Johnson v. United States

• Decision Date: 31 May 2012
• Docket Number: Civil Action No. DKC 09–0787.
• Citation: 861 F.Supp.2d 629
• Parties: Mary JOHNSON v. UNITED STATES of America.
• Court: U.S. District Court — District of Maryland

861 F.Supp.2d 629

Mary JOHNSON

v.UNITED STATES of America.

Civil Action No. DKC 09–0787.

United States District Court, D. Maryland.

May 31, 2012.

Alexei M. Silverman, Bethesda, MD, Douglas R. Taylor, Law Office of Douglas R. Taylor, Kensington, MD, Sheila Thurmond Mayers, Law Offices of Sheila Mayers, Washington, DC, for Mary Johnson.

Allie C. Yang–Green, Melissa Dickey, United States Department of Justice, Washington, DC, for United States of America.

MEMORANDUM OPINION

DEBORAH K. CHASANOW, District Judge.

Presently pending and ready for resolution in this action is the “joint motion to alter or amend the judgment” filed by Plaintiff and Counterclaim Defendant Mary Johnson and Additional Counterclaim Defendant Ford Johnson. (ECF No. 103). The issues are fully briefed, and the court now rules pursuant to Local Rule 105.6, no hearing being deemed necessary. For the reasons that follow, the motion will be denied.

I. Background

The following facts are an abbreviated version of those set forth in the court's earlier memorandum opinion, which granted the motions for summary judgment filed by Defendant and Counterclaim Plaintiff the United States of America. (ECF No. 99). Ford and Mary Johnson are husband and wife. Both have been involved with Koba Institute (“Koba” or “the corporation”), an organization that Mr. Johnson originally founded to perform various government contracts. Since 1998, Mrs. Johnson has been the corporation's sole shareholder; she appointed herself as chairperson of the board in 2001. The corporate bylaws provided that the board chairperson would also serve as Koba's president. Because the Johnsons had agreed that Mrs. Johnson would be the primary caregiver to the couple's children, however, she delegated her authority in the corporation to Mr. Johnson, and he was appointed as president. Mrs. Johnson has since served as Koba's vice president.

Despite her limited involvement in the corporation's daily affairs, Mrs. Johnson has had authority to write checks from Koba's bank accounts without needing another signatory since 2001. From 2001 through 2004, she received a six-figure salary, a corporate car, and a cell phone. On the infrequent occasions that she came to the office, Mrs. Johnson would approve board resolutions, such as ratification of Mr. Johnson's actions on behalf of the corporation, and perform tasks in the human resources department. Mr. Johnson, who received no direct salary from Koba and was compensated in the form of rent payments on the couple's home, oversaw the corporation's daily activities, including issues relating to its payroll taxes. When Mr. Johnson was away from the office, Mrs. Johnson would manage Koba's affairs based on explicit instructions provided by Mr. Johnson. For instance, she would only sign checks that Mr. Johnson had already expressly approved.

Near the end of 2004, the Internal Revenue Service (“IRS”) notified Mrs. Johnson that Koba had not paid its payroll taxes for several quarters during 2001, 2002, 2003, and 2004. Upon receipt of this notice, Mrs. Johnson had “a serious talk” with Mr. Johnson and “told him” the situation was “unacceptable.” (ECF No. 94–7, at 18, 36). She then proceeded to “fire[ ] the finance director,” who had previously been tasked with making payroll tax payments, and “directed Mr. Johnson to personally handle all future tax payments as of January 2005.” (ECF No. 1 ¶ 16). She also “required” Mr. Johnson to submit “visual proof” of all tax payments Koba made. ( Id.). Because Koba did not pay these outstanding payroll taxes in full, the IRS assessed trust fund recovery penalties against the Johnsons pursuant to 26 U.S.C. § 6672.

On March 30, 2009, after paying a small amount toward her assessment, Mrs. Johnson filed a suit in this court seeking a refund. The Government answered the complaint and filed a counterclaim against both of the Johnsons to reduce its assessments to judgment. Following discovery and an unsuccessful settlement conference, the Government moved for summary judgment against the Johnsons in October 2011. (ECF Nos. 80–81). The day after filing its summary judgment motions, the Government also preemptively moved to strike the reports and testimony of Leo Bruette, an accountant on whom it believed the Johnsons would rely in opposing summary judgment, on the ground that his reports and testimony did not satisfy Federal Rule of Evidence 702. (ECF No. 82). The Johnsons thereafter jointly opposed the motion to strike, and the Government replied to their opposition. On November 28, 2011, one month after opposing the motion to strike, the Johnsons submitted oppositions to the Government's summary judgment motions. Mr. Johnson also moved for “partial summary judgment” against the Government on the same day. (ECF No. 93). None of the Johnsons' submissions included—or even referenced—Mr. Bruette's reports. The Government thereafter replied to each of these filings.

On March 22, 2012, 861 F.Supp.2d 609, 2012 WL 993401 (D.Md.2012), the court issued a memorandum opinion and order granting the Government's motions for summary judgment against the Johnsons, denying Mr. Johnson's cross-motion for summary judgment, and denying as moot the motion to strike. (ECF Nos. 99, 100). The opinion explained that the Johnsons' failure to rely on Mr. Bruette's reports precluded the Johnsons from creating any disputes of material fact based upon those reports and rendered the motion to strike moot. Judgment was entered against Mr. Johnson and Mrs. Johnson in the amounts of $240,071.12, and $304,355.90, respectively, plus interest accruing since August 22, 2011. In response to concerns regarding the potential for “double recovery” against the Johnsons (ECF No. 99, at 45), the court's order required these judgments to “be reduced to the extent that the [Government] has collected or will collect on those debts pursuant to the offer in compromise it approved with Koba Institute,” (ECF No. 100, at 2).

Twenty-eight days later, on April 19, 2012, the Johnsons filed a joint motion to alter or amend the judgment, asserting that the court erred in failing to consider Mr. Bruette's reports when resolving the summary judgment motions. (ECF No. 103).¹ The Government has opposed this motion in its entirety.

II. Standard of Review

A motion to alter or amend the judgment filed within twenty-eight days of the entry of judgment is evaluated pursuant to Federal Rule of Procedure 59(e). Fed.R.Civ.P. 59(e); MLC Auto., LLC v. Town of S. Pines, 532 F.3d 269, 280 (4th Cir.2008). “In general, ‘reconsideration of a judgment after its entry is an extraordinary remedy which should be used sparingly.’ ” Pac. Ins. Co. v. Am. Nat'l Fire Ins. Co., 148 F.3d 396, 403 (4th Cir.1998) (quoting 11 Charles Alan Wright et al., Federal Practice and Procedure § 2810.1, at 124 (2d ed.1995)). As a result, courts have recognized only three limited grounds for granting a motion to reconsider pursuant to Federal Rule of Civil Procedure 59(e): (1) to accommodate an intervening change in controlling law; (2) to account for new evidence not available at trial; or (3) to correct clear error of law or prevent manifest injustice. United States ex rel. Becker v. Westinghouse Savannah River Co., 305 F.3d 284, 290 (4th Cir.2002) (citing Pac. Ins., 148 F.3d at 403). Additionally, it is axiomatic that a Rule 59(e) motion “may not be used to relitigate old matters, or to raise arguments or present evidence that could have been raised prior to the entry of judgment.” Pac. Ins., 148 F.3d at 403 (quoting Frietsch v. Refco, Inc., 56 F.3d 825, 828 (7th Cir.1995)).

III. Analysis

The Johnsons have moved to alter or amend the judgment by contending that the court erred in two principal ways in resolving the motions for summary judgment and to strike. First, they assert that the court erred by failing to consider Mr. Bruette's reports in its resolution of the summary judgment motions. Second, they maintain that the court should have held oral argument before deciding those motions. According to the Johnsons, these errors have led to manifest injustice, thus requiring reconsideration of the court's March 22, 2012, memorandum opinion and order. Both of these arguments—which merely seek a second bite at the summary judgment apple—are patently without merit.

A. No Error Resulted From the Court's Failure to Consider Arguments and Evidence Not Presented by the Johnsons on Summary Judgment

The Johnsons begin by arguing that the court must alter or amend the judgment because it failed to account for inaccuracies in the § 6672 assessments and ultimate judgments.² According to the Johnsons,Mr. Bruette's reports demonstrate these inaccuracies or, at the very least, raise genuine disputes of material fact on these issues which render summary judgment in the Government's favor improper. This argument, however, suffers from one salient flaw—notably, the Johnsons' wholesale failure either to present or support these arguments with evidence in response to the Government's summary judgment motions.³

With regard to the § 6672 assessments, the Government asserted in its summary judgment motions that tax assessments were presumed correct upon submission of certified copies of the certificates of assessment (“Form 4340”) and that the Johnsons bore the burden of demonstrating that these assessments were erroneous. (ECF No. 80–1, at 17) (citing United States v. Pomponio, 635 F.2d 293, 296 (4th Cir.1980); ECF No. 81–1, at 9 (citing Pomponio, 635 F.2d at 296)).⁴ Despite the Government's statement in the motion to strike anticipating that the Johnsons would use Mr. Bruette's reports to create a factual dispute regarding the accuracy of the assessments (ECF No. 82–2, at 2 n. 1), neither of their opposition papers even remotely addressed this issue. ⁵ Indeed, Mr. Johnson even went so far as to state that “[t]he only relevant issue regarding [his] alleged liability .... [was] whether the Government ha[d] timely and properly...