Court Opinion

ID: 198192
Source: CourtListenerOpinion
Date Created: 2011-02-07 03:47:29+00
Date Added: 2024-06-11T08:47:20.539107
License: Public Domain

[NOT FOR PUBLICATION--NOT TO BE CITED AS PRECEDENT]
             United States Court of Appeals
                 For the First Circuit

No. 98-1278

                     JACK T. FREDYMA,

                  Plaintiff, Appellant,

                            v.

                LAKE SUNAPEE BANK, ET AL.,

                  Defendants, Appellees.

       APPEAL FROM THE UNITED STATES DISTRICT COURT

            FOR THE DISTRICT OF NEW HAMPSHIRE

        [Hon. Shane Devine, Senior District Judge]

                          Before

                 Selya, Circuit Judge,
            Campbell, Senior Circuit Judge,
               and Lynch, Circuit Judge.

 Jack T. Fredyma on brief pro se.
 Michael D. Ramsdell and Gallagher, Callahan & Gartrell, P.A.on brief for appellee Lake Sunapee Bank.
 Loretta C. Argrett, Assistant Attorney General, William S.
Estabrook and Pamela C. Berry, Attorneys, Department of Justice and
Paul M. Gagnon, United States Attorney, on brief for the appellees,
United States of America, United States Department of Treasury, and
Internal Revenue Service.

November 3, 1998

                                           Per Curiam.  Plaintiff-appellant Jack Fredyma appeals
pro se from the dismissal of his claims against various federal
defendants (the Internal Revenue Service, the Department of
Treasury, and the United States) and the grant of summary
judgment in favor defendant Lake Sunapee Bank (formerly
Landmark Bank).  We affirm.
          The underlying action stems from a levy placed by the
Internal Revenue Service ("IRS") on a Landmark Bank account
containing a certificate of deposit under the names of Fredyma
and his mother.  The bank honored the levy by withdrawing
$9,338.00 from the account and sending the money to the IRS. 
For the purposes of this appeal, it is assumed by all parties
that the funds in the account derive from two lump sum workers'
compensation payments to Fredyma totaling approximately
$100,000.00.
          Fredyma contends that the bank account was immune
from levy under 26 U.S.C.  6334(a)(7) (exempting from levy any
amount "payable" to an individual as workmen's compensation). 
This contention lies at the heart of a five count complaint
filed against defendants on September 17, 1996.  Three of these
counts are at issue on appeal:  Count I alleges wrongful levy
by the IRS, Count II alleges reckless and intentional violation
of 26 U.S.C.  6334(a)(7) by IRS officials, and Count V alleges
that the bank violated state law in honoring the levy.  
          Fredyma's complaint indicates that he filed several
"administrative complaints"  protesting  the  levy  prior  to
                             -2-
initiating the instant lawsuit.  The IRS allegedly responded,
inter alia, that workers' compensation benefits are not exempt
from levy upon deposit in a bank account.  In the district
court, both the federal defendants and the bank took the
position that the funds at issue were not immune from levy.
          The district court dismissed Count I for lack of
jurisdiction.  In particular, the court concluded that Count
II, which alleges a cause of action under 26 U.S.C.  7433, is
the only claim as to which the United States has waived its
sovereign immunity.  Fredyma has made no persuasive argument
otherwise on appeal, and we conclude that Count I was properly
dismissed for lack of jurisdiction. 
          The district court entered judgment in favor of the
defendants on Counts II and V after concluding that the funds
at issue were not exempt from levy.  Noting that the issue is
one of first impression, the lower court concluded that the
plain meaning of "payable" in  6334(a)(7) applies to an amount
to be paid or capable of being paid but not money that has
already been paid.  Fredyma challenges this interpretation, and
he points to legislative history which, he contends, indicates
that Congress intended to protect monies paid.  See H.R. Rep.
No. 89-1884, at 61 (1996); S.R. No. 89-1708, at 19 (1966),
reprinted in 1966 U.S.C.C.A.N. 3722, 3741.
          We affirm the dismissal of Count II on an alternative
basis than that given by the district court.  By its terms, 26
U.S.C.  7433(a) permits the recovery of damages against the
government only for "reckless[]" or "intentional[]" disregard
of an Internal Revenue Code provision.  Where, as here, the
IRS's interpretation of the Code is, at the very least,
reasonable, no action lies under  7433.  Cf. United States v.
Toyoto of Visalia, 772 F. Supp. 481, 492 (E.D.Cal. 1991)
(indicating that it is not the intent of  7433 that "any time
an officer of the IRS makes a mistake or simply does not agree
with a particular interpretation of the law, the United States
is liable for damages"), aff'd, 988 F.2d 126 (1993).  In so
holding, we express no opinion as to whether or not the IRS is
correct in its interpretation.
          We also affirm the dismissal of Count V on an
alternative basis.  Contrary to Fredyma's suggestion, we
conclude that 26 U.S.C.  6332(e) protects the bank from any
liability arising from the surrender of the property.  The
Ninth Circuit opinion relied upon by Fredyma, Farr v. United
States, 990 F.2d 451 (9th Cir. 1993) (holding that an employer
was not immune from liability to a taxpayer for its improper
transfer of workers' compensation benefits), is distinguishable
on its facts.  In Farr, the IRS never asked the party in
possession to turn over workmen's compensation benefits;
indeed, it eschewed any desire to have the party do so.  Farr,
990 F.2d at 457.  By contrast, in the instant case the IRS
levied on the very property in question. 
          Affirmed.