UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK
May 18, 2006
MAJOR C. SEABURY, PLAINTIFF,
THE CITY OF NEW YORK, DEFENDANT.
The opinion of the court was delivered by: Garaufis United States District Judge
MEMORANDUM AND ORDER
Plaintiff Major C. Seabury, appearing pro se , files the present action alleging a variety of claims against the City of New York. Plaintiff has paid the requisite filing fee to commence this action. As set forth below, the Complaint is dismissed in part and Plaintiff is directed to file an Amended Complaint within thirty (30) days from the date of this order.
Plaintiff submits a 48-page Complaint along with voluminous exhibits, many of which appear to be unrelated to his claims in this action.*fn1 His multiple "Causes of Action" each cite various alleged crimes; complain that the New York City Board of Education ("BOE") and the Teacher's Retirement System ("TRS") misapplied and incorrectly reported various transfers, withdrawals, loans, and payments of payroll and pension funds; and allege that these actions increased his federal tax liability, "depleted" his pension, and "contaminated" his taxes, his pension funds, and his banking accounts. As near as can be determined by the Court in a painstaking reading of his papers, it appears that Plaintiff's underlying concerns are the depletion of his pension funds and an ongoing dispute with the Internal Revenue Service ("IRS") regarding taxes claimed to be owed for prior tax years. Although the Complaint is difficult to parse, the Court believes that Plaintiff is alleging the following facts and raising the following claims against Defendant.
At some time prior to the initiation of the present action, Plaintiff was employed by the BOE (Plaintiff's Complaint ("Compl.") at 2), and participated in the TRS (Compl. at 4). According to Plaintiff, on January 31, 2002, Plaintiff removed $20,243.59 from his tax deferred annuity account at the TRS. He describes these funds as "prior service time monies." (Id.) Plaintiff alleges that Defendant failed to properly credit these funds to his Tier IV Pension Account, Number 728147. (Id. at 7.) Instead, Plaintiff alleges, these funds and "all of the plaintiff's moneys [were] reported as alleged income" (Id.) and caused all subsequent W-2 Forms and his federal and state tax returns to be fraudulent. (Id. at 8, 9, 13, 14, 19, 22, 23, 31, 44.)*fn2
Plaintiff asserts that on June 19, 2003, Plaintiff "served 'notice'" of his intent to retire, by sending "'sworn' retirement papers" effective June 26, 2003. (Id. at 4.) The application included a hand-written notation: "Should the undersigned be denied his total service time of approximat [cut off] 38 years, 4 months and 17 days, this application shall become null and [cut off]. The undersigned then demands to be returned to his position of school pyschol [cut off]." (Plaintiff's Exhibit F, sub-Exhibit A). A letter from the Office of the Principal at Hale A Woodruff Public School 224, addressed to Plaintiff, and dated June 23, 2005 requests Plaintiff to contact the payroll office immediately and indicates that paperwork is enclosed. (Plaintiff's Exhibit A, second sub-Exhibit E.) According to Plaintiff, Defendant "denied" Plaintiff's retirement by letter dated July 2, 2003. (Compl. at 4.) Plaintiff did not return to work on September 1, 2003. (Id. at 5.) Nonetheless, Plaintiff alleges that he was retained on the payroll as a school psychologist, and continued to receive electronic payments until June 28, 2005. (Id. at 5, 12.) He received an "Employee Pay Statement," dated June 28, 2005, showing earnings for that period of $5669.39; year-to-date earnings of $11,772.65; and deductions for federal and state withholding taxes, Social Security taxes, and Medicare taxes. (Id. at 24; Plaintiff's Exhibit A, sub-Exhibit O.) However, Plaintiff also asserts that he did not receive "any 'Employee Pay Statements' for the Jan. 1, 2005 through Jan. 31, 2005 time period." (Compl. at 24.)
Plaintiff suggests that the June 28, 2005 statement is evidence of Defendant's attempt to establish a fraudulent "final average salary." (Id. at 25.) Plaintiff argues that because Defendant fraudulently established his final average salary, he should be accorded a final average salary equal to the "maximum sum in the present contract," and that this amount should serve as the basis for his Tier IV Pension and for calculating compensatory and punitive damages in the present lawsuit. (Id. at 25-26.)
Plaintiff further alleges that by keeping him on salary after he served notice of retirement, Defendants conspired to defraud him of his Tier IV Pension benefits. (Id. at 42.) Plaintiff asserts that any income he received from June 26, 2003 until June 28, 2005 should not have been considered "earned income," and thus should not be subject to federal tax liability. (Id. at 5, 23.) He demands that all funds he received from Defendant "should be defined and declared a 'tax free gift.'" (Id. at 24; see also id. at 7, 8, 13, 15, 20, 22, 24, 27, 28, 33, 47.)
Plaintiff asserts that he currently remains an employee of the BOE and a member of the TRS. (Id. at 24, 26.) Plaintiff alleges that he was not served with any termination papers by the BOE or by the TRS. (Id. at 20, 24, 29.) He argues that his continued employment and receipt of salary from September 1, 2003 to December 31, 2004 contradicts the "TRS's apparent assertion that the plaintiff was not a member of TRS and Tier IV during this period of time." (Id. at 19; see also id. at 5, 23, 24.)*fn3
Plaintiff alleges that Defendant's alleged failure to compensate him as an employee or retiree is "earned income fraud and/or pension fraud and federal tax withholding fraud." (Id. at 28.) He further alleges that Defendant's denial of that status denies him rights and privileges in violation of the United Federation of Teachers' Contract, the New York State constitution, and the Fifth, Sixth, and Fourteenth Amendments to the United States Constitution. (Id. at 26, 29.) In particular, he asserts that Defendant's failure to provide him with termination papers violates his constitutional rights. (Id. at 29.)
Plaintiff asserts that Defendant continues to make electronic transfers of pension funds to his checking account without his permission. (Id. at 32.) Plaintiff argues that "all deductions that were electronically transferred from the plaintiff's N.Y.C.B.O.E. to the City of New York Deferred Compensation 401K plan #98998-03 from Jan. 1, 2005 through Jan. 31, 2005 have as their basis and foundation earned income fraud and federal tax withholding fraud." (Id. at 28.) Accordingly, he argues, "[a]ny and all monies removed from this account were 'not' distributions for the Jan. 1, 2005 through Dec. 31, 2005 tax period" and should be declared a "tax free gift" and, in addition, the funds should be replaced by the Defendant as punitive and compensatory damages. (Id. at 28-29.) On the other hand, he states that payments into his Tier I account were not fraudulent. (Id. at 30.)
Plaintiff accuses Defendant of committing "tax fraud," "Banking Fraud," "Federal Deposit Insurance Fraud," and mail fraud by making electronic transfers of pension and payroll funds and by using the United States Postal Service to mail "false and fraudulent" documents including IRS reporting forms, checks alleged to be income, and a letter claiming that several checks had been lost or not received. (Id. at 1, 5, 7, 12-13, 17-18, 21, 31, 32, 33, 35-37, 40.)
Plaintiff also asserts that beginning in April 26, 2002, Defendant "begins another round of similar allegations of proven earned income fraud, tax withholding fraud, state tax withholding fraud, pension fraud, medicare fraud, social security fraud against Rahsaan A. Seabury."*fn4 (Id. at 9-10.) Plaintiff argues that this suggests a "pattern of federal and state tax fraud." ( Id. at 10.) He also asserts that "defendants [sic] actions against Rahsaan Seabury were retribution for the plaintiff filing papers." (Id.)
Plaintiff further alleges that Defendant retaliated against Plaintiff by terminating his Tier I Pension, Number 164307 and his "N.Y.C.E.R.S. pension # 36407" on August 1, 2003, in response to Plaintiff filing a complaint in case number 107348/2003 in the New York Civil Court for the County of New York. (Id. at 6, 29.)
On September 30, 2003, Plaintiff filed a complaint in the New York Civil Court for Kings County, alleging improper termination of his pension. (Id. at 6.) Plaintiff filed a "sworn complaint of Banking Fraud with the New York State Department of Banking dated April 12, 2005." (Id. at 38-39; see also Plaintiff's Exhibit F.) The Office of Thrift Supervision responded and explained that it had no authority over the actions of the City of New York. (Plaintiff's Exhibit F.) Nonetheless, Plaintiff claims that the agency's failure to investigate or deny the allegations is proof of the validity of his allegations. (Compl. at 39.) On November 1, 2005, Plaintiff submitted "a sworn complaint" to the Office of the Brooklyn District Attorney alleging Fraud and Earned Income Fraud. (Id. at 5; Plaintiff's Exhibit A, second sub-Exhibit B.) He argues that the District Attorney's failure to respond within 30 days is proof "by adoptive admission" of Defendant's guilt. (Compl. at 5.)
Plaintiff also has a dispute with the Internal Revenue Service ("IRS"), although the IRS is not named as a defendant in this action. Plaintiff alleges that the IRS demanded that he "return an unsolicited $5,094.08 apparent refund" for tax year 2003 along with interest and penalty. (Id. at 15.) Plaintiff received a Final Notice of Intent to Levy and Notice of Your Right to a Hearing, dated July 16, 2005, regarding "overdue taxes" from the period ending on December 31, 2003. (Plaintiff's Exhibit E.) Plaintiff seems to argue that this document, because it was not signed by the commissioner of the IRS and because it was not followed by a "Notice of Levy," is evidence of a conspiracy between the IRS and Defendant to extort money from Plaintiff or to defend against Plaintiff's claims regarding the improper accounting and taxation of his pension and payroll income. (Id. at 16.) It appears that on August 8, 2005, Plaintiff filed Amended Tax Returns for 2003 and 2004, claiming zero income and asserting that his W-2 Forms were in violation of various tax topics and 26 U.S.C. §7202. (Plaintiff's Exhibit A, third sub-Exhibit B & second sub-Exhibit C) Plaintiff alleges that he received two letters from the IRS, dated November 21, 2005, denying refunds for 2003 and 2004 "because a corrected 1099-R and W-2 and appropriate documentation from the payer was not provided." (Id. at 15; see also Plaintiff's Exhibit A, IRS letter dated Nov. 21, 2005.) Plaintiff asserts that he filed a complaint with the IRS on April 6, 2005, alleging "Electronic Wire Transfer Fraud and "Federal Tax Fraud" and that the IRS and Defendant failed to respond within 30 days. (Id. at 18, 21.)
Plaintiff has a related case pending in the United States District Court for the Southern District of New York ("S.D.N.Y."), Civil Docket Number 06 Civ. 1497.*fn5 In that action, Plaintiff claims that his prior S.D.N.Y. case, Civil Docket Number 04 Civ. 10078, was improperly dismissed for failure to prosecute. (Plaintiff's Exhibit A, Complaint in 06 Civ. 1497.) Plaintiff has also litigated some or all of these issues in the New York State Civil Courts, Kings County, Index Number 35252/2003, and County of New York, Index Number 107348/2003. (Id. at 6, 14, 19, 23, 26, 29.) He alleges that the prior state and federal cases are founded in fraud. (Id. at 29- 31, 42.) Plaintiff received an Order in Index Number 35252/03 dated June 16, 2004 with the hand-written notation "After oral argument Plaintiff's motion is denied in all respects." (Plaintiff's Exhibit D.) Plaintiff alleges that the New York State court failed to issue a judgment that was properly signed and affixed with the raised seal of the court. (Compl. at 29.) He argues that "because he had no judgment or order which had any standing, force or effect," he was denied the right to appeal to the appellate division in violation of his state and federal constitutional rights. (Id.; see also Id. at 11, 30-31.)
Plaintiff demands that all of the taxes withheld by Defendant be returned, in addition to compensatory and punitive damages. (Id. at 8, 46-47.) Further, he argues that all of his past expenses, assets and liabilities are tainted with the alleged fraud, and thus he demands that Defendant be assessed the value of all of his current assets as compensatory damages. He also requests "$250,000,000 in Compensatory Damages and treble punitive damages for fraud, malice, intent and forethought." (Id. at 45.) Plaintiff also requests compensatory and punitive damages for "libeling and slandering" Plaintiff and "multiple counts of defamation of Character." (Id. at 45-46.)
In reviewing plaintiff's complaint, the Court is mindful that because plaintiff is proceeding pro se , his submissions should be held "to less stringent standards than formal pleadings drafted by lawyers." Hughes v. Rowe, 449 U.S. 5, 9 (1980) (citation omitted). Furthermore, his pleadings must be read liberally and interpreted as raising the strongest arguments they suggest. McEachin v. McGuinnis, 357 F.3d 197, 200 (2d Cir. 2004); Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994). "[T]he failure in a complaint to cite a statute, or to cite the correct one, in no way affects the merits of a claim. Factual allegations alone are what matters." Northrop v. Hoffman of Simsbury, Inc., 134 F.3d 41, 46 (2d Cir. 1997) (quoting Albert v. Carovano, 851 F.2d 561, 571 n.3 (2d Cir. 1988) ( en banc ). If a liberal reading of the complaint "gives any indication that a valid claim might be stated," this Court must grant leave to amend the complaint. See Cuoco v. Moritsugu, 222 F.3d 99, 112 (2d Cir. 2000); Gomez v. USAA Fed. Sav. Bank, 171 F.3d 794, 795 (2d Cir. 1999).
However, "[i]t is axiomatic that federal courts are courts of limited jurisdiction and may not decide cases over which they lack subject matter jurisdiction. Unlike failure of personal jurisdiction, failure of subject matter jurisdiction is not waivable and may be raised at any time by a party or by the court sua sponte . If subject matter jurisdiction is lacking, the action must be dismissed." Lyndonville Sav. Bank & Trust Co. v. Lussier, 211 F.3d 697, 700-01 (2d Cir. 2000) (citing Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986); United Food & Commercial Workers Union, Local 919 v. CenterMark Props. Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir. 1994)). Accordingly, "before deciding any case we are required to assure ourselves that the case is properly within our subject matter jurisdiction." Wynn v. AC Rochester, 273 F.3d 153, 157 (2d Cir. 2001) (citations omitted).
Federal subject matter jurisdiction is available only when a "federal question" is presented, or when plaintiff and defendant are of diverse citizenship and the amount in controversy exceeds $75,000. To invoke federal question jurisdiction, the plaintiff's claim(s) must arise "under the Constitution, laws, or treaties of the United States." 28 U.S.C. §1331. "Federal question jurisdiction may be properly invoked only if the plaintiff's complaint necessarily draws into question the interpretation or application of federal law." State of New York v. White, 528 F.2d 336, 338 (2d Cir. 1995). Internal Revenue Code Claims Plaintiff appears to argue that federal question jurisdiction is conferred by references to the Internal Revenue Code.*fn6 Plaintiff alleges "Federal Tax Withholding Fraud pursuant to IRS Title 26 U.S.C. §7202" (Id. at 6, 7, 12, 13, 17, 18, 21), and a "pattern of federal and state tax fraud" (Id. at 10). Section 7202 of the United States Tax Code provides for criminal penalties for failing to collect, account for, or pay over any taxes imposed by the Tax Code, but does not provide for a private right of action. See 26 U.S.C. §7202. Private citizens cannot enforce the provisions of the Tax Code. That is the duty of the Secretary of the Treasury and the Commissioner of the Internal Revenue Service, who are charged with the responsibility of administering and enforcing the Tax Code, including allegations of suspected fraud. United States v. LaSalle Nat'l Bank, 437 U.S. 298, 308 (1978). Federal courts have consistently refused to imply a private cause of action under the tax laws, including actions of employees against employers who have violated the requirements of the Tax Code. See Deleu v. Scaife, 775 F. Supp. 712, 716-17 (S.D.N.Y. 1991); DiGiovanni v. City of Rochester, 680 F. Supp. 80, 82-82 (W.D.N.Y. 1988).
If Plaintiff wishes to bring a cause of action in federal court to recover any tax alleged to have been erroneously or illegally assessed or collected, the United States is the proper defendant in such an action. While 28 U.S.C. §1346(a)(1) provides the district courts with jurisdiction over civil actions against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, Congress and the Courts have developed "a series of procedural hurdles that taxpayers must surmount in order to maintain" such an action. United States v. Forma, 42 F.3d 759, 763 (2d Cir. 1994). These requirements include exhaustion of administrative remedies within the Internal Revenue Service and time limitations on filing suit. See 26 U.S.C. §7422(a); 26 U.S.C. §6511.
A consistent motif running throughout the Complaint and attached Exhibits is Plaintiff's repeated allegations of fraud. In addition to the aforementioned claims of "Federal Tax Fraud," Plaintiff accuses Defendant of "Banking Fraud," "Federal Deposit Insurance Fraud," and mail fraud. Plaintiff's fraud claims, whether appearing under state or federal law, are subject to the heightened pleading standard of Rule 9(b) of the Federal Rules of Civil Procedure ("Rule 9(b)"), which requires that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed.R.Civ.P. 9(b). Plaintiff fails to state facts which would meet the particularity requirements for allegations of fraud under state or federal law.*fn7 State Court Claims To the extent plaintiff seeks to challenge the decisions of the New York State Courts, the Rooker-Feldman doctrine clearly precludes this Court from exercising jurisdiction in this matter. Under the Rooker-Feldman doctrine -- named after two United States Supreme Court cases, Rooker v. Fid. Trust Co., 263 U.S. 413 (1923), and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983) -- the United States District Court has no authority to review final judgments of a state court in judicial proceedings, except for constitutional challenges and reviews pursuant to an application for a writ of habeas corpus. As the Supreme Court recently reiterated, the doctrine precludes a district court from hearing "cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the federal district court proceedings commenced and inviting district court review and rejection of those judgments." Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 125 S.Ct. 1517, 1521-22 (2005). District courts do not have jurisdiction over challenges to state court decisions arising out of judicial proceedings "even if those challenges allege that the state court's action was unconstitutional." Feldman, 460 U.S. at 486.
Therefore, to the extent plaintiff brings the instant complaint as a means to challenge the state court decisions, this Court lacks jurisdiction to consider Plaintiff's claims that the state court judgment was procured by "perjury, fraud and deceit" (Id. at 29), or to review the substantive basis for the New York court's decision or the format in which it was issued. See Thaler v. Casella, 960 F. Supp. 691, 697-98 (S.D.N.Y. 1997) (Rooker-Feldman "requires that an aggrieved state court litigant must pursue his claims directly in the state appellate courts and ultimately to the United States Supreme Court."). "As the Supreme Court noted in Rooker, even if the judgment was wrongly procured, it is, nevertheless, an effective and conclusive adjudication until modified or reversed in the appropriate State appellate or collateral proceeding." Smith v. Wayne Weinberger, P.C., 994 F. Supp. 418, 424 (E.D.N.Y. 1998.) Constitutional Claims -- Leave to Amend Plaintiff also claims that Defendant violated his constitutional rights under the Fifth, Sixth, and Fourteenth Amendments and alleges that Defendant retaliated against him for filing a lawsuit in state court. The Court interprets Plaintiff's Complaint as brought pursuant to 42 U.S.C. §1983. Section 1983 allows an individual to bring suit against persons who, under color of state law, have caused him to be "depriv[ed] of any rights, privileges, or immunities secured by the Constitution and laws" of the United States. 42 U.S.C. §1983.
Plaintiff names only the City of New York as a defendant, and does not name individual defendants. A municipality can be liable under §1983 only if a plaintiff can show that a municipal policy or custom caused the deprivation of his or her constitutional rights. See Monell v. Dept. of Soc. Servs ., 436 U.S. 658, 690-91 (1978). Proof of a single incident of unconstitutional activity is not sufficient to impose liability on a municipality unless proof of the incident includes proof that it was caused by an existing, unconstitutional municipal policy that can be attributed to a municipal policymaker. City of Oklahoma City v. Tuttle, 471 U.S. 808, 823-24 (1985).
The Court grants Plaintiff leave to file an Amended Complaint to name as defendants the individuals responsible for the alleged deprivation of his rights or to allege facts that would support a liability claim against the City of New York pursuant to Monell. In addition, Plaintiff must set forth the specific dates and details of any facts supporting his claims that the defendant(s) have retaliated against him or otherwise deprived him of his pension benefits in violation of his federal constitutional rights.
Plaintiff shall have thirty (30) days from the date of this order to file an Amended Complaint addressing his constitutional claims under 42 U.S.C. §1983. All other claims in this case are dismissed under the Rooker-Feldman doctrine or for lack of subject matter jurisdiction. Fed.R.Civ.P. 12(h)(3). The amended complaint must be captioned "Amended Complaint," and bear the same docket number as this Order.
All further proceedings shall be stayed for thirty (30) days. The Court certifies pursuant to 28 U.S.C. §1915(a)(3) that any appeal from this Order would not be taken in good faith and therefore in forma pauperis status is denied for purpose of an appeal. See Coppedge v. United States, 369 U.S. 438, 444-45 (1962).
NICHOLAS G. GARAUFIS United States District Judge