United States District Court, N.D. Illinois
July 16, 2004.
The opinion of the court was delivered by: PHILIP REINHARD, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, Holly Bourbon, filed a pro se complaint against
defendant, the Internal Revenue Service, claiming that she is
entitled to the return of money withheld from her tax refunds and
the removal of tax liens, both related to taxes allegedly owed
pursuant to her involvement in a former business. Plaintiff
further alleges that she has provided defendant with "all the
state documents" and has attached to her complaint a copy of an
agreed order entered in state court which, pursuant to a
settlement agreement, provides that plaintiff shall be held
"harmless and indemnified against any and all obligations of any
kind or nature whatsoever resulting from [plaintiff's] ownership
or employment with said corporation."
Defendant moved to dismiss the complaint pursuant to
Fed.R.Civ.P. 12(b)(1), contending that this court lacks subject matter
jurisdiction because plaintiff has not alleged that she has met
the statutory prerequisites for filing a tax refund action, and
pursuant to Fed.R.Civ.P. 12(b)(6), asserting that the state
court order does not preclude it from seeking to recover on
plaintiff's tax obligations. Defendant also asserts it is not a
suable entity and that the United States is the proper defendant.
Plaintiff, in her response, states that she had a "hearing" at
defendant's local office and presented it with "all court
The court grants defendant's motion to dismiss pursuant to
Rule 12(b)(6) for failure to state a claim. Plaintiff seeks to use the
state court order to preclude defendant from collecting taxes she
allegedly owes and to compel a refund of the taxes already
withheld. Because the order was issued by an Illinois state
court, this court must look to the law of Illinois to determine
whether claim preclusion (res judicata) bars defendant from
pursuing its tax claim against plaintiff. See Walsh Construction
Company of Illinois v. National Union Fire Insurance Company,
153 F.3d 830, 832 (7th Cir. 1998). Under Illinois law, res
judicata applies when: (1) there is a final judgment on the
merits by a court of competent jurisdiction; (2) there is an
identity of causes of action; and (3) there is an identity of
parties or their privies. Walsh Construction, 153 F.3d at 832.
Further, claim preclusion applies to issues that were actually
decided or could have been decided in the original suit. Walsh
Construction, 153 F.3d at 832.
In this case, plaintiff cannot prevail on her claim that
defendant is precluded from enforcing her alleged tax obligation
based on the state court order. That order contains no final
judgment as to plaintiff's tax obligations to defendant. Rather,
the order merely states she is not liable for any obligations as
between herself and the other parties to the settlement
agreement. Nor could the order provide such tax relief as the
state court lacked the authority to rule on the issue of whether
plaintiff owes certain taxes to defendant. Additionally, there is
no identity of causes of action as the state court matter had
nothing to do with plaintiff's obligations under federal tax
laws. Further, there is no identity of parties as defendant was
not involved in the state court action. Finally, the tax
obligations of plaintiff as issue here were not, and could not
be, decided in the state court action. Thus, plaintiff cannot
rely on the state court order in this action to obtain relief
related to her tax obligation to defendant. As that is the theory
upon which plaintiff's complaint is premised, the court dismisses
the complaint for failure to state a claim upon which relief may
be granted. If plaintiff is to obtain any relief under the state
court order as it pertains to indemnification, she must do so in
Alternatively, even if the complaint did state a claim under
Rule 12(b)(6), it would be properly dismissed under Rule 12(b)(1)
as plaintiff has not alleged or shown that she satisfied the
statutory prerequisites to maintain a tax refund suit. See Hefti
v. Internal Revenue Service, 8 F.3d 1169, 1173-74 (7th Cir.
Having dismissed the complaint it is not necessary to rule on
the propriety of naming the IRS as a defendant although such a
procedure is highly doubtful. See Sampson Investments v.
Sampson, 111 F. Supp.2d 1064, 1065 n. 1 (E.D. Wisc. 2000).
For the foregoing reasons, the court dismisses plaintiff's
complaint in its entirety.
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