2008 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 8-11-2008 

# Lichtm an v . U SA P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 07-2902

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2008

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2008 D e c i sion s b y an authori z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion " L ichtm an v

. U SA" (2008). 2008 D e cisio n s . P ape r 683. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2008/683NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

___________ N o. 07- 2902

___________ J OAN L I CH T M AN, CP A, A ppel l ant

v. UNI TE D ST ATE S OF AM ERI CA

____________________________________ O n A p p ea l from the U n it ed S tat es D istri ct C o u rt f o r th e E a ste rn D istric t o f P e n n sy lv a n ia ( D . C . C i vi l A ct i on N o. 07- 0010 ) D i s tr i ctJ udge: H onor abl e Paul S. D i amond

____________________________________ Subm i tt ed Pur s uantt o T hi r d C i r cui tL A R 34. 1( a)

A pr i l 14, 2008 B efor e: M C K E E , SM I T H and C H A G A R E S, C i r cui tJ udges

( O pi ni on fi l ed : A ugus t11, 2008)

___________ OP I NI ON

___________ P E R C UR I AM A ppel l ant , J oan Li chtm an, appea l s fr om the j udgm entof the U ni t ed St at es D i s tr i ct C our tforthe East ern D i s tr i ctof Penns y l vani a di s m i s s i ng hercompl ai nt . Forthe r eas ons th a tf o l l o w, we wi l l a f

f i r m.2

O n J anuary3, 2007, L i chtm an fi l ed a s ui tagai ns tthe U ni t ed St at es . T he fa ctual al l egat i ons i n L i chtm an’ s compl ai ntar e s um m ar i zed a s fol l ow s : L i chtm an’ s fatherand u n cle (“th e L ichtm an b roth ers” ), b o th o f w h o m are n o w d ec ea sed , h eld f idu ciaryp o w ers o v e r se v e n tru sts . T h e tru sts w e re e sta b lish e d b yL ich tm a n ’s g ra n d f a th e r to b e n e f

it h is s even gr andchi l dr en. E ach gr andchi l d, i ncl udi ng L i chtm an, w as the s ol e bene fi ci aryof th e p r i n c i p a l o f

h i s o rh e rtru s t . Th e Li c h t ma n b r o th e r s we r e th e p r i ma ryi n c o me benef i ci ar i es of the trus t s , but , i n the eve ntthatone of the gr andchi l dr en demonstr at ed a m o n etaryn ee d d u e to h ea lth , w elfa re, ed u ca ti o n , m ainten an ce o r sup p o rt , the trust’s i ncome w as t o be pai d t o hi m orher . W hi l e over s eei ng thos e trus t s , the Li chtm an b ro th e rs e n g a g e d in se lf d e a lin g a n d tax e v a sio n . T h e yw e re a ss iste d in c o n c e a lin g th e ir t ax eva s i on s chemes bythe l aw fi r m and the ac count i ng fi r m w ho pr epar ed the t ax r etur ns f o r th e tru sts . T h e L ich tm a n b ro th e rs a lso d e n ied L ich tm a n in c o m e d istrib u tio n s d e sp ite herdemonstr at i on of a medi cal need. L i chtm an fi l ed mul t i pl e compl ai nt s w i th the I nt ernal R evenue Ser vi ce ( “I R S”) and the Feder al B ur eau of I nves t i gat i on ( “FB I ”) re g a rd in g th e L ich tm a n b ro th e r’s tax e v a sio n sc h e m e ; h o w e v e r, b o th a g e n c ies f a iled to a s s e s s ta x e s a g a in s t a n d p ro s e c u te th e o f f e n d e rs . B as ed on the for egoi ng fac t s , L i chtm an s eeks the fol l ow i ng r el i ef: ( 1) a w r i tof m andamus di r ect i ng the Secr et aryof the Tre as uryt o col l ectt axes al l egedl yow ed byt he L ich tm a n b ro th e rs; (2 ) a w rit o f m a n d a m u s d ire c tin g th e G o v e rn m e n t to p ro se c u te c e rta in I R S agent s and the t ax and l aw fi r m s thatpr epar ed the al l egedl yfr audul entt ax form s ; ( 3)3

a n i n f o r me r ’ s f e e p u r s u a n tt o 2 6 U. S . C. § 7 2 1 4 ; ( 4 ) r e s t i tu t i o n p u r s u a n tt o 2 6 U. S . C. § 7214; ( 5) damages pur s uantt o 26 U . S. C . § 7426( h) ; and ( 6) damages pur s uantt o the F e d e ra l T o rt C laim s A c t (“ F T C A ” ); 2 8 U .S .C . § 2 6 7 1 . A p p e llee f iled a m o tio n to di s m i s s , ar gui ng thatthe cl ai m s w er e barr ed byr es j udi cat a, s over ei gn i m m uni ty , l ack of s ubj ectm att erj ur i s di ct i on, l ack of s t andi ng, and fa i l ur e t o s t at e a c l ai m upon w hi ch r el i ef m aybe gr ant ed. A l though t he D i s tr i ctC our tconcl uded Li chtm an’ s s ui tw as notbarr ed b y re s ju d ica ta , the courtgr ant ed the U ni t ed St at es ’ s m ot i on forthe var i ous othergr ounds st at ed. L i chtm an ap peals . W e have j ur i s di ct i on overthi s appea l pur s uantt o 28 U . S. C . § 1291. O urr evi ew of th e p o rtio n o f

th e D istric t C o u rt’s o rd e r d ism iss in g L ich tm a n ’s m a n d a m u s p e tit io n is p le n a ry. H a rm o n C o v e C o n d o m in iu m A s s ’n v . M a rs h , 8 1 5 F .2 d 9 4 9 , 9 5 1 (3 d C ir . 1 9 8 7 ). W e al s o exer ci s e pl enaryr evi ew overthe port i on of the D i s tr i ctC our t ’ s or dergr ant i ng t he U n ite d S ta te s ’s m o tio n to d is m is s . F a g in v . G ilm a rt in , 4 3 2 F .3 d 2 7 6 , 2 8 1 (3 d C ir . 2 0 0 5 ). “I n r evi ew i ng the mot i on t o di s m i s s , w e mustacc eptas true the fa ct s al l eged i n the c o m p la in t a n d v ie w th e m in th e lig h t m o s t f a v o ra b le to [ L ic h tm a n ].” Id . Li c h t ma n ’ s f

i r s ta n d s e c o n d c l a i ms s e e k ma n d a mu s r e l i e f p u r s u a n tt o 2 8 U. S . C. § 1 36 1, w hich st at es:

T h e d istri ct co u rt s sh all h av e o ri g inal juri sd ict ion o f a n yac ti o n in the n ature of m andamus t o compel an off i cerorempl oy ee of

the U ni t ed St at es orany agenc yther eof t o per form a dutyow ed t o the pl ai nt i ff. I n herfi r s tcl ai m , L i chtm an s eeks a w r i tof m andamus di r ect i ng the Secr et aryof4

the Tre as uryt o col l ectt axes al l egedl yow ed bythe Li chtm an br other s . L i chtm an l acks sta n d in g to p re se n t th is c laim b e c a u se sh e h a s f a iled to d e m o n stra te a ju d icia lly c o g n iz a b le in

ju ry in f a c t. S e e L u

ja n v . D e f

e n d e rs o f W ild lif e , 5 0 4 U .S . 5 5 5 , 5 6 0 (1 9 9 2 ). L ich tm a n ’s c laim is n o t p a rticu lar ize d ; itis a g e n e ra lize d g rie v a n c e o f b e h a lf o f a ll taxp ay ers. Se e W arth v . S eldin , 4 2 2 U . S . 4 9 0 , 5 0 0 (19 7 5 ). F u rth erm o re, th e IR S ’s d e c isio n to in v e stig a te o r n o t in v e stig a te a p a rticu lar tax p a y e r’s c a se is w ith in its di s cr et i on; thus , the I R S cannotbe compel l ed under28 U . S. C . § 1361 t o i nves t i gat e or as s es s t axes agai ns tthe Li chtm an br other s . C f. U ni t ed St at es v. M cK ee, 192 F. 3d 535 (6 th C ir. 1 9 9 9 ) (s tatin g “ c o u rts m u st d e f e r to th e d isc re tio n o f

re v e n u e a g e n ts a s to w h e th e r a n in itia tio n o f a c ri m in a l in v e s tig a tio n is w a rr a n te d .” ). L ich tm a n ’s s e c o n d c laim se e k s a w rit o f m a n d a m u s d ire c tin g th e G o v e rn m e n t to p ro se c u te c e rta in IR S a g e n ts a n d th e tax a n d law f irm s th a t p re p a re d th e a lleg e d ly fr audul entt ax form s . T he D i s tr i ctC our tcorr ect l yconcl uded thatthe D epart m entof Ju stic e (“ D O J” ) d o e s n o t o w e a d u tyto L ich tm a n to p ro se c u te th e o f f e n d e rs in v o lv e d in the al l eged t ax eva s i on s cheme. Fur therm or e, the D O J ’ s deci s i on t o pr os ecut e ornot pr os ecut e an i ndi vi dual i s w i thi n i t s di s cr et i on; thus , the D O J cannotbe compel l ed under 2 8 U .S .C . § 1 3 6 1 to p ro se c u te th e a lleg e d o f f e n d e rs. S e e In m a tes o f A tti c a C o rr. F a c ili ty v. R ockef

el l er , 477 F. 2d 375, 379 ( 2d C i r . 1973) ( s t at i ng, “fe der al court s have tr adi t i onal l y , and, t o ourknow l edge, uni form l yr efr ai ned fr om overturni ng, atthe i ns t ance o f a p riv a te p e rso n , d isc re tio n a ryd e c isio n s o f f e d e ra l p ro se c u tin g a u th o rities n o t to5

p rose cu te pe rson s reg ard ing w h o m a c o m p lai n t of crim inal co n d u ct i s m ad e.”). L i chtm an’ s nexttw o cl ai m s s eek a n i nform er ’ s fee and r es t i tut i on pur s uantt o 26 U . S. C . § 7214. I n or derforL i chtm an t o be aw ar ded an i nform er ’ s fee orr es t i tut i on, h o w e v e r, a re v e n u e o f

f ic e r o r a g e n t m u s t f

ir s t b e c o n v ic te d p u rs u a n t to 2 6 U .S .C . § 7 2 1 4 . Li c h t ma n f

a i l s t o i d e n t i f

ya n yi n d i v i d u a l wh o h a s b e e n c o n v i c t e d p u r s u a n tt o 2 6 U. S . C. § 7 2 1 4 . A c c o rd in g ly, th e D is tr ic t C o u rt p ro p e rl yd is m is s e d b o th c la im s . L ich tm a n ’s f

if th c laim se e k s d a m a g e s u n d e r 2 6 U .S .C . § 7 4 2 6 (h ), w h ich p e rm its damages i n an ac t i on br oughtpur s uantt o 26 U . S. C . § 7426( a) . Sect i on 7426( a) ( 1) p e rm its a n a c tio n a g a in st th e U n ited S tate s if th e IR S h a s p lac e d a w ro n g f u l lev ya g a in st a thi r d party ’ s pr operty . L i chtm an as s ert s thatthe I R S’ s fai l ur e t o as s es s t axes agai ns tt he trus tpr opertyhel d bythe Li chtm an br other s cons t i tut es a w r ongful l evy . L i chtm an, h o w ev er, fail s to a ll eg e tha t th e IR S p lace d an ylevyag ains t th e trust pro p ertyn o r i s the re anyi ndi cat i on thats uch a l evyeverexi s t ed. T he I R S’ s fai l ur e t o as s es s t axes agai ns tt he pr operty , w i thoutm or e, i s i ns uffi ci entt o cons t i tut e a l evy , w r ongful orotherw i s e. See I nt er fi r s tB ank D al l as , N . A . v. U ni t ed St at es , 769 F. 2d 299, 304 ( 5th C i r . 1985) ( hol di ng that“[i ] n or derforSect i on 7426 t o appl y , the I R S m us thave made an a ctual ‘ l evy ’ upon the p rop ertyin q u esti o n . ”); see a lso N icke rson v . U n it ed S tat es, 51 3 F . 2 d 3 1 , 3 3 (1st C ir . 1 9 7 5 ). I n herfi nal cl ai m , L i chtm an as s ert s thats he i s ent i t l ed t o damages pur s uantt o t he F T C A , 2 8 U .S .C . § 2 6 7 1 , b e c a u se sh e su f f e re d f in a n c ial lo ss e s a n d th re a ts to h e r w e ll-6

being as a res ultof the IR S ’s fai l ure t o assess t axes ag ai nstthe L i chtm an b rothers and as a re s u lt o f th e D O J ’s f

a ilu re to p ro s e c u te th e o f f e n d e rs in v o lv e d in th e ta x e v a s io n s c h e m e . T he FT C A i s the exc l us i ve r emedyagai ns tthe U ni t ed St at es fort or tcl ai m s ar i s i ng outof th e w ro n g f

u l a c ts o f G o v e rn m e n t e m p lo y e e s a c tin g w ith in th e s c o p e o f th e ire m p lo ym e n t. 2 8 U .S .C . § 2 6 7 9 . T h e F T C A ’s w a iv e r o f so v e re ig n im m u n ity , h o w e v e r, is su b jec t to s e v e r a l e x c e p t i o n s . S e e 2 8 U. S . C. § 2 6 8 0 . Up o n r e v i e w o f L i c h t ma n ’ s c l a i m, we c o n c lu d e th a t it is b a rr e d b yth e e x c e p tio n s to th e F T C A . T he fir stpo rt i on of L i chtm an’s FT C A cl ai m i s based o n the I R S ’s fai l ure t o assess tax e s a g a in st th e L ich tm a n b ro th e rs. T h e F T C A d o e s n o t ap p lyto a n y“ c laim a risin g in r e s p e c to f

th e a s s e s s m e n to rc o l l e c t i o n o f a n y t a x . ” 2 8 U . S . C . § 2 6 8 0 ( c ) . A c c o r d i n g l y, the I R S’ s fai l ur e t o as s es s t axes agai ns tthe Li chtm an br other s i s barr ed bys ect i on 2680( c) ’ s excl us i on. See I nt er fi r s tB ank D al l as , N . A . , 769 F. 2d at307 ( concl udi ng that s ect i on 2680( c) ' s exce pt i on “s peci fi cal l yappl i es t o a lltax -re late d c laim s) ( e m p h a sis in o rig in a l). T h e se c o n d p o rtio n o f L ich tm a n ’s F T C A c laim is b a se d o n th e D O J’s f a ilu re to pr os ecut e the off

ender s i nvol ved i n the t ax eva s i on s cheme. Sect i on 2680( a) pr ecl udes a n yc l a i m “ b a s e d u p o n th e e x e r c i s e o rp e r f o r ma n c e o rth e f

a i l u r e t o e x e r c i s e o rp e r f o r m a di s cr et i onaryfunct i on ordutyon the partof a f eder al agenc yoran empl oy ee of the G overnm ent , w hetherornotthe di s cr et i on i nvol ved be a bus ed. ” “Pr os ecut or i al deci s i ons as t o w hether , w hen and a gai ns tw hom t o i ni t i at e pr os ecut i on ar e qui nt es s ent i al exampl es of governm ent al di s cr et i on i n enfor ci ng the cr i m i nal l aw , and, acc or di ngl y , court s haveuni form l yfound them t o be i m m une underthe di s cr et i onaryfunct i on exce pt i on. ” Pool er

v. U ni t ed St at es , 787 F. 2d 868, 871 ( 3d C i r . 1986) . A ccor di ngl y , thi s por t i on of L ic h tm a n ’s F T C A c la im is a ls o b a rr e d . F o r th e f o re g o in g re a so n s, w e w ill a f f irm th e ju d g m e n t o f

th e D istric t C o u rt. L i chtm an’ s m ot i on, r eques t i ng an i nj unct i on t o pr eventthe G overnm entfr om fi l i ng any re s p o n s e to th e a p p e a l a n d to re m a n d th e a p p e a l to th e D is tr ic t C o u rt , is d e n ie d .

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