Zappone et al. v. United States et al., Case No. 16-4111 (COOK, Batchelder, Gibbons).

Zappone et al. v. United States et al., Case No. 16-4111 (COOK, Batchelder, Gibbons).

The Internal Revenue Service executed search-and-seizure warrants on the plaintiffs-appellants’ business during an investigation for tax evasion and seized a large amount of cash from the business’s safe. The plaintiffs contended that the IRS agents illegally pocketed a portion of the seized money, and filed administrative claims to the IRS seeking the amount allegedly stolen. Plaintiffs submitted executed power-of-attorney forms with their claims. About six months later, the IRS mailed letters denying the claims to two of the plaintiffs’ listed attorneys. By that time, however, the plaintiffs had switched counsel without notifying the IRS. The letters stated that the plaintiffs must bring suit within six months of the date of mailing of the letters in order to contest the decision.

Over eight months later, the plaintiffs sued the United States and several IRS agents for alleged torts stemming from the execution of the warrants and the alleged conversion of the cash from the safe. The district court granted summary judgment for the defendants, rejecting the plaintiffs’ requests for equitable tolling and finding that the claims against the United States were barred by the statute of limitations because they were not filed within six months of the mailing of the IRS notices of denial, and the claims against the individual special agents were barred by the two-year statute of limitations for Bivens claims in Ohio. The plaintiffs appealed.

As to the United States, the Sixth Circuit affirmed the trial court’s denial of equitable tolling. In so doing, the Court cast further doubt on the five-factor test this Circuit has historically used to evaluate whether or not to apply equitable tolling, see Jackson v. United States, 751 F.3d 712, 719 (6th Cir. 2014), strongly suggesting that it no longer has to be followed strictly. Indeed, the panel suggested a willingness to abandon the test entirely and replace it with the two-factor test the U.S. Supreme Court set out for habeas cases in Holland v. Florida, 560 U.S. 631, 649 (2010) (requiring (1) that the petitioner has been pursuing his rights diligently and (2) that some extraordinary circumstance stood in his way and prevented timely filing). The Court held that it could consider both standards in evaluating the plaintiffs’ case, and noted that “the two approaches are quite compatible and may often lead to the same result.” The Court ultimately found that the plaintiffs failed to meet the requisite burden as to the United States under either test because the IRS complied with notice requirements, the claim was a mere “garden variety claim of excusable neglect,” and the plaintiffs were not diligent in pursuing their claims.

As to the individual special-agent defendants, the Court held that the plaintiffs’ Bivens claim arose on the date of the alleged constitutional violation—the date of the search and seizure. Therefore, because the suit was filed more than two years later, the Court held that the suit was barred by the statute of limitations. In doing so, the Court confirmed well-settled precedent that the statute of limitations for a Bivens claim against federal officials for constitutional violations in Ohio is two years, as the Bivens claim takes the statute of limitations set out in the state’s residual or general personal injury statute, which in Ohio is Ohio Rev. Code § 2305.10.