Roberts v. C.I.R.

• Citation: 175 F.3d 889
• Decision Date: 04 May 1999
• Docket Number: No. 96-8579,96-8579
• Parties: -2282, 99-1 USTC P 50,511, 12 Fla. L. Weekly Fed. C 782 John W. ROBERTS, Cheryl W. Roberts, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 889

175 F.3d 889

83 A.F.T.R.2d 99-2282, 99-1 USTC P 50,511,

12 Fla. L. Weekly Fed. C 782

John W. ROBERTS, Cheryl W. Roberts, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.

No. 96-8579.

United States Court of Appeals, Eleventh Circuit.

May 4, 1999.

Graydon W. Florence, Atlanta, GA, Anthony Musto, Decatur, GA, for Petitioners.

Gary R. Allen, Chief, Appellate Section, Tax Division, Janet A. Bradley, Gilbert S. Rothenberg, Bruce R. Ellisen, Department of Justice, Washington, DC, Paul J. Morochnik, Thompson, O'Brien, Kemp and Nasuti, P.C., Norcross, GA, for Respondent.

Appeal from a Decision of the United States Tax Court.

Before TJOFLAT, BIRCH and MARCUS ^*, Circuit Judges.

TJOFLAT, Circuit Judge:

Petitioners John W. Roberts ("Roberts") and Cheryl W. Roberts appeal from a decision of the United States Tax Court finding them liable for certain deficiencies in and additions to tax as determined by the Commissioner. The Commissioner has filed a motion to dismiss this appeal for lack of jurisdiction on the ground that the petitioners' notice of appeal was untimely. We hold that sections 362(a)(1), 362(a)(8), and 108 of the Bankruptcy Code neither stayed nor sufficiently extended the petitioners' time to appeal the Tax Court's decision. Accordingly, we find that their notice of appeal was untimely and grant the Commissioner's motion.

I.

This case stems from an Internal Revenue Service ("IRS") investigation into the petitioners' individual and business finances for the tax years 1979-1984. In part, the business aspect of the investigation concerned two corporations: Alcovy Wood Products, Inc. ("AWP"), of which Roberts was president and a 50 percent shareholder, and Alcovy Properties, Inc. ("API"), which was wholly owned by Roberts. One result of the investigation was a twelve-count indictment against Roberts for the crimes of attempted tax evasion and willfully filing false tax returns. See 26 U.S.C. §§ 7201, 7206(1) (1994). Roberts pled guilty to one count of each crime in January 1989.

A second result was the Commissioner's issuance of notices of deficiency to AWP, API, and the petitioners in August 1990. In the petitioners' notice, which pertained to their joint tax returns for the years 1979-1984, the Commissioner determined that they were liable for deficiencies and for accuracy-related additions to tax under 26 U.S.C. § 6661; a substantial portion of this liability was attributable to Roberts' unauthorized use of AWP funds for his personal benefit. This notice also stated that Roberts was liable for fraud penalties under 26 U.S.C. § 6653(b)(1) for the years 1982-84. ¹ AWP, API, and the petitioners each filed a timely petition with the Tax Court on October 29, 1990, requesting a redetermination of the deficiencies and penalties. See 26 U.S.C. § 6213 (1994). The cases were consolidated for trial.

The Tax Court entered decisions for the Commissioner in the three consolidated cases on March 23, 1993. See Roberts v. Commissioner, 65 T.C.M. (CCH) 2121 (1993). Unbeknownst to the court and the Commissioner, however, the petitioners had filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (11 U.S.C.) on March 1, 1993. The Commissioner did not discover the existence of the bankruptcy petition until July 13, 1993. On July 15, the Commissioner filed a motion under Tax Court Rule 162 to vacate the Tax Court's decision in the petitioners' case on the ground that it had been entered in violation of the automatic stay provision of the Bankruptcy Code. See 11 U.S.C. § 362(a)(8) (1994). On July 19, the court vacated its decision and noted that further proceedings in the case automatically were stayed. The Commissioner then sought and received an order from the Bankruptcy Court that lifted the automatic stay. This order, entered on September 29, 1993, lifted the stay "for the limited purpose of proceeding with the case filed by the debtors in the Tax Court, [and modified the stay] to permit the assessment but not collection, of any liability determined by the Tax Court." After receiving notice of this order from the Commissioner, the Tax Court reentered its decision on October 27, 1993.

The Bankruptcy Court dismissed the petitioners' bankruptcy petition on November 10, 1993, but they filed another Chapter 11 petition on December 30, 1993. On March 7, 1994, AWP, API, and the petitioners filed notices of appeal to this court from the decisions of the Tax Court. In an unpublished opinion filed on December 28, 1995, a panel of this court dismissed those appeals. See Roberts v. Commissioner, No. 94-8283 (11th Cir. Dec. 28, 1995) (per curiam). With regard to the petitioners' appeal, ² the panel stated:

Under the [Commissioner's] characterization of this case, we lack jurisdiction because the notice of appeal was not timely filed. Under [the Robertses'] characterization of the case, we lack jurisdiction because the notice of appeal was ineffective due to the automatic stay related to bankruptcy. We agree that it is clear that, at this time, we lack jurisdiction; thus, we dismiss this appeal. We specifically decline to decide whether a notice of appeal filed after the automatic stay is lifted would be timely filed for the parties in bankruptcy.

In an effort to remedy this lack of jurisdiction, the petitioners filed a motion in the Bankruptcy Court to lift the automatic stay. The court granted their motion on April 22, 1996. The court's order stated: "to the extent that the automatic stay provisions of 11 U.S.C. § 362 apply to the Debtors pursuing an appeal of a final decision from the United States Tax Court, said stay is lifted." On May 3, 1996, the petitioners filed a second notice of appeal to this court from the decision of the Tax Court in their case. It is this notice of appeal that is presently before us.

II.

In considering the Commissioner's motion to dismiss the petitioners' appeal for lack of jurisdiction, we begin with the proposition that courts of appeals have exclusive jurisdiction to review decisions of the Tax Court pursuant to section 7482 of the Internal Revenue Code (26 U.S.C.). In order to obtain appellate review, however, a party to a decision of the Tax Court must file "a notice of appeal with the clerk of the Tax Court within 90 days after the decision of the Tax Court is entered." 26 U.S.C. § 7483 (1994). With certain exceptions not relevant here, the decision of the Tax Court becomes final if no notice of appeal is filed within this 90-day period. ³ See 26 U.S.C. § 7481(a)(1) (1994). In this case, the Tax Court reentered its decision on October 27, 1993, and the petitioners filed the present notice of appeal on May 3, 1996. Unless the 90-day period for filing a notice of appeal was either stayed or sufficiently extended, therefore, the petitioners' appeal was untimely and we must dismiss it for lack of jurisdiction. The Commissioner contends that sections 362(a)(1), 362(a)(8), and 108 of the Bankruptcy Code neither stayed nor sufficiently extended the 90-day period in order to render the petitioners' appeal timely. We agree.

A.

Section 362(a)(1) of the Bankruptcy Code provides, in pertinent part, that the filing of a bankruptcy petition "operates as a stay, applicable to all entities, of ... the commencement or continuation ... of a judicial, administrative, or other action or proceeding [i] against the debtor ..., or [ii] to recover a claim against the debtor...." 11 U.S.C. § 362(a)(1) (1994). The petitioners, relying on the Ninth Circuit's opinion in Delpit v. Commissioner, 18 F.3d 768 (9th Cir.1994), contend that both the Tax Court's consideration of their petition for redetermination and their appeal from the Tax Court's decision were merely continuations of the administrative income tax assessment proceedings that the Commissioner had commenced against them. As a result, they argue, the filing of their December 1993 bankruptcy petition operated to stay the continuation of these administrative proceedings--i.e., to stay the running of the 90-day period for filing a notice of appeal from the Tax Court's decision--pursuant to both clauses of section 362(a)(1). The Commissioner, relying in part on Freeman v. Commissioner, 799 F.2d 1091 (5th Cir.1986), contends that section 362(a)(1) did not apply because the petitioners commenced a judicial proceeding against him when they filed their petition for redetermination in the Tax Court--a court that had no jurisdiction to assist him in recovering any claim against the petitioners. In evaluating these contentions, we consider each clause of section 362(a)(1) separately.

1.

The answer to the question of whether a proceeding before the Tax Court (as well as any appeal therefrom) constitutes a proceeding "against the debtor" under the first clause of section 362(a)(1) largely depends on whether the filing of a petition for redetermination with the Tax Court is viewed as the continuation of an administrative proceeding or the commencement of a judicial one. The Delpit and Freeman cases have taken opposing views on this question. Both cases involved petitioners who filed for bankruptcy after appealing from a decision of the Tax Court; these petitioners argued that section 362(a)(1) automatically stayed their appeals. In Freeman, 799 F.2d at 1092, the Fifth Circuit began its analysis with the proposition that an appeal from a decision of the Tax Court is the continuation of a judicial proceeding. In order to determine whether that appeal was a proceeding "against the debtor," the court examined the initial posture of the case. ⁴ It found that the appellants had initiated the judicial proceeding by filing their petition with the Tax Court. Accordingly, neither the Tax Court proceeding nor the petitioners' appeal therefrom was a proceeding "against the debtor" and section 362(a)(1) did not apply. See id. at 1093. In Delpit, on the other hand, the Ninth Circuit concluded that a proceeding before the Tax Court...