Watson v. United States ( 2008 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 14, 2008
No. 07-41178 Charles R. Fulbruge III
Summary Calendar Clerk
SAMUEL R WATSON; ESTER R WATSON
Plaintiffs-Appellants
v.
UNITED STATES OF AMERICA, ex rel; AMELIA LERMA, Revenue Officer
Defendant-Appellee
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 2:07-CV-326
Before JOLLY, DENNIS, and PRADO, Circuit Judges.
PER CURIAM:*
Plaintiffs-Appellants appeal the district court’s dismissal with prejudice
of their claims asserting that a United States revenue officer acted unlawfully
in connection with the assessment and collection of taxes, as well as the district
court’s denial of their motion to recuse and their motion to vacate several rulings
of the district court. For the following reasons, we AFFIRM in part, VACATE
in part, and REMAND.
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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. 07-41178
I. FACTUAL AND PROCEDURAL BACKGROUND
After assessing unpaid federal income tax liabilities against Samuel and
Esther Watson (“Plaintiffs”) for tax years 1996-2000, the Internal Revenue
Service (“IRS”) filed several notices of federal tax liens against Plaintiffs and
issued numerous levies to collect the unpaid assessments. Plaintiffs filed a
Texas state court action challenging the validity of the federal tax liens, and the
action was removed to the United States District Court for the Southern District
of Texas. There, Chief Judge Hayden Head (“Chief Judge Head”) dismissed the
case for lack of subject matter jurisdiction. In 2007, the IRS released the tax
liens filed against Plaintiffs after using the proceeds from a sale of some of
Plaintiffs’ property to satisfy Plaintiffs’ liabilities.
Prior to the release of the liens, on August 1, 2007, Plaintiffs filed the
present action against the United States ex rel. Revenue Officer Amelia Lerma
(“Defendant”) under 26 U.S.C. § 7433 in the United States District Court for the
Southern District of Texas. They alleged that during the course of the
assessment and collection of their federal taxes, Defendant committed various
acts that were unlawful under the Internal Revenue Code and under federal
criminal statutes. Plaintiffs initially sought a temporary restraining order
(“TRO”) removing the liens against their real property and also sought damages.
Chief Judge Head presided over this action and denied Plaintiffs’ request for a
TRO, noting that Plaintiffs had failed to show that they had a substantial
likelihood of success on the merits, that the threatened injury to them
outweighed the damage to the opposing party, or that the public interest would
not be disserved by the TRO. The court also granted Defendant an extension of
time to answer the complaint.
Plaintiffs moved to vacate the district court’s orders and to recuse Chief
Judge Head on the ground that the denial of the TRO request, the extension of
time given to Defendant, and the dismissal of their earlier case demonstrated
2
No. 07-41178
that he was biased. On October 2, 2007, Defendant moved to dismiss Plaintiffs’
suit for lack of subject matter jurisdiction and for failure to state a claim.
Plaintiffs did not respond to the motion to dismiss, and they failed to appear at
the pretrial conference scheduled for October 18, 2007. On November 14, 2007,
the district court dismissed the case with prejudice based on two alternative
grounds: (1) it granted Defendant’s motion to dismiss for lack of subject matter
jurisdiction because under its Local Rule 7.4, Plaintiffs’ failure to respond to the
Defendant’s motion could be “construed as a representation of no opposition”;
and (2) in the alternative, it dismissed the case for failure to prosecute based on
Plaintiffs’ failure to appear at the pre-trial conference despite receiving sufficient
notice. In addition, the district court denied Plaintiffs’ motion to recuse and
vacate earlier orders. Plaintiffs appealed.
II. DISCUSSION
A. Motion to recuse
We review the denial of a motion to recuse for abuse of discretion.
Matassarin v. Lynch, 174 F.3d 549, 571 (5th Cir. 1999). Under 28 U.S.C. § 455,
a party may request the recusal of a judge either if “[the judge] has a personal
bias or prejudice concerning a party, or personal knowledge of disputed
evidentiary facts concerning the proceeding,” id. § 455(b)(1), or if “his
impartiality might reasonably be questioned,” id. § 455(a). Plaintiffs contend
that Chief Judge Head should have been recused for bias, citing his dismissal of
their earlier case, his denial of their TRO request, and his extension of
Defendant’s time to respond to Plaintiffs’ complaint. The Supreme Court has
stated that “judicial rulings alone almost never constitute a valid basis for a bias
or partiality motion.” Liteky v. United States, 510 U.S. 540, 555 (1994); see also
Andrade v. Chojnacki, 338 F.3d 448, 455 (5th Cir. 2003). Plaintiffs cite no
evidence of bias other than the judge’s rulings, nor do they cite any relevant
authority in support of their proposition that he should have been recused. We
3
No. 07-41178
therefore hold that his decision not to recuse himself was not an abuse of
discretion.
B. Motion to vacate prior orders
A motion to alter or amend a judgment under Federal Rule of Civil
Procedure 59(e) “must clearly establish either a manifest error of law or fact or
must present newly discovered evidence” and “cannot be used to raise arguments
which could, and should, have been made before the judgment issued.”
Rosenzweig v. Azurix Corp., 332 F.3d 854, 863 (5th Cir. 2003) (internal quotation
marks omitted). Plaintiffs offer no facts or arguments in support of their motion
to vacate the court’s prior orders. Therefore, the district court’s denial of this
motion was proper.
C. Dismissal for lack of subject matter jurisdiction
The district court granted Defendant’s motion to dismiss for lack of subject
matter jurisdiction based solely on Plaintiffs’ failure to file a response or appear
at a pretrial conference to respond to the motion. In doing so, the district court
relied on its Local Rule 7.4, which permits it to construe a party’s failure to
respond as a representation of no opposition. It did not consider the substance
of the motion. We have previously recognized “the power of district courts to
‘adopt local rules requiring parties who oppose motions to file statements of
opposition.’” Johnson v. Pettiford, 442 F.3d 917, 918 (5th Cir. 2006) (quoting
John v. Louisiana, 757 F.2d 698, 708 (5th Cir. 1985)). However, “we have not
‘approved the automatic grant, upon failure to comply with such rules, of
motions that are dispositive of the litigation.’” Id. (quoting John, 767 F.2d at
709). Rather, “[b]efore a trial judge dismisses a complaint with prejudice, there
should be a clear record of delay or contumacious conduct, and a finding that
lesser sanctions would not serve the system of justice.” Luna v. Int’l Ass’n of
Machinists & Aerospace Workers Local #36, 614 F.2d 529, 531 (5th Cir. 1980).
The mere failure to respond to a motion is not sufficient to justify a dismissal
4
No. 07-41178
with prejudice. See Johnson, 442 F.3d at 919 (vacating a dismissal of a habeas
petition based on the petitioner’s failure to respond to a government motion,
because a two-month period with no response did not constitute a clear record
of delay and because the district court did not consider lesser sanctions); Ramsey
v. Signal Delivery Serv., Inc., 631 F.2d 1210, 1214 (5th Cir. 1980) (vacating a
district court’s dismissal with prejudice because the plaintiff’s failure to respond
to a motion to dismiss within three months was not the sort of extreme delay
that warranted dismissal).
Here, only a month and a half elapsed between Defendant’s motion to
dismiss and the district court’s dismissal. This is a shorter delay than was
present in either Luna or Ramsey, in which we found insufficient evidence of
delay, and Defendant cites no cases in which we have found a clear record of
delay on facts similar to those here. Plaintiffs’ modest delay in responding to the
motion, even in combination with their failure to appear at a hearing to respond
to the motion, does not constitute sufficient delay or contumacious conduct that
would justify dismissal with prejudice. Moreover, there is no evidence that the
district court attempted to use lesser sanctions or found that lesser sanctions
would not have served the system of justice. Therefore, the district court erred
in dismissing the case with prejudice based on Plaintiffs’ failure to respond to
Defendant’s motion.
D. Dismissal for failure to prosecute
As an alternative to its dismissal for lack of subject matter jurisdiction, the
district court dismissed the case for failure to prosecute because Plaintiffs failed
to appear before the court at an initial pretrial conference. We review the
dismissal of a case based on failure to prosecute for abuse of discretion.
Stearman v. Comm’r of Internal Revenue, 436 F.3d 533, 535 (5th Cir. 2006).
“Dismissals with prejudice for failure to prosecute are proper only where (1)
there is a clear record of delay or contumacious conduct by the plaintiff and (2)
5
No. 07-41178
the district court has expressly determined that lesser sanctions would not
prompt diligent prosecution, or the record shows that the district court employed
lesser sanctions that proved to be futile.” Id. As discussed above, we see no
evidence that the district court employed lesser sanctions or expressly
determined that lesser sanctions would be inadequate, nor do we find a clear
record of delay or contumacious conduct by Plaintiffs. Therefore, the district
court abused its discretion in dismissing for failure to prosecute.
III. CONCLUSION
We AFFIRM the district court’s denial of Plaintiffs’ motion to recuse and
motion to vacate prior orders, VACATE its dismissal for lack of subject matter
jurisdiction or alternatively for failure to prosecute, and REMAND for further
proceedings.
AFFIRMED IN PART, VACATED IN PART, AND REMANDED.
6