Boudreau v. United States, BAP NO. RI 19-056

• Decision Date: 11 December 2020
• Docket Number: Bankruptcy Case No. 15-10162-DF,Adversary Proceeding No. 16-01001-DF,BAP NO. RI 19-056
• Citation: 622 B.R. 817
• Parties: Jason Daniel BOUDREAU, Debtor. Jason Boudreau, Plaintiff-Appellant, v. United States of America, Defendant-Appellee.
• Court: U.S. Bankruptcy Appellate Panel, First Circuit

622 B.R. 817

Jason Daniel BOUDREAU, Debtor.

Jason Boudreau, Plaintiff-Appellant,

v.United States of America, Defendant-Appellee.

BAP NO. RI 19-056

Bankruptcy Case No. 15-10162-DF

Adversary Proceeding No. 16-01001-DF

United States Bankruptcy Appellate Panel of the First Circuit.

December 11, 2020

Jason Boudreau, Pro Se, on brief for Appellant.

James M. Strandjord, Esq., on brief for Appellee.

Before Lamoutte, Fagone, and Katz, United States Bankruptcy Appellate Panel Judges.

Fagone, U.S. Bankruptcy Appellate Panel Judge.

The bankruptcy court entered a judgment determining that certain tax debts owed by Jason Boudreau (the "Debtor") were excepted from discharge. The Debtor appeals from that judgment. For the reasons set forth below, we AFFIRM .

BACKGROUND

I. The Bankruptcy Filing

The Debtor, who is incarcerated at a prison in Rhode Island, filed a chapter 7 petition in 2015. On his schedules, he listed the Internal Revenue Service ("IRS") as the holder of priority claims for unpaid federal income taxes for 2004, 2007, 2009, 2010, and 2011. In due course, the chapter 7 trustee filed a report indicating there were no assets available for distribution to creditors. A few months later, the Debtor received his discharge and the case was closed.

II. The Adversary Proceeding

A. The Complaint

Almost a year later, the Debtor commenced an adversary proceeding against the IRS and two others. In his second amended complaint, the Debtor sought a determination as to the dischargeability of his federal income tax debts for the years 2008 through 2011 (the "Tax Years"). The Debtor alleged that, in 2012 or 2013 while he was incarcerated, he filed tax returns for the Tax Years, and the IRS had not timely assessed taxes against him for those years. Accordingly, the Debtor sought: (1) a full or partial discharge of his tax debt for the Tax Years; (2) a determination of when he filed his income tax returns for the Tax Years and whether any assessment for the Tax Years was time-barred; and (3) a determination as to the amount of his federal tax liabilities for the Tax Years.¹

B. Order Dismissing Complaint in Part

The IRS moved to dismiss each of the Debtor's claims, asserting, among other things, that the tax debts for the Tax Years were excepted from discharge as a matter of law under either § 523(a)(1)(A) or (B). The IRS also contended the bankruptcy court lacked subject matter jurisdiction under 28 U.S.C. § 1334 as there was "no bankruptcy purpose" for a determination as to the amount or legality of the Debtor's tax debts. Alternatively, the IRS urged the bankruptcy court to abstain from deciding the matter under 28 U.S.C. § 1334(c). Following a hearing in 2017, the bankruptcy court granted the IRS's motion as to all claims asserted against the IRS, except for the first claim relating to dischargeability.²

The IRS then answered the complaint. It denied that the returns for the Tax Years had been filed in 2012 or 2013. Instead, it maintained that, because the returns for those years were, in fact, first received by the IRS in 2017, the returns were filed in 2017. As a result, the post-petition assessment of taxes in January 2017 was, according to the IRS, timely.

C. Cross-Motions for Summary Judgment

The IRS and the Debtor filed cross-motions for summary judgment, arguing they were entitled to judgment as a matter of law as to the dischargeability of the Debtor's federal tax liabilities for the Tax Years. They agreed that the only dispute between them was regarding when the returns for the Tax Years were filed. The IRS maintained that the returns for the Tax Years were not filed until January 4, 2017, which triggered its post-petition assessment of taxes. The Debtor, on the other hand, contended he initially filed tax returns for the Tax Years in 2012 and that the January 2017 returns were merely replications of the original returns. The only evidence the Debtor submitted regarding the filing of the returns was his own sworn declaration attesting that he had placed the tax returns for the Tax Years in the prison mailbox in 2012.

The parties agreed that the filing date for the tax returns was dispositive as to the dispute between them. If the tax returns for the Tax Years were filed in 2012, as the Debtor asserted, then he would have no tax liability for those years because the IRS did not assess the taxes against him within three years of filing the returns as required by § 6501(a) of the Internal Revenue Code ("I.R.C."). See 26 U.S.C. § 6501(a) (providing that, with exceptions not applicable here, federal income taxes must be assessed within three years of the filing of a tax return). On the other hand, if the Debtor did not file the tax returns until 2017, as the IRS claimed, then the tax assessments in 2017 would have been timely, see 26 U.S.C. § 6501(c)(3) (providing that limitations period for assessing federal income taxes does not begin to run until a tax return is filed), and the resulting tax liability would be nondischargeable under either § 523(a)(1)(A) or (B).

D. The IRS Judgment

On August 9, 2018, the court issued a decision determining that the Debtor's federal tax debts for the Tax Years were excepted from discharge and entered judgment in favor of the IRS (the "IRS Judgment"). See Boudreau v. Dep't of Treasury (In re Boudreau), 587 B.R. 799 (Bankr. D.R.I. 2018). The bankruptcy court agreed that the case hinged entirely on the date the tax returns for the Tax Years were filed and concluded that the question presented a "purely legal issue" which could be decided on summary judgment. Id. at 801. It then made the following statement: "The Court has jurisdiction over this matter under 28 U.S.C. §§ 157(a) and 1334, and DRI LR Gen 109(a). This is a core proceeding under 28 U.S.C. § 157(b)(2)(A), (B), (I), and (O)." Id. at 802.

After considering the relevant statutes, regulations, and case law, the bankruptcy court concluded that: (1) the IRS had met its initial burden of proof by submitting documentary evidence sufficient to show that the returns were not filed in 2012; (2) there was no evidence the returns were actually delivered to the IRS in 2012 or that the Debtor sent the returns by registered or certified mail as required by I.R.C. § 7502 ; (3) even if the common-law mailbox rule could be invoked, the Debtor did not provide any evidence such as a postmark, proof of actual delivery, copies of the dated and signed tax returns allegedly filed, or witness testimony to corroborate the claims in his declaration; and, similarly, (4) even if the prison mailbox rule applied, the Debtor was required to produce corroborating evidence such as a registered mail receipt or a prison log reflecting the mailing. As a result, the bankruptcy court concluded:

[T]he IRS has met its burden of proving by a preponderance of the evidence that Mr. Boudreau did not file tax returns for the Tax Years in 2012. Based on the legal standards for review of summary judgment motions, under the circumstances and evidence presented, there is no genuine dispute of material fact. A rational factfinder could resolve the issue of whether Mr. Boudreau filed the tax returns in 2012 only in favor of the IRS, and accordingly, the IRS is entitled to judgment as a matter of law. Conversely, Mr. Boudreau has not satisfied his burden to rebut the IRS's evidence, and he is not entitled to summary judgment in his favor. The IRS's motion for summary judgment is GRANTED, and Mr. Boudreau's motion for summary judgment is DENIED.

Id. at 809.

E. The Final Judgment in the Adversary Proceeding

After further proceedings, the bankruptcy court entered judgments resolving the Debtor's remaining claims against the other defendants. The last such judgment was entered in October 2019 (the "Final Judgment"), thereby concluding the adversary proceeding.

F. The Present Appeal

The Debtor filed a notice of appeal with respect to the Final Judgment. He subsequently clarified, in a "Corrected Notice of Appeal," that he was challenging only the IRS Judgment. On appeal, the parties essentially reassert the same arguments they presented in the summary judgment proceedings. The IRS also argues, as it did in its motion to dismiss below, that the bankruptcy court lacked subject matter jurisdiction to determine the tax dispute between the Debtor and the IRS.

APPELLATE JURISDICTION

We have jurisdiction to hear appeals from final orders of the bankruptcy court. 28 U.S.C. § 158(a), (c) ; see also Ritzen Grp., Inc. v. Jackson Masonry, LLC, ––– U.S. ––––, 140 S. Ct. 582, 587, 205 L.Ed.2d 419 (2020) ; Bullard v. Blue Hills Bank, 575 U.S. 496, 135 S. Ct. 1686, 1692, 191 L.Ed.2d 621 (2015). Although the IRS Judgment was interlocutory when entered, it later merged into the Final Judgment. See Segarra Miranda v. Banco Popular de P.R. (In re Rivera Mercado), 599 B.R. 406, 416 (B.A.P. 1st Cir. 2019) (citation omitted) (providing that, under the merger rule, "prior interlocutory orders merge with the final judgment in a case and may be reviewed on appeal from the final order"). Moreover, "an order granting summary judgment is a final order where no counts against any defendants remain." Hann v. Educ. Credit Mgmt. Corp. (In re Hann), 476 B.R. 344, 353 (B.A.P. 1st Cir. 2012) (citation omitted) (internal quotation marks omitted), aff'd, 711 F.3d 235 (1st Cir. 2013). As such, we have jurisdiction to hear this appeal.

STANDARD OF REVIEW

Appellate courts review an order granting summary judgment de novo. See Bates v. CitiMortgage, Inc., 844 F.3d 300, 303 (1st Cir. 2016) (citation omitted); Hannon v. ABCD Holdings, LLC (In re Hannon), 839 F.3d 63, 69 (1st Cir. 2016) (citation omitted). They also "review whether the lower court had subject matter jurisdiction de novo." Sanger v. Ahn (In re Ahn), 804 F. App'x 541, 544 (9th Cir. 2020) (citation omitted); see also Concerto Software, Inc. v. Vitaquest Int'l, Inc., 290 B.R. 448, 450 (D. Me. 2003) ("Subject matter jurisdiction is a legal issue, and, thus, is reviewed de novo.") (citation...