Libutti v. U.S.
| Decision Date | 26 November 1997 |
| Docket Number | No. 94-cv-1114.,94-cv-1114. |
| Parties | Edith LIBUTTI, d/b/a Lion Crest Stable, a sole proprietorship, Plaintiff, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — Northern District of New York |
Hinman, Howard & Kattell, Binghamton, NY (Paul T. Sheppard, of counsel), for plaintiff.
Barrett & Gravante LLP, Albany, NY (George F. Carpinello, Scott W. Dales, of counsel), for Margaux Stallions, by special appearance.
Vimont & Wills PLLC, Lexington, KY (Richard E. Vimont, Bernard F. Lovely, of counsel), for Margaux Stallions, by special appearance.
U.S. Department of Justice, George P. Eliopoulos, Trial Attorney, Tax Division, Washington, DC, for defendant.
Presently before the Court are motions by both the plaintiff Edith Libutti and the defendant United States of America. First, plaintiff moves, pursuant to Rule 59(a)(2) of the Federal Rules of Civil Procedure, for a new trial and amendment of judgment. Specifically, plaintiff requests that the Court vacate the judgment of this Court dated July 31, 1997, admit additional testimony from Robert Libutti, amend the Court's findings of fact and conclusions of law and enter a new judgment.
Second, the government moves for limited discovery on the issue of whether this Court has personal jurisdiction over the Devil His Due Syndicate, Margaux Stallions, Inc. and other members of the Syndicate. Additionally, the government seeks to alter or amend portions of the Court's Memorandum-Decision & Order of August 4, 1997, for clarification of aspects of that Order, and for an injunction pending determination of this motion and any appeal that may be taken.
For the reasons that follow, plaintiff's motion for a new trial and amendment of judgment is DENIED. Additionally, the government's motion for limited discovery on the issue of whether the Court has personal jurisdiction over Devil His Due Syndicate members is DENIED. Lastly, the government's motion to alter or amend the Court's Memorandum-Decision & Order of August 4, 1997 is DENIED, and the government's motion for an injunction pending appeal is DENIED.
The ownership of the racehorse Devil His Due has long been disputed by the plaintiff and the government. In LiButti v. United States, 894 F.Supp. 589 (N.D.N.Y.1995), this Court held that the Internal Revenue Service (IRS) wrongfully levied upon Devil His Due because the government did not prove that the plaintiff owned Devil His Due as a nominee for her father, Robert Libutti ("Robert"). In reaching this decision, the Court refused to infer from Robert's (a non-party witness) assertion of the privilege against self-incrimination that he owned Devil His Due rather than the plaintiff.
The government appealed the Court's decision. While the appeal was pending, plaintiff entered into a Syndicate Agreement with Margaux Stallions, Inc. ("Margaux"),1 a Kentucky corporation that manages thoroughbred stallions. Pursuant to the Syndicate Agreement, plaintiff converted her ownership interest of Devil His Due into fifty fractional interests or shares. Plaintiff then sold twenty-five shares to Margaux for $1,224,000. Margaux, in turn, sold twelve of its twenty-five shares to various third parties.
Thereafter, the Second Circuit decided the appeal, holding that adverse inferences may be drawn from a non-party's refusal to answer questions. LiButti v. United States, 107 F.3d 110, 124 (2d Cir.1997). Accordingly, the Second Circuit remanded the case for this Court to determine whether adverse inferences should be drawn from Robert's refusal to testify. Id.
On remand, this Court inferred that Robert was the de facto owner of Devil His Due, and that the plaintiff held ownership in the stable and horse as Robert's nominee. LiButti v. United States, 968 F.Supp. 71, 77 (N.D.N.Y.1997). Accordingly, this Court lifted the injunction barring the government from enforcing the IRS levy against Devil His Due.
Subsequently, the government sought to regain the benefits of owning Devil His Due by Order to Show Cause requesting, inter alia, to escrow all proceeds of any further transfer or earnings received or realized by plaintiff or any person or entity having an interest in Devil His Due, including any of plaintiff's successors in interest after August 3, 1995. The government also sought an accounting by plaintiff and her successors in interest of all proceeds relating to Devil His Due since August 3, 1995. In a Memorandum-Decision & Order filed August 4, 1997, this Court held that the government's recovery by restitution from the plaintiff would be limited to the plaintiff's interest in Devil His Due after July 2, 1997, plus any sums derived from that interest after July 2, 1997. LiButti v. United States, 1997 WL 570493, at *3-5 (N.D.N.Y. Aug.4, 1997).
Rule 59(a)(2) provides that, on motion for a new trial in a nonjury case, a district court may on sound discretion "open the judgment if one has been entered, take additional testimony, amend findings of fact and conclusions of law or make new findings and conclusions, and direct the entry of a new judgment." Fed.R.Civ.P. 59(a)(2). To succeed on its motion, the movant must show that (1) the court has made a manifest error of law, (2) the court has made a manifest error of fact, or (3) there exists newly discovered evidence. See, e.g., Ball v. Interoceanica Corp., 71 F.3d 73, 76 (2d Cir.1995), cert. denied, ___ U.S. ___, 117 S.Ct. 169, 136 L.Ed.2d 111 (1996); Baasch v. Reyer, 827 F.Supp. 940, 942 (E.D.N.Y.1993); 11 Charles A. Wright and Arthur R. Miller, FEDERAL PRACTICE AND PROCEDURE § 2804, at 53 (2d ed.1995). However, a movant should not use Rule 59 merely to relitigate previously-decided matters. See, e.g. Farr Man Coffee, Inc. v. Chester, 1993 WL 328854, at *1 (S.D.N.Y. Aug. 26, 1993), aff'd, 19 F.3d 9 (2d Cir.1994).
In the present case, plaintiff argues that the Court erred in drawing an adverse inference against plaintiff for Robert's refusal to testify. Plaintiff also argues that the Court should conduct an evidentiary hearing relating to the relationship between the plaintiff and Robert. Moreover, according to plaintiffs, because Robert has now agreed to testify, plaintiff should be allowed to offer Robert's previously unavailable testimony.
None of these contentions has merit. First, plaintiff's Memorandum of Law spends much time arguing that the Court should not have drawn an adverse inference from Robert's refusal to testify. Rule 59, however, should not be used to relitigate previously-decided matters. See, e.g., Farr Man Coffee, Inc., 1993 WL 328854, at *1. Here, the Court previously decided that it was appropriate to draw an adverse inference against the plaintiff for Robert's refusal to testify. The issue will not now be revisited merely because plaintiff disagrees with the result. Rather, plaintiff must show that the Court made a manifest error of law or fact in making its decision. See, e.g., Ball, 71 F.3d at 76. Assuming plaintiff makes such argument, plaintiff has entirely failed to show that the decision of the Court with respect to this issue constituted manifest error of either law or fact.
Second, the Court will not order a new trial to permit plaintiff to present evidence relating to the relationship with her father for purposes of the adverse inference issue. As the government points out, plaintiff was aware of the adverse inference issue before trial, and could have presented evidence relating to plaintiff's relationship with Robert at trial. Justice does not require that the plaintiff now be awarded a second bite at the proverbial apple.
Third, the Court will not take additional testimony from Robert who previously refused to testify. Importantly, plaintiff has failed to present any evidence that the testimony of Robert would change the result in this case. No affidavits or other evidence have been provided relating to the specific matters that Robert's testimony would cover. As such, the Court will not order a new trial based upon the speculative value of the testimony of Robert.
Accordingly, plaintiff's rule 59 motion is DENIED.
It is firmly established that a motion to alter or amend will not be granted unless one of the following grounds for relief are met: (1) an intervening change in controlling law; (2) the availability of new evidence not previously available; (3) the need to correct a clear error of law or fact; or (4) to prevent manifest injustice. See, e.g., Atlantic States Legal Foundation v. Karg Bros., 841 F.Supp. 51, 53 (N.D.N.Y.1993). The first two grounds are inapplicable to the matter at hand. No intervening changes in the law have occurred and new evidence has not come to light that previously was unavailable. That leaves us with only grounds three and four—the government must demonstrate a clear error of law or fact, or manifest injustice in the Court's August 4, 1997 Order.
In the present case, the government argues that the Court should alter or amend its August 4, 1997 Order to vacate the ruling that the government may not recover proceeds of Devil His Due between the August 3, 1995 Order and the July 2, 1997 Order. Specifically, the government contends that the Court made a clear error of law in holding that restitution is not proper prior to July 2, 1997.
To review, the Court's July 2, 1997 Order held that the plaintiff is the nominee of Robert, and that Robert is the owner of Devil His Due. Libutti, 968 F.Supp. at 77. Accordingly, the July 2, 1997 Order lifted a permanent injunction that the Court had previously issued pursuant to 26 U.S.C. § 7426, prohibiting the enforcement of a levy placed by the IRS on Devil His Due. Libutti v. United States, 894 F.Supp. 589, 591 (N.D.N.Y.1995).
Following the July 2, 1997...
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