IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-21031
JOE ALFRED IZEN, JR.,
Plaintiff-Appellant,
versus
TERRANCE CATALINA, Special Agent,
In his Official and Individual Capacity;
JAMES CLIMER, Special Agent,
In his Official and Individual Capacity,
Defendants-Appellees.
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Appeal from the United States District Court
for the Southern District of Texas
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June 29, 2001
Before JOLLY, MAGILL*, and BENAVIDES, Circuit Judges.
PER CURIAM:
In late 1989, the IRS initiated an administrative proceeding
to suspend Joe Alfred Izen, an attorney, from practicing before
the IRS. Patrick McDonough, an attorney with the Office of
Director of Practice (which is independent of the IRS),
recommended that Izen be suspended because he had failed to
timely file federal income tax returns for 1980, 1981, and 1982.
During this administrative disbarment proceeding, McDonough
denied that the IRS was pursuing criminal charges against Izen.
*
Circuit Judge of the Eighth Circuit, sitting by
designation.
Relying on this statement, Izen testified before the
administrative law judge. In late 1991, McDonough learned that
Izen was in fact the target of an ongoing criminal investigation
conducted by the IRS. McDonough then dismissed the
administrative complaint against Izen.
The ongoing criminal investigation began in early 1990
(shortly after the administrative proceedings had begun). IRS
agent Terrance Catalina directed the investigation. Another IRS
agent, James Climer, posed as an oil investor with illegal funds
that needed “laundering.” Catalina’s investigation of Izen
resulted in an indictment in 1995. The indictment alleged that
Izen created a foreign trust for the purpose of money laundering.
Izen plead “not guilty” to the money laundering charges, raising
the defenses of entrapment, prosecutorial misconduct, and tainted
evidence. He filed a motion to suppress all evidence obtained
through the administrative proceedings.
The district court judge hearing the money laundering case
denied Izen’s motion to suppress. He explained that there was no
duplicity between McDonough and Catalina: “[T]wo government
agencies [were] separately conducting their business with neither
knowing what the other was doing, and with the resulting mistake
by McDonough providing no benefit to the government and causing
no harm to Izen.” In May 1996, before the case went to trial,
however, the government moved to dismiss all pending criminal
charges against Izen.
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In May 1997, Izen filed this Bivens suit, seeking $4 million
in damages, against Catalina and Climer in both their official
and individual capacities. Izen alleged that the IRS agents
subjected him to malicious and retaliatory prosecution and
violated his Fifth Amendment privilege against self-
incrimination.
Catalina and Climer filed motions to dismiss for lack of
jurisdiction and for failure to state a claim on which relief can
be granted, as well as a motion for summary judgment on qualified
immunity grounds. The district court referred the matter to a
magistrate judge, who issued a memorandum recommending that
Izen’s claims be dismissed. Izen filed objections, but the
district court adopted the magistrate judge’s recommendation.
The district court dismissed in part, and granted summary
judgment in part.
DISCUSSION
On appeal, Izen raises his Fourth Amendment claim of
malicious prosecution arguing that the criminal charges against
him were terminated in his favor. He also claims that the
criminal charges were brought in retaliation in violation of his
First Amendment rights. Moreover, Izen appeals certain discovery
and evidentiary rulings. Lastly, Izen appeals the district
court’s grant of summary judgment in favor of the government on
qualified immunity grounds. Climer also continues to argue that
the court lacks personal jurisdiction over him due to improper
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service of process. Each issue will be addressed in turn.
Personal Jurisdiction
The district court properly exercised personal jurisdiction
over Climer. Izen complied with Rule 4(e)(1), which allows
service pursuant to the law of the state where the district court
is located or where service is effected. Fed. R. Civ. Proc.
4(e)(1). Oklahoma law provides that: “Service by mail shall be
accomplished by mailing a copy of the summons and petition by
certified mail, return receipt requested and delivery restricted
to the addressee.” OKLA. STAT. ANN. tit. 12, § 2004(C)(2)(b).
Oklahoma courts, however, require only “substantial compliance”
with the statutes. Graff v. Kelly, 814 P.2d 489 (Okla. 1991).
Thus, the Tenth Circuit has held that service of process was
valid where someone other than the addressee signed the return
receipt but the defendant received actual notice of the attempted
service. Kitchens v. Bryan Co. Natl. Bank, 825 F.2d 248, 256
(10th Cir. 1987)(“In Oklahoma, the object of the state notice
statutes is to provide a method of notification which ‘is
reasonably calculated to give [the defendant] knowledge at a
meaningful time and in a meaningful manner of the attempted
exercise of jurisdiction and an opportunity to be heard. No
rigid formula exists as to the kind of notice that must be sent;
the notice required will necessarily vary with the circumstances
and conditions.’”). Some Oklahoma courts have even suggested
that service of process is sufficient to confer personal
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jurisdiction if it informs the defendant that he has been sued.
See Shamblin v. Beasley, 967 P.2d 1200, 1210 (Ok.1998); see also
Van Nort v. Davis, 800 P.2d 1082 (Okla. App. 1990).
In the instant case, Izen sent service of process to
Climer’s Oklahoma City office at a time when he no longer worked
there, and someone else signed the receipt. Climer received
prompt, actual notice of the suit. The summons was delivered to
the IRS office on April 15, 1998. On May 6, 1998, Climer filed a
motion to enlarge the time to file an answer. Previously, Izen
solicited information from the IRS regarding the manner in which
Izen could effect service upon Climer and, as the district court
found, the IRS failed to provide full and accurate information.
Given Climer’s actual notice of this suit and the circumstances
surrounding the method of notification, it is clear that the
method of notification was reasonably calculated to give, and in
fact, did give the defendant at a meaningful time and in a
meaningful manner knowledge of the attempted exercise of
jurisdiction to give the defendant an opportunity to be heard.
Accordingly, the district court did not err in exercising
jurisdiction over Climer.
Malicious Prosecution
Izen has properly brought this suit for damages against the
defendants in their individual capacities alleging that federal
officers violated his constitutional rights. See Bivens v. Six
Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S.
5
388 (1971). This Circuit has long recognized a constitutional
right under the Fourth Amendment “to be free from malicious
prosecution.” Kerr v. Lyford, 171 F.3d 330, 339 (5th Cir. 1999);
see also Eugene v. Alief Ind. Sch. Dist., 65 F.3d 1299, 1303,
1305 (5th Cir. 1995)(holding that this right was clearly
established as early as 1972). But “malicious prosecution may be
a constitutional violation . . . only if all of its common law
elements are established.” Evans v. Ball, 168 F.3d 856, 862 n.9,
863 (5th Cir. 1999). To sustain a malicious prosecution claim,
Texas law requires that a plaintiff show “(1) a criminal action
was commenced against him; (2) the prosecution was caused by the
defendant or with his aid; (3) the action terminated in the
plaintiff’s favor; (4) the plaintiff was innocent; (5) the
defendant acted without probable cause; (6) the defendant acted
with malice; and (7) the criminal proceeding damaged the
plaintiff.” Taylor v. Gregg, 36 F.3d 453, 455 (5th Cir. 1994).
The district court dismissed Izen’s malicious prosecution
claim because Izen failed to state a claim for which relief could
be granted. Specifically, the district court found that the
criminal proceeding did not terminate in favor of Izen. This
Court reviews a district court’s dismissal of a claim under Rule
12(b)(6) de novo. Brown v. Nationsbank Corp., 188 F.3d 579, 585
(5th Cir. 1999).
The IRS agents and the district court rely on language in
Evans stating that “proceedings terminate in favor of the accused
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only when they affirmatively indicate that [the accused] is not
guilty.” Evans, 168 F.3d at 859; see also Taylor, 36 F.3d at
456. We find both Evans and Taylor factually distinguishable
from the case at hand and the rule therein not controlling. In
both Evans and Taylor, the plaintiff in the malicious prosecution
suit had entered into a plea bargain in order to terminate the
criminal proceedings. In Evans, for example, the plaintiff
retired from his government job in exchange for a dismissal of
the criminal charges. In Izen’s case, there is no quid pro quo.
In Brandley v. Keeshan, 64 F.3d 196 (5th Cir. 1995), when
determining whether the criminal proceeding terminated in the
plaintiff’s favor, this Court noted that “an order of dismissal
based on the affirmative decision not to prosecute are examples
of such termination.” Brandley, 64 F.3d at 199. Similarly, in
Kerr, the defendants were indicted, but the charges against them
were dropped. This Court found that the elements of a malicious
prosecution claim were satisfied, including termination in their
favor, except for probable cause. Kerr, 171 F.3d at 340. Also,
in Brummett v. Camble, 946 F.2d 1178 (5th Cir. 1991), the claims
against the plaintiff were dismissed. This Court in determining
whether the statute of limitations had run on the plaintiff’s
malicious prosecution claim held that “Brummett’s suit was filed
less than two years after the underlying criminal proceeding
terminated in his favor.” Brummett, 946 F.2d at 1184.
Additionally, Texas courts have held that a prosecution has
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been terminated in the accused’s favor where the prosecutor has
dismissed the charges. See Thrift v. Hubbard, 974 S.W.2d 70, 78
(Tex. App.--San Antonio, 1998); Leal v. American Nat’l Ins. Co.,
928 S.W.2d 592, 597 (Tex. App.–Corpus Christi, 1996). Thus, in
instances where the criminal defendant’s charges were dismissed
without a quid pro quo arrangement, this Court has found that the
prosecution terminated in their favor. In the instant case, the
charges against Izen were dropped and the government moved to
dismiss the case without any concession or agreement by Izen.
Accordingly, we find that the underlying claim in the instant
case was terminated in Izen’s favor. We therefore vacate the
district court’s dismissal of Izen’s malicious prosecution claim
and remand for consideration whether the defendants had probable
cause and acted with malice when prosecuting Izen.
Retaliatory Prosecution
In granting summary judgment in favor of the defendants in
regard to Izen’s retaliatory prosecution claim, the district
court required that Izen show a material issue of fact that
“there was no legitimate purpose at all for the Defendants’
conduct.” The rule in this Circuit, however, is that a plaintiff
alleging retaliatory prosecution must show that he was
“prosecuted at least in part to retaliate for constitutionally
protected conduct.” Gates v. City of Dallas, 729 F.2d 343, 346
(5th Cir. 1984). As the rule articulated in Gates makes clear,
retaliation need not be the sole motive for prosecuting.
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Therefore, the district court was mistaken in requiring Izen to
prove that “there was no legitimate purpose at all for the
Defendants’ conduct.”
The district court concluded that the IRS agents had a
legitimate reason for instituting its criminal investigation:
Catalina learned that Izen had not timely filed tax returns.
However, neither the district court nor the IRS agents explain
the connection between Izen’s late filing of tax returns and the
agents’ decision to begin an undercover sting operation to
investigate possible money laundering through offshore trusts.
Based on the record and the briefs, there is a genuine issue of
material fact as to the reasons Izen was investigated and
prosecuted and therefore we vacate the grant of summary judgment
as to Izen’s retaliatory prosecution claim.
Self-Incrimination
The district court dismissed Izen’s Fifth Amendment claim.
The court held that collateral estoppel applied because
previously, at a pretrial motion in the money laundering suit,
the judge denied a motion to suppress because he saw no Fifth
Amendment violation. Even if collateral estoppel does not apply
as Izen contends, we find, however, that Izen’s Fifth Amendment
claim lacks merit and therefore affirm the district court’s grant
of summary judgment in this regard. Izen claims that, because he
was not informed of the ongoing criminal investigation at the
time he testified in civil court, he unfairly incriminated
9
himself. At the time Izen testified at the civil trial, however,
he knew there was a possibility he was incriminating himself,
even if there were not ongoing criminal charges, and could have
exercised his Fifth Amendment rights. “[A] witness may properly
invoke the Fifth Amendment ‘privilege against compulsory
self-incrimination . . . 'in any proceeding, civil or criminal,
administrative or judicial, investigatory or adjudicatory' when
he [or she] 'reasonably apprehends a risk of self-incrimination,
. . . though no criminal charges are pending against him [or
her], . . . and even if the risk of prosecution is remote.'" Doe
v. Louisiana, 2 F.3d 1412 at 1419 n.14 (5th Cir. 1993)(citations
omitted). Moreover, there is no showing that these statements
were used against Izen or affected the proceedings as both the
criminal and civil actions were dismissed. United States v.
Tapp, 812 F.2d 177, 179 (5th Cir. 1987). We therefore affirm
the district court’s dismissal of Izen’s Fifth Amendment claim.
Grand Jury Minutes
Izen also appeals the district court’s decision which denied
Izen’s motion to disclose grand jury minutes. This court reviews
a district court’s decision regarding disclosure of grand jury
materials under an abuse of discretion standard. In re Grand
Jury Testimony, 832 F.2d 60, 60-2 (5th Cir. 1987). “Rule 6(e)
provides certain exceptions, and case law has established that a
district court may properly order release of grand jury materials
where a party demonstrates with particularity a ‘compelling
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necessity’ for the materials.” Id. at 62-63. We find that Izen
has not shown a compelling necessity and the district court did
not abuse its discretion in denying this motion.
Qualified Immunity
Izen also appeals the district court’s grant of summary
judgment based on qualified immunity. The basic rule of
qualified immunity is that: “Government officials performing
discretionary functions generally are shielded from liability for
civil damages insofar as their conduct does not violate clearly
established . . . constitutional rights of which a reasonable
person would have known.” Harlow v. Fitzgerald, 457 U.S. 800,
818 (1982). Having determined that Izen’s constitutional claims
were not viable, the district court reasoned that it would not be
obvious to the defendants that they were violating Izen’s
constitutional rights, and accordingly dismissed the claims on
the alternative basis of qualified immunity. In as much as we
have set aside the district court’s finding with respect to
Izen’s First and Fourth amendment claims, the rationale for the
district court’s granting qualified immunity evaporate and we
remand the qualified immunity issue for reconsideration.
Discovery
In this regard, Izen also argues that the district court
abused its discretion in not allowing discovery prior to ruling
on the qualified immunity motion. Generally, a court should
allow discovery only if it finds that the officer’s conduct
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violated a clearly established right. See Siegert v. Gilley, 500
U.S. 226 (1991). Because we have remanded Izen’s First and
Fourth Amendment claims, we vacate this ruling and instruct the
court to consider this claim in light of its findings on remand.
Accordingly, we AFFIRM the district court’s dismissal of
Izen’s Fifth Amendment claim and its denial of Izen’s motion to
disclose grand jury minutes; the orders dismissing Izen’s
malicious prosecution claim, granting qualified immunity and
granting summary judgment in regard to Izen’s retaliatory
prosecution claim are VACATED and the case is remanded to the
district court for further proceedings consistent with this
opinion.
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