Damron v. Yellow Frieght Systems

LEROY DAMRON, )
) Bedford Circuit
Plaintiff/Appellant, ) No. 7301
)
VS. )
)
YELLOW FREIGHT SYSTEM, INC., ) Appeal No.
JERI ELLISON, CAROL HERTHEL, ) 01A01-9712-CV-00724
)
Defendants/Appellees. )
IN THE COURT OF APPEALS OF TENNESSEE
FILED
AT NASHVILLE
August 19, 1998
APPEAL FROM THE CIRCUIT COURT OF BEDFORD COUNTY
AT SHELBYVILLE, TENNESSEE Cecil W. Crowson
Appellate Court Clerk
HONORABLE LEE RUSSELL, JUDGE
Leroy Damron
514 Temple Ford Road
Shelbyville, Tennessee 37160
PRO SE FOR PLAINTIFF/APPELLANT
Wade B. Cowan
315 Deaderick Street
Suite 1425
Nashville, Tennessee 37238-1425
ATTORNEY FOR DEFENDANTS/APPELLEES
AFFIRMED AND REMANDED.
HENRY F. TODD
PRESIDING JUDGE, MIDDLE SECTION
CONCURS:
BEN H. CANTRELL, JUDGE
WILLIAM B. CAIN, JUDGE
LEROY DAMRON, )
) Bedford Circuit
Plaintiff/Appellant, ) No. 7301
)
VS. )
)
YELLOW FREIGHT SYSTEM, INC., ) Appeal No.
JERI ELLISON, CAROL HERTHEL, ) 01A01-9712-CV-00724
)
Defendants/Appellees. )
OPINION
The plaintiff, Leroy Damron, has appealed from a summary judgment dismissing his suit
against his former employer Yellow Freight Systems, Inc., (hereafter “Yellow”) and two of its
office employees for wages withheld because of levy process issued by the U.S. Internal Revenue
Service (hereafter IRS) to collect delinquent income taxes assessed against plaintiff. Plaintiff
presents the following issues:
I. Whether the trial court erred in failing to
consider that the Notice of Levy was defective.
II. Whether trial court erred in granting summary
judgment in favor of defendant/appellee, Yellow Freight
System, Inc., on the grounds that there was no relief available
from state courts and Tennessee Law because
defendant/appellee had immunity under the Internal Revenue
Code for turning over wages in compliance with a defective
Notice of Levy issued by the Internal Revenue Service.
On August 22, 1994, IRS mailed to Yellow a “Notice of Levy” asserting a claim of
$86,605.18 against plaintiff for unpaid income taxes for the calendar years, 1984-1988, inclusive.
In response to the notice of levy, Yellow forwarded to IRS the net amount of plaintiff’s paycheck
on each payday thereafter. This suit seeks the recovery from Yellow of the amounts paid to IRS
on various grounds of irregularity of procedure by IRS.
On September 8, 1995, plaintiff filed this suit against Yellow and two of its employees.
The unsworn complaint alleged in relevant part the following:
7. On September 9, 1994, Plaintiff received his
paycheck for the pay period ending September 2, 1994, to
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find that $562.12 had been deducted and noted as a deduction
per court order.
8. Plaintiff had never been informed, by anyone,
that a court order for garnishment or any other deductions
were pending.
9. On September 12, 1994, the Plaintiff
telephoned the Yellow Freight payroll department, spoke to
Carol Herthel, and asked for an explanation for the deduction.
10. Defendant Herthel explained that the
deduction was made because of a “Notice of Levy” by the
Internal Revenue Service she had received by regular mail on
August 29, 1994.
----
14. Herthel subsequently made deductions every
additional week that the Plaintiff worked, never allowing
more than $21.62 to be paid weekly.
15. Plaintiff did not receive his copy of the
“Notice” from Yellow Freight until September 23, 1994, by
regular mail.
----
19. The defendants had no legal right or obligation
to:
C. Honor a false instrument. The “Notice of
Levy,” form 668-A, was fraudulent on its face, and was not
even the proper document to be sent an employer.
----
23. Even if the “Notice” had been lawful, the
Defendants would have failed in their responsibility, to the
Plaintiff, by not sending him his the copy of the “Notice of
Levy,” and thereby giving timely notice, as required by law,
so that he could claim any exemptions.
----
WHEREFORE, it is prayed that the Court grant the
Plaintiff relief as follows:
1. Actual damages in the amount of two thousand
dollars.
2. Compensatory and punitive damages in the
amount of one hundred thousand dollars.
3. Reasonable attorney fees and costs in bringing
this action.
The answer of defendants generally denied wrongdoing and asserted that the complaint
failed to state a claim for which relief can be granted.
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In support of their motion for summary judgment, defendants filed the affidavit of Jeri
Ellison stating:
1. I am a payroll supervisor for Yellow Freight
System, Inc., and a defendant in this case.
2. I have personal knowledge of the facts
contained in this affidavit.
3. Attached as Exhibit 1 is a true and accurate
copy of the Notice of Levy from the Internal Revenue Service
received by Yellow Freight System, Inc. on or about August
29, 1994.
4. The payroll deductions that Mr. Damron
complains about in his complaint made solely as a result of
Yellow Freight System, Inc.’s honoring the Notice of Levy
referred to above.
The Notice of Levy exhibited to the affidavit listed federal income taxes and penalties
due from plaintiff for the years 1984-1988 in the total amount of $86,605.18, and required
Yellow to remit to the IRS the net wages due plaintiff.
The plaintiff filed an unsworn response to defendants’ motion for summary judgment
with a collection of legal arguments, together with his affidavit stating:
1. On Friday, September 9, 1994, I picked up my
paycheck from the guard shack at Yellow Freight’s terminal
in Nashville, Tennessee.
2. The check showed a deduction of $562.12 for
a court order, of which I had no knowledge.
3. I called the payroll department on the next
workday, the following Monday, September 12, 1994, and
spoke to Carol Herthel, payroll clerk, who informed me that
the money had been taken because of an IRS levy.
4. Ms. Herthel told me that she would continue
to take my wages until the IRS told her to stop.
5. I was never received any notice from anyone
about the Notice of Levy before the confiscation began. After
I inquired about my copy to Ms. Herthel, I received it a month
later.
6. I have never received a copy of any
assessment, or a Notice of Demand For Tax from the IRS.
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7. Yellow Freight System, Inc. never paid me
more than $21.63 for any week after September 9, 1994.
8. I repeatedly informed Yellow’s payroll and
legal departments the Notice of Levy was fraudulent, that they
made an error in taking my money, but they ignored me.
9. The above specific facts are made on the
personal knowledge of the plaintiff, Leroy Damron, and
indicate there is a genuine issue for trial.
The Trial Court sustained defendants’ motion for summary judgment, and plaintiff
appealed. His first issue asserts that the notice of levy was defective. He argues that the notice
of levy was ineffective and should havbe been ignored because he was not notified by IRS in
advance that the levy would be sent to Yellow; that it was not on the proper form and was not
properly served. Each of these arguments claims a fault of the IRS and not of Yellow or its
employees, except it is claimed that Yellow had a fiduciary duty to plaintiff to require IRS to
enforce its debt in strict compliance with all applicable laws and regulations.
Yellow responds that it has no duty, fiduciary or otherwise to challenge any process
received from the IRS if it appears on its face to be effective.
In U.S. v. Rogers, 461 US. 677, 103 S. Ct. 2132, 76 L. Ed. 2d 236 (1983), the United
States Supreme Court held that claims of the nature raised by plaintiff “do not require judicial
intervention” (by the employer), but that “it is up to the taxpayer --- to go to court.”
26 USC § 6332(e) provides that compliance with that of a levy discharges that the
receiver of the levy from any obligation or liability to the taxpayer for payments to the IRS in
compliance with the levy.
26 USC § 6332(d)(1) provides a 50% of penalty for failure to comply with a levy.
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This Court is satisfied that Yellow had and has no duty to plaintiff to ignore, resist or
litigate the levy.
Plaintiff’s second and last issue asserts that the Trial Court held that plaintiff’s claims
were not assertable in a state court. Plaintiff asserts no claim that his earnings were incorrectly
computed by Yellow. The discussion of plaintiff’s first issue establishes that plaintiff’s claim
should be made in a suit in which IRS is joined.
It is apparent that this controversy is basically between plaintiff and IRS which is not a
party to this suit. TRCP Rule 19 reads in pertinent part as follows:
19.01 Persons to Be Joined if Feasible. - A person
who is subject to the jurisdiction of the court shall be joined
as a party if (1) in the person’s absence complete relief cannot
be accorded among those already parties, or (2) the person
claims an interest relating to the subject of the action and is so
situated that the disposition of the action in the person’s
absence may (I) as a practical matter impair or impede the
person’s ability to protect that interest, or (ii) leave any of the
persons already parties subject to a substantial risk of
incurring double, multiple, or otherwise inconsistent
obligations by reasons of the claims interest. If the person has
not been so joined, the court shall order that the person be
made a party. If the person properly should join as a plaintiff
but refuses to do so, he or she may be made a defendant, or in
a proper case, an involuntary plaintiff. This rule shall be
construed to allow joint tort-feasors and obligors on
obligations that are joint and several to be sued either jointly
or severally.
19.02. Determination by Court Whenever Joinder
Not Feasible. - If a person as described in Rule 19.01(1)-(2)
hereof cannot be made a party, the court shall determine
whether in equity and good conscience the action should
proceed among the parties before it; or should be stayed or
dismissed, the absent person being thus regarded as
indispensable. The factors to be considered by the court
include: (1) to what extent a judgment rendered in the
person’s absence might be prejudicial to the person or those
already parties; (2) the extent to which, by protective
provisions in the judgment, by the shaping of relief, or other
measures, the prejudice can be lessened or avoided; (3)
whether or not a judgment rendered in the person’s absence
will be adequate; and (4) whether or not the plaintiff will have
an adequate remedy if the action is dismissed for nonjoinder.
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19.03. Pleading Reasons for Nonjoinder. - A
pleading asserting a claim for relief shall state the names, if
known to the pleader, of any persons as described in Rule
19.01(1)-(2) hereof who are not joined, and the reasons why
they are not joined.
The complaint states no reason why IRS was not joined as an interested party. However,
it is doubtful that IRS could be joined in this action without its consent.
Federal courts have jurisdiction of controversies involving the collection of federal taxes.
28 USCA § 1396, 47-B CJS - § 1164 pp. 498 et seq. The preferable route to a complete and just
resolution of the controversy would be a suit within the federal jurisdiction. Although not
claimed by plaintiff, he is allowed an exemption of part of his wages. 28 USCA § 6334(d).
This Court has determined that the present action cannot be justly decided between the
present parties because of the absence of an indispensable party.
The judgment of the Trial Court is affirmed without prejudice to further proceedings in
the Trial Court or other tribunal of competent jurisdiction for an inclusive adjudication of the
rights and liabilities of all interested parties. Costs of this appeal are taxed against the plaintiff
and his surety.
AFFIRMED AND REMANDED.
_________________________________
HENRY F. TODD
PRESIDING JUDGE, MIDDLE SECTION
CONCURS:
_____________________________
BEN H. CANTRELL, JUDGE
_____________________________
WILLIAM B. CAIN, JUDGE
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