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Wellington v. Daza

United States District Court, D. New Mexico

June 5, 2018

DAVID WELLINGTON, Plaintiff,
v.
FERNANDO DAZA, SPECIAL AGENT MARSHALL, SPECIAL AGENT HAND, UNKNOWN NAME DOE 1, UNKNOWN NAME DOE 2, UNKNOWN NAME DOE 3, UNKNOWN NAME DOE 4, and UNKNOWN NAME DOE 5, Defendants.

          MEMORANDUM OPINION AND ORDER DENYING MOTION FOR PARTIAL SUMMARY JUDGMENT

         In PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT (Doc. No. 40) (Motion), Plaintiff David Wellington asks the Court to hold as a matter of law that a search warrant authorizing the search of his residence was facially invalid. Plaintiff also asks the Court to rule that Defendant Fernando Daza may not assert qualified immunity from Plaintiff's claims under 42 U.S.C. § 1983 for violations of the First and Fourth Amendments. See COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF AND DAMAGES (Doc. No. 1). Since the undisputed evidence of record does not establish that Defendant Daza violated Plaintiff's First and Fourth Amendment rights, the Court will deny the Motion.

         I. STANDARD OF REVIEW

         Summary judgment may be granted if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). When applying this standard, the Court examines the factual record and reasonable inferences therefrom in the light most favorable to the party opposing summary judgment. Applied Genetics Intl, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir. 1990). The party seeking summary judgment bears the initial burden of “show[ing] that there is an absence of evidence to support the nonmoving party's case.” Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir. 1991) (internal quotation marks omitted). Once the movant meets this burden, Rule 56 requires the opposing party to designate specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). In considering a motion for summary judgment, the Court must “determine whether the evidence proffered by plaintiff would be sufficient, if believed by the ultimate factfinder, to sustain her claim.” Foster v. Alliedsignal, Inc., 293 F.3d 1187, 1195 (10th Cir. 2002).

         When the issue of qualified immunity is raised, the court analyzes a motion for summary judgment differently. “The doctrine of qualified immunity protects public or government officials ‘from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.'” Pearson v. Callahan, 555 U.S. 223, 231 (2009) (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982)). Once qualified immunity is raised, the plaintiff bears the burden of satisfying a “strict two-part test.” McBeth v. Himes, 598 F.3d 708, 716 (10th Cir. 2010) (citation omitted). The plaintiff must establish that 1) the defendant violated a constitutional right and 2) the right was clearly established at the time of the defendant's conduct. Courtney v. Oklahoma ex rel., Dep't of Pub. Safety, 722 F.3d 1216, 1222 (10th Cir. 2013). “If the plaintiff fails to satisfy either part of this two-part inquiry, the court must grant the defendant qualified immunity.” Hesse v. Town of Jackson, Wyo., 541 F.3d 1240, 1244 (10th Cir. 2008) (quotations omitted). But, if the plaintiff succeeds in carrying his two-part burden, the burden shifts to the defendant to show there are no remaining material issues of fact that would defeat qualified immunity. Estate of Booker v. Gomez, 745 F.3d 405, 412 (10th Cir. 2014).

         II. BACKGROUND

         A. Stay of this Case

         In this Bivens[1] action, Plaintiff claims that a search of his residence under a search warrant procured and executed by agents of the United States Internal Revenue Service (IRS) violated the First and Fourth Amendments of the United States Constitution. During the search, agents seized computers, electronic devices, electronic data, financial and legal documents, correspondence, tax literature, and a safe. Plaintiff alleges that Defendant Daza, [2] a Special Agent with the IRS Criminal Division (IRS CD), violated his constitutional rights because the search was based on a facially invalid, overbroad search warrant. (Compl. (Doc. No. 1) ¶ 18.)

         On January 24, 2018, the Court granted Defendants' motion to stay this proceeding to allow the government to pursue its criminal investigation of Plaintiff and others. ORDER GRANTING DEFENDANTS' MOTION TO STAY TIME TO ANSWER AND TO STAY LITIGATION (Doc. No. 28). In the stay motion, Defendants asserted that a criminal investigation was initiated because the IRS believed Plaintiff was using “a variety of third party entities, including trusts and other entities, in furtherance of tax evasion.” (Mot. (Doc. No. 17) at 2.) The Court granted a stay until April 1, 2018 but ordered Defendants to file a status report on March 1, 2018. In the status report (Doc. No. 36), Defendants renewed the request for a stay of six months or until the criminal investigation is completed. In his response to the status report, Plaintiff asked the Court not to extend the stay and to allow him to discover the identity of unknown Defendants so Plaintiff could serve those Defendants.

         The stay ended on April 1, 2018. Id. This Motion was filed on April 6, 2018. On April 9, 2018, the Court held a hearing and ordered Defendants to respond to the Motion. See DEFENDANT'S RESPONSE IN OPPOSITION TO PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT (Doc. No. 43). Plaintiff has filed a Reply brief. See PLAINTIFF'S REPLY TO DEFENDANT'S OPPOSITION TO PARTIAL SUMMARY JUDGMENT MOTION (Doc. No. 44).

         B. Issuance of the Warrant; Motion for Return of Property

         On March 10, 2017, Magistrate Judge William P. Lynch issued the warrant in No. 17-mr-0186 (Warrant Case). On March 14, 2017, IRS agents executed the warrant and a warrant return was filed on March 16, 2017 containing an inventory of items seized from Plaintiff's residence. (Warrant Case Doc. No. 3). On March 20, 2017, Magistrate Judge Karen B. Molzen granted Defendants' motion to seal the warrant application and affidavit. (Warrant Case Doc. Nos. 4 & 5.)

         On April 18, 2017, Plaintiff filed a Motion for Return of Property Seized Under Warrant (Warrant Case Doc. No. 6). See Fed. R. Crim. P. 41(g). On October 10, 2017, Magistrate Judge Jerry H. Ritter denied the motion without prejudice for lack of jurisdiction to allow Plaintiff to file a civil action for return of his property or to amend the Complaint in this case. (Warrant Case Doc. No. 14.) Plaintiff appealed Magistrate Judge Ritter's ruling to the Tenth Circuit Court of Appeals, but the appeal was dismissed for lack of jurisdiction. In the Matter of the Search of 2124 Altura Verde Ln. NE, Albuquerque, NM 87110, Wellington v. United States, No. 17-2205 (10th Cir. Jan. 8, 2018).

         Instead of filing a civil action or amending the Complaint, Plaintiff filed a motion to consolidate the Warrant Case with this case. Defendants responded that on February 20, 2018, all of Plaintiff's property had been returned; therefore, the motion had become moot. Finding that the Warrant Case and this case are “dissimilar in purpose and procedure” and that the issue had become moot, the Court denied the motion to consolidate. MEMORANDUM OPINION AND ORDER (Doc. No. 38).

         C. Causes of Action

         In Plaintiff's FIRST CAUSE OF ACTION (Compl. ¶¶ 46-50), he claims that Defendant Daza and other agents, “collectively agreed to willfully and wantonly … pursue a search and invasion of plaintiff's privacy and seizure of property they knew would be unlawful.” (Id. ¶ 47.) Plaintiff further alleges that all Defendants “conducted a general search and seizure, seizing items regardless of whether they were listed in the warrant or not.” (Id. ¶ 48.) As a result, Plaintiff alleges that the Defendants willfully “violated his Fourth Amendment right to be free from unreasonable searches and seizures, and agreed and conspired with each other to do so.” (Id. ¶ 49.)

         In his SECOND CAUSE OF ACTION (Compl. ¶¶ 51-54), Plaintiff alleges that the seizure of his “computer/electronic records not only violated the Fourth Amendment, but even Fed. R. Crim. P. 41 itself.” (Compl. ¶ 52.) Plaintiff alleges that Defendant Daza “caused the electronic records to be copied for a later unrestricted search for anything at all.” (Id. ¶ 53.) Plaintiff claims that the Defendants willfully “violated plaintiff's Fourth Amendment right to be free of unreasonable searches and seizures by seizing the electronic equipment and intend on continuing to violate the right by copying the electronic data for their later unrestricted browsing for absolutely anything at all.” (Id. ¶ 54.)[3]

         In the FIFTH CAUSE OF ACTION, Plaintiff claims that Defendant Daza and the other defendants “collectively agreed to wilfully (sic) and wantonly disregard any such limitations, and to search for and seize publications based solely on their content and ideas they expressed. The defendants obtained a warrant which contained language they knew left it entirely to the discretion of the searching agents what was to be seized, and they treated it like a general warrant.” (Id. ¶ 60.) According to Plaintiff, Defendants' actions were done “in plain and clear violation of First Amendment protected Free Speech and Press constitutional limitations.” (Id. ¶ 61.) Plaintiff claims that Defendant Daza has retained the materials “in order (at least in part) [to] engage in censorship of the materials…. [i]n plain and clear violation of the First Amendment Free Speech and Press constitutional limitations.” (Id. ¶ 62.)

         In his SIXTH CAUSE OF ACTION (Compl. ¶¶ 63-65), Plaintiff alleges that the Defendants collectively agreed to willfully and wantonly “disregard any such limitations and search for and seize any and all information about plaintiff's ‘contacts' and people he may know, regardless of purpose. This included family, friends, acquaintances, political affiliations, and anyone plaintiff might know for any purpose.” (Id. ¶ 64.) In addition, Plaintiff claims that “defendants obtained and executed a warrant which contained language they knew was not anywhere near narrow enough to comply with the precision required by the First Amendment when Associational rights are involved. They then treated it like a general warrant, seized whatever they liked, and turned over the seized items to defendant Daza.” (Id. ¶ 65.)

         D. WARRANT

         1. Undisputed Material Facts

         The SEARCH AND SEIZURE WARRANT (warrant) states “[a]n application by a federal law enforcement officer or an attorney for the government requests the search of the following person or property located in the … District of New Mexico See Attachment A.” Attachment A contains a legal description of the residence, describes the residence by color, and has pictures of the residence. (Compl. Ex. A, Attachment A.) In the warrant, Magistrate Judge Lynch found “that the affidavit(s), or any recorded testimony, establish probable cause to search and seize the person or property described above [in Attachment A], and that such a search will reveal … the property to be seized [described in] Attachment B.” (Id.)

         Attachment B contains an in outline of items subject to seizure:

         I. Items to be Seized.

The following items, records, documents, files or materials, in whatever form, including handmade or mechanical form (such as printed, written, handwritten, or types); photocopies … electronic, and magnetic form (such as tapes, cassettes, hard disks, floppy disks, diskettes, compact discs, CD-ROMs, DVDs, optical discs, Zip cartridges, printer buffers, smart cards, flash drives, external and internal hard drives, or electronic notebooks, or any other storage medium, are to be seized and searched for the evidence, fruits and instrumentalities of crimes relating to violations of 26 U.S.C. § 7201 (Attempt to Evade Taxes)[4] and 18 U.S.C. § 371 (Conspiracy [to Defraud the United States]), [5]for the time-period of January 1, 2005, through the present, to specifically include:
1. Books and records pertaining to National Business Services, New Mexico Limited Liability Companies (NM LLCs), Stacy Underwood, David Wellington, Jerry Schrock, Michelle Schrock or associated companies/parties;
a) Originals and copies of all income tax returns and their associated forms, work papers, information sheets and taxpayer records.
b) Business income and expense records such as receipt books, journals, ledgers, billing records and invoices, and receipts, deposit slips, cancelled checks, bank statements, payroll records, cash receipts and cash expense journals, worksheets, schedules, cashier checks, money orders, investment accounts, financial statements, income statements, balances (sic) sheets, trial balances, accounting records, records of purchases and revenues received, and payroll records.
c) Bank, financial institution, and investment account records, checkbooks, statements, deposit slips, canceled checks, cashier's checks, loan records, financial statements, credit reports, records of wire transfer, and keys to safe-deposit boxes.
d) Documents constituting, listing or describing domestic trusts, limited liability companies (LLCs) or other foreign entities created on behalf of any of the above mentioned individuals or businesses, including articles of incorporation, articles of organization, operating agreements, certificates or licenses of incorporation, bylaws, corporate resolutions, trust agreements, lists of directors, officers, managers or trustees and abstracts of memoranda.
e) Correspondence between the above mentioned individuals or businesses, and accountants, bookkeepers or other business associates. Address books, phone books, personal calendars, daily planners, journals, ...

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