Cooper Agency v. United States

• Decision Date: 01 June 1971
• Docket Number: Civ. A. No. 70-1023.
• Citation: 327 F. Supp. 948
• Court: U.S. District Court — District of South Carolina
• Parties: COOPER AGENCY, Plaintiff, v. UNITED STATES of America, Defendant.

327 F. Supp. 948

COOPER AGENCY, Plaintiff, v. UNITED STATES of America, Defendant.

Civ. A. No. 70-1023.

United States District Court, D. South Carolina, Columbia Division.

June 1, 1971.

Henry H. Edens, of Edens & Lathan, Columbia, S. C., for plaintiff.

John K. Grisso, U. S. Atty., D. of South Carolina, Columbia, and Wistar O. Stuckey, Asst. U. S. Atty., Columbia, S. C., for defendant.

ORDER

HEMPHILL, District Judge.

Defendant's motion to dismiss projects this case before this court for a decision, the fourth in a series of litigations arising out of tax assessments against plaintiff and related taxpayers. Initially, Chief Judge Martin ruled on the efforts of the taxpayers to forestall collection. Cooper Agency Inc. v. McLeod (D.C.S.C.1964), 235 F.Supp. 276; affirmed per curiam 348 F.2d 919. The Circuit Court opinion was filed August 4, 1965 and on September 27, 1965, taxpayer(s) again commenced action seeking an injunction against any action by the District Director of Internal Revenue to collect certain alleged tax liabilities. On defendant's motion to dismiss this court dismissed the complaint with prejudice. Cooper Agency v. McLeod (D.C. S.C. October 28, 1965), 247 F. Supp. 57. This decision was not appealed. After this decision was reported the parties began negotiations toward a compromise settlement of claims for $1,250,000.00 and plaintiff paid the sum agreed upon, whereupon the District Director released his liens and abandoned further collection processes, and perfected other administrations and agreements toward a complete settlement. Allocation of the payment was agreed upon. Exactly¹ two years after the settlement agreement plaintiff filed claim for a refund. Upon rejection plaintiff commenced a third action. Motions for summary judgment resulted in the granting of defendant's motion by the court. Cooper Agency v. United States (D.C. S.C.1969) 301 F. Supp. 871 affirmed 422 F.2d 1331 (April 8, 1970). On November 18, 1970, plaintiff filed this suit seeking to set aside the judgments on the suits previously heard before Judge Russell (Civil Action No. 68-533, one and the same as 301 F.Supp. 871) and this writer (AC-1804), one and the same as 247 F.Supp. 57, and, in effect, asking the refund refused by Judge Russell. Various counsel represented the parties throughout the series.

A short history of the action spotlights the highlights.

On September 16, 1963, there were certain jeopardy transferee assessments made against the plaintiff totaling $547,040.40, including interest. Statutory notices of deficiency dated September 16, 1963, reflecting these assessments, were mailed to the plaintiff advising the plaintiff of its right to petition the Tax Court within 90 days from the date of the letter in the event the plaintiff elected to contest the assessments in the Tax Court. Plaintiff was also notified by additional statutory notices of deficiency which were dated September 16, 1963, that the defendant would make additional assessments against the plaintiff totaling $960,988.00, including interest, and notifying plaintiff of its right to petition the Tax Court. The plaintiff thereafter on November 5, 1963, well within the period during which the plaintiff could have petitioned the Tax Court for a redetermination of its liability, filed a complaint (Civil Action No. 1283) in this district, seeking injunctive relief against the outstanding and the proposed assessments. The plaintiff contended among other things that the notices of deficiency upon which the assessments were based were defective, thereby rendering the assessments null and void. The court sustained the sufficiency of the notices of deficiency and denied relief to the plaintiff in that action. Cooper Agency, Inc. v. McLeod, D.C., 235 F.Supp. 276, supra.

At the conclusion of the above action negotiations were held between the plaintiff and representatives of the Internal Revenue Service in an attempt to affect a settlement of the plaintiff's and other associated taxpayers' liabilities. These negotiations did not result in a compromise in whole or in part of the plaintiff's tax liabilities. Thereafter, Civil Action No. AC-1804 was commenced in this court on September 27, 1965, when the plaintiff filed the complaint together with a motion for preliminary injunction against Harold M. McLeod, District Director of Internal Revenue Service. Briefly, the plaintiff alleged that the Government conceded through an agent during the settlement negotiations that only $198,000 out of the original assessments were owed by the plaintiff. The plaintiff then contended that the notices of deficiency were invalid to the extent that they exceeded $198,000. The Government denied that any concession had been made by its agent and objected to the admissibility of testimony concerning statements made during the negotiations. An affidavit of the District Director of Internal Revenue was filed stating that the plaintiff as of September 29, 1965, owed a total of $1,881,358.52 on the assessment made on September 16, 1963, and on the additional assessment made on February 7, 1964, including interest to the date of the affidavit. This action was dismissed on the motion of the defendant. Cooper Agency v. McLeod, D.C., 247 F.Supp. 57, supra. The rationale for the decision and the facts upon which it is based are fully laid out by the court in its opinion.

Thereafter, the plaintiff and all associated parties renewed the settlement negotiations and on November 24, 1965, the plaintiff, acting on behalf of all the taxpayers involved, submitted an offer in writing of $1,250,000 to compromise all assessments made or proposed. The agreement further stated that the parties should agree upon the allocation of payments made against the various assessments. The offer of the plaintiff was accepted and the amount paid.

On November 24, 1967, a claim for refund was filed for recovery of $1,192,405.43, of the $1,250,000 paid pursuant to the accepted offer, plus interest, by the plaintiff, Cooper Agency. A statutory notice of disallowance of the refund was issued on May 23, 1968, and a suit for refund was commenced on June 18, 1968, in this court. This suit resulted in a judgment for the defendant denying any refund to the plaintiff. Cooper Agency v. United States, D.C., 301 F. Supp. 871, supra. In that action the plaintiff served upon the defendant, United States of America, interrogatories specifically asking the defendant to confirm the fact that the total amount due by the plaintiff as transferee on September 16, 1963, was $463,118.55, plus interest or a total of $547,044.49. Defendant's answer to the interrogatories specifically stated that the above-cited figures of the plaintiff were in accord with the official records of the Internal Revenue Service. Thereafter, an amended answer stated that the official records of the Internal Revenue Service reflected that five assessments in addition to those mentioned above were proposed on September 16, 1963, and that statutory notices of deficiency covering the proposed assessments were issued on September 16, 1963. The amended answer to plaintiff's interrogatories clearly states that the Internal Revenue Service records reflect the total tax liability proposed and assessed as of September 16, 1963, to be $1,412,522.38, plus interest.

Thereafter, on September 23, 1970, the plaintiff served and filed Notices of Motion under Rule 60(b) of the Federal Rules of Civil Procedure seeking orders granting relief from the operation and effect of the judgments entered by the court in the cases of Cooper Agency v. United States, Civil Action No. 68-533, and Cooper Agency v. McLeod, Civil Action No. AC-1804. On November 16, 1970, the plaintiff requested the Notices of Motion be withdrawn and it was so ordered on that date. On November 18, 1970, the plaintiff filed a complaint in this action containing similar allegations to those contained in the aforementioned motions. The United States has filed Motion to Dismiss now before this court.

JURISDICTION

This court lacks jurisdiction over the subject matter. The action here, in effect, is to set aside the judgment in Civil Action No. 65-533 (D.C., 301 F.Supp. 871). Plaintiff seeks to do indirectly that which Judge Russell ruled could not be done directly. Judge Russell's order in Civil Action No. 65-633 effectively affirmed the compromise which included the issues attempted in Civil Action No. AC-1804 (D.C., 247 F. Supp. 57). The language employed by plaintiff does not disguise the attempt.

Furthermore, the District Court is not a proper place for plaintiff to seek relief. The United States Fourth Circuit Court of Appeals has affirmed, 422 F. 2d 1331, and if plaintiff is entitled to any relief he must first seek leave of the appellate court to pursue further proceedings in the trial court below. Mid-Eastern Electronics Inc. v. First National Bank of Southern Maryland (CCA 4 1967), 380 F.2d 355; Tribble v. Bruin (CCA 4 1960), 279 F.2d 424. The District Court has no power to reopen and review without sanction of the appellate court. Carpenter v. Rohm & Haas Co., D.C., 9 F.R.D. 535, affd. (CCA 3 1950) 180 F.2d 749. It can only exercise such power as is directed by the Court of Appeals. Davis Harvester Co. v. Long Mfg. Co. (D.C.N.C.1967), 283 F. Supp. 536. Plaintiff in effect is asking this court to reverse the appellate court's mandate. The court has no jurisdiction to do so.

THE COMPLAINT FAILS TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED

The basis of plaintiff's claim (paragraph 17 of the complaint) is that this court has been misled by the sworn statements filed by the Government. Thus, the action is predicated entirely on the allegation that the affidavit filed by the District Director, showing that the plaintiff owed the Government $1,881,858.52, alleging such constituted a misrepresentation of fact. Plaintiff maintains that the records of the Internal Revenue Service show that the...