Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnd-5_05-cv-01108/USCOURTS-alnd-5_05-cv-01108-0/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 28:2201 Declaratory Judgement

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Plaintiff sues Richardson in both his individual capacity, and in his official capacity as an 1

IRS agent.

See doc. no. 1 (Complaint). 2

28 U.S.C. § 1331 states that “[t]he district courts shall have original jurisdiction of all civil

3

actions arising under the Constitution, laws, or treaties of the United States.”

28 U.S.C. § 1346(a)(1) states: 4

(a) The district courts shall have original jurisdiction, concurrent with the

United States Court of Federal Claims, of:

(1) Any civil action against the United States for the recovery of any

internal-revenue tax alleged to have been erroneously or illegally

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ALABAMA

NORTHEASTERN DIVISION

DOMER L. ISHLER, )

)

Plaintiff, )

)

vs. ) Civil Action No. CV-05-S-1108-NE

)

COMMISSIONER OF INTERNAL, )

REVENUE, UNITED STATES OF )

AMERICA, et al., )

)

Defendants. )

MEMORANDUM OPINION

Plaintiff, Domer L. Ishler, asserts claims against three defendants: (1) the

Commissioner of Internal Revenue for the United States of America (“the

Commissioner”); (2) John L. Richardson, an agent for the Internal Revenue Service

(“IRS”); and (3) Nissei Sangyo America, Ltd. (“NSA”). Plaintiff bases federal 1 2

subject matter jurisdiction on 28 U.S.C. §§ 1331, 1346, 1361, 2201, and 2202, as 3456 7

FILED

 2006 Jul-05 PM 02:26

U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 1 of 54
assessed or collected, or any penalty claimed to have been collected

without authority or any sum alleged to have been excessive or in any

manner wrongfully collected under the internal-revenue laws[.]

28 U.S.C. § 1346(b)(1) states: 

Subject to the provisions of chapter 171 of this title, the district courts,

together with the United States District Court for the District of the canal Zone and

the District Court of the Virgin Islands, shall have exclusive jurisdiction of civil

actions on claims against the United States, for money damages, accruing on and

after January 1, 1945, for injury or loss of property or personal injury or death caused

by the negligent or wrongful act or omission of any employee of the Government

while acting within the scope of his office or employment, under circumstances

where the United States, if a private person, would be liable to the claimant in

accordance with the law of the place where the act or omission occurred.

28 U.S.C. § 1361 states that “[t]he district courts shall have original jurisdiction of any 5

action in the nature of mandamus to compel an officer or employee of the United States or any

agency thereof to perform a duty owed to the plaintiff.”

28 U.S.C. § 2201 states, in pertinent part: 6

(a) In 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, a proceeding under section 505 or 1146 of title 11, or in any

civil action involving an antidumping or countervailing duty proceeding regarding

a class or kind of merchandise of a free trade area country (as defined in section

516A(f)(10) of the Tariff Act of 1930), as determined by the administering authority,

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 seeking such

declaration, whether or not further relief is or could be sought. Any such declaration

shall have the force and effect of a final judgment or decree and shall be reviewable

as such. 

28 U.S.C. § 2201(a) (emphasis supplied). 

Section 2202 states that “[f]urther necessary or proper relief based on a declaratory judgment 7

or decree may be granted, after reasonable notice and hearing, against any adverse party whose rights

have been determined by such judgment.” 28 U.S.C. § 2202. 

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he alleges statutory violations, asserts claims against officials of the United States

government, and requests declaratory relief. All of plaintiff’s claims arise out of a

dispute over his liability for federal income taxes on certain revenue generated in a

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 2 of 54
Plaintiff recently hired counsel. See doc. no. 27 (Notice of Appearance by Cheryl Baswell- 8

Guthrie on behalf of plaintiff). However, he filed his complaint, and all other pleadings pertinent

to this opinion, as a pro se litigant. Plaintiff’s attorney has not sought to amend any of plaintiff’s

pleadings or briefs after appearing as counsel of record. 

Complaint, at 16-19. 9

See id. at ¶¶ 1, 31. 10

See id. at ¶ 1. 11

See id. at ¶¶ 2, 31. 12

Id. at ¶ 51. This court could not locate an Alabama statute entitled the “Alabama Salesman 13

Protection Act.” Thus, the court assumes plaintiff must be referring to the Alabama Sales

Representative’s Commission Contracts Act, Ala. Code §§ 8-24-1 et seq. (1975). The pertinent

provisions of that Act state:

Sales representative commission contracts; commission due.

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business deal involving defendant NSA. 

Plaintiff’s pro se complaint states three explicit causes of action: (1) a claim 8

for a declaratory judgment that plaintiff is entitled to a federal income tax credit for

funds withheld by NSA from the proceeds of a business deal involving plaintiff and

NSA; (2) a claim for “damages for breach of trust or fiduciary duty” against

Richardson and the IRS; and (3) an “informal claim for refund or credit” from the IRS

for taxes allegedly withheld by NSA. In addition, the complaint — certainly no 9

model of clarity — contains allegations that could be construed as alleging the

following, not specifically-enumerated claims: (1) fraud against all defendants; (2) 10

breach of contract against NSA; (3) civil conspiracy against all defendants; and (4) 11 12

a claim for treble damages against NSA under a state statute that plaintiff describes

as the “Alabama Salesman Protection Act.” Plaintiff requests entry of an order 13

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 3 of 54
(a) The terms of the contract between the principal and sales representative

shall determine when a commission is due.

(b) If the time when the commission is due cannot be determined by a

contract between the principal and sales representative, the past practices between the

parties shall control, or if there are no past practices, the custom and usage prevalent

in this state for the business that is the subject of the relationship between the parties

shall control.

(c) All commissions that are due at the time of termination of a contract

between a sales representative and principal shall be paid within thirty days after the

date of termination. Commissions that become due after the termination date shall

be paid within thirty days after the date on which the commissions become due.

Ala. Code § 8-24-2 (1975). The damages provision of the Act states that “[a] principal who fails to

pay a commission as required by Section 8-24-2 is liable to the sales representative in a civil action

for three times the damages sustained by the sales representative plus reasonable attorney’s fees and

court costs.” Ala. Code § 8-24-3 (1975).

See Complaint, at ¶¶ 77-82. Plaintiff requests $25,000,000 in damages from the 14

Commissioner; $150,000,000 from NSA; and $10,000,000 from Richardson. 

Doc. no. 7. Federal Rule of Civil Procedure 12(b) states, in pertinent part:

15

Every defense, in law or fact, to a claim for relief in any pleading, whether a

claim, counterclaim, cross-claim, or third-party claim, shall be asserted in the

responsive pleading thereto if one is required, except that the following defenses may

at the option of the pleader be made by motion: (1) lack of jurisdiction over the

subject matter, (2) lack of jurisdiction over the person, . . . (5) insufficiency of service

of process, [or] (6) failure to state a claim upon which relief can be granted . . . .

Doc. no. 8. 16

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requiring the Commissioner to issue him a tax credit, entry of an order allowing

discovery, and damages in the total amount of $185,000,000. Richardson and the

14

Commissioner jointly filed a motion to dismiss plaintiff’s claims against them

pursuant to subsections (b)(1), (b)(2), (b)(5), and (b)(6) of Federal Rule of Civil

Procedure 12. NSA also moved to dismiss plaintiff’s claims against it pursuant to

15

Rules 12(b)(1) and 12(b)(6). These motions presently are before the court. 16

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 4 of 54
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I. STANDARDS OF REVIEW

A. Rule 12(b)(6): Failure to State a Claim Upon Which Relief Can Be

Granted

The Federal Rules of Civil Procedure require only that a complaint contain a

“‘short and plain statement of the claim’ that will give the defendant fair notice of

what the plaintiff’s claim is and the grounds upon which it rests.” Conley v. Gibson,

355 U.S. 41, 47 (1957) (quoting Fed. R. Civ. P. 8(a)(2)). Consequently, a complaint

should not be dismissed for failing to state a claim upon which relief can be granted

“unless it appears beyond doubt that the plaintiff can prove no set of facts in support

of his claim which would entitle him to relief.” Conley, 355 U.S. at 45-46. Even so,

pleadings must be “something more than an ingenious academic exercise in the

conceivable.” Marsh v. Butler County, 268 F.3d 1014, 1037 (11th Cir. 2001) (en

banc). Although notice pleading may not require that the pleader allege a “specific

fact” to cover every element, or allege “with precision” each element of a claim, the

Eleventh Circuit has explained that the complaint must “contain either direct or

inferential allegations respecting all the material elements necessary to sustain a

recovery under some viable legal theory.” Roe v. Aware Woman Center for Choice,

Inc., 253 F.3d 678, 683 (11th Cir. 2001).

When ruling on a Rule 12(b)(6) motion, the court must accept all well-pleaded

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 5 of 54
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facts as true, and construe them in the light most favorable to the non-moving party.

Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); see also, e.g., Brooks v. Blue

Cross and Blue Shield of Florida, 116 F.3d 1364, 1369 (11th Cir. 1997); Quality

Foods de Centro America, S.A. v. Latin American Agribusiness Dev. Corp., S.A., 711

F.2d 989, 994-95 (11th Cir. 1983). Further, “[a] complaint may not be dismissed

because the plaintiff’s claims do not support the legal theory he relies upon since the

court must determine if the allegations provide for relief on any possible theory.”

Brooks, 116 F.3d at 1369 (emphasis in original) (citation omitted).

Additionally, the Eleventh Circuit has observed that “[a] statute of limitations

defense may be raised on a motion to dismiss for failure to state a claim for which

relief can be granted under Fed. R. Civ. P. 12(b)(6), when the complaint shows on its

face that the limitations period has run.” ACCO Corp. v. Precision Air Parts, Inc.,

676 F.2d 494, 495 (11th Cir 1982). 

B. Rule 12(b)(1): Lack of Subject Matter Jurisdiction

Federal district courts are tribunals of limited jurisdiction, “‘empowered to hear

only those cases within the judicial power of the United States as defined by Article

III of the Constitution,’ and which have been entrusted to them by a jurisdictional

grant authorized by Congress.” University of South Alabama v. The American

Tobacco Co., 168 F.3d 405, 409 (11th Cir. 1999) (quoting Taylor v. Appleton, 30

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 6 of 54
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F.3d 1365, 1367 (11th Cir. 1994)). Accordingly, an “Article III court must be sure

of its own jurisdiction before getting to the merits” of any action. Ortiz v. Fiberboard

Corp., 527 U.S. 815, 831 (1999) (citing Steel Co. v. Citizens for a Better

Environment, 523 U.S. 83, 88-89 (1998)); see also, e.g., Galindo-Del Valle v.

Attorney General, 213 F.3d 594, 598 n.2 (11th Cir. 2000) (observing that federal

courts are “obligated to inquire into subject matter jurisdiction sua sponte whenever

it may be lacking.”), cert. denied, 533 U.S. 949 (2001); University of South Alabama,

168 F.3d at 410 (“[A] court should inquire into whether it has subject matter

jurisdiction at the earliest possible stage in the proceedings.”).

C. Rule 12(b)(2): Lack of Personal Jurisdiction

When ruling upon a Rule 12(b)(2) motion to dismiss for lack of personal

jurisdiction in the absence of an evidentiary hearing,

the plaintiff must establish a prima facie case of personal jurisdiction

over a nonresident defendant. A prima facie case is established if the

plaintiff presents enough evidence to withstand a motion for directed

verdict. The district court must accept the facts alleged in the complaint

as true, to the extent they are uncontroverted by the defendant’s

affidavits. Finally, where the plaintiff’s complaint and the defendant’s

affidavits conflict, the district court must construe all reasonable

inferences in favor of the plaintiff.

Robinson v. Giarmarco & Bill, P.C., 74 F.3d 253, 255 (11th Cir. 1996) (quoting

Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir. 1990) (citations omitted); see also,

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 7 of 54
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh 17

Circuit adopted as binding precedent all Fifth Circuit decisions handed down prior to the close of

business on September 30, 1981.

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e.g., Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir. 1988).

D. Rule (12)(b)(5): Insufficiency of Service of Process

Plaintiff bears the burden of establishing that service was properly effected

pursuant to Federal Rule of Civil Procedure 4. See Prewitt Enterprises, Inc. v.

Organization of the Petroleum Exporting Countries, 224 F.R.D. 497, 501 (N.D. Ala.

2002) (Clemon, J.), aff’d, 353 F.3d 916 (11th Cir. 2003).

E. Pro Se Litigants

Parties who appear pro se are afforded a leniency not granted to those who are

represented by counsel. See, e.g., Hughes v. Rowe, 449 U.S. 5, 9 (1980) (“It is settled

law that the allegations of [a pro se complaint filed by a state prisoner], ‘however

inartfully pleaded,’ are held to ‘less stringent standards than formal pleadings drafted

by lawyers.’”) (quoting Haines v. Kerner, 404 U.S. 519 (1972)); Harmon v. Berry,

728 F.2d 1407, 1409 (11thCir. 1984) (same); Woodall v. Foti, 648 F.2d 268, 271 (5th

Cir. 1981) (“A pro se complaint, however inartfully drafted, must be held to less 17

rigorous standards than the formal pleadings prepared by lawyers and can only be

dismissed for failure to state a claim if it appears ‘beyond doubt that the plaintiff can

prove no set of facts in support of his claim which would entitle him to relief.’”)

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 8 of 54
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(quoting Haines).

Even so, the leniency accorded pro se litigantsis not unqualified. As the Sixth

Circuit has written:

While courts must apply “less stringent standards” in determining

whether pro se pleadings state a claim for which relief can be granted,

Estelle v. Gamble, 429 U.S. 97, 106, 97 S. Ct. 285, 292, 50 L. Ed. 2d

251 (1976), pro se plaintiffs are not automatically entitled to take every

case to trial. As this court has noted, the lenient treatment generally

accorded to pro se litigants has limits. Jourdan v. Jabe, 951 F.2d 108,

110 (6th Cir. 1991). Where, for example, a pro se litigant fails to

comply with an easily understood court-imposed deadline, there is no

basis for treating that party more generously than a represented litigant.

Id.

Pilgrim v. Littlefield, 92 F.3d 413, 416 (6th Cir. 1996). 

II. THE ALLEGATIONS OF PLAINTIFF’S COMPLAINT

During the time period relevant to his complaint, plaintiff served as Chief

Executive Officer of Twentieth Century Marketing (“TCM”), a company engaged in

the business of locating manufacturers of electronic products in Asian nations and

finding markets for the sale of those products within the United States. In 1985,

Ishler (on behalf of TCM) began to negotiate with NSA to locate and purchase audio

cassette tape mechanisms from a Chinese company for installation in the stereo

systems of new Chrysler automobiles. Chrysler agreed to purchase the cassette

mechanisms over a period of at least three years.

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 9 of 54
Complaint, at ¶ 16. 18

See id. at Appendix A-2 (Notice of Termination). Federal Rule of Civil Procedure 12(b) 19

provides that, when ruling on a 12(b)(6) motion to dismiss for failure to state a claim upon which

relief can be granted, and

matters outside the pleadings are presented to and not excluded by the court, the

motion shall be treated as one for summary judgment and disposed of as provided in

Rule 56, and all parties shall be given reasonable opportunity to present all material

made pertinent to such a motion by Rule 56. 

Fed. R. Civ. P. 12(b). 

Even so, there are several circumstances in which a court may consider matters outside the

pleadings when ruling upon a 12(b)(6) motion to dismiss, without formally converting it to a Rule

56 motion for summary judgment. See, e.g., Harris v. Ivax Corp., 182 F.3d 799, 802 n.2 (11th Cir.

1999) (observing that there are some circumstances in which “the usual rules for considering

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During the negotiation period of TCM’s contract with NSA, TCM also

partnered with Camaro Trading Company of Hong Kong (“Camaro”) to assist in

obtaining the cassette mechanisms for sale to Chrysler. The arrangement with

Camaro was beneficial to TCM, because Camaro was “in a position to provide and

promote financing, clerical, and inspection work, and the necessary services to

purchase and sell products fromChina.” Chrysler paid NSA directly for the cassette 18

mechanisms it purchased, and NSA agreed to pay Camaro a five-percent (5%) sales

commission on its sales proceeds from Chrysler. Camaro, in turn, agreed to share a

portion of this commission with TCM. Between the years 1984 and 1990, this

agreement generated approximately $90,000,000 to $100,000,000 in revenue for

NSA.

On March 31, 1989, NSA terminated its agreement with Camaro. Plaintiff 19

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 10 of 54
12(b)(6) motions are . . . bent”).

One occasion that allows for deviation from the rules is when copies of documents are

attached to a plaintiff’s complaint. Id. (“Ordinarily, the full text of [a document] would not be part

of the record under review for a dismissal under Fed.R.Civ.P. 12(b)(6) unless it was attached to the

complaint.”) (emphasis supplied) (citing 5 Charles A. Wright & Arthur Miller, Federal Practice and

Procedure § 1356, at 590-92 (1969));see also Brooks v. Blue Cross and Blue Shield of Florida, 116

F.3d 1364, 1368 (11th Cir. 1997) (observing that 12(b)(6) motions are “limited primarily to the face

of the complaint and attachments thereto”) (emphasis added). Thus, considering the appendices to

plaintiff’s complaint does not require the court to convert the pending motions to dismiss to motions

for summary judgment.

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states the reason for the termination was NSA’s desire to increase profits by

eliminating Camaro as a broker, and thereby eliminating Camaro’s five-percent

commission fee. The Notice of Termination delivered to Camaro by NSA stated:

When we made the Agreement with you, you let us assume that

you were an Alabama corporation when in fact, as we have just

discovered, you are a Hong Kong corporation. Thereafter, we asked you

at least twice about income-tax withholding, and you said that we had

no withholding obligation, but you failed to furnish us with IRS Form

4224 (Exemption from Withholding of Tax on Income Effectively

Connected with the Conduct of a Trade or Business in the United

States). As you well know, we have not made any withholdings from

the commissions paid to you nor, of course, have we filed IRS Form

1042 (Annual Withholding Tax Return for U.S. Source Income of

Foreign Persons) or IRS Form 1042S (Foreign Person’s U.S. Source

Income Subject to Withholding) as to any of those commissions.

Our tax lawyers have concluded that under these circumstances

your status as a foreign corporation, in the absence of Form 4424,

required us to make the 30% withholding applicable under U.S. tax

laws, IRC §881(a), even though that status was unknown to us, and that

accordingly our failure to do so, or to make the requisite IRS filings, has

exposed usto liability to the IRS. That exposure would compromise not

only the amounts not withheld, plus interest, but statutory penalties as

well. At this juncture, we see the exposure as being in the high six

figures.

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 11 of 54
Complaint, at Appendix A-2 (Notice of Termination). Paragraph 13(a) of the Sales 20

Representative Agreement between Camaro and NSA stated: 

The relationship created by this Agreement is that [of] principal and selling

agent. [Camaro] is an independent contractor and not an employee of [NSA].

[Camaro] shall not, without prior written consent of [NSA], have any right or

authority, express or implied, to create or assume any obligation of any kind or nature

whatsoever on behalf of [NSA], or to accept legal process, or make any warranty or

representation on behalf of [NSA], or obligate or render [NSA] liable in any manner

whatsoever.

Doc. no. 11 (NSA’s brief in support of motion to dismiss), Exhibit C (“Sales Representative

Agreement”), at ¶ 13(a). Paragraph 12(a)(iii) stated:

Either party may terminate this Agreement immediately upon written notice

in the event that the other party shall breach any term or condition of this Agreement,

shall become insolvent, shall make an assignment for the benefit of creditors, shall

take advantage of any insolvency act or statute, shall commit an act of bankruptcy,

shall have filed against it a petition in bankruptcy or insolvency or for the

appointment of a receiver or trustee of all or a portion of its property, which petition

shall not be dismissed within ten (10) days to bond or make payment on any

execution upon a judgement [sic] against it, or either party shall attempt, without

prior written consent of the other party, to assign all or any part of this Agreement,

or any rights accruing hereafter.

Id. at ¶ 12(a)(iii). 

Another occasion allowing for deviation from the requirement to convert a 12(b)(6) motion

to one for summary judgment arises when a defendant attaches to its motion to dismiss a document

that is central to the claims in a plaintiff’s complaint, and the contents of that document are not in

dispute. In such cases, the court may refer to the document without converting the motion into one

for summary judgment. Harris, 182 F.3d at 802 n.2 (observing that “a document central to the

complaint that the defense appends to its motion to dismiss is also properlyconsidered, provided that

its contents are not in dispute”). Stated differently, a court may consider such documents as

part of the pleadings for purposes of Rule 12(b)(6) dismissal, and the defendant’s

attaching such documents to the motion to dismiss will not require conversion of the

motion into a motion for summary judgment. Venture Assoc. Corp. v. Zenith Data

Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993) (“Documents that a defendant attaches

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You have thus obligated us and rendered us liable to the Internal

Revenue Service, in breach of paragraph 13(a) ofthe Agreement, and we

hereby terminate the Agreement as provided in paragraph 12(a)(iii),

effective at once.20

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 12 of 54
to a motion to dismiss are considered part of the pleadings if they are referred to in

the plaintiff’s complaint and are central to her claim.”). . . .

Brooks, 116 F.3d at 1369. Plaintiff referred to the Sales Representative Agreement in his complaint,

and the Agreement is central to plaintiff’s claim. Additionally, the contents of the Agreement are

not in dispute. Thus, the court may consider the Agreement without converting the pending motions

to dismiss into motions for summary judgment.

See Complaint, at ¶ 22; doc. no. 11 (NSA’s brief in support of motion to dismiss), at 21

Exhibit A (copy of opinion by the Alabama Supreme Court in Camaro Trading Co. v. Nissei Sangyo

America, Ltd., 628 So. 2d 463 (Ala. 1993)). See also supra, note 20.

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NSA also filed a lawsuit for declaratory judgment in the courts of the state of

Alabama. On September 3, 1993, the Supreme Court of Alabama affirmed the

declaration of the lower court that no enforceable contract existed between NSA and

Camaro.21

For a time, NSA continued to pay Camaro the commissions due to it from

NSA’s prior sales to Chrysler. Then, on April 12, 1989, NSA sent Camaro a letter

bearing the heading “Notice of Set-Off and Deficiency.” The letter stated:

Please refer to our Notice of Termination dated March 31, 1989

(“Termination Date”), whereunder we terminated the January 1, 1987

Sales Representative Agreement (“Agreement”) between you and

ourselves (without in anyway conceding that such Agreement is, or ever

was, valid or enforceable against us), and notified you that we would

take appropriate steps to collect any damages we may suffer for having

failed, through your actions, to withhold U.S. taxes from the

commissions paid to you under the Agreement. In computing the

damages due to us, we intend to take into account your unpaid

commissions on sales made prior to the Termination Date — though

there is no legal requirement that we do so.

Accordingly, this is to notify you that we will retain those

commissions to offset, at least partially, our own liability for the taxes

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 13 of 54
Complaint, at Appendix A-2 (Notice of Set-Off and Deficiency). 22

See Complaint, at ¶ 24. Plaintiff states this amount now has increased to “at least $1.5 23

million to $2.5 million.” Id. at ¶ 29. 

See id. 24

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not withheld. At present, we estimate that such commissions (assuming,

for this purpose only, that any commissions are legally due to you)

would total approximately $400,000, based on forecasted deliveries

through the end of July.

Of course, we cannot predict how the IRS will decide the matter,

though in self-protection we will try to induce them, on one basis or

another, to accept less than the full amount owed, and we hope that a

compromise will be available. Then, when our IRS situation has been

resolved, we will seek reimbursement from you, through legal

proceedings if necessary, for any assessment beyond the commissions

legally due to you and retained by us, plus our other damages, costs and

expenses including attorneys’ fees.

We are bringing the entire matter to the attention of the U.S.

taxing authorities at once, so as to make some attempt to lessen our

exposure to the IRS, and hence yours to us, and also to try to prevent

any damage to our reputation and standing with the IRS. Your own

liability for payment of U.S. taxes is, of course, a totally separate matter

and does not affect our withholding obligation. If you conclude that you

are not liable for any U.S. taxes and are entitled to a refund of the

amounts withheld, any action to be taken at or with the IRS to obtain

such a refund is your responsibility and will have to be taken by you.22

Plaintiff characterizes this letter as an admission by NSA that it owes Camaro

more than $400,000 in accrued commissions. He also alleges that NSA’s 23

withholding of $400,000 created an “IRS Trust Fund,” held by NSA to satisfy his

(and Camaro’s) tax liability. Plaintiff relies on Section 7501 of the Internal 24

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 14 of 54
Id. at ¶¶ 26-27. 25

Id. at ¶ 31. See also doc. no. 11 (NSA’s brief in opposition to motion to dismiss), at Exhibit

26

B (March 28, 2002 opinion of the United States Tax Court). See also supra, note 20.

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Revenue Code, which states that

[w]henever any person is required to collect or withhold any

internal revenue tax from any other person and to pay over such tax to

the United States, the amount of tax so collected or withheld shall be

held to be a special fund in trust for the United States. The amount of

such fund shall be assessed, collected, and paid in the same manner and

subject to the same provisions and limitations (including penalties) as

are applicable with respect to the taxes from which such fund arose.

26 U.S.C. § 7501(a). NSA never paid the withheld commissions to Camaro, TCM,

or plaintiff, and “it has never been determined” that NSA paid the money over to the

IRS. 

25

The IRS conducted a criminal investigation and audit of plaintiff and TCM for

the 1988 and 1989 tax years, and assessed taxes on $2,000,000 in commissions

actually paid by NSA to Camaro during those years. TCM received $650,000 of that

amount as a “sub-commission” under its contract with Camaro, and TCM paid

income taxes on the $650,000 sum. Plaintiff asserts that this payment satisfied all of

his (and TCM’s) federal tax liability. Nonetheless, in 2002, the United States Tax

Court upheld the assessments imposed upon plaintiff and TCM for taxes on the full

$2,000,000 in commission fees. The Tax Court also declared that plaintiff should be

held individually responsible for Camaro’s tax liability. The IRS refuses to 26

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 15 of 54
Complaint, at ¶¶ 32, 33. 27

The materials submitted bythe parties do not indicate the length of plaintiff’s incarceration, 28

or the criminal statute under which he was prosecuted.

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acknowledge the existence of any trust funds created by NSA’s withholdings, and it

denies that it ever received any money from NSA to satisfy Camaro’s tax liability.

Thus, the IRS insists that plaintiff is liable for income taxes on all of Camaro’s

commissions, even though NSA already withheld funds from those commissions to

pay taxes. 

27

In 1990, plaintiff’s attorney made a demand that the IRS provide plaintiff a tax

credit in the amount of the funds withheld by NSA. The IRS never responded to this

demand in any manner, and it has refused to respond to any of plaintiff’s inquiries

about the credit.

Defendant John Richardson, an agent for the IRS, was assigned to investigate

plaintiff’s case in 1990. In order to arrange a meeting with plaintiff and his counsel

on March 28, 1990, Richardson assured plaintiff that the criminal investigation

against him had been closed, and that only a civil investigation remained. Despite

this representation, however, the criminal charges against plaintiff were reopened

several months later, and plaintiff eventually was incarcerated. Richardson also 28

refused to close the civil investigation file on plaintiff, even though he knew that

NSA had withheld funds from Camaro that, plaintiff alleges, should have been used

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 16 of 54
Complaint, at ¶ 54. 29

26 U.S.C. § 6331(a) grants the I.R.S. the right to levy on a taxpayer’s property in order to

30

collect on an unpaid tax liability. That section states:

If any person liable to pay any tax neglects or refuses to pay the same within

10 days after notice and demand, it shall be lawful for the Secretary to collect such

tax (and such further sum as shall be sufficient to cover the expenses of the levy) by

levy upon all property and rights to property (except such property as is exempt under

-17-

to satisfy Camaro’s tax liability. Additionally, Richardson failed to honor, or even

to investigate, plaintiff’s demand for a tax credit in the amount of the funds withheld

by NSA. Richardson also failed to acknowledge an offer by plaintiff’s attorney to

hold $400,000 in escrow for payment to the United States pending settlement of the

civil proceedings against plaintiff, as long as NSA also paid into escrow the

commissions it withheld from Camaro. Plaintiff claims that Richardson engaged in

this conduct with the purposes of destroying TCM as a business, and of ruining

plaintiff financially.

The IRS also investigated NSA for fraudulent conduct during the years 1984-

1989. The IRS agreed not to prosecute NSA for approximately $100,000,000 in taxes

due, and instead allowed NSA to shift the focus of the investigation to plaintiff, TCM,

and Camaro. 

Plaintiff alleges that the total amount sought from him by the IRS, including

penalties and interest, is $4,000,000. The IRS apparently has instituted collection

29

proceedings against plaintiff, and plaintiff apparently requested and received a 30

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 17 of 54
section 6334) belonging to such person or on which there is a lien provided in this

chapter for the payment of such tax. Levy may be made upon the accrued salary or

wages of any officer, employee, or elected official, of the United States, the District

of Columbia, by serving a notice of levy on the employer (as defined in section

3401(d)) of such officer, employee, or elected official. If the Secretary makes a

finding that the collection of such tax is in jeopardy, notice and demand for

immediate payment of such tax may be made by the Secretary and, upon failure or

refusal to pay such tax, collection thereof by levy shall be lawful without regard to

the 10-day period provided in this section.

26 U.S.C. § 6331(a).

26 U.S.C. § 6330 provides the right to such a hearing, stating, in pertinent part:

31

(a) Requirement of notice before levy. — 

(1) In general. — No levy may be made on any property or

right to property of any person unless the Secretary has notified such

person in writing of their right to a hearing under this section before

such levy is made. Such notice shall be required only once for the

taxable period to which the unpaid tax specified in paragraph (3)(A)

relates.

Complaint, Appendix A-1 (Notice of Determination), at unnumbered page 2. 32

-18-

collection due process hearing concerning his 1988-89 income tax liability with the

IRS Appeals Office. On May 4, 2005, he received a Notice of Determination from

31

the Appeals Office, setting forth the decision on the collection due process hearing.

The Notice stated: “The Internal Revenue Service may proceed with whatever

collection action they deem appropriate since you did not provide the necessary

financial information for review or offer any alternative to collection that could be

accepted at this time.” The Notice also informed plaintiff: “If you want to dispute

32

this determination in court, you must file a petition with the United States Tax Court

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 18 of 54
Id. at unnumbered page 1 (emphasis supplied). 33

Richardson and the Commissioner also argue that plaintiff’s complaint should be dismissed 34

for insufficiency ofservice of process under Federal Rule 12(b)(5). The court need not consider this

argument, because, as set forth infra, plaintiff’s claims against these defendants are due to be

dismissed on other grounds. However, if the court were considering the issue, it would be inclined

not to dismiss the claims of a pro se plaintiff for failure to serve, especially considering that Federal

Rule 4(i)(3) states that a court should “allow a reasonable time to serve process under Rule 4(i) for

the purpose of curing the failure to serve” officers or employees of the United States government.

Plaintiff makes no argument on this point in his brief. 35

-19-

for a redetermination within 30 days from the date of this letter.” Plaintiff did not 33

file a petition with the Tax Court, but instead filed his complaint with this court on

May 31, 2005.

III. DISCUSSION

A. Motion to Dismiss by the Commissioner of Internal Revenue and John L.

Richardson in His Official Capacity

Richardson and the Commissioner argue that this court lacks jurisdiction over

Ishler’s claims, and that they are entitled to sovereign immunity. 

34

1. Lack of Jurisdiction

The Commissioner is correct that plaintiff’s claims — to the extent they may

be construed as an appeal of the collection due process determination by the IRS —

are not properly before this court. Pursuant to 26 U.S.C. § 6330, a taxpayer wishing 35

to appeal an IRS collection due process determination must do so in the Tax Court,

unless the Tax Court does not have jurisdiction of the underlying tax liability, in

which event the appeal may be made to a United States District Court. See 26 U.S.C.

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 19 of 54
The Notice of Determination plaintiff received from the IRS specifically informed plaintiff 36

that, if he wished to “dispute this determination in court, [he] must file a petition with the United

States Tax Court for a redetermination within 30 days from the date of this letter.” Complaint,

Exhibit A-1 (Notice of Determination). 

Complaint, at ¶ 1 (emphasis supplied). 37

-20-

§ 6330. The Tax Court does possess jurisdiction of disputes relating to income 36

taxes. See 26 C.F.R. § 601.102(b)(1)(I). Thus, a panel of the Eleventh Circuit has

held that “[t]he tax court has exclusive jurisdiction over challenges to an IRS

determination of income tax liability.” Peterson v. Kreidich, 139 Fed. Appx. 134,

135-36 (11th Cir. 2005)(per curiam) (emphasis supplied) (citing 26 U.S.C. §§

6212(a), 6213(a), 7442; 26 C.F.R. §§ 301.6330-1(f)(2)(Q-F3 & A-F3),

601.102(b)(1)(i)). This exclusive jurisdiction extends to disputes over due process

violations arising out of the collection of income taxes. See Peterson, 139 Fed. Appx.

at 136 (citing Voelker v. Nolen, 365 F.3d 580, 581 (7th Cir. 2004); Marino v. Brown,

357 F.3d 143, 146 (1st Cir. 2004); Martin v. C.I.R., 756 F.2d 38, 40 (6th Cir. 1985)).

Here, plaintiff’s Count Two falls within the exclusive jurisdiction of the Tax

Court. In the first paragraph of his complaint, plaintiff acknowledges that his claims,

“in part,” regard “the May 4, 2005, Internal Revenue Service, Appeals Office . . .

Notice of Determination Concerning Collection Action(s).” Count Two, entitled 37

“Damages for Breach of Trust or Fiduciary Duty,” fits this characterization precisely.

It states:

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 20 of 54
Id. at ¶¶ 70-72 (emphasis supplied). 38

-21-

70. Ishler avers that the Internal Revenue Service has been

engaged in a continuing conspiracy of deprivation of due process,

statutory rights, and rights identified in the United States Supreme Court

and lower federal court decisions.

71. Ishler avers that the most recent deprivation occurred when

IRS appeals agent Celestine Morgan, of Birmingham, Alabama,

Collection Due Process Hearing Officer, failed by either refusal or

neglect to take into consideration the certified and attested fact that NSA

had withheld $400,000.00 plus all subsequent commissions, as

identified in a letter produced by NSA dated April 12, 1989.

72. Ishler avers that despite NSA’s declared withholding of the

specific sum of $400,000.00 and all of the remaining commissions due

to Ishler/TCM/Camaro as a result of NSA’s sales to Chrysler, the

Internal Revenue Service has never taken any action against NSA, even

after Ishler made a demand and claim for credit for the funds withheld

by NSA.38

This claim clearly seeks review of the decision by the Collection Due Process

Hearing officer. As the Tax Court possesses exclusive jurisdiction over this claim,

it is due to be dismissed from this court.

Construed most favorably to plaintiff, his other claims — those for a

declaratory judgment, an informal claim of refund, fraud, and civil conspiracy —

cannot be considered solely as appeals of the collection due process determination.

Even so, some of those claims — those for money damages against the

Commissioner, and against Richardson in his official capacity — are barred by the

doctrine of sovereign immunity.

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 21 of 54
-22-

2. Sovereign immunity

“The United States, as sovereign, is immune from suit save asit consents to be

sued.” United States v. Sherwood, 312 U.S. 584, 586 (1941) (citations omitted). All

waivers of the nation’s sovereign immunity must be “unequivocally expressed,” and

all expressed waivers will be strictly construed. United States v. Nordic Village, Inc.,

503 U.S. 30, 33 (1994); see also id. at 34 (recognizing the “traditional principle that

the Government’s consent to be sued ‘must be construed strictly in favor of the

sovereign,’ . . . and not ‘enlarge[d] . . . beyond what the language requires’”)

(citations omitted) (bracketed alterations in original); Library of Congress v. Shaw,

478 U.S. 310, 318 (1986) (“In analyzing whether Congress has waived the immunity

of the United States, we must construe waivers strictly in favor of the sovereign . . .

and not enlarge the waiver “‘beyond what the language requires.’”) (citations

omitted). When it applies, sovereign immunity is “a complete bar to lawsuits” against

the United States. State of Fla., Dept. of Business Regulation v. U.S. Dept. of

Interior, 768 F.2d 1248, 1251 (11th Cir. 1985). 

The protection of sovereign immunity generally extends to claims against the

United States, agencies of the United States government, and employees of those

agencies sued in their official capacities. See, e.g., Simons v. Vinson, 394 F.2d 732,

736 (5th Cir. 1968) (“The immunity of the sovereign, however, extends to its agencies

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 22 of 54
An exception to this general principle exists when the suit alleges: “(1) action by officers 39

beyond their statutory powers and (2) even though within the scope of their authority, the powers

themselves or the manner in which they are exercised are constitutionally void.” Dugan, 372 U.S.

at 621-22 (citing Malone v. Bowdoin, 369 U.S. 643, 647 (1962)). Plaintiff does not allege that either

of these exceptions applies here.

-23-

. . . and to the officers of these agencies.”); Kozera v. Spirito, 723 F.2d 1003, 1008-09

(1st Cir. 1983) (“A federal officer sued for damages in her official capacity is immune

from suit absent an express consent to suit or waiver of immunity.”) (citation

omitted). As the Eleventh Circuit has stated:

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. Alabama Rural Fire

Insurance Co. v. Naylor, 530 F.2d 1221, 1225 (5th Cir. 1976). See

Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 687 n.6,

69 S. Ct. 1457, 1460 n.6, 93 L. Ed. 1628 (1949). 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. Dugan v. Rank,

372 U.S. 609, 620, 83 S. Ct. 999, 1006, 10 L. Ed. 2d 15 (1963);

Alabama Rural Fire Insurance Co. v. Naylor, 530 F.2d at 1225.

Panola Land Buyers Ass’n v. Shuman, 762 F.2d 1550, 1555 (11th Cir. 1985). 

39

Here, plaintiff seeks monetary damages from Richardson in his official and

individual capacities. He seeks both monetary damages and injunctive relief from the

Commissioner, in his official capacity only. Any judgment on plaintiff’s claims for

monetary damages against the Commissioner and Richardson, in their respective

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 23 of 54
Plaintiff seeks a declaration that the Commissioner be required “to credit Ishler with any 40

funds withheld by NSA from Ishler/TCM/Camaro, including the accrued increased amount of such

funds at the appropriate interest rate commencing at the time the funds were withheld up to the

present . . . .” Complaint, at ¶ 77. 

26 U.S.C. § 7214(a) provides, in pertinent part:

41

(a) Unlawful acts of revenue officers or agents. — Anyofficer or employee

of the United States acting in connection with any revenue law of the United States

— 

. . . .

(2) who knowingly demands other or greater sums than are authorized

by law, or receives any fee, compensation, or reward, except as by

law prescribed, for the performance of any duty,

. . . .

shall be dismissed from office or discharged from employment and, upon conviction

-24-

official capacities, would be satisfied out of the federal treasury. Additionally,

plaintiff’s claims for injunctive relief against the Commissioner seek to compel the

Commissioner to take action on behalf of the IRS. Thus, all of plaintiff’s claims 40

against the Commissioner (both for money damages, and for equitable relief), as well

as plaintiff’s claims for money damages against Richardson in his official capacity,

are, in reality, claims against the United States. These claims will be barred by the

sovereign immunity of the United States, unless a waiver of immunity applies.

Plaintiff relies on 26 U.S.C. §§ 7214(a)(2), 7432(a), and 7433(a) to support a

waiver of sovereign immunity in this case. First, section 7214 is a criminal statute,

and thus cannot be relied upon to provide the basis for a waiver of sovereign

immunity in this civil case. 

41

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 24 of 54
thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years,

or both. The court may in its discretion award out of the fine so imposed an amount,

not in excess of one-half thereof, for the use of the informer, if any, who shall be

ascertained by the judgment of the court. The court also shall render judgment

against the said officer or employee for the amount of damages sustained in favor of

the party injured, to be collected by execution.

26 U.S.C. § 7214(a) (emphasis in original).

-25-

Section 7432 also does not provide an applicable waiver of immunity. That

section, relating to an IRS agent’s failure to release a tax lien, states in pertinent part:

(a) In general. — If any officer or employee of the Internal

Revenue Service knowingly, or by reason of negligence, fails to release

a lien under section 6325 on property of the taxpayer, such taxpayer

may bring a civil action for damages against the United States in a

district court of the United States.

26 U.S.C. § 7432(a) (boldface emphasis in original, italicized emphasis supplied).

Section 6325 states, in pertinent part:

(a) Release of lien. — Subject to such regulations as the Secretary

may prescribe, the Secretary shall issue a certificate of release of any

lien imposed with respect to any internal revenue tax not later than 30

days after the day on which —

(1) Liability satisfied or unenforceable. — The Secretary

finds that the liability for the amount assessed, together with all

interest in respect thereof, has been fully satisfied or has become

legally unenforceable; or 

(2) Bond accepted. — There is furnished to the Secretary

and accepted by him a bond that is conditioned upon the payment

of the amount assessed, together with all interest in respect

thereof, within the time prescribed by law (including any

extension of such time), and that is in accordance with such

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 25 of 54
See doc. no. 11, at Exhibit B. 42

Id. at Exhibit F. 43

The full text of the pertinent portion of the regulation reads: 44

(e) No civil action in federal district court prior to filing an administrative claim

-26-

requirements relating to terms, conditions, and form of the bond

and sureties thereon, as may be specified by such regulations.

26 U.S.C. § 6325(a) (boldface emphasis in original; italicized emphasis supplied).

Section 7432 clearly does not apply to plaintiff’s claims in this suit. As an

initial matter, plaintiff did not file suit against the United States, as the statute

requires, but against officials of the United States government. Further, and more

importantly, plaintiff has not shown that he hasfully satisfied his income tax liability.

To the contrary, the present dispute arises out of the fact that plaintiff has not paid

taxes. Plaintiff also has not shown that his tax liability has been declared legally

unenforceable by any administrative, legislative, or judicial entity. To the contrary,

the United States Tax Court upheld plaintiff’s tax liability, and that decision was

42

affirmed by the Eleventh Circuit Court of Appeals. 

43

Additionally, plaintiff has failed to comply (or at least to demonstrate his

compliance) with the administrative prerequisites to bringing a suit under § 7432.

The regulations implementing § 7432 require a plaintiff to file, and to receive a

decision upon, an administrative claim before filing suit in federal court. See 26

C.F.R. § 301.7432-1(e). Plaintiff has offered no proof, or even an allegation, that 44

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 26 of 54
— 

(1) Except as provided in paragraph (e)(2) of this section, no action

under paragraph (a) of this section shall be maintained in any federal district

court before the earlier of the following dates:

(i) The date a decision is rendered on a claim filed in

accordance with paragraph (f) of this section; or

(ii) The date 30 days after the date an administrative claim is

filed in accordance with paragraph (f) of this section.

(2) If an administrative claim is filed in accordance with paragraph (f)

of this section during the last 30 days of the period of limitations described

in paragraph (i) of this section, the taxpayer may file an action in federal

district court anytime after the administrative claim is filed and before the

expiration of the period of limitations, without waiting for 30 days to expire

or for a decision to be rendered on the claim.

26 C.F.R. § 301.7432-1(e) (emphasis in original).

-27-

he has filed an administrative claim, much less that he has received a decision on such

a claim. Therefore, he cannot maintain a claim under 26 U.S.C. § 7432(a), and he is

not entitled to assert a waiver of sovereign immunity based on that statute. See, e.g.,

Shaw, 478 U.S. at 318 (stating the general principle that all waivers of sovereign

immunity must be strictly construed).

Neither can plaintiff rely on the waiver of sovereign immunity provided by 26

U.S.C. § 7433. That section, relating to unauthorized collection actions, states in

pertinent part:

(a) In general. – If, in connection with any collection of Federal

tax with respect to a taxpayer, any officer or employee of the Internal

Revenue Service recklessly or intentionally, or by reason of negligence

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 27 of 54
-28-

disregards any provision of this title, or any regulation promulgated

under this title, such taxpayer may bring a civil action for damages

against the United States in a district court of the United States. Except

as provided in section 7432, such civil action shall be the exclusive

remedy for recovering damages resulting from such actions.

26 U.S.C. §7433 (boldface emphasis in original, italicized emphasis supplied). 

Again, the court points out that plaintiff asserts his § 7433 claim against

officials of the United States government, not against the United States. In addition,

plaintiff’s claim does not challenge actions taken by an IRS employee during

collection of his tax liability. Indeed, there is no indication that the IRS actually has

begun collection actions. Plaintiff apparently has been given notice that such actions

are impending, and he has received a collection due process hearing. His present

lawsuit is, in part, an attempt to appeal that hearing, but there is no indication that the

IRS has begun to collect on the debt. 

Instead, plaintiff’s claim challenges the assessment of the tax itself. Such a

claim is not cognizable under § 7433. In this regard, the court finds the holding of

the Fifth Circuit in Shaw v. United States, 20 F.3d 182 (5th Cir. 1994) to be

persuasive. There, the court held that 

[t]he plain language of [§ 7433] is well supported by the statute’s

legislative history. Although in its early form the statute granted

taxpayers the right to sue “for damages in connection with the

determination or collection of any Federal tax,” H.R. Conf. Rep. No.

100-1104, 100th Cong., 2d Sess. 228 (1988), reprinted in 1988

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 28 of 54
Additionally, plaintiff has failed to satisfy the administrative prerequisites to bringing a § 45

7433 claim. The regulations implementing § 7433 state, in pertinent part:

-29-

U.S.C.C.A.N. 4515, 5288 (emphasis added), Congress later deleted that

portion of the statute that referred to determination of taxes. As the

Conference Agreement states, § 7433 “is limited to reckless or

intentional disregard in connection with the collection of taxes. An

action under this provision may not be based on alleged reckless or

intentional disregard in connection with the determination of tax.” H.R.

Conf. Rep. No. 100-1104, 100th Cong., 2d Sess. 229 (1988), reprinted

in 1988 U.S.C.C.A.N. 4515, 5289 (emphasis added). Therefore, based

upon the plain language of the statute, which is clearly supported by the

statute’s legislative history, a taxpayer cannot seek damages under §

7433 for an improper assessment of taxes. See also Miller v. United

States, 763 F. Supp. [1534,] 1543 [(N.D. Cal. 1991)] (noting the

difference between an assessment activity and a collection activity). In

this case, although the IRS improperly assessed tax liability against Mrs.

Shaw, it did not engage in improper collection procedures. Thus, Mrs.

Shaw cannot collect damages under § 7433.

Shaw, 20 F.3d at 184 (emphasis in original) (footnote omitted). See also Gandy

Nursery, Inc. v. United States, 412 F.3d 602, 607 (5th Cir. 2005) (“We have

previously determined that § 7433 is not the proper vehicle for recovering damages

relating to an improper assessment of taxes.”) (emphasis in original). As plaintiff has

no cognizable claimunder § 7433, the waiver of sovereign immunity provided by that

statute does not apply. See Brewer v. Commissioner, Internal Revenue, – F. Supp. 2d

– , 2006 WL 1310687, at *3-4 (S.D. Ala. May 12, 2006) (holding that a plaintiff who

could not state a viable claim under § 7433 also could not avail itself of that statute’s

waiver of sovereign immunity).45

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 29 of 54
(d) No civil action in federal district court prior to filing an

administrative claim – 

(1) Except as provided in paragraph (d)(2) of this section, no action

under paragraph (a) of this section shall be maintained in any federal district

court before the earlier of the following dates:

(i) The date the decision is rendered on a claim filed in

accordance with paragraph (e) of this section; or

(ii) The date six months after the date an administrative claim

is filed in accordance with paragraph (e) of this section.

(2) If an administrative claim is filed in accordance with paragraph (e)

of this section during the last six months of the period of limitations

described in paragraph (g) of this section, the taxpayer may file an action in

federal district court any time after the administrative claim is filed and

before the expiration of the period of limitations.

26 C.F.R. § 301.7433-1(d) (emphasis in original). Plaintiff has offered no proof, or even an

allegation, that he has complied with these administrative prerequisites. 

-30-

The waiver of immunity set forth in the Federal Tort Claims Act, 28 U.S.C. §§

1346(b), 2671 et seq. (“FTCA”), also does not apply. Although the FTCA usually

does provide a waiver of the nation’s sovereign immunity, Phillips v. United States,

260 F.3d 1316, 1318 (11th Cir. 2001), there is an exception to that waiver for taxrelated claims. 28 U.S.C. § 2680 states, in pertinent part, that the FTCA does not

apply to “[a]ny claim arising in respect of the assessment or collection of any tax or

customs duty . . . .” 28 U.S.C. § 2680(c). This provision has been interpreted broadly,

and its purpose is to protect the United States from suits arising out of any of its taxrelated activities. See Capozzoli v. Tracey, 663 F.2d 654, 657 (5th Cir. Dec. 1981)

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 30 of 54
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(“[I]n enacting Section 2680(c) of the FTCA, Congress intended to insulate the IRS

from tort liability stemming from any of its revenue-raising activities.”); Quickley v.

United States, No. CIVA1:04CV1454-TWT, 2004 WL 2827880 (N.D. GA. Oct. 20,

2004) (“[Section 2680(c)] has been given a broad interpretation and applies to suits

for damages stemming from activities undertaken to collect taxes.”). As plaintiff’s

claims in this suit relate to the Commissioner’s assessment of income tax liability,

those claims fall under the § 2680(c) exception to the FTCA’s waiver of sovereign

immunity.

Finally, the waiver of sovereign immunity for a tax refund suit does not apply.

28 U.S.C. § 1346(a)(1) provides this waiver, stating:

(a) The district courts shall have original jurisdiction, concurrent

with the United States Court of Federal Claims, of:

(1) Any civil action against the United States for the

recovery of any internal-revenue tax alleged to have been

erroneously or illegally assessed or collected, or any penalty

claimed to have been collected without authority or any sum

alleged to have been excessive or in any manner wrongfully

collected under the internal-revenue laws[.]

28 U.S.C. § 1346(a)(1). As a prerequisite to filing suit under § 1346(a)(1), a taxpayer

must first pay to the IRS the full amount of the contested tax assessment. Flora v.

U.S., 362 U.S. 145, 175-77 (1960). Plaintiff has not done so and, thus, cannot avail

himself of the § 1346(a)(1) waiver.

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 31 of 54
Complaint, at ¶ 76 (emphasis supplied). 46

-32-

The court concludes, nevertheless, that, construing plaintiff’s pleadings in the

light mostfavorable to him, and with the leniency afforded to pro se litigants, another

waiver of sovereign immunity is applicable. Plaintiff states in his complaint that he

“does not concede that the United States is immune from suit in equity to determine

the proper, lawful, and equitable manner in which the commissions due and owing

to Ishler/TCM and Camaro, withheld by NSA, should be adjudged to have been paid

with respect to Ishler/TCM and Camaro.” 

46

Plaintiff is correct that the protection of sovereign immunity generally does not

extend to actions against the United States (or its agencies and employees) seeking

non-monetary relief. Section 702 of the Administrative Procedure Act (“APA”)

states:

A person suffering legal wrong because of agency action, or

adversely affected or aggrieved by agency action within the meaning of

a relevant statute, is entitled to judicial review thereof. An action in a

court of the United States seeking relief other than money damages

and stating a claim that an agency or an officer or employee thereof

acted or failed to act in an official capacity or under color of legal

authority shall not be dismissed nor relief therein be denied on the

ground that it is against the United States or that the United States

is an indispensable party. The United States may be named as a

defendant in any such action, and a judgment or decree may be entered

against the United States: Provided, That any mandatory or injunctive

decree shall specify the Federal officer or officers (by name or by title),

and their successors in office, personally responsible for compliance.

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 32 of 54
This is true even though plaintiff requests that the IRS be required to give him a credit for 47

a substantial sum of money. In Bowen v. Massachusetts, 487 U.S. 879 (1988), the Supreme Court

elucidated the meaning of the term “money damages,” as it is used in the APA. The Court noted that

“[t]he fact that a judicial remedy may require one party to pay money to another is not a sufficient

reason to characterize the relief as ‘money damages.’” Id. at 893. Instead,

-33-

Nothing herein (1) affects other limitations on judicial review or the

power or duty of the court to dismiss any action or deny relief on any

other appropriate legal or equitable ground; or (2) confers authority to

grant relief if any other statute that grants consent to suit expressly or

impliedly forbids the relief which is sought.

5 U.S.C. § 702 (italicized emphasis in original, boldface emphasis supplied). This

provision has been construed broadly, and it applies to all actions for non-monetary

relief against the United States, not just actions actually pled under the APA. See

Florida Marine Contractors v. Williams, No. 2:03CV229-T-30SPC, 2004 WL

964216, *2-3 (M.D. Fla. April 22, 2004) (“[T]he waiver of sovereign immunity

contained in Section 702 of the APA is a general waiver of sovereign immunity

without a limitation on whether a cause of action under the APA is also pled.”) (citing

Panola, 762 F.2d at 1555; Sheehan v. Army and Air Force Exchange Service, 619

F.2d 1132, 1139 (5th Cir. 1980), overruled on other grounds by Army & Air Force

Exchange Service v. Sheehan, 456 U.S. 728 (1982)). Plaintiff requests a declaration

that he is entitled to a tax credit for the commissions withheld by NSA, and an

injunction requiring plaintiff to issue the credit. This claim seeks relief other than

money damages based on the actions or inactions of the Commissioner. Therefore, 47

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 33 of 54
“[t]he term ‘money damages,’ 5 U.S.C. § 702, we think, normally refers to a sum of

money used as compensatory relief. Damages are given to the plaintiff to substitute

for a suffered loss, whereas specific remedies ‘are not substitute remedies at all, but

attempt to give the plaintiff the very thing to which he was entitled.’ D. Dobbs,

Handbook on the Law of Remedies 135 (1973). Thus, while in many instances an

award of money is an award of damages, ‘[o]ccasionally a money award is also a

specific remedy.’”

Id. at 895 (quoting Maryland Dept. of Human Resources v. Dept. of Health and Human Services,

763 F.2d 1441, 1446 (D.C. Cir. 1985)). Here, although plaintiff does assert a claim for

compensatory damages from the United States, his equitable claims (for declaratory, and, possibly,

injunctive, relief) request that he be credited with money to which he already is allegedly entitled.

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plaintiff’s equitable claim against the Commissioner is not barred by sovereign

immunity. 

In summary, all of plaintiff’s claims for monetary damages against both the

Commissioner and from Richardson, in his official capacity, are barred by sovereign

immunity. Sovereign immunity does not bar plaintiff’s monetary claims against

Richardson in his individual capacity, however, nor plaintiff’s equitable claims

against the Commissioner.

3. Declaratory Judgment Act

Even though sovereign immunity does not bar plaintiff’s equitable claims

against the Commissioner, this court still lacks jurisdiction over those claims.

Plaintiff bases his claim for declaratory relief on the Federal Declaratory Judgment

Act, 28 U.S.C. § 2201, which explicitly excludes tax-related claims. Section 2201

states: 

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 34 of 54
Plaintiff does not attempt to make an argument under section 7428, which concerns tax- 48

exempt charitable organizations. See 26 U.S.C. § 7428.

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(a) In 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, a proceeding under [48]

section 505 or 1146 of title 11, or in any civil action involving an

antidumping or countervailing duty proceeding regarding a class or kind

of merchandise of a free trade area country (as defined in section

516A(f)(10) of the Tariff Act of 1930), as determined by the

administering authority, 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 seeking such declaration, whether or not

further relief is or could be sought. Any such declaration shall have the

force and effect of a final judgment or decree and shall be reviewable as

such. 

28 U.S.C. § 2201(a) (emphasis supplied). The purpose of the tax exception is “to

insulate the determination, assessment, and collection of taxes from pre-enforcement

judicial interference.” Turner v. Internal Revenue Service, No. Civ.A.02-0650-CG-C,

2002 WL 31556462, *1 (S.D. Ala. Oct. 8, 2002). Thus, it is “well settled that a

declaratory judgment cannot be issued in a tax case.” Horne v. United States, 519

F.2d 51, 52 (5th Cir. 1975) (finding that a taxpayer’s request that an assessment of tax

deficiency be declared void was impermissible under the Declaratory Judgment Act).

See also Melton v. Kurtz, 575 F.2d 547, 548 (5th Cir. 1978) (rejecting taxpayer’s

request for a declaration that certain federal tax statutes are unconstitutional and an

injunction to prevent the Commissioner from assessing and collecting taxes from

him); Turner, 2002 WL 31556462, at *1 (rejecting taxpayer’s request for a

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 35 of 54
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“declaratory judgment determining the amount of his tax liability and an injunction

prohibiting the IRS from collecting the taxes during the pendency of the suit”); Sands

v. United States, No. 94-0537-CIV, 1995 WL 552308, *5-6 (S.D. Fla.June 19, 1995)

(rejecting taxpayer’s request for a declaration that he was “never obligated or liable

for any unpaid taxes for the years 1984, 1987 or 1990; and further declaring that any

and all assessments, liens or notices of lien or levy arising from any such purported

taxes were null and void and of no effect whatsoever”).

Plaintiff’s request for a declaration that he is entitled to an income tax credit

for the amount of the commission funds withheld by NSA is a request “with respect

to Federal taxes.” As a result, this court lacks jurisdiction over the declaratory

judgment claim (Count One of plaintiff’s complaint). See Turner, 2002 WL

31556462, at *1 (court lacks jurisdiction over a claim for declaratory relief in a tax

case); West v. United States, No. Civ.1:00-CV-1800-JO, 2001 WL 1103229, *7 (N.D.

Ga. July 30, 2001) (same). 

In addition, to the extent plaintiff seeks injunctive relief against the

Commissioner, that claim also is barred, as the court’s declaration that plaintiff is

entitled to a tax credit would be a prerequisite to any injunction requiring the

Commissioner to issue that credit. See Turner, 2002 WL 31556462, at *2 (dismissing

claim for injunctive relief when the underlying claim for declaratory relief also was

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 36 of 54
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dismissed). 

The court concludes the bar against declaratory claims in tax cases (and

injunctions arising from those declaratory claims) extends to Count Three of

plaintiff’s complaint, as well as to Count One. There is no discernable difference

between the relief sought in Count One, and the relief sought in Count Three. In

Count One, plaintiff requests a declaration that he is entitled to an income tax credit

for the funds withheld by NSA. In Count Three, he makes an “Informal Claim for

Refund or Credit.” More specifically, he states:

74. Ishler alleges that a demand for credit of the NSA withheld

taxes was sent to the Internal Revenue Service, and that such credit

should be applied against any claims of liability for taxes due on NSA

commission income withheld from Ishler/TCM. Documents referencing

the formal and informal demand for tax credit are attached hereto, as

Appendix A-5.

75. Despite NSA’s declared withholding of the specific sum of

$400,000.00, and all of the remaining commissions due and owing to

Ishler, TCM and/or the facilitator, Camaro, as a result of NSA’s sales to

Chrysler, the Internal Revenue Service has never instituted any action

with respect to the demand for credit to Ishler of the NSA withheld IRS

trust funds.

76. Ishler does not concede that the United States is immune from

suit in equity to determine the proper, lawful, and equitable manner in

which the commissions due and owing to Ishler/TCM and Camaro,

withheld by NSA, should be adjudged to have been paid with respect to

Ishler/TCM and Camaro.

Complaint, at ¶¶ 74-76. In both of these claims, plaintiff seeks a determination that

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 37 of 54
The court is uncertain why Richardson and the Commissioner did not raise collateral 49

estoppel as a defense, as did NSA. They would have had a strong argument on this point, for the

reasons set forth in § III (C)(1), infra.

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he is entitled to a tax credit, and an order compelling the Commissioner to issue him

a credit. Counts One and Three are, in essence, the same claim.

In summary, to the extent plaintiff seeks review of the Collection Due Process

Hearing by the IRS, exclusive jurisdiction over that claim rests in the Tax Court.

Plaintiff’s claims for money damages against the Commissioner, and against

Richardson in his official capacity, are barred by sovereign immunity. Plaintiff’s

claims for declaratory and injunctive relief are impermissible under the Declaratory

Judgment Act. Therefore, all of plaintiff’s claims against the Commissioner, and

against Richardson in his official capacity, are due to be dismissed.

49

B. Motion to Dismiss by John Richardson in His Individual Capacity

Plaintiff’s fraud and civil conspiracy claims against Richardson, in his

individual capacity, are barred by the applicable statutes of limitations. A fraud or

conspiracy claim under Alabama law must be brought within two years of the date on

which the claimaccrues. Ala. Code § 6-2-38(l) (1975) (2005 Replacement Vol.). See

Jones v. Kassouf & Co., P.C., – So. 2d –, 2006 WL 1304901, *3 (Ala. May 12, 2006)

(fraud); Rumford v. Valley Pest Control, Inc., 629 So. 2d 623, 625 (Ala. 1993)

(conspiracy). A fraud claim does not accrue until the plaintiff has discovered the

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 38 of 54
Doc. no. 11, at Exhibit F. 50

Complaint, at Exhibit A-1. 51

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facts constituting the fraud, or when those facts “ought to or should have been

discovered; that is, the time of discovery is the time at which the party actually

discovered the fraud or had facts that, upon closer examination, would have led to the

discovery of the fraud.” Stockton v. CKPD Development Co., – So. 2d. –, 2005 WL

3006854, *13 (Ala. Civ. App. Nov. 10, 2005) (citing Dickens v. SouthTrust Bank of

Alabama, N.A., 570 So. 2d 610, 612 (Ala. 1990); Lader v. Lowder Realty Better

Homes & Gardens, 512 So. 2d 1331, 1332 (Ala. 1987) (internal quotation marks

omitted)); see also Ala. Code § 6-2-3 (1975) (2005 Replacement Vol.). 

Plaintiff filed this action on May 31, 2005. Thus, any claims that accrued

before May 31, 2003 are time-barred. Plaintiff does not allege that Richardson took

any actions related to his claims after that date. In fact, Richardson’s relevant actions

occurred no later than 1990 or 1991, during his investigation of plaintiff. The only

events occurring after May 31, 2003 were the Eleventh Circuit’s issuance of an order

affirming the decision of the Tax Court, and the issuance by the IRS of the Notice 50

of Determination on plaintiff’s collection due process hearing. Neither of these 51

events involved additional actions taken byRichardson. Plaintiff nonetheless asserts

his claims are timely, stating:

The United States has kept this matter in an active mode since the

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 39 of 54
Doc. no. 12, at ¶ 28. 52

In Boyce, the Alabama Supreme Court relied upon a previous decision that held, because

53

the plaintiff’s “conspiracy to defraud claim is dependent upon the underlying fraud, the statute of

limitations on that claim began to run at the same as did the statute for the underlying fraud claim.”

Boyce, 2006 WL 1119285, at *8 (citing Kelly v. Alexander, 554 So. 2d 343, 344 (Ala. 1989),

overruled on other grounds by Ford Motor Co. v. Neese, 572 So. 2d 1255 (Ala. 1990)). This is but

another way of stating the familiar principle that a claim for civil conspiracy cannot proceed if the

tort claim underlying the conspiracy is not viable. See, e.g., McLemore v. Ford Motor Co., 628 So.

2d 548, 551 (Ala. 1993) (“Because the underlying cause of action is not viable, the conspiracy claim

must also fail.”) (citing Allied Supply Co. v. Brown, 585 So. 2d 33, 36 (Ala. 1991)).

-40-

inception of the efforts to destroy Ishler in 1989. Ishler has only

recently, after rejection of incompetent counsel, and diligent inquiry into

the matter, discovered the fraud perpetrated against Ishler, by the

Commissioner, John L. Richardson, and NSA.52

Plaintiff’s argument that he “only recently” discovered Richardson’s alleged fraud is

unpersuasive, as plaintiff has been involved in ongoing investigation and litigation

concerning his tax liability for more than fifteen years. Plaintiff almost certainly had

actual knowledge of Richardson’s actions as early as 1990, when Richardson’s

investigation of him began. Even if he did not have actual knowledge, he had

knowledge of facts sufficient to lead him to discovery of the alleged fraud. 

Accordingly, plaintiff’s fraud claim against Richardson is time-barred.

Because hisfraud claim is time-barred, his claim for conspiracy to commit fraud also

is time-barred. See Boyce v. Cassese, – So. 2d –, 2006 WL 1119285, *8 (Ala. April

28, 2006) (“We have concluded that the Boyces’ claims of fraudulent

misrepresentation and fraudulent suppression are time-barred. For the same reasons,

the Boyces’ conspiracy claims against the Casseses are time-barred.”).

53

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 40 of 54
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C. Motion to Dismiss by Nissei Sangyo American, Ltd.

Construing plaintiff’s complaint in the light most favorable to him, plaintiff

asserts legal claims against NSA for fraud, conspiracy, breach of contract, and

violation of the Alabama Sales Representative’s Commission Contracts Act, as well

as equitable claims for a declaratory judgment and an accounting. NSA argues that

plaintiff’s claims against it must be dismissed because: (1) plaintiff is collaterally

estopped from asserting all his claims; (2) plaintiff lacks standing to pursue a breach

of contract claim; and (3) all claims are barred by the applicable statutes of

limitations. 

1. Collateral estoppel

NSA first assertsthat plaintiffis collaterally estopped from asserting his claims

due to the preclusive effect of: the prior decision by the Tax Court; the prior decision

of the Eleventh Circuit Court of Appeals, affirming the Tax Court; and the decision

of the Alabama Supreme Court that no enforceable contract existed between NSA and

Camaro. The analysis ofthis issue requires an important distinction — unrecognized,

or at least unmentioned, by any of the parties — between federal and state law. When

considering the preclusive effect of a prior federal judgment, a court must apply

federal preclusion law. See, e.g., CSX Transportation, Inc. v. Brotherhood of

Maintenance of Way Employees, 327 F.3d 1309, 1316-17 (11th Cir. 2003) (“We now

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 41 of 54
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hold that federal preclusion principles apply to prior federal decisions, whether

previously decided in diversity or federal question jurisdiction.”). On the other hand,

when considering the preclusive effect of a prior state judgment, the court must apply

state preclusion law. See, e.g., Mitchell v. Humana Hospital-Shoals, 942 F.2d 1581,

1582-83 (11th Cir. 1991) (“A federal court . . . is to accord a prior state judgment the

same preclusive effect as would courts of the state issuing the judgment.”) (citation

omitted). Thus, the preclusive effect of the decisions by the Tax Court and the

Eleventh Circuit must be considered separately from the preclusive effect of the

decision of the Alabama Supreme Court.

a. Tax Court and Eleventh Circuit decisions

NSA first asserts that the decisions of the Tax Court and the Eleventh Circuit

preclude plaintiff from relitigating the issue of whether he is entitled to a credit for

the $400,000 in commissions allegedly withheld by NSA in 1989. Because NSA

argues the preclusive effect of prior federal judgments, federal preclusion principles

apply. In the Eleventh Circuit,

“[c]ollateral estoppel or issue preclusion forecloses relitigation of an

issue of fact or law that has been litigated and decided in a prior suit.

There are several prerequisites to the application of collateral estoppel:

(1) the issue at stake must be identical to the one involved in the prior

litigation; (2) the issuemust have been actually litigated in the prior suit;

(3) the determination of the issue in the prior litigation must have been

a critical and necessary part of the judgment in that action; and (4) the

party against whom the earlier decision is asserted must have had a full

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 42 of 54
See doc. no. 11, at Exhibits B, F. The NSA withholdings were not the only items of 54

plaintiff’s tax liability discussed in the opinion of the Tax Court, but they were considered

nonetheless. Additionally, plaintiff stated in his complaint that, “[d]uring the course of the years

from 1989 to 2005, the Tax Court and the IRS refused to admit the existence of the IRS trust funds

withheld by NSA.” Complaint, at ¶ 32.

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and fair opportunity to litigate the issue in the earlier proceeding.” I.A.

Durbin, Inc. v. Jefferson Nat’l Bank, 793 F.2d 1541, 1549 (11th Cir.

1986). 

CSX Transportation, 327 F.3d at 1317. The court finds that all these requirements

are satisfied with regard to the previous decisions by the Tax Court and the Eleventh

Circuit. 

First, the issue asserted by plaintiff here is identical to an issue involved in the

Tax Court and Eleventh Circuit litigation. Plaintiff argues that he is entitled to a

credit for the $400,000 in commissions allegedly withheld by NSA, and that NSA

should have to either pay those withholdings over to the IRS, or account for the

manner in which the funds have been disbursed. Stated differently, plaintiff argues

that he should not have been held liable for this $400,000 tax liability. The Tax Court

held that plaintiff was liable for unpaid taxes, including the $400,000 amount

withheld by NSA, and the Eleventh Circuit upheld that decision on appeal. 

54

Further, this issue was actually litigated in the Tax Court. In Ishler’s trial

memorandum to the Tax Court, he sated:

On March 31, 1989, NSA sent Camaro a notice of termination of

the Sales Representative Agreement. Also on March 31, 1989, NSA

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 43 of 54
Doc. no. 11, Exhibit E, at 5 (emphasis in original). 55

Id. at 7. 56

Doc. no. 11, Exhibit B. at 10-11. 57

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filed a declaratory judgment action in the Circuit Court of Madison

County, Alabama against Camaro, seeking a declaration that the Sales

Representative Agreement was void. On April 12, 1988, NSA also

notified Camaro that it was withholding approximately $400,000 from

Camaro’s commissions for purposes of offsetting any tax liability owed

by NSA. Thus, NSA was sharing information with the I.R.S before

NSA canceled the Sales Representative Agreement and withheld

approximately $400,000 from Camaro.55

Plaintiff also stated:

On April 20, 1992, Camaro presented an offer to the Revenue

Agent Richardson. Camaro offered to put $400,000 in escrow with the

I.R.S. In return, Camaro requested that NSA deposit with the I.R.S. the

amount that it had withheld from Camaro. Camaro apparently never

received any response from the I.R.S.

56

The Tax Court’s consideration of these statements is reflected in its opinion:

NSA terminated the NSA/Camaro agreement on March 31, 1989.

In the notice of termination, NSA stated that Camaro had let NSA

erroneously assume that Camaro was an Alabama corporation when the

agreement was executed. Because Camaro was a Hong Kong

corporation, NSA faced unexpected liability for a large amount of

withholding tax under section 881(a) (plus penalties and interest). On

April 12, 1989, NSA told Camaro that NSA would retain unpaid

commissions otherwise due to Camaro to offset that potential tax

liability.57

Ishler raised the issue again in his appellate brief to the Eleventh Circuit, where

he stated:

NSA sent Notices of Termination of the Contract and quit paying

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 44 of 54
Doc. no. 11, Exhibit D, at 11-12 (citations to the record omitted). 58

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commissions. NSA claimed it was withholding $400,000.00 of

Camaro’s commissions to pay taxes. . . .

Ishler later learned that NSA was being investigated for failure to

pay U.S. taxes. . . .

Still later, NSA claimed it was gong to offset $400,000.00 for

commissions owed to Camaro against any tax liability owed to the IRS

for withholding on the commissions . . . 

NSA ultimately brought suit in Alabama against Camaro. There

was a ruling that NSA could get out of the contract because Camaro was

not registered to do business in Alabama. . . .

At the same time the suit was going on, NSA was trying to hire

Scott Taylor away from TCM. . . .

The last commission check Camaro received from NSA was in

March, 1989.

Ishler incurred $350,000.00 in personal legal expenses as a result

of the Camaro-NSA litigation. . . .

Ishler pointed out to IRS counsel that NSA was withholding

money from Camaro that legally belonged to Camaro in order to pay

withholding taxes. . . .

58

In the same brief, plaintiff stated:

While IRS apparently convinced the Tax Court that [funds] had escaped

U.S. taxation, IRS never disclosed the results of [its audit of NSA], the

disposition of the $400,000 which NSA claimed it had withheld out of

the commission checks due Camaro to pay withholding tax. Ishler and

TCM’s knowledge of NSA’s withholding, which was done by NSA at

the ultimate expense of Camaro, TCM, and Ishler, is enough, standing

alone, to defeat the Commissioner’s claim that Ishler committed any act

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 45 of 54
Id. at 18. 59

Id. at 22-23 (internal citations omitted). 60

Id. at 27. 61

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to evade payment of a tax obligation he knew he owed.

59

Plaintiff also argued:

Here, even if Ishler had been grossly negligent in relying on NSA’s

representations that they were withholding monies from the Camaro

commissions to pay the withholding tax thereon, he could not be found

guilty of fraud. . . . Reliance on withholding by third parties and

statements from third parties indicating that the disputed taxes will be

paid have defeated the Commissioner’s fraud charges over and over

again . . . .

This is not a case where the taxpayer filled out false withholding

certificates. The withholding was claimed to have been made by an

adverse third party, NSA, out of Camaro’s and, ultimately, TCM’s

commissions. 

60

Finally, Ishler argued to the Eleventh Circuit that “[t]he Commissioner should be

ordered to disclose the ultimate disposition of his withholding tax controversy with

NSA and Camaro.” The Eleventh Circuit subsequently upheld the Tax Court’s 61

decision to assess tax liability to plaintiff. 

Based on the arguments in plaintiff’s briefs to the Tax Court and the Eleventh

Circuit, the only reasonable conclusion is that the issue of plaintiff’s entitlement to

a credit for the funds withheld by NSA as commissions was actually litigated before

those courts.

Additionally, the determination that plaintiff was not entitled to a tax credit for

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 46 of 54
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the withheld commissions was a necessary and critical part of the judgment in the Tax

Court, which was upheld by the Eleventh Circuit. If the Tax Court had considered

plaintiff to be entitled to a $400,000 credit for the withheld commissions, it would not

have assessed plaintiff with tax liability for that amount. 

Finally, plaintiff had a full and fair opportunity to litigate the issue of his

entitlement to a tax credit in the prior proceedings. As set forth above, he raised the

issue extensively in his briefs to both the Tax Court, and to the Eleventh Circuit. 

Accordingly, plaintiff is collaterally estopped from relitigating the issue of his

entitlement to a tax credit for the commissions withheld by NSA. This issue forms

the entire basis for plaintiff’s claims for declaratory relief and for an accounting, and

those claims — insofar as they seek relief against NSA — are due to be dismissed.

On the other hand, plaintiff’s claims against NSA for fraud, breach of contract,

conspiracy, and violation of the Alabama Sales Representative’s Commission

Contracts Act all involve issues which were not litigated and determined in the prior

federal litigation. Accordingly, those claims may not be dismissed on the ground they

are precluded by the prior decisions of the Tax Court and the Eleventh Circuit. That

ruling, however, does not answer the question of whether they are precluded by prior

state court decisions.

b. Alabama Supreme Court decision

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 47 of 54
The Alabama Supreme Court has recognized that “the federal courts have held that 62

mutuality — the requirement that the parties in both actions are the same — is no longer a

prerequisite.” Ex parte Flexible Products, 915 So. 2d at 45. Nonetheless, “Alabama continues to

require that a party may be barred from relitigating an issue, such as duty or breach, only if that issue

has previously been found adversely to that same party.” Id. 

-48-

NSA also asserts plaintiff is collaterally estopped from relitigating any claims

based on an alleged contract with NSA, because the Supreme Court of Alabama has

decided that no enforceable contract existed between NSA and Camaro. As NSA

relies on the preclusive effect of a state court judgment, state preclusion principles

apply.

In Alabama, “[c]ollateral estoppel is an equitable defense interposed against

a party attempting to relitigate an issue that has been resolved in an earlier case

involving the same parties.” Ex parte Flexible Products Co., 915 So. 2d 34, 45 (Ala.

2005) (emphasis supplied). A party asserting the defense must satisfy the following

elements: (1) the parties in the two proceedings are identical, or in privity with one

another; (2) the issues in the two proceedings are identical; (3) the issue was actually

litigated in the prior proceeding; and (4) resolution of the issue was necessary to the

prior judgment. See id.; see also Mitchell, 942 F. 2d at 1583 (relying upon Alabama

law).

62

NSA cannot satisfy these elements, because Ishler was not a party to the

Alabama Supreme Court proceeding. The parties in the Alabama case were NSA and

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 48 of 54
See Camaro Trading Co., Ltd. v. Nissei Sangyo America, Ltd., 628 So. 2d 463 (Ala. 1993),

63

a copy of which is attached as Exhibit A to NSA’s brief in support of its motion to dismiss.

Doc. no. 11, at 16 (emphasis supplied). 64

-49-

Camaro, not NSA and Ishler. Further, NSA expressly concedes that Ishler and 63

Camaro were not in privity with each other. In its brief to this court, NSA states:

NSA and Camaro were the only parties to the “Sales

Representative Agreement.” Ishler was not in privity with, or had any

rights otherwise under the contract. [sic] There is nothing in the “Sales

Representative Agreement” that reflects an intent on the part of NSA

and Camaro to bestow any direct benefits under the contract upon Ishler.

In fact, Ishler has alleged that Ishler and TCM independently engaged

in negotiations with Camaro because of Camaro’s strategic location in

Southeast Asia. (Compl. at ¶ 16) Accordingly, Ishler asserts that he and

TCM entered into an agreement with Camaro, independent of NSA,

whereby Ishler/TCM and Camaro would split the NSA commissions . .

. .

64

Accordingly, collateral estoppel does not bar any of plaintiff’s claims which are

founded on the existence of the contract between NSA and Camaro.

2. Statute of limitations

NSA also argues that plaintiff’s claims for fraud, conspiracy, breach of

contract, and violation ofthe Alabama Sales Representative’s Commission Contracts

Act are barred by the applicable statutes of limitations.

a. Fraud

As discussed in § III(B), supra, a fraud claim under Alabama law must be

brought within two years after a plaintiff has discovered the facts constituting the

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 49 of 54
Doc. no. 13, at ¶¶ 16.8.3, 16.9. 65

See id. at ¶¶ 16.10, 30. 66

Id. at ¶ 27. 67

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fraud, or within two years after the plaintiff should have discovered those facts.

Plaintiff states that NSA “committed fraud” by “claiming the non-existence of

Camaro Trading Company,” and by “lying to the Internal Revenue Service in order

to avoid payment for services which were, and are currently being taken advantage

of byNSA.” NSA first attempted to eliminateCamaro’s role in its business dealings 65

with Chrysler (or to “claim the non-existence of Camaro”) in 1989, when it

terminated the Sales Representative Agreement with Camaro. NSA reported the

situation to the IRS soon thereafter, and an investigation ensued. Thus, the events

upon which plaintiff relies to support his fraud claim occurred in the late 1980's and

early 1990's, much more than two years prior to the commencement of this action. 

Plaintiff nonetheless asserts hisfraud claim is timely, because he did not come

to a “full understanding” of NSA’s allegedly fraudulent conduct until he received the

May 4, 2005 Notice of Determination from the IRS concerning his collection due

process hearing. He also asserts that the fraud “is still ongoing as the money that 66

was withheld by NSA on the paid commissions has not been paid over to the United

States.” These arguments are unavailing. The relevant question is not when 67

plaintiff fully understood the alleged fraud, but when plaintiff discovered (or should

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 50 of 54
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have discovered) it. Plaintiff was aware, or at least should have been aware, of all the

facts relevant to his fraud claim when NSA withheld commissions from Camaro, and

when the IRS began its investigation. At the very latest, he had knowledge of all

relevant facts by the time the Tax Court upheld the IRS assessment against him in

March of 2002. The 2005 Notice of Determination did not notify plaintiff of any

additional facts to support his fraud claim. Instead, the Notice merely informed

plaintiff that he had not provided sufficient information for the appeals committee to

render a decision. Accordingly, plaintiff’s fraud against NSA claim is time-barred.

b. Breach of contract

A breach of contract claim under Alabama law must be brought within six

years of the date on which the claim accrues. Ala. Code § 6-2-38(9) (1975) (2005

Replacement Vol.). The claim accrues on the date the contract is breached, not the

date on which the plaintiff sustains actual damage as a result of the breach. AC, Inc.

v. Baker, 622 So. 2d 331, 333, 335 (Ala. 1993) (citing Stephens v. Creel, 429 So. 2d

278, 280 (Ala. 1983); Lipscomb v. Tucker, 294 Ala. 246, 258, 314 So. 2d 840, 850

(1975)).

The essence of plaintiff’s breach of contract claim is that NSA failed to pay

Camaro commissions, as agreed, because it withheld those commissions to satisfy its

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 51 of 54
See Complaint, at ¶¶ 18-25, 51; see also doc. no. 13 (plaintiff’s brief in opposition to NSA’s 68

motion to dismiss), at ¶¶ 15, 16.7. Plaintiff also asserts (in his brief, but not in his complaint) that

he is entitled to contract damages in quantum meruit due to the fact that he and TCM actually

performed the services under the contract between NSA and Camaro, but did not receive

compensation for those services. He asserts that a six-year statute of limitations also applies to this

claim. See doc. no. 13, at ¶¶ 34-39. As the business relationship between NSA and Camaro was

terminated in 1989, and commissions were withheld by Camaro that same year, a quantum meruit

claim also would be time-barred.

NSA asserts that plaintiff does not have standing to sue for violation of the agreement 69

between it and Camaro, because he was neither a party to that agreement, nor in privity with a party.

This argument appears to have merit. As plaintiff himself declares, “[t]he written/express contract

was between NSA and Camaro, and Ishler/TCM are not mentioned in that contract.” Doc. no. 13

(plaintiff’s brief in opposition to NSA’s motion to dismiss), at ¶ 37. Even so, the court need not

consider that argument, because, even if plaintiff did possess the requisite standing to sue on the

contract, any breach of contract claim would be barred by the statute of limitations. 

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income tax liability to the IRS. Setting aside the issue of whether plaintiff has 68

standing to sue for violation of the agreement between Camaro and NSA, any claim 69

based on violation of that agreement would be time-barred. NSA terminated the Sales

Representative Agreement with Camaro on March 31, 1989. NSA notified Camaro

that it was withholding commissions to satisfy its potential income tax liability to the

IRS on April 12, 1989. As these events occurred more than seventeen years ago, the

six-year limitations period on plaintiff’s breach of contract claim against NSA expired

long ago.

c. Conspiracy

Plaintiff alleges that NSA conspired with the IRS to defraud him. A civil

conspiracy claim under Alabama law must be brought within two years of the date of

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 52 of 54
See § III(B), supra. 70

See discussion, supra, page 40. 71

The better reading of the complaint is that plaintiff does not assert a separate claim under 72

the Alabama Sales Representative’s Commission Contracts Act, but that he relies upon the Act to

support a claim for treble damages against NSA on his underlying breach of contract claim. See Ala.

Code § 8-24-3 (1975) (“A principal who fails to pay a commission as required by Section 8-24-2 is

liable to the sales representative in a civil action for three times the damages sustained by the sales

representative plus reasonable attorney’s fees and court costs.”).

See Ala. Code § 8-24-3(c) (1975) (“All commissions that are due at the time of termination 73

of a contract between a sales representative and principal shall be paid within thirty days after the

date of termination. Commissions that become due after the termination date shall be paid within

thirty days after the date on which the commissions become due.”).

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accrual. As plaintiff’s fraud claim — the claim underlying the conspiracy — is

70

time-barred, his conspiracy claim against NSA also is time-barred. 

71

d. Alabama Sales Representative’s Commission Contracts Act

To the extent plaintiff’s complaint can be construed as alleging a separate claim

under the Alabama Sales Representative’s Commission Contracts Act, Ala. Code §§

8-24-1 et seq. (1975), that claim also is time-barred. The Act does not contain a 72

separate statute of limitations provision, and this court could not locate any authority

as to what the limitations period should be. The court concludes, however, that the

statute of limitations could be no longer than the six-year period for breach of

contract claims codified in Ala.Code § 6-2-34 (1975). Plaintiff’s claim accrued thirty

days after NSA terminated the Sales Representative Agreement with Camaro, and

refused to pay further commissions under the agreement, or at the latest, thirty days

after commissions resulting under the contract became due. Plaintiff does not argue 73

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 53 of 54
Plaintiff will not be allowed the opportunity to amend his complaint. See doc. no. 13 74

(plaintiff’s brief), at ¶ 40 (“An amended complaint will more thoroughly brief the Court on Ishler’s

rights to remedy in this case against NSA founded upon the doctrines of quantum meruit and unjust

enrichment, and the fraud perpetrated by NSA.”). An amendment would not cure the deficiencies

in plaintiff’s claims. See Burger King Corp. v. Weaver, 169 F.3d 1310, 1319 (11th Cir. 1999)

(futility is an adequate basis for denying leave to amend).

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that any commissions under the contract were due after May 31, 1999, the date six

years before this case was filed. Therefore, plaintiff cannot proceed against NSA

under the Alabama Sales Representative’s Commission Contracts Act. 

In summary, plaintiff’s claims against NSA for fraud, breach of contract,

conspiracy, and violation of the Alabama Sales Representative’s Commission

Contracts Act all are barred by the applicable statutes of limitations. 

IV. CONCLUSION

For the foregoing reasons, the motions to dismiss by defendants Commissioner

of Internal Revenue, John L. Richardson, and Nissei Sangyo American, Ltd. are due

to be granted. All of plaintiff’s claims will be dismissed. An appropriate order will 74

be entered contemporaneously herewith.

DONE this 5th day of July, 2006.

______________________________

United States District Judge

Case 5:05-cv-01108-CLS Document 29 Filed 07/05/06 Page 54 of 54