Finkelstein v. U.S.

• Decision Date: 09 September 1996
• Docket Number: Civil Action No. 96-744 (AJL).
• Citation: 943 F.Supp. 425
• Parties: Ethel FINKELSTEIN, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of New Jersey

943 F.Supp. 425

Ethel FINKELSTEIN, Plaintiff, v. UNITED STATES of America, Defendant.

Civil Action No. 96-744 (AJL).

United States District Court, D. New Jersey.

September 9, 1996.

Stuart A. Foreman, New York City, Lewis Reicher, Teaneck, NJ, for Plaintiff.

Susan C. Cassell, Assistant United States Attorney, Newark, NJ, Jonathon Jackel, Trial Attorney, Tax Division, U.S. Department of Justice, Washington, DC, for U.S.

LECHNER, District Judge.

This is an action brought by plaintiff Ethel Finkelstein ("Ethel Finkelstein") against the United States of America (the "Government") seeking to recover the sum of $212,945.24 tendered to the Internal Revenue Service (the "I.R.S.") as a deposit in the nature of a cash bond to stop the running of interest and penalties on a potential payroll tax liability. Jurisdiction is alleged pursuant to 28 U.S.C. § 1346(a)(1). Currently before the court is a motion for summary judgment filed by the Government ("Government Motion for Summary Judgment").¹ For the reasons stated below, the Government Motion for Summary Judgment is granted.

Facts

A. Background

Ethel Finkelstein ("Ethel Finkelstein") resides at 431 East Palisades Avenue in Englewood, New Jersey. Complaint at ¶ 1. Ethel Finkelstein is married to Jerome Finkelstein ("Jerome Finkelstein"). Finkelstein Affidavit at ¶ 4. Through and including 1981, Ethel Finkelstein and Jerome Finkelstein employed Aaron Goodman ("Goodman") as their tax advisor and accountant.² Finkelstein Affidavit at ¶ 4. During that period, Goodman prepared and filed joint tax returns for Ethel Finkelstein and Jerome Finkelstein. Finkelstein Affidavit at ¶ 4. Also during that period, Jerome Finkelstein operated a business known as the European Tailoring Group, Inc. (the "European Tailoring Group"). Opposition Brief at 2. Jerome Finkelstein was a responsible party for the payment of outstanding taxes of European Tailoring Group. Opposition Brief at 2. Goodman continued to represent Ethel Finkelstein as her accountant and tax advisor until 1988.³ Finkelstein Affidavit at ¶ 3.

B. The Tax Liability

Ethel Finkelstein alleges she became aware in 1987 that Jerome Finkelstein had a potential tax liability with respect to withholding payroll taxes (the "Payroll Tax Liability") at his business, the European Tailoring Group. Finkelstein Affidavit at ¶ 5. Ethel Finkelstein was concerned she might also be liable for the Payroll Tax Liability based on two facts. Finkelstein Affidavit at ¶ 5. First, Ethel Finkelstein had filed joint returns with her husband and believed those joint returns would make her liable. Finkelstein Affidavit at ¶ 5(a). Second, a search warrant with respect to the Payroll Tax Liability was directed toward the European Tailoring Group, Jerome Finkelstein and herself.⁴ Finkelstein Affidavit at ¶ 5(b). Ethel Finkelstein also alleges Goodman advised her she might be liable for the tax liability.⁵ Finkelstein Affidavit at ¶ 6.

Pursuant to Goodman's advice, Ethel Finkelstein delivered to Goodman on or about 5 May 1988 a bank check (the "Bank Check") in the amount of $212,945.25 payable to the I.R.S.⁶ Finkelstein Affidavit at ¶ 10; Complaint at Exhibit A. Ethel Finkelstein alleges Goodman advised her that the Bank Check would be sent to the I.R.S. with a cover letter (the "5 May 1988 Letter") explaining that the Bank Check would be held as a payment of principal only and would be returned to Ethel Finkelstein in the event that no tax liability against her was found.⁷ Finkelstein Affidavit at ¶ 11; Complaint at Exhibit B. Ethel Finkelstein stated that the 5 May 1988 Letter also provided any unused portion of the Bank Check should be returned to Ethel Finkelstein.⁸ Finkelstein Affidavit at ¶ 11.

In January 1989, Goodman notified Ethel Finkelstein she was not responsible for any of the Payroll Tax Liability.⁹ Finkelstein Affidavit at ¶ 16. Goodman then advised Ethel Finkelstein to make a demand claim for a refund. Finkelstein Affidavit at 17. On 15 February 1989, Ethel Finkelstein demanded a refund of the Bank Check or its equivalent value (the "15 February 1989 Demand Letter").¹⁰ Finkelstein Affidavit at ¶ 18; Complaint at ¶ 9; Complaint at Exhibit C. On or about 16 June 1989, the I.R.S advised Goodman that the Bank Check would be applied to the personal income tax liability (the "Personal Income Tax Liability") of Jerome Finkelstein (the "Notice of Disallowance")¹¹. Finkelstein Affidavit at ¶ 19; Opposition Brief at 3.

Ethel Finkelstein alleges the Notice of Disallowance of the I.R.S. did not comply with proper procedure as it was not sent by certified or registered mail. Finkelstein Affidavit at ¶ 20. On 2 November 1990, Ethel Finkelstein filed Form 843 restating her claim (the "Form 843 Claim"). Complaint at ¶ 16 and Exhibit D. Ethel Finkelstein filed her Complaint on 14 February 1996. Complaint at 1.

Discussion

A. Standard of Review for Summary Judgment Motions

To prevail on a motion for summary judgment, the moving party must establish "there is no genuine issue as to any material fact and that [she] is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The present task is to determine whether genuine issues of material fact exist and whether the Government is entitled to judgment as a matter of law. A district court may not resolve factual disputes in a motion for summary judgment. Linan-Faye Constr. Co. v. Housing Auth., 49 F.3d 915, 926-27 (3d Cir. 1995) ("at the summary judgment stage, `the judge's function is not ... to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial'") (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986)); Desvi, Inc. v. Continental Ins. Co., 968 F.2d 307, 308 (3d Cir.1992) ("threshold inquiry is whether there are `genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party'") (citations omitted).

In considering a motion for summary judgment, all evidence submitted must be viewed in a light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Healey v. Southwood Psychiatric Hosp., 78 F.3d 128, 130-31 (3d Cir.1996); General Ceramics Inc. v. Firemen's Fund Ins. Cos., 66 F.3d 647, 651 (3d Cir.1995); Meyer v. Riegel Products Corp., 720 F.2d 303, 307 n. 2 (3d Cir.1983) (the court must resolve "all inferences, doubts and issues of credibility ... against the moving party"), cert. dismissed, 465 U.S. 1091, 104 S.Ct. 2144, 79 L.Ed.2d 910 (1984).

When the resolution of issues depends wholly upon the interpretation of specific statutory language and the applicable law, summary judgment is appropriate. See DiBiase v. SmithKline Beecham Corp., 48 F.3d 719, 724 (3d Cir.), cert. denied, ___ U.S. ___, 116 S.Ct. 306, 133 L.Ed.2d 210 (1995); see also Gans v. Mundy, 762 F.2d 338, 341 (3d Cir.) ("summary judgment is proper where the facts are undisputed"), cert. denied, 474 U.S. 1010, 106 S.Ct. 537, 88 L.Ed.2d 467 (1985); Estate of Reddert, 925 F.Supp. 261, 265 (D.N.J.1996).

In addition, when the nonmoving party bears the burden of proof at trial, the moving party is entitled to summary judgment by showing "there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325, 106 S.Ct. at 2553. Once the movant demonstrates an essential element of the nonmovant's case is lacking, the nonmovant must come forward with sufficient evidence to demonstrate there is a factual controversy as to that element. Anderson, 477 U.S. at 247, 106 S.Ct. at 2509; Siegel Transfer, Inc. v. Carrier Express, Inc., 54 F.3d 1125, 1130-31 (3d Cir.1995); Witco, 38 F.3d at 686. "The mere existence of a scintilla of evidence in support of the [nonmovant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." Anderson, 477 U.S. at 252, 106 S.Ct. at 2512; Matsushita, 475 U.S. at 586, 106 S.Ct. at 1355 (nonmovant must "do more than simply show that there is some metaphysical doubt as to the material facts"); accord Siegel, 54 F.3d at 1130-31; Nevets C.M., Inc. v. Nissho Iwai Am. Corp., 726 F.Supp. 525, 534 (D.N.J. 1989), aff'd without Op'n, 899 F.2d 1218 (3d Cir.1990).

If the nonmovant fails to make a sufficient showing regarding an essential element of its case upon which it will bear the ultimate burden of proof at trial, all other facts are necessarily immaterial and summary judgment must be granted. Celotex, 477 U.S. at 321, 106 S.Ct. at 2552; Siegel, 54 F.3d at 1130-31; see also Armstrong v. City of Dallas, 997 F.2d 62, 67 (5th Cir.1993) ("[s]ummary judgment is appropriate where critical evidence is so weak or tenuous on an essential fact that it could not support a judgment in favor of the nonmovant, or where it is so overwhelming that it mandates judgment in favor of the movant").

The dispute between the parties in the present case rests upon the threshold determination of whether the action is barred by the statute of limitations.¹² The Government contends that the claim is barred by the statutes of limitations found in 28 U.S.C. § 2401(a)¹³ and 26 U.S.C. § 6532(a)(1).¹⁴ Ethel Finkelstein counters the claim is not barred by the statute of limitations found in 26 U.S.C. § 6532(a) because the I.R.S. did not send the Notice of Disallowance by certified or registered mail as required by the rule.¹⁵

The resolution of issues in this case depends wholly upon the interpretation of statutory language and the applicable law. Because there are no genuine issues of material fact, the case is appropriate for summary judgment analysis. See DiBiase, 48 F.3d at 724; Gans, 762 F.2d at 341 ("summary judgment proper where facts are undisputed"); Continental Ins. Co. v. Bodie, 682 F.2d 436, 439 (3d Cir.1982); Estate of Reddert, 925 F.Supp. at 265; ...