Estate of Buder v. U.S.

Decision Date18 February 2005
Docket NumberNo. 4:03CV01860 ERW.,4:03CV01860 ERW.
Citation372 F.Supp.2d 1145
PartiesESTATE OF Kathryn M. BUDER, et al., Plaintiffs, v. UNITED STATES of America, Defendant.
CourtU.S. District Court — Eastern District of Missouri

David G. Ott, Jeffery T. McPherson, John R. Barsanti, Jr., Paul E. Kovacs, Armstrong Teasdale, LLP, St. Louis, MO, for Plaintiffs.

Anne Norris Graham, U.S. Department of Justice, Washington, DC, for Defendant.

MEMORANDUM AND ORDER

WEBBER, District Judge.

This matter comes before the Court upon United States' Motion for Judgment on the Pleadings [doc. # 10] and Plaintiffs' Motion for Summary Judgment [doc. # 17]. A hearing was held on January 12, 2005, and the Court heard arguments from the parties on the Motions.

I. BACKGROUND FACTS1

In November 1984, G.A. Buder, Jr. died, leaving a will and accompanying codicil which included provisions for certain charitable organizations, his wife, his children, and his grandchildren.2 In all, there were thirty-one legatees of G.A. Buder Jr.'s estate. G.A. Buder, Jr.'s will created a trust from the residue of the estate for the benefit of his wife and children ("Residuary Trust").3 At the time of his death, G.A. Buder Jr.'s estate elected to treat the Residuary Trust as Qualified Terminable Interest Property ("QTIP") and claimed a marital deduction for the value of the Residuary Trust. G.A. Buder Jr.'s estate filed its federal estate tax return in 1986, showing a tax due of $156,648. The Internal Revenue Service ("IRS") audited the return and asserted a deficiency based upon disallowing a certain charitable deduction. G.A. Buder Jr.'s estate paid the deficiency and then filed a claim for a refund. The IRS disallowed the claim, and G.A. Buder Jr.'s estate filed suit for the refund, putting the charitable deduction at issue. See Buder v. United States, 7 F.3d 1382 (8th Cir.1993). During the litigation over the charitable deduction, the United States raised an affirmative set-off defense that the Residuary Trust did not qualify as a QTIP. However, the United States did not raise this issue until ten days prior to trial and the court refused to consider the set-off defense because it was untimely and not pleaded.4 The court allowed the charitable deduction and did not permit any set-off defense; on appeal, the Eighth Circuit affirmed.

Kathryn Buder, G.A. Buder Jr.'s wife, died in January 2000. In October 2000, Kathryn Buder's personal representatives included the Residuary Trust in her estate's federal estate tax return.5 On November 22, 2002, Plaintiffs filed claims for refunds of federal estate tax in the amount of $18,043,530.17, plus interest.6

Pursuant to G.A. Buder, Jr.'s will, on the death of Kathryn Buder, the Residuary Trust was to be divided into such number of equal parts as would provide trusts for G.A. Buder, III, Theodore Buder, and Marshall Buder ("the Buder sons") and conditionally for his daughter, Dorothy Buder.7 Following Kathryn Buder's death, Dorothy Buder claimed that she was entitled to share in the Residuary Trust, a claim her three brothers contested in court. Dorothy Buder and her three brothers reached a settlement and Dorothy Buder released all claims she had with respect to the Residuary Trust. As a result of this release, the Residuary Trust was divided into three trusts (the "Resulting Trusts"). Each Resulting Trust had one of the brothers as its primary beneficiary for his life, with the remainder to be distributed to the primary beneficiary's descendants. Thereafter, the trustees of the Resulting Trusts exercised their powers to terminate the Resulting Trusts and each reached a settlement agreement with his respective descendants whereby each descendent received a payment in exchange for releasing all claims against the Resulting Trusts.

On December 30, 2003, Plaintiffs brought suit in this Court to recover the refund they claim is due on the Kathryn Buder estate tax. Defendant USA has moved for Judgment on the Pleadings, raising equitable recoupment as an affirmative defense, and Plaintiffs have moved for Summary Judgment.

II. SUMMARY JUDGMENT STANDARD

Pursuant to Federal Rule of Civil Procedure 12, "[a]fter the pleadings are closed but within which time as not to delay the trial, any party may move for judgment on the pleadings." Fed.R.Civ.P. 12(c). In determining whether judgment on the pleadings is appropriate, a court must limit its consideration to the pleadings and matters within the public record. Faibisch v. Univ. of Minn., 304 F.3d 797, 802 (8th Cir.2002). If "matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56." Fed.R.Civ.P. 12(c). If the motion is treated as one for summary judgment, the parties must be given reasonable opportunity to present material pertinent to a summary judgment motion. Id.

Here, the Court will treat Defendant's motion for judgment on the pleadings as a motion for summary judgment. When Defendant moved for judgment on the pleadings, Defendant relied only on the pleadings and on matters contained in the public record. However, Defendant later supplemented its motion in accordance with this Court's order to do so. The supplement provides various calculations and supporting documents which do not appear to be part of the public record. Defendant has presented matters outside the pleadings, the Court has considered those materials, and the parties have had a reasonable opportunity to present material pertinent to a motion for summary judgment. Therefore, the Court will treat Defendant's motion for judgment on the pleadings as a motion for summary judgment. Thus, in this case, the Court is presented with cross-motions for summary judgment.

Pursuant to Federal Rule of Civil Procedure 56(c), a court may grant a motion for summary judgment only if all of the information before the court shows "there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The United States Supreme Court has noted that "summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the federal rules as a whole, which are designed to `secure the just, speedy and inexpensive determination of every action.'" Id. at 327, 106 S.Ct. 2548 (quoting Fed.R.Civ.P. 1). "By its terms, [Rule 56(c)(1)] provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Material facts are those "that might affect the outcome of the suit under the governing law," and a genuine material fact is one such that "a reasonable jury could return a verdict for the nonmoving party." Id. Further, if the non-moving party has failed to "make a showing sufficient to establish the existence of an element essential to that party's case, ... there can be `no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548.

The initial burden of proof in a motion for summary judgment is placed on the moving party to establish the non-existence of any genuine issue of fact that is material to a judgment in its favor. City of Mt. Pleasant, Iowa v. Associated Elec. Co-op., Inc., 838 F.2d 268, 273 (8th Cir.1988). Once this burden is discharged, if the record does in fact bear out that no genuine dispute exists, the burden then shifts to the non-moving party who must set forth affirmative evidence and specific facts showing there is a genuine dispute on that issue. Anderson, 477 U.S. at 249, 106 S.Ct. 2505. When the burden shifts, the non-moving party may not rest on the allegations in its pleadings, but by affidavit and other evidence must set forth specific facts showing that a genuine issue of material fact exists. Fed.R.Civ.P. 56(e). To meet its burden, the non-moving party may not rest on the pleadings alone and must "do more than simply show there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In fact, the non-moving party must show there is sufficient evidence favoring the non-moving party which would enable a jury to return a verdict for it. Anderson, 477 U.S. at 249, 106 S.Ct. 2505; Celotex, 477 U.S. at 324, 106 S.Ct. 2548. "If the non-moving party fails to produce such evidence, summary judgment is proper." Olson v. Pennzoil Co., 943 F.2d 881, 883 (8th Cir.1991).

III. ANALYSIS

In its Motion, Defendant states that the Residuary Trust should have been taxed with the G.A. Buder, Jr. Estate, but that it was not due to the G.A. Buder Jr. Estate's QTIP election. According to Defendant, the Court should apply the doctrine of equitable recoupment to reduce the refund due the Kathryn Buder Estate by the G.A. Buder, Jr. Estate's underpayment of tax. Plaintiffs oppose the Motion, and make their own motion for summary judgment. They argue that Defendant's claim for equitable recoupment should be rejected. Plaintiffs argue that they should be awarded a full refund for the estate taxes paid by the Kathryn Buder estate on the Residuary Trust. Thus, the parties agree that the QTIP election made by the G.A. Buder, Jr. estate was improper. They further agree that the Residuary Trust therefore should not have been included in the Kathryn Buder estate. Accordingly, it is undisputed that Plaintiffs are entitled to a refund in the amount of $18,043,530.17, plus interest from October 19, 2000, the date...

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1 cases
  • Buder v. U.S., 05-2145.
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • February 7, 2006
    ...Circuit Judge. The facts are undisputed and were fully recited by the district court in this case. Estate of Kathryn M. Buder v. United States, 372 F.Supp.2d 1145, 1146-48 (E.D.Mo.2005). We give an abbreviated version here. When G.A. Buder, Jr. died in 1984, his will created a residuary tru......

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