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Simon v. Muschell

United States District Court, N.D. Indiana, Fort Wayne Division

February 24, 2015

JAMES A. SIMON, et al., Plaintiffs,
v.
SPECIAL AGENT PAUL MUSCHELL, et al., Defendants.

OPINION AND ORDER

JAMES T. MOODY, District Judge.

On November 6, 2007, Internal Revenue Service ("IRS") agents searched the home of plaintiffs James Simon, Denise Simon, [1] and R.S. ("plaintiffs"). As a result of this search, plaintiffs filed two suits. First, in suit 1:09-cv-00301, plaintiffs sued several IRS special agents alleging that the agents had violated the Fourth and Fifth Amendments to the United States Constitution when they executed the search warrant. (1:09-cv-00301, DE #1.) Plaintiffs then sued the United States in case 1:10-cv-00058, alleging claims for intentional infliction of emotional distress, negligent infliction of emotional distress, negligence, trespass, invasion of privacy, and wrongful death, all under the Federal Tort Claims Act ("FTCA"). (1:10-cv-00058, DE #1.)

In October 2010, the court consolidated these two cases into case 1:09-cv-00301 and stayed the case pending the outcome of plaintiff James Simon's criminal trial. (1:09-cv-00301, DE #40.) In 2014, the court lifted the stay in order for the United States to file a motion to dismiss plaintiffs' claims against it. (1:09-cv-00301, DE #45.) After the stay was lifted, the United States[2] filed the present motion to dismiss. (1:09-cv-00301, DE #47.) Plaintiffs have filed a response (1:09-cv-00301, DE #48), and defendant has filed a reply (1:09-cv-00301, DE #49). For the following reasons, defendant's motion is granted.

I. Facts[3]

As early as January 2007, the IRS began investigating plaintiff James Simon for violations of the Internal Revenue Code. (1:10-cv-00058, DE #1 at ¶ 15.) In November 2007, IRS agent Paul Muschell signed a probable cause affidavit in an effort to obtain a search warrant to search plaintiffs' home. ( Id. at ¶¶ 17-18.) On November 2, 2007 the United States District Court for the Northern District of Indiana reviewed the affidavit submitted by Muschell and issued a search warrant to search plaintiffs' home. ( Id. at ¶ 20.)

According to the allegations in plaintiffs' complaint, which the court accepts as true for purposes of ruling on defendant's motion, defendant, through Muschell, intentionally or negligently made false and/or misleading statements in the affidavit in support of the request for a search warrant of plaintiffs' home. ( Id. at ¶ 21.) These false and/or misleading statements misled the judge that reviewed the request for a search warrant. ( Id. at ¶ 22.) The affidavit was negligently reviewed and/or approved by Muschell and other IRS agents prior to being submitted to the court. ( Id. at ¶ 23.) Several government tax offices failed to review the affidavit for completeness and accuracy. ( Id. at ¶ 25.) Defendant improperly, unlawfully, and negligently tendered the request for a search warrant, including Muschell's affidavit, when it knew or should have known there was no probable cause to support a search warrant. ( Id. at ¶ 26.) Additionally, defendant failed to follow several internal IRS regulations during the acquisition and execution of the search warrant for plaintiffs' home. ( Id. at ¶ 27.)

On November 6, 2007, defendant, through Muschell and other IRS agents and employees, searched plaintiffs' residence pursuant to the search warrant. ( Id. at ¶ 29.) At the initiation of the search warrant, only R.S. and Denise Simon were at the Simon residence. ( Id. at ¶ 31.) Plaintiff James Simon was not in the United States at that time. ( Id. ) Despite the fact that neither James Simon nor Denise Simon owned a gun, several IRS agents executing the search warrant wore bulletproof vests and had their guns visible during the search of plaintiffs' home. ( Id. at ¶¶ 32-33.) The IRS agents executing the search warrant violated IRS procedures by putting R.S., who was ten years old at the time, in harm's way. ( Id. at ¶ 34.)

During the search, IRS agent Linda Porter made comments to Denise Simon implying violations of law not addressed in the affidavit or warrant, causing emotional stress and harm to Mrs. Simon. ( Id. at ¶ 35.) On November 9, 2007, three days after the execution of the search warrant, Denise Simon committed suicide. ( Id. at ¶ 38.) Several hours before her death, Denise Simon wrote a letter expressing her concern regarding the armed IRS agents coming into her home, her concern for her children's safety after the search, and her distrust of the federal government. ( Id. at ¶ 39.) As a result of defendant's investigation into the Simons and the subsequent search of the Simons' home, plaintiff filed the current suit against defendant, alleging intentional infliction of emotional distress, negligent infliction of emotional distress, negligence in obtaining the search warrant, negligence in executing the search warrant, trespass, invasion of privacy, and wrongful death. (1:10-cv-00058, DE #1 at 12-18.) Defendant has now moved to dismiss plaintiffs' complaint. (1:09-cv-00301, DE #47.)

Before moving on to addressing the arguments made in the parties' briefs, it is important to note what took place in plaintiff James Simon's criminal trial.[4] In 3:10-cr-00056, a grand jury returned a twenty-three count indictment against James Simon, as a result of the IRS's investigation into the Simons' finances. (3:10-cr-00056, DE #1.) At trial, a jury convicted Mr. Simon of 19 out of 23 counts, including four counts of filing false federal income tax returns. (3:10-cr-00056, DE #1; DE #128; DE #160.) As a result of his convictions, Mr. Simon was sentenced to 72 months imprisonment, and was also ordered to make restitution to several entities, including the IRS. (3:10-cr-00056, DE #160.) Mr. Simon appealed his conviction, and the United States Court of Appeals for the Seventh Circuit affirmed the judgment of the district court. (3:10-cr-00056, DE #189); United States v. Simon, 727 F.3d 682, 700 (7th Cir. 2013).

II. Legal Standard

Defendant has moved to dismiss plaintiffs' claims under RULE 12(b)(6) of the FEDERAL RULES OF CIVIL PROCEDURE for failure to state a claim upon which relief may be granted. RULE 8 of the FEDERAL RULES OF CIVIL PROCEDURE sets forth the pleading standard for complaints filed in federal court; specifically, that rule requires that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8. "The RULE reflects a liberal notice pleading regime, which is intended to focus litigation on the merits of a claim rather than on technicalities that might keep plaintiffs out of court." Brooks v. Ross, 578 F.3d 574, 580 (7th Cir. 2009) (internal quotation marks omitted). "While the federal pleading standard is quite forgiving... the complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ray v. City of Chicago, 629 F.3d 660, 662-63 (7th Cir. 2011) (quoting Bonte v. U.S. Bank, N.A., 624 F.3d 461, 463 (7th Cir. 2010)); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007).

For purposes of deciding defendant's RULE 12(b)(6) motion, the court accepts plaintiffs' factual allegations as true. Pardus, 551 U.S. at 93.

III. Analysis[5]

In its motion to dismiss, defendant argues that the dismissal of plaintiffs' FTCA claims against it is appropriate in this case. "The FTCA permits suits against the United States for personal injuries caused by the wrongful acts of federal employees acting within the scope of their employment under circumstances in which a private person would be liable to the plaintiff." Reynolds v. United States, 549 F.3d 1108, 1112 (7th Cir. 2008). "The FTCA provides both a jurisdictional grant and a waiver of sovereign immunity[.]" Clark v. United States, 326 F.3d 911, 912-13 (7th Cir. 2003) "Although the FTCA's waiver of sovereign immunity is broad, Congress has excepted certain claims from its purview, " Reynolds, 549 F.3d at 1112, including "[a]ny claim arising in respect of the assessment or collection of any tax...." 28 U.S.C. § 2680(c).

Defendant, therefore, argues that plaintiffs' FTCA claims must be dismissed under 28 U.S.C. § 2680(c), which "exempts the government from tort liability for tax-related claims." Clark, 326 F.3d at 912; (DE #46 at 3.) Defendant argues that plaintiffs' claims in this case - negligent infliction of emotional distress, negligence, trespass, invasion of privacy, and wrongful death - all arise out of the assessment or collection of plaintiffs' taxes. (DE #46 at 8-9.)

In response, plaintiffs argue that § 2680(c) does not apply in this case because the investigation into plaintiffs' finances and the IRS agents' search of plaintiffs' home was "purely criminal in nature, and, on its face, devoid of intent or effort to ultimately assess or collect taxes from Mr. Simon." (DE #48 at 6.) Plaintiffs go on to argue that § 2680(c) does not apply in this case because the search of plaintiffs' home violated internal IRS policies, and therefore, was not for the purpose of assessing or collecting taxes. ( Id. at 7.) Finally, plaintiffs ...


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