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Hockin v. United States

United States District Court, D. Oregon

August 15, 2019

KIMBERLY HOCKIN, Plaintiff,
v.
UNITED STATES OF AMERICA, Defendant.

          J. Scott Moede, Volunteer Attorney, Lewis & Clark Low-Income Taxpayer Clinic, Of Attorneys for Plaintiff.

          Richard E. Zuckerman, Principal Deputy Assistant Attorney General, and Boris Bourget, Trial Attorney, Tax Division, United States Department of Justice, and Billy J. Williams, United States Attorney, United States Attorney's Office, Of Attorneys for Defendant.

          OPINION AND ORDER

          MICHAEL H. SIMON UNITED STATES DISTRICT JUDGE.

         Kimberly Hockin (“Plaintiff”) brings this action against the United States of America (“Defendant”), seeking a refund of taxes collected by the Internal Revenue Service (“IRS”) for the 2007 tax year. Defendant moves to dismiss Plaintiff's claims for lack of subject matter jurisdiction. U.S. Magistrate Judge Jolie Russo issued findings and a recommendation that the Court grant Defendant's motion as it relates to Plaintiff's claim that it was inequitable to hold her responsible for the unpaid tax or deficiency incurred on the joint tax returns that her ex-husband filed when they were married and as to Plaintiff's quasi-estoppel claim. For the reasons that follow, the Court adopts in part and rejects in part the Findings and Recommendation. Defendant's motion to dismiss is denied in part and granted in part.

         STANDARDS

         Under the Federal Magistrates Act (“Act”), the Court may “accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate.” 28 U.S.C. § 636(b)(1). If a party objects to a magistrate judge's findings and recommendations, “the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” Id.; Fed.R.Civ.P. 72(b)(3).

         For those portions of a magistrate judge's findings and recommendations to which neither party has objected, the Act does not prescribe any standard of review. See Thomas v. Arn, 474 U.S. 140, 152 (1985) (“There is no indication that Congress, in enacting [the Act], intended to require a district judge to review a magistrate's report to which no objections are filed.”); United States. v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc) (holding that the court must review de novo magistrate judge's findings and recommendations if objection is made, “but not otherwise”). Although in the absence of objections no review is required, the Act “does not preclude further review by the district judge[] sua sponte . . . under a de novo or any other standard.” Thomas, 474 U.S. at 154. Indeed, the Advisory Committee Notes to Fed.R.Civ.P. 72(b) recommend that “[w]hen no timely objection is filed, ” the Court review the magistrate judge's recommendations for “clear error on the face of the record.”

         Federal courts are courts of limited jurisdiction. Gunn v. Minton, 568 U.S. 251, 256 (2013) (quotation marks omitted). As such, a court is to presume “that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted); see also Robinson v. United States, 586 F.3d 683, 685 (9th Cir. 2009); Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of “subject-matter jurisdiction, because it involves a court's power to hear a case, can never be forfeited or waived.” United States v. Cotton, 535 U.S. 625, 630 (2002). An objection that a particular court lacks subject matter jurisdiction may be raised by any party, or by the court on its own initiative, at any time. Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006); Fed.R.Civ.P. 12(b)(1). The Court must dismiss any case over which it lacks subject matter jurisdiction. Fed.R.Civ.P. 12(h)(3); see also Pistor v. Garcia, 791 F.3d 1104, 1111 (9th Cir. 2015) (noting that when a court lacks subject-matter jurisdiction, meaning it lacks the statutory or constitutional power to adjudicate a case, the court must dismiss the complaint, even sua sponte if necessary).

         A Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction may be either “facial” or “factual.” See Safe Air for Everyone, 373 F.3d at 1039. A facial attack on subject matter jurisdiction is based on the assertion that the allegations contained in the complaint are insufficient to invoke federal jurisdiction. Id. “A jurisdictional challenge is factual where ‘the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction.'” Pride v. Correa, 719 F.3d 1130, 1133 n.6 (9th Cir. 2013) (quoting Safe Air for Everyone, 373 F.3d at 1039)). When a defendant factually challenges the plaintiff's assertion of jurisdiction, a court does not presume the truthfulness of the plaintiff's allegations and may consider evidence extrinsic to the complaint. See Terenkian v. Republic of Iraq, 694 F.3d 1122, 1131 (9th Cir. 2012); Robinson, 586 F.3d at 685; Safe Air for Everyone, 373 F.3d at 1039. A factual challenge “can attack the substance of a complaint's jurisdictional allegations despite their formal sufficiency.” Dreier v. United States, 106 F.3d 844, 847 (9th Cir. 1996) (citation and quotation marks omitted). Plaintiff timely filed an objection to which Defendant responded. Plaintiff objects to the portion of Magistrate Judge Russo's recommendation that the Court conclude that it lacks jurisdiction to consider Plaintiff's innocent spouse claim and Plaintiff's quasi-estoppel claim.

         BACKGROUND

         In this facial challenge, the Court draws the facts from the allegations in Plaintiff's complaint. Plaintiff married Shawn Harrison (“Harrison”) in 1997. While they were married, Harrison had complete control over the family finances and took responsibility for the family's taxes. Plaintiff was unaware of any potential financial problems until, at the end of 2008, several of the family's vehicles were repossessed and the bank foreclosed on the family home. Plaintiff alleges that Harrison was suffering from alcohol abuse and addiction and was physically violent with her daughters. On July 30, 2009, Plaintiff and Harrison filed for divorce. The divorce was finalized on August 5, 2009. Two days earlier, on August 3, 2009, Harrison filed a joint tax return for the 2007 tax year. On October 26, 2009, Harrison filed a joint tax return for the 2008 tax year. Plaintiff claims that she did not sign either the 2007 or 2008 tax returns. No. party has located a copy of the 2007 tax return.

         In 2014, the IRS told Plaintiff that she owed $10, 000 for tax year 2007 and $80, 000 for tax year 2008. Plaintiff filed a claim with the IRS for innocent spouse relief under 26 U.S.C. § 6015(f). The IRS denied Plaintiff's claim for innocent spouse relief for both 2007 and 2008 but granted Plaintiff other relief for the 2008 tax year because it concluded that Plaintiff did not sign the return for tax year 2008.[1] In December 2014, the IRS issued a letter ruling informing Plaintiff of its decision to deny innocent spouse relief as to the 2007 tax year.

         Plaintiff alleges that she made several payments on the 2007 tax liability, totaling more than $10, 000. Plaintiff filed a claim with the IRS, seeking a refund of these payments plus interest and penalties. The IRS denied Plaintiff's claim for a refund. Plaintiff then sued in United States District Court, seeking a refund of these payments under 28 U.S.C. § 1346(a)(1) and 26 U.S.C. § 7422(a).

         Plaintiff asserts three theories of recovery. First, she claims that she did not sign the 2007 tax return and so it is not a valid joint tax return and any tax liability collected on the 2007 tax return was erroneously or illegally collected. Magistrate Judge Russo concluded that Plaintiff had stated a valid refund claim under 28 U.S.C. § 1346(a)(1) and therefore recommended that the Court deny ...


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