-SP Georgett Said v. Encore Senior Living LLC et al, No. 5:2011cv01033 - Document 25 (C.D. Cal. 2012)
Court Description: MINUTES (IN CHAMBERS): ORDER GRANTING MOTION TO DISMISS AND DISMISSING COMPLAINT WITH PREJUDICE by Judge Virginia A. Phillips re: 10 Motion for Judgment on the Pleadings. (See document for specifics) (mrgo) Modified on 2/24/2012 (mrgo). Modified on 2/24/2012 (mrgo).
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-SP Georgett Said v. Encore Senior Living LLC et al Doc. 25 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 GEORGETTE SAID, 12 13 14 15 16 ) ) Plaintiff, ) ) v. ) ) ENCORE SENIOR LIVING ) LLC; DOES 1-60 ) INCLUSIVE, ) ) Defendants. ) ________________________ ) Case No. EDCV 11-01033 VAP (SPx) ORDER GRANTING MOTION TO DISMISS AND DISMISSING COMPLAINT WITH PREJUDICE [Motion filed on August 26, 2011] 17 18 Before the Court is a Motion to Dismiss ("Motion") 19 filed by Defendant Encore Senior Living, LLC 20 ("Defendant"). After considering the papers in support 21 of, and opposition to, the Motion, the Court GRANTS 22 Defendant's Motion. 23 24 25 26 27 28 Dockets.Justia.com 1 2 I. BACKGROUND Plaintiff Georgette1 Said was an employee of 3 Defendant. (Not. of Removal, Ex. A (Compl.) at 1.) 4 While she was working for Defendant, the Internal Revenue 5 Service ("IRS") sent Defendant a wage garnishment letter, 6 dated October 25, 2010, and a Notice of Levy 7 (collectively, "the WGL"). (Id.)2 The cover page of the 8 WGL stated that the levy against Plaintiff "attache[d] 9 the taxpayer's take-home pay," but that Plaintiff was 10 "not entitled to the exemptions under section 6334(a)(9) 11 of the Internal Revenue Code." (WGL at 2.) The Notice 12 of Levy stated that the "excemptions [sic] referred to by 13 Internal Revenue Code section 6334 are not allowed 14 because of other income that is received by [Plaintiff 15 and her husband]. What ever [sic] is normally paid to 16 [Plaintiff] should be remitted to the Internal Revenue 17 Service." (WGL at 1.) After listing the amount owed, 18 the Notice of Levy states further, 19 20 21 1 The precise spelling of Plaintiff's first name is 22 unclear. In the caption of her complaint, Plaintiff spells her name "Georgett," whereas she spells it 23 "Georgette" in the body of the complaint. (See Compl. at 1.) For consistency, the Court uses the spelling 24 "Georgette." 2 Plaintiff objects to the Court's reliance on the WGL, as it was not attached to the pleadings, but was 26 instead included as an exhibit to the Declaration of Monica Hamblet ("Hamblet Decl.") in support of this 27 Motion. (Doc. No. 11.) For the reasons set forth infra in Section III.A., the Court overrules Plaintiff's 28 objection, and relies on the WGL to resolve the Motion. 25 2 1 2 3 This levy requires you to turn over to us: (1) this taxpayer's wages and salary that have been earned but not paid, as well as wages and salary earned in the future until this levy is released, and (2) this taxpayer's other income that you have now or for which you are obligated. 4 5 (WGL at 1.) 6 7 After Defendant received the WGL, it garnished 8 Plaintiff's entire "take home pay," vacation time, and 9 "money allocated for healthcare." (Compl. at 1.) In so 10 doing, Plaintiff contends, Defendant ignored the IRS's 11 schedule for wage garnishment. (Id.) As a result, 12 Plaintiff contends she received no compensation for the 13 work she performed in violation of state and federal law. 14 (See Compl. at 2.) 15 16 Accordingly, on March 16, 2011, Plaintiff filed a 17 complaint against Defendant in the California Superior 18 Court for the County of Riverside, alleging the following 19 claims: 20 1. 21 Violation of federal minimum wage law, 29 U.S.C. § 206; 22 2. Breach of Contract; 23 3. Violation of 29 U.S.C. § 215(a)(2); 24 4. Violation of Cal. Labor Code § 203; 25 5. Violation of Cal. Minimum Wage Law. 26 Defendant removed the complaint to this Court on July 5, 27 2011. 28 3 1 On August 26, 2011, Defendant filed this Motion, the 2 Hamblet Declaration, and an Appendix of Non-Local 3 Authorities. (Doc. No. 10.) On October 11, 2011, 4 Plaintiff filed her Opposition, and on October 18, 2011, 5 Defendant filed its Reply. (Doc. Nos. 22, 24.) 6 7 8 II. LEGAL STANDARD Federal Rule of Civil Procedure 12(c) provides that 9 "[a]fter the pleadings are closed — but early enough not 10 to delay trial — a party may move for judgment on the 11 pleadings." A motion for judgment on the pleadings is a 12 vehicle for summary adjudication, but the standard is 13 like that of a motion to dismiss. Hishon v. King & 14 Spalding, 467 U.S. 69, 73 (1984); Dworkin v. Hustler 15 Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989). The 16 only significant difference is that a 12(c) motion is 17 properly brought "after the pleadings are closed -- but 18 early enough not to delay trial." Fed. R. Civ. P. 12(c); 19 Dworkin, 867 F.2d at 1192; see William W. Schwarzer, A. 20 Wallace Tashima & James M. Wagstaffe, Federal Civil 21 Procedure Before Trial § 9:319-323. 22 23 As a general matter, the Federal Rules of Civil 24 Procedure require only that a plaintiff provide "'a short 25 and plain statement of the claim' that will give the 26 defendant fair notice of what the plaintiff's claim is 27 and the grounds upon which it rests." 28 4 Conley v. Gibson, 1 355 U.S. 41, 47 (1957) (quoting Fed. R. Civ. P. 8(a)(2)); 2 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). 3 Under the Rule 12(b)(6) pleading standard, a plaintiff 4 must set forth allegations that create a "plausible" 5 entitlement to relief. Twombly, 550 U.S. at 557, 570. 6 "A pleading that offers 'labels and conclusions' or 'a 7 formulaic recitation of the elements of a cause of 8 action' does not satisfy [Rule] 8 and is subject to 9 dismissal." Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 10 1937, 1949 (2009) ("The plausibility standard is not akin 11 to a 'probability requirement,' but it asks for more than 12 a sheer possibility that a defendant has acted 13 unlawfully. Where a complaint pleads facts that are 14 'merely consistent with' a defendant's liability, it 15 stops short of the line between possibility and 16 plausibility of 'entitlement to relief.'") (citing 17 Twombly, 550 U.S. at 557, 570). 18 19 Judgment on the pleadings is proper only when there 20 is no unresolved issue of fact and no question remains 21 that the moving party is entitled to a judgment as a 22 matter of law. Torbet v. United Airlines, Inc., 298 F.3d 23 1087, 1089 (9th Cir. 2002). The court must assume the 24 truthfulness of all material facts alleged and construe 25 all inferences reasonably to be drawn from the facts in 26 favor of the responding party. Hal Roach Studios, Inc. 27 v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 28 5 1 1990). Although the scope of review is limited to the 2 contents of the complaint, the court may also consider 3 exhibits submitted with the complaint, id. at 1555 n.19, 4 and "take judicial notice of matters of public record 5 outside the pleadings," Mir v. Little Co. of Mary Hosp., 6 844 F.2d 646, 649 (9th Cir. 1988). 7 8 If a court concludes dismissal is appropriate, leave 9 to amend shall be freely given when justice so requires. 10 Fed. R. Civ. P. 15(a). "This policy is to be applied 11 with extreme liberality." Eminence Capital, LLC v. 12 Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) 13 (internal quotation marks and citation omitted). In the 14 absence of any apparent or declared reason – such as 15 undue delay, bad faith, or dilatory motive on the part of 16 the movant, repeated failure to cure deficiencies by 17 amendments previously allowed, undue prejudice to the 18 opposing party by virtue of allowance of the amendment, 19 or futility of amendment – leave sought should be "freely 20 given." Foman v. Davis, 371 U.S. 178, 182 (1962). 21 Dismissal without leave to amend is not appropriate 22 unless it is clear that the complaint could not be saved 23 by amendment. Id. 24 25 26 27 28 6 1 III. DISCUSSION 2 A. Reliance on Documents Outside the Pleadings 3 The parties dispute whether the Court may consider 4 the WGL, as it is a document not contained in the 5 parties' pleadings, but was instead introduced as an 6 exhibit to Ms. Hamblet's Declaration. "Certain written 7 instruments attached to pleadings may be considered part 8 of the pleading." United States v. Ritchie, 342 F.3d 9 903, 908 (9th Cir. 2003) (citing Fed. R. Civ. P. 10(c)). 10 "Even if a document is not attached to a complaint, it 11 may be incorporated by reference into a complaint if the 12 plaintiff refers extensively to the document or the 13 document forms the basis of the plaintiff's claim." Id. 14 (citations omitted); see also Tellabs, Inc. v. Makor 15 Issues & Rights, Ltd., 551 U.S. 308, 323 (2007) (noting 16 that "courts must consider the complaint in its entirety, 17 as well as other sources courts ordinarily examine when 18 ruling on Rule 12(b)(6) motions to dismiss, in 19 particular, documents incorporated into the complaint by 20 reference . . ."); Branch v. Tunnell, 14 F.3d 449, 454 21 (9th Cir. 1994) (overruled on other grounds in Galbraith 22 v. Cnty. of Santa Clara, 307 F.3d 1119, 1127 (9th Cir. 23 2002)) ("We have said that a document is not 'outside' 24 the complaint if the complaint specifically refers to the 25 document and if its authenticity is not questioned."). 26 27 28 7 1 Further, the Ninth Circuit has "extended the doctrine 2 of incorporation by reference to consider documents in 3 situations where the complaint necessarily relies upon a 4 document or the contents of the document are alleged in a 5 complaint, the document's authenticity is not in question 6 and there are no disputed issues as to the document's 7 relevance." Coto Settlement v. Eisenberg, 593 F.3d 1031, 8 1038 (9th Cir. 2010) (citing, inter alia, Knievel v. 9 ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005)). Numerous 10 district courts in this circuit have applied the 11 "incorporation by reference" doctrine to motions under 12 Rule 12(c). See, e.g., In re Novatel Wireless Sec. 13 Litig., __ F. Supp. 2d __, 2011 WL 5873113, *8 (S.D. Cal. 14 2011); Delgado v. United Facilities, Inc., No. 15 2:11-cv-00485-MCE-DAD, 2011 WL 1586475, *1 n.4 (E.D. Cal. 16 Apr. 22, 2011); Shepard v. Miler, No. CIV. 2:10-1863 WBS 17 JFM, 2010 WL 5205108, *2 (E.D. Cal. Dec. 15, 2010); Rice 18 v. Ralphs Foods, No. C 09–02650 SBA, 2010 WL 5017118, *3 19 (N.D. Cal. Dec. 3, 2010); Tumlinson Grp., Inc. v. 20 Johannessen, No. 2:09-cv-1089 JFM, 2010 WL 4366284, *3 21 (E.D.Cal. Oct. 27, 2010). 22 23 The Court finds that Plaintiff's Complaint 24 incorporates the WGL by reference, and that the Court may 25 therefore rely upon it in resolving this Motion. 26 Plaintiff's Complaint states: 27 28 8 Here, 1 2 3 4 5 6 The IRS sent a wage garnishment to [Defendant] which [sic] at the time was the employer of [Plaintiff]. The IRS requested that [Defendant] give them all of [Plaintiff's] "take home pay." [Defendant] took it one step further gave [sic] the IRS all her "take home pay," vacation time which [sic] was not due at the time and was not requested, and money allocated for health care, which is not part of her take home pay. IRS has a pay schedule for garnishments which [sic] [Defendant] ignored. 7 (Compl. at 1:22-27.) Plaintiff therefore alleges the 8 contents of the WGL in her Complaint, and necessarily 9 relies upon the WGL in asserting Defendant failed to 10 follow the WGL's instructions when garnishing her wages. 11 Moreover, neither party disputes the WGL's authenticity, 12 or that it is relevant to this case. Accordingly, the 13 Court may rely upon the WGL in resolving Defendant's 14 Motion under Rule 12(c). Coto Settlement, 593 F.3d at 15 1038; Novatel, 2011 WL 5873113, at *8; see also McDowell 16 v. Norfolk S. Corp., No. 2:06-CV-00038D, 2007 WL 2815743, 17 *3 (E.D.N.C. Jan. 24, 2007) (considering a Notice of Levy 18 introduced in the defendants' motion to dismiss where the 19 plaintiff's "entire claim [was] based on the Notice"). 20 21 B. "Immunity" Under 26 U.S.C. § 6332(e) and "Wages" 22 Under § 6334 23 Defendant moves to dismiss Plaintiff's Complaint 24 because it contends: (1) Plaintiff's vacation time and 25 "money allocated for healthcare" are "wages" that may be 26 garnished; (2) if the vacation time and healthcare funds 27 are not wages, the Notice of Levy required Defendant 28 9 1 garnish more than Plaintiff's "wages;" and (3) 26 U.S.C. 2 § 6332(e) immunizes Defendant from any liability arising 3 out of its compliance with an IRS notice of levy. 4 5 a. Funds Garnished 6 Defendant contends that Plaintiff's vacation time and 7 healthcare funds are "wages" that may be garnished under 8 the Notice of Levy. Plaintiff asserts that Defendant 9 garnished her pay improperly because these funds do not 10 constitute "wages." 11 12 "[I]n the application of a federal revenue act, state 13 law controls in determining the nature of the legal 14 interest which the taxpayer had in the property. This 15 follows from the fact that the federal statute creates no 16 property rights but merely attaches consequences, 17 federally defined, to rights created under state law." 18 United States v. Nat'l Bank of Commerce, 472 U.S. 713, 19 723 (1985) (internal quotations and citations omitted); 20 accord Aquilino v. United States, 363 U.S. 509, 513 21 (1960) ("[I]n the application of a federal revenue act, 22 state law controls in determining the nature of the legal 23 interest which the taxpayer had in the property."). 24 Accordingly, the Court must determine whether Plaintiff's 25 "vacation time" and "money allocated for healthcare" are 26 wages under California law. 27 28 10 1 In Suastez v. Plastic Dress-Up Co., 31 Cal. 3d 774 2 (1982), the California Supreme Court held that "vacation 3 pay is simply a form of deferred compensation," and is "in 4 effect, additional wages for services performed." 5 3d at 779-80. 31 Cal. More recently, the court reaffirmed its 6 holding in Suastez, stating that California law construes 7 8 9 10 11 the term "wages" broadly to include not only the periodic monetary earnings of the employee but also the other benefits to which he is entitled as a part of his compensation. [Citation] Courts have recognized that "wages" also include those benefits to which an employee is entitled as a part of his or her compensation, including money, . . . vacation pay, and sick pay. 12 Schachter v. Citigroup, Inc., 47 Cal. 4th 610, 618 (2009) 13 (internal citation and quotations omitted) (emphasis 14 added). Hence, under California law, Plaintiff's 15 vacation time constitutes "wages." Schachter, 47 Cal. 16 4th at 618. 17 18 Further, under California law, "wages" include 19 compensation for health benefits. See People v. Alves, 20 155 Cal. App. 2d Supp. 870, 872 (1957) ("There is no 21 doubt that payments to a health or welfare fund made as 22 part of the compensation for services rendered by 23 employees are wages as that word is used in the foregoing 24 [California Supreme Court case]."); Road Sprinkler 25 Fitters Local Union No. 669 v. G & G Fire Sprinklers, 26 Inc., 102 Cal. App.4th 765, 781 (2002) (citing Alves and 27 holding "'[w]ages' include health benefits"); see also 28 11 1 Sturgeon v. Cnty. of L.A., 167 Cal. App. 4th 630, 647 2 (2008) (noting the continuing validity of Alves). 3 Accordingly, as both Plaintiff's vacation time and 4 healthcare funds are "wages" under California law, 5 Defendant did not garnish Plaintiff's wages improperly by 6 including those funds. 7 8 Plaintiff argues, however, that under the Internal 9 Revenue Code, 26 U.S.C. § 3401, the term "wages" does not 10 include vacation time or pre-tax benefits such as 11 Plaintiff's healthcare funds. 12 argument lacks merit. (Opp'n at 2.) Plaintiff's By its own language, § 3401 13 defines wages "[f]or purposes of this chapter" only, 14 i.e., Chapter 24 of Title 26. 26 U.S.C. § 3401(a). 15 Chapter 24 includes §§ 3401 through 3406. It does not, 16 however, include the provisions at issue here, which are 17 contained in Chapters 63 (Assessment) and 64 18 (Collection). Accordingly, the definition provided in 19 § 3401 does not apply here. 20 21 The Court finds, therefore, that the funds Defendant 22 garnished were "wages." As the Court finds that 23 Plaintiff's vacation time and healthcare funds are 24 "wages" under California law, it need not reach 25 Defendant's second argument; i.e., that garnishing those 26 funds was proper because the Notice of Levy required 27 Defendant garnish more than Plaintiff's "wages." 28 12 1 b. Immunity Under 26 U.S.C. § 6332(e) 2 With certain exceptions inapplicable here, under the 3 Internal Revenue Code, any person who is "in possession 4 of (or obligated with respect to) property or rights to 5 property subject to levy upon which a levy has been made 6 shall, upon demand of the Secretary, surrender such 7 property or rights (or discharge such obligation) to the 8 Secretary . . . ." 26 U.S.C. § 6332(a). A person who 9 fails to surrender the property subject to levy is 10 "liable in his own person and estate to the United States 11 in a sum equal to the value of the property or rights not 12 so surrendered, . . . together with costs and interest on 13 such sum . . . ," and is also liable for a penalty equal 14 to 50 percent of that amount. 26 U.S.C. § 6332(d). "[A] 15 refusal to honor the levy [is] at the third person's own 16 risk." Farr v. United States, 990 F.2d 451, 456 (9th 17 Cir. 1993). 18 19 "Of course, a third person put in that position might 20 well complain that he is being forced to negotiate 21 between the Scylla of IRS fury and the Charybdis of 22 taxpayer vengeance every time a levy is made. Congress in 23 its wisdom has made some provision for that difficulty." 24 Id. Accordingly, under 26 U.S.C. § 6332(e), a person who 25 "surrenders such property or rights to property . . . to 26 the Secretary" is "discharged from any obligation or 27 liability to the delinquent taxpayer and any other person 28 13 1 with respect to such property or rights to property 2 arising from such surrender or payment." Id. (quoting 26 3 U.S.C. § 6332(e)). 4 5 Courts have interpreted the statutory immunity in 6 § 6332(e) to provide that if a third party honors a levy, 7 that party is "discharged from any obligation or 8 liability to the delinquent taxpayer with respect to such 9 property." Nat'l Bank of Comm., 472 U.S. at 721. Hence, 10 for third parties that comply with a Notice of Levy, 11 "§ 6332(e) provides the third party an absolute defense 12 against any subsequent claim by a delinquent taxpayer or 13 any other person." United States v. Hemmen, 51 F.3d 883, 14 887–88 & n.3 (9th Cir. 1995) (emphasis added). 15 16 Here, Defendant complied with the Notice of Levy, and 17 garnished Plaintiff's pay in accordance with the notice. 18 Defendant is therefore statutorily immune from "any 19 subsequent claim" arising out of its actions. Thus, 20 Plaintiff cannot maintain her claims against Defendant. 21 22 Plaintiff nevertheless contends that Defendant had a 23 duty as Plaintiff's employer to "inquire as to the 24 validity of the IRS request," including the provision in 25 the notice stating Plaintiff did not qualify for any 26 exemptions under § 6334. (Opp'n at 2; WGL at 1.) 27 Defendant had no such obligation. 28 14 1 Once the IRS served a Notice of Levy on Defendant, it 2 "had a legal obligation under § 6332(a) to turn over to 3 the IRS [Plaintiff's] [income]; [Defendant] could not 4 challenge the validity of the levy." Moore v. Gen. 5 Motors Pension Plans, 91 F.3d 848, 851 (7th Cir. 1996); 6 Farr, 990 F.2d at 456 (noting that § 6332(e) saves a 7 third person served with a levy from being "forced to 8 negotiate between the Scylla of IRS fury and the 9 Charybdis of taxpayer vengeance"); see also Schiff v. 10 Simon & Schuster, Inc., 780 F.2d 210, 212 (2d Cir. 1985) 11 (holding that a dispute relating to the underlying tax 12 assessment does not alter the obligation to honor the 13 levy and noting that "arguments challenging tax levy are 14 more appropriately brought in an action against the 15 government"); accord Nat'l Bank of Commerce, 472 U.S. at 16 727 ("a bank served with a notice of levy has two, and 17 only two, possible defenses for failure to comply with 18 the demand: that it is not in possession of the property 19 of the taxpayer, or that the property is subject to a 20 prior judicial attachment or execution."). Accordingly, 21 as Defendant had no obligation to "inquire as to the 22 validity of the IRS request," Plaintiff's contention 23 lacks merit. (Opp'n at 2.) 24 25 Additionally, Plaintiff contends that Defendant 26 should have inquired about the validity of the Notice of 27 Levy because the notice stated Plaintiff did not qualify 28 15 1 for an exemption under § 6334. In addition to the 2 reasons set forth above, this contention lacks merit as 3 it contravenes the governing federal regulations. Under 4 those regulations, where, as here, the Notice of Levy 5 states that "no amount of the taxpayer's wages, salary, 6 or other income is exempt from levy," the employer "may 7 rely on such notification in paying over amounts pursuant 8 to the levy." 26 C.F.R. § 301-6334-2. Hence, Defendant 9 was entitled to rely on the IRS's determination that 10 Plaintiff did not qualify for an exemption under § 6334. 11 12 Accordingly, as Defendant is immune under § 6332(e), 13 and as Plaintiff's arguments to the contrary all fail, 14 the Court GRANTS Defendant's Motion. 15 16 17 IV. CONCLUSION As Defendant complied with the Notice of Levy, it is 18 statutorily immune from suit under § 6332(e). Further, 19 as Plaintiff's complaint is based entirely on Defendant's 20 compliance with the Notice of Levy, and as Defendant 21 enjoys immunity for complying with the notice, the Court 22 finds that it is "absolutely clear" amendment would be 23 futile here. See Sands v. Lewis, 886 F.2d 1166, 1168 24 (9th Cir. 1989) (dismissal of a pro se complaint without 25 leave to amend is proper where it is "absolutely clear 26 that the deficiencies of the complaint could not be cured 27 by amendment"). The Court therefore GRANTS Defendant's 28 16 1 Motion and DISMISSES Plaintiff's Complaint WITH 2 PREJUDICE. 3 4 5 Dated: 6 February 24, 2012 VIRGINIA A. PHILLIPS United States District Judge 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17
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