First Interstate Bank of Nevada v. US

• Decision Date: 21 November 1994
• Docket Number: No. CV-S-94-0034-PMP (RLH).,CV-S-94-0034-PMP (RLH).
• Citation: 874 F. Supp. 286
• Parties: FIRST INTERSTATE BANK OF NEVADA, as Executor of the Estate of Marilla D. Black and as Trustee of the Marilla D. Black Testamentary Trust, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of Nevada

874 F. Supp. 286

FIRST INTERSTATE BANK OF NEVADA, as Executor of the Estate of Marilla D. Black and as Trustee of the Marilla D. Black Testamentary Trust, Plaintiff, v. UNITED STATES of America, Defendant.

No. CV-S-94-0034-PMP (RLH).

United States District Court, D. Nevada.

November 21, 1994.

Mark Solomon, Allen J. Wilt, Paul D. Bancroft and Stephen R. Hackett, Lionel Sawyer & Collins, Reno, NV, for plaintiff.

Brian Feldman, Tax Div., U.S. Dept. of Justice, Washington, DC, for defendant.

ORDER

PRO, District Judge.

Presently before the Court is Plaintiff First Interstate's Motion for Summary Judgment (# 21) ("Motion"), filed September 19, 1994. The Defendant filed its Opposition (# 23) ("Opposition") on October 7, 1994. Plaintiff filed its Reply (# 24) on October 24, 1994.

I. Factual and Procedural Background

This is an action by Plaintiff First Interstate Bank of Nevada ("First Interstate") to recover overpayments of federal income taxes by Marilla D. Black, deceased, for the tax years of 1985 to 1990, pursuant to 26 U.S.C. § 7422. See Complaint (# 1). Plaintiff First Interstate, as Executor of the estate of Marilla D. Black and the Trustee of the Marilla D. Black testamentary trust, the sole beneficiary of the residue of the estate of Marilla D. Black, filed tax returns for Marilla D. Black for tax years 1985 through 1990 on October 15, 1991. See id. These returns sought refunds from overpayments allegedly made by Marilla Black during those years. See id.

Following the Complaint, the Defendant United States of America (the "Government") filed a Motion to Dismiss (# 6) on April 18, 1994, based upon the limitations period governing tax refund suits under 26 U.S.C. § 6511. This Court by Order (# 13), entered May 26, 1994, denied the Government's Motion to Dismiss based on the doctrine of equitable tolling.

Throughout this action, Plaintiff has asserted that Marilla Black was mentally incompetent and suffered from senile dementia during the tax periods at issue. These facts are not disputed by the Government in its Opposition. The Government does dispute the role of Charles Black throughout Marilla Black's mental incompetence.

Charles Black, the son of Marilla Black, earned an economics degree from Stanford University, and following a brief two year period with a brokerage firm acted as an investor for the family, living off of his investments. Deposition of Charles Black. The Government asserts that Charles Black assisted Marilla Black in filing estimated tax payments during the tax periods in issue.

II. Summary Judgment

Pursuant to Federal Rule of Civil Procedure 56, summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."

The party moving for summary judgment has the initial burden of showing the absence of a genuine issue of material fact. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir.1982), cert. denied, 460 U.S. 1085, 103 S.Ct. 1777, 76 L.Ed.2d 349 (1983). Once the movant's burden is met by presenting evidence which, if uncontroverted, would entitle the movant to a directed verdict at trial, the burden then shifts to the respondent to set forth specific facts demonstrating that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). If the factual context makes the respondent's claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986); California Arch. Bldg. Prod. v. Franciscan Ceramics, 818 F.2d 1466, 1468 (9th Cir.1987), cert. denied, 484 U.S. 1006, 108 S.Ct. 698, 699, 98 L.Ed.2d 650 (1988).

If the party seeking summary judgment meets this burden, then summary judgment will be granted unless there is significant probative evidence tending to support the opponent's legal theory. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968); Commodity Futures Trading Comm'n v. Savage, 611 F.2d 270 (9th Cir. 1979). Parties seeking to defeat summary judgment cannot stand on their pleadings once the movant has submitted affidavits or other similar materials. Affidavits that do not affirmatively demonstrate personal knowledge are insufficient. British Airways Bd. v. Boeing Co., 585 F.2d 946, 952 (9th Cir.1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1790, 60 L.Ed.2d 241 (1979). Likewise, "legal memoranda and oral argument are not evidence and do not create issues of fact capable of defeating an otherwise valid motion for summary judgment." Id.

A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the differing versions of the truth. See Admiralty Fund v. Hugh Johnson & Co., 677 F.2d 1301, 1305-06 (9th Cir. 1982); Admiralty Fund v. Jones, 677 F.2d 1289, 1293 (9th Cir.1982).

All facts and inferences drawn must be viewed in the light most favorable to the responding party when determining whether a genuine issue of material fact exists for summary judgment purposes. Poller v. CBS, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). After drawing inferences favorable to the respondent, summary judgment will be granted only if all reasonable inferences defeat the respondent's claims. Admiralty Fund v. Tabor, 677 F.2d 1297, 1298 (9th Cir.1982).

The trilogy of Supreme Court cases cited above establishes 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.'" Celotex Corp., 477 U.S. at 327, 106 S.Ct. at 2555 (quoting Fed.R.Civ.P. 1). See also Avia Group Int'l, Inc. v. L.A. Gear Cal., 853 F.2d 1557, 1560 (Fed.Cir.1988).

III. Equitable Tolling

This Court in its Order denying the Government's Motion to Dismiss held that equitable tolling principles apply to tax refund claims, and further held that "mental incompetency may, in appropriate cases, toll the statute of limitations for filing a tax refund action." Order (# 13), fn. 2, quoting Scott v. United States, 795 F.Supp. 1028 (D.Hawaii 1992) ("Scott I"). This Court relied on the opinion of the United States Supreme Court in Irwin v. Veterans Affairs, 498 U.S. 89, 95, 111 S.Ct. 453, 457, 112 L.Ed.2d 435 (1990), reh'g denied, 498 U.S. 1075, 111 S.Ct. 805, 112 L.Ed.2d 865 (1991) (holding statute of limitations in actions against the government are subject to a rebuttable presumption of equitable tolling applicable to suits against private defendants) and the decisions of several district courts considering the issue. See Scott I, 795 F.Supp. 1028 (permitting equitable tolling of Section 6511's limitations period for severe and chronic alcoholism); Scott v. United States, 847 F.Supp. 1499 (D.Hawaii 1993) ("Scott II") (same); Wiltgen v. United States, 813 F.Supp. 1387 (N.D.Iowa 1992) (permitting equitable tolling of Section 6511's limitations for schizophrenia); and Johnsen v. United States, 758 F.Supp. 834 (E.D.N.Y. 1991) (permitting equitable tolling of Section 6511's limitations for mental incompetency). This Court rejected the decisions of United States v. Dalm, 494 U.S. 596, 608, 110 S.Ct. 1361, 1368, 108 L.Ed.2d 548 (1990), reh'g denied, 495 U.S. 941, 110 S.Ct. 2195, 109 L.Ed.2d 523 (1990) (doctrine of equitable recoupment does not support separate suit for refund of earlier paid gift tax after taxpayer settled tax court deficiency proceeding and agreed to pay income tax on transaction), and the decisions of the Eleventh and First Circuits, in Vintilla v. United States, 931 F.2d 1444 (11th Cir.1991), reh'g, en banc, denied, 942 F.2d 798 (11th Cir.1991) (refusing to allow equitable tolling in tax refund cases), and Oropallo v. United States, 994 F.2d 25 (1st Cir.1993) (same). See Order (# 13).

The law of the case doctrine "precludes a court from re-examining an issue previously decided by the same court, or a higher appellate court, in the same case." Moore v. Jas. H. Matthews & Co., 682 F.2d 830, 833 (9th Cir.1982). The doctrine is a discretionary one created to maintain consistency and avoid reconsideration of issues during the course of a single continuing lawsuit. Pit River Home and Agricultural Cooperative Association v. United States, 30 F.3d 1088, 1097 (9th Cir.1994). The Court has already considered whether equitable tolling principles apply to tax refund cases and whether mental incompetency may trigger equitable tolling. See Order (# 13). Accordingly, the Court will not reconsider its ruling that equitable tolling principles apply to tax refund claims and that mental incompetency may toll the statute of limitations for such a claim. See Pit River, 30 F.3d 1088, 1097.

IV. Equitable Tolling as available to Plaintiff

The doctrine of equitable tolling is applied in two situations. Seattle Audubon Society v. Robertson, 931 F.2d 590, 595 (9th Cir.1991).¹ The first involves plaintiffs who were unable to assert their claims due to wrongful conduct on the part of the defendants. Id. The second involves "extraordinary circumstances beyond plaintiffs' control" that make it impossible to assert their claims timely. Id.

Plaintiffs here assert that the failure of Marilla Black to timely file a return on her income tax or to assert a claim for refund of tax overpaid was due to her dementia. Plaintiffs urge this Court to apply equitable...