Izen v. CatalinaIzen v. Catalina
PER CURIAM:
Plaintiff-Appellant Joe Alfred Izen, Jr., a Texas attorney, appeals the district court‘s order granting summary judgment in favor of IRS agents Terrance Catalina and James Climеr. Izen‘s Bivens action alleges that Catalina and Climer engaged in malicious prosecution and retaliation in violation of the Fourth
I.
Izen is a tax attorney. He has long represented tax protestors and other defendants in criminal tax cases. In August 1989, IRS agent Catalina received a referral from the Waco, Texas, IRS collection office alleging that Izen had not filed income tax returns for tax years 1986, 1987, and 1988. The referral contained allegations from a third party informant that Izen was involved in money laundering, including allegations that Izen was involved in
In October 1989, Catalina accepted the referral for investigation of the charge of failure to file tax returns. He determined there was insufficient basis to investigate Izen for money laundering, but recommended opening a criminal income tax investigation for the years 1986 through 1988 based on the missing returns. Catalina also recommended including 1985 in the investigation, though a return had been filed. Catalina‘s tax investigation was soon derailed by the fact that Izen ultimately filed his 1986 return in September 1989, and filed his 1987 and 1988 returns in April 1990, even receiving refunds approved by Catalina.
Although Catalina dropped the income tax investigation, he then embarked on a money laundering investigation. Izen alleges that the impetus for the investigation was a desire to retaliate against him for his history of association with tax protestors, his representation of criminal tax defendants, and his representation of taxpayers utilizing foreign trusts to reduce their federal income tax. See, e.g., United States v. Dahlstrom, 713 F.2d 1423 (9th Cir. 1983) (reversing the convictions of foreign tax shelter promoters, one of whom was represented by Izen). Izen‘s contention
Upon reviewing the reports concerning Izen‘s client, Catalina, with the permission of his superiors, commenced an undercover investigation of Izen himself which lasted from 1990 to 1992. Climer was the undercover agent assigned to the investigation. Climer posed as a client seeking to create a foreign trust in which to deposit proceeds from the sale of purportedly stolen oil. Numerous conversations between Izen and Climer were apparently taped, though the agents have not placed any of the recordings in the record.1 Catalina testified before a grand jury in May 1995, and it returned a four-count indictment of Izen for conspiracy to commit money laundering and aiding or abetting or attempting money laundering. Izen alleges that the indictment was securеd in part due to alleged misrepresentations made by Catalina to the grand jury.2 In May 1996, for undisclosed reasons, the
Izen brought suit in 1997, alleging various constitutional and non-constitutional torts. The district court dismissed all of Izen‘s claims. Izen appealed the dismissal of his Fоurth Amendment malicious prosecution claim, his First Amendment retaliation claim, his Fifth Amendment claim, the denial of his motion for disclosure of grand jury materials, and the grant of summary judgment in favor of the agents based on their qualified immunity defense.
In Izen I we reversed the dismissal of the malicious prosecution and retaliation claims, holding that the district сourt had misconstrued the applicable law on both. In addition, we held that a genuine issue of material fact existed as to whether Izen was investigated and prosecuted in retaliation for representing criminal tax defendants. We affirmed the dismissal of Izen‘s Fifth Amendment claim as well as the denial of his motion for disclosure.
On remаnd, Izen filed a second amended complaint in which he added a Federal Tort Claims Act cause of action against the United States. The district court again granted summary judgment in favor of the agents and United States on all claims. Izen appeals the grant of summary judgment on his malicious prosecution claim, his retaliation claim, and his Federal Tort Claims Act cause of action.
This court reviews a grant of summary judgment de novo. Chriceol v. Phillips, 169 F.3d 313, 315 (5th Cir. 1999). We may affirm a grant of summary judgment on grounds other than those offered by the district court. Id. The moving party bears the burden of showing that there is an absence of evidence to support the nonmoving party‘s case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If this burden is met, then the nonmoving party must set forth specific faсts showing a genuine issue for trial remains.
A. Malicious Prosecution
We affirm the district court‘s order granting summary judgment on Izen‘s claim of malicious prosecution, though on different grounds. In this circuit, plaintiffs no longer allege a constitutional violation by satisfying the state law elements of malicious prosecution alone. Castellano v. Fragozo, 352 F.3d 939, 942 (5th Cir. 2003) (en banc), cert. denied, 125 S. Ct. 33 (2004).3 Because Izen‘s complaint does nоt state a claim under the Fourth
B. Federal Tort Claims Act
Izen‘s second amended complaint alleges claims under the Federal Tort Claims Act based on the state torts of malicious prosecution, false arrest, intentional infliction of emotional distress, and negligence. The district court held that each of these claims failed for lack of exhaustion under
C. First Amendment Retaliation
The Retaliation Standard
Izen alleges that Catalina launched the sting operation and prosecuted him in retaliation for his history of representing criminal tax defendants. “[T]he First Amendment prohibits not only direct limitations on speech but also adverse government action against an individual because of her exercise of First Amendment
In the criminal prosecution context, plaintiffs must establish three elements in order to make out a retaliation claim. Keenan v. Tejeda, 290 F.3d 252, 258 (5th Cir. 2002). Plaintiffs must show that “(1) they were engaged in constitutionally protected activity, (2) the defendants’ actions caused them to suffer an injury that would chill a person of ordinary firmness from continuing to engage in that activity, and (3) the defendants’ adverse actions were substantially motivаted against the plaintiffs’ exercise of constitutionally protected conduct.” Id. This court further requires plaintiffs in the prosecution context to establish each of the common law malicious prosecution elements in addition to those three derived from the First Amendment. Id. at 260; see also Johnson v. La. Dep‘t of Agric., 18 F.3d 318, 320 (5th Cir. 1994) (same).6 “One of these standards is an absence of
The district court applied the Johnson standard and granted summary judgment on behalf of the agents, reasoning in part that Izen had not established the common law elements of malicious prosecution. Izen v. Catalina, 251 F. Supp. 2d 1327, 1340-41 (S.D. Tex. 2002). In particular, the court held that Izen had not raised an issue of material fact as to whether the agents lacked probable cause to prosecute. A court determines whether probable cause existed as of the time the government instituted criminal proceedings. Gordy v. Burns, 294 F.3d 722, 728, overruled on other grounds by Castellano v. Fragozo, 352 F.3d at 948-49. Although Catalina‘s initial informаtion about Izen came from a potentially unreliable informant, Catalina received verifiable, independent information concerning Izen‘s questionable activities that amounted to probable cause before seeking an indictment.
In 1989, the IRS learned the following about Izen from the informant: (1) Izen was personally invоlved in the failure of the Chilton Private Bank in Chilton, Texas; (2) Izen was closely tied to Robert Chappell, the founder of NLIC, a tax shelter operating out of the Bahamas; (3) Izen engineered large transfers of money from Chilton Private Bank to offshore banks before the Chilton Private Bank failed; and (4) Izen had deposited $4-5 million dollars in the Isle of Man. R. 798. Additionally, the IRS learned the Izen had a great deal of knowledge about offshore banking and the working of NLIC, and he had a “close personal relationship” with Robert Chappell. R. 797. This information, coupled with Izen‘s failure to file tax returns for the years 1986, 1987, and 1988, led Catalina to conclude that opening a criminal investigation into Izen‘s affairs was warranted. The Chief
Initial inquiries, including a deposition given by Izen, indicated irregularities with Izen‘s financial transactions for the 1985 tax year (in which he did file a tax return). Catalina, however, concedes that he was not awarе that Izen eventually filed tax returns for the missing years. The returns were filed in September of 1989, after the investigation was officially opened. In any event, after Catalina‘s initial review of the documents indicated suspicious activity, and in light of the procedural benefits (mainly the ability to enforce summonses) afforded by a grand jury, Catalina requested a grand jury investigation.8 The Department of Justice approved this request. Catalina thought an undercover operation would assist in the case. Catalina‘s supervisor approved the operation. In early 1990, Catalina began to corroborate some of the information provided by the initial informant. Catalina learned independently that: (1) Izen had been representing NLIC since 1983; (2) the president and founder of NLIC, Robert Chappell, was a fugitive from a mail fraud conviction; (3) Chappell and his organization attracted numerous “anti-government” individuals; (4) several fugitives were apparently
Additionally, the undercover operation gleaned more information about potential money laundering. For examplе, one suspect explained that Chilton Private Bank could be used to launder money. When, acting undercover, Climer contacted Izen and asked him to set up an offshore trust, he offered to do so. Izen also helped Climer launder the money by establishing offshore accounts and foreign trusts, and using tax haven country banks. Izen violated domestic tax law through these actions. Izen also disobeyed other American law requirements, such as failing to file a Form 8300 after receiving a $15,000 cash payment from Climer.
III.
For the foregoing reasons, we AFFIRM the district court‘s order granting summary judgment to the defendants as to all claims.