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Long v. United States

March 31, 2009

HAROLD D. LONG AND SHERRIE K. LONG, PLAINTIFFS,
v.
UNITED STATES OF AMERICA, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Paul L. Friedman United States District Judge

MEMORANDUM OPINION

Plaintiffs brought this suit for damages resulting from allegedly illegal tax liens placed on their house. Defendants counterclaimed to reduce the liens to judgment. The action is presently before the Court on defendants' motion to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure and plaintiffs' motion to dismiss the counterclaim. Upon careful consideration of the parties' papers and the entire record in the case, the Court grants defendants' motion to dismiss, and denies plaintiffs' motion to dismiss.*fn1

I. BACKGROUND

Plaintiffs Harold D. Long and Sherrie K. Long allege that the Internal Revenue Service ("IRS") unlawfully placed five tax liens totaling $52,617.29 on their house between 1997 and 2003. See Compl. ¶¶ 14, 19. Plaintiffs further allege that they first learned of these liens on November 20, 2004, when they were scheduled to close on the sale of their house. See id. ¶¶ 13-14. At the closing, an attorney informed plaintiffs that any proceeds from the sale were due to the IRS. See id. ¶ 13. Plaintiffs allege that the illegal liens caused the cancellation of the closing and significant financial hardship. See id. ¶¶ 16-18. Plaintiffs also allege that they have exhausted their administrative remedies. See id. ¶ 37. They now seek damages for unauthorized tax collections under 26 U.S.C. § 7433 and failure to release a lien under 26 U.S.C. § 7432 against defendants, the United States of America and the Internal Revenue Service. In response, defendants assert a counterclaim to reduce to judgment plaintiffs' allegedly unpaid taxes which were the basis for the liens.

II. STANDARD OF REVIEW

Rule 12(b)(6) of the Federal Rules of Civil Procedure allows dismissal of a complaint if plaintiffs fail "to state a claim upon which relief can be granted." FED. R. CIV. P. 12(b)(6). In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the Supreme Court clarified the standard of pleading that plaintiffs must meet in order to survive a motion to dismiss under Rule 12(b)(6). The Court noted that "Federal Rule of Civil Procedure 8(a)(2) requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests[.]'"

Id. at 555 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); see also Aktieselskabet AF 21 v. Fame Jeans Inc., 525 F.3d 8, 15 (D.C. Cir. 2008). Although "detailed factual allegations" are not necessary to withstand a Rule 12(b)(6) motion to dismiss, to provide the "grounds" of "entitle[ment] to relief," plaintiffs must furnish "more than labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Bell Atlantic Corp. v. Twombly, 550 U.S. at 555; see also Papasan v. Allain, 478 U.S. 265, 286 (1986). The Court stated that there was no "probability requirement at the pleading stage," Bell Atlantic Corp. v. Twombly, 550 U.S. at 556, but "something beyond . . . mere possibility . . . must be alleged[.]" Id. at 557-58. The facts alleged in the complaint "must be enough to raise a right to relief above the speculative level," id. at 555, or must be sufficient "to state a claim for relief that is plausible on its face." Id. at 570. The Court referred to this newly clarified standard as "the plausibility standard." Id. at 560 (abandoning the "no set of facts" language from Conley v. Gibson). According to the D.C. Circuit, Twombly "leaves the long-standing fundamentals of notice pleading intact." Aktieselskabet AF 21 v. Fame Jeans Inc., 525 F.3d at 15.

On a motion to dismiss under Rule 12(b)(6), the Court "must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 127 S.Ct. 2197, 2200 (2007); see also Bell Atlantic Corp. v. Twombly, 550 U.S. at 555. The complaint "is construed liberally in the plaintiffs' favor, and [the Court should] grant plaintiffs the benefit of all inferences that can be derived from the facts alleged." Kowal v. MCI Communications Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). Nevertheless, the Court need not accept inferences drawn by plaintiffs if those inferences are unsupported by facts alleged in the complaint; nor must the Court accept plaintiffs' legal conclusions. See Kowal v. MCI Communications Corp., 16 F.3d at 1276; Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002).

III. DISCUSSION

As an initial matter, the Court finds that defendants' argument that the United States is the only proper defendant under Sections 7432 and 7433 has been conceded by plaintiffs. See L. CIV. R. 7(b). The IRS will be dismissed as a defendant.

A. The Statute of Limitations Bars Plaintiffs' Claims

The statutes upon which plaintiffs rely for their claims provide a two year statute of limitations. See 26 U.S.C. § 7432(d)(3) ("an action to enforce liability created under this section . . . may be brought only within 2 years after the date of the right of action accrues."); 26 U.S.C. § 7433(d)(3) (same). Plaintiffs' cause of action "accrue[d] when [they] had a reasonable opportunity to discover all essential elements of a possible cause of action." 26 C.F.R. § 301.7432-1(h)(i)(2); see also 26 C.F.R. § 301.7433-1(g)(2) (same). The Court finds that plaintiffs had a reasonable opportunity to discover all of the essential elements of their cause of action when they first learned of the tax liens on November 20, 2004. See, e.g., Delvecchio v Smith, 558 F. Supp. 2d 1243, 1250 (S.D. Fla. 2008) (cause of action under 26 U.S.C. § 7433 accrued when plaintiffs learned of federal tax lien); Bright v. United States, 446 F. Supp. 2d 339, 345 (E.D. Pa. 2006) (cause of action under 26 U.S.C. § 7433 accrued when plaintiff learned of IRS levy on his salary). Accordingly, plaintiffs had until November 20, 2006 to commence suit.

They did not file this lawsuit until May 16, 2008, well after the two-year statute of limitations expired.*fn2

Plaintiffs argue that they suffered a continuing violation and that the statute of limitations therefore should accrue on a later date. The continuing violation doctrine applies when the complained of act "'is one that could not reasonably have been expected to be made the subject of a lawsuit when it first occurred because its character as a violation did not become clear until it was repeated during the limitations period,' typically because it is only its cumulative impact . . . that reveals its illegality." Taylor v. FDIC, 132 F. 3d 753, 765 (D.C. Cir. 1997) (quoting Dasgupta v. Univ. of Wis. Bd. Of Regents, 121 F. 3d 1138, 1139 (7th Cir. 1997)) (internal citation omitted). The continuing violation doctrine cannot be invoked "if a single incident merely produces a lingering injury." Macklin v. ...


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