Appeal from an order entered in the United States District Court for the Southern District of New York, Griesa, J., denying defendants-appellants' motion to dismiss and their alternative motion for summary judgment. Defendants allege they are immune from suit on each of plaintiff's claims, and that the action should have been dismissed. Reversed and remanded.
Before: MESKILL, PRATT and ALTIMARI, Circuit Judges.
Plaintiff Arlen Yalkut is an attorney at law residing in Rockland County, New York. Defendants Augie Gemignani and Myron Gold are Internal Revenue Service (IRS) agents. They appeal from an order of the United States District Court for the Southern District of New York, Griesa, J, denying their motion to dismiss Yalkut's complaint and their alternative motion for summary judgment. These motions were based on defendants' claim of absolute immunity from plaintiff's state law tort claims and qualified immunity from plaintiff's constitutional claim.
Yalkut originally filed this action in the Supreme Court of the State of New York, County of Rockland, claiming Gemignani and Gold committed various common law and constitutional torts when they levied on his bank account. Defendants, as federal officers being sued for acts occurring under color of their employment, removed this action to federal court. 28 U.S.C. §§ 1441(a), 1442(a)(1) (1982); see Mesa v. California, 489 U.S. 121, 57 U.S.L.W. 4199, 4202-03, 103 L. Ed. 2d 99, 109 S. Ct. 959 (U.S. Feb. 21, 1989).
For the purposes of this decision, we have taken the facts as alleged by plaintiff.
The critical events leading to this suit occurred in 1977, when Yalkut was a partner in the law firm of Bleifer & Yalkut, P.C. The law firm was dissolved that year, but it left some unfinished business, namely, unpaid taxes. Bleifer made a partial tax payment to the IRS, leaving a large balance unpaid. Yalkut attempted to settle the firm's tax bill, but was unsuccessful. In 1980, a penalty of $4,944.20 was assessed against Bleifer and Yalkut for the firm's unpaid taxes.
In August 1982, a lien was placed on Yalkut's residence. While two different IRS offices (the one for the district in which Yalkut lived and the one for the district in which Bleifer lived) attempted to coordinate Bleifer's and Yalkut's payments, the IRS levied on Yalkut's home in October 1982. The IRS, Bleifer and Yalkut finally agreed in December 1982 that Bleifer and Yalkut would each pay $200 a month to the IRS until the debt was satisfied. At this time, the IRS claimed that only $4,561.68 was due. The levy was then released, as Yalkut had begun making payments to the IRS. The lien on Yalkut's home remained, however. Bleifer and Yalkut both made their scheduled payments, and in July 1983 the IRS informed Bleifer that no more payments were due. This notice was erroneous, however, and in 1984, Bleifer and Yalkut agreed to resume making payments.
In mid-1985, an IRS accounting showed that $119.45 plus interest remained to be paid. Yalkut and Bleifer disputed this amount, believing they had not been given credit for all of their payments. Bleifer contacted the IRS' Problem Resolution Office, where the total balance owed in March 1986 was eventually determined to be $2,527.40. On April 1, 1986, Bleifer and Yalkut paid the balance due while continuing to contest the amount of the assessment. The 1982 lien on Yalkut's home was removed April 8, 1986. Yalkut eventually received a refund of $684.80, after the IRS determined that he and Bleifer had, in fact, overpaid the tax owed.
Bleifer and Yalkut thought that payment of the tax debt in April 1986 would bring to an end their problems with the IRS. However, on May 7, 1986, defendant Gemignani placed an IRS levy on Yalkut's bank account. This occurred after Yalkut refused Gemignani's request to sign a waiver of the six year IRS collection statute of limitations. When the six year period from the date the tax or penalty is assessed has expired, the IRS can no longer collect the tax or penalty. 26 U.S.C. § 6502(a)(1) (1982). The time limit for the penalty assessed against Bleifer and Yalkut in 1980 was about to run out, and although they had paid the debt in full, the IRS feared that Bleifer might contest the penalty assessed against him. Bleifer could bring such an action any time within two years of payment of the penalty, i.e., until March 31, 1988. 26 U.S.C. § 6532 (1982). If Bleifer did contest the penalty, and prevailed, his payments would be refunded to him. In that event, the IRS would not be able to collect the remainder of the assessment from Yalkut, as the six year statute of limitations would have run. Pursuant to IRS policy, Gemignani sought the waiver of the statute of limitations from Yalkut.
When a "responsible person," that is, one responsible for a tax penalty assessment, Internal Revenue Manual § 5638.1(10) (1985) (IRS Manual), like Yalkut in this situation, refuses to waive the six year statute of limitations, IRS policy authorizes the agent involved to do one of two things: collect the amount of the entire assessment from the person immediately or sue to obtain a judgment on the assessment. Id. Gemignani, in consultation with his supervisor, Gold, opted for the former, and filed a levy on Yalkut's bank account for the entire amount of the penalty, $4,743.84. Because Yalkut needed the money in his bank account, he capitulated and, on May 14, 1986, signed a waiver extending the statute of limitations until December 31, 1988, along with a rider stating that he did so under compulsion. The levy was released the same day.
In his complaint against Gemignani and Gold, Yalkut alleged that defendants' filing of the levy was, inter alia, without the scope of their employment, in excess of their authority, taken with the knowledge that Yalkut did not owe the IRS money, without legal basis or justification, and malicious. The complaint stated seven causes of action: conversion, intentional infliction of emotional distress, prima facie tort, defamation, harm to reputation, civil rights violations under 42 U.S.C. § 1983 (1982), and conspiracy to harm Yalkut. Yalkut seeks monetary damages for his alleged injuries. Defendants moved for dismissal of the action pursuant to Fed. R. Civ. P. 12(b)(6) or, alternatively, for summary judgment pursuant to Fed. R. Civ. P. 56(b). ...