Greene v. Kansas Dept. of Revenue

CourtCourt of Appeals of Kansas
DecidedSeptember 26, 2025
Docket128006
StatusUnpublished

This text of Greene v. Kansas Dept. of Revenue (Greene v. Kansas Dept. of Revenue) is published on Counsel Stack Legal Research, covering Court of Appeals of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Greene v. Kansas Dept. of Revenue, (kanctapp 2025).

Opinion

NOT DESIGNATED FOR PUBLICATION

No. 128,006

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

DAVID GREENE JR., MARCIA GREENE, and DAVID GREENE III, Appellants,

v.

KANSAS DEPARTMENT OF REVENUE and STEVE STOTTS, Director of Taxation, in his Individual and Official Capacity, Appellees.

MEMORANDUM OPINION

Appeal from Butler District Court; JANETTE L. SATTERFIELD, judge. Oral argument held via Zoom on August 18, 2025. Opinion filed September 26, 2025. Affirmed.

Braxton T. Moral, of Depew Gillen Rathbun & McInteer, LC, of Wichita, for appellant.

Adam D. King, of Kansas Department of Revenue, for appellee.

Before GARDNER, P.J., COBLE and BOLTON FLEMING, JJ.

PER CURIAM: This appeal is before us after many years of litigation between the parties concerning the status of various tax assessments. David Greene Jr. and Marcia Greene, husband and wife, were operators of C and J Distributing (Greenes' Distributing). Greenes' Distributing sold cigarettes, candy, tobacco, and restaurant supplies to retailers. David and Marcia's sons, David Greene, III and Jonathan Greene, owned C and J Wholesale, LLC (Greenes' Wholesale), a company that sold novelty items, rented properties, and set up accommodations for events.

1 In August 2012, the Kansas Department of Revenue (KDOR) levied a $460,000 tax assessment against the Greenes based on possession of a potpourri substance called "Diablo." The assessment was reversed by the Kansas Board of Tax Appeals (BOTA) in 2014, and this court affirmed the reversal. In 2016 the assessment was amended by KDOR to $924,400 and levied against the Greenes and Greenes' Wholesale, which was affirmed by a BOTA ruling in December of 2017. The Greenes appealed the BOTA ruling and the district court ruled in their favor, which ruling was affirmed by this court in 2021. The Greenes then filed the present case against KDOR and its Director of Taxation, Steve Shotts, alleging the protracted proceedings by KDOR and Stotts constituted violations of 42 USC § 1983 and the Kansas Tort Claims Act (KTCA). The district court granted KDOR's motion to dismiss the action, and the Greenes filed this appeal.

The Greenes raise four issues on appeal. First, they allege that the district court improperly dismissed the Greenes' Fifth Amendment claim under 42 U.S.C. § 1983. Second, they maintain that the district court erred in its ruling that only a judicial process is sufficient for maintaining a claim for abuse of process under the KTCA. Third, the Greenes argue that the district court incorrectly ruled that the Greenes' KTCA claim was subject to an exception under K.S.A. 75-6104(a)(6). Finally, the Greenes allege that the district court erred by dismissing the Greenes' claims before the parties could complete the discovery.

Because we find the Greenes do not allege facts warranting recovery under 42 USC § 1983 against either KDOR or Stotts, and the actions the Greenes complain of do not constitute "judicial process" under the KTCA, the district court did not err in granting the motion to dismiss, and we therefore affirm.

2 FACTUAL AND PROCEDURAL BACKGROUND

In August 2012, KDOR levied a $460,000 tax assessment against David Greene and Marcia Greene for possession of a potpourri substance named "Diablo" that the Kansas Board of Pharmacy had deemed a controlled substance. Whether Diablo was a controlled substance was a matter of much debate by KDOR, the Greenes, and others. In September 2014, the Kansas Board of Tax Appeals (BOTA) determined that any assessments on the relevant chemical substances in Diablo were invalid. KDOR appealed to this court which affirmed the BOTA's decision in early 2016. See In re Tax Appeal of Hasting, No. 112,700, 2016 WL 763569 (Kan. App. 2016) (unpublished opinion).

But the dispute between the parties did not end there. In April 2016, KDOR amended the tax assessment against the Greenes after a new, separate substance was allegedly identified at a property rented out by Greenes' Distributing during a criminal investigation of nonparties. Based on the presence of this new substance, KDOR increased the assessment to $924,400 and expanded the assessment to include Greenes' Wholesale. The Greenes objected to this amended assessment, and after an informal appeal conference, a KDOR hearing officer abated the amended assessment in September 2016. KDOR did not appeal this abatement.

Despite this abatement, KDOR still continued to seek enforcement of the original $460,000 assessment, and litigation continued. In December 2017, BOTA issued an opinion that confirmed the original assessment and added penalties and interest, bringing the amount owed by David and Marcia Greene and Greenes' Wholesale as of August 31, 2017, to $463,933.82, which included penalties and interest.

In response, in January 2018, David and Marcia Greene and Greenes' Wholesale filed a petition for judicial review of the BOTA opinion in Butler County District Court to determine the status of all remaining assessments. The district court ruled in favor of

3 the Greenes and Greenes' Wholesale, finding no outstanding tax assessments remained, and in May 2021, a panel of this court affirmed that decision. See In re Tax Appeal of Greene, No. 122,379, 2021 WL 1936066, (Kan. App. 2021) (unpublished opinion).

After many years of litigation, in August 2023, David Greene Jr, Marcia Greene, and David Greene III filed suit against defendants "Kansas Department of Revenue, [and] Steve Stotts, in his individual and official capacity." The Greenes' petition included three causes of action: (1) a 42 U.S.C. § 1983 claim against Stotts as Director of Taxation at KDOR; (2) a claim against KDOR under the Kansas Judicial Review Act (KJRA); and (3) an abuse of process claim against KDOR under the KTCA. The petition alleged that for 11 years, KDOR had engaged in a "crusade" against the Greenes that resulted in years of litigation as well as financial and emotional hardship.

The petition further alleged that through the date of filing the complaint, KDOR had retained $62,500 in seized items from the Greenes in addition to failing to lift the initial $460,000 tax assessment in a timely manner. As a result of these actions, the Greenes alleged that they lost their direct status with tobacco manufacturing contacts, resulting in $50,000 in damages, as well as $232,570 in lost income, and $47,000 in attorney fees. The Greenes' petition claimed that Director Stotts and KDOR insisted on maintaining a fraudulent assessment against the Greenes and retained property in violation of the Greenes' Fourth Amendment Rights under the United States Constitution. The summons for the petition was sent individually to both KDOR and Director Stotts.

In October 2023, KDOR responded to the Greenes' petition with a motion to dismiss. The motion alleged multiple deficiencies with the Greenes' complaint including a lack of subject matter jurisdiction, failure to comply with the requirements of the KJRA, failure to state a claim upon which relief can be granted, insufficient process or defective service of process, lack of personal jurisdiction, and immunity.

4 In response to KDOR's motion, the Greenes filed an amended petition.

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