Heller v. Plave

• Citation: 743 F. Supp. 1553
• Decision Date: 18 July 1990
• Docket Number: No. 89-0639-CIV.,89-0639-CIV.
• Parties: Daniel Neal HELLER, Plaintiff, v. Lawrence S. PLAVE, Doreen H. Kaplan and Thomas A. Lopez, Defendants.
• Court: U.S. District Court — Southern District of Florida

743 F. Supp. 1553

Daniel Neal HELLER, Plaintiff, v. Lawrence S. PLAVE, Doreen H. Kaplan and Thomas A. Lopez, Defendants.

No. 89-0639-CIV.

United States District Court, S.D. Florida.

July 18, 1990.

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Gilbert Haddad, Coral Gables, Fla., Joseph C. Brock and Lisa Heller Green, Miami, Fla., for plaintiff.

Robert Senior, Asst. U.S. Atty., Miami, Fla., Jose F. DeLeon, Tax Div., U.S. Dept. of Justice, Washington, D.C., for defendants.

MEMORANDUM ORDER

SCOTT, District Judge.

This is a Bivens¹ action filed by Plaintiff Daniel Neal Heller ("HELLER") against three employees of the Internal Revenue Service ("IRS") for interference with a defense witness and the use of known false testimony. The Defendants, Lawrence S. Plave ("PLAVE"), Doreen H. Kaplan ("KAPLAN") and Thomas A. Lopez ("LOPEZ"), have moved for summary judgment. They assert six defenses: absolute immunity, qualified immunity, res judicata, statute of limitations, judicial estoppel, and election of remedies.

I. FACTUAL BACKGROUND

Heller is an attorney in private practice. In October, 1977, the IRS began a civil audit of Heller's income tax return for the year ending December 31, 1976. A computer formula had identified Heller's tax return as having a high potential for error. The IRS assigned Revenue Agent Kaplan to undertake, what began as, a routine investigation of Heller's return.

On May 1, 1979, after seventeen months of investigation, Kaplan found evidence of fraud in the pattern of Heller's returns and referred the case to the Criminal Investigation Division (CID) of the IRS for further investigation. This referral involved the services of all three Defendants: Kaplan sent the Heller file to Lopez, a Group Manager in CID; Lopez then turned the report over to Special Agent Plave, who took over the Heller investigation.² Based upon Plave's investigation, the IRS recommended that criminal charges be brought against Heller for his tax returns covering the years 1975, 1976, and 1977. The deficiencies in these returns included omissions of legal fees of $178,326.80, $71,914.53 and $187,696.15, respectively.

Eventually, the IRS brought Heller to trial for tax evasion. Heller defended by asserting his reliance on the expertise of his accountant, Leonard I. Safra ("SAFRA"), in preparing his returns from 1972 through 1978.³ Safra is a certified public accountant and former IRS employee who specializes in providing accounting services for lawyers. Safra and his firm handled all of the accounting work for Heller's legal practice. Safra, however, was not a defense witness at Heller's tax evasion trial. Rather, he became a key IRS witness by testifying against Heller. There is no question that Safra perjured himself at Heller's trials.⁴

This lawsuit arises from the alleged conduct of the defendant IRS agents that encouraged Safra to provide false testimony. Heller claims that the agents induced Safra to testify falsely by threatening him with criminal prosecution. Then, they knowingly allowed Safra to commit perjury at Heller's criminal trials.⁵ Heller asserts that the defendants were motivated by a personal vendetta against him arising from his role in exposing alleged IRS misconduct.⁶

The facts, and inferences therefrom, are in dispute. On July 3, 1979, Plave, Kaplan and Lopez met to discuss the Joint Investigation (civil — criminal) of Heller.⁷ It is undisputed that the defendants agreed at this meeting to "preclude" Heller's use of a "false" reliance defense. Then, on July 13, 1979, Lopez and Plave visited Safra at his office.⁸ The agents did not take notes at this meeting. It is undisputed that Plave and Lopez advised Safra at this time that he could be a defendant in a criminal case for aiding and assisting Heller in evading his taxes. The parties dispute the Defendants' intent in giving this warning. The Defendants contend that they expressed their concern over Safra's role in Heller's affairs; yet, Plave concedes that he intended to scare and intimidate Safra. Heller asserts that the threats of prosecution were intended to induce Safra to testify falsely against him.

Following this initial meeting, events unfolded quickly in the Heller investigation. The very next business day Plave met with Safra's attorney, Charles L. Ruffner ("Ruffner"). At this meeting, Ruffner informed Plave that Safra wanted to be a witness in the Heller case. According to Heller, Plave and Ruffner agreed that Safra would testify that he knew nothing Heller's case-closed method of accounting until after Heller's 1978 return was filed. In return, Plave allegedly promised that Safra would not be prosecuted for aiding Heller. Nine days later, on July 25, 1979, Safra and his firm resigned as Heller's accountants. This action terminated Heller's access to Safra, his co-workers and his records.

On August 17, 1979, Plave, Kaplan and Lopez formally interviewed Safra, with Ruffner present, in IRS offices. At that time, Safra stated that Heller concealed this information from him until March, 1979. No one brought forth the official notes of Kaplan's earlier interviews with Safra in which Safra acknowledged the case-closed method. Heller contends that Plave, Kaplan, and Lopez knew then that Safra had changed his story. Moreover, they understood how this change would preclude Heller from asserting his reliance defense. The Defendants did not disclose Safra's contradictory statements to officials of the IRS or the Justice Department.

On June 15, 1981, Plave and Kaplan submitted their final prosecution report recommending criminal prosecution of Heller. Thereafter, officials of the IRS and the Justice Department approved this recommendation.

II. PROCEDURAL HISTORY

Two civil suits filed by Heller preceded his criminal trials. The agents utilize these suits as a basis for several affirmative defenses in their summary judgment motion. Initially, on March 6, 1981, Heller filed an accounting malpractice complaint against Safra and his partners in state circuit court. This complaint alleged ten counts.⁹ The circuit court stayed this action on May 28, 1981. On January 6, 1989, the action was dismissed with prejudice. The Hellers settled for five (5) million dollars. Then, on June 29, 1982, Heller filed an unlawful disclosure action against Plave.¹⁰ This case was tried in January, 1987, and decided on February 4, 1987. Heller v. Plave, 657 F.Supp. 95 (S.D.Fla. 1987). Prior to trial, Heller unilaterally withdrew allegations regarding the personal vendetta that motivated Plave's conduct. No proof of a personal vendetta was offered at trial, although it was raised in opening arguments. Plave was ultimately held liable for thirteen negligent disclosures regarding the status and nature of the criminal investigation against Heller. Heller v. Plave, 657 F.Supp at 99. On December 31, 1987, the parties settled this action for $21,816.41 and Plave dismissed his appeal with prejudice.

Heller's criminal ordeal began on June 30, 1982, when the Department of Justice authorized criminal prosecution of Heller and a Grand Jury in the Southern District of Florida returned an indictment against him. Heller was tried on three counts of tax evasion in violation of 26 U.S.C. § 7201 (1983) and three counts of falsely subscribing to an income tax return in violation of 26 U.S.C. § 7206(1) (1983). A jury trial commenced on August 25, 1983. On November 10, 1983, following a twelve-week trial, the jury convicted Heller on all counts. On March 29, 1985, Heller was sentenced to three years imprisonment, fined thirty thousand dollars ($30,000) (plus costs), and granted bond pending appeal.

On April 7, 1986, the United States Court of Appeals for the Eleventh Circuit reversed Heller's conviction, citing juror bias. United States v. Heller, 785 F.2d 1524 (11th Cir.1986). On remand, Heller was convicted once again. Subsequently, the court sentenced Heller to three years imprisonment, and denied bond pending appeal. Commencing on June 2, 1987, Heller served four (4) months in prison.

On September 29, 1987, the Eleventh Circuit reversed Heller's conviction for a second time, ruling that Safra had perjured himself, thereby depriving Heller of a fair trial. Heller was released from prison and granted a new trial. On March 21, 1988, the Eleventh Circuit denied the Government's petition for rehearing and rehearing en banc. On April 29, 1988, the district court granted the Government's motion to dismiss the indictment.

Heller brought the present action on March 28, 1989. On June 30, 1989, the Defendants moved to dismiss the complaint or alternatively, for summary judgment. Heller responded on August 18, 1989. With the case in an appropriate juxtaposition, we now proceed to resolve the merits of the summary judgment motion.

III. LEGAL ANALYSIS

A. Collateral Estoppel

The Defendants' suggest that United States v. Heller, 830 F.2d 150 (11th Cir. 1987) (hereinafter "Heller I") is a "unique decision" which is not binding in this action. Because this assertion is of concern to the Court, we sua sponte consider the preclusive effect of the Eleventh Circuit's ruling as it pertains to the parties and issues in this lawsuit.¹¹ See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

In essence, the Defendants suggest that this Court is collaterally estopped from using Heller I (offensively) as dispositive of governmental interference with Safra's testimony. Thus, given Heller I, in light of the concept of collateral estoppel, the issue now before the Court concerns what questions must be relitigated in this Bivens action? To grant preclusive effect to an issue, we must find that:

1. the issue has been actually raised and litigated in the prior proceeding;

2. the issue was a critical and necessary part of the final judgment in the earlier litigation; and

3. the issue is the same in both actions.

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