United States v. Evans ( 2009 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
August 18, 2009
No. 08-51054 Charles R. Fulbruge III
Clerk
UNITED STATES OF AMERICA
Plaintiff-Appellee
v.
LINDA P EVANS, as the Independent Executrix of The Estate of Robert C
Evans, Jr, Deceased; LINDA P EVANS, Individually
Defendants-Appellants
Appeal from the United States District Court
for the Western District of Texas
5:05-CV-99
Before WIENER, GARZA, and ELROD, Circuit Judges.
PER CURIAM:*
Linda P. Evans (“Evans”) appeals the district court’s judgment in this
action filed against her by the United States. For the following reasons, we
affirm.
I
Evans is the executrix of the estate (“Estate”) of her late husband, Robert
C. Evans, Jr. The IRS initiated an audit of the couple’s joint income tax returns
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
No. 08-51054
and determined that the returns demonstrated a number of deficiencies. Evans
brought Tax Court proceedings to challenge those deficiencies both on her own
behalf and on behalf of the Estate. The Tax Court judgment found against
Evans and the Estate. Evans did not pay the deficient amounts but transferred
her own assets and those of the Estate to a limited partnership. The United
States brought the instant action in district court to collect unpaid taxes,
penalties and accrued interest.1 The United States sought to: (1) reduce to
judgment federal tax assessments made against Evans and the Estate; (2) hold
Evans personally liable as a fiduciary under the federal insolvency statute for
transferring assets out of the Estate without having satisfied her husband’s
outstanding tax liabilities; (3) set aside as fraudulent the transfers of assets to
the limited partnership or, alternatively, to have the partnership declared
Evans’s nominee; (4) foreclose upon the federal tax liens against Evans’ property;
and (5) sell the property.
The parties filed cross-motions for summary judgment. The district court
granted the United States’ motion with respect to the tax assessments and the
fraudulent transfer claim, but held that the fiduciary liability claim was barred
by res judicata. The United States successfully moved for reconsideration, and
the district court held that the fiduciary claims were not barred by res judicata.
Evans also filed a motion for reconsideration, which was denied. In addition to
ordering that Evans pay the judgment, the district court declared the federal tax
liens valid and ordered the foreclosure and sale of the subject property. Evans
timely appealed. On appeal, Evans argues that the district court erred in: (1)
granting summary judgment to the United States; (2) denying her motion for
1
Evans’ joint income tax liability amounted to $519,124.23 for tax years 1989, 1990,
and 1993; her fiduciary liability amounted to $299,184.83 for the tax, interest and penalties
due by the Estate.
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No. 08-51054
reconsideration of the validity of the underlying tax assessments; and (3)
denying her motion under F ED. R. C IV. P. 60(b)(4).
II
We review de novo the district court’s order granting summary judgment.
Gray v. United States, 553 F.3d 410, 412 (5th Cir. 2008).
The United States may seek relief for a taxpayer’s fraudulent transfer of
property under the applicable rules of the state in which the property is located.
Commissioner v. Stern, 357 U.S. 39, 45 (1958). The district court held that the
transfer of assets belonging to Evans and the Estate to the limited partnership
constituted a fraudulent transfer under the Texas Uniform Fraudulent Transfer
Act (“TUFTA”), T EX. B US. & C OM. C ODE §24.006(a). On appeal, Evans does not
dispute the holding that the transfers at issue are fraudulent under TUFTA, but
argues that the United States is barred from relief by TUFTA’s extinguishment
clause, which states that a cause of action with respect to a fraudulent transfer
or obligation under §24.006(a) is extinguished unless the action is brought
within four years after the transfer was made or the obligation was incurred.
T EX. B US. & C OM. C ODE §24.010(a)(2).
The district court correctly held, however, that the United States is not
bound by state statutes of limitations in fraudulent conveyance actions. United
States v. Summerlin, 310 U.S. 414, 416 (1940); United States v. Fernon, 640 F.2d
609, 611-12 (5th Cir. 1981) (“ ‘[I]t is well settled that the United States is not
bound by state statutes of limitation or subject to the defense of laches in
enforcing its rights. . . . The same rule applies whether the United States brings
its suit in its own courts or in a state court.’ ”) (quoting Summerlin, 310 U.S. at
416). Rather, the United States is subject to the ten-year statute of limitations
found in § 6502(a)(1) of the Internal Revenue Code.2 See Fernon, 640 F.2d at
2
26 U.S.C. § 6502(a)(1) states that “Where the assessment of any tax imposed by this
title has been made within the period of limitation properly applicable thereto, such tax may
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No. 08-51054
611-12 & n.7 (interpreting a prior version of § 6502, which set a six-year, rather
than ten-year, statute of limitations).
Evans attempts to distinguish the instant case from Summerlin and
Fernon by arguing that the TUFTA extinguishment clause is a statute of repose,
not a statute of limitations. See, e.g., Smith v. Am. Founders Fin., Corp., 365
B.R. 647, 676 (S.D. Tex. Mar. 10, 2007) (holding that TUFTA §24.010 is a statute
of repose). However, Summerlin does not differentiate between statutes of
limitation and statutes of repose, and we find no reason to do so. “[S]tatutes of
repose eliminate the underlying rights when they lapse,” Margolies v. Deason,
464 F.3d 547, 551 (5th Cir. 2006), extinguishing the right of relief when the
applicable time period expires. Because the fundamental question addressed by
Summerlin is whether a claim brought by the United States can be time-barred
under state law, the effect of a statute of repose—which bars a claim that is
untimely—is equivalent to that of a statute of limitations and thus is treated the
same under Summerlin. See Summerlin, 310 U.S. at 417 (“When the United
States becomes entitled to a claim, acting in its governmental capacity and
asserts its claim in that right, it cannot be deemed to have abdicated its
governmental authority so as to become subject to a state statute putting a time
limit upon enforcement.”); see also Bresson v. Commissioner, 213 F.3d 1173,
1177-79 (9th Cir. 2000) (holding that Summerlin applies to extinguishment
clause under California Uniform Fraudulent Transfer Act, which mirrors
language contained in TUFTA). We thus find that the district court correctly
held that the United States’ TUFTA claim was not time-barred.
be collected by levy or by a proceeding in court, but only if the levy is made or the proceeding
begun. . . within 10 years after the assessment of the tax. . .”
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No. 08-51054
III
Evans also appeals the district court’s denial of her motion to reconsider
the procedural validity of the underlying income tax assessments. The denial
of a motion for reconsideration is reviewed for abuse of discretion. Lincoln Gen.
Ins. Co. v. De La Luz Garcia, 501 F.3d 436, 442 (5th Cir. 2007).
The district court did not abuse its discretion in denying Evans’ motion for
reconsideration. First, Evans filed her motion on February 22, 2008, eleven
months after the district court issued its order and well outside the time frame
allotted by Fed. R. Civ. P. 59(e), which gives a party ten days after the entry of
judgment within which to file. See Fed. R. Civ. P. 59(e) (“A motion to alter or
amend a judgment must be filed no later than 10 days after the entry of the
judgment.”) The district court acted within its discretion to deny Evans’ motion
solely based on its untimeliness. Second, Evans’ arguments fail on the merits.
Evans argues that (1) the Form 4340 that was provided by the IRS and which
sets out the tax assessments for tax years 1989, 1990, 1991 and 1993 is invalid;
(2) the tax assessments for tax years 1989, 1990, and 1991 were invalid because
they were made within 90 days after entry of a Tax Court decision, in
contravention of 26 U.S.C. § 6213(a); (3) the tax assessments were illegal
because they were conducted under a so-called “Quick Assessment.” We are
satisfied from the record, including the extensive proceedings in Tax Court and
district court, that these assertions are utterly lacking in substance.
Evans is unable to point to any specific evidence for her contention that
the IRS’s assessment of her tax liability is incorrect. “A [Form 4340] Certificate
of Assessment and Payment. . . has been held to be presumptive proof of a valid
assessment where the taxpayer has produced no evidence to counter that
presumption.” United States v. McCallum, 970 F.2d 66, 71 (5th Cir. 1992). The
United States has supplied a detailed accounting of the assessments, and neither
the district court nor the Tax Court found the Form 4340 assessments to be
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No. 08-51054
illegitimate. We thus reject Evans’ contention that the tax assessments are
invalid.
The IRS also did not contravene 26 U.S.C.A. § 6213(a), which states that
“Except as otherwise provided . . . no assessment of a deficiency in respect of any
tax . . . shall be made, begun, or prosecuted until such notice has been mailed to
the taxpayer, nor until the expiration of such 90-day or 150-day period, as the
case may be, nor, if a petition has been filed with the Tax Court, until the
decision of the Tax Court has become final.” Here, the IRS conducted the
assessments before the decision of the Tax Court had become final, which, in the
case of an appeal, occurs pursuant to subsections (a)(2) and (a)(3) of 26 U.S.C.
§ 7481 sometime after this court rules. Nevertheless, our review of the Tax
Court's decision acts as a stay of assessment only if the taxpayer files a bond
with the Tax Court under 26 U.S.C. § 7485 no later than the date that she files
her notice of appeal. 3 Evans filed no bond. Thus, the IRS properly continued
with the assessment.
Finally, the IRS’s use of “quick assessments”, a standard procedure under
IRS regulations, was legal. See, e.g., Dallin ex rel. Estate of Young v. United
States, 62 Fed. Cl. 589, 601-02 (2004) (finding that mislabeling of assessment as
jeopardy assessment, rather than a quick assessment, did not render it invalid,
3
Section 7485 states that:
Notwithstanding any provision of law imposing restrictions on the assessment and
collection of deficiencies, the review [of the Tax Court’s decision accorded by section
7483 of the Code] shall not operate as a stay of assessment or collection of any portion
of the amount of the deficiency determined by the Tax Court unless a notice of appeal
in respect of such portion is duly filed by the taxpayer, and then only if the taxpayer))
(1) on or before the time his notice of appeal is filed has filed with the Tax Court
a bond in a sum fixed by the Tax Court not exceeding double the amount of the
portion of the deficiency in respect of which the notice of appeal is filed, and
with surety approved by the Tax Court, conditioned upon the payment of the
deficiency as finally determined, together with any interest, additional
amounts, or additions to the tax provided for by law, or
(2) has filed a jeopardy bond under the income or estate tax laws.
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No. 08-51054
where it was clear on the face of the documents that an assessment was made,
and amount of the tax and identification of the responsible person was correct);
Republic Petroleum Corp. v. United States, 613 F.2d 518, 525 (5th Cir.
1980)(affirming district court judgment in part where underlying assessments
were “quick assessments”.)
IV
Evans lastly appeals the district court’s denial of her F ED. R. C IV. P.
60(b)(4) motion to void the judgment as a matter of law. We review the denial
of a Rule 60(b)(4) motion de novo. Callon Petroleum Co. v. Frontier Ins. Co., 351
F.3d 204, 208 (5th Cir. 2003).
Evans argues that the judgment is void because the district court lacked
jurisdiction to enter the order of foreclosure and sale on the subject properties.
Specifically, Evans argues that the United States failed to file a Notice of Lien
concerning the mineral rights or royalties before commencing the civil lawsuit.
The record belies this assertion. Notices of the United States’ liens were
properly filed prior to the instigation of litigation. The district court properly
denied Evans’ motion to void the judgment.4
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
4
Further, the district court noted that the liens arise automatically upon the date of
the assessment under 26 U.S.C. §§6321 and 6322 regardless of the filing of notice; an alleged
failure to file notice does not affect the taxpayer, but only the validity of the lien as against a
subsequent “purchaser, holder of a security interest, mechanic’s lienor, or judgment lien
creditor.” 26 U.S.C. § 6323(a).
7