In re Bozich
| Decision Date | 03 April 1997 |
| Docket Number | Bankruptcy No. 95-01811-TUC-JMM,Adversary No. A96-00086. |
| Citation | 212 BR 354 |
| Parties | In re Richard W. BOZICH and Vivian A. Bozich, Debtors. Richard W. BOZICH and Vivian A. Bozich, Plaintiffs, v. INTERNAL REVENUE SERVICE and United States of America, Defendants. |
| Court | U.S. Bankruptcy Court — District of Arizona |
Richard W. Bozich and Vivian A. Bozich, Tucson, AZ.
Robert McIntosh, Trial Attorney, Tax Division, U.S. Department of Justice, Washington, DC.
Richard W. Bozich and Vivian A. Bozich ("Plaintiffs") filed the above-captioned chapter 13 bankruptcy case on July 28, 1995. On September 29, 1995, the Internal Revenue Service ("the IRS") filed a proof of claim, asserting a total of $50,875.14 in secured, unsecured priority, and unsecured non-priority claims. On January 26, 1996, the IRS amended its proof of claim to reduce the total amount of its claims to $43,389.63.
On April 11, 1996, Plaintiffs, through attorney William G. Lane, requested permission to sell their residence. At the hearing on the matter, only the chapter 13 trustee's attorney and Mr. Lane appeared, and the sale was approved.
On April 23, 1996, Plaintiffs filed a pleading that, while titled as a "Motion to Lift I.R.S. Liens," asked only for the existing IRS lien on their residence to be transferred to any new home that Plaintiffs might later purchase; Plaintiffs did not challenge the lien's validity. The United States filed an objection to this motion on May 2, 1996. The Court denied Plaintiffs' motion but authorized the sale of the residence to proceed, so long as $12,327.57 remained in escrow until an anticipated challenge to the IRS's lien was resolved.
On May 31, 1996, Plaintiffs, in propria persona, filed a "Response to the Internal Revenue Service Objection to Motion to Lift IRS Liens; Motion to Dismiss." Although the title of this pleading suggests that it is related to Plaintiffs' earlier, unsuccessful motion to transfer the IRS's lien to any new residence purchased by Plaintiffs, in actuality it constituted the first written challenge to the validity of the IRS's claims. The motion raised various arguments, consisting mostly of statutory and constitutional challenges to the validity of the Internal Revenue Code, and technical challenges to the proof of claim filed by the IRS.
On June 5, 1996, Plaintiffs, through their attorney, filed a pleading entitled "Objection to Proof Notice." This pleading challenged the IRS's proof of claim on the basis of alleged inaccuracies in the amounts claimed by the IRS for taxes, interest, and penalties.
The Court set July 1, 1996 for a hearing on the challenges to the IRS's claims.
On June 17, 1996, Mr. Lane was allowed to withdraw as counsel for Plaintiffs.
On June 19, 1996, Plaintiffs, again representing themselves, filed an "Amended Motion to Dismiss." This pleading added a timeliness objection to the other bases for Plaintiffs' challenge to the IRS's proof of claim.1
On June 20, 1996, the United States moved to vacate the July 1 hearing on the basis of improper service. By order dated June 28, 1996, the Court granted that motion.
At this point, the Court determined that Plaintiffs' challenge to the validity of the IRS's claims should be brought in the form of an adversary proceeding. Thus, the June 28 order also contained the following directives:
On July 11, 1996, after the Court Clerk complied with the Court's order to place Plaintiffs' pro-per motions in an adversary file, Plaintiffs filed a complaint. That complaint, while urging various bases for disallowing the IRS's claims, did not challenge the factual accuracy of the amounts claimed by the IRS.
The IRS failed to file a timely answer; instead, on August 15, 1996, the IRS filed a motion for summary judgment. On August 21, 1996, Plaintiffs filed a motion for judgment by default.
On September 9, 1996, the Court entered an order denying Plaintiffs' motion for default judgment, striking the IRS's motion for summary judgment, and directing the IRS to file an answer or other pleading permitted by Rule 12 of the Federal Rules of Civil Procedure.
Subsequently, the IRS answered Plaintiffs' complaint and resubmitted its motion for summary judgment. At the hearing on the IRS's motion on December 4, 1996, Plaintiffs' argument consisted largely of an assertion that Plaintiffs paid, at least in part, the taxes upon which the IRS's claims are based. However, this assertion is not among the claims made in Plaintiffs' complaint. Therefore, the IRS argued, it would be error for this Court to consider that assertion. Beyond that, the IRS rested on its pleadings.
On December 11, 1996, The Court entered a memorandum decision and a partial judgment and order. The Court's rulings were: (1) that the IRS was entitled to summary judgment on Plaintiffs' claim that the IRS was required to have permission from the Attorney General and the Secretary of the Treasury before filing its proof of claim; (2) that the IRS's motion for summary judgment was denied as to Plaintiffs' claim that the IRS's claims should be disallowed because there was no proof that Barbara Lundberg, the IRS representative who signed the proof of claim, was authorized to do so; (3) that the IRS was permitted to submit an amended motion for summary judgment addressing only the issue of Ms. Lundberg's authority, but only if that amended motion for summary judgment were supported by affidavits and/or other admissible evidence; (4) that, in responding to any amended motion for summary judgment in favor of the IRS on the issue of Ms. Lundberg's authority, Plaintiffs were expected to submit whatever evidence they might have in support of their position; (5) that Plaintiffs' timeliness objection to the IRS's proof of claim was dismissed; and (6) that Plaintiffs were to have 15 days to amend their complaint for the sole purpose of adding the claim that the amount claimed by the IRS for taxes, interest, and penalties is factually inaccurate. In addition, the Court stated in its memorandum decision that it would not entertain any amendments to Plaintiffs' complaint that added new or different legal challenges to the IRS's proof of claim.
On December 24, 1996, Plaintiffs filed an amended complaint, adding to their earlier claims the allegation that the IRS's proof of claim was inaccurate.
On December 26, 1996, the IRS filed an amended motion for summary judgment, asking again for dismissal of Plaintiffs' claim that Barbara Lundberg lacked authority to sign the IRS's proof of claim. The IRS's motion is supported by the affidavit of Gerald W. Carter, chief of the IRS's insolvency unit in Phoenix, Arizona.
On January 8, 1997, the IRS answered Plaintiffs' amended complaint.
On January 21, Plaintiffs responded to the IRS's amended motion for summary judgment, and filed a cross-motion for summary judgment.
On February 11, the IRS filed a supplement to its amended motion for summary judgment.
On February 19, Plaintiffs moved to strike the IRS's supplement to its amended motion for summary judgment, and asked for sanctions.
On February 27, Plaintiffs filed a motion requesting that the Court enter summary judgment against the IRS because of the IRS's failure to respond to the cross-motion for summary judgment that Plaintiffs had filed on January 21.
On March 5, the IRS responded to Plaintiffs' motion to strike the IRS's supplement to its amended motion for summary judgment. On March 6, Plaintiffs moved to strike that response.
Also on March 6, the IRS responded to Plaintiffs' February 27 request that the Court enter summary judgment in Plaintiffs' favor because of the IRS's failure to respond to Plaintiffs' cross-motion for summary judgment.
On March 7, Plaintiffs filed an amended motion to strike the IRS's response to Plaintiffs' earlier motion to strike the IRS's supplement to its amended motion for summary judgment.
Therefore, the following motions currently are pending before this Court:
On March 18, a hearing was held on the IRS's amended motion for summary judgment. The IRS was represented by Robert McIntosh, and Mr. Bozich appeared in propria persona. Having considered the arguments of the parties, the state of the record, and the applicable law, the Court is prepared to issue its ruling on each of the motions currently pending in this matter.2
In the first of the three motions to strike now pending in this matter, Plaintiffs argue that the IRS's supplement to its amended motion for summary judgment should be stricken. However, Plaintiffs' motion appears to be based upon a misunderstanding of the process by which the Court reaches its legal...
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