859 F.2d 115 (9th Cir. 1988), 86-7666, Abatti v. C.I.R.

Docket Nº:86-7666, 87-7387 to 87-7399.
Citation:859 F.2d 115
Party Name:USTC P 9548 Ben ABATTI and Margaret Abatti et al., Petitioners, v. COMMISSIONER OF the INTERNAL REVENUE SERVICE, Respondent.
Case Date:October 07, 1988
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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859 F.2d 115 (9th Cir. 1988)

USTC P 9548

Ben ABATTI and Margaret Abatti et al., Petitioners,

v.

COMMISSIONER OF the INTERNAL REVENUE SERVICE, Respondent.

Nos. 86-7666, 87-7387 to 87-7399.

United States Court of Appeals, Ninth Circuit

October 7, 1988

Argued and Submitted Aug. 10, 1988.

William K. Hogan, San Rafael, Cal., for petitioners.

Gary R. Allen and Bruce R. Ellisen, Tax Div., Dept. of Justice, Washington, D.C., for respondent.

Appeal from Decision of the United States Tax Court.

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Before WRIGHT and POOLE, Circuit Judges, and BREWSTER [*], District judge.

POOLE, Circuit Judge:

This case presents a difficult question of Tax Court jurisdiction. The Tax Court entered decisions against appellants pursuant to their agreement to be bound by the opinion in five representative lead cases. After the lead cases were reversed on appeal, appellants filed a motion to vacate the decisions in their cases. The Tax Court declined to hear the motion, based in part on its lack of jurisdiction to vacate final decisions, and in part on its conclusion that the decisions were proper even though the lead cases had been overturned. We affirm.

FACTS AND PROCEEDING BELOW

The fourteen appellants were among a large group of taxpayers who claimed deductions in connection with their investment in five related limited partnerships. The Commissioner disallowed the deductions, and the taxpayers petitioned the Tax Court for redetermination of their resulting deficiencies. Five representative cases were consolidated for trial, and a group of taxpayers, including the fourteen appellants, agreed to be bound by the Tax Court's opinion in the lead case. The "Agreement to Be Bound" (agreement), which was attached to the Commissioner's motion to calendar and consolidate the five lead cases, provided in relevant part:

6. Because the subject cases involve common questions of law and fact with respect to the deductibility of the partnership losses, and in the interest of efficiently resolving all of the cases, the parties agree as follows:

  1. That they will file a motion to calendar and consolidate for trial the five cases listed below, each of which involves a petitioner who was a limited partner in one of the five partnerships ...

  2. That all of the subject cases will be bound by this Court's opinion in the five consolidated cases listed above, and decisions may be entered in accordance therewith.

  3. That all of the subject cases except the five consolidated cases listed above will be continued generally until such time as an opinion is issued with respect to the consolidated cases.

The core of this dispute concerns whether appellants were bound by the Tax Court's opinion in the lead cases, as the Commissioner urges, or only by a final decision in the lead cases, as appellants claim. However, because of the posture of the case at the time of this appeal, we are primarily concerned with jurisdictional issues.

The lead cases were decided against the taxpayers on summary judgment. Gauntt v. Commissioner, 82 T.C. 96 (1984). Subsequently, upon motion of the Commissioner, decisions were entered in the trailing cases pursuant to the agreement to be bound. Two of the taxpayers whose cases were among the consolidated lead cases filed appeals, as did 36 of the taxpayers whose cases were decided pursuant to the agreement. These 38 cases were consolidated on appeal, and the Tax Court's decision was reversed in Heinz v. Commissioner, 770 F.2d 874 (9th Cir.1985). The court in Heinz held that summary judgment, granted on the basis of an issue first raised by the Commissioner in the final round of simultaneous briefs and never briefed by the taxpayers, deprived the taxpayers of a "full and fair opportunity to ventilate the issues involved in the motion." Id. at 876. Thirteen additional taxpayers subject to the agreement also appealed, but did so after the original 38 cases had been consolidated. These later appeals were held in abeyance until after Heinz was decided, then summarily reversed and remanded for further proceedings in accordance with Heinz. The fourteen appellants in this case did not appeal the decisions entered against them

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as a result of the opinion issued in the lead cases.

Upon remand of the appealed cases, settlement negotiations commenced...

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