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Charles Maxwell v. United States and Internal Revenue Service

July 3, 2012


The opinion of the court was delivered by: John D. Bates United States District Judge


Petitioner Charles Maxwell sues the United States and the Internal Revenue Service (IRS) to prevent the IRS from accessing certain of his bank records in an investigation of his tax liabilities. Now before the Court are Maxwell's petition to quash a summons that IRS Revenue Agent Ernest Schultz issued to his bank in November 2011, the government's motion to dismiss that petition, and petitioner's motion to vacate or amend the court's order denying him leave to file under seal. For the reasons discussed below, the Court will deny both of petitioner's requests and will grant the government's motion to dismiss.

I. Background

On November 22, 2011, the IRS issued an administrative summons to U.S. Bank, N.A. to turn over certain bank records in Maxwell's name. See Pet'r's Pet. to Quash Summons ("Pet.") (Dec. 21, 2011) [Docket Entry 1] at 6. Maxwell, a notorious tax protester in his hometown of Nashville, has previously filed a number of unmeritorious petitions to quash IRS summonses in the Middle District of Tennessee. See Mem. of Law in Support of U.S.'s Mot. Dismiss Pet. ("Resp't's Mem.") (Jan. 18, 2012) [Docket Entry 6-1] at 1 & n.1. A judge of that district ultimately penalized petitioner with sanctions for his repeated filing of frivolous claims. See Maxwell v. IRS, No. 3:09-0308, 2009 WL 1681493, at *3 (M.D. Tenn. May 19, 2009).

In December 2011, Maxwell filed a petition to quash the IRS summons along with a "Declaration by Affidavit," Pet. at 1-4, 5, in response to which he was granted leave to proceed in forma pauperis. Order Granting Mot. Leave to Proceed In Forma Pauperis ("Order") (filed Dec. 21, 2011) [Docket Entry 3]. The government now moves to dismiss Maxwell's petition on grounds that the Court lacks subject matter jurisdiction over it. U.S.'s Mot. to Dismiss Pet. ("Resp't's Mot.") (Jan. 18, 2012) [Docket Entry 6] at 1. In addition to asserting his claim for the IRS summons to be quashed, Maxwell seeks leave to file his financial affidavit under seal. See Pet'r's Resp. in Opp'n to Resp't's Mot. Dismiss ("Pet'r's Resp.") (Feb. 7, 2012) [Docket Entry 7]; Pet'r's Mot. to Vacate or Amend Order Denying Leave to File Under Seal ("Pet'r's Mot.") (Jan. 10, 2012) [Docket Entry 5] at 1-4.

II. Standard of Review

As an initial matter, the Court recognizes that complaints submitted by pro se plaintiffs are reviewed by the court under "less stringent standards than formal pleadings drafted by lawyers." Haines v. Kerner, 404 U.S. 519, 520 (1972). However, a pro se complaint must still plead "factual matter that permits the court to infer more than the mere possibility of misconduct." Jones v. Horne, 634 F.3d 588, 596 (D.C. Cir. 2011) (internal citations omitted).

In adjudicating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1), "the allegations of the complaint should be construed favorably to the pleader." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); see Leatherman v. Tarrant Cnty. Narcotics & Coordination Unit, 507 U.S. 163, 164 (1993); Phillips v. Bureau of Prisons, 591 F.2d 966, 968 (D.C. Cir. 1979).

Therefore, the factual allegations in the complaint must be presumed true, and the petitioner must be given every favorable inference that may be drawn from them. Scheuer, 416 U.S. at 236; Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000). However, the court need not accept as true "a legal conclusion couched as a factual allegation," nor inferences that are unsupported by the facts set out in the complaint. Trudeau v. Fed. Trade Comm'n, 456 F.3d 178, 193 (D.C. Cir. 2006) (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).

The party seeking to invoke a federal court's jurisdiction in such a case (petitioner here) bears the burden of establishing that the court has jurisdiction. See U.S. Ecology, Inc. v. U.S. Dep't of Interior, 231 F.3d 20, 24 (D.C. Cir. 2000). "'[P]laintiff's factual allegations in the complaint . . . will bear close[] scrutiny in resolving a 12(b)(1) motion.'" Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 13-14 (D.D.C. 2001) (quoting 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1350 (2d ed. 1987)). As long as the court accepts the factual allegations in the complaint as true, it may also consider other material in determining whether it has jurisdiction. See Jerome Stevens Pharms., Inc. v. FDA, 402 F. 3d 1249, 1253-54 (D.C. Cir. 2005); EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624-25 n.3 (D.C. Cir. 1997); see also Bowe-Connor v. Shinseki, No. 10-2032, 2012 WL 601025 (D.D.C. Feb. 24, 2012).

II. Motion to Dismiss

The United States moves to dismiss Maxwell's petition on the ground that this Court lacks subject matter jurisdiction to adjudicate his claim. The Court agrees.

First, this Court has jurisdiction over a suit brought against the United States only to the extent that the government has itself waived sovereign immunity with respect to the claim at issue. United States v. White Mountain Apache Tribe, 537 U.S. 465, 472 (2003); see also Gray v. Bell, 712 F.2d 490, 507 (D.C. Cir. 1983). Consequently, the "terms of its consent to be sued in any court determine that court's jurisdiction to entertain the suit." United States v. Dalm, 494 U.S. 596, 608 (1990). Therefore, petitioner's claims are justiciable only if they comply with Section 7609 of the Internal Revenue Code (IRC) -- which specifies when a party may challenge the government's authority to issue a third-party summons to a record-keeper. See Bell v. United States, 521 F. Supp. 2d 456, 458 (D. Md. 2007), aff'd, 275 F. App'x 221 (4th Cir. 2008).

Section 7609(b)(2) of the IRC specifies that any person entitled to notice of a summons may "begin a proceeding to quash such summons not later than the 20th day after the day such notice is given." IRC § 7609(b)(2). The IRS gave notice of the summons to the third party in this case, Maxwell, on November 22, 2011. Decl. of Revenue Agent Ernest Schultz (Jan. 18, 2010) [Docket Entry 6-2], ¶ 8. The twentieth day after that date was December 12, 2011; however, Maxwell did not file his petition until December 21, 2011. Since he missed the statutory deadline for instituting this proceeding, the conditions of the waiver of sovereign immunity have not been met, and this Court must dismiss the petition for lack of subject matter jurisdiction.*fn1 See Clay v. United States, 199 F.3d 876, 879 (6th Cir. 1999) (finding that the court lacks jurisdiction over a motion to quash that ...

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