Marten v. Swain

601 F. App'x 446
CourtCourt of Appeals for the Seventh Circuit
DecidedFebruary 24, 2015
DocketNo. 14-1771
StatusPublished
Cited by2 cases

This text of 601 F. App'x 446 (Marten v. Swain) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Marten v. Swain, 601 F. App'x 446 (7th Cir. 2015).

Opinion

ORDER

Janice and Christopher Marten sued two Indiana state employees under 42 U.S.C. [447]*447§ 1983 for alleged civil-rights violations in connection with a state tax investigation. Specifically, the Martens claimed that the two officials — Rick Albrecht, a tax auditor, and Andrew Swain, an attorney in the Office of the State Attorney General— fraudulently procured a search warrant for their home and business, searched and seized items beyond the scope of that warrant, used administrative subpoenas in furtherance of a criminal investigation, and withheld exculpatory evidence. The district court dismissed the § 1983 claim as time-barred — a decision that, as both sides now acknowledge, runs contrary to our holding in Julian v. Hanna, 732 F.3d 842 (7th Cir.2013). Even so, the defendants argue that we can affirm the dismissal because the complaint fails to plead adequate facts to state a claim for relief. But they did not make this argument in the district court, so we cannot rely on it as an alternative ground to support affirmance. Swain also argues that he is entitled to absolute prosecutorial immunity. This argument was raised below but is not appropriate for resolution on the pleadings. We vacate and remand.

I. Background

Because the case was dismissed at the pleading stage, we accept the facts alleged in the Martens’ complaint as true. Serino v. Hensley, 735 F.3d 588, 590 (7th Cir.2013). In 2007 the Indiana Department of Revenue (“the DOR”) initiated a tax audit of Janice Marten’s jewelry business. Al-brecht was the original auditor on the case. From July 2007 to January 2008, Janice asked Albrecht for status updates on the audit, but he did not respond. In 2008 the DOR initiated civil proceedings against Janice and her business, alleging that they had failed to collect and remit the correct sales tax.

The Office of the Indiana Attorney General dispatched Swain, chief counsel in its Tax Litigation Section, to represent the DOR in the civil proceedings. In June 2008 Swain subpoenaed and deposed Janice and her husband, Christopher. The couple asked Swain if they needed a lawyer. He told them that they did not. What Swain did not tell them was that Albrecht had already launched a criminal investigation. Before the depositions took place, Albrecht submitted an affidavit in support of a search warrant for the Martens’ home and the jewelry business. The Martens allege that the affidavit contained “misleading, if not false, statements of fact.”

Swain and other unidentified officials executed the search warrants on July 20, 2008. The search extended to items and locations not covered by the warrants. Afterward, Swain gave the Martens search inventories purporting to itemize the seized property, but the inventories omitted a substantial number of items.

While the search was ongoing, Albrecht handed Janice copies of tax assessments against her business. Two days later, the DOR filed formal Jeopardy Assessment Notices seeking about $900,000 from the jewelry business and the Martens in their capacity as officers of the business. The Martens retained counsel, and the lawyers met with the DOR Commissioner on October 10 and negotiated a settlement. The terms of the settlement called for the Martens to make a preliminary escrow deposit of $100,000 pending a review of the audit and a final determination of back taxes due. On October 15 the jewelry business delivered a check for $100,000 to the DOR.

Eight days later, the Martens were arrested on 14 criminal counts, including failure to pay taxes, tax evasion, and falsification of tax records. The charging information was based in part on Albrecht’s [448]*448affidavit and evidence gleaned from the Martens’ depositions from the civil proceedings. The criminal charges remained pending for nearly two and a half years. Finally, on March 7, 2011, the state court dismissed all charges against the Martens after finding that the audit report had been purposefully withheld from them and their counsel.

In February 2012 the Martens filed suit in district court against Swain, Albrecht, the DOR, the Office of the Attorney General, and unknown representatives of these state offices. Count I alleged a § 1983 claim for violation of the Martens’ rights under the Fourth, Fifth, Sixth, and Fourteenth Amendments. Counts II, III, IV, and V alleged claims under Indiana law for malicious prosecution, intentional infliction of emotional distress, abuse of process, and conversion.

The defendants moved to dismiss the action in its entirety. The district court dismissed Counts I, III, IV, and V with prejudice, finding each count barred by the applicable statute of limitations. The court dismissed Count II (the state-law malicious-prosecution claim) without prejudice, and allowed the Martens to amend their complaint to address notice and immunity issues under the Indiana Tort Claims Act.

The amended complaint alleged a single state-law claim for malicious prosecution against Swain, Albrecht, and the State of Indiana. The defendants again moved to dismiss, this time for lack of subject-matter jurisdiction, or alternatively, based on the immunity provision of the Tort Claims Act. The Martens conceded that with the dismissal of the § 1983 claim, jurisdiction was now lacking. They asked the court to “remand” the case to state court.

The district court declined the remand request because the Martens had initiated the suit in federal court. And although no federal claim had survived the initial motion to dismiss, the court retained jurisdiction and addressed the state-law malicious-prosecution claim on. the merits. The court held that Swain and Albrecht were entitled to immunity under the Tort Claims Act and the State of Indiana had not consented to suit. Accordingly, the court dismissed the amended complaint with prejudice. This appeal followed.

II. Discussion

The Martens’ sole argument on appeal is that the district court erred in dismissing their § 1983 due-process claim for malicious prosecution as time-barred under the two-year statute of limitations.1 The judge concluded that the claim accrued in 2008 when Swain and Albrecht took the actions in question, rather than in 2011 when the criminal charges against the Martens were dismissed. Because the Martens filed suit in late 2012, the judge dismissed the claim as untimely.

That decision is incompatible with Julian v. Hanna, 732 F.3d 842, as Swain and Albrecht now admit. We held in Julian that a § 1983 claim for malicious prosecution “does not accrue until the criminal proceeding that gave rise to it ends in the claimant’s favor.” Id. at 845. Under this rule of accrual, the due-process claim accrued in 2011 when the criminal charges against the Martens were dismissed. The § 1983 claim — filed the following year— was therefore timely.

[449]*449Swain and Albrecht concede the error but insist that we can affirm anyway because the Martens have failed to state a claim upon which relief can be granted. They identify two flaws in the complaint.

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Cite This Page — Counsel Stack

Bluebook (online)
601 F. App'x 446, Counsel Stack Legal Research, https://law.counselstack.com/opinion/marten-v-swain-ca7-2015.