Court Opinion

ID: 4683336
Source: CourtListenerOpinion
Date Created: 2021-05-03 15:00:54.558614+00
Date Added: 2024-06-11T08:04:14.449652
License: Public Domain

Case: 20-1562   Document: 42     Page: 1   Filed: 05/03/2021

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

      TERRI L. STEFFEN, PAUL A. BILZERIAN,
                 Plaintiffs-Appellants

                            v.

                   UNITED STATES,
                   Defendant-Appellee
                 ______________________

                       2020-1562
                 ______________________

    Appeal from the United States Court of Federal Claims
 in No. 1:12-cv-00063-PEC, Judge Patricia E. Campbell-
 Smith.
                 ______________________

                  Decided: May 3, 2021
                 ______________________

     TERRI L. STEFFEN, PAUL BILZERIAN, Basseterre, Saint
 Kitts and Nevis, pro se.

     JANET A. BRADLEY, Tax Division, United States Depart-
 ment of Justice, Washington, DC, for defendant-appellee.
 Also represented by JOAN I. OPPENHEIMER, RICHARD E.
 ZUCKERMAN.
                  ______________________

     Before NEWMAN, DYK, and REYNA, Circuit Judges.
Case: 20-1562     Document: 42     Page: 2     Filed: 05/03/2021

2                                    STEFFEN   v. UNITED STATES

    Opinion for the court filed by Circuit Judge REYNA.
    Dissenting opinion filed by Circuit Judge NEWMAN.

 REYNA, Circuit Judge.
     This appeal is the latest in a protracted litigation span-
 ning more than three decades in the federal courts. Pro se
 appellants Terri L. Steffen and Paul A. Bilzerian are a mar-
 ried couple seeking an $8.2 million tax refund pursuant to
 26 U.S.C. § 1341. The money in dispute stems from trans-
 actions that Mr. Bilzerian made in 1985 and 1986 related
 to the purchase and sale of certain common stocks, for
 which he was convicted of securities fraud. Because the
 appellants’ complaint does not entitle them to the legal
 remedy they seek, we affirm the decision of the United
 States Court of Federal Claims granting the government’s
 motion to dismiss and denying leave to amend the com-
 plaint.
                         BACKGROUND
      On September 29, 1989, Mr. Bilzerian was convicted
 on nine counts of securities fraud, making false statements
 to the Securities and Exchange Commission (SEC), and
 conspiracy to commit certain offenses and defraud the SEC
 and the Internal Revenue Service (IRS). United States v.
 Bilzerian, 926 F.2d 1285, 1289 (2d Cir. 1991). The United
 States District Court for the Southern District of New York
 entered a judgment of conviction, sentenced Mr. Bilzerian
 to four years in prison, and imposed a $1.5 million fine. Id.
 The court further ordered Mr. Bilzerian to disgorge
 $62,337,599.53.      Sec. & Exch. Comm’n v. Bilzerian,
 112 F. Supp. 2d 12, 14 (D.D.C. 2000), aff’d, 75 F. App’x 3
 (D.C. Cir. 2003).
     On January 31, 2012, Mrs. Steffen filed a pro se com-
 plaint in the Court of Federal Claims seeking an
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 STEFFEN   v. UNITED STATES                                 3

 $8,243,145 tax refund pursuant to 26 U.S.C. § 1341. 1
 S.A. 1. She amended the complaint on April 23, 2012. See
 S.A. 5. On August 7, 2017, Mrs. Steffen and Mr. Bilzerian
 filed a second amended complaint as joined parties.
 S.A. 46.
     On September 19, 2018, the government filed a motion
 to dismiss with prejudice the appellants’ second amended
 complaint for failure to state a claim upon which relief can

     1   The appellants are not represented by counsel in
 this appeal, but they are no strangers to judicial proceed-
 ings and have appeared pro se dozens of times during the
 last three decades. See generally, e.g., Sec. & Exch.
 Comm’n v. Bilzerian, 811 F. App’x 3 (D.C. Cir. 2020); Stef-
 fen v. United States, 147 Fed. Cl. 142 (2020); In re Steffen,
 611 F. App’x 677 (11th Cir. 2015); In re Steffen, No. 8:13-
 CV-1700-T-27, 2014 WL 11428827 (M.D. Fla. Mar. 13,
 2014); Iberiabank v. Daer Holdings, LLC, No. 8:12-CV-
 2872-T-30MAP, 2014 WL 345925 (M.D. Fla. Jan. 30, 2014);
 Sec. & Exch. Comm’n v. Bilzerian, No. CV 89-1854 (RCL),
 2012 WL 13070124 (D.D.C. Nov. 15, 2012); Steffen v.
 Comm’r, 104 T.C.M. (CCH) 303 (T.C. 2012); Sec. & Exch.
 Comm’n v. Bilzerian, 487 F. App’x 580 (D.C. Cir. 2012);
 Sec. & Exch. Comm’n v. Bilzerian, No. CV 89-1854 (RCL),
 2011 WL 13267160 (D.D.C. Oct. 3, 2011); Steffen v. Aker-
 man Senterfitt, No. 8:04-CV-1693-T-24MSS, 2005 WL
 8160099 (M.D. Fla. Nov. 30, 2005); Sec. & Exch. Comm’n v.
 Bilzerian, 131 F. Supp. 2d 10 (D.D.C. 2001), aff’d, 75 F.
 App’x 3 (D.C. Cir. 2003); Sec. & Exch. Comm’n v. Bilzerian,
 127 F. Supp. 2d 232 (D.D.C. 2000), aff’d, 75 F. App’x 3
 (D.C. Cir. 2003); Bilzerian v. Comm’r, 82 T.C.M. (CCH) 295
 (T.C. 2001); In re Bilzerian, 153 F.3d 1278 (11th Cir. 1998);
 Bilzerian v. United States, 41 Fed. Cl. 134 (1998);
 Bilzerian v. United States, 125 F.3d 843 (2d Cir. 1997); Sec.
 & Exch. Comm’n v. Bilzerian, 29 F.3d 689 (D.C. Cir. 1994);
 In re McReynolds, 166 B.R. 452 (Bankr. M.D. Fla. 1994).
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4                                    STEFFEN   v. UNITED STATES

 be granted. S.A. 65. The Court of Federal Claims granted
 the motion on July 24, 2019, issued its order pursuant to
 Rule 12(b)(6) of the Rules of the Court of Federal Claims
 (RCFC), and sua sponte denied permission to file any fur-
 ther amendments to the complaint. J.A. 2, 8. On Au-
 gust 20, 2019, the appellants filed a motion for
 reconsideration pursuant to RCFC 59(a)(1) and sought
 leave to file a third amended complaint. J.A. 10–11. The
 court denied the motion for reconsideration and request to
 amend on January 6, 2020. Id. This appeal followed. We
 have jurisdiction under 28 U.S.C. § 1295(a)(3).
                          DISCUSSION
     We review de novo a dismissal for failure to state a
 claim upon which relief can be granted by the Court of Fed-
 eral Claims. Welty v. United States, 926 F.3d 1319, 1323
 (Fed. Cir. 2019) (citing Boyle v. United States, 200 F.3d
 1369, 1372 (Fed. Cir. 2000)). In a denial of a motion to
 amend a complaint, we review the findings of the Court of
 Federal Claims for an abuse of discretion. Intrepid v. Pol-
 lock, 907 F.2d 1125, 1129 (Fed. Cir. 1990).
     The Court of Federal Claims may properly grant a mo-
 tion to dismiss under RCFC 12(b)(6) when a complaint does
 not allege facts that show the plaintiff is entitled to the le-
 gal remedy sought. Lindsay v. United States, 295 F.3d
 1252, 1257 (Fed. Cir. 2002). The appellants’ second
 amended complaint sought a tax refund pursuant to
 § 1341. To establish entitlement to a tax refund under the
 statute, a taxpayer must satisfy two elements. First, the
 taxpayer must show a reasonable belief that she had an
 unrestricted right to the disputed funds when she first re-
 ported them as income. See 26 U.S.C. § 1341(a)(1); Nacchio
 v. United States, 824 F.3d 1370, 1374 (Fed. Cir. 2016) (ci-
 tation omitted). Second, the taxpayer is required to tether
 a claim for a tax deduction in excess of $3,000 to another
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 STEFFEN   v. UNITED STATES                                   5

 section of the Internal Revenue Code (IRC). 2 See 26 U.S.C.
 § 1341(a)(2)–(3); Culley v. United States, 222 F.3d 1331,
 1335 (Fed. Cir. 2000) (citations omitted). A plaintiff cannot
 prevail under § 1341 unless both requirements are met.
     The appellants’ complaint fails to establish a reasona-
 ble belief of having an unrestricted right to the disputed
 funds when the money was first reported as income. The
 funds in dispute originated from Mr. Bilzerian’s securities
 fraud, for which he was convicted in a court of law. This
 court has held that a reasonable, unrestricted-right belief
 cannot exist where a taxpayer knowingly acquires the dis-
 puted funds via fraud. Culley, 222 F.3d at 1335 (Fed.
 Cir. 2000) (citation omitted). The “taxpayer’s illicit hope
 that his intentional wrongdoing will go undetected cannot
 create the appearance of an unrestricted right.” Id.
 at 1336. This principle applies with equal force here and
 forecloses the appellants’ unrestricted-right claim to re-
 cover the funds as a matter of law.
     Because the appellants cannot, as a matter of law, have
 a reasonable, unrestricted-right belief, they cannot plead a
 claim under § 1341. As a result, further opportunity to

     2   The text of the statute prescribes an allowance for
 a tax-refund claim if:
     (1) an item was included in gross income for a prior
     taxable year (or years) because it appeared that the
     taxpayer had an unrestricted right to such item;
     (2) a deduction is allowable for the taxable year be-
     cause it was established after the close of such prior
     taxable year (or years) that the taxpayer did not
     have an unrestricted right to such item or to a por-
     tion of such item; and
     (3) the amount of such deduction exceeds $3,000.
 26 U.S.C. § 1341(a).
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6                                    STEFFEN   v. UNITED STATES

 amend their complaint would be futile. See Kemin Foods,
 L.C. v. Pigmentos Vegetales del Centro S.A. de C.V.,
 464 F.3d 1339, 1353 (Fed. Cir. 2006) (noting that leave to
 amend may be denied when “the amendment would be fu-
 tile”).
     The second § 1341 requirement proves equally unavail-
 ing for the appellants. The Court of Federal Claims noted
 that, despite “hav[ing] had multiple opportunities to revise
 their complaint,” the appellants failed to tether their tax-
 refund claim to another section of the Tax Code as required
 by statute. Steffen v. United States, 145 Fed. Cl. 1, 5
 (2019), reconsideration denied, 147 Fed. Cl. 142 (2020).
 The “fail[ure] to address th[is] deficiency in response to the
 [government]’s motion to dismiss” for ten months in three
 subsequent briefs is fatal to their claim. Steffen, 145 Fed.
 Cl. at 5. The court therefore properly dismissed the com-
 plaint.
      The appellants argue that their failure to state a claim
 under § 1341 should be excused because they are entitled
 to pro se deference. See Appellants’ Br. 12. But the Court
 of Federal Claims found that argument unpersuasive in
 view of the appellants’ litigation history. See Steffen,
 145 Fed. Cl. at 5. We acknowledge the long-held principle
 that pleadings drafted by pro se litigants are generally held
 to “less stringent standards” than pleadings filed by
 trained attorneys. Haines v. Kerner, 404 U.S. 519, 520–21
 (1972). But procedural leniency toward a specific class of
 litigants does not translate to unfettered deference and
 dereliction of judicial review. Courts may scour pro se
 pleadings in search for a legal argument, but they cannot
 excuse a litigant’s failure to bring a claim entitled to legal
 remedy. See Henke v. United States, 60 F.3d 795, 799
 (Fed. Cir. 1995) (“The fact that [a party] acted pro se in the
 drafting of his complaint may explain its ambiguities, but
 it does not excuse its failures.”). As is evident from their
 extensive litigation history in the federal courts, the appel-
 lants are anything but inexperienced pro se litigants. To
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 STEFFEN   v. UNITED STATES                                  7

 the contrary, the appellants have demonstrated an ability
 to draft a variety of legal documents, and they wield a legal
 acumen uncommon among pro se litigants. The appellants’
 complaint had already undergone three iterations before
 the Court of Federal Claims denied permission to file any
 further amendments. Under these circumstances, we con-
 clude that the Court of Federal Claims did not abuse its
 discretion in denying the appellants special deference.
     Based on the foregoing, we hold that the Court of Fed-
 eral Claims properly dismissed the case because the appel-
 lants (1) did not have an unrestricted right to funds
 acquired by fraud as a matter of law, foreclosing their abil-
 ity to plead a claim under § 1341; (2) failed to tether the
 § 1341 deduction claim to another section of the IRC; and
 (3) were not entitled to pro se deference under the facts pre-
 sented. Because leave to amend would have been futile,
 the Court of Federal Claims properly exercised its discre-
 tion to deny leave to amend the complaint.
     The dissent claims that the Court of Federal Claims
 dismissed the suit for failure to “cite” applicable tax-code
 sections. Dissent Op. at 2. This is not accurate. The Court
 of Federal Claims explained that the appellants were
 aware of the § 1341 requirements and had multiple oppor-
 tunities to cure the defects in their complaint. Steffen,
 145 Fed. Cl. at 5. Based on those facts, the court deter-
 mined that “[a]bsent an allegation of the source of the de-
 duction plaintiffs seek, the court cannot provide a legal
 remedy.” Id. We agree.
     The dissent also contends that the Court of Federal
 Claims dismissed the action “without notice and without
 opportunity to amend the complaint.”         Dissent Op.
 at 1–2, 3. This is also incorrect. The government undis-
 putably moved to dismiss on the ground that the appellants
 cannot establish a reasonable belief of an unrestricted
 right to the funds. S.A. 82–91. We also note that the
 § 1341 requirement to tether a tax deduction to another
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8                                    STEFFEN   v. UNITED STATES

 section of the Tax Code was properly raised in the govern-
 ment’s brief in support of its motion to dismiss the appel-
 lants’ second amended complaint with prejudice. See
 S.A. 81 (noting that a taxpayer must show “entitle[ment]
 to a deduction under the [IRC] . . . , [which] must be ‘allow-
 able’ under a provision of the [Tax] Code other than
 § 1341.”) (citations omitted). The appellants therefore had
 clear notice of this ground and could have responded, but
 did not do so, “in any of the subsequent three briefs they
 filed.” Steffen, 145 Fed. Cl. at 5. Accordingly, we find no
 abuse of discretion in the denial to amend the complaint for
 a third time, so as to identify a potential provision of the
 Tax Code to which the claim could be tethered as required
 under § 1341. In any event, any amendment would have
 been futile because the appellants could not have reasona-
 bly believed that they had an unrestricted right to the
 funds under the statute.
     The extensive litigation history of this case reveals a
 clear pattern: The appellants have, for decades, litigated to
 no avail the same tax-refund claims. The appellants’ in-
 volvement in other cases demonstrates they were aware of
 the § 1341 requirements, including the need to tether a tax-
 deduction claim to another section of the IRC. This litiga-
 tion history belies the appellants’ claims that they had no
 clear notice of the § 1341 requirements. 3 Even if, contrary

     3    For example, during proceedings before the United
 States Bankruptcy Court for the Middle District of Florida,
 Steffen filed a “Debtor’s Motion for Partial Summary Judg-
 ment on Tax Refund Claim,” S.A. 470, which explicitly
 cited Culley and cross-referenced 26 U.S.C. § 162
 (I.R.C. § 162) as the other section of the IRC required for
 entitlement to a deduction under § 1341. S.A. 480–81. In
 a case before the Court of Federal Claims in 1998, the ap-
 pellants filed suit challenging another IRS denial of a de-
 duction, which the appellants claimed qualified as an
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 STEFFEN   v. UNITED STATES                                   9

 to the facts above, the appellants somehow had inadequate
 notice of the tethering requirement, there is a wholly inde-
 pendent ground for denying leave to amend because, as a
 matter of law, the appellants cannot demonstrate a reason-
 able belief of an unrestricted right to the disputed funds,
 making any amendment entirely futile.
     We have considered the appellants’ remaining argu-
 ments and find them unavailing. We discern no basis to
 conclude that, under the facts of this case, the Court of Fed-
 eral Claims abused its discretion in dismissing the appel-
 lants’ complaint.
                           CONCLUSION
     For the reasons set forth in this opinion, we affirm the
 decision of the Court of Federal Claims granting the gov-
 ernment’s motion to dismiss and denying leave to amend
 the complaint.
                           AFFIRMED
                              COSTS
 Costs for the appellee.

 “ordinary and necessary business expense” under 26 U.S.C.
 § 162(a). Bilzerian, 41 Fed. Cl. at 135; S.A. 576. The rec-
 ord shows other such instances of the appellants’ notice of
 the § 1341 requirements.
Case: 20-1562    Document: 42      Page: 10   Filed: 05/03/2021

    United States Court of Appeals
        for the Federal Circuit
                   ______________________

         TERRI L. STEFFEN, PAUL A. BILZERIAN,
                    Plaintiffs-Appellants

                              v.

                     UNITED STATES,
                     Defendant-Appellee
                   ______________________

                         2020-1562
                   ______________________

    Appeal from the United States Court of Federal Claims
 in No. 1:12-cv-00063-PEC, Judge Patricia E. Campbell-
 Smith.
                 ______________________

 NEWMAN, Circuit Judge, dissenting.

     The Court of Federal Claims dismissed this tax refund
 appeal on the pleadings and with prejudice, on the ground
 of absence of jurisdiction or failure to state a claim. 1 The
 dismissal was without prior notice to the plaintiffs of any
 defect in their complaint, and without opportunity to cure

     1  Steffen v. United States, 145 Fed. Cl. 1 (2019) (“Dis-
 missal Order”); id., 147 Fed. Cl. 142 (2020) (“Recon. Dec.”).
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 2                                  STEFFEN   v. UNITED STATES

 the defect, which was the omission from the complaint of
 the numbers of the applicable sections of the Tax Code.
     In its dismissal, the Court of Federal Claims did not
 discuss the merits of this tax refund claim; this appeal to
 the Federal Circuit is solely on the question of the
 dismissal with prejudice, without notice and without
 opportunity to amend the complaint. Thus in their briefs
 neither the appellant nor the government discussed the
 merits of the tax refund claim.
     Nonetheless, my colleagues now decide the tax refund
 claim, and on this basis they rule that the Court of Federal
 Claims was correct in dismissing the complaint for lack of
 jurisdiction. My colleagues ignore that the facts are not
 presented and the law is not argued. There has been no
 decision by the Court of Federal Claims. Thus the courts
 deny these taxpayers their right to judicial review of the
 IRS decision; on a ground so shaky that the government
 never raised it in the Court of Federal Claims, although the
 government filed three motions to dismiss. This is not full
 and fair judicial process.
     The only question before us is the dismissal with
 prejudice because the complaint did not cite the sections of
 the Tax Code, and refusal of the proffered amended
 complaint. The government does not now support the
 reasoning of the Court of Federal Claims, and devotes most
 of its argument to impugning the character of these
 plaintiffs. My colleagues on this panel undertake a sua
 sponte decision of the tax refund claim as their reason for
 supporting the improper dismissal.
     The panel majority decides the tax refund claim
 without briefing, without a record, without argument,
 without trial and without decision. These plaintiffs are
 thus evicted from the protection of the laws, for their claim
 has never had judicial review. As Justice John Marshall
 observed:
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 STEFFEN   v. UNITED STATES                                  3

     The very essence of civil liberty certainly consists
     in the right of every individual to claim the protec-
     tion of the laws, whenever he receives an injury.
     One of the first duties of government is to afford
     that protection.
 Marbury v. Madison, 5 U.S. 137, 163 (1803). The principle
 of protection by judicial review is the foundation of a nation
 ruled by law. Chambers v. Balt. & Ohio R.R. Co., 207 U.S.
 142, 148 (1907) (“The right to sue and defend in the courts”
 is “[i]n an organized society . . . the right conservative of
 all other rights, and lies at the foundation of orderly
 government.” This right “is one of the highest and most
 essential privileges of citizenship”).
     These plaintiffs are now deprived of this constitutional
 right, without notice and without sound reason.            I
 respectfully dissent.
                               A
      The Court of Federal Claims, after seven years of
 litigation activity on this case, preceded by a decade of
 litigation in IRS tribunals, dismissed the complaint with
 prejudice and without notice, stating that: “Absent an
 allegation of the source of the deduction plaintiffs seek, the
 court cannot provide a legal remedy. As such, the court
 must dismiss the complaint for failure to state a claim upon
 which relief can be granted.” Dismissal Order at 5. The
 court refused to permit amendment of the complaint,
 although the IRS record is replete with citations to the
 applicable Tax Code provisions.
     Plaintiffs state, without contradiction, that this
 asserted flaw was mentioned for the first time in the issued
 Dismissal Order.     The plaintiffs filed a request for
 reconsideration accompanied by a request to file an
 amended complaint, and were denied.
     The Court of Federal Claims not only departed from
 the rules governing the content of a complaint, but also
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 4                                   STEFFEN   v. UNITED STATES

 departed from routine procedures for amendment of a
 flawed complaint. Precedent is uniformly against denial of
 remedial amendment; indeed, when “it appears plainly
 from [the] record that jurisdiction exists, it best serves the
 interest of justice to grant the motion for leave to amend
 without requiring a perfunctory remand for that purpose.”
 Carlton v. Baww, Inc., 751 F.2d 781, 789 (5th Cir. 1985).
                               B
      The Court of Federal Claims did not review the merits
 of the tax refund claim, but simply dismissed the complaint
 for “fail[ure] to meet . . . the pleading standards,” Recon.
 Dec. at 146. My colleagues now state that “the appellants
 [] did not have an unrestricted right to funds acquired by
 fraud,” Maj. Op. at 7. However, the Court of Federal
 Claims’ dismissal was based solely on the “threshold issue”
 of the plaintiffs’ failure to identify the applicable sections
 of the Tax Code. Dismissal Order at 4.
      The panel majority now decides the merits of the tax
 refund claim, although the merits are not before us for de-
 cision. My colleagues hold, sua sponte, that “appellants’
 complaint does not entitle them to the legal remedy they
 seek,” Maj. Op. at 2. Notably, the government never moved
 to dismiss on that ground. The government had filed sev-
 eral motions to dismiss, including for absence of a neces-
 sary party and for a more definite statement, but the
 government did not move to dismiss on the ground adopted
 by the panel majority.
     The merits are not presented for our appellate review.
 There is no exposition and argument of the grounds on
 which my colleagues purport to rely, and my colleagues’
 recitation of facts and theories has no record citations, and
 no opportunity for response. See Mullane v. Cent. Hanover
 Bank & Trust Co., 339 U.S. 306, 314 (1950) (“An
 elementary and fundamental requirement of due process
 in any proceeding which is to be accorded finality is notice
 reasonably calculated, under all the circumstances, to
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 STEFFEN   v. UNITED STATES                                    5

 apprise interested parties of the pendency of the action and
 afford them an opportunity to present their objections.”).
      Complex issues warrant full briefing and due
 consideration in the trial court. See Ferreiro v. United
 States, 350 F.3d 1318, 1327 (Fed. Cir. 2003) (remanding the
 government’s jurisdictional arguments because “[t]he
 Court of Federal Claims did not rule on those grounds and
 we decline to rule on them in the first instance on appeal”);
 Centrak, Inc. v. Sonitor Techs., Inc., 915 F.3d 1360, 1369
 (Fed. Cir. 2019) (declining to consider enablement in the
 first instance on appeal); Valeant Pharm. N. Am. LLC v.
 Mylan Pharm. Inc., 978 F.3d 1374, 1384–85 (Fed. Cir.
 2020) (remanding to the district court to consider
 additional Rule 12(b)(6) arguments in the first instance).
 My colleagues stray from these foundations of due process.
                                C
     The complaint herein was not incurably defective. A
 complaint must state a plausible claim for relief, but “does
 not require the plaintiff to set out in detail the facts upon
 which the claim is based, but enough facts to state a claim
 to relief that is plausible on its face.” Cary v. United States,
 552 F.3d 1373, 1376 (Fed. Cir. 2009) (citing Bell Atl. Corp.
 v. Twombly, 550 U.S. 544, 570 (2007)).
     Dismissal of a complaint under Rule 12(b)(6) requires
 prior notice of the perceived inadequacy, with an
 opportunity to remedy any defect. “[A] plaintiff with an
 arguable claim is ordinarily accorded notice of a pending
 motion to dismiss for failure to state a claim and an
 opportunity to amend the complaint before the motion is
 ruled upon.” Neitzke v. Williams, 490 U.S. 319, 329 (1989).
 The plaintiff must be enabled “meaningfully to respond by
 opposing the motion to dismiss on legal grounds or by
 clarifying his factual allegations so as to conform with the
 requirements of a valid legal cause of action.” Id. at 329–
 30; see also, e.g., Coates Reprographics, Inc. v.
 Subligraphics, S.A., 845 F.2d 1034 (Fed. Cir. 1988)
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 6                                  STEFFEN   v. UNITED STATES

 (vacating and remanding in part because “having acted sua
 sponte, the court gave [plaintiff] no opportunity, prior to
 entry of the order, to present its arguments with respect to
 its being prejudiced by the dismissal.”).
     Notice and an opportunity to remedy a defective
 complaint is the general rule. Perez v. Ortiz, 849 F.2d 793,
 797 (2d Cir. 1988) (“[T]he general rule is that a district
 court has no authority to dismiss a complaint for failure to
 state a claim upon which relief can be granted without
 giving the plaintiff an opportunity to be heard.”) (internal
 quotation marks and citations omitted). In the absence of
 any reason to deny leave to amend the complaint, “[t]he
 court should freely give leave when justice so requires.”
 Fed. R. Civ. P. 15(a)(2). As the Supreme Court stated in
 Foman v. Davis, 371 U.S. 178 (1962):
     If the underlying facts or circumstances relied upon
     by a plaintiff may be a proper subject of relief, he
     ought to be afforded an opportunity to test his
     claim on the merits. In the absence of any apparent
     or declared reason . . . the leave sought should, as
     the rules require, be ‘freely given.’ Of course, the
     grant or denial of an opportunity to amend is
     within the discretion of the District Court, but
     outright refusal to grant the leave without any
     justifying reason appearing for the denial is not an
     exercise of discretion; it is merely abuse of that
     discretion and inconsistent with the spirit of the
     Federal Rules.
 Id. at 182. The Court of Federal Claims departs from its
 own precedent. See AAA Pharmacy, Inc. v. United States,
 108 Fed. Cl. 321, 329 n.9 (2012) (“[I]n general, sua sponte
 Rule 12(b)(6) dismissals are erroneous if parties have not
 been afforded notice that the complaint insufficiently
 states a claim and an opportunity to amend the complaint,”
 unless “it is crystal clear that the plaintiff cannot prevail
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 STEFFEN   v. UNITED STATES                                 7

 and that amending the complaint would be futile” (quoting
 Chute v. Walker, 281 F.3d 314, 319 (1st Cir. 2002)).
      Despite this solid practice, the Court of Federal Claims
 and now the Federal Circuit deny these fundamentals of
 fair process, and my colleagues dispose of the merits with-
 out presentation of the merits.
                              D
      The Court of Federal Claims stated that it was not per-
 mitting an amended complaint “[b]ecause plaintiffs were
 aware of the relevant standard, have had multiple oppor-
 tunities to revise their complaint, and failed to address the
 deficiency in response to defendant’s motion to dismiss, the
 court will not permit further amendments in this case.”
 Dismissal Order at 5; see also Recon. Dec. at 146. However,
 there was no motion to dismiss on this ground. The plain-
 tiffs had no notice that the court deemed the complaint de-
 ficient, and this purported deficiency was never raised by
 the government. To the contrary: jurisdiction was accepted
 over seven years of litigation activity after the complaint
 was filed.
     The government on this appeal does not defend the
 refusal to permit amendment of the complaint. Instead,
 the government points to the past offenses of the plaintiffs,
 for which they received civil and criminal penalties.
 Persons who have committed offenses are not thereby
 excluded from access to judicial review of other issues. See
 Bounds v. Smith, 430 U.S. 817, 821 (1977) (“It is now
 established beyond doubt that prisoners have a
 constitutional right of access to the courts.”); Lewis v.
 Casey, 518 U.S. 343, 350 (1996) (“The right that Bounds
 acknowledged was the (already well-established) right of
 access to the courts.”).
    The right of reasonable access to the courts is “secured
 by the Constitution and laws of the United States.”
 Johnson v. Avery, 393 U.S. 483, 498 n.24 (1969) (Douglas,
Case: 20-1562    Document: 42      Page: 17     Filed: 05/03/2021

 8                                   STEFFEN   v. UNITED STATES

 J., concurring). A complaint should be dismissed for failure
 to state a claim only if it is clear that no relief could be
 granted under any set of facts that could be proved
 consistent with the allegations. Anaheim Gardens v.
 United States, 444 F.3d 1309, 1314–15 (Fed. Cir. 2006)
 (citing Hishon v. King & Spalding, 467 U.S. 69, 73 (1984)).
 “The factual allegations must be enough to raise a right to
 relief above the speculative level.” Cary, 552 F.3d at 1376.
 This requires “enough facts to state a claim to relief that is
 plausible on its face.” Id.; Scheuer v. Rhodes, 416 U.S. 232,
 236 (1974), overruled on other grounds by Davis v. Scherer,
 468 U.S. 183, 188 (1984) (a well-pleaded complaint may
 proceed even if it appears “that a recovery is very remote
 and unlikely”). The dismissal of the complaint with
 prejudice and denial of opportunity to amend were a clear
 abuse of discretion.
     These plaintiffs are entitled to review of the merits of
 their tax refund claim. From my colleagues’ contrary
 ruling, I respectfully dissent.