Geiselman v. U.S., s. 91-1501

• Decision Date: 31 March 1992
• Docket Number: 91-1738,Nos. 91-1501,s. 91-1501
• Citation: 961 F.2d 1
• Parties: -1093, 92-1 USTC P 50,200 Michael J. GEISELMAN, et al., Plaintiffs, Appellants, v. UNITED STATES of America, et al., Defendants, Appellees. Michael J. GEISELMAN, Plaintiff, Appellant v. UNITED STATES of America, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 1

961 F.2d 1

69 A.F.T.R.2d 92-1093, 92-1 USTC P 50,200

Michael J. GEISELMAN, et al., Plaintiffs, Appellants, v. UNITED STATES of America, et al., Defendants, Appellees.

Michael J. GEISELMAN, Plaintiff, Appellant v. UNITED STATES of America, Defendant, Appellee.

Nos. 91-1501, 91-1738.

United States Court of Appeals First Circuit.

Submitted Dec. 16, 1991.

Decided March 31, 1992.

Michael J. Geiselman and Valerie Washburn Geiselman, on brief, pro se.

Wayne A. Budd, U.S. Atty., Shirley D. Peterson, Asst. Atty. Gen., Gary R. Allen, Gayle P. Miller and Sally J. Schornstheimer, Attys., Tax Div., Dept. of Justice, on brief, for appellees.

Before SELYA, Circuit Judge, CAMPBELL, Senior Circuit Judge, and CYR, Circuit Judge.

PER CURIAM.

The appellants in these consolidated appeals, Valerie Washburn Geiselman (appellant in No. 91-1501) and Michael Geiselman (appellant in both No. 91-1501 and No. 91-1738), appeal from the district court's grant of summary judgment to the United States of America and to Gerard Esposito, the District Director of the Internal Revenue Service (collectively, the "federal defendants"). Although the paths of these appeals wind through a procedural thicket and a small but dense forest of papers, they lead eventually to a clear patch of substantive legal ground. For the reasons stated below, we dismiss the appeal in No 91-1501 for lack of jurisdiction and affirm the judgment at issue in No. 91-1738.

The Tax Deficiencies

The root of the Geiselmans' claims is the government's seizure and sale of their home to satisfy unpaid tax debts. The sale occurred on March 22, 1989. The debts arose when Michael Geiselman failed to file federal income tax returns for 1978 through 1982, and Valerie Geiselman failed to file returns for 1979 and 1980. In 1986 the IRS mailed separate "notices of deficiency" to Michael and Valerie. See 26 U.S.C. § 6212(a). Michael's notice of deficiency told him that he owed more than $30,000 in unpaid taxes, penalties and interest; Valerie's notice informed her that she owed the government about $2,000.

The mailing of the notices of deficiency set the clock running on the ninety-day period in which Michael and Valerie could petition the Tax Court for redetermination of the deficiencies. 26 U.S.C. § 6213(a). During that period, the IRS is barred from taking any action to collect the debt, id., and in this case the Service duly refrained. Neither Michael nor Valerie filed a petition for redetermination in the Tax Court. According to the documents submitted to the district court, the IRS took the next step in the collection process on October 6, 1986, when it formally (and separately) assessed the amounts due from each spouse. See 26 U.S.C. § 6201 (authorizing Secretary of Treasury to assess taxes), § 6203 ("assessment shall be made by recording the liability of the taxpayer in the office of the Secretary"). On the same day, the IRS sent "First Notices" of the respective assessments to Michael and Valerie. 26 U.S.C. § 6303(a) (Secretary shall, within 60 days of assessment, "give notice to each person liable for the unpaid tax, stating the amount and demanding payment thereof"). Additional notices followed as the IRS periodically assessed interest due on the underlying tax liabilities.

Once demand had been made, liens arose in favor of the United States against all of Michael and Valerie's property and rights to property. See 26 U.S.C. § 6321. In 1989, as neither Michael nor Valerie had paid the taxes due, the government seized the Geiselmans' house and sold it to satisfy their tax obligations. See 26 U.S.C. § 6331 (authorizing Secretary to levy on property to collect outstanding taxes). The government sold the house to Daniel Ito for $175,000. The government applied almost $90,000 of the sale price to settle Michael's tax liability (swollen to that figure, we take it, by the accrual of interest and additional penalties), and another $4,663 to settle Valerie's.

The Lawsuits

On March 17, 1989 (five days before the government sold his house), Michael Geiselman sued the United States in federal district court in Massachusetts. He alleged that the government's lien on his property was ineffective because the government had committed procedural errors in determining the deficiency and assessing the tax liability. Michael unsuccessfully sought a temporary restraining order barring the sale, but pressed the suit even after the sale in order to "quiet title" to the property and to obtain a permanent order unwinding the transfer and returning title to him. Valerie was not a party to this lawsuit.

Valerie is, however, party to a second lawsuit which she and Michael filed in a Massachusetts Superior Court in January 1990. This suit named the United States, Gerard Esposito (District Director of the IRS) and Daniel Ito (the buyer of the Geiselmans' house) as defendants. This suit, too, alleged procedural defects in the tax collection process and sought an order effectively returning title to the Geiselmans. The government and Esposito answered; Ito answered and counterclaimed for damages caused by the Geiselmans' continued occupation of the premises.

The government removed the second lawsuit to the federal district court, where the two cases were consolidated. The district court eventually granted summary judgment to the federal defendants. These appeals followed.

Appellate Jurisdiction

Appeal No. 91-1738 springs from the first lawsuit, in which Michael alone sued only the United States. As the grant of summary judgment settled all outstanding issues between both parties to that case, the judgment was "final" and we have jurisdiction over the appeal.

Appeal No. 91-1501, however, arises from the second lawsuit, involving both Michael and Valerie as plaintiffs, and Daniel Ito and Gerard Esposito, as well as the government, as defendants. The federal defendants contend, and we agree, that we lack jurisdiction over this latter appeal. The district court granted summary judgment to the government and Esposito in the second lawsuit, but the record reveals no disposition of the Geiselmans' claim against Ito or of Ito's counterclaim against them. The district court did not certify the judgment for immediate appeal pursuant to Fed.R.Civ.P. 54(b).

"It is elementary that a grant of summary judgment as to some parties in a multi-party litigation does not constitute a final order unless the requirements of Fed.R.Civ.P. 54(b) are met." Brookens v. White, 795 F.2d 178, 179 (D.C.Cir.1986). See also Spiegel v. Trustees of Tufts College, 843 F.2d 38 (1st Cir.1988). Similarly, a claim and a counterclaim constitute "multiple claims," and a decision on only one does not constitute a final appealable order absent compliance with Rule 54(b). Belmont Place Associates v. Blyth, Eastman, Dillon & Co., 565 F.2d 1322 (5th Cir.1978) (per curiam); Bank of New York v. Hoyt, 108 F.R.D. 184, 186-87 (D.R.I.1985). We therefore conclude that this court lacks jurisdiction to hear appeal No. 91-1501.

The Merits of No. 91-1738

Michael Geiselman's lawsuit against the government involved a narrow range of issues. Because Michael did not petition the Tax Court for a redetermination of the deficiency, and because he had not complied with the jurisdictional prerequisites to the maintenance of a tax refund action, see 26 U.S.C. § 7422(a) (administrative refund claim must be filed before taxpayer can sue), he did not put the merits of the tax assessment before the district court--that is, he could not and did not contest his liability for the amount of tax assessed. The district court had jurisdiction, under 28 U.S.C. § 2410(a), only to determine whether the government's lien on Michael's house was so tainted by procedural defects as to render it, and the subsequent seizure and sale, a nullity. See Schmidt v. King, 913 F.2d 837, 839 (10th Cir.1990); Elias v. Connett, 908 F.2d 521, 527-28 (9th Cir.1990); Pollack v. United States, 819 F.2d 144, 145 (6th Cir.1987) and cases cited therein.

Michael alleged the existence of three procedural defects: (1) he had not been issued a "statutory" notice of deficiency, (2) the government had not properly assessed his tax liability, and (3) he had not been issued the "mandated" notice of assessment and demand for payment. ¹ He also contended that the government could not obtain a lien on the house because he and Valerie owned the property as tenants by the entirety.

Notice of Deficiency

The Internal Revenue Code authorizes the IRS to issue notices of deficiency, but does not say what form these notices must take or what information they must contain. 26 U.S.C. § 6212(a). But, because it is clear that the purpose of the notice "is only to advise the person who is to pay the deficiency that the Commissioner means to assess him; anything that does this unequivocally is good enough." Olsen v. Helvering, 88 F.2d 650, 651 (2d Cir.1937) (Hand, L., J.). The minimum requirement is that the notice "set forth the amount of the deficiency and the tax year involved." Alford v. Commissioner of Internal Revenue, 800 F.2d 987, 988 (10th Cir.1986). See also Estate of Yaeger v. Commissioner of Internal Revenue, 889 F.2d 29, 35 (2d Cir.1989) (notice generally must indicate that deficiency has been determined and identify taxpayer, taxable year involved and amount of deficiency); Stoecklin v. Commissioner of Internal Revenue, 865 F.2d 1221, 1224 (11th Cir.1989); Donley v. Commissioner of Internal Revenue, 791 F.2d 383, 384-85 (5th Cir.1986).

The notice of deficiency issued to Michael satisfied these minimum requirements. In fact, the attachments to the notice (which ran to twenty-three pages) went beyond the minimum and detailed the elements and calculation of the deficiency. Nevertheless, Michael contends that the notice was defective for two reasons. First, he says that the notice failed to articulate either the exact taxing statute upon which the deficiency was based, or the factual basis for...