Smith v. Kitchen ( 1997 )

UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
Michael Duane, Smith,
Plaintiff-Appellant,
v.
No. 97-1237
MILLIE R. KITCHEN, RANDY
KOMISAREK, and KEITH WOODS,
Defendants-Appellees.
ORDER
Filed on September 15, 1998
Before BRORBY, EBEL and KELLY, Circuit Judges.
On the court’s own motion, the order and judgment originally filed on
December 12, 1997, shall be published. The published opinion is attached to this
order.
Entered for the Court
Patrick Fisher, Clerk of Court
By:
Keith Nelson
Deputy Clerk
F I L E D
United States Court of Appeals
Tenth Circuit
DEC 12 1997
PUBLISH
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
Michael Duane, Smith,
Plaintiff-Appellant,
v.
No. 97-1237
MILLIE R. KITCHEN, RANDY
KOMISAREK, and KEITH WOODS,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Colorado
(D.C. No. D.C. No. 96-D-2558)
Submitted on the briefs: *
Michael Duane, Smith, Pro Se.
Robert A. Kitsmiller and Richard C. Hopkins of Podoll & Podoll, P.C., Denver,
Colorado, for Defendants-Appellees.
Before BRORBY, EBEL and KELLY, Circuit Judges.
EBEL, Circuit Judge.
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of this
appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The cause therefore is ordered
submitted without oral argument.
Plaintiff-appellant filed this civil rights suit seeking damages for alleged
violations of the United States Constitution by certain private officers and
employees of a private bank in Colorado. Finding the appellant’s claims
eminently frivolous, we affirm the district court’s dismissal of this case.
Furthermore, we invoke our power under Fed. R. App. P. 38 to order the appellant
to show cause why he should not be sanctioned for the frivolousness of this
appeal.
I.
Plaintiff-appellant Michael Duane, Smith (“Smith”) 1 filed this case seeking
damages for a cornucopia of alleged violations of his rights, including claims of
mail fraud, perjury, and civil rights conspiracy. The wicker holding Smith’s
basket of claims together is his contention that the defendants have deprived him
1
During the proceedings below, the appellant vigorously objected to the
district court’s practice of captioning all documents in this case with Smith’s full
name in all capital letters. (See Aplee. Supp. App., at 53, 84-87.) In light of the
fact that Smith actually received notice of all materials filed in this case, we
cannot see what prejudice Smith suffered as a result of the district court’s
practice. Nevertheless, we see no reason why the caption in this case cannot be
amended to reflect Smith’s preferred typography, including a comma after his
middle name. As a result, the court has directed that the caption in this appeal be
modified.
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of his property without due process of law, in violation of Smith’s rights under
the Fifth Amendment. Smith brought his claim for money damages -- seeking
$1,750,000 -- under the Ku Klux Klan Act of 1871, 42 U.S.C. § 1983.
Smith’s almost $2 million claim arose out of a tax levy for $2,176.35 by the
Internal Revenue Service against Smith. The IRS had issued a Notice of Levy to
Colorado National Bank, ordering the bank to turn over any moneys it held in
Smith’s accounts. The bank complied with this notice, turning over the money
remaining in Smith’s checking account. Smith then brought this suit against the
individual defendants, who are officers and/or in-house counsel for Colorado
National Bank. 2
After it was docketed in the district court, Smith’s case was referred to
Magistrate Judge Donald E. Abram for pre-trial matters. Smith seems to have
contended that the Judge Abram lacked jurisdiction to supervise the case, and
Smith refused to appear for a pre-trial conference after being ordered to do so. In
response to this contempt, Judge Abram ordered Smith to pay $200 to the
2
The appellees have informed the court that Smith also brought suit against
the Secretary of the Treasury and various IRS agents for this tax levy. According
to the appellees, this case is still pending in the U.S. District Court for the
District of Colorado. We note that the appellant has failed to comply with 10th
Cir. R. 28.2, requiring a clear statement of whether there have been any prior or
related appeals in this case. Such a statement would have indicated that Smith
previously sought a writ of mandamus from the Tenth Circuit in this case. The
petition was denied in In re Smith, No. 97-1208 (10th Cir. June 19, 1997)
(unpublished order).
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defendants’ counsel by January 31, 1997. As of April 10, 1997, Smith had failed
to pay this sanction, and the record before us includes no indication that Smith
has ever paid the sanction, nor has he challenged the sanction in the proceedings
below or here on appeal.
Rather than answering Smith’s complaint under Fed. R. Civ. P. 12(a), the
defendants filed a Rule 12(b)(6) motion to dismiss Smith’s complaint. The
defendants contended that they were immune from liability under 26 U.S.C. §
6332(e). After conducting a hearing on the motion, the magistrate judge
recommended that Smith’s complaint be dismissed in light of 26 U.S.C.
§ 6332(e).
Smith filed a pleading titled “Refusal for Fraud,” which the district court
interpreted as raising objections to the magistrate’s recommended disposition. In
its decision, following a de novo review of the record, the district court
reaffirmed the magistrate judge’s conclusion that the defendants were entitled to a
complete defense under 26 U.S.C. § 6332(e). The district court also noted that
any claim by Smith that these defendants had violated his due process rights
under the Fifth Amendment must fail because the defendants are not federal
government actors.
In his appeal here, Smith has reasserted his claim of a Fifth Amendment
violation by these defendants. Smith also has raised a variety of ancillary claims:
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that the magistrate judge lacked jurisdiction to consider the defendants’ motion to
dismiss; that Smith’s right to counsel was abridged by the magistrate judge’s
refusal to allow a “non-bar counselor” to assist Smith; that Smith should have
been allowed to pursue discovery in response to the defendants’ motion to
dismiss; and that the district court should have clarified its jurisdiction to hear
constitutional claims.
II.
The frivolity of Smith’s claims must be dealt with seriously because of the
waste of resources Smith has inflicted on the court and the appellees. First, Smith
has brought his claim for damages under 42 U.S.C. § 1983. 3 This statute provides
a private cause of action against “[e]very person who, under color of any statute
. . . of any State or Territory or the District of Columbia, subjects, or causes to be
subjected, any citizen of the United States . . . to the deprivation of any rights,
privileges, or immunities secured by the Constitution and laws” of the United
States. See 42 U.S.C. § 1983 (emphasis added). As the text itself makes clear,
3
Because Smith’s complaint was dismissed under Fed. R. Civ. P. 12(b)(6),
we review the district court’s determination de novo, taking the facts as alleged in
Smith’s complaint as true. See Chemical Weapons Working Group, Inc. v. United
States Dep’t of the Army, 111 F.3d 1485, 1490 (10th Cir. 1997). Furthermore, we
have applied the principle of generous construction to Smith’s pleadings in light
of the fact that he is not represented by counsel. See Riddle v. Mondragon, 83
F.3d 1197, 1202 (10th Cir. 1996).
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this statute imposes liability only for actions taken under state law. See District
of Columbia v. Carter, 409 U.S. 418, 424-25 (1973); Wheeldin v. Wheeler, 373
U.S. 647, 650 n.2 (1963). It simply does not apply to actions taken under federal
law. See Kotmair v. Gray, 505 F.2d 744, 746 (4th Cir. 1974) (per curiam)
(holding that section 1983 does not reach conduct by bank employees complying
with an IRS levy under 26 U.S.C. § 6331); see also Morse v. North Coast
Opportunities, Inc., 118 F.3d 1338, 1343 (9th Cir. 1997) (awarding attorney’s fees
to defendant and characterizing plaintiff’s claim under section 1983 as
“unreasonable” and “meritless” when defendants’ underlying conduct arose under
color of federal law). Thus, because Smith’s complaint alleges conduct under
color of federal law, i.e. the Internal Revenue Code, there is no liability under 42
U.S.C. § 1983.
Second, even if we were generously to construe Smith’s complaint as
raising a Bivens-style claim for conduct under color of federal law (which it does
not), see Bivens v. Six Unknown Named Federal Narcotics Agents, 403 U.S. 388(1971), the claim still would be deficient as a matter of law because the
underlying constitutional right that Smith asserts -- due process under the Fifth
Amendment -- does not apply to the conduct of private actors who are defendants
in this case. The Fifth Amendment establishes that “[n]o person shall . . . be
deprived of life, liberty, or property, without due process of law.” U.S. Const.
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amend V. From the earliest interpretations of this amendment, courts have agreed
that the Fifth Amendment protects against actions by the federal government. See
Barron v. The Mayor & City Council of Baltimore, 32 U.S. (7 Pet.) 243, 247, 250-
51 (1833). The amendment provides no protection against private actions by
private individuals. See Public Utils. Comm’n v. Pollak, 343 U.S. 451, 461
(1952); cf. The Civil Rights Cases, 109 U.S. 3, 23-25 (1883) (interpreting state
action requirement under the Fourteenth Amendment). A private individual falls
within the scope of our Constitution’s due process guarantees only when the
private actor may “be fairly said to be a state actor.” See Lugar v. Edmondson
Oil Co., 457 U.S. 922, 937 (1982); Gilmore v. Salt Lake Community Action
Program, 710 F.2d 632, 635-36 (10th Cir. 1983) (applying the state action tests
under the Fourteenth Amendment to a claim under the Fifth Amendment, to find
no federal action in a local community action program regulated and funded in
part by the federal government). In this case, where the only “act” by the
defendants was to comply with a lawful levy from the Internal Revenue Service,
no reasonable person could conclude that the defendants can fairly be
characterized as governmental actors.
Third, even if we could fairly characterize the defendants’ conduct as
government action, they are entitled to a complete defense under 26 U.S.C. §
6332(e). As part of its policy of encouraging efficient collection of federal taxes
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and voluntary compliance with the tax laws, see United States v. National Bank of
Commerce, 472 U.S. 713, 721 (1985), Congress has declared that any person who
honors an IRS levy against a taxpayer’s property “shall be discharged from any
obligation or liability to the delinquent taxpayer and any other person with respect
to such property . . . .” 26 U.S.C. § 6332(e). Although there may be some
disagreement between the circuits as to whether section 6332(e) creates a
“defense” or an “immunity,” this provision clearly bars money damages against a
person who has complied with an IRS levy. See Kentucky ex rel. United Pac. Ins.
Co. v. Laurel County, 805 F.2d 628, 636 (6th Cir. 1986) (holding that defendants
were entitled to a “complete defense” under prior version of section 6332(e));
Burroughs v. Wallingford, 780 F.2d 502, 503 (5th Cir. 1985) (holding defendants
“immune” from liability as a result of prior version of section 6332(e)) Schiff v.
Simon & Schuster, Inc., 780 F.2d 210, 212 (2d Cir. 1985) (holding that the
defendants were discharged from liability as a result of prior version of section
6332(e)). In Smith’s case, he has offered no fact or law to contradict the clear
mandate of section 6332(e). As a result, we hold that the defendants here are
discharged from any potential liability to Smith arising from their compliance
with the IRS levy on Smith’s checking account.
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III.
Smith’s ancillary claims are equally meritless. On appeal, Smith appears to
be contending that he never consented to a trial of his case by a magistrate judge
under 28 U.S.C. § 636(c). However, his case was not “tried” by a magistrate
judge. Instead, the district court referred the defendants’ motion to dismiss to the
magistrate judge for a hearing and recommendations under 28 U.S.C. §
636(b)(1)(B). The magistrate judge delivered his recommended findings and
conclusions to the district court, which then considered the plaintiff’s objections,
all as required by, and in compliance with, 28 U.S.C. § 636(b)(1)(C). The district
court’s dismissal of Smith’s complaint under Rule 12(b)(6) did not violate
Smith’s right to a jury trial under the Seventh Amendment: When Smith failed to
plead any facts that would overcome the defendants’ complete defenses, there
were no facts to be “tried” by a jury. In this posture, Smith’s lack of consent to
the magistrate judge is simply irrelevant.
Smith’s next issue involves his allegation that the magistrate judge denied
him his Sixth Amendment right to effective assistance of counsel by refusing to
allow Smith to use “non-bar counsel.” We need not consider Smith’s rather
implausible argument that a plaintiff in a civil rights suit has a Sixth Amendment
right to counsel because Smith has waived this issue on appeal. Smith failed to
raise this issue in his objections to the magistrate judge’s recommended findings
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and conclusions. As a result, he may not raise the claim now. See Ayala v.
United States, 980 F.2d 1342, 1352 (10th Cir. 1992); Moore v. United States, 950
F.2d 656, 659 (10th Cir. 1991); (see also Aplee. Supp. App., at 43 (warning the
plaintiff that he risked waiver of his right to appeal if he failed to raise his
objections before the district court)).
Smith also contends that the dismissal of his complaint prevented him from
pursuing discovery against the defendants. Smith has failed to point to any facts
that he might discover either through depositions or interrogatories that would be
material to the court’s consideration of the Rule 12(b)(6) motion. Nevertheless,
even if Smith had pointed out how discovery would be useful for the motion to
dismiss, he has waived this claim by failing to raise it before the district court.
Smith’s final contention of error involves his complaint that the district
court should have responded to his argument that by captioning its documents
“UNITED STATES DISTRICT COURT,” the court below was functioning as a
“territorial” court rather than as an Article III court. Smith has raised this
argument at every stage of this litigation, but he has yet to clarify his point. As
best we can determine, Smith has cobbled together stray quotations from various
sources to claim that a federal district court can function either as a “territorial”
court under Article I or as a “constitutional” court under Article III. Without
giving any credence to Smith’s bizarre argument, and despite our inability to see
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how Smith’s distinction would matter in this case, we hold that the United States
District Court for the District of Colorado was fully empowered under Article III
to consider Smith’s constitutional claims.
IV.
In their brief, the appellees have asked this court to award them their
attorneys fees and costs under Fed. R. App. P. 38 because of the frivolousness of
Smith’s appeal. See Burroughs v. Wallingford, 780 F.2d 502, 503 (5th Cir. 1986)
(awarding double costs and attorneys fees for a frivolous appeal of a dismissal
under 26 U.S.C. § 6332). We note, however, that we may not award such a
sanction under Rule 38 without a separately filed motion or notice. See Fed. R.
App. P. 38, advisory committee’s note (1994 Amendment). Nevertheless, we
have concluded that Smith’s conduct both here and in the district court cannot be
overlooked; to tolerate Smith’s conduct in this case is to risk allowing Smith to
inflict this conduct on other courts in this circuit. See Support Sys. Int’l, Inc. v.
Mack, 45 F.3d 185, 186 (7th Cir. 1995) (per curiam). Therefore, under Rule 38,
we now order the appellant Michael Duane, Smith to show cause why he should
not be sanctioned in the amount of $500, payable to the attorneys for the
defendants. Furthermore, this sanction shall include the additional condition that
the Clerk of Court for this circuit shall not accept any new appeals from Smith in
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any civil matters, excluding habeas corpus petitions, until Smith has certified,
under oath, that he has satisfied this sanction. Cf. Mack, 45 F.3d at 186.
In summary, then, we AFFIRM the judgment of the district court, and we
ORDER the appellant to SHOW CAUSE why he should not be sanctioned for his
frivolous appeal.
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