Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-02176/USCOURTS-caed-2_05-cv-02176-3/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 26:7401 IRS: Tax Liability

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA,

2:05-cv-2176-MCE-CMK

Plaintiff,

v. MEMORANDUM AND ORDER

MICHAEL CAREY; LEONE CAREY;

DOUGLAS CARPA and ROBERT

TALBOT (or their successor

trustees), as Trustees of the

RANCH HOLDING TRUST; MICHAEL

BLOOMQUIST (or his successor

trustee), as Trustee of the

HIDDEN MEADOWS HOLDING TRUST;

PAMELA GRAFF; PATRICIA WELCH

(aka PATRICIA KOERNER); STATE

of CALIFORNIA FRANCHISE TAX

BOARD, and STATE of CALIFORNIA

DEPARTMENT of INDUSTRIAL

RELATIONS,

Defendants.

______________________________

MICHAEL CAREY and LEONE CAREY,

Cross Claimants,

v.

UNITED STATES OF AMERICA, and

STATE of CALIFORNIA FRANCHISE

TAX BOARD,

Cross Defendants.

Case 2:05-cv-02176-MCE-CMK Document 65 Filed 06/28/06 Page 1 of 7
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Because oral argument will not be of material assistance, 1

the Court orders this matter submitted on the briefs. E.D. Cal.

Local Rule 78-230(h). 

2

Through the present action, the United States of America

(“United States”) seeks, inter alia, to foreclose federal tax

liens, plus penalties and interest, against certain real property

as provided by 26 U.S.C. § 7403. This action has been brought

against Michael and Leone Carey (“Careys”); Douglas Carpa and

Robert Talbot (both as trustees of the Ranch Holding Trust);

Michael Bloomquist (as trustee of the Hidden Meadows Holding

Trust); and various other Defendants.1

On April 10, 2006, the Careys filed a Counter Claim against

the United States and against Paul S. Ham (“Ham”) and McGregor W.

Scott (“Scott”), as counsel for the United States, pursuant to

Fed. R. of Civ. P. 13. This Counter Claim alleges the following

injuries: (1) criminal fraud of identify theft (for the

“unauthorized use of the Carey’s identity ... to foreclose on an

instrument not evidenced in the complaint”); (2) involuntary

servitude (“legal coercion to seize property and money not due

and owing”); (3) libel (“by the filing of an unsupported civil

action”); and (4) “breach of trust by violating the cestui que

trusts” by naming them as parties defendant and “implying the

trusts ... hold ... property that can be attached” by the United

States. Counter Claim, p. 2-3, ¶ 4. For these alleged injuries,

the Careys claim damages in the amount of $32,365,172. Counter

Claim, p. 7.

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Case 2:05-cv-02176-MCE-CMK Document 65 Filed 06/28/06 Page 2 of 7
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3

Now before this Court is the United States’ unopposed Motion

to Dismiss the Careys’ counter claim for 1) failure to state a

claim upon which relief can be granted with respect to Ham and

Scott in their individual capacities pursuant to Fed. R. Civ. P.

12(b)(6); and 2) failure to allege an applicable waiver of

sovereign immunity for the substituted defendant United States

pursuant to Fed. R. Civ. P. 12(b)(1). For the reasons set forth

below, the United States’ Motion to Dismiss is granted.

BACKGROUND

The Court has already set forth a detailed factual

background for this action in its Order dated April 20, 2006,

which is incorporated by reference and need not be reproduced

herein. Mem. & Order 2, April 20, 2006.

STANDARD

I. 12(b)(6) Motion to Dismiss

On a motion to dismiss for failure to state a claim under

Rule 12(b)(6), all allegations of material fact must be accepted

as true and construed in the light most favorable to the

nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336,

337-38 (9th Cir. 1996).

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Case 2:05-cv-02176-MCE-CMK Document 65 Filed 06/28/06 Page 3 of 7
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4

A complaint will not be dismissed for failure to state a claim

“‘unless it appears beyond doubt that plaintiff can prove no set

of facts in support of [his or] her claim that would entitle [him

or] her to relief.’” Yamaguchi v. Dep’t of the Air Force, 109

F.3d 1475, 1480 (9th Cir. 1997) (quoting Lewis v. Tel. Employees

Credit Union, 87 F.3d 1537, 1545 (9th Cir. 1996)).

If the court grants a motion to dismiss a complaint, it must

then decide whether to grant leave to amend. The Court should

“freely give[]” leave to amend when there is no “undue delay, bad

faith[,] dilatory motive on the part of the movant, ... undue

prejudice to the opposing party by virtue of ... the amendment,

[or] futility of the amendment ....” Fed. R. Civ. P. 15(a);

Foman v. Davis, 371 U.S. 178, 182 (1962). Generally, leave to

amend is only denied when it is clear that the deficiencies of

the complaint cannot be cured by amendment. DeSoto v. Yellow

Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).

II. 12(b)(1) Motion to Dismiss

In moving to dismiss for lack of subject matter jurisdiction

pursuant to Rule 12 (b)(1), the challenging party may either make

a “facial attack” on the allegations of jurisdiction contained in

the complaint or can instead take issue with subject matter

jurisdiction on a factual basis (“factual attack”). Thornhill

Publ’g Co. v. Gen. Tel. & Elect. Corp., 594 F.2d 730, 733 (9th

Cir. 1979); Mortensen v. First Fed. Sav. & Loan Ass’n, 549 F.2d

884, 891 (3d Cir. 1977).

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5

If the motion constitutes a facial attack, the Court must

consider the factual allegations of the complaint to be true. 

Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir. 1981);

Mortensen, 549 F.2d at 891. If the motion constitutes a factual

attack, however, “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.” Thornhill, 594 F.2d

at 733 (quoting Mortensen, 549 F.2d at 891).

If the Court grants a motion to dismiss a complaint, it must

then decide whether to grant leave to amend. Generally, leave to

amend should be denied only if it is clear that the deficiencies

of the complaint cannot be cured by amendment. Broughton v.

Cutter Labs., 622 F.2d 458, 460 (9th Cir. 1980).

ANALYSIS

1. United States Substituted as Defendant

The Federal Employees Liability Reform and Tort Compensation

Act (“FELRTCA”) provides that “upon certification by the Attorney

General that the defendant employee was acting within the scope

of his office or employment at the time of the incident out of

which the claim arose ... the United States shall be substituted

as the party defendant.” 28 U.S.C. § 2679(d)(1).

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6

Here, a delegate of the United States Attorney General has

certified that Scott and Ham acted in the scope of their

employment at all times relevant to the Careys’ Counter Claim.

Accordingly, the Careys’ claims against Scott and Ham in

their individual capacities are dismissed without leave to amend. 

Those claims instead shall are deemed brought against the United

States.

 

2. Sovereign Immunity

The United States, as a sovereign, may not be sued without

its consent, and the terms of its consent define this Court’s

jurisdiction. United States v. Dalm, 494 U.S. 596 (1990). The

United States seeks to have the Careys’ claims dismissed on the

ground that the Careys’ have failed to identify any statutory or

judicial authority of waiver or consent. 

Indeed, the Ninth Circuit has clarified that a party

bringing a cause of action against the federal government bears

the burden of showing an unequivocal waiver of immunity. Baker

v. United States, 817 F.2d 560, 562 (9th Cir. 1987) (citing

Holloman v. Watt, 708 F.2d 1399, 1401 (9th Cir. 1983), cert.

denied, 466 U.S. 958, 80 L. Ed. 2d 552, 104 S. Ct. 2168 (1984). 

Plaintiffs have flatly failed to satisfy their burden of showing

an unequivocal waiver of immunity that would permit this Court to

exercise jurisdiction over their claims. Accordingly, the

Plaintiffs’ claims against the United States are dismissed with

leave to amend. 

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7

CONCLUSION

For the reasons set forth above, the Careys’ claims against

Scott and Ham in their individual capacities are dismissed

without leave to amend. The Careys’ claims against the United

States are dismissed with leave to amend. The Court hereby

orders that any such amendment shall be filed no later than ten

(10) days from the date of this Order.

IT IS SO ORDERED.

DATED: June 27, 2006

_____________________________

MORRISON C. ENGLAND, JR

UNITED STATES DISTRICT JUDGE

 

Case 2:05-cv-02176-MCE-CMK Document 65 Filed 06/28/06 Page 7 of 7