Lunnon v. United States
| Decision Date | 08 July 2021 |
| Docket Number | Civ. No. 16-1152 MV/JFR |
| Parties | MICHAEL LUNNON, Plaintiff, v. UNITED STATES OF AMERICA, et al., Defendants. |
| Court | U.S. District Court — District of New Mexico |
THIS MATTER is before the Court on the United States' Motion for Partial Summary Judgment on the Section 6213 Action, filed January 19, 2021. Doc. 247. Plaintiff filed a Response on February 2, 2021. Doc. 255. The United States filed a Reply on February 16, 2021. Doc. 262. This matter is also before the Court on Plaintiff's Motion for Summary Judgment Against the United States, filed January 21, 2021. Doc. 251. The United States filed a Response on February 4, 2021. Doc. 258. Plaintiff filed a Reply on February 18, 2021. Doc. 264. Having reviewed the parties' submissions and the relevant law, and for the reasons set forth herein, the Court finds that the United States' Motion for Partial Summary Judgment is well taken and recommends that it is GRANTED. The Court further finds that Plaintiff's Motion for Summary Judgment is not well taken and recommends that it be DENIED.
This action began on October 19, 2016, when Plaintiffs Michael Lunnon and LG Kendrick, LLC ("LG Kendrick"), filed a Complaint for Administrative Review, Injunctive Relief and Refund, Quiet Title, and Damages against the United States of America. Doc. 1. Plaintiffs' claims arose from a March 10, 2011, Notice of Levy on Wages, Salary, and Other Income, and a March 15, 2011, Notice of Federal Tax Lien issued by the Internal Revenue Service indicating that Plaintiff Michael Lunnon owed unpaid taxes for years 1998, 1999 and 2005. Id. Following various appeals and stays, on September 18, 2018, Plaintiff Michael Lunnon filed an Amended Complaint, in which he removed LG Kendrick, as a Plaintiff and added T. W. Lyons2 and The UPS Store3 as Defendants. Doc. 104. The Amended Complaint also removed a cause of action for quiet title, and added two causes of action, i.e., Count IV against Defendant Lyons and TUPSS for RICO Violations, and Count VI against TUPSS for Bad Faith Breach of Contract.4 Id. At its core, Plaintiff's Amended Complaint is based on allegations that the United States engaged in the unauthorized collection of Plaintiff's unpaid taxes. Id. Since the filing of his Amended Complaint, Count I (Judicial Review of Administrative Decision) has been fully dismissed (Docs. 139, 143); Count II (Refund Against Defendant United States) has been partially dismissed (Docs. 211, 235); Count III (Damages for Unauthorized Collection Against United States Under 26 U.S.C. § 7433) has been fully dismissed (Docs. 139, 143, 241, 253);Count IV (RICO Violations by Defendants T. W. Lyons and TUPSS) has been fully dismissed (Docs. 149, 154), and Count VI (Bad Faith Breach of Contract Against TUPSS) has been fully dismissed (Docs. 231, 236).
Now before the Court are the parties' cross motions for summary judgment addressing what remains of Plaintiff's Count II.5
On March 10, 2011, Revenue Officer Lyons served the Notice of Levy (the "March 2011 Levy"), shown as Exhibit 2 to the Plaintiff's Amended Complaint, on Mail Boxes Etc., Inc., to collect monthly payments Mail Boxes Etc. made to LG Kendrick. Doc. 248 at 6, ¶ 5. The March 2011 Levy related only to Plaintiff's income tax delinquencies for tax years 1998, 1999 and 2005. Id., fn. 6.
On July 21, 2015, Revenue Officer Lyons served the Notice of Levy (the "July 2015 Levy") to collect monthly payments Mail Boxes Etc. made to LG Kendrick. Doc. 248 at 7, ¶ 7. The first page of the July 2015 Levy related only to Plaintiff's income tax delinquencies for tax years 2006, 2007, 2008 and 2009, and to the Section 6672 penalties assessed against him for the second, third and fourth quarters of 2009 and all four quarters of 2010. Id., fn. 9.
At his deposition, Plaintiff was asked "[d]o you have any evidence to support the allegations you made in your amended complaint, at ECF 104?" Plaintiff answered, "I claim the Fifth Amendment; I refuse to answer the question on the grounds it may incriminate me." Doc. 248 at 7, ¶ 9, fn. 11. Plaintiff also was asked to admit that the IRS had mailed to himstatutory notices of deficiency for 1998, 1999 and 2005. Id. at 8, ¶ 10. Plaintiff again invoked his Fifth Amendment privilege. Id., fn. 12. When asked to identify any evidence supporting the contention in his Amended Complaint that the IRS had not mailed him statutory notices of deficiency, Plaintiff similarly invoked his Fifth Amendment privilege. Id.
Plaintiff disputes certain of the United States' undisputed material facts as follows:
(1) The United States asserts that it is undisputed that Plaintiff did not file income tax returns or amended income tax returns for any of the tax years 1998, 1999 and 2005. Doc. 248 at 6, ¶ 1, fn. 2. In support, the United States attached the Fourth Declaration of IRS Agent Brenda Garcia, which includes three exhibits (Forms 4340 for the tax years at issue). Id. Plaintiff objects to the Fourth Declaration of Brenda Garcia and argues that it amounts to untimely disclosed expert opinion evidence and that the attached exhibits are inadmissible evidence under certain Federal Rules of Evidence. Doc. 255 at 1, ¶ 1.
(2) The United States asserts that the IRS sent statutory notices of deficiency to Plaintiff for each of the tax years 1998, 1999 and 2005. Doc. 248 at 6, ¶¶ 2, 3, 4, fns. 3, 4, 5. In support, the United States attached the Fourth Declaration of IRS Agent Brenda Garcia, which includes three exhibits (Forms 4340 for the tax years at issue). Id. Plaintiff objects to the Fourth Declaration of Brenda Garcia and argues that it amounts to untimely disclosed expert opinion evidence and that the attached exhibits are is inadmissible evidence under certain Federal Rules of Evidence. Doc. 255 at 1-2, ¶¶ 2, 3, 4.
(3) The United States asserts that between March 2011 and August 2015, the IRS both levied and credited $36,953.62 towards the tax liabilities that were listed in the March 2011 Levy. Doc. 248 at 7, ¶ 6, fn. 7. Plaintiff argues that the March 2011 levy notice was continuous andnever released by the IRS and that as of the filing of the Amended Complaint the IRS had collected $70,538.80 on a levy notice which alleged only $44,528.81. Doc. 255 at 2, ¶ 6.
(4) The United States asserts that between August 25, 2015, and December 19, 2017, the IRS both levied and credited over $36,262.62 towards the Plaintiff's tax liabilities that were listed in the July 2015 Levy. Doc. 248 at 7, ¶ 8, fn. 10. Plaintiff argues that this levy cannot be effective since the March 2011 levy notice was never released and should be deemed continuous pursuant to 26 U.S.C. § 6331(e). Doc. 255 at 2, ¶ 8.
The United States argues that it is entitled to summary judgment on several grounds. First, it argues that Plaintiff cannot seek a refund of the levied funds because, as argued in his Amended Complaint, the funds were not levied from him but from LG Kendrick. Doc. 248 at 9. As such, the United States argues that the "proper action would be an action by LG Kendrick under 26 U.S.C. 7426, seeking a return of its own purported wrongfully levied funds." Id. Second, the United States argues that Plaintiff's Section 6213 action is barred by his failure to comply with 26 U.S.C. § 7422, which requires that before a taxpayer may bring suit in any court for the recovery of any tax alleged to have been erroneously or illegally collected, the taxpayer must file a claim for refund. Id. at 10. Third, the United States argues that Plaintiff is not entitled to a refund of the funds that were lawfully levied following the issuance of statutory notices of deficiency for each of the tax years at issue because the undisputed facts demonstrate that the IRS mailed the necessary notices of deficiency required under Section 6212 for the three tax years at issue. Id. at 10-12. Fourth, the United States contends that because Plaintiff refused to testify at his deposition and invoked his Fifth Amendment privilege, Plaintiff is precludedfrom offering rebuttal evidence. Id. Lastly, the United States argues that Plaintiff cannot seek a refund of funds levied pursuant to the July 2015 Levy because that levy sought collection of taxes as to different tax periods which are not at issue in Plaintiff's Amended Complaint. Id. at 12-13.
As set forth above, Plaintiff disputes certain of the undisputed material facts the United States submitted. Doc. 255 at 1-2. In support, Plaintiff objects to the Fourth Declaration of Brenda Garcia the United States attached in support of its undisputed material facts and argues that Ms. Garcia's statements amount to expert opinion testimony which the United States failed to timely disclose as required by Federal Rule of Civil Procedure 26. Id. at 2-5. Plaintiff further argues that the Forms 4340 Ms. Garcia attached to her Declaration are inadmissible hearsay because they were not authenticated by her and are inadmissible under Federal Rule of Evidence 1006 because they are mere summaries without any supporting documents. Id.
Plaintiff next argues that he is the proper party to seek a refund because the levied amounts belong to him and that under the alter ego determination there is no distinction between the property of LG Kendrick and himself. Doc. 255 at 5-6. Plaintiff further argues that it is undisputed that the amounts levied were credited to him, not some third-party, thereby making the United States' argument that the proper action is for LG Kendrick to seek a refund pursuant to 26 U.S.C. § 7426 as "specious."6 Id.
Plaintiff contends that his refund claim is not barred by Section 7422 for failure to file an administrative claim because Section 6213(a) explicitly states that any relief sought...
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