United States v. Novotny

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
JUL 31 2003
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 02-1417
(D.C. No. 99-RB-2196 (PAC))
EDWARD G. NOVOTNY, in his (D. Colo.)
individual capacity as Trustee of
MIDWEST LIMITED and
SUNRISE INVESTMENTS,
Defendant-Appellant,
STATE OF COLORADO;
DEPARTMENT OF REVENUE,
Defendant-Appellee,
and
ETTA B. NOVOTNY,
Defendant.
ORDER AND JUDGMENT *
Before TACHA , Chief Judge, BRORBY , Senior Circuit Judge, and HARTZ ,
Circuit Judge.
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
Defendant Edward G. Novotny, appearing pro se, appeals the district
court’s adverse judgment in this civil tax matter. He asserts that the district court
lacked jurisdiction to hear and determine the case against him. This court
exercises its jurisdiction pursuant to 28 U.S.C. §1291 and affirms.
BACKGROUND
The United States brought suit to reduce to judgment assessments against
Mr. Novotny for income taxes, penalties, and interest from tax years 1989 through
1991 and to foreclose its liens upon seven parcels of real property nominally held
by two trusts, Midwest Limited and Sunrise Investments. The United States
named as defendants in the action all known parties having an interest in the
parcels of property, including the trusts, Etta B. Novotny (the taxpayer’s spouse),
and the State of Colorado, Department of Revenue (which had filed its own tax
liens against the properties). The trusts, Mrs. Novotny, and the State of Colorado
filed various counterclaims and crossclaims.
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After a series of orders and a bench trial, the district court concluded that:
(1) Mr. Novotny was liable to the United States for federal income taxes and
statutory assessments in the amount sought by the United States, $171,932.76;
(2) the transfers of the seven parcels of property to the trusts were void as to
the United States, in that the trusts were shams and also alter egos and nominees
of Mr. Novotny; (3) the transfers should be set aside and the federal tax liens
foreclosed on the properties; (4) Mrs. Novotny was entitled to judgment quieting
title to her undivided one-half interest in the properties; and (5) the State of
Colorado’s tax lien against the properties is valid, subordinate, and junior to that
of the United States.
Accordingly, the court entered judgment and ordered the properties sold,
with one half of the net sale proceeds to be applied first to Mr. Novotny’s
federal tax liability, and if this liability is satisfied and funds remain, then to
Mr. Novotny’s Colorado state tax liability. The other half of the net proceeds was
to be paid to Mrs. Novotny. The court also entered a deficiency judgment against
Mr. Novotny and in favor of the United States, if the proceeds of the sale did not
satisfy the federal tax debt. Only Mr. Novotny has appealed. 1
1
Although Mrs. Novotny has entered a pro se notice of appearance, she is
not an appellant in this matter. Neither she nor her husband may represent the
trusts. See Knoefler v. United Bank , 20 F.3d 347, 348 (8th Cir. 1994) (holding
that a nonlawyer trustee may not represent a trust in federal court). Further, as an
(continued...)
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DISCUSSION
Mr. Novotny’s appellate arguments are not entirely clear, but they appear to
focus on the district court’s jurisdiction. We review the question of the district
court’s jurisdiction de novo. Kunkel v. Cont’l Cas. Co. , 866 F.2d 1269, 1273
(10th Cir. 1989).
Although we liberally construe Mr. Novotny’s pro se appellate brief,
see Ledbetter v. City of Topeka , 318 F.3d 1183, 1187 (10th Cir. 2003), we will
not assume the role of his advocate, see Hall v. Bellmon , 935 F.2d 1106, 1110
(10th Cir. 1991). As we decipher the argument section of Mr. Novotny’s brief,
he makes four jurisdictional challenges. First, he claims that the federal district
court lacked jurisdiction to determine the legal status of the trusts for tax
purposes, because the ruling “debauch[ed] unlawfully the trust laws enacted by
the Colorado Legislature as purveyors of a sham,” Appellant’s Br. at 9. Second,
he asserts that the United States did not comply with his own novel interpretation
of 26 U.S.C. § 7401, a provision which states that a tax civil action may not be
commenced unless the Secretary of Treasury or his delegate authorizes it and the
Attorney General or his delegate directs that it be commenced. Third, he claims
that, in ruling against him, judicial officials violated their oaths promising to
1
(...continued)
individual litigant, Mrs. Novotny prevailed in district court.
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defend the United States Constitution and were therefore acting outside of their
jurisdiction. And finally, he argues that the district court lost its jurisdiction
when it applied the general rule that taxpayers bear the burden of establishing the
error in the IRS’s determination of the tax due, United States v. Brown, ___ F.3d
___, No. 01-4229, 2003 WL 21529086, *4 (10th Cir. July 8, 2003), a procedure
that left him defenseless against an unconstitutional bill of pains and penalties.
It is plain that 26 U.S.C. § 7402 and 28 U.S.C. § 1340 explicitly vest
federal district courts with jurisdiction over civil actions involving the
enforcement of the internal revenue laws. Further, the government satisfactorily
established the necessary jurisdictional elements in this case. We find no merit in
Mr. Novotny’s jurisdictional challenges and conclude that they are patently
incorrect.
To the extent that Mr. Novotny has attempted to make other arguments
on appeal, and seeks a review of evidentiary rulings or the sufficiency of the
evidence, those arguments are waived by his failure to provide us with a transcript
of the trial. See United States v. Vasquez , 985 F.2d 491, 495 (10th Cir. 1993)
(stating that a failure to file a transcript precludes review of evidentiary rulings
or claims concerning sufficiency of the evidence).
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Mr. Novotny’s motion to file a supplement reply brief is GRANTED. The
judgment of the district court is AFFIRMED. The mandate shall issue forthwith.
Entered for the Court
Deanell Reece Tacha
Chief Judge
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