Peretz v. United States

• Decision Date: 04 December 2020
• Docket Number: No. 18-1699T,18-1699T
• Parties: MEIR PERETZ, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Claims Court

MEIR PERETZ, Plaintiff, v. UNITED STATES, Defendant.

No. 18-1699T

United States Court of Federal Claims

December 4, 2020

Tax; Motion for Reconsideration; 26 U.S.C. § 6532 Statute of Limitations; Motion to Amend Complaint; Refund; Deposit.

Lawrence R. Kulak, Law Office of Lawrence R. Kulak, New York, NY, for plaintiff.

Karen E. Servidea, Trial Attorney, Court of Federal Claims Section, Tax Division, United States Department of Justice, Washington, D.C., for defendant. With her was Mary M. Abate, Assistant Chief, Court of Federal Claims Section, David I. Pincus, Chief, Court of Federal Claims Section, and Richard E. Zuckerman, Principal Deputy Assistant Attorney General, Tax Division, Department of Justice.

OPINION

HORN, J.

The court issued a decision on May 31, 2020 granting defendant's motion to dismiss the above-captioned case, and judgment in this court was entered on June 1, 2020. See generally Peretz v. United States, 148 Fed. Cl. 586 (2020). The May 31, 2020 Opinion is incorporated into this Opinion. Thereafter, the plaintiff, Meir Peretz, filed a motion asking the court to reconsider its decision granting defendant's motion to dismiss plaintiff's complaint. Plaintiff, Meir Peretz, originally filed a complaint in the United States Court of Federal Claims against the United States alleging entitlement to a tax refund of $121,288.00 from the Internal Revenue Service (IRS).¹ A majority of the monies were withheld from plaintiff's Citicorp, Inc. (Citicorp) brokerage account from the proceeds of two stock sales in 2005 as backup withholding tax. The balance of the monies were withheld due to stock dividends paid on plaintiff's stocks. Plaintiff alleged that the funds were wrongfully withheld because the stock transactions resulted in a net loss, and that,in any event, he is not subject to backup withholding tax because he is a nonresident alien, who is "not required to file any income tax return." According to plaintiff, in order to recover the amount withheld, the IRS "demanded" that plaintiff file a tax return and Form W-7, titled: "Application for IRS Individual Taxpayer Identification Number." Plaintiff ultimately submitted multiple versions of a Form 1040 tax return for the 2005 tax year on separate dates, all of which stated that the withholdings resulted in an alleged $121,288.00 overpayment of his tax liability, which liability plaintiff stated was zero. Plaintiff stated that he first submitted a Form 1040 for the tax year 2005 in 2009 and that it was "timely filed on April 14, 2009." Plaintiff also referred to this tax return as a "claim for refund." Plaintiff further argued that the IRS wrongfully remains in possession of his funds because the "IRS did not process the 2005 1040 return timely filed on April 14, 2009," and that, instead, the IRS considered "only the untimely" returns that plaintiff had sent to the IRS in later correspondences with the IRS. Plaintiff requested that the court "should direct Defendant to return the $121,288 deposited with the IRS and misappropriated by the Defendant as of December 27, 2005, plus 9% pre and post judgment interest compounded annually as is applicable in New York State on a judgment for conversion, plus costs and attorney fees." Finally, plaintiff asserted in his complaint in this court that he "should also be awarded damages pursuant to IRC 7433 [26 U.S.C. § 7433 (2018)] for the reckless and intentional misconduct of the IRS in confiscating and retaining monies it illegally converted." In response to the complaint, defendant filed its motion to dismiss plaintiff's complaint. Defendant asserted first that plaintiff did not file his suit for refund within the time allowed in 26 U.S.C. § 6532(a) (2018); and second that this court is barred from hearing plaintiff's damages claim under 26 U.S.C. § 7433 for "reckless and intentional misconduct" by the IRS.

In the Opinion issued earlier this year, the court granted defendant's motion to dismiss. See Peretz v. United States, 148 Fed. Cl. at 613. The court found that, pursuant to 26 U.S.C. § 6532, plaintiff's suit in this court for the refund of $121,288.00, plus interest, for the 2005 tax year was not timely filed within two years of the first Notice of Disallowance issued by the IRS on July 29, 2015. See Peretz v. United States, 148 Fed. Cl. at 604-05. The court also found that the United States Court of Federal Claims lacked subject-matter jurisdiction over plaintiff's separate claim that plaintiff should be entitled to damages under 26 U.S.C. § 7433. See Peretz v. United States, 148 Fed. Cl. at 612.

As noted above, plaintiff has filed a motion for this court to reconsider its earlier decision to dismiss plaintiff's complaint. In plaintiff's motion for reconsideration, plaintiff did not state under which Rule of the Rules of the United States Court of Federal Claims (RCFC) Mr. Peretz brought his motion to reconsider. Subsequently, in his reply brief, plaintiff stated that "[p]laintiff's Motion for Reconsideration . . . was timely filed by Plaintiff's attorney's office under RCFC 59(b)(1) and/ or RCFC 60 on June 29, 2020." On the same day that plaintiff filed his motion for reconsideration, plaintiff also filed a motion for leave to amend his complaint. Defendant responded to both motions. The plaintiff replied and the parties submitted sur-replies.

Reconsideration of a judgment is not intended to permit a party to retry its case when it previously was afforded a full and fair opportunity to do so. The United StatesCourt of Appeals for the Federal Circuit has stated that it "reviews the trial court's decision on reconsideration for an abuse of discretion." Entergy Nuclear FitzPatrick, LLC v. United States, 711 F.3d 1382, 1386 (Fed. Cir. 2013) (citing Yuba Nat. Res., Inc. v. United States, 904 F.2d 1577, 1583 (Fed. Cir.) (noting that "[t]he decision whether to grant reconsideration lies largely within the discretion of the [trial] court"), reh'g denied (Fed. Cir. 1990)); see also Int'l Custom Prods., Inc. v. United States, 791 F.3d 1329, 1339 (Fed. Cir. 2015) (stating that the United States Court of Appeals for the Federal Circuit reviews "the dismissal of a motion to amend and the dismissal of a motion for reconsideration for an abuse of discretion" (citing Renda Marine, Inc. v. United States, 509 F.3d 1372, 1380 (Fed. Cir. 2007) (motion for reconsideration); and Saarstahl AG v. United States, 177 F.3d 1314, 1320 (Fed. Cir. 1999) (motion to amend))); Nat'l Westminster Bank, PLC v. United States, 512 F.3d 1347, 1363 (Fed. Cir. 2008) ("An abuse of discretion occurs when a court misunderstands or misapplies the relevant law or makes a clearly erroneous finding of fact."); PPG Indus., Inc. v. Celanese Polymer Specialties Co., Inc., 840 F.2d 1565, 1572 (Fed. Cir. 1988) (discussing "abuse of discretion" standard and stating that "[a]lthough various errors of law, fact, substance and form, singly or in combination, may affect the relief granted at the trial level, if the error did not actually form the basis for the determination appealed, no abuse of discretion will have occurred because the error is harmless"); Carter v. United States, 207 Ct. Cl. 316, 318, 518 F.2d 1199, 1199 (1975), cert. denied, 423 U.S. 1076, reh'g denied, 424 U.S. 950 (1976); CanPro Invs. Ltd. v. United States, 131 Fed. Cl. 528, 531 (2017); Osage Tribe of Indians of Okla. v. United States, 97 Fed. Cl. 345, 348 (2011) (discussing RCFC 59(a) and RCFC 60(b)); Oenga v. United States, 97 Fed. Cl. 80, 83 (2011) (discussing RCFC 59(a)); Webster v. United States, 92 Fed. Cl. 321, 324, recons. denied, 93 Fed. Cl. 676 (2010) (discussing RCFC 60(b)); Alpha I, L.P. ex rel. Sands v. United States, 86 Fed. Cl. 126, 129 (2009) (discussing RCFC 54(b) and 59(a)); Banks v. United States, 84 Fed. Cl. 288, 291-92 (2008) (discussing RCFC 54(b) and 59(a)); Corrigan v. United States, 70 Fed. Cl. 665, 667-68 (2006) (discussing RCFC 59(a)); Tritek Techs., Inc. v. United States, 63 Fed. Cl. 740, 752 (2005); Keeton Corr., Inc. v. United States, 60 Fed. Cl. 251, 253 (2004) (discussing RCFC 59(a)); Paalan v. United States, 58 Fed. Cl. 99, 105 (2003), aff'd, 120 F. App'x 817 (Fed. Cir.), cert. denied, 546 U.S. 844 (2005); Citizens Fed. Bank, FSB v. United States, 53 Fed. Cl. 793, 794 (2002) (discussing RCFC 59(a)).

"Motions for reconsideration must be supported 'by a showing of extraordinary circumstances which justify relief.'" Caldwell v. United States, 391 F.3d 1226, 1235 (Fed. Cir. 2004) (quoting Fru-Con Constr. Corp. v. United States, 44 Fed. Cl. 298, 300 (1999)) (discussing RCFC 59(a)), reh'g en banc denied (Fed. Cir.), cert. denied, 546 U.S. 826 (2005); see also Biery v. United States, 818 F.3d 704, 711 (Fed. Cir. 2016); Fiskars, Inc. v. Hunt Mfg. Co., 279 F.3d 1378, 1382 (Fed. Cir. 2002) ("Rule 60(b)(6) is available only in extraordinary circumstances and only when the basis for relief does not fall within any of the other subsections of Rule 60(b)." (citing Marquip, Inc. v. Fosber Am., Inc., 198 F.3d 1363, 1370 (Fed. Cir. 1999), reh'g denied (Fed. Cir. 2000); Provident Sav. Bank v. Popovich, 71 F.3d 696, 700 (7th Cir. 1995))); Oenga v. United States, 97 Fed. Cl. at 83; Seldovia Native Ass'n Inc. v. United States, 36 Fed. Cl. 593, 594 (1996) (discussing RCFC 59(a)), aff'd, 144 F.3d 769 (Fed. Cir. 1998). Generally, "[t]he cases seem to make [a] fault/no fault distinction the controlling factor in determining whether extraordinary circumstances will be found or not. In a vast majority of cases finding that extraordinarycircumstances do exist so as to justify relief, the movant is completely without fault . . . ." 12 Joseph T. McLaughlin and Thomas D. Rowe, Jr., Moore's Federal Practice § 60.48[3][b] (3rd ed. 2008) (discussing RCFC 60(b)(6)); see also Amado v. Microsoft Corp., 517 F.3d 1353, 1363 (2008) (citing Pioneer Inv. Servs. Co. v. Brunswick Assoc. Ltd. P'ship, 507 U.S. 380, 393 (1993)) (discussing RCFC 60(b)(6)).

Courts must address reconsideration motions with ...