Haggart v. Philips Medical ( 1994 )

USCA1 Opinion

        November 10, 1994       [NOT FOR PUBLICATION]
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT





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        No. 94-1453

                                 MICHAEL J. HAGGERT,

                                Plaintiff, Appellant,

                                          v.

                        PHILIPS MEDICAL SYSTEMS, INC., ET AL.,

                                Defendants, Appellees.


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                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                      [Hon. Michael Ponsor, U.S. District Judge]
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                                        Before

                                Torruella, Chief Judge,
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                            Selya and Cyr, Circuit Judges.
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            Michael J. Haggert on brief pro se.
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            Loretta C.  Arsgett, Assistant  Attorney General,  Gary R.  Allen,
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        David English  Carmack and S.  Robert Lyons, Attorneys,  Tax Division,
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        Department of Justice, on brief for appellees Philips Medical Systems,
        Inc.,  Heritage  Bank for  Savings,  Ann McDonald,  Elaine  Dionne and
        United States of America.
            Ann S. Duross, Assistant General Counsel, Robert D.  McGillicuddy,
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        Senior Counsel, and Marta  W. Berkley, Counsel, on brief  for appellee
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        Federal Deposit  Insurance Corporation  As Receiver for  Heritage Bank
        for Savings.









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                      Per Curiam.   Michael Haggert appeals the  district
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            court's  grant of  summary judgment  in  favor of  the United

            States,  Philips Medical  Systems,  Inc., Heritage  Bank  for

            Savings,  and  two  of   Heritage's  employees.    We  affirm

            essentially for  the reasons given  by the district  court in

            its decisions dated March 24, 1992 and March 24, 1994, adding

            only the following comments.  

                      Haggert complains that  the district court did  not

            address  his  allegation  that the  notice  of  levy  sent to

            Heritage  Bank violated  certain  provisions of  the Internal

            Revenue  Code  ("Code").   His  complaint  is without  merit,

            however, since  the court  did address the  alleged statutory

            violations.  It correctly concluded that the Internal Revenue

            Service  ("IRS")  could  effect  a  levy  on  Haggert's  bank

            accounts at Heritage  Bank by  sending the bank  a notice  of

            levy.   See 26 U.S.C.   6331(b)  ("The term 'levy' as used in
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            this title includes the power of distraint and seizure by any

            means."); IRS Reg.    301.6331-1(a)(1) ("Levy may be made  by

            serving a notice of levy on any person in possession of . . .

            property subject to levy, including . . .  bank accounts, . .

            .  ."); see also Schiff  v. Simon &  Schuster, Inc., 780 F.2d
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            210,  212  (2d Cir.  1985) (levy  on  property has  long been

            effected  by serving a notice  of levy, and  so an employee's

            argument that  the IRS could not levy on his wages by sending

            a notice of levy to his employer was "absolutely meritless").



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            The differing  language in  section 6331(a) to  which Haggert

            points  -- the  statute permits  levying  on the  property of

            delinquent taxpayers  "by levy," but provides  for levying on

            the salaries  of federal  employees  by "notice  of levy"  to

            their employers --  is not meaningful in view of the law just

            cited.  See  also Sims v.  United States,  359 U.S. 108,  113
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            (1959) (   6331(a)'s provision relating to  levy upon federal

            employees' salaries was enacted specifically to subject those

            salaries "to the same  collection procedures as are available

            against all other taxpayers").

                      The district court also considered  Haggert's other

            claims of procedural irregularity.  It essentially determined

            that  it  need  not   consider  those  claims  in  evaluating

            Haggert's  suit against the bank.   As the  court noted, pre-

            levy procedural requirements are imposed only on the IRS, and

            the IRS had been dismissed from the suit.  We see no error in

            the court's reasoning.   See, e.g., 26 U.S.C.    6331(a) (the
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            Secretary  of the  Treasury must  wait a specified  number of

            days  after  providing  the   taxpayer  with  notice  of  his

            outstanding taxes  and demand  for payment before  levying on

            the taxpayer's  property); id.  (d)(1) (the Secretary  of the
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            Treasury  may  not  levy  on  the  property  of  a delinquent

            taxpayer until the  taxpayer has been given  a written notice
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            1.  Although 26 U.S.C.    6332(c) requires banks to surrender
of intent  to levy); id. (d)(4)  (describing what information
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            a delinquent  taxpayer's property  "only after 21  days after
            service  of levy,"  Haggert  has not  claimed  that the  bank
the notice of  intent to  levy must contain).1   Moreover,  a
            failed to wait the full 21 days after receiving the notice of
            levy before complying with the notice.  

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            bank which has  received an  IRS notice of  levy must  comply

            with the  levy, and has only two defenses -- that the bank is

            not  in possession of the  property, or that  the property is

            subject  to a  prior judicial attachment  or execution.   See
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            United States  v. National  Bank of  Commerce, 472  U.S. 713,
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            722,  727 (1985); see 26  U.S.C.   6332(a)  ("[A]ny person in
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            possession of (or obligated  with respect to) property .  . .

            upon which  a levy has been  made shall . .  . surrender such

            property . .  . to  the Secretary [of  the Treasury],  except

            such part of  the property . . .  as is, at the time  of such

            demand,  subject  to an  attachment  or  execution under  any

            judicial process.").  Thus,  any procedural errors  committed

            by  the IRS  in serving  the notice  of  levy would  not have

            excused  the bank  from  its obligation  to  comply with  the

            notice of  levy, and the  district court could  grant summary

            judgment   for  the  bank   without  first   considering  the

            substantive merits of the alleged errors by the IRS.2

                      Haggert also avers that  the United States has lost

            its sovereignty, having  previously declared bankruptcy,  and

            so could not be substituted for the individual IRS defendants

            originally sued  by Haggert.   Since  Haggert did  not assert

            this  claim below,  however,  he  has  waived it  on  appeal.





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            2.  In passing,  we also  note that Haggert's  claims of  IRS
            error were meritless.

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            United  States  v. Ocasio-Rivera,  991  F.2d 1,  3  (1st Cir.
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            1993).  

                      Next,  Haggert says  that  the points  made in  his

            "affidavits" were never answered, so that summary judgment in

            his favor was warranted.  Those affidavits did not attempt to

            dispute any  material fact in  this case,  however, but  were

            used  exclusively  to  argue Haggert's  case.    Accordingly,

            summary  judgment  for  the  defendants was  proper.    See 6
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            Moore's  Federal Practice Pt. 2,   56.22[1], at 56-746 to 748
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            (1993 ed.) ("The affidavit is no place for ultimate facts and

            conclusions of law, nor for argument of the party's cause.").

                      Haggert's  remaining  claims  were either  resolved

            correctly  by  the  district  court  or  are  in  any   event

            meritless, and so they need not be further discussed here.

                      Finally,  the  United  States  asks   us  to  award

            sanctions of  $1,500 against  Haggert for filing  a frivolous

            appeal.  In a  previous appeal by Haggert in a  related case,

            we said that Haggert's arguments in support of his claim that

            he was  not required  to pay  federal income  tax -- some  of

            which  are  reasserted in  this  appeal  -- were  "meritless,

            indeed silly on their face."  See In re Haggert, No. 92-1519,
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            slip  op. at  10 (1st  Cir. Dec.  22, 1992)  (unpublished per

            curiam).  Haggert's  claim that the IRS  had violated certain

            Code  provisions  apparently was  not  made  in his  previous

            appeal,  but, as  the district  court found,  that  claim was



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            unavailing against the  bank.  Nonetheless, Haggert  appealed

            the judgment  in favor of the bank, yet, on appeal, failed to

            describe any error  in that  finding.  He  also appealed  the

            grant of  summary judgment for his  employer, Philips Medical

            Systems,  Inc.,   despite  the   court's  citation  of   Code

            provisions which expressly immunized  Philips from this suit.

            Since Haggert should have known that his appeal had no chance

            of success, sanctions are  warranted.  See E.H. Ashley  & Co.
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            v.  Wells Fargo Alarm Services, 907 F.2d 1274, 1280 (1st Cir.
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            1990) (it is enough to find an appeal frivolous under Fed. R.

            App. P. 38 if the appellant  "should have been aware that the
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            appeal  had no  chance of  success") (emphasis  in original);

            Lefebvre v.  Commissioner, 830 F.2d 417, 421  (1st Cir. 1987)
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            (a pro se taxpayer "whose  assertions have been found totally

            frivolous  below,  runs  the  risk of  substantially  harsher

            appellate  sanctions [than  double  costs] if  the appeal  is

            objectively  frivolous, i.e.,  without  any legal  or factual

            basis").     In   view   of   Haggert's   present   financial

            circumstances, however, we only grant damages of $300.

                      Affirmed.   Damages of  $300 awarded to  the United
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            States in addition to ordinary costs.
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