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Zappone v. United States

United States Court of Appeals, Sixth Circuit

September 7, 2017

Todd N. Zappone; Carrie M. Zappone; Dustin A. Zappone; SNZ; DNZ, Plaintiffs-Appellants,
v.
United States of America, et al., Defendants-Appellees.

          Argued: July 27, 2017

         Appeal from the United States District Court for the Northern District of Ohio at Toledo. No. 3:15-cv-02135-Jack Zouhary, District Judge.

         ARGUED:

          William T. Whitaker, WILLIAM T. WHITAKER CO. LPA, Akron, Ohio, for Appellants.

          Sherra Wong, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellees.

         ON BRIEF:

          William T. Whitaker, WILLIAM T. WHITAKER CO. LPA, Akron, Ohio, for Appellants.

          Bruce R. Ellisen, Robert J. Branman, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellees.

          Before: BATCHELDER, GIBBONS, and COOK, Circuit Judges.

          OPINION

          COOK, CIRCUIT JUDGE.

         Todd N. and Carrie M. Zappone ("Zappones") sued the United States and several IRS agents ("Defendants"), alleging state-law and constitutional torts stemming from a search of the Zappones' business and a seizure of cash from their company safe. The district court granted summary judgment in favor of the Defendants, concluding that the claims were time barred.

         We AFFIRM.

         I.

         The Zappones own Ohio Scrap Corporation ("OSC"), a scrap-metal recycling business in Delta, Ohio. On November 8, 2012, IRS Special Agents executed search-and-seizure warrants on OSC's offices and the Zappones' home in the course of investigating alleged tax evasion and illegal restructuring. During the search, the Special Agents arrested the Zappones and seized their computers, cell phones, business records, and a large quantity of cash from the company safe. When the Special Agents took the money to The Brink's Company after the search, the security company "counted [it] and issued a receipt . . . in the amount of $1, 264, 000." But the Zappones maintain that the safe contained significantly more-$3, 150, 000 in total-and that the Special Agents pocketed the excess cash.

         In April 2013, the United States brought a civil-forfeiture proceeding against the $1, 264, 000. See United States v. $1, 264, 000 in U.S. Currency, No. 3:13-cv-00905 (N.D. Ohio Apr. 22, 2013). Shortly thereafter, the Zappones asserted claims against the currency for that amount. In June, however, they filed amended claims alleging that the amount of the defendant currency "is understated with the true value at approximately Three Million One Hundred Fifty Thousand Dollars ($3, 150, 000)."

         Alongside the civil-forfeiture case, the Zappones pursued other avenues for retrieving the Special Agents' purportedly ill-gotten gains. In July 2014, the Zappones and OSC submitted administrative claims to the IRS seeking $1, 886, 000, the difference between the amount of currency allegedly seized and the amount that was then the res of the civil-forfeiture action. The claims arrived under a cover letter from attorney Michael T. Arnold, dated July 21, 2014. In addition to the claims, the Zappones submitted executed power-of-attorney forms that identified their counsel as Arnold, Robert J. Fedor, and Benjamin C. Heidinger and listed their counsel's address. The IRS received these materials in August 2014.

         On February 11, 2015, the IRS mailed letters denying the claims via certified mail to Fedor and Arnold. The letters advised the lawyers that their "client[s] may contest this determination and bring suit against the United States in the appropriate United States district court no later than six months after the date of the mailing of this notification." The attorneys received the denials two days later. By this time, however, the Zappones had switched counsel. But they had not notified the IRS of Arnold and Fedor's withdrawal of representation; nor is there record of the denial letters being returned to the IRS as undeliverable.

         On October 14, 2015, the Zappones[1] filed the complaint in this case against twelve IRS employees and one IRS subcontractor, alleging both state-law torts (conversion, invasion of privacy, intentional infliction of emotional distress, and civil conspiracy) and constitutional claims (violation of their due process rights and unreasonable search and seizure). These claims stemmed from the IRS Special Agents' execution of the search-and-seizure warrants on the Zappones' property and the purported misappropriation of their cash. The district court later substituted the United States for the individual defendants with respect to the state-law claims.

         After a status conference, the district court directed the Defendants to file a motion on the threshold issue of whether the applicable statutes of limitations barred the state-law and constitutional claims. Thereafter, the Defendants moved to dismiss all claims, and the Zappones opposed the motion. Recognizing that it would have to consider matters outside the complaint to address the parties' statute-of-limitations arguments, the district court treated the motion to dismiss as one for summary judgment. The court decided in favor of the Defendants, concluding that the Zappones had filed their state-law and constitutional claims outside the appropriate limitations periods and rejecting their requests for equitable tolling. The Zappones appealed.

         II.

         We review de novo the district court's determination that the applicable statutes of limitations barred the Zappones' state-law and constitutional claims. Banks v. City of Whitehall, 344 F.3d 550, 553 (6th Cir. 2003) (citing Tolbert v. Ohio Dep't of Transp., 172 F.3d 934, 938 (6th Cir. 1999)). We also review de novo the district court's "decision on the application of equitable tolling where the facts underlying the equitable tolling are undisputed." Chavez v. Carranza, 559 F.3d 486, 493 (6th Cir. ...


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