Estate of Harold Stuller v. United States

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 15-1545
ESTATE OF HAROLD STULLER, deceased, WILMA STULLER, and
L.S.A., INC.,
Plaintiffs-Appellants,
v.
UNITED STATES OF AMERICA,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Central District of Illinois, Springfield Division.
Case No. 3:11-CV-3080-RM-TSH — Richard Mills, Judge.
____________________
ARGUED NOVEMBER 30, 2015 — DECIDED JANUARY 26, 2016
____________________
Before ROVNER and WILLIAMS, Circuit Judges, and SHAH,
District Judge.*
SHAH, District Judge. Wilma Stuller and her late husband,
Harold, bred Tennessee Walking Horses on their horse farm
* Of the Northern District of Illinois, sitting by designation.
2 No. 15-1545
in Tennessee.1 They incorporated the horse-breeding opera-
tion as L.S.A., Inc., and claimed its substantial losses as de-
ductions on their tax returns. But the IRS determined that
the horse-breeding was not an activity engaged in for profit
and so assessed taxes and penalties against the Stullers. The
IRS also penalized the Stullers for failing to timely file their
2003 return. After paying up, the appellants, Wilma Stuller,
Harold’s estate, and LSA, sued the government for a refund.
At a bench trial, the district court excluded the Stullers’ pro-
posed expert, found that LSA was not run as a for-profit
business under 26 U.S.C. § 183, and determined that the
Stullers lacked reasonable cause for failing to timely file their
2003 tax return. The court also denied a request to amend
the judgment and effectively refund the taxes paid by the
Stullers on rental income received from LSA. We affirm.
1 The Tennessee Walking Horse is a breed known for its unusual,
flashy gait and, according to the Tennessee Walking Horse Breeders’ and
Exhibitors’ Association, is the “world’s greatest show, trail, and pleasure
horse.” See http://twhbea.com/breed/history.php (visited Jan. 26, 2016).
The breed has also been the subject of controversy. In order to produce
the desired gait in the horse, some have resorted to cruel practices such
as soring—the use of chemicals or devices to cause pain whenever the
horse’s feet touch the ground, making it pick its feet up quickly. The
Horse Protection Act of 1970, 15 U.S.C. §§ 1821–1831, prohibits soring,
and the U.S. Department of Agriculture enforces the act, which provides
both civil and criminal penalties. E.g., Derickson v. U.S. Dep’t of Agric., 546
F.3d 335 (5th Cir. 2008); United States v. McConnell, et al., No. 4:12-cr-
00009-HSM-WBC (E.D. Tenn.) (2012 prosecution involving sored Ten-
nessee Walking Horses and conspiracy to violate Horse Protection Act).
There are no allegations of soring at the Stullers’ farm.
No. 15-1545 3
I
The Stullers lived in Springfield, Illinois, and owned sev-
eral Steak ‘n Shake franchises throughout central Illinois.
They also bred horses. In 1985, they decided to move their
horses to a warmer climate and bought a farm in Petersburg,
Tennessee. At some point, the Stullers entered into an oral
agreement with horse trainer Mack Motes to train their hors-
es and manage the farm. Under this agreement, Motes re-
ceived payments for training the horses, a 50% interest in
horses born at the farm, prize money won by the horses, the
right to breed his horses with their horses (for free), and the
right to trade his horses with theirs. In 1992, the Stullers
founded L.S.A., Inc., an S corporation, as a horse-breeding
operation. LSA was owned entirely by the Stullers. A few
years later, the Stullers started purchasing property in Ea-
gleville, Tennessee, to relocate the horse farm to a larger
property. By 1999, they had purchased a house and adjoin-
ing 332 acres for around $800,000. This property was owned
by the Stullers individually or by each as trustees of a revo-
cable trust, with each other as a beneficiary. The Stullers,
however, lived at their home in Springfield, Illinois, where
they cared for their granddaughter.
LSA was not profitable. From 1994 to 2009, it lost money
every year except 1997, when its annual profit was $1,500.
From 1999 to 2005, its annual losses ranged between around
$130,000 to around $170,000 per year. During this time, LSA
was only able to continue operating because it received
around $1.5 million in loans from the Stullers, which were
not repaid. For tax years 2003 to 2005, LSA reported losses
totaling around $430,000 (about $130,000 to $150,000 per
year). Because an S corp’s losses pass through to its share-
4 No. 15-1545
holders, the Stullers claimed deductions for LSA’s losses on
their individual tax returns. The Stullers also reported in-
come on their tax returns from LSA’s annual rental payments
of $80,000 for use of the Tennessee property.
Tragedy struck on January 6, 2003, when a fire broke out
at the Stullers’ Springfield home. Harold died, and the house
was destroyed. Wilma Stuller and her granddaughter sur-
vived, although Stuller was hospitalized for double pneu-
monia. While waiting for her house to be rebuilt, Stuller
lived at various rental properties. She also hired a personal
assistant. Stuller managed to file a timely federal income tax
return for the year 2002 for herself and her husband, but she
did not file their 2003 joint return until February 2005.
Following an audit of the 2003 joint return and Stuller’s
2004 and 2005 individual tax returns, the IRS determined
that the horse-breeding was not an activity engaged in for
profit under 26 U.S.C. § 183 and therefore the Stullers could
not claim deductions for the S corp’s losses. The IRS also im-
posed penalties for the late filing of the 2003 return. The
Stullers paid the resulting assessments in full and filed suit
in the district court for a refund.2 The case proceeded to a
bench trial.
Section 183 of the Internal Revenue Code permits tax de-
ductions for losses from S corp activities engaged in for prof-
it (i.e., business losses). 26 U.S.C. § 183. Treasury Regulation
§ 1.183–2(b) provides a non-exclusive list of relevant factors
for determining whether an activity is engaged in for profit,
2 Wilma Stuller married Motes (the horse trainer) in 2012 and took
the name Stuller-Motes, but we refer to her as Stuller for simplicity. We
also refer to the appellants collectively as the Stullers.
No. 15-1545 5
including: (1) the manner in which the taxpayer carries on
the activity; (2) the expertise of the taxpayer or his advisors;
(3) the time and effort expended by the taxpayer; (4) the ex-
pectation that assets may appreciate in value; (5) the taxpay-
er’s success in other similar or dissimilar activities; (6) the
taxpayer’s history of income or losses; (7) the amount of oc-
casional profits, if any; (8) the financial status of the taxpay-
er; (9) elements of personal pleasure or recreation. No one
factor is determinative; instead, all relevant facts and cir-
cumstances are to be taken into account. Id. In considering
whether an operation was a business activity engaged in for
profit, more weight is given to objective facts than a taxpay-
er’s statement of intent. Burger v. Commissioner, 809 F.2d 355,
358 (7th Cir. 1987); see Treas. Reg. § 1.183–2(a).
Before trial, citing Daubert v. Merrell Dow Pharmaceuticals,
Inc., 509 U.S. 579 (1993), the government moved to preclude
Motes from testifying as an expert on whether the Stullers’
horse-breeding was carried on with the intent to earn a prof-
it. The district court allowed Motes to testify, reserving its
ruling on the Daubert motion. After trial, the district court
granted the motion. It determined that Motes’s expertise did
not extend to the financial or business aspects of a horse-
breeding operation and he lacked a reliable methodology to
opine on the Stullers’ intent.3
3 In the context of a bench trial, postponing the Daubert ruling until
after trial was not error. “[W]here the factfinder and the gatekeeper are
the same, the court does not err in admitting the evidence subject to the
ability later to exclude it or disregard it if it turns out not to meet the
standard of reliability established by Rule 702.” In re Salem, 465 F.3d 767,
777 (7th Cir. 2006).
6 No. 15-1545
The district court held that LSA was not operated with a
good faith intent to profit, and therefore its losses were not
deductible as business expenses. The objective factors most
significant to the district court were the unbusinesslike man-
ner in which the Stullers operated LSA, the Stullers’ history
of steady losses with only one barely profitable year, and the
substantial tax benefit LSA provided to the Stullers, given
their income from other business ventures.
The district court also found that the Stullers did not es-
tablish reasonable cause for the untimely filing of the 2003
return.
II
The Stullers argue that the district court’s exclusion of
Motes’s expert testimony failed to follow the Daubert frame-
work and ignored the record. Review of a district court’s ap-
plication of Daubert is de novo. If the court adhered to the
Daubert framework, then its decision on admissibility is re-
viewed for abuse of discretion. C.W. ex rel. Wood v. Textron,
Inc., 807 F.3d 827, 835 (7th Cir. 2015).
The district court followed Daubert. It considered wheth-
er Motes was qualified in the relevant field (i.e., the business
and financial aspects of horse-breeding) based on his educa-
tion, training, or experience, per Federal Rule of Evidence
702. The court then examined whether Motes used a reliable
methodology and analyzed the bases for his conclusions, the
materials that Motes did or did not review, and whether
Motes considered any factors outlined in Treasury Regula-
tion § 1.183–2(b) or any other relevant factors. In making its
determination, the district court did not ignore the Stullers’
arguments and did not ignore evidence in the record. In-
No. 15-1545 7
deed, the court recognized that Motes was a horse trainer
and that he was testifying based on his observations from
day-to-day operations of the farm; the court simply disa-
greed that there was sufficient foundation for expert testi-
mony.
The district court’s determination that Motes lacked the
requisite expertise and methodology was well-supported,
and not an abuse of discretion. The issue for which Motes
was offered as an expert was whether LSA’s horse-breeding
activity was run with the intent to profit. A witness may be
qualified as an expert through “knowledge, skill, experience,
training, or education.” Fed. R. Evid. 702. Acknowledging
that Motes had over fifty years of experience in training and
breeding horses, the district court found that Motes’s exper-
tise did not extend to the financial and business aspects of
running a horse-breeding operation. This was quite clearly
correct. Motes testified that he did not breed horses to make
money, it had been years since he sold a horse that he had
bred, and his income was largely derived from training
horses.
The district court also did not abuse its discretion in find-
ing that Motes lacked a reliable methodology. The Stullers
admit that Motes was unaware of and did not consider the
nine, non-exhaustive factors relevant to determining wheth-
er an activity is engaged in for profit, as listed in § 1.183–
2(b). He was also unfamiliar with LSA’s finances and did not
review any of its business or financial records. Instead, his
method was to draw a conclusion based on his observations
of the farm over the years and his oral agreement with the
Stullers. Rule 702, however, requires an expert’s testimony to
have “a reliable basis in the knowledge and experience of
8 No. 15-1545
[the relevant] discipline.” Kumho Tire Co. v. Carmichael, 526
U.S. 137, 149 (1999) (quoting Daubert, 509 U.S. at 592); see
Bielskis v. Louisville Ladder, Inc., 663 F.3d 887, 894 (7th Cir.
2011). Given Motes’s failure to consider the financial records
of LSA and his unfamiliarity with the relevant factors out-
lined in § 1.183–2(b), the district court was well within its
discretion to exclude Motes’s testimony as unreliable.
Motes had no specialized experience or reliable method
to draw upon when opining on the intent of the Stullers to
turn a profit—he was at most a lay witness to the operations
on the farm. The court considered some of his testimony in
that proper context (for example, his testimony about the
hard work required to breed and train horses), but correctly
disregarded Motes’s opinion about the Stullers’ intent.
III
The Stullers also challenge the district court’s finding that
LSA was not engaged in an activity for profit under 26
U.S.C. § 183. We review this finding for clear error, meaning
we reverse only when “left with the definite and firm convic-
tion that a mistake has been committed.” Burger, 809 F.2d at
358 (quoting Anderson v. City of Bessemer City, 470 U.S. 564,
573 (1985)).
The district court here applied each factor of the regula-
tions to the facts—so made no legal error—and drew infer-
ences and conclusions that were grounded in the evidence.
Its conclusion that only one factor, the expectation of asset
appreciation, weighed in the Stullers’ favor, while almost
every other consideration pointed to the horse-breeding as a
hobby or personal pleasure for the Stullers, was not implau-
No. 15-1545 9
sible, illogical, or internally inconsistent. See Furry v. United
States, 712 F.3d 988, 992 (7th Cir. 2013).
The evidence at trial showed that LSA kept minimal rec-
ords for tax purposes (e.g., monthly bank statements), but
did not retain records of expenses, horse training, or prizes
won by horses. Although “a taxpayer need not maintain a
sophisticated cost accounting system,” the taxpayer must at
least use a recordkeeping system “to monitor expenses or
losses,” in order for the taxpayer to make informed business
decisions. Burger, 809 F.2d at 359. The recordkeeping for LSA
did not adequately track expenses and other important in-
formation that would have allowed the Stullers to make in-
formed business decisions.
Also, despite consistent and significant annual losses,
LSA did not change its operating methods or adopt any new
techniques that would significantly turn around its finances.
In particular, the structure of the Stullers’ agreement with
Motes made it difficult from the outset for LSA to make a
meaningful profit on any LSA-bred horse. Motes automati-
cally received half the sale proceeds for any LSA-bred horse,
in addition to the right to breed his horses with LSA’s horses
for free and to trade horses with LSA, even though LSA in-
curred all of the associated expenses with breeding and rais-
ing the horses. Motes also received substantial payments for
training the horses, which were additional expenses incurred
by LSA. Yet the Stullers never considered renegotiating their
agreement with Motes. There is also no evidence that they
attempted to find other sources of revenue for LSA, such as
boarding horses or giving riding lessons. The Stullers argue
that they took other means to control LSA’s expenses, such as
purchasing additional land for growing hay and digging
10 No. 15-1545
ponds, buying veterinary equipment to provide veterinary
services in-house for the horses, and canceling insurance
policies on the horses. But these changes did not address the
root causes of LSA’s unprofitability and, without more, were
merely drops in the bucket. “[A] taxpayer must show that he
or she has instituted some methods for controlling expenses,
and if losses are mounting, methods to control those losses.”
Burger, 809 F.2d at 359. The Stullers failed to institute any re-
alistic methods to control expenses or losses. This fact, along
with the poor recordkeeping, showed that LSA was not run
in a businesslike manner.
“Taxpayers should not only familiarize themselves with
the undertaking, but should also consult or employ an ex-
pert, if needed, for advice on how to make the operation
profitable.” Id. The Stullers had substantial business experi-
ence operating Steak ‘n Shake restaurant franchises, which
were regulated and assisted to a large extent by the Steak ‘n
Shake corporate office. But horse-breeding was a very differ-
ent kind of activity, and there was no evidence in the record
that the Stullers consulted with any experts regarding meth-
ods for running a profitable horse-breeding enterprise.4
Stuller argues that she and Harold received advice from
their accountant and Motes. The accountant testified that
while he provided advice related to the creation of LSA,
prepared its tax returns, and generated annual reports of its
4Stuller also had an independent restaurant (one without franchisor
supervision like the Steak ‘n Shake restaurants). The failure of this res-
taurant, which closed within one year of opening at a loss of hundreds of
thousands of dollars, weighs against finding that the Stullers engaged in
similar, independently-run activities in the past and converted them
from unprofitable to profitable enterprises. Treas. Reg. § 1.183–2(b)(5).
No. 15-1545 11
assets and liabilities, he was not capable of providing advice
specific to the horse-breeding industry. Similarly, Motes tes-
tified that despite his years of experience breeding and train-
ing horses, he had no expertise in the financial or business
aspects of horse-breeding. His horse-breeding activities were
personal, not business-oriented. A taxpayer’s failure to ac-
quire expertise or consult relevant experts indicates lack of a
profit motive. See Burger, 809 F.2d at 359.
The Stullers never came close to turning a meaningful
profit through LSA; the best objective indicator that horse-
breeding was a hobby, not a business, was their high toler-
ance for loss. See id. § 1.183–2(b)(6) and (7). LSA reported
losses every year from 1994 to 2009, except for a $1,500 profit
in 1997. By 2005, the Stullers had loaned LSA around $1.5
million, interest free, in order to keep the horse-breeding op-
eration afloat, which also weighs against finding that LSA
was operated with the intent to profit. Importantly, LSA’s
losses were relatively consistent (ranging from $130,000 to
$190,000 per year during 1999 to 2005). As in Burger, LSA’s
steady losses continued beyond any arguable start-up phase
of LSA and “beyond the point in which the petitioners could
reasonably expect a profit.” 809 F.2d at 361. The consistency
of these losses from year to year also weighs against Stuller’s
argument that the losses during 2003 to 2005 resulted from
independent events, like a downturn in the economy and
adverse publicity affecting Tennessee Walking Horses.
During its years in operation, LSA’s only profit occurred
in 1997 and was only $1,500. This modest profit was the re-
sult of the fortuitous sale of a non-LSA bred horse for
12 No. 15-1545
$100,000.5 The Stullers argue that a profit motive can be in-
ferred from the speculative nature of horse-breeding, sug-
gesting that a few similar sales could have turned LSA
around. “[A]n opportunity to earn a substantial ultimate
profit in a highly speculative venture is ordinarily sufficient
to indicate that the activity is engaged in for profit even
though losses or only occasional small profits are actually
generated.” Treas. Reg. § 1.183–2(b)(7). But “[a]n occasional
small profit from an activity generating large losses, or from
an activity in which the taxpayer has made a large invest-
ment, would not generally be determinative that the activity
is engaged in for profit.” Id. That is what we have here.
There was no evidence that LSA’s operations were similar to
horse-breeding operations that generated substantial profits.
Under these circumstances, the Stullers’ belief that one or
more of their horses might achieve great success is “at best a
‘mere expectation’ utterly lacking in ‘any probative founda-
tion.’” Filios v. Commissioner, 224 F.3d 16, 23 (1st Cir. 2000)
(quoting Hendricks v. Commissioner, 32 F.3d 94, 100 (4th Cir.
1994)).
“Substantial income from sources other than the activity
(particularly if the losses from the activity generate substan-
tial tax benefits) may indicate that the activity is not engaged
in for profit especially if there are personal or recreational
elements involved.” Treas. Reg. § 1.183–2(b)(8). The Stullers
received a substantial income from their other activities, in-
cluding the Steak ‘n Shake franchises, rental properties, and
investment income. LSA’s considerable losses—passed
5Notably, because the horse was not bred at LSA, the Stullers did
not have to share the sale proceeds with Motes.
No. 15-1545 13
through the S corp to the Stullers—generated substantial tax
benefits for the Stullers over the years.
The Stullers also derived a great deal of pleasure from
the horse-breeding operation, despite the hard work in-
volved. Where an activity involves “substantial personal or
recreational aspects,” a significant expenditure of time and
effort does not necessarily indicate an intention to derive a
profit. Treas. Reg. § 1.183–2(b)(3).
Another factor not listed in § 1.183–2(b) but considered
by the district court was the size of the horse farm. Stuller
argued that having around thirty horses on a farm clearly
showed that it was a business, not a hobby. But the court did
not err in finding that the size of the horse farm was not dis-
positive in this particular case, especially considering the
unbusinesslike manner in which LSA was run and its history
of losses with barely any profit.
Finally, there was some evidence that the Tennessee farm-
land might appreciate. Treas. Reg. § 1.183–2(b)(4). But this
expectation of appreciation (from an asset that did not be-
long to the S corp) did not offset the combination of other
objective facts showing that LSA was not run with the intent
to profit.
Considering, in particular, LSA’s poor recordkeeping, the
lack of business practices directed at making a profit, its sub-
stantial annual losses, and the significant tax benefits to the
Stullers, there is no clear error in the district court’s finding
that the totality of facts and circumstances showed that LSA
was not run as an activity with the intent to profit.
14 No. 15-1545
IV
Stuller also appeals the district court’s finding that she
lacked “reasonable cause” for the failure to timely file the
2003 income tax return. She disputes only the court’s deter-
mination of whether the elements of reasonable cause were
present. This is a question of fact reviewed for clear error.
Univ. of Chicago v. United States, 547 F.3d 773, 785 (7th Cir.
2008).
Section 6651(a)(1) of the Internal Revenue Code imposes
a penalty for failure to timely file “unless it is shown that
such failure is due to reasonable cause and not due to willful
neglect.” 26 U.S.C. § 6651(a)(1). A filing delay is due to “rea-
sonable cause” when the taxpayer has made a satisfactory
showing that she “exercised ‘ordinary business care and
prudence’ but nevertheless was ‘unable to file the return
within the prescribed time.’” United States v. Boyle, 469 U.S.
241, 246 (1985) (quoting Treas. Reg. § 301.6651–1(c)(1)). Will-
ful neglect means “a conscious, intentional failure or reckless
indifference.” Id. at 245.
Stuller argued that she was prevented from timely filing
the joint 2003 return until February 2005, despite a six-month
extension until October 2004, due to the difficult circum-
stances resulting from the fire. These circumstances included
her husband’s death, the destruction of their home, personal
health problems and depression, employee embezzlement
from the Steak ‘n Shake businesses, and the fact that she was
required to assume responsibility for obligations that were
previously shared between her and her husband, including
the care of their granddaughter. These were certainly tragic
and difficult events for Stuller to endure, but Stuller did not
show that she exercised ordinary business care and pru-
No. 15-1545 15
dence or that circumstances prevented timely filing. For ex-
ample, during this timeframe, Stuller was able to timely file
the joint 2002 return, to manage the Steak ‘n Shake fran-
chises, and to attend and compete in horse shows. She also
had hired a personal assistant, who presumably helped
Stuller to manage her affairs.
Stuller claims that, following her husband’s death, miss-
ing trust and probate records prevented her from complet-
ing their joint tax return, but the trial testimony shows that
the only outstanding documents her accountant needed to
complete the tax return were bank statements. Even if these
were in storage following the fire, duplicate copies could
have been easily obtained from the bank.
Stuller’s difficulties, while no doubt distressing, did not
involve a combination of severity and timing that would
have made it “virtually impossible” for her to comply with
the filing requirements, Matter of Carlson, 126 F.3d 915, 923
(7th Cir. 1997), especially considering that Stuller had al-
ready sought and received an extension until October 2004.
Stuller failed to satisfactorily show that she exercised “ordi-
nary business care and prudence,” and the district court did
not clearly err in finding that she lacked reasonable cause for
her untimely filing.
V
After the district court determined that the Stullers did
not engage in horse-breeding with intent to profit, and there-
fore that the Stullers could not deduct LSA’s losses, they
moved to amend the judgment, seeking a credit for the rent-
al income reported from LSA. This request was denied. The
district court’s determination is a legal issue reviewed de no-
16 No. 15-1545
vo. Mathin v. Kerry, 782 F.3d 804, 805 (7th Cir. 2015) (ques-
tions of law from a bench trial are reviewed de novo); see also
Catalano v. Commissioner, 240 F.3d 842 (9th Cir. 2001).
The point here is that LSA, an S corp, is a different entity
than the Stullers, its shareholders. “[W]hile a taxpayer is free
to organize [her] affairs as [she] chooses, nevertheless, once
having done so, [she] must accept the tax consequences of
her choice, whether contemplated or not, and may not enjoy
the benefit of some other route [she] might have chosen to
follow but did not.” Commissioner v. National Alfalfa Dehydrat-
ing & Milling Co., 417 U.S. 134, 149 (1974) (citations omitted).
Denial of the Stullers’ corporate-level deduction for LSA’s
losses did not change the fact that the Stullers annually re-
ceived lease income from LSA, which was reported on their
returns. Because denial of the corporate deduction does not
change the “fundamental principle that an S corporation is a
separate entity from its shareholders,” the denial of a corpo-
rate-level deduction for an S corp’s shareholder does not en-
title the taxpayer to remove rental income from an individu-
al tax return. Catalano, 240 F.3d at 843–44. Similarly, the
Stullers cannot now “look through the forms they chose
themselves in order to improve their tax treatment with the
benefit of hindsight.” United States v. Fletcher, 562 F.3d 839,
842 (7th Cir. 2009).6
6Comdisco, Inc. v. United States, cited by the Stullers, similarly states
that “a taxpayer generally may not disavow the form of a deal.” 756 F.2d
569, 577 (7th Cir. 1985) (citing National Alfalfa, 417 U.S. at 149). And un-
like the taxpayer in Comdisco, the Stullers have not established that the
economic reality of their chosen transaction with LSA was something
different than what they had reported. Instead, the Stullers’ argument
looks more like a belated attempt to game the system in order to maxim-
ize their tax benefits.
No. 15-1545 17
The Stullers raise, for the first time on appeal, an argu-
ment for equitable recoupment. This argument has been
waived. Hess v. Bresney, 784 F.3d 1154, 1161 (7th Cir. 2015).
Even if it had not been waived, the Stullers would not be en-
titled to equitable recoupment because the doctrine is nar-
rowly applied and “will lie only where the Government has
taxed a single transaction, item, or taxable event under two
inconsistent theories.” United States v. Dalm, 494 U.S. 596, 605
n. 5 (1990). Because the lessee, LSA, is a separate entity from
the lessors, the Stullers, there is no inconsistent legal theory
here. Catalano, 240 F.3d at 844.
VI
The judgment of the district court is AFFIRMED.