Stephanatos v. United States , 306 F. App'x 560 ( 2009 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2008-5091
BASIL N. STEPHANATOS,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
Basil N. Stephanatos, of Wayne, New Jersey, pro se.
Christine D. Mason, Trial Attorney, Tax Division, Appellate Section, United States
Department of Justice, of Washington, DC, for defendant-appellee. With her on the
brief were Nathan J. Hochman, Assistant Attorney General, and Richard Farber,
Attorney.
Appealed from: United States Court of Federal Claims
Judge Lawrence M. Baskir
NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2008-5091
BASIL N. STEPHANATOS,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
Appeal from the United States Court of Federal Claims in 06-CV-781, Judge Lawrence
M. Baskir.
__________________________
DECIDED: January 6, 2009
__________________________
Before MICHEL, Chief Judge, PROST and MOORE, Circuit Judges.
PER CURIAM.
Plaintiff-Appellant Basil N. Stephanatos appeals a decision of the United States
Court of Federal Claims granting the government’s motion to dismiss his complaint.
Stephanatos v. United States, 81 Fed. Cl. 440 (2008). Because the complaint was
properly dismissed, we affirm.
I. BACKGROUND
Mr. Stephanatos filed a complaint with the U.S. Court of Federal Claims on
November 21, 2006. The complaint alleged a number of illegal actions by the U.S.
government, including constitutional and statutory violations, and sought a refund for the
taxes paid by Mr. Stephanatos for 1992, 1999, 2000, 2004, and 2005. On November
29, 2006, Mr. Stephanatos moved to amend his complaint, which the court allowed.
This amendment added the tax year 2006 to the complaint. The court ultimately
dismissed the complaint for a variety of reasons, as discussed in more detail below.
Before getting to the Court of Federal Claims, Mr. Stephanatos raised the same
or similar issues before the U.S. Tax Court, the U.S. District Court for the District of New
Jersey, and the U.S. Court of Appeals for the Third Circuit. In the U.S. Tax Court, Mr.
Stephanatos claimed he was entitled to a reduction in the deficiencies and penalties
that had been assessed against him for the years 1999 and 2000. The court found that
he was not entitled to any reductions and had to pay the assessed penalties.
Stephanatos v. Comm’r, 87 T.C.M. (CCH) 1429 (2004). The Third Circuit affirmed.
Stephanatos v. Comm’r, 112 F. App’x 868 (3d Cir. 2004) (unpublished table decision),
cert. denied, 543 U.S. 1123 (2005).
In the U.S. District Court for the District of New Jersey, Mr. Stephanatos brought
suit against a number of parties, including the U.S. government and the Tax Court
judge, alleging that they had violated his constitutional and statutory rights, and
“engaged in extortion, fraud, racketeering, conspiracy, obstruction of justice, and
treason.” Stephanatos v. Cohen, No. 06-1310, 2006 WL 2872519, at *1 (D.N.J. Aug. 7,
2006). He also sought monetary damages and tax refunds for 1992, 1999, and 2000.
Id. That court granted the defendants’ motion to dismiss under Fed. R. Civ. Pro.
12(b)(1), finding that Mr. Stephanatos’s challenges to the United States taxation system
had been previously raised and adjudicated, and that Mr. Stephanatos raised the
constitutional and other federal injuries “solely for the purpose of attempting to invoke
[the district c]ourt’s jurisdiction.” Id. at *2. The court declined to exercise jurisdiction
2008-5091 2
over any state law claims that Mr. Stephanatos might have alleged, and dismissed any
other pending motions or claims under Fed. R. Civ. Pro. 12(b)(1). As before, Mr.
Stephanatos appealed to the Third Circuit; that court affirmed the district court’s
decision to dismiss with prejudice, stating that his arguments had “no arguable basis in
fact or law” and that the district court “lacked jurisdiction to entertain many of
Stephanatos’s claims because they were obviously frivolous and without merit.”
Stephanatos v. Cohen, 236 F. App’x 785, 786–87 (3d. Cir. 2007).
II. DISCUSSION
We have jurisdiction over an appeal from the Court of Federal Claims’ final
judgment under 28 U.S.C. § 1295(a)(3). This court reviews all of the issues decided by
the Court of Federal Claims in this case de novo. Nw. LA Fish & Game Pres. Comm’n
v. United States, 446 F.3d 1285, 1289 (Fed. Cir. 2006) (failure to state a claim); Pines
Residential Treatment Ctr., Inc. v. United States, 444 F.3d 1379, 1380 (Fed. Cir. 2006)
(subject matter jurisdiction); Faust v. United States, 101 F.3d 675, 677 (Fed. Cir. 1996)
(res judicata).
A. The Tax Claims
Mr. Stephanatos argues that the court’s decision to dismiss the case for lack of
subject matter jurisdiction is clearly erroneous “because the defendant acknowledged
the existence of the legal claims before the court.” The Court of Federal Claims,
however, has inherent power to determine whether it has jurisdiction, even when the
parties agree otherwise. See Folden v. United States, 379 F.3d 1344, 1354 (Fed. Cir.
2004).
The Court of Federal Claims correctly determined that it did not have subject
matter jurisdiction over Mr. Stephanatos’s claims for a refund of the taxes and penalties
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assessed for 1999 and 2000. Mr. Stephanatos chose to bring those claims before the
Tax Court first, and when he did so, he put the entire matter into the hands of that court.
Erickson v. United States, 309 F.2d 760, 767 (Ct. Cl. 1962) (“[T]he Tax Court’s
jurisdiction, once it attaches, extends to the entire subject of the correct tax for the
particular year.”). Thus, the Court of Federal Claims properly dismissed these claims.
While Mr. Stephanatos did not bring his claim for tax years 1992 and 2004–2006
before the Tax Court, he did bring the 1992 tax claims before the District Court for the
District of New Jersey. Those claims were dismissed with prejudice (as were tax years
1999 and 2000) under Fed. R. Civ. Pro. 12(b)(1), and the Court of Federal Claims held
that it was barred from hearing the claims by principles of res judicata.
Challenging this dismissal under Fed. R. Civ. Pro. 12(b)(1), Mr. Stephanatos
correctly points out that a case dismissed for lack of subject matter jurisdiction has not
received a final judgment on the merits for purposes of res judicata. See Lewis v.
United States, 70 F.3d 597, 602–04 (Fed. Cir. 1995). This is true even where a court
purports to dismiss a case with prejudice. See, e.g., Scott Aviation v. United States,
953 F.2d 1377, 1378 (Fed. Cir. 1992) (“Without jurisdiction, the Claims Court cannot
presume to dismiss the complaint with prejudice.”).
Whenever possible, then, frivolous claims should be dismissed under Fed. R.
Civ. Pro. 12(b)(6) for failure to state a claim upon which relief can be granted, which is a
final adjudication on the merits. Lewis, 70 F.3d at 602–03 (recognizing this as the
“general rule”). Nonetheless, we affirm the court’s decision to dismiss, because we
agree with every court that has evaluated these claims—the claims are obviously
frivolous and without merit.
2008-5091 4
The discussion above applies with equal force to Mr. Stephanatos’s claims for
tax and penalty refunds from 2004–2006. For the 2004 and 2005 claims, the Court of
Federal Claims treated the government’s motion under Fed. R. Civ. Pro. 12(b)(1) as a
Fed. R. Civ. Pro. 12(b)(6) motion and dismissed the claims. Stephanatos, 81 Fed. Cl. at
442. The 2006 claims were dismissed for the same reasons. In discussing this result,
the court stated that “[t]he many efforts that [Mr. Stephanatos] has made to persuade
courts of the merits of his position have been uniformly unsuccessful. His position with
respect to these later tax years can fare no better here.” Id. at 444. In other words,
although the tax year might be different, the argument made regarding what taxes and
penalties Mr. Stephanatos owes remains the same. As such, the Court of Federal
Claims correctly dismissed his 2004–2006 claims under Fed. R. Civ. Pro. 12(b)(6).
B. Other Claims
Mr. Stephanatos raises (or seems to raise) a variety of other claims, some
arguably for the first time on appeal. He claims that he is entitled to money damages for
illegal exaction and that the government has violated Treasury regulations, Internal
Revenue Manual procedures, and the Takings Clause. Mr. Stephanatos also states
that his tax filings were the result of a unilateral mistake, that the government acted
unconscionably, and that he is entitled to equitable recoupment to avoid unjustly
enriching the government.
First, Mr. Stephanatos’s equitable recoupment claim is not supported by his
pleadings. Although Mr. Stephanatos repeatedly cites Bull v. United States, 295 U.S.
247 (1935), to support his claim, he fails to recognize other guidance on that issue. In
United States v. Dalm, 494 U.S. 596, 605 n.5 (1990), the Court noted: “Since Bull, we
have emphasized that a claim of equitable recoupment will lie only where the
2008-5091 5
Government has taxed a single transaction, item, or taxable event under two
inconsistent theories.” Mr. Stephanatos, as far as this court can tell, has not identified
any inconsistent theories asserted by the government. And to the extent that Mr.
Stephanatos is claiming a breach of contract, he does not allege that any contract
existed between himself and the government—a necessary prerequisite to such a claim.
Both of these claims fail because they do not state a claim upon which relief may be
granted.
Regarding Mr. Stephanatos’s claim that the government violated Internal
Revenue Manual procedures and Treasury regulations, these claims appear to be
alternate ways of phrasing Mr. Stephanatos’s 1992, 1999, 2000, and 2004–2006 tax
claims, which we concluded were properly dismissed.
Next, Mr. Stephanatos argues that he is owed money damages because his
funds were illegally exacted from him. Illegal exaction “involves money that was
improperly paid, exacted, or taken from the claimant in contravention of the Constitution,
a statute, or a regulation.” Norman v. United States, 429 F.3d 1081, 1095 (Fed. Cir.
2005) (quotation omitted). The illegal exaction claim was not properly raised before the
Court of Federal Claims. Mr. Stephanatos merely stated in a footnote that “it should be
noted that although plaintiff does not expressly use the term ‘illegal exaction’ or
‘wrongful exaction’ throughout this instant complaint, it should be construed as if the
terms . . . are being used throughout this complaint.” Arguments that are not fleshed
out and are merely raised in footnotes are not preserved. See SmithKline Beecham
Corp. v. Apotex Corp., 439 F.3d 1312, 1320 (Fed. Cir. 2006) (discussing footnotes in
appeals briefs); see also Halliburton Energy Servs., Inc. v. M-I LLC, 514 F.3d 1244,
2008-5091 6
1250 n.2 (Fed. Cir. 2008). We may treat this argument as waived, since this court
“does not ‘review’ that which was not presented to the [trial] court.” Sage Prods., Inc. v.
Devon Indus., Inc., 126 F.3d 1420, 1426 (Fed. Cir. 1997). But even if we were to
evaluate this argument, as before, it appears that Mr. Stephanatos’s illegal exaction
claim is in essence the same argument he made regarding his tax and penalty liabilities,
which we again note were properly dismissed.
Mr. Stephanatos also claims that the government violated the Takings Clause of
the Fifth Amendment. This argument cannot succeed, regardless of whether Mr.
Stephanatos is alleging a per se or regulatory taking. See Commonwealth Edison Co.
v. United States, 271 F.3d 1327, 1339 (Fed. Cir. 2001) (en banc) (“[R]egulatory actions
requiring the payment of money are not takings.”); Branch v. United States, 69 F.3d
1571, 1576 (Fed. Cir. 1995) (“[E]ven though taxes or special municipal assessments
indisputably ‘take’ money from individuals or businesses, assessments of that kind are
not treated as per se takings under the Fifth Amendment.”).
We affirm the Court of Federal Claims’ disposition as it relates to his tort, Privacy
Act, Freedom of Information Act, and other constitutional claims. We likewise affirm the
court’s holding that it did not have jurisdiction over the equitable relief requested in this
case. To the extent that Mr. Stephanatos makes other arguments, we find them to be
without merit.
CONCLUSION
For the reasons stated above, we affirm the Court of Federal Claims’ decision to
dismiss Mr. Stephanatos’s complaint.
2008-5091 7