Court Opinion

ID: 195646
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:44:26+00
Date Added: 2024-06-11T09:42:41.077723
License: Public Domain

October 5, 1994
                    [NOT FOR PUBLICATION]
                UNITED STATES COURT OF APPEALS
                    FOR THE FIRST CIRCUIT

                                         

No. 94-1315

           KENNETH A. HANLEY AND PHYLLIS G. HANLEY,

                   Plaintiffs, Appellants,

                              v.

                  UNITED STATES OF AMERICA,

                     Defendant, Appellee.

                                         

         APPEAL FROM THE UNITED STATES DISTRICT COURT

              FOR THE DISTRICT OF MASSACHUSETTS

     [Hon. Frank H. Freedman, Senior U.S. District Judge]
                                                        

                                         

                            Before

                    Torruella, Chief Judge,
                                          
                Selya and Cyr, Circuit Judges.
                                             

                                         

Kenneth A. Hanley and Phyllis G. Hanley on brief pro se.
                                       
Loretta C.  Argrett, Assistant  Attorney General,  Gary R.  Allen,
                                                                 
Charles  E. Brookhart and  Sara Ann Ketchum,  Attorneys, Tax Division,
                                       
Department of Justice, on brief for appellee.

                                         

                                         

     Per Curiam.  Appellants  Keith and Phyllis Hanley appeal
               

pro  se  from  a  judgment  dismissing  their  first  amended
       

complaint for  lack of  jurisdiction and  from the  denial of

their post-judgment motions to amend the complaint and for  a

new trial.  For the following reasons, we affirm.

                          BACKGROUND

     This is the  second appeal to  this court in  connection

with the Hanleys' 1986  income taxes.  On April 26, 1990, the

Hanleys filed a petition in the United States Tax Court for a

redetermination of deficiency for  tax year 1986.   In Hanley
                                                             

v.  Commissioner, No. 92-1035  (1st Cir. Dec.  16, 1992) (per
                

curiam), we upheld the Tax Court's finding of a deficiency in

the amount  of $524.  On  April 9, 1993, the  Hanleys filed a

vaguely worded complaint in  the United States District Court

for the District of  Massachusetts alleging that the Internal

Revenue  Service had discriminated  against them and deprived

them of  due  process of  law  by violating  various  federal

statutes in connection with  the assessment and collection of

their 1986 taxes.  Although the  complaint is notably lacking

in factual  detail, the  central allegation is  that the  IRS

failed  to process  a  partnership schedule  attached to  the

Hanleys'  1986  tax  return,  and  as  a  result,  improperly

assessed  them in the amount  of $1,824.   The complaint also

alleges that the IRS  improperly failed to issue a  notice of

deficiency before making  this assessment.1  Read  liberally,

and in light of later filings, the complaint alleges that the

IRS unlawfully  levied on Keith  Hanley's military  pension.2

Finally,  the   complaint  alleges   that  the  IRS   made  a

mathematical error  in computating the Hanleys' tax liability

for 1986 and refuses to correct it.3

     On July 23,  1993, the government  moved to dismiss  the

complaint for lack of jurisdiction.  Among  other things, the

government  argued  that  to the  extent  the  suit  could be

construed as  a claim for  a refund pursuant  to 28 U.S.C.   

1346(a) and  26 U.S.C.   7422,  it is barred by  the Hanleys'

failure to allege, as jurisdictional prerequisites, that they

                    

1.  Although there is no  evidence in the record whether  the
IRS sent the Hanleys a  notice of deficiency before assessing
them $1,824 for tax year 1986,  it is undisputed that the IRS
at some  point determined that  an additional amount  was due
for  that taxable  year  and sent  the  Hanleys a  notice  of
deficiency in the  amount of  $1,217.  Indeed,  it was  after
receiving  this  notice of  deficiency  in  January 1990  for
$1,217 that the Hanleys filed a petition in the Tax Court.

2.  Although the Hanleys contend  that this pension is exempt
from levy,  they rely on chapter 73 of title 10 of the United
States Code,  which exempts annuities payable  to a surviving
spouse  and children--but  not military  pensions--from levy.
See 10 U.S.C.   1440; 26 U.S.C.   6334(6).  Although under 26
   
U.S.C.    6334(6),  special  pension payments  received by  a
person whose name  has been  entered on the  Army, Navy,  Air
Force,  and Coast Guard Medal  of Honor roll  are exempt from
levy,  appellants have  never alleged  that Keith  Hanley has
been  entered on this honor  roll or receives  such a special
pension.  

3.  The original complaint names the Commissioner of Internal
Revenue   as  defendant.      The  first   amended  complaint
substitutes the United States as defendant.

                             -3-

filed an administrative  claim for refund  and paid the  full

tax assessed.  In addition, the government argued that such a

suit  is barred  by 26  U.S.C.    6512(a), which  prohibits a

taxpayer  who  has petitioned  the  Tax Court  from  filing a

refund suit for the  same taxable year.  The  government also

argued  that to  the extent  the complaint  could be  read as

alleging a  common law  tort, such a  claim is  barred by  28

U.S.C.    2680(c).   Finally, the government  argued that any

claim  under 26 U.S.C.    7433 for damages  caused by the IRS

during  the  collection of  taxes is  barred by  the Hanleys'

failure to allege that they exhausted administrative remedies

pursuant to 26 U.S.C.   7433(d)(1).  

     On November  23, 1993, the district  court dismissed the

first  amended  complaint  for  lack  of  jurisdiction.    On

December 7, 1993,  the Hanleys  filed a motion  to amend  the

complaint.  A proposed  second amended complaint, attached to

this  motion,  added  the  allegation that  the  Hanleys  had

exhausted  administrative  remedies,  but was  not  otherwise

significantly  different  than the  first  amended complaint.

Approximately a week later, on December 13, 1993, the Hanleys

filed a motion for new trial.   Appended to this motion was a

copy of a document headed:

     ADMINISTRATIVE    DEMAND     TO    THE    SECRETARY
     (COMMISSIONER  OF  INTERNAL  REVENUE  SERVICE)  FOR
     RETURN OF  ALL ILL  GOTTEN OR OVER  COLLECTED MONEY
     TAKEN BY  THE REVENUE SERVICE BY  MEANS OF MISTAKE;
     OVER   ASSESSMENT;  LEVIES;   AUTOMATED  COLLECTION
     PROCESS  OR OTHER  MEANS  NOT SPECIFICALLY  LEGALLY

                             -4-

     AUTHORIZED TOO UNDER THE REVENUE LAWS AND TO RETURN
     ALL  OVER  ASSESSED  PENALTIES;  AND  INTEREST  NOT
     ENTITLED TO, AS PER THE IRS CODE . . . 

The  district court  denied  both post-judgment  motions, and

this appeal followed.

                          DISCUSSION

     We  begin with  the  basic proposition  that the  United

States,  as a  sovereign, is  immune from  lawsuit  unless it

consents to be sued.   United States v. Testan, 424 U.S. 392,
                                              

399  (1976).   Accordingly,  any lawsuit  against the  United

States must be brought in compliance  with a specific statute

which  expressly waives sovereign immunity.   Id. at  399.  A
                                                 

plaintiff has  the burden  of showing  a waiver  of sovereign

immunity.  See Baker v. United States, 817 F.2d 560, 562 (9th
                                     

Cir. 1987), cert. denied, 487 U.S. 1204 (1988).
                        

     The  Hanleys contend that 28 U.S.C.    1346(a)(1) and 26

U.S.C.   7422, which together authorize a taxpayer to sue the

government for a tax refund, provide a jurisdictional    base

for  their suit.    They further  argue  that they  not  only

alleged, but submitted evidence to prove, that they satisfied

the  requirements for such a suit by filing an administrative

claim  and  paying all  taxes due.    See McMillen  v. United
                                                             

States Dep't of Treasury,  960 F.2d 187, 188 (1st  Cir. 1991)
                        

(per curiam) (ruling that district court  lacked jurisdiction

over refund  action where  these requirements were  not met).

Appellants   also  contend   that  the  district   court  had

                             -5-

jurisdiction under 26  U.S.C.   7433,  and that they  alleged

and  proved that they  exhausted the  administrative remedies

necessary to bring  an action under this  statute for damages

incurred  during the  collection of taxes.   See  Conforte v.
                                                          

United States,  979 F.2d 1375,  1377 (9th Cir.  1992) (ruling
             

that district  court lacked  jurisdiction over    7433 action

where plaintiff failed to exhaust administrative remedies).  

     There is  no question  that the first  amended complaint

fails to allege that the Hanleys exhausted the administrative

remedies necessary to bring a refund suit or a   7433 action.

In  their opposition to  the motion to  dismiss, however, the

Hanleys   allege  that   "all  administrative   avenues  were

exhausted."   The proposed  second amended  complaint alleges

that  the  Hanleys filed  for  an  administrative refund  and

"exhausted  all legal  and administrative  avenues."   In the

accompanying motion to  amend, the Hanleys cite as proof that

they made an administrative  claim, the document, attached to

the motion for new trial, demanding "return of all ill gotten

or  over collected money."  In their  motion for a new trial,

appellants  cite  this  same  document  as  proof  that  they

exhausted the administrative requirements for filing a   7433

claim. 

     Even if  we indulge appellants  as pro se  litigants and

construe their  first amended complaint  to incorporate later

allegations of having  exhausted administrative remedies,  we

                             -6-

are persuaded that the refund and   7433 claims were properly

dismissed.  The applicable Treasury regulations  require that

an administrative  refund claim include  a detailed statement

providing  the grounds for relief.  See 26 C.F.R.   301.6402-
                                       

2(b)(1).  If  this requirement is not  met, meaningful review

of  the   refund  claim   at  the  administrative   level  is

impossible,  and  a  district  court  lacks  jurisdiction  to

entertain  the refund suit.  See, e.g.,  Hefti v. IRS, 8 F.3d
                                                     

1169, 1173  (7th Cir. 1993);  Goulding v. United  States, 929
                                                        

F.2d 329, 332 (7th  Cir. 1991), cert. denied, 113  S. Ct. 188
                                            

(1992).  In the instant case,  the document alleged to be the

Hanleys' administrative refund claim utterly fails to specify

any grounds for relief,  and district court jurisdiction was,

accordingly, lacking.4   The Treasury regulations  for filing

an administrative claim pursuant  to   7433 similarly require

a statement  of the  grounds for  relief.   See  26 C.F.R.   
                                               

301.7433-1(e)(2).   We  think  it equally  apparent that  the

purported administrative demand for "return of all ill gotten

                    

4.  In light of our ruling that  appellants failed to satisfy
the jurisdictional  prerequisites for a refund  suit, we need
not  reach the  government's argument  that  the filing  of a
petition in the Tax  Court serves as a jurisdictional  bar to
any  refund suit.   We  observe, however,  that as  a general
rule,  the Tax  Court's  jurisdiction extends  to the  entire
subject  of the correct tax  for the particular  year, and 26
U.S.C.    6512(a) serves  to deprive  the  district court  of
jurisdiction once  the Tax  Court has  been petitioned.   See
                                                             
Solitron Devices v.  United States, 862  F.2d 846, 848  (11th
                                  
Cir. 1989).  Appellants have not argued that the instant case
falls within any of the exceptions set forth in   6512(a).   

                             -7-

or over  collected money"  was inadequate to  confer district

court jurisdiction over the Hanleys'   7433 claim.

     For similar reasons, we uphold the denial of appellants'

motion to amend the complaint.  We note as an  initial matter

that once  a district court  enters judgment on  a dismissal,

the filing  of  an  amendment  cannot be  allowed  until  the

judgment  is set aside or vacated under Federal Rule of Civil

Procedure  59(e)  or   60(b).    See  Acevedo-Villalobos   v.
                                                        

Hernandez,  22 F.3d  384, 389  (1st Cir. 1994),  petition for
                                                             

cert. filed, 63 U.S.L.W.  3161 (U.S. Aug. 29, 1994)  (No. 94-
           

362).   Putting  aside  the fact  that  the Hanleys  did  not

accompany their motion to amend with the requisite Rule 59(e)

or  60(b) motion, we could  not find that  the district court

abused its  discretion.  The  only significant change  in the

proposed  second  amended  complaint  was   the  addition  of

allegations   that   the  Hanleys   exhausted  administrative

avenues.    Assuming,  without  deciding,  that  the proposed

changes  cured  certain  facial  deficiencies  in  the  first

amended complaint with respect  to the Hanleys' refund  and  

7433 claims,  it is  plain, for the  reasons just  discussed,

that the  proposed amendments  were futile.   See  Jackson v.
                                                          

Salon, 614 F.2d 15, 17 (1st Cir. 1980) (post-judgment  motion
     

to amend  complaint properly denied where  amendment would be

futile).

                             -8-

     We  need not  devote  as much  attention to  appellants'

remaining arguments.   The  Hanleys contend that  the Federal

Tort Claims  Act (FTCA),  28 U.S.C.    2671-2680,  provides a

jurisdictional basis  for their  action.  Section  2680(c) of

the  FTCA, however,  prohibits  any suit  against the  United

States "arising in respect of the assessment or collection of

any tax . . . "  See McMillen,  960 F.2d at 188.  The conduct
                             

alleged  by the Hanleys as  the basis of  their lawsuit falls

squarely within  the parameters of this  exclusion.  Contrary

to the position taken  by the Hanleys,    2680(c) encompasses

any activities of an  IRS agent even remotely related  to his

or  her official  duties  of assessing  or collecting  taxes,

including  unlawful  or  unauthorized actions.    See,  e.g.,
                                                            

National Commodity  & Barter Ass'n  v. Gibbs, 886  F.2d 1240,
                                            

1246 n.5 (10th Cir. 1989) (rejecting argument that    2680(c)

is  inapplicable  where IRS  failed  to comply  with  its own

procedures); Capozzoli v. Tracey, 663 F.2d 654, 657 (5th Cir.
                                

Dec.  1981)  (rejecting argument  that  tortious or  wrongful

conduct by an agent  cannot, by definition, be in  respect of

his official duties of assessing or collecting taxes); Morris
                                                             

v. United States, 521 F.2d 872, 874 (9th Cir. 1975) (unlawful
                

seizure and levy  of property fell  within exempted group  of

tort   claims  arising  out   of  tax   collection  efforts).

Appellants'   constitutional  challenge   to      2680(c)  is

meritless.

                             -9-

     We also reject  appellants' argument  that the  district

court's  dismissal of their  first amended complaint deprived

them  of their right to  a jury trial  under the Constitution

and various federal  statutes.  Where,  as here, federal  law

provides no  basis for the exercise  of federal jurisdiction,

there  is  no  cognizable  cause  of  action  to   which  any

constitutional or statutory  right to a jury trial can apply.

See County of  Suffolk v.  Long Island Lighting  Co., 710  F.
                                                    

Supp.  1387, 1404 (E.D.N.Y. 1989), aff'd in part and rev'd in
                                                             

part,  907  F.2d 1295  (2d  Cir. 1990)  (ruling  that Seventh
    

Amendment  right to  a jury  trial  was not  implicated where

plaintiff's claim  was dismissed  for lack of  jurisdiction).

We add, however, that  the Seventh Amendment right to  a jury

trial does not  extend to actions against  the United States,

see,  e.g., Hudson v. United States, 766 F.2d 1288, 1292 (9th
                                   

Cir. 1985); and  that Article III, Section 2, Clause 3 of the

Constitution, which provides that "the trial of  all crimes .

. . shall be by jury", is not applicable to the instant civil

action alleging violations of civil statutes.  

     We  have considered appellants'  remaining arguments and

find them to be without merit.5  

     Affirmed.
              

                    

5.  We also deny appellants' request for oral argument.

                             -10-