Source: https://docs.justia.com/cases/federal/district-courts/arizona/azdce/2:2011cv01260/624740/16
Timestamp: 2017-03-30 21:22:53
Document Index: 697184390

Matched Legal Cases: ['§6332', '§6332', '§6332', '§6332', '§6332', '§6332', '§6331', '§6332', '§6331', '§301']

ORDER, granting Defendant's Motion to Dismiss 1 ; this case is dismissed in its entirety; denying as moot Plaintiff's Motion to Proceed 12 and Motion to Produce the Levy 14 and Defendant's Motion to Strike 15 for Cristy v. Wells Fargo Bank NA :: Justia Dockets & Filings Log In
Cristy v. Wells Fargo Bank NA
ORDER, granting Defendant's Motion to Dismiss 1 ; this case is dismissed in its entirety; denying as moot Plaintiff's Motion to Proceed 12 and Motion to Produce the Levy 14 and Defendant's Motion to Strike 15 . Signed by Judge James A Teilborg on 2/6/12.(REW)
No. CV 11-1260-PHX-JAT
Currently pending before the Court are: Defendant’s Motion to Dismiss (Doc. 1-1 Ex.
C), which was originally filed in Maricopa County Justice Court State of Arizona,
Arrowhead Division; Plaintiff’s Motion to Proceed (Doc. 12) and Motion to Produce the
Levy (Doc. 14); and Defendant’s Motion to Strike (Doc. 15). The Court now rules on the
Plaintiff John Cristy filed his Complaint in Maricopa County Justice Court State of
Arizona, Arrowhead Division, on May 17, 2011. (Doc. 1-1 Ex. A.) Plaintiff marked on his
Complaint that his claim arises from contract. Plaintiff alleges that Defendant Wells Fargo
unlawfully confiscated his property, i.e. money in his bank account, by surrendering it to the
Internal Revenue Service ( the “IRS”) without a warrant or court order. Plaintiff claims that
a notice of levy is insufficient and that a warrant of distraint is required.
Defendant filed the pending Motion in state court on June 13, 2011. Defendant then
removed to this Court on June 24, 2011 (Doc. 11), along with a notification of the pending
Motion to Dismiss. When Plaintiff did not respond to the Motion, Defendant filed a Motion
for Summary Disposition (Doc. 6). The Court denied the Motion for Summary Disposition
without prejudice and gave Plaintiff until September 26, 2011 to file a response to the Motion
Plaintiff filed a “Motion to Dismiss; Response & Disclosure” on September 23, 2011.
(Doc. 11.) Plaintiff also filed a “Motion to Proceed” on October 13, 2011 (Doc.12) and a
“Motion to Proceed: And Request to Produce the Levy” on November 14, 2011 (Doc. 14.)
Defendant filed a Motion to Strike Plaintiff’s Motion to Proceed and request to Produce the
Levy on November 18, 2011. (Doc. 15.)
The Court may dismiss a complaint for failure to state a claim under Federal Rule of
Civil Procedure 12(b)(6) for two reasons: 1) lack of a cognizable legal theory and 2)
unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)(citing
not suffice. To survive a motion to dismiss, a complaint must contain
on its face.” Iqbal, 129 S.Ct. at 1949. Facial plausibility exists if the pleader pleads factual
In Arizona, courts assess the sufficiency of a claim under Arizona Rule of Civil
Procedure 8, which mirrors Federal Rule of Civil Procedure 8.1 Cullen v. Auto-Owners Ins.
Co., 189 P.3d 344, 346 (Ariz. banc 2008). Arizona courts follow a notice pleading standard.
Id. Under that standard, a pleading must give the adverse party fair notice of the nature and
The Court notes that Plaintiff filed his Complaint in Arizona state court, which has
not adopted Twombly. The Court does not need to decide which pleading standard applies,
federal or state, because the Complaint fails to state a claim under either standard.
basis of the claim and indicate generally the type of litigation involved. Id.
If a pleading does not meet the standards of Rule 8, a party may move to dismiss for
failure to state a claim pursuant to Arizona Rule of Civil Procedure 12(b)(6). When deciding
a Rule 12(b)(6) motion, Arizona courts consider only the pleading itself and the well-pleaded
allegations contained therein. Id. The courts assume the truth of all well-pleaded factual
allegations and reasonable inferences therefrom. Id. “Because Arizona courts evaluate a
complaint’s well-pled facts, mere conclusory statements are insufficient to state a claim upon
which relief can be granted . . . a complaint that states only legal conclusions . . . does not
satisfy Arizona’s notice pleading standard under Rule 8.” Id.
Arizona courts did not adopt the Supreme Court’s admonition in Conley v. Gibson,
355 U.S. 41 (1957) that complaints should not be dismissed unless it appears beyond doubt
that the plaintiff could prove no set of facts in support of her claim. Id. at 346-47. Arizona
trial courts may not speculate about hypothetical facts that might entitle a plaintiff to relief.
Id. at 347. Instead, they are limited to considering the well-pleaded allegations and
reasonable inferences from those allegations. Id.
Defendant attached to its Motion to Dismiss the Notice of Levy served on Defendant
by the IRS.2 The IRS issued the Notice of Levy on April 24, 2011 to Wells Fargo “to collect
money owed by the taxpayer.” (Ex. 1 to Compl.) The Notice indicates that Plaintiff owed
$180,660.52 in unpaid taxes.
Section 6332(a) of the Internal Revenue Code (the “Code”) obligates an entity holding
a taxpayer’s property to “surrender such property or rights” to the IRS “upon demand” of an
IRS official. 26 U.S.C. §6332(a). A bank account is a species of property subject to levy
The Court may consider the Notice of Levy without converting the Motion to
Dismiss to a motion for summary judgment because the Plaintiff references and necessarily
relies on the Notice in his Complaint and does not dispute its authenticity, even though he
did not attach the Notice as an exhibit to the Complaint. Coto Settlement v. Eisenberg, 593
F.3d 1031, 1038 (9th Cir. 2010).
within the meaning of §6332. United States v. Nat’l Bank of Comm., 472 U.S. 713, 721
Once an entity complies with a demand by surrendering property to the IRS, the entity
is “discharged from any obligation or liability to the delinquent taxpayer and any other
person with respect to such property or rights to property arising from such surrender or
payment.” 26 U.S.C. §6332(e). Courts, including the United States Supreme Court, have
interpreted §6332(e) to mean that if a bank honors a levy, it is “discharged from any
obligation or liability to the delinquent taxpayer with respect to such property.” Nat’l Bank
of Comm., 472 U.S. at 721; United States v. Hemmen, 51 F.3d 883, 887-88 & n.3 (9th Cir.
1995)(“§6332(a) imposes a duty on third parties to honor the Service’s notice of levy” and
“§6332(e) provides the third party an absolute defense against any subsequent claim by a
delinquent taxpayer or any other person.”). A taxpayer is not without remedies, however,
because the Code provides administrative and judicial remedies against the government.
Contrary to Plaintiff’s belief, banks do not require a warrant or court order before
complying with a notice of levy. Section 3692 of the 1939 Code formerly required that a
warrant of distraint accompany a notice of levy. But this section was repealed in 1954, and
was replaced with §6331, which does not require a warrant of distraint.
Per the Code, banks holding a delinquent taxpayer’s property must comply with a
levy.3 In fact, if a bank fails to comply with a levy, the bank may incur substantial liability
to the government, including penalties. Nat’l Bank of Comm., 471 U.S. at 721; Hemmen, 51
F.3d at 887.
When Defendant Wells Fargo complied with the Notice of Levy by turning over
Plaintiff’s property, Defendant did nothing more than what was required of it by the Code.
And because pursuant to 26 U.S.C. §6332(e) Defendant is discharged from any liability to
The term “levy” includes the power of distraint and seizure by any means, including
a notice of levy. See 26 U.S.C. §6331(b). And a levy is made by serving a notice of levy on
the party in possession of the property. See Treas.Reg. §301.633-1(a)(1); United States v.
Donahue Indus. Inc., 905 F.2d 1325, 1330 (9th Cir. 1990).
Plaintiff for turning over his property to the IRS, Plaintiff’s claim against Defendant
necessarily fails as a matter of law. The Court therefore will grant the Motion to Dismiss,
and the Court will not grant leave to amend because amendment would be futile.
IT IS ORDERED Granting Defendant’s Motion to Dismiss (Doc. 1-1). This case is
IT IS FURTHER ORDERED Denying as moot Plaintiff’s Motion to Proceed (Doc.
12) and Motion to Produce the Levy (Doc. 14) and Defendant’s Motion to Strike (Doc. 15).