United States District Court, D. Arizona
J. Markovich United States Judge.
before the Court is a motion to dismiss for lack of subject
matter jurisdiction, failure to state a claim, and
insufficient service of process filed by Defendants United
States of America, Spencer, Nguyen, Matchison, Settles, and
Ward. (Doc. 10). Also pending before the Court are a motion
to dismiss for lack of subject matter jurisdiction and
failure to state a claim filed by Defendant Hale (Doc. 22), a
motion to substitute party filed by the Defendants (Doc. 12),
and a motion to compel filed by Plaintiff (Doc. 19). All of
the motions have been fully briefed and are now ripe for
Donald D. Bailey filed this action on January 19, 2017
against Defendants the United States of America, Theodore
Spencer, Van Nguyen, Amy Matchison, Segrid Settles, Lori
Hale, and Phillip Ward. (Doc. 1). Plaintiff alleges that
Defendants committed fraud in auditing his tax returns and
conspiring to defraud him of a tax refund. Specifically,
Plaintiff claims that Spencer and Nguyen made false
statements about additional income and taxes owed in the tax
returns they audited, and that they therefore committed fraud
by stating Plaintiff acted willfully and recklessly by
underreporting tax liability. Plaintiff also claims Matchison
committed fraud by redacting documents and giving false
testimony in a prior action, CV-05-310-TUC-CKJ, that Settles
and Hale did not give Plaintiff a $42, 000 tax refund in
their audit reports, and that Ward falsified three tax
returns. Plaintiff further alleges that the Defendants were
not acting within the course and scope of their employment
and thus are being sued personally. Plaintiff seeks a refund
of the $10, 500 he paid towards the IRS penalty assessment
and dismissal of the remaining $59, 500 balance, plus damages
for harm to his reputation and personal suffering.
Motion to Substitute Party
filed a notice to substitute the United States of America for
the individually named Defendants pursuant to the Federal
Tort Claims Act, 28 U.S.C. § 2671 et seq., as amended by
the Federal Employees Liability Reform and Tort Compensation
Act, 28 U.S.C. § 2679. The Act specifies that a suit
against the United States is the exclusive remedy for tort
claims regarding the wrongful or negligent acts or omissions
of federal employees acting within the course and scope of
their employment, and protects federal employees from
“any other civil action or proceeding for money
damages.” 28 U.S.C. § 2679(b)(1); see also
Simmons v. Himmelreich, 136 S.Ct. 1843, 1848 (2016)
(“Under the exclusive remedies provision, a plaintiff
generally cannot sue an employee where the FTCA would allow
him to sue the United States instead.”).
also included a “Certification of Scope of
Employment” with their notice. (Doc. 12-1).
“‘[I]f the Attorney General . . . certif[ies]
that a Government employee named as defendant was acting
within the scope of his employment when he committed the
alleged tort, ' the Liability Reform Act dictates that
the United States be substituted as the sole
defendant[.]” Simmons, 136 S.Ct. at 1848
(quoting United States v. Smith, 499 U.S. 160, 166
complaint alleges violations of Arizona common law that
allegedly occurred while each of the Defendants was employed
by the United States. While Plaintiff asserts that the
Defendants were not acting within the scope of their
employment and are being sued personally, there is no
evidence to support this contention. Further, the Acting U.S.
Attorney for the District of Arizona has certified that each
of the individually named Defendants was acting within the
scope of their employment at the time the alleged tortious
acts occurred. Accordingly, the United States is the sole
proper defendant in this action.
Motion to Compel
requests that the Court compel defense attorney Nithya Senra
to require Defendant Hale to testify at a deposition. (Doc.
19). In her response, Senra notes that discovery is not
authorized under the Federal Rules of Civil Procedure at this
point in the litigation because the parties have not yet
conferred as required by Fed.R.Civ.P. 26(f). (Doc. 20). Senra
further notes that Plaintiff's discovery request is
premature, given the pending motions to dismiss. Plaintiff
contends that there is no reason he should not be allowed to
depose Hale, and therefore argues the Court should allow him
to do so. (Doc. 21).
Court finds that Plaintiff's motion should be denied. The
Court has not yet held a Rule 16 scheduling conference due to
the pending motions to dismiss, and thus the parties have not
conferred pursuant to Rule 26(f). See Fed. R. Civ.
P. 26(f); 30(a)(2). Discovery at this juncture would be both
premature and procedurally improper.
First Motion to Dismiss
United States of America, on its own behalf and on behalf of
Spencer, Nguyen, Matchison, Settles, and Ward, moves to
dismiss Plaintiff's complaint under Fed.R.Civ.P.
12(b)(1), 12(b)(5), and 12(b)(6) for lack of subject matter
jurisdiction, failure to state a claim, and insufficient
service of process. (Doc. 10).
first argue that the Court lacks jurisdiction over this
matter because Plaintiff alleges he has only paid 15% of the
$70, 000 penalty assessment, and in order to establish
jurisdiction, the taxpayer must first fully pay the contested
assessment. Defendants also note that Plaintiff does not meet
any of the exceptions to the full pay rule. Defendants
further argue that the ...