Shannahan v. U.S., 96CV1484-J RBB.
| Decision Date | 08 January 1999 |
| Docket Number | No. 96CV1484-J RBB.,96CV1484-J RBB. |
| Citation | 47 F.Supp.2d 1128 |
| Parties | William P. SHANNAHAN and Saracia L.P. Shannahan, Plaintiffs, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — Southern District of California |
Thomas E. Sharkey, McInnis Fitzgerald Rees and Sharkey, San Diego, CA, for plaintiffs.
Henry C. Darmstadter, U.S. Department of Justice, Trial Attorney Tax Division, Washington, DC, U.S. Attorney, U.S. Attorneys Office, Civil Division, San Diego, CA, for USA, defendant.
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
This matter comes before the Court on motion for summary judgment by Defendant United States of America ("Government"). The Court has received and considered the Government's motion, Plaintiffs' opposition, and the Government's reply. Pursuant to Local Rule 7.1, the Court found the matter suitable for disposition without oral argument, notified the parties, and took the matter under submission. For the reasons stated below, the Court GRANTS the Government's motion for summary judgment.
This case involves a dispute between a tax attorney and the federal government over tax refunds for three years (1991, 1992, and 1993) and an injunction prohibiting the Government from collecting from Plaintiffs tax liabilities for the 1991 calendar year.1 The Government's motion seeks summary judgment on two grounds. First, the Government argues that the Court lacks subject matter jurisdiction over the tax refund suit for 1991, 1992, and 1993 because Plaintiffs do not meet the jurisdictional requirements for a refund under 28 U.S.C. § 1346(a)(1). Second, the Government claims that under 26 U.S.C. § 7421, Plaintiffs cannot pursue their fourth cause of action to enjoin the Internal Revenue Service ("IRS") from further collection of taxes.
Plaintiffs are husband and wife, and Plaintiff William Shannahan is a tax attorney whose change of employment and disputes over compensation with his various employers have motivated Plaintiffs to file amended returns and to claim withholding credits for the calendar years of 1991, 1992, and 1993. For this reason, the Court briefly describes the history of Plaintiff William Shannahan's employment in this section. For the sake of brevity and clarity, the Court further elaborates on the amended returns and credits in the relevant sections rather than in this section.
In 1987, Plaintiff William Shannahan and others formed Shannahan, Fitzgerald, & Flam, ("SS & F"), a professional law corporation. Plaintiff was issued stock in this corporation for a cash equity contribution of $24,500. (Pls. Decl., filed July 24, 1998, at ¶ 41). On July 1, 1990, SS & F surrendered its license to practice law in corporate form and changed its name to SSS Investment Corporation, a California corporation. Id. at ¶ 42. On December 30, 1990, Plaintiff William Shannahan sold all of his stock in SSS Investment Corporation for $24,500. Id. at ¶ 43.
In 1990 Plaintiff William Shannahan became an employee of Shannahan, Smith & Stipanov, a professional law corporation. Id. at ¶ 5. The name of this corporation was changed to Shannahan, Smith, Scalone & Stipanov ("SSSS") on January 1, 1991. Id. On September 30, 1991, Plaintiff William Shannahan terminated his employment with SSSS and litigation commenced regarding Plaintiff's right to additional compensation from SSSS. Id. at ¶ 6. In December 1993, an arbitrator announced an award to Plaintiffs of $163,355 arising from Plaintiff William Shannahan's litigation with SSSS. Id. at ¶ 21.
In November 1991, Plaintiff William Shannahan became an employee of Shannahan, Smith & Dailey ("SS & D"), a professional law corporation. Id. at ¶ 13. On October 4, 1992, Plaintiff William Shannahan terminated his employment with SS & D and had discussions with SS & D regarding additional compensation due to Plaintiff. Id. at ¶ 14. Later, SS & D was renamed to Smith, Dailey & Eischen ("SD & E") to reflect that Plaintiff William Shannahan was no longer an employee. (Decl. Smith, filed July 23, 1998, at ¶ 7).
The Court may grant summary judgment upon a showing that there is "no genuine issues as to any material fact and the moving party is entitled to judgment as a matter of law."2 FED.R.CIV.P. 56(c). A fact is "material" only if its resolution will affect the outcome of the lawsuit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a material fact is "genuine" only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.
The moving party has the initial burden of demonstrating that summary judgment is proper. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). If the nonmoving party will bear the burden of proof at trial, the moving party does not discharge its initial burden simply by making a "conclusory assertion that the nonmoving has no evidence," but must rather demonstrate the absence of a genuine issue by either: (1) submitting proof that would negate an essential element of the nonmovant's claim or defense; or (2) showing the nonmovant's inability to produce sufficient admissible evidence at trial. Adickes, 398 U.S. at 157-61, 90 S.Ct. 1598; Celotex Corp. v. Catrett, 477 U.S. 317, 332, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (Brennan, J., dissenting).
If the moving party meets this initial burden of production, then the burden shifts to the nonmoving party to show that summary judgment is not appropriate. Celotex, 477 U.S. at 324, 106 S.Ct. 2548. To make such a showing the nonmoving party must go beyond the pleadings and designate admissible material facts showing that there is a genuine issue for trial such that a reasonable jury could find in their favor by the appropriate standard of proof. Anderson, 477 U.S. at 255, 106 S.Ct. 2505.
To determine if there is a genuine dispute of material facts the Court shall consider all admissible affidavits and supplemental documents submitted in a motion for summary adjudication. Connick v. Teachers Ins. and Annuity Ass'n, 784 F.2d 1018, 1020 (9th Cir.), cert. denied, 479 U.S. 822, 107 S.Ct. 91, 93 L.Ed.2d 43 (1986). This includes discovery documents such as answers to deposition questions, and interrogatories. FED.R.CIV.P. 56(c). Unless foundational or other evidentiary objections are timely made, however, even inadmissible evidence may be considered by the Court and will support a judgment. Faulkner v. Fed'n of Preschool and Community Educ. Ctr., Inc., 564 F.2d 327, 328 (9th Cir.1977) (per curiam). The Court has no duty to consider proof not specifically directed to its attention. Schneider v. TRW, Inc., 938 F.2d 986, 990 n. 2 (9th Cir.1991).
In determining whether to grant summary judgment, the Court must keep in mind that "[c]redibility determinations, the weighing of evidence, and the drawing of legitimate inferences from the facts are jury junctions, not those of a judge." Anderson, 477 U.S. at 255, 106 S.Ct. 2505. The inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. Id.
As an initial matter, the Court must address the objections made by the parties to the evidence provided to the Court for the purposes of deciding this summary judgment motion. The Government objects to the admissibility of evidence provided by Plaintiffs regarding Plaintiffs' belief that SS & D would withhold federal income taxes for 1992 and 1993. Specifically, the Government objects to the memorandum of Jim Eischen, dated October 3, 1992. (Gov't Obj., filed August 14, 1992). The basis for the Government's objection is inadmissible hearsay under Fed.R.Evid. 802. Id.
Plaintiffs also filed an "Objection and Opposition to Decl. of Smith and Exhibits" on August 13, 1998 in which Plaintiffs object to the declaration filed by Robert Smith, one of the founding attorneys of SS & D. Plaintiffs argue that the declaration is self-serving and that the contradictions contained within the evidence show that material questions of fact exist in this litigation. Although Plaintiffs' file this document as an "objection," it fails to provide this Court with any objections as to the admissibility of the evidence under the Fed.R.Evid. or any legal support. As stated above, credibility determinations are not the function of the Court in ruling on motions for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Therefore, the Court declines to consider Plaintiffs objection as a bar to its consideration of the facts set forth in Mr. Smith's declaration.
Since the only objection as to the admissibility of evidence is made with respect to the memo written by Jim Eischen, this is the only objection the Court must address before ruling on the motion itself. The memorandum in question was written by Jim Eischen to William Shannahan on October 3, 1992. This memorandum was written because of Plaintiff William Shannahan's dispute with SS & D over his compensation for the 1992 year. It appears that in September, 1992, Plaintiff William Shannahan was paid $35,000 with no withholdings made by Plaintiff's employer. (Pls. Decl. in Opp., Exh. 1 at p. 2). In the memo, Mr. Eischen determined that SS & D still owed Plaintiff William Shannahan $10,949. Id. at p. 2. Then, Mr. Eischen states that he would call Paychex to determine the amount of the withholding for the $35,000 already paid to Plaintiffs in September, 1992 and for the $10,949.80 still owed to Plaintiffs. Id. at p. 5. Plaintiffs argue that this memo supports their contention that SS & D promised to withhold federal income tax from Plaintiffs' 1992 earnings and that Plaintiffs relied upon this representation in filing their tax returns. (Pls. Opp. at 18).
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