Roman v. United States ( 2023 )

Case: 22-1015 Document: 25 Page: 1 Filed: 03/09/2023
United States Court of Appeals
for the Federal Circuit
______________________
JUAN ROMAN,
Plaintiff-Appellee
v.
UNITED STATES,
Defendant-Appellant
______________________
2022-1015
______________________
Appeal from the United States Court of Federal Claims
in No. 1:20-cv-00040-BAF, Senior Judge Bohdan A. Futey.
______________________
Decided: March 9, 2023
______________________
JUAN ROMAN, Butner, NC, pro se.
BETHANY HAUSER, Tax Division, United States Depart-
ment of Justice, Washington, DC, for defendant-appellant.
Also represented by DAVID A. HUBBERT, JOAN I.
OPPENHEIMER.
______________________
Before LOURIE, DYK, and HUGHES, Circuit Judges.
Hughes, Circuit Judge.
This is a tax refund case. Pro se Plaintiff-Appellee Juan
Roman sued the government in the United States Court of
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2 ROMAN v. US
Federal Claims alleging, among other things, that he was
entitled to a refund on taxes that he paid but that were
assessed against his ex-wife. Before the government filed
its Answer, the Court of Federal Claims denied the govern-
ment’s motion to dismiss Mr. Roman’s third-party refund
claim, granted the government’s motion to dismiss Mr. Ro-
man’s other claims, and entered judgment in the amount
of $50,002.04 in Mr. Roman’s favor. For the reasons pro-
vided below, we vacate the trial court’s judgment as it per-
tains to Mr. Roman’s third-party refund claim and remand
for further proceedings consistent with this opinion.
I
A
Mr. Roman and his ex-wife, Iris Gabriela Espinosa, en-
tered into a property settlement agreement in 2009 as part
of their divorce. In exchange for $150,000 from Mr. Roman,
Ms. Espinosa transferred to him her interest in the home
that they shared. In an amendment to the agreement, Mr.
Roman agreed to pay any taxes assessed on Ms. Espinosa
for her receipt of the $150,000. Ms. Espinosa reported the
$150,000 payment on her tax return as income for the 2010
tax year. The IRS then assessed $50,002.04 in taxes and
penalties and mailed Ms. Espinosa a notice of intent to take
possession of her property, including the previously shared
home, if the assessment was not satisfied.
Mr. Roman and Ms. Espinosa met with an IRS officer
to discuss the matter. Mr. Roman asked if the notice to Ms.
Espinosa indicated that the IRS had already placed a lien
on his home. Mr. Roman explained that Ms. Espinosa no
longer had any ownership rights in the previously shared
home. While the lien had apparently not been placed, the
IRS officer consulted with a supervisor and told Mr. Roman
that Ms. Espinosa’s tax liability must be paid to stop a levy
against Mr. Roman’s home. Mr. Roman claims that he be-
lieved that he “ha[d] no realistic alternative to payment of
a tax that he did not owe.” J.A. 19–20 (Complaint at 2–3).
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ROMAN v. US 3
The IRS officer also told Mr. Roman that he could appeal
the assessment once the tax was fully paid.
The IRS officer prepared an installment agreement for
paying the tax liability that listed Ms. Espinosa as the tax-
payer, identifying Mr. Roman’s checking account and fi-
nancial institution. Although Mr. Roman did not agree to
sign the installment agreement, Mr. Roman made an ini-
tial large payment towards the amount due on his ex-wife’s
account and then began sending monthly payments to the
IRS in accordance with the installment agreement. The
$50,002.04 tax obligation was satisfied on March 8, 2017.
Mr. Roman asserts that he paid the tax under protest.
B
On January 13, 2020, Mr. Roman filed a refund suit in
the Court of Federal Claims. 1 Mr. Roman argued that the
IRS wrongfully assessed the income tax on the $150,000
transfer because 26 U.S.C. § 121(a) provides for an exclu-
sion from gross income of gain for certain sales of a princi-
pal residence. He argued that his payment to Ms. Espinosa
qualified for exclusion under 26 U.S.C. § 121; thus, no
taxes were legitimately owed on the $150,000 sum, and he
was entitled to a refund of his $50,002.04 payment.
Mr. Roman asserted that he had standing to contest
Ms. Espinosa’s tax liability in the Court of Federal Claims
under two theories. First, he argued he could bring a third-
party refund claim under 28 U.S.C. § 1346(a)(1), relying on
1 Mr. Roman also brought a personal refund claim
and various claims for wrongful collection, tort, criminal
misconduct, and due process violations. The Court of Fed-
eral Claims dismissed Mr. Roman’s personal refund claim
and various other claims for damages. Roman v. United
States, No. 20-40 T at J.A. 13 (Aug. 2, 2021) (unreported)
(available at J.A. 2–13). Mr. Roman does not contest the
Court of Federal Claims rulings in this respect.
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4 ROMAN v. US
the Supreme Court’s discussion of the meaning of the term
taxpayer in United States v. Williams, 514 U.S. 527 (1995).
Second, Mr. Roman contended that, even if he were not
deemed a taxpayer, he had a cause of action under the im-
plied contract clause of the Tucker Act because he paid Ms.
Espinosa’s taxes under duress. See 28 U.S.C. § 1491(a)(1).
The government moved to dismiss Mr. Roman’s third-
party refund claim for lack of subject matter jurisdiction.
The government argued that Mr. Roman was not in the
class of persons who could bring an action under
§ 1346(a)(1) because 26 U.S.C. § 6511 requires that the
claimant in such case be the “taxpayer.” Citing Court of
Claims and Court of Federal Claims case law, the govern-
ment contended that Ms. Espinosa alone was the “tax-
payer” who could file a refund suit for the $50,002.04
because she was the person against whom the tax was as-
sessed. The government also argued that the Williams de-
cision could not support Mr. Roman’s position because it
had been superseded by statute.
The Court of Federal Claims denied the government’s
motion as to Mr. Roman’s third-party tax refund claim. The
court determined that it had jurisdiction under § 1346(a)(1)
over Mr. Roman’s third-party refund claim as an action for
the recovery of any internal revenue tax alleged to have
been erroneously or illegally assessed or collected based on
his claim that the income tax was not legally owed under
26 U.S.C. § 121. See Roman v. United States, No. 20-40 T,
at J.A. 9–10 (Aug. 2, 2021) (unreported) (available at
J.A. 2–13) [Decision]. According to the trial court, Mr. Ro-
man was a “taxpayer.” Id. The court noted that the govern-
ment did not address the merits of Mr. Roman’s claim that
the $150,000 was not taxable income under 26 U.S.C.
§ 121. Id. The court then found that all of Mr. Roman’s pay-
ments to the IRS were documented in the record and
granted Mr. Roman’s third-party refund claim in the
amount of $50,002.04. Id. at J.A. 13.
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ROMAN v. US 5
The government appealed. We have jurisdiction pursu-
ant to 28 U.S.C. § 1295(a)(3).
II
Resolution of this appeal rests on two issues. First, we
must decide whether Mr. Roman was a “taxpayer” as re-
quired by 26 U.S.C. § 6511(a). For the reasons explained
below, we hold that he is not and that the Court of Federal
Claims lacked jurisdiction to hear Mr. Roman’s third-party
refund claim under § 1346(a)(1). We then turn to whether
Mr. Roman has nevertheless pled an implied contract claim
under 28 U.S.C. § 1491(a)(1). We hold that he has.
We review de novo the Court of Federal Claims’ grant
or denial of a motion to dismiss for lack of subject matter
jurisdiction, and we accept well-pleaded factual allegations
as true. Inter-Tribal Council of Ariz., Inc. v. United States,
956 F.3d 1328, 1338 (Fed. Cir. 2020). Findings of fact relat-
ing to jurisdictional issues are reviewed for clear error.
Banks v. United States, 314 F.3d 1304, 1307–08 (Fed. Cir.
2003). Mr. Roman, as the plaintiff, bears the burden of es-
tablishing jurisdiction by a preponderance of the evidence.
Brandt v. United States, 710 F.3d 1369, 1373 (Fed. Cir.
2013).
We give pro se plaintiffs more latitude in their plead-
ings than a party represented by counsel, Estelle v. Gam-
ble, 429 U.S. 97, 106 (1976), and we may search the
complaint and record “to see if plaintiff has a cause of ac-
tion somewhere displayed,” Ruderer v. United States, 412
F.2d 1285, 1292 (Ct. Cl. 1969). Such leniency, however,
does not relieve a plaintiff of jurisdictional requirements.
Kelley v. Sec’y, U.S. Dep’t of Lab., 812 F.2d 1378, 1380 (Fed.
Cir. 1987).
A
We first address whether the Court of Federal Claims
erred in holding that it had jurisdiction over Mr. Roman’s
third-party tax refund claim under § 1346(a)(1).
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6 ROMAN v. US
The government argues that the trial court lacked ju-
risdiction because one who pays the tax liability of another,
as Mr. Roman did for Ms. Espinosa, is not a “taxpayer.” We
agree.
Section 1346(a)(1) provides that:
The district courts shall have original jurisdiction,
concurrent with the United States Court of Federal
Claims, of [] [a]ny civil action against the United
States for the recovery of any internal-revenue tax
alleged to have been erroneously or illegally as-
sessed or collected, or any penalty claimed to have
been collected without authority or any sum al-
leged to have been excessive or in any manner
wrongfully collected under the internal-revenue
laws.
Section 6511(a) provides that a “[c]laim for credit or refund
of an overpayment of any tax imposed by this title in re-
spect of which tax the taxpayer is required to file a return
shall be filed by the taxpayer . . . .” (emphasis added).
And 26 U.S.C. § 7701(a)(14) defines a taxpayer as “any per-
son subject to any internal revenue tax.” In short,
§ 1346(a)(1) gives the Court of Federal Claims jurisdiction
to hear tax refund cases; § 6511(a) requires that the claim-
ants in such cases be the taxpayer; and § 7701 defines who
is the taxpayer.
Generally, we are bound by statutory interpretations
of our predecessor court, the Court of Claims. S. Corp. v.
United States, 690 F.2d 1368, 1369 (Fed. Cir. 1982) (en
banc). In the context of refund claims, the Court of Claims
has construed the term “taxpayer” in a “strict or narrow
sense . . . [to] mean[] a person who pays, overpays, or is
subject to pay his own personal income tax.” Econ. Plumb-
ing & Heating Co. v. United States, 470 F.2d 585, 590 n.3
(Ct. Cl. 1972) (emphasis added). Similarly, in Collins v.
United States, the Court of Claims held that “[i]n order to
maintain an action for the refund of taxes . . . , the plaintiff
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ROMAN v. US 7
must be the taxpayer who has overpaid his own taxes.”
532 F.2d 1344, 1347 n.2 (Ct. Cl. 1976) (emphasis added). In
other words, to be a “taxpayer” for refund purposes, a party
must be the one against whom the tax liability was as-
sessed.
The Court of Federal Claims here cited Economy
Plumbing and Collins, yet still found Mr. Roman to be a
taxpayer even though the tax was assessed against Ms. Es-
pinosa. The trial court appears to base this conclusion on a
distinction between a tax that is overpaid versus one that
is not actually due. The court stated:
However, there were no claims that the amounts
paid [in Economy Plumbing and Collins] were not
actually due from the assessed taxpayers in either
of those cases. For this reason, the Court concluded
that “the plaintiff, a nontaxpayer, [had to] estab-
lish independent jurisdictional grounds for his ac-
tion.” [Collins, 532 F.2d at 1347 n.2.] Here, Plaintiff
does claim that the amount paid was not actually
due; that is his basis for requesting a refund, not
overpayment. Therefore, Plaintiff is in the category
of taxpayer.
Decision at J.A. 9–10. While it is true that both Economy
Plumbing and Collins considered plaintiffs who overpaid
taxes owed by another, that fact does not support the trial
court’s conclusion. There is simply nothing in either case to
suggest that this is a distinction with a difference. The two
cases simply stand for the proposition that a party seeking
a refund must be the one against whom the tax liability
was assessed. Indeed, that understanding accords with the
language of § 7701, which limits taxpayers to the person
“subject to any internal revenue tax.”
Nor does the Supreme Court’s decision in United States
v. Williams, 514 U.S. 527 (1995), provide a jurisdictional
basis for Roman’s third-party refund suit. In Williams, the
Supreme Court allowed a woman to challenge a lien on her
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8 ROMAN v. US
property by means of a refund suit under 28 U.S.C.
§ 1346(a)(1) even though it resulted from an assessment
only against her ex-husband, making her a third party. See
id. at 529. In EC Term of Years Trust v. United States, how-
ever, the Court emphasized the limitations of Williams,
noting that its holding “that § 1346(a)(1) authorizes a tax-
refund claim by a third party whose property was subjected
to an allegedly wrongful tax lien” was based “on the specific
understanding that no other remedy . . . was open to the
plaintiff in that case.” 550 U.S. 429, 434–35 (2007).
Congress, however, has since provided such a remedy.
The IRS Restructuring and Reform Act of 1998, Pub. L. No.
105-206, § 3106, 112 Stat. 685, added I.R.C. §§ 6325(b)(4)
and 7426(a)(4). Section 6325(b)(4)(A) allows a third-party
owner whose property is subject to a lien to obtain a certif-
icate of discharge after either depositing cash or furnishing
a bond sufficient to protect the lien interest of the United
States. Section 7426(a)(4) then provides a judicial remedy
to “bring a civil action against the United States in a dis-
trict court of the United States for a determination of
whether the value of the interest of the United States (if
any) in such property is less than the value determined by
the Secretary.” Section 7426(a)(4) also provides that “[n]o
other action may be brought by such person for such a de-
termination.” That § 7426(a)(4) provides that it is the ex-
clusive remedy for a third-party property owner to dispute
the propriety of the lien is further evidence that Mr. Roman
is not a “taxpayer” for purposes of § 1346(a)(1).
Our sister circuits have also interpreted Williams nar-
rowly. E.g., JetPay Corp. v. U. S. Internal Revenue Serv.,
26 F.4th 239, 244 (5th Cir. 2022) (“[Section] 7426 is now
the only avenue for third party actions.” (citation and quo-
tation mark omitted)); First Am. Title Ins. Co. v. United
States, 520 F.3d 1051, 1053 (9th Cir. 2008) (“EC Term of
Years Trust v. United States narrows the permissible inter-
pretation of Williams and there can no longer be a good ar-
gument for allowing a third-party challenge to an
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ROMAN v. US 9
assessment, barred by § 7426, to be made under § 1346.”
(footnote omitted)).
In short, Mr. Roman was not a “taxpayer” as required
by 28 U.S.C. § 1346(a)(1) because he was not the person
against whom the tax liability was assessed. The tax here
was assessed against Ms. Espinosa, not Mr. Roman. Con-
sequently, the trial court lacked jurisdiction to hear
Mr. Roman’s third-party refund claim and the trial court’s
judgment in Mr. Roman’s favor is vacated.
B
Next, we turn to whether Mr. Roman’s complaint
pleads a contractual claim over which the trial court has
jurisdiction under 28 U.S.C. § 1491(a)(1). The government
recognizes that our precedent establishes that “a party who
pays a tax for which he is not liable may sue to recover that
tax if it was paid under duress because the duress creates
an ‘implied in fact contract.’” Appellant’s Br. 26 (citing Col-
lins, 532 F.2d at 1347; 28 U.S.C. § 1491(a)(1)). This juris-
diction comes from the Tucker Act, which confers on the
Court of Federal Claims jurisdiction to hear contractual
claims against the government, including implied-in-fact
contracts. Kirkendall v. United States, 31 F. Supp. 766, 769
(Ct. Cl. 1940); see also 28 U.S.C. § 1491(a)(1) (“The United
States Court of Federal Claims shall have jurisdiction to
render judgment upon any claim against the United States
founded . . . upon any . . . implied contract with the United
States . . . .”); DaCosta v. United States, 393 F. App’x 712,
714 (Fed. Cir. 2010) (nonprecedential) (explaining that an
implied contract is “a fiction of law where a promise is im-
puted to perform a legal duty, as to repay money obtained
by fraud or duress” (internal quotation marks omitted)
(quoting Hercules Inc. v. United States , 516 U.S. 417, 424
(1996))).
Duress is a fact-specific inquiry; it requires (1) involun-
tary acceptance, with (2) no alternative, and (3) coercive
acts by the government. Collins, 532 F.2d at 1348. Whether
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10 ROMAN v. US
a plaintiff has established duress “depend[s] upon the cir-
cumstances of each individual case.” Fruhauf Sw. Garment
Co. v. United States, 111 F. Supp. 945, 951 (Ct. Cl. 1953);
see also Document Mgmt. Grp., Inc. v. United States, 11 Cl.
Ct. 463, 466 (1987) (“In deciding defendant’s motion to dis-
miss, all of the plaintiff’s findings of uncontroverted fact
are assumed to be true. These findings include plaintiff’s
assertion of involuntariness and duress.” (citation omit-
ted)); 28 WILLISTON ON CONTRACTS § 71:5 (4th ed.)
(“Whether the evidence is sufficient to establish any one of
the elements of duress is generally a question of fact.”).
Mr. Roman argues that the IRS agent’s action “put Ro-
man under duress to pay his ex-wife’s taxes.” Appellee’s Br.
2. Supporting that argument are factual allegations that
(1) Roman paid the tax “in protest,” suggesting involuntary
acceptance, J.A. 27–28; (2) Roman advocated for his posi-
tion to the IRS agent, who told him that he nonetheless had
to pay, suggesting no alternative; and (3) the IRS threat-
ened to levy his home, suggesting a coercive act. We inti-
mate no view on the merits of Mr. Roman’s claims of
duress, nor do we decide what bearing Mr. Roman’s prom-
ise to his ex-wife would have on the inquiry. We only hold
that these factual allegations are sufficient to support a
claim of an implied contract and survive a motion to dis-
miss. In light of that conclusion, we remand to the trial
court for further proceedings on Mr. Roman’s implied con-
tract claim.
III
For the foregoing reasons, the judgment in favor of Mr.
Roman’s third-party refund claim under 28 U.S.C.
§ 1346(a)(1) is vacated, and the case is remanded for fur-
ther proceedings on Mr. Roman’s implied contract claim.
VACATED AND REMANDED
COSTS
No costs.