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Bailey v. United States

United States District Court, D. Arizona

November 16, 2017

Donald D Bailey, Plaintiff,
v.
United States of America, et al., Defendants.

          ORDER

          Eric J. Markovich United States Judge.

         Pending 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 ruling.

         I. Background

         Plaintiff 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.

         II. Motion to Substitute Party

         Defendants 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.”).[1]

         Defendants 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 (1991)).

         Plaintiff's 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.

         III. Motion to Compel

         Plaintiff 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).

         The 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.

         IV. First Motion to Dismiss

         Defendant 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).

         Defendants 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 ...


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