MAGISTRATE RECOMMENDS DISMISSAL OF COMPLAINT FOR FAILURE TO STATE CLAIM.

                 IN THE UNITED STATES DISTRICT COURT

REPORT

I.

BACKGROUND.

[2] During the years 1983 through 1987, the Plaintiffs, who are married, and their four children, lived in Arizona. Plaintiff Lindy Aldridge worked as an independent truck driver. The Plaintiffs now live in Priest River, Idaho, and Lindy Aldridge asserts that he is disabled. Plaintiffs initially brought suit against the state of Arizona, the Arizona Department of Revenue, and assistant attorney general Edwinus Van Vianen (collectively, "the Arizona Defendants"). They alleged that the Arizona Defendants improperly assessed income earned for the years 1983-1987, improperly assessed taxes, failed to credit them with certain deductions, failed to take action before the ten-year statute of limitations ran out, and obtained a judgment against them without a hearing.

[3] On June 22, 2000, the Court entered an Order approving the parties' stipulation to dismiss the Arizona Defendants. (Docket #24 and #25.)

[4] Plaintiffs also brought suit against the Internal Revenue Service and the United States (collectively, "the government Defendants"), alleging that the IRS acted in concert with the Arizona Defendants. (Plaintiffs' complaint, docket #1, at paragraph 10.)

[5] Plaintiffs allege that they did not have any taxable income for the years 1983-1987, because the expenses of working as an independent trucker were very high and because they were entitled to take deductions for their four children. Plaintiffs state that they no longer have any financial records for the period in question, however, because they were lost over time.

[6] A review of the documents attached to Plaintiffs' complaint reveals that Plaintiffs filed for bankruptcy under Chapter 7 on January 11, 1988, and that a discharge of the debtors was granted on May 10, 1988.

[7] On November 11, 1996, a summons and complaint were filed in the Arizona Tax Court by the state of Arizona and the Arizona Department of Revenue against Plaintiff Sylvia Diane Aldridge, seeking $3,347.28 in taxes and $1,090.90 in penalties for the years 1983-1987.

[8] On September 16, 1999, a summons and complaint were filed in the Arizona Tax Court by the state of Arizona and the Arizona Department of Revenue against Plaintiffs Lindy Aldridge and Sylvia Diane Aldridge, as husband and wife, seeking $2,942.44 in taxes and $959.80 in penalties for the years 1983-1987.

[9] After the summons and complaint were filed, the Arizona Department of Revenue performed audits of Sylvia's tax returns for 1983-1987 (she filed separately), and determined that she owed $4,297.86 in taxes, penalties, and interest for 1983; $169.29 for 1984; $1330.43 for 1985; $4,147.26 for 1986; and $918.35 for 1987. In each of the audits, Sylvia was given a dependents deduction.

[10] On August 10, 1999, a judgment was obtained in the Arizona Tax Court against Plaintiffs for $3,347.28 in taxes, plus $1,023.98 in penalties, and plus $7,666.26 in interest, for the period of 1983- 1987.

[11] Plaintiffs now live in Idaho and brought the instant suit alleging many common law causes of action and seeking a declaratory judgment that no taxes are owed, as well as compensatory damages, attorneys fees, and punitive damages.

II.

STANDARD OF REVIEW.

[12] A motion to dismiss should not be granted "unless it appears beyond doubt that Plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Clegg v. Cult Awareness Network, 18 F.3d 752, 754 (9th Cir. 1994). When a complaint or portion thereof is tested as to the legal sufficiency of the claims for relief, all allegations of material fact in the complaint are taken as true and construed in the light most favorable to the moving party. Buckey v. County of Los Angeles, 968 F.2d 791, 794 (9th Cir. 1991), cert. denied, 506 U.S. 909 (1992).

[13] The Ninth Circuit has held that "in dismissals for failure to state a claim, a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegations of other facts." Cook, Perkiss & Liehe, Inc. v. Northern California Collection Service, Inc., 911 F.2d 242, 247 (9th Cir. 1990). While amendments are liberally permitted under Fed.R.Civ.P.15(a), the district court may deny leave to amend when there has been an undue delay in bringing the motion, and the opposing party would be unfairly prejudiced by the amendments. U.S. v. Pend Oreille Public Utility Dist. No.1, 28 F.3d 1544, 1552-53 (9th Cir. 1994), cert. denied, 115 S.Ct. 1356 (1995).

III.

THE GOVERNMENT DEFENDANTS' MOTION TO DISMISS.

[14] The United States, and its agency, the Internal Revenue Service, have moved to dismiss the complaint on the grounds that the government is entitled to claim sovereign immunity, and the Plaintiffs have failed to state a claim upon which relief can be granted.

[15] In their motion, the government Defendants assert that the Plaintiffs fail to state a claim upon which relief could be granted. A review of the Plaintiffs' complaint reveals that the government Defendants are only mentioned in a few allegations. In paragraphs 4 and 5 of the complaint, the government Defendants are identified. (Docket #1.) In paragraphs 10 and 39 of the Plaintiffs' complaint, the government Defendants are alleged to have acted in concert with the Arizona Defendants. Id. In paragraphs 27, 28, and 29 of the Plaintiffs' complaint, it is alleged that the government Defendants are liable for injuries or damages resulting from their acts or for failing to prevent the acts of the other Defendants. Id. The Plaintiffs do not make specific allegations as to any acts undertaken by the government Defendants, nor is there any indication in the documents attached to Plaintiffs complaint that there was ever a federal component to the tax collection action by the Arizona Defendants.

[16] Plaintiffs have responded to the motion by arguing that the government Defendants are liable because the judgment entered in Arizona Tax Court was obtained by using information that was provided by the IRS which was a violation of the bankruptcy discharge order. Plaintiffs state that this is "presumed and not rebutted." (Plaintiffs' brief in response to the U.S. motion, docket 20, page 2, paragraph 1.)

[17] Plaintiffs' argument falls to take into account that they have the burden of proving their allegations. The record before the Court is completely void of any indication that the government Defendants were in any way involved in the action taken by the state of Arizona to collect income tax. On the face of the complaint, the Plaintiffs have not alleged any "short plain statements of fact" against the government Defendants. The allegations are only conclusory and do not spell out any factual basis of their alleged claims against the government Defendants.

[18] Even if the complaint could be said to state a claim against the government Defendants, however, the District Court is not the proper forum in which to pursue such an action, because this Court does not have the authority to enforce an order of discharge issued by the Bankruptcy Court in the District of Arizona. A review of the allegations on the face of the complaint does not support finding that the Plaintiffs have otherwise stated a claim against the government Defendants and the motion to dismiss should be granted.

IV.

PLAINTIFFS' MOTION TO COMPEL PRODUCTION.

[19] Plaintiffs seek an order from the court requiring the Defendants to supply them with copies of all of the documents relative to the 1983-1987 tax years, including income tax returns, statements of income, etc., as "strict proof of the debts claimed."

[20] The motion appears to be aimed solely at the Arizona Defendants and, because they have all been dismissed, the motion to compel shall be deemed to be moot.

ORDER

[21] Based on the foregoing, the Court being otherwise fully advised in the premises, IT IS HEREBY ORDERED that Plaintiffs' motion to compel production of proof of claims (docket 19), filed January 26, 2000, is deemed to be MOOT.

RECOMMENDATION

[22] Based upon the foregoing, the Court being otherwise fully advised in the premises, the Court hereby RECOMMENDS that the government Defendants' motion to dismiss (docket #16), filed January 21, 2000, be GRANTED.

[23] Written objections to this Report and Recommendation must be filed within ten (10) days pursuant to 28 U.S.C. section 636(b)(1) and Local Rule 72.1(d), or as a result of failing to do so, that party may waive the right to raise factual and/or legal objections to the United States Court of Appeals for the Ninth Circuit.

DATED: August 3, 2000.