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DAVIDSON v. COMMISSIONER

May 4, 1984

ARTHUR T. DAVIDSON, M.D. and EZERIA W. DAVIDSON, Plaintiffs, against COMMISSIONER OF INTERNAL REVENUE, GEORGE PATERNO, Agent of Internal Revenue, and GOVERNMENT OF THE UNITED STATES OF AMERICA, Defendants.


The opinion of the court was delivered by: HAIGHT

MEMORANDUM OPINION AND ORDER

HAIGHT, District Judge:

Plaintiffs Arthur and Ezeria Davidson bring this action against the United States, the Commissioner of the Internal Revenue Service, and Revenue Officer George Paterno to restrain the IRS from enforcing a levy on plaintiffs' personal bank account on the ground that the actions of the IRS, through its agent Paterno, were racially motivated. Plaintiffs also seek actual and punitive damages. The case is presently before the Court on defendants' motion to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(1) and (6) for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted. For the reasons stated, defendants' motion is granted.

 Factual Background

 The circumstances giving rise to this suit are as follows.On September 5, 1979, the IRS made an assessment against plaintiffs in the amount of $1,115.43 with respect to their personal income tax liability for the year 1976. (Paterno Aff. P3 and Ex. A). IRS records indicate that plaintiffs were promptly sent a notice and demand for payment. On July 11, 1980, a follow-up letter was sent to plaintiffs again notifying them of their outstanding obligation and advising them as follows:

 "If we do not receive your payment or if you do not contact our office, enforcement action can be taken at any time after 20 days from the date of this letter without any further notice to you. Salary or wages due you may be levied upon, as provided by section 6331 of the Internal Revenue Code, by serving a notice of levy on your employer. Bank accounts, receivables, commissions, or any other kind of income you have are also subject to levy. Any property or rights to property, such as automobiles may also be seized and sold to satisfy your tax liability." (Paterno Ex. C).

 The above letter was returned to the IRS with a handwritten statement scrawled across the face of it stating that plaintiffs were "unable to pay this amount at this time." (Id.). The matter was then assigned to Revenue Officer Paterno for collection. On November 7, 1980, Paterno sent plaintiffs a notice of their liabilities for the years 1969, 1972, and 1976 and urged them to send the balances due promptly. (Paterno Ex. E). Plaintiff Arthur Davidson again returned the IRS notice with a typewritten statement to the effect that "this matter is now in the United States District Courts and is scheduled to be heard by the Court of Appeals for the 2nd Circuit." Id. Officer Paterno thereafter prepared a notice of federal tax lien with respect to plaintiffs' liabilities for the years 1972 and 1976 which was filed with the County Clerk, Westchester County. (Paterno Ex. A).

 An assessment in the amount of $4,515.39 was also made against plaintiffs for the year 1972. Officer Paterno was assigned to this matter as well, and, as described above, included plaintiffs' 1972 tax liabilities in his November 7, 1980 request for payment as well as the notice of federal tax lien filed in the Westchester County Clerk's Office. (Paterno Aff. P5).

 Also pertinent to this litigation, although not directly in issue here, are certain assessments made against plaintiff Arthur Davidson's business corporation in connection with its returns for the second and third quarters of 1979 and the second quarter of 1978. (Paterno Ex. G). The corporation was advised on February 18, 1981, by way of a "Final Notice Before Seizure" letter, that the IRS could seize its property if its outstanding taxes were not paid within ten days.On May 12, 1981, at the direction of his group manager, Officer Paterno served a levy on the checking account maintained by the corporation at Citibank, N.A. (Paterno Aff. P19).

 This levy on plaintiff's corporate account prompted an irate phone call to Paterno from Dr. Davidson, a call plaintiff alleges took place on May 14, 1981 (Am. Comp. P15), but which Paterno and two other witnesses aver took place on May 13, 1981 (Paterno Aff. P10). The parties' accounts of the ensuing conversation and its aftermath differ substantially. Plaintiff contends that he asked Paterno why "such a drastic action" had been taken without prior notice in view of plaintiffs' demonstrated readiness to make some arrangements to resolve the matter. When plaintiff suggested that Paterno's actioins were grounded in racial animus, Officer Paterno allegedly replied, "I will show you how prejudiced an Italian can be against a black physician," and slammed down the phone. (Am. Comp. PP16-17). Paterno acknowledges that the conversation was heated but vigorously denies making the racial comment attributed to him or any other racial remarks. Two other IRS officers present during the phone call, one of whom is black, support Paterno's version of the conversation. (Anderson Aff. P3; Merola Aff. P3).

 On May 14, 1981, the day following the phone call, Paterno served a levy on Dr. Davidson's personal account at Citibank, an action plaintiffs attribute to Paterno's "racial prejudice." (Am. Comp. P19). Paterno disputes this characterization and avers that, up until May 13, 1981, the IRS was completely unaware of a personal account upon which the IRS could levey and apply toward plaintiffs' personal income tax liabilities. On that day, Dr. Davidson himself inadvertantly revealed to Paterno's acting group manager, John Manolis, that he maintained an individual account at Citibank in addition to his corporation's account. (Manolis Aff. P3-4). Manolis communicated this information to Paterno, who promptly served a levy on this account in accordance with his collection responsibilities. (Paterno Aff. P11).

 Defendants' Motion to Dismiss

 Defendants move to dismiss the amended complaint on the ground that the acation is barred by section 7421 of the Internal Revenue Code, 26 U.S.C. § 7421, and on the further ground that none of the statutes cited by plaintiffs serve as a jurisdictional predicate for the action. Even assuming jurisdiction were proper, defendants argue that they are entitled to sumamry judgment.

 To the extend that the plaintiffs seek to restrain the IRS from levying against their personal Citibank account, the action is clearly barred by § 7421 of the Internal Revenue Code. That section, commonly referred to as the ...


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