Ishler v. United States

Decision Date07 April 2014
Docket NumberNo. 13-475 T,13-475 T
PartiesDOMER L. ISHLER, Plaintiff, v. THE UNITED STATES, Defendant.
CourtCourt of Federal Claims

DOMER L. ISHLER, Plaintiff,
v.
THE UNITED STATES, Defendant.

No. 13-475 T

United States Court of Federal Claims

Filed April 7, 2014


Tax; Refund Claim; Full
Payment Rule; Requirement of
a Timely Administrative
Claim, 26 U.S.C. §§ 6511(a),
7422(a) (2012); Jurisdictional
Effect of a Previous Tax Court
Petition.

Joe A. Izen, Jr., Bellaire, TX, for plaintiff. Matthew Gilmartin, Houston, TX, of counsel.

Robert Stoddart, United States Department of Justice Tax Division, with whom were Kathryn Keneally, Assistant Attorney General, David I. Pincus, Chief, Court of Federal Claims Section, Mary M. Abate, Assistant Chief, Washington, DC, for defendant.1

OPINION

BUSH, Senior Judge.

Now pending before the court is defendant's motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6) of the Rules of the United States Court of Federal Claims (RCFC). That motion has been fully briefed and is ripe for a decision by

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this court. Oral argument was neither requested by the parties nor deemed necessary by the court. Because the court concludes that it lacks jurisdiction over plaintiff's claims, defendant's motion to dismiss is granted.2

BACKGROUND3

In this tax refund suit, plaintiff Domer L. Ishler, a resident of Alabama, seeks a refund of federal income taxes, Federal Insurance Contributions Act (FICA) taxes,4 and Federal Unemployment Tax Act (FUTA) taxes5 he alleges were withheld by Nissei Sangyo America, Ltd. (Nissei) from sales commissions owed to Mr. Ishler (and/or entities owned or controlled by him) in connection with the sale of electronics components in Alabama during the years 1986 through 1991.6 Plaintiff's claimed refund is $400,000, but, according to plaintiff, may well exceed $2,000,000 "as the exact amount that Nissei withheld out of the commissions due [Mr. Ishler and/or his entities] is currently unknown." Compl. ¶ 2(a). Mr. Ishler

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states that he does not know if Nissei ever remitted those amounts to the Internal Revenue Service (IRS), id. ¶ 2(b), but nevertheless demands a refund on the theory that the law treats such amounts as having been paid to the IRS "regardless of whether IRS ever physically received such withholding taxes," id. ¶ 2(a).

This is not the first suit involving Mr. Ishler's or his entities' dealings with Nissei; at least three other courts, including the United States Tax Court, have adjudicated claims arising from those dealings.7 Of particular relevance here, Mr. Ishler and 20th Century Marketing, Inc. (20th Century), his wholly-owned corporation, petitioned the Tax Court in August 1999 for a redetermination of income tax deficiencies assessed against plaintiff and 20th Century, including fraud penalties assessed against Mr. Ishler, for failing to report as income certain commissions paid by Nissei to Camaro Trading Company (Camaro), a Hong Kong corporation, in 1987 and 1988. See Def.'s Mot. Exs. 1-2. The Tax Court, in a memorandum opinion issued on March 28, 2002, upheld the deficiencies and concluded that Mr. Ishler had fraudulently "used Camaro to divert [Nissei] payments to himself and to his family and friends through an opaque series of transfers in 1987 and 1988." See Ishler v. Comm'r, T.C.M. (RIA) 2002-79, 2002 WL 467216, at *11 (2002), aff'd mem., 88 F. App'x 385 (11th Cir. 2003). The Tax Court's decision was summarily affirmed by the United States Court of Appeals for the Eleventh Circuit, see Ishler v. Comm'r, 88 F. App'x 385 (11th Cir. 2003), and the United States Supreme Court subsequently denied Mr. Ishler's petition for certiorari, see Ishler v. Comm'r, 543 U.S. 810 (2004).

In May 2005, plaintiff filed a complaint with the United States District Court for the Northern District of Alabama in which he asserted various claims against

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the IRS Commissioner, an IRS revenue agent, and Nissei arising out of plaintiff's ongoing dispute with the IRS concerning his tax liability with respect to commissions paid by Nissei. Among plaintiff's claims in that lawsuit were an informal claim for refund of taxes allegedly withheld by Nissei, and a claim for a declaratory judgment that Mr. Ishler was entitled to a tax credit for amounts withheld by Nissei. In dismissing all of Mr. Ishler's claims, the district court held, inter alia, that the United States had not waived sovereign immunity with respect to Mr. Ishler's informal refund claim because Mr. Ishler had not first paid the full amount of the contested tax assessment. See Ishler v. Comm'r, 442 F. Supp. 2d 1189, 1207-08 (N.D. Ala. 2006) (citing 28 U.S.C. § 1346(a)(1), and Flora v. United States, 362 U.S. 145, 175-77 (1960)). Additionally, with respect to Mr. Ishler's claim for a declaratory judgment that he was entitled to a credit for amounts withheld by Nissei, the district court held that the aforementioned decisions of the Tax Court and the Eleventh Circuit precluded plaintiff from re-litigating the issue of whether he was entitled to such a credit. See id. at 1215. The district court's decision was affirmed, albeit on other grounds, by the Eleventh Circuit. See Ishler v. Comm'r, 237 F. App'x 394 (11th Cir. 2007).

Having failed to secure any relief before the Tax Court, the district court, the Eleventh Circuit, or the Supreme Court, plaintiff filed suit in this court on July 12, 2013 seeking a refund of taxes allegedly withheld by Nissei from sales commissions reputedly owed to Mr. Ishler and/or his various entities. The complaint did not disclose any of Mr. Ishler's previous lawsuits arising from his dealings with Nissei.

The government moved to dismiss plaintiff's complaint on October 1, 2013. In its motion, defendant argues, first, that this court lacks jurisdiction to consider Mr. Ishler's claims for refund with respect to any taxable year identified in his complaint with the possible exception of 1989. See Def.'s Reply at 3-8. Second, the government asserts that plaintiff fails to state a claim for relief with respect to any taxable period over which this court may possess jurisdiction. See Def.'s Mot. at 4-17; Def.'s Reply at 8-11. Defendant therefore requests that plaintiff's complaint be dismissed with prejudice under RCFC 12(b)(6) as to tax year 1989, and without prejudice under RCFC 12(b)(1) as to all other tax years.

Mr. Ishler responds to the government's motion to dismiss with numerous assertions, very few of which are relevant to the court's analysis and none of which

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have any merit. Upon consideration of plaintiff's arguments, the court must conclude that it lacks jurisdiction over each of his claims.

DISCUSSION

I. Standard of Review under RCFC 12(b)(1)

The relevant issue presented by a motion to dismiss under RCFC 12(b)(1) "'is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.'" Patton v. United States, 64 Fed. Cl. 768, 773 (2005) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), abrogated on other grounds by Harlow v. Fitzgerald, 457 U.S. 800 (1982)). In considering the issue of subject matter jurisdiction, this court must presume all undisputed factual allegations to be true and construe all reasonable inferences in favor of the plaintiff. Scheuer, 416 U.S. at 236; Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 747 (Fed. Cir. 1988) (citations omitted).

Where the court's jurisdiction is challenged, the plaintiff bears the burden of establishing subject matter jurisdiction by a preponderance of the evidence and by presenting competent proof. Alder Terrace, Inc. v. United States, 161 F.3d 1372, 1377 (Fed. Cir. 1998) (citing McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 189 (1936)); Reynolds, 846 F.2d at 748 (citations omitted). If the plaintiff fails to meet his burden, and jurisdiction is therefore found to be lacking, the court must dismiss the action. RCFC 12(h)(3).

In considering a motion to dismiss for lack of subject matter jurisdiction which challenges the truth of jurisdictional facts alleged in the complaint, the court may make findings of fact pertinent to its jurisdiction. Ferreiro v. United States, 350 F.3d 1318, 1324 (Fed. Cir. 2003) (citing Moyer v. United States, 190 F.3d 1314, 1318 (Fed. Cir. 1999), and Reynolds, 846 F.2d at 747); Rocovich v. United States, 933 F.2d 991, 993 (Fed. Cir. 1991) ("In determining whether a motion to dismiss should be granted, the Claims Court may find it necessary to inquire into jurisdictional facts that are disputed."). In making findings of fact pertinent to its jurisdiction, the court is not restricted to the face of the pleadings, but may review evidence extrinsic to the pleadings, including declarations or affidavits. Rocovich, 933 F.2d at 994 (citing Land v. Dollar, 330 U.S. 731, 735 n.4 (1947), and Reynolds, 846 F.2d at 747).

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II. Jurisdictional Framework

The United States Court of Federal Claims has jurisdiction, concurrent with the United States district courts, over suits for refund of taxes alleged to have been erroneously or unlawfully assessed or collected. See 28 U.S.C. § 1346(a)(1) (2012); see also United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1, 4 (2008); Roberts v. United States, 242 F.3d 1065, 1067 (Fed. Cir...

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