Petition — G. M. Leasing Corp. v. United States

Sees

FILED

y 4 7 = 8 5 9 ve Supreme Court, U.S 71

No. A-431 dEC 14 1977

a, K, JR., CLERK

in the Supreme Court of the

United States

October Term, 1977

G. M. LEASING CORP., and

GEORGE I. NORMAN, IIL,

Petitioners,

Vv.

THE UNITED STATES OF AMERICA, et al.,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE TENTH CIRCUIT

JOSEPH JAY BULLOCK

Attorney for Petitioners

353 East 300 South

Salt Lake City, Utah 84111

INDEX

Page

I I ii iccecsseiesimdnciaenninnciiinniahonniion 2

Oa cieeiilnctialenatiabaiien 2

QUESTIONS PRESENTED .............................-.- 3

SN a ica dcea Lanes nsesissiieetbniabionliadon 3

REASONS FOR GRANTING THE WRIT... 4

ELLE A MINE Ae AN: RARE LON 6

IIIS, TIL inistcicnsinecitnsaltiteesenliopeabamaimiilaigielaiiiiins A-1

CITATIONS

G. M. Leasing Corp. v. United States, et al.,

Unreported District Court Decision .................. 2

G. M. Leasing Corp. v. United States, et al.,

429 U.S. B88 (1975) on.cneeccccccecccecccnecsoccsneesosesoeee 2

G. M. Leasing Corp. v. United States, et al.,

514 F.2d 935 (10th Cir., 1975) .00000.. ee. 2

G. M. Leasing Corp. v. United States, et al.,

560 F.2d 1011 (10th Cir. 1977) 0000.0... 2

Bivens v. Six Unknown Named A gents of

Federal Bureau of Narcotics,

Ge TEED, GN CI caiccientcsnceeecesesseeenseenee 4

Bivens v. Six Unknown Named A gents of

Federal Bureau of Narcotics,

456 F.2d 1339 (2nd Cir. 1972)... 4

ii

CONSTITUTIONAL PROVISION

Fourth Amendment to the Constitution of the

United States:

The right of the people to be secure in their per-

sons, houses, papers, and effects, against unreasonable

searches and seizures, shall not be violated, and no

Warrants shall issue, but upon probable cause, sup-

ported by Oath or affirmation, and particularly de-

scribing the place to be searched, and the persons or

things to be seized.

en

l

in the Supreme Court of the

United States

October Term, 1977

No. A-421

G. M. LEASING CORP., and

GEORGE 1. NORMAN, IIL.,

Petitioners,

v.

THE UNITED STATES OF AMERICA, et al.,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE TENTH CIRCUIT

The petitioners petition for a writ of certiorari to

review the judgment of the United States Court of

Appeals for the Tenth Circuit in this case.

2

OPINIONS BELOW

The findings of fact and conclusions of law, to-

gether with the judgment rendered in the United States

District Court were unreported.

The opinion of the Court of Appeals, affirming in

part and reversing in part the United States District

Court for the District of Utah, is reported at 514 F.2d

935 (10th Cir., 1975).

The opinion of the United States Supreme Court,

affirming in part and reversing in part the decision of

the United States Court of Appeals for the Tenth Cir-

cuit, is reported at 429 U.S. 338 (1975).

The opinion of the United States Court of Appeals

for the Tenth Circuit (Appendix A, infra A-1), re-

versing and remanding to the United States ,vistrict

Court for the District of Utah, is reported at 560 F.2d

1011 (10th Cir. 1977).

JURISDICTION

The judgment of the Court of Appeals was entered

on August 19, 1977, (Appendix A, infra A-1). By

order dated November 14, 1977 Mr. Justice White

extended the time for filing a petition for writ of cer-

tiorari to and including December 14, 1977. The juris-

diction of this Court is invoked under 28 U.S.C.

1254(1).

3

QUESTIONS PRESENTED

Whether, having violated petitioners’ Fourth

Amendment rights by an intrusion upon their private

property without proper consent or valid search war-

rant, is an agent of the United States immune from the

payment of money damages where the agent acted in

reliance upon the erroneous advice of counsel.

STATEMENT

In connection with an investigation of the income

tax liability of the taxpayer, the Internal Revenue Ser-

vice determined deficiencies and made jeopardy assess-

ments pursuant to section 6861 (a) of the Internal Rev-

enue Code of 1954.

For the purpose of levying on property subject to

seizure, agents of the Internal Revenue Service went

to petitioners’ office, a cottage-type building and made

a warrantless, forced entry.

In G. M. Leasing Corp., supra, pp 2 this Court

held the warrantless entry into the petitioners’ office

violated the taxpayers’ Fourth Amendment rights.

Having determined a violation of the petitioners’

Fourth Amendment rights had occurred, this Court re-

manded the case to the Court of Appeals for the pur-

pose of determining whether the petitioners were en-

titled to money damages or, in the alternative, was the

defendant immune from the payment of such damages.

4

The Court of Appeals held, relying upon Bivens

v. Six Unknown Federal Narcotic Agents, 456 F.2d

1339 (2nd Cir., 1972), that although no absolute im-

munity was available, the petitioners were neverthe-

less not entitled to money damages since the agents

relied upon the advice of counsel that the seizure could

be undertaken as it was.

REASONS FOR GRANTING THE WRIT

1. This Court reserved its consideration of the im-

munity question, both in G. M. Leasing Corp. v. United

States, supra, pp. 2 and in Bivens v. Six Unknown

Federal Narcotics Agents, 403 U.S. 388 (1971).

Each Court of Appeals upon remand held that no

absolute immunity was available but that the defend-

ant(s) in each case were nevertheless not liable for the

payment of money damages since the acts complained

of were, in each case, undertaken in good faith.

The question of whether there will be immunity

based on good faith, so as to preclude the liability for

money damages, has not been the subject of considera-

tion by this Court.

This Court should grant the writ for the purpose

of considering whether good faith on the part of the

warrantless intruders shall be a sufficient basis for

denial of money damages.

2. The Court of Appeals held that good faith

could be based on erroneous advice of counsel.

5

The warrantless violation of the Fourth Amend-

ment in Bivens, supra, resulted in an arrest of the peti-

tioner. The Fourth Amendment violation in Bivens,

supra, was excused on the basis that the F.B.I. nar-

cotics agents’ lives are in constant danger in performing

functions wherein they should not be Jeft defenseless.

The unlawful act was undertaken for the purpose of

apprehending a criminal.

The Fourth Amendment violation in this case was

excused on the basis that it made no sense to expect

the agent to second-guess the advice of counsel and,

accordingly, the agent acted in good faith.

The unlawful advice of counsel upon which the

agent relied was obtained from a superior, a person who

also represented the United States in the same civil

proceeding.

No lives were in jeopardy, nor was any attempt

being made to escape apprehension. The objective of

the search was to obtain property to be used for the

purpose of satisfying a civil judgment and/or to obtain

evidence to be utilized in connection with Federal tax

proceedings.

This Court has not considered the distinction be-

tween warrantless intrusions in the course of apprehend-

ing a criminal and an intrusion in the course of obtain-

ing collection of a civil obligation.

The Court should grant the writ for the purpose of

considering whether a reliance by the agent upon the

6

improper advice of counsel will permit the agent to

claim he acted in good faith.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted,

Joseph Jay Bullock,

Attorney for Petitioners

December 1977

A-l

APPENDIX A

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

No. 74-1436

G. M. LEASING CORP.,

Plaintiff-A ppellee,

and

GEORGE I. NORMAN III,

Plaintiff-Intervenor,

v.

THE UNITED STATES OF AMERICA, et al,

Dependants- A ppellants.

ON REMAND FROM THE

SUPREME COURT OF THE UNITED STATES

Myron C. Baum, Acting Assistant Attorney General;

Gilbert E. Andrews, Jonathan S. Cohen, and Stephen

M. Gelber, Attorneys; Tax Division, Department of

Justice, Washington, D.C.; and Ramon M. Child,

United States Attorney, for Defendants-Appellants.

Richard J. Leedy, Salt Lake City, Utah, for Plaintiff-

Appellee.

Before HILL, SETH and BARRETT, United States

Circuit Judges.

HILL, Circuit Judge.

A-2

We have this case on remand, G. M. Leasing Corp.

v. United States, ........ nen (1977), and must

address the questions of money damages against agents

of the Internal Revenue Service (IRS) for violations

of Fourth Amendment rights of G. M. Leasing Corp.

(Corporation) committed in levying on property pur-

suant to a jeopardy assessment and of the applicability

of the doctrine of official immunity.

We will recount the fact and prior proceedings

briefly." George I. Norman, Jr., failed to file proper

personal income tax returns for the calendar years 1970

and 1971. A subsequent investigation resulted in jeop-

ardy assessments against Norman and his wife in excess

of $1,000,000. IRS determined that Corporation, os-

tensibly a luxury car and boat leasing business, was

Norman’s alter ego and that the corporate assets were

subject to levy to satisfy Norman's tax liability. IRS

levied upon certain of Norman’s personal assets and

certain assets of Corporation. We are presently con-

cerned with activities of IRS agents in effecting the

levy on assets of Corporation contained within a cottage

used as its business office in Salt Lake City, Utah. On

March 21, 1973, agents came to the cottage and gained

entry with the aid of a locksmith. Norman’s son,

George I. Norman III, who was using the cottage as

a residence, arrived at that point and inquired what

the agents were doing. As a result of their uncertainty

as to whether the cottage was a residence or a business,

1 The facts are more fully set out in the prior opinions. G.M.

Leasing Corp. v. United States, 514 F.2d 935 (10th Cir. 1975),

iulddedl | os, le

A-3

the agents left without seizing any property. They re-

turned on March 23, 1973, again entered with the aid

of a locksmith, and seized the furnishings and some

business records of Corporation.

This action, originally filed May 3, 1973, in the

United States District Court for the District of Utah,

challenged the jeopardy assessments against Norman

and his wife, challenged the IRS determination that

Corporation was Norman’s alter ego, and claimed dam-

ages against individual IRS officers for their warrant-

less seizure of assets.” ‘The United States counter-

claimed for foreclosure on the jeopardy assessment.

After a non-jury trial, the district court found, inter

alia, that the assessment was erroneous, the Normans

had no tax liability for the vears 1970 and 1971, Corp-

oration was not Norman’s alter ego, the agents’ activ-

ities constituted an illegal search and seizure, Agent

Philip J. Clayton participated in the search and seizure

with malice, and Corporation was entitled to recover

money damages in an undetermined amount. The dis-

trict court denied the government's counterclaim. On

these issues, we reversed the district court. G. M. Leas-

ing Corp. v. United States, 514 F.2d 935 (10th Cir.

1975).

The Supreme Court granted certiorari on Corpor-

ation’s petition, 423 U.S. 1031 (1975), to decide

2 Norman’s son was permitted to intervene and filed a claim with

regard to stock seized by the IRS officers to which he claimed

ownership. His claim has been previously disposed of. GM.

Leasing Corp. v. United States, supra.

A-4

whether the IRS agents violated Corporation's Fourth

Amendment rights in conducting the seizure of assets.

The Court determined that although the agents prop-

erly levied upon Corporation’s property located in places

where no privacy interest was involved,’ the warrantless

entry into the cottage constituted an unreasonable

search.

We are now directed to consider the issue of

damages against the individual agents.

The case of Bivens v. Six Unknown Federal Nar-

cotics Agents, 403 U.S. 388 (1971), makes it clear that

a cause of action for damages will lie against a federal

officer or agent who violates Fourth Amendment rights

under color of his authority. ‘The remaining question is

whether the dcctrine of official inimunity shields the

IRS agents from such an action, for it is now the law

of the case that they violated Corporation’s Fourth

Amendment rights in entering the cottage without a

search warrant.

A modern statement of the doctrine of official im-

munity is found in Barr v. Matteo, 360 U.S. 564 (1959).

The Court there upheld a claim of absolute privilege by

the director of the Office of Rent Stabilization against

a libel action for publishing a press release detailing

reasons for termination of personnel. The Court said

3} The IRS had also levied upon several luxury automobiles titled

to Corporation. The Court said, ‘“‘The seizures of the automobiles

in this case took place on public streets, parking lots, or other

open places, and did not involve any invasion of privacy.” ........

i F so ; 50 L.Ed. 2d at 543.

A-5

that the doctrine of official immunity, largely of judicial

making, represents a balance between conflicting inter-

ests: the rights of individual citizens to seek redress for

wrongs committed by officials of the government and

the need for such officials to be free to exercise their

duties unfettered by the prospect of being called to de-

fend themselves against damage suits for acts done in

the course of their duties. It is applied when, as a

policy matter, the latter interest outweighs the former.

The Court reasoned that, given the complexities of gov-

ernment with the delegation and redelegation of auth-

ority, the protection of the doctrine should not be

limited to “high government officials.” So long as an

act is done within the scope of an officer’s authority,

the pertinent inquiry is whether the act involves the

exercise of discretion by a government officer which

justifies the protection of the doctrine.

We applied the doctrine in Garner v. Rathburn,

346 F.2d 55 (10th Cir. 1965). In that case, an injured

military laborer sought to recover against the civilian

supervisor of a military paving maintenance crew, alleg-

ing that the supervisor was negligent in causing de-

fective equipment t» be used. We held the suit was

barred by the doctrine of official immunity; selecting

equipment was within the scope of the supervisor's

duties and demanded exercise of judgment and discre-

tion of such nature as to warrant the absolute pro-

tection of the doctrine. We discussed the nature of of-

ficial immunity :

The federal standard of immunity indicates

that officials of the Federal Government are not

A-6

personally liable for alleged torts which result

from acts done within the tramework or scope of

their duties which necessarily involve the exercise

of discretion which public policy requires be

made without fear of saccenel Waaie. ... The

purpose for the rule of the immunity is obvious.

Government officials must be free to perform

their duties unafraid that what they do may re-

sult in personal damage suits. (Footnotes

omitted. )

346 T.2d at 56.

The first question in applying the doctrine, whether

the conduct was in the scope of an officer's duties, has

been the source of some confusion. As Judge Hand

wrote in Gregoire v. Biddle, 177 F.2d 579 (2d Cir.

1949) :

[I]t can be argued that official powers, since

they exist only ie the public good, never cover

occasions where the public good is not their aim,

and hence that to exrecise a power dishonestly is

necessarily to overstep its bounds. A moment's

reflection shows, however, that that cannot be

the meaning of the limitation without defeating

the whole doctrine. What is meant by saying

that the officer must be acting within the scope

of his power cannot be more than that the occa-

sion must be such as would have justified the act,

if he had been using his power for any of the

purposes on whose account it was vested in him.

177 F.2d at 581. It is thus clear that so long as a

given function is within the scope of an officer's auth-

ority, that he performs it unlawfully does not carry

it outside that scope.

A-7

It was among the duties of the IRS officers in the

present case to levy on property pursuant to jeopardy

assessments. Although they did so unconstitutionally,

they were acting within the scope of their duties.

Is the duty of levying upon property in satisfaction

of IRS jeopardy assessments of such a nature as to

justify the absolute protection of the doctrine! In Sow-

ders v. Damron, 457 F.2d 1182 (10th Cir. 1972), we

held the doctrine of official immunity protected an IRS

officer from civil liability for fraudulently obtaining the

signature of a taxpayer on a return. The IRS agents

cite this case for the proposition that they are entitled

to official immunity for all acts done within the scope

of their duties. It may well be, however, that the scope

of an officer's duties includes acts for which he is en-

titled to immunity as well as acts for which he is not,

for the nature of the particular duty performed deter-

mines the applicability of the doctrine. Doe v. Mc-

Millan, 412 U.S. 306 (1973); Barr v. Matteo, supra;

Jackson v. Kelly, ........ F.2d ........ (10th Cir. 1977).

In the present case, the tax liability had been estab-

lished by the jeopardy assessments, and it had been

determined that the assets of Corporation were subject

to levy to satisfy Norman’s obligation. The agents were

directed to seize the assets. The agents’ acts were min-

isterial: The policy decisions had been made; the agents

were only to implement the levy. We do not believe

the agents, in levying on Corporation’s assets, were per-

forming a function “which necessarily involve[d] the

exercise of discretion which public policy requires be

made without fear of personal liability.” Garner v.

A-8

Rathburn, supra. The fearless, vigorous, and effective

administration of the policies of government spoken of

in Barr v. Matteo can be pursued without the protec-

tion of absolute immunity here. A contrary holding

would leave aggrieved citizens without a remedy even

for malicious Fourth Amendment incursions.*

That is not to say that IRS officers are entitled to

no protection whatsoever. In Bivens v. Six Unknown

Federal Narcotics Agents, 456 F.2d 1339 (2nd Cir.

1972), the Second Circuit similarly rejected a claim of

absolute immunity to suit for Fourth Amendment in-

cursions by federal police officers. However, the court

held that an officer is protected from liability if he acts

on a good faith belief that his conduct is not improper,

so long as that belief is reasonable. An analogous

“limited immunity” is recognized in suits against state

officers brought under 42 U.S.C. § 1983. Wood v.

Strickland, 420 U.S. 308 (1975); Scheuer v. Rhodes,

416 U.S. 232 (1974); Pierson v. Ray, 386 U.S. 547

(1967). Such a rule strikes an equitable balance be-

tween the conflicting interests dealt with previously: ©

The right of private citizens to seek judicial redr_ss is

preserved as to malicious abuses; the effective function

of yovernment is unhampered as long as conduct is

based upon an officer's honest and reasonable belief in

its la\vfulness.

‘ As the Supreme Court pointed out: “Indeed, one of the prim-

ary evils intended to be eliminated by the Fourth Amendment

was the massive intrusion on privacy undertaken in the collec-

tion of taxes pursuant to general warrants and writs of assist-

GS dcicctes US. at _......: 530 L.Ed. 2d at 545.

A-9

We believe the record is sufficient to support a

determination of the agents’ good faith. In this regard,

Corporation argues that in conducting the audit and

determining the assessment, the officers were motivated

by a vendetta against Norman. These matters, even

assuming their correctness, are peripheral; the issue is

not the officers’ attitude generally but whether they

believed they were acting in accordance with the law

in entering the cottage without a warrant.

Of principal importance is the undisputed fact that

the officers conducted the seizure upon the advice of

IRS regional counsel. It makes no sense to expect the

officers to second-guess the IRS regional attorney who

counseled them that the seizure could be undertaken as

it was. In a similar case, Jackson v. Wise, 385 F. Supp.

1159 (D. Utah 1974), the fact that an IRS agent

acted on advice of counsel was held sufficient to sup-

port a finding that his actions were in good faith. We

are satisfied that the officers entered the cottage on the

reasonable and good faith belief that their conduct was

lawful. Corporation is not entitled to recover damages

against them.

The case is reversed and remanded to the district

court with directions to dismiss the action.

‘The district court found that “Defendant Philip Clayton ma-

liciously committed said forced entry, and search and seizure.”

We specifically rejected that finding, stating “{pjart of the

basis for the trial court’s ruling .. . appears to be a finding

that appellant Clayton's participation in the search and seizure

was of a malicious character. There is no evidence in the record

to support this finding, and we must hold that it is clearly

erroneous.’ 514 F.2d at 940-941.