: Is the action a suit
against the United States as a sovereign? The answer is obtained by
examining the nature of the relief which may be provided. An action
is one against the United States as a sovereign where the judgment
sought is to be satisfied from monies of the federal Treasury, or where
the judgment interferes with public administration, or where the
judgment’s effect is to compel or restrain the government’s actions.
Panola Land Buyers Ass’n v. Shuman, 762 F.2d 1550, 1555 (11th Cir. 1985)
(internal citations omitted). A lawsuit against United States officers in official
capacity for money damages that would be paid from the public treasury is a suit
against the United States. Graham v. Henegar, 640 F.2d 732, 733, n.1 (5th Cir.
Unit A March 1981) (citing Unimex, Inc. v. HUD, 594 F.2d 1060 (5th Cir. 1979)).
Additionally, the plaintiff bears the burden of establishing subject matter
jurisdiction, see Sweet Pea Marine, 411 F.3d at 1248 n.2, and, thus, must prove an
explicit waiver of immunity.
In the present case, Ishler asserted state law claims of fraud and civil
conspiracy, and possibly a breach of trust or fiduciary duty claim, against the IRS
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and Agent Richardson, in his official capacity, and sought monetary damages from
them. To this extent, Ishler was actually seeking monetary damages against the
United States, Graham, 640 F.2d at 733, n.1, and so the claims were barred by the
doctrine of sovereign immunity unless a waiver of immunity applied. JBP
Acquisitions, 224 F.3d at 1263.
We have reviewed the statutes cited by Ishler to support a waiver of
sovereign immunity, and we conclude that none of them is applicable here.
Furthermore, to the extent that Ishler’s complaint can be liberally construed as
relying on the Federal Tort Claims Act, 28 U.S.C. § 2671, et seq., or on the tax
refund act, 28 U.S.C. § 1346(a)(1), to demonstrate a waiver, the government’s
sovereign immunity could not have been waived by either statute. The Federal
Tort Claims Act, by its express language, does not apply to “[a]ny claim arising in
respect of the assessment or collection of any tax . . .,” see 28 U.S.C. § 2680(c).
The waiver provided for in § 1346(a)(1) only applies when a taxpayer pays to the
IRS the full amount of the contested tax liability, Flora v. United States, 362 U.S.
145, 176-77, 80 S. Ct. 630, 647, 4 L. E. 2d 623 (1960), and here it is undisputed
that Ishler has not fully paid the amount of the contested taxes.
Because Ishler did not show a waiver in the instant case, we conclude that
the state law claims for monetary damages against the IRS and Agent Richardson,
in his official capacity, were properly dismissed for lack of jurisdiction under
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Fed.R.Civ.P. 12(b)(1).1
For the foregoing reasons, we affirm the district court’s judgment of
dismissal.
AFFIRMED.
1
Ishler also raised state law claims against Agent Richardson in his individual capacity.
Although we conclude that the district court improperly dismissed these claims under
Fed.R.Civ.P. 12(b)(6), we conclude that dismissal without prejudice was appropriate, albeit
under Fed.R.Civ.P. 12(b)(1) for lack of original or supplemental jurisdiction. See Cochran, 291
F.3d at 778, n.3 (“[W]e may affirm for any reason supported by the record, even if not relied on
by the district court”). We likewise conclude that the district court properly dismissed the state
law claims against NSA on statute of limitation grounds pursuant to Fed.R.Civ.P. 12(b)(6).
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