Plaintiff-Appellant
v.
TOWNES MAHAFFEY, GENERAL COUNSEL PROFESSIONAL AND
PERSONAL CAPACITY; AMERICAN BANK
Defendants-Appellees
Release Date: MAY 05, 2009
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
Summary Calendar
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 2:08-CV-59
Before DAVIS, GARZA and PRADO, Circuit Judges.
PER CURIAM:/*/
Samuel R. Watson and Esther R. Watson, proceeding pro se, filed suit against Townes Mahaffey and American Bank alleging that the defendants (1) violated their rights under the Fourth and Fifth Amendments to the United States Constitution as well as 42 U.S.C. sections 1982, 1983; (2) violated 18 U.S.C. section 1344; (3) violated 18 U.S.C. section 242; and (4) violated 28 U.S.C. section 3201. The Watsons further alleged that the tax levy against them was invalid and that they were not obligated to pay federal income taxes. The district court granted the defendants' motion for summary judgment, finding that, pursuant to 26 U.S.C. section 6332(e), the defendants were immune from liability arising from their compliance with the tax levy.
In order to collect the Watson's back taxes, the IRS sent a notice of levy upon the bank. See 26 U.S.C. 6331(a); United States v. National Bank of Commerce, 472 U.S. 713, 719-21 (1985). The bank compiled with the notice of levy, eventually surrendering about $ 15,000 to the IRS. See 26 U.S.C. section 6332(a), (c), (d). The Watsons' claims against the defendants stem from the defendants' compliance with the IRS levy. Pursuant to section 6332(e), the defendants are immune from liability to the Watsons in connection with the defendants' compliance with the IRS levy. See Burroughs v. Wallingford, 780 F.2d 502, 503 (5th Cir. 1986).
AFFIRMED.
FOOTNOTE
/*/ Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
SAMUEL R. WATSON, ET AL,
Plaintiffs,
v.
TOWNES MAHAFFEY, ET AL,
Defendants.
Release Date: APRIL 11, 2008
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
ORDER
On this day came on to be considered the motion of Defendants Townes Mahaffey and American Bank, N.A., d/b/a American Bank (hereinafter, "American Bank") to dismiss the above-styled action pursuant to Federal Rule of Civil Procedure 12(b)(6), and in the alternative, for summary judgment on Plaintiffs Samuel Watson and Esther Watson's causes of action (D.E.
. For the reasons set forth below, Defendants' motion for summary judgment is hereby GRANTED/1/, and the Court DISMISSES all of Plaintiffs' claims against Defendants Townes Mahaffey and American Bank.I. JURISDICTION
This Court has federal question jurisdiction over this action pursuant to 28 U.S.C. section 1331.
II. FACTUAL BACKGROUND
Plaintiffs are tax protestors who allege that they are not obligated to pay federal income taxes, on account of their understanding of various cases, statutes, and the United States Constitution. (D.E. 1, Complaint, pp. 3, 8-14). Plaintiffs did not pay their federal income taxes for the tax-years ending on December 31, 1996, December 31, 1997, December 31, 1998 and December 31, 1999. (D.E. 1, Exh. A-1, Notice of Levy). As of November, 2005, Plaintiffs' tax obligations for tax-years 1996-1999, including interest and penalties, totaled $ 235,535.16. (Id.). Plaintiffs continue to maintain that they are not obligated to pay these tax obligations. (Complaint, p. 1, alleging that "the IRS did not have the authority to tax [Plaintiffs'] income")./2/
On November 21, 2005, the Internal Revenue Service (hereinafter, "IRS") served a Notice of Levy on American Bank, in the amount of $ 235,535.16, for Plaintiffs' outstanding tax obligations. (Notice of Levy). American Bank sent a letter to Plaintiffs dated November 22, 2005, notifying Plaintiffs that American Bank had been served with the Notice of Levy. (D.E. 1, Exh. A-2, November American Bank Letter). The letter indicated that the levy required American Bank to place holds on certain of Plaintiffs' bank accounts, and that pursuant to the terms of the levy, American Bank must freeze the accounts for a period of 21 days. (Id.). The letter indicated that upon conclusion of the 21 day freeze period, unless Plaintiffs were to take appropriate legal action, American Bank would be required to remit the funds in the frozen accounts directly to the IRS. (Id.). The letter was signed by Townes Mahaffey, General Counsel of American Bank. (Id.).
Plaintiffs responded to American Bank's November 22, 2005 letter, indicating their belief that the IRS levy was not valid because it "was not signed by a de jure judge of the Court." (D.E. 1, Exh. A-4, Watson Letter)./3/ Plaintiffs' letter also detailed various other arguments regarding the validity of the levy and the legal authority of the IRS. (Id.).
In mid-December, 2005, American Bank notified Plaintiffs that following the expiration of the 21 day freeze period, American Bank complied with the levy served by the IRS. (D.E. 1, Exh. A-7 and D.E. 1, Exh. A-9, December American Bank Letters). The bank surrendered approximately $ 15,000.00 to the IRS from Plaintiffs' bank accounts. (Id.). Following payment of the levy, American Bank released the holds on Plaintiffs' accounts. (Id.).
III. PROCEDURAL BACKGROUND
Plaintiffs, proceeding pro se, filed suit against Defendants Townes Mahaffey/4/ and American Bank on February 25, 2008 (D.E. 1). Liberally construing the pro se Plaintiffs' Complaint/5/, it appears that Plaintiffs intended to bring the following claims against Defendants: (1) bank fraud in violation of 18 U.S.C. section 1344; (2) violations of Plaintiffs' rights under the Fourth and Fifth Amendments to the United States Constitution, under 42 U.S.C. sections 1982 and 1983; (3) violation of 18 U.S.C. section 242; and (4) breach of fiduciary duty via Defendants' alleged failure to investigate the levy after receipt of Plaintiffs' letter disputing the levy's validity. Plaintiffs also appear to allege a general claim that the IRS levy on Plaintiffs' bank accounts was improper, as there was no court order authorizing the IRS to levy the funds. Plaintiffs also allege a general claim that they are not under an obligation to pay federal income taxes.
On March 17, 2008, Defendants filed the motion to dismiss/motion for summary judgment that is currently before the Court. (D.E.
. Defendants argue that American Bank acted properly and within the law in surrendering Plaintiffs' funds in compliance with the IRS levy, and that Defendants are not liable to Plaintiffs pursuant to 26 U.S.C. section 6332(e). Defendants argue that all of Plaintiffs' claims should be dismissed.On April 7, 2008, Plaintiffs filed their response to Defendants' motion to dismiss/motion for summary judgment (D.E. 14)./6/ Plaintiffs argue that they are not obligated to pay federal income taxes, on account of their reading of the Sixteenth Amendment to the United States Constitution, and based on their view that federal income taxes only apply to employees of the federal government. Plaintiffs also argue that the levy served on the IRS was not valid, because the IRS did not have a court order to seize Plaintiffs' funds./7/
As set forth below, Plaintiffs' arguments do not have merit, and Defendants are entitled to summary judgment on all of Plaintiffs' causes of action.
IV. DISCUSSION
A. Summary Judgment Standard
Federal Rule of Civil Procedure 56 states that summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact." Fed. R. Civ. P. 56(c). The substantive law identifies which facts are material. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Ellison v. Software Spectrum, Inc., 85 F.3d 187, 189 (5th Cir. 1996). A dispute about a material fact is genuine only "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248; see also Judwin Props., Inc., v. U.S. Fire Ins. Co., 973 F.2d 432, 435 (5th Cir. 1992).
The "party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Wallace v. Texas Tech. Univ., 80 F.3d 1042, 1046-1047 (5th Cir. 1996). If the nonmovant bears the burden of proof on a claim, the moving party may discharge its burden by showing that there is an absence of evidence to support the nonmovant's case. See Celotex Corp., 477 U.S. at 325; Ocean Energy II, Inc. v. Alexander & Alexander, Inc., 868 F.2d 740, 747 (5th Cir. 1989).
Once the moving party has carried its burden, the nonmovant "may not rest upon the mere allegations or denials of his pleading, but . . . must set forth specific facts showing that there is a genuine issue for trial." First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 270 (1968); see also Schaefer v. Gulf Coast Reg'l Blood Ctr., 10 F.3d 327, 330 (5th Cir. 1994) (stating that nonmoving party must "produce affirmative and specific facts" demonstrating a genuine issue).
When the parties have submitted evidence of conflicting facts, "the evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor." Willis, 61 F.3d at 315. Summary judgment is not appropriate unless, viewing the evidence in the light most favorable to the nonmoving party, no reasonable jury could return a verdict for that party. See, e.g., Rubinstein v. Adm'rs of the Tulane Educ. Fund, 218 F.3d 392, 399 (5th Cir. 2000).
B. Defendants are Entitled to Summary Judgment on Plaintiffs' Claims
As set forth below, the undisputed facts demonstrate that Defendants are immune from liability to Plaintiffs for surrendering the funds at issue to the government. Because Defendants are immune from such liability under 26 U.S.C. section 6332(e), Defendants are entitled to summary judgment on all of Plaintiffs' causes of action.
1. Section 6321 Lien on Property
Section 6321 of the Internal Revenue Code provides for an automatic lien on taxpayer property for unpaid taxes. Section 6321 states as follows:
If any person liable to pay any tax neglects or refuses to pay
the same after demand, the amount (including any interest,
additional amount, addition to tax, or assessable penalty,
together with any costs that may accrue in addition thereto)
shall be a lien in favor of the United States upon all property
and rights to property, whether real or personal, belonging to
such person.
26 U.S.C. section 6321. Under this section, "f an individual fails to meet his tax obligations after demand, a lien automatically arises on all of his property and rights to property." United States v. Jefferson-Pilot Life Ins. Co., 49 F.3d 1020, 1021 (4th Cir. 1995). A lien under Section 6321 "continues until the [tax] obligation is satisfied." Id. (citing 26 U.S.C. section 6322).
A lien under 26 U.S.C. section 6321 "is merely a security interest and does not involve immediate seizure" of the property. In re Sills, 82 F.3d 111, 113-114 (5th Cir. 1996). The government must take further steps beyond the lien to recover on the tax deficiency. See id.; see also Am. Trust v. Am. Cmty. Mut. Ins. Co., 142 F.3d 920, 922-23 (6th Cir. 1998) (stating that the government has "several separate procedures through which it can recover the tax deficiency", including filing a lien-foreclosure suit or obtaining an administrative levy under Section 6331 of the Internal Revenue Code). The government has a "formidable arsenal of collection tools" to collect on the tax deficiency, so as "to ensure the prompt and certain enforcement of the tax laws in a system relying primarily on self-reporting." United States v. Rodgers, 461 U.S. 677, 683 (1983).
