Haag v. United States , 736 F.3d 66 ( 2013 )

United States Court of Appeals
For the First Circuit
No. 12-2176
KATHLEEN HAAG,
Plaintiff, Appellant,
v.
UNITED STATES OF AMERICA,
INTERNAL REVENUE SERVICE,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Patti B. Saris, U.S. District Judge]
Before
Torruella, Dyk,* and Thompson,
Circuit Judges.
Timothy J. Burke, with whom Burke & Associates, was on brief
for appellant.
John Schumann, Attorney, Tax Division, Department of Justice,
with whom Kathryn Keneally, Assistant Attorney General, Teresa E.
McLaughlin, Attorney, Tax Division, and Carmen M. Ortiz, United
States Attorney, were on brief for appellees.
November 25, 2013
*
Of the Federal Circuit, sitting by designation.
TORRUELLA, Circuit Judge. This case marks the fourth
time that taxpayer Kathleen Haag ("Haag") has appeared before this
court to litigate matters pertaining to her federal income tax
liability. In this most recent episode, Haag claims that the
district court erred when it dismissed her complaint, which sought
equitable relief from judgment, for failure to state a claim.
Haag's claim is premised on her belief that I.R.S. Notice 2011-70,
2011-32 I.R.B. 135, 2011 WL 3035113 ("Notice 2011-70" or "the
Notice") affords her equitable relief from judgment and that our
prior finding to the contrary was mere dicta. Finding now -- for
a second time -- that Notice 2011-70 is inapplicable to Haag, we
affirm.
I. Background
The origins of this litigation are well documented, see
Haag v. United States (Haag I), 485 F.3d 1, 2 (1st Cir. 2007), so
we sketch here only the essential facts. In December 2002, the
United States filed suit against Haag and her husband Robert Haag
(collectively, "the Haags") in district court, seeking to reduce to
judgment $1,620,244 in tax liabilities for the years 1985 to 1991
and 1993 through 2001. In Haag's answer to the government's
complaint, she asserted an affirmative defense; she claimed that
she was entitled to "innocent spouse" relief pursuant to 26 U.S.C.
§ 6015(b). At that time, however, a two-year statute of
limitations governed innocent spouse relief claims. The government
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argued that the limitations period had already run and that Haag
had administratively waived her claim. While the case was pending,
the Haags filed a separate action contending that they had been
denied a statutorily required hearing. The district court agreed
that the limitations period had run and granted summary judgment in
favor of the government on both claims. The Haags appealed only
their hearing claim, which we affirmed in Haag I.
Undaunted, Haag continued her pursuit of relief from
judgment. First, in an action later consolidated with her
husband's, Haag attempted to revive the arguments decided in Haag
I. This Court held that the Haags' claims were barred by the
principle of res judicata. Haag v. United States (Haag II and Haag
III), 589 F.3d 43 (1st Cir. 2009). Next, Haag sought to take
advantage of a new legal development when, in 2009, the United
States Tax Court ("the Tax Court") invalidated the two-year
limitations period on requests for innocent spouse relief. See
Lantz v. Commissioner, 132 T.C. 131, 131 (2009)(holding that two-
year statute of limitations on requests for innocent spouse release
was improper), rev'd, 607 F.3d 479 (7th Cir. 2010). Haag filed a
fourth suit in the Tax Court asserting that Lantz had invalidated
the two-year limitations period and that 26 U.S.C. § 6015(g)(2)
could lift the res judicata bar, allowing her to relitigate her
claim for innocent spouse relief. The Tax Court disagreed, and we
once again affirmed, holding that res judicata applied. Haag v.
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Shulman (Haag IV), 683 F.3d 26, 30-32 (1st Cir. 2012). By the time
of our decision, Lantz had been reversed by the Seventh Circuit,
but the IRS had issued Notice 2011-70 stating its intent to adopt
other regulations concerning the availability of equitable relief
to innocent spouses under § 6015(f). Until such regulations could
be adopted, the Notice provided that equitable relief would be
available to innocent spouses under certain conditions.
Notice 2011-70 provides, in pertinent part, that
taxpayers whose innocent spouse relief claims had been litigated
previously and barred by the two-year statute of limitations would,
going forward, not be subject to collection "[i]f the IRS
stipulated in the court proceeding that the individual's request
for equitable relief would have been granted had the request been
timely." Notice 2011-70 at 136. Noting that no such stipulation
appeared in Haag I, we agreed with the government that Notice 2011-
70 did not apply to Haag:
In any event, we are constrained to agree with
the government's reasoning that the terms of
Notice 2011-70 would be inapplicable to Haag
even if her claim were not precluded by res
judicata. . . . In Haag's case, the IRS never
stipulated that § 6015(f)'s two-year deadline
constituted the sole obstacle to her claim.
On the contrary, we note that in the Haag I
litigation, the government argued that Haag
administratively waived her claim by not
articulating her request for relief before the
Secretary prior to raising it at the district
court.
Haag IV, 683 F.3d at 32 n.2.
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This brings us to the present matter. On September 9,
2011, before Haag IV was final, Haag filed this complaint seeking
relief from the judgment in Haag I pursuant to Federal Rule of
Civil Procedure 60(d)(1).1 The government moved to dismiss the
case on November 1, 2011, arguing that Haag had failed to satisfy
any of the grounds for relief from a final judgment under Rule
60(b), or alternatively, that Haag had failed to state a claim
under Federal Rule of Civil Procedure 12(b)(6). That matter was
stayed pending our ruling in Haag IV, at which point the case was
reopened. The district court ultimately dismissed the case for
failure to state a claim, finding that Notice 2011-70 did not
afford Haag the opportunity to seek equitable relief from the
judgment in Haag I.2 Haag now appeals the dismissal of her
complaint.
II. Analysis
We review a district court's grant of a motion to dismiss
for failure to state a claim de novo. Gray v. Evercore
Restructuring L.L.C., 544 F.3d 320, 324 (1st Cir. 2008). Although
1
Federal Rule of Civil Procedure 60(d)(1) recognizes a court's
authority to "entertain an independent action to relieve a party
from a judgment, order, or proceeding." Haag sought equitable
relief from the district court's order in United States v. Haag,
02-CV-12490-REK, 2004 WL 2650274 (D. Mass. Sept. 30, 2004), which
denied Haag's innocent spouse relief claim.
2
The district court also found that Haag I became final in 2006
despite Haag's continued efforts to litigate the matter. Haag does
not challenge this finding on appeal.
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we view all well-pleaded facts in the light most favorable to the
non-moving party, "the tenet that a court must accept as true all
of the allegations contained in a complaint is inapplicable to
legal conclusions." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
In short, Haag's argument on appeal is that her complaint
was wrongly dismissed because Notice 2011-70 provides her with a
new and plausible claim to equitable relief. She dismisses our
finding to the contrary in Haag IV as mere dicta upon which the
district court erroneously relied. By way of support, Haag cites
the Notice's stated purpose: to expand the period in which
taxpayers may request innocent spouse relief.3 See Notice 2011-70
at 135. She also cites a Notice provision stating, in part, that
where a final judgment has been entered in a case denying an
innocent spouse relief claim as time barred, the IRS will not seek
to collect. See id. at 136.
The IRS, however, has expressly limited its willingness
to forgo collection activity to certain limited circumstances,
encompassing only those cases in which "the IRS stipulated in the
court proceeding that the individual's request for equitable relief
would have been granted had the request been timely." Id. Haag
3
Haag's quotation of the Notice also includes language that is
not, in fact, part of the Notice. The additional language upon
which Haag relies appears to come from a commercial summary, or
headnote, from Wolters Kluwer. While we have serious doubts as to
whether the summary supports Haag's position, we are certain that
we need not waste time parsing such extraneous material.
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readily concedes that no such stipulation was made in her case.
This leaves Haag in the precarious position of arguing that a
Notice which provides specified relief only in limited
circumstances -- which Haag admittedly does not meet -- nonetheless
affords her the opportunity to apply for equitable relief.
Haag pins her hopes on a sentence that appears in the
Notice under the heading "Requests that Were in Litigation and that
Litigation is Now Final." She points us to language that tells
individuals in litigated cases where the IRS provided the necessary
stipulation that they "do not need to reapply for equitable
relief." Id. at 136 (emphasis added). From this instruction,
Haag seeks to infer precisely the inverse proposition. She argues
that the IRS, by stating that taxpayers in specified cases need not
reapply for relief, has implied that taxpayers who do not meet
these criteria must reapply if they desire equitable relief. The
Notice's plain language, however, does not support such a strained
reading.
The Notice is structured such that it divides taxpayers
seeking equitable relief into separate categories, providing
different transitional rules for those with future requests,
pending requests, requests denied but not litigated, requests in
litigation, and requests that were litigated and are now final.
See id. at 135-36. While the Notice explicitly provides that those
individuals whose requests "were denied by the IRS solely for
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untimeliness and were not litigated may reapply for relief," id. at
135 (emphasis added), it makes no such allowance for those, like
Haag, whose requests were litigated and who received no
stipulation, see id. at 136. To the contrary, when discussing
those taxpayers whose litigation is now final, the Notice expressly
limits the relief it offers to "the circumstances set forth," which
Haag concedes are inapplicable to her. As we determined in Haag
IV, Haag simply does not qualify for the relief she claims under
Notice 2011-70.
Moreover, even assuming that Haag is correct insofar as
she argues that our discussion of Notice 2011-70 in Haag IV
constituted non-binding dicta, the district court certainly did not
err by incorporating our findings into its own analysis. "[C]ourts
often, quite properly, give considerable weight to dictum -
particularly to dictum that seems considered as opposed to casual."
Dedham Water Co., Inc. v. Cumberland Farms Dairy, Inc., 972 F.2d
453, 459 (1st Cir. 1992). Nothing prevented the district court
from agreeing with our reasoning and quoting from it in delivering
its opinion, and none of Haag's arguments have persuaded us to
reverse course on the question of the applicability of Notice 2011-
70 to her case.
Because all of Haag's arguments regarding res judicata
are predicated on her belief that Notice 2011-70 is applicable to
her claim, we need go no further. By its plain language, Notice
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2011-70 does not apply to Haag's situation because her request for
relief was previously litigated, is now final, and there was no IRS
stipulation. As such, Haag has failed to state a claim upon which
relief can be granted, and the district court properly dismissed
her complaint.
So concludes yet another attempt by Haag to delay the
government's legitimate collection efforts by litigating a claim of
dubious merit. Should Haag continue this course of conduct in the
future, she may risk incurring sanctions.
Affirmed.
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