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Powell v. Internal Revenue Service

United States District Court, E.D. Michigan, Southern Division

July 31, 2015

William E. Powell, Plaintiff,
v.
Internal Revenue Service, Defendant.

OPINION & ORDER ON DEFENDANT'S MOTION TO DISMISS

SEAN F. COX, District Judge.

Plaintiff William E. Powell filed this pro se action against the United States Internal Revenue Service ("I.R.S.") on July 3, 2014. The matter is currently before the Court on the I.R.S.'s Motion to Dismiss. The I.R.S. argues that this Court should dismiss this action for lack of subject matter jurisdiction because Plaintiff has not exhausted his administrative remedies with respect to any proper Freedom of Information Act ("FOIA") request made by Plaintiff. As an additional or alternative ground, the I.R.S. also argues that this Court should dismiss this action because, even if Plaintiff had exhausted his administrative remedies, the I.R.S. has either produced the requested documents or advised Plaintiff that it does not possess them.

As explained below, the Court concludes that Plaintiff made three proper FOIA requests to the I.R.S. for two specific documents: 1) a 1989 Corporate Tax Return for the Powell Printing Company; and 2) a Form 2553 for the company. To the extent that Plaintiff seeks to assert claims based on any other requests to the I.R.S., the Court DISMISSES such claims for lack of subject matter jurisdiction.

The Court further concludes that Plaintiff has exhausted his administrative remedies as to his March 28, 2014 FOIA request for: 1) a 1989 Corporate Tax Return for the Powell Printing Company; and 2) a Form 2553 for the company.

The Court then considers the I.R.S.'s additional or alternative argument - that Plaintiff fails to state a claim as to those requests because the I.R.S.: 1) produced to plaintiff a copy of the Form 2553 and cannot find the original of that document; and 2) informed plaintiff that the other document he seeks does not exist. A declaration recently submitted in support of the I.R.S.'s motion now acknowledges that the I.R.S. does possess the original Form 2253 and that declaration fails to address the I.R.S.'s search for the 1989 Corporate Tax Return for the Powell Printing Company. As such, the Court shall: 1) allow the I.R.S. to file a new or amended declaration addressing the agency's search for the 1989 Corporate Tax Return for the Powell Printing Company; and 2) Order the I.R.S. to show cause, in writing, why Counsel for Defendant should not be required to appear at a Conference in this matter, along with the original Form 2553, so that Plaintiff may inspect the original document.

BACKGROUND

Plaintiff filed this action against the I.R.S. on July 3, 2014. On July 15, 2014, this Court granted Plaintiff's motion seeking to proceed in forma pauperis in this action, pursuant to 28 U.S.C. § 1915.

Because Plaintiff is proceeding in forma pauperis, the applicable statute requires this Court to dismiss this case, at any time, if it fails to state a claim upon which relief may be granted. See 28 U.S.C. § 1915(b)(2) ("the court shall dismiss the case at any time if the court determines that" the action "fails to state a claim on which relief may be granted.").

Plaintiff's Amended Complaint is 14 pages long and attaches 140 pages of documents. (Docket Entry No. 10). Plaintiff's Amended Complaint states that in 2011, Plaintiff discovered estate-planning documents of his late father, William A. Powell, owner of the Powell Printing Company. Plaintiff appears to believe that some type of fraud was committed in connection with the administration of the trust and/or his father's estate.[1]

Plaintiff's Amended Complaint does not identify a jurisdictional basis for his complaint against the I.R.S., except to state that "This action is brought pursuant to the authority because the actions took place with a Federal Agency of the United States identified as the Internal Revenue Service." (Id. at Pg ID 108). Construing Plaintiff's pro se Amended Complaint very broadly, Plaintiff alleges that he requested documents from the I.R.S. under the FOIA and that he has not received the requested documents.

On October 14, 2014, the I.R.S. filed a motion seeking to dismiss Plaintiff's Amended Complaint. (Docket Entry No. 19). In that motion, the I.R.S. argues that this Court should dismiss this action on several grounds. The I.R.S. argues that this Court should dismiss this action for lack of subject matter jurisdiction because Plaintiff has not exhausted his administrative remedies with respect to any proper FOIA requests by Plaintiff. The I.R.S. asserts that Plaintiff has not filed the requisite administrative appeals prior to bringing this lawsuit.

As an additional or alternative ground, the I.R.S. also argues that this Court should dismiss this action because, even if Plaintiff had exhausted his administrative remedies, the I.R.S. has either produced the requested documents or advised Plaintiff that it does not possess them. (Id. at 5, stating "Court have found they lack jurisdiction when an agency's adequate search reveals that it possesses no records responsive to a FOIA request reasoning that an agency cannot withhold from disclosure records it does not possess.") (citing Vonderheide v. I.R.S., 194 F.3d 1315, 1999 WL 1000875 (6th Cir. 1999)).

Plaintiff filed a response in opposition to the I.R.S.'s Motion to Dismiss on October 27, 2014. (Docket Entry No. 21). Plaintiff attached more than 70 pages of documents to his Response Brief.

The I.R.S. filed a Reply Brief on November 13, 2014.

The Court heard oral argument on April 9, 2015. Before proceeding to address the challenges in the motion, however the Court noted that Plaintiff had more than one pending action against the I.R.S. involving documents he had allegedly requested under FOIA and gave the parties an opportunity to discuss the requests, in order to see if they could resolve this matter. After the parties discussed the issues, they advised that Plaintiff wishes to obtain three specific documents from the I.R.S. and the parties asked the Court to hold the Motion to Dismiss in Abeyance for six weeks, so that the I.R.S. could attempt to locate the documents. ( See Docket Entry No. 30). The parties advised that the three documents that Plaintiff was looking for are: 1) an SS-4 Application for Powell Printing Company, which Plaintiff asserts corresponds to DLN XXXXX-XXX-XXXXX-X (hereinafter "the SS-4 Application"); 2) the original Form 2553 filed by Powell Printing Company, which Plaintiff asserts corresponds to DLN XXXXX-XXX-XXXXX (hereinafter "the original Form 2553"); and 3) the Estate Tax Return Form 706 for the Estate of William A. Powell (hereinafter "the Estate Tax Return").

Thereafter, the parties appeared for a Status Conference on June 25, 2015. At that conference, Defense Counsel advised the Court that: 1) it has provided a photocopy of the 2253 Form to Plaintiff and that it does not have the original copy of that document; and 2) it does not have either the SS-4 Application or the Estate Tax Return that Plaintiff seeks.

The Court then asked the I.R.S. whether it intended to submit an affidavit in support of its motion, describing its search for the requested documents, as that was what was done in the Vonderheide case cited by the I.R.S. in its Motion to Dismiss.

On July 13, 2015, Counsel for Defendant filed a "Declaration Of Joy E. Gerdy Zogby."

Standard of Review

The I.R.S. brings the instant Motion to Dismiss Amended Complaint under Fed.R.Civ.P. 12(b)(1) and 12(b)(6).

Although pro se pleadings are liberally construed, Haines v. Kerner, 404 U.S. 519, 520 (1972), a district court is required to dismiss an in forma pauperis action under 28 U.S.C. § 1915(e) if it fails to state a claim upon which relief can be granted. Neitzke v. Williams, 490 U.S. 319 (1989).

Rule 12(b)(1) motions to dismiss for lack of subject-matter jurisdiction generally come in two varieties: a facial attack or a factual attack. Gentek Blding Products, Inc. v. Steel Peel Litigation Trust, 491 F.3d 320, 330 (6th Cir.2007). If the attack on jurisdiction is a facial attack on the complaint, the court must accept the allegations in the complaint as true and construe them in a light most favorable to the non-moving party. United States v. A.D. Roe Co., Inc., 186 F.3d 717, 721-722 (6th Cir. 1999). If the attack is factual, however, the court may weigh evidence and resolve factual disputes. Ohio Nat. Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990).

Here, the I.R.S. asserts, among other things, that Plaintiff cannot make a showing of all the elements of a FOIA claim. Based on Plaintiff's alleged inability to show each element of the claim, Defendants contend that this Court lacks jurisdiction. The Court construes this as a factual attack on subject matter jurisdiction.

Because the attack is factual, no presumption of truthfulness applies to Plaintiff's allegations. Genteck, 491 F.3d at 330. A factual attack is "a factual controversy, [and] the district court must weigh the conflicting evidence to arrive at the factual predicate that subject-matter does or does not exist." Id. "[A] trial court has wide discretion to allow affidavits, documents and even a limited evidentiary hearing to resolve disputed jurisdictional facts." Ohio Nat. Life Ins. Co. v. United States, 922 F.2d at 325.

ANALYSIS

The FOIA confers jurisdiction on this Court to enjoin an agency from withholding records and to order the production of any agency records improperly withheld. 5 U.S.C. § 552(a)(4)(B). Under this provision, federal jurisdiction is dependent on Plaintiff showing that an agency has (1) improperly (2) withheld (3) agency records. Kissinger v. Reporters Comm'n for Freedom of the Press, 445 U.S. 136, 150 (1980).

Here, Plaintiff attaches to his Amended Complaint, and to his brief in opposition to the I.R.S.'s Motion to Dismiss, a litany of documents. And Plaintiff alleges that he has had various oral and written communications with individuals during his search for documents and information. ...


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