U.S. v. Bryant, 93-2510
| Decision Date | 01 February 1994 |
| Docket Number | No. 93-2510,93-2510 |
| Citation | 15 F.3d 756 |
| Parties | -1223, 94-1 USTC P 50,057 UNITED STATES of America, Plaintiff-Appellee, v. Kermit BRYANT; Frances Bryant; The Bryant Family Trust; and Phil Bryant, Renee B. Stacks, Rhonda Frederick, and Debbie Herndon, as Trustees for the Bryant Family Trust, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Counsel who presented argument on behalf of the appellants was Richard Hatfield of Little Rock, Arkansas. The names of Richard F. Hatfield and Thomas J. Swearingen of Little Rock, Arkansas, appear on the brief of the appellants.
Counsel who presented argument on behalf of the appellee was David Shuster of Washington, DC. The names of Michael L. Paup, Gary R. Allen, Jonathan S. Cohen and David A. Shuster of Washington, DC, appear on the brief of the appellee.
Before MAGILL and LOKEN, Circuit Judges, and EISELE, * Senior District Judge.
This is an action by the United States under 26 U.S.C. Secs. 7401 and 7403 to set aside a fraudulent conveyance and to foreclose federal tax liens on the conveyed properties. In November 1985, Kermit Bryant pleaded guilty to a criminal tax violation and promised, as a condition of probation, to "pay all taxes, penalties, and interest correctly assessed by the Internal Revenue Service." Bryant and his wife, Frances, then filed a petition in the Tax Court contesting $464,918.21 in proposed tax deficiencies and penalties for the tax years 1977-1980 and 1982.
On April 25, 1987, in the transaction here at issue, the Bryants conveyed substantially all their real and personal property in trust to their four children; in exchange for $10, the trust received properties having a value of at least $450,000, including the Bryants' home in which they continued to reside. In October 1988, pursuant to a settlement agreement signed by both Kermit and Frances Bryant, the Tax Court entered a final judgment determining the challenged tax deficiencies. The IRS then made assessments in excess of $700,000; the Bryants responded by executing a Collection Information Statement disclosing total assets of less than $8,000.
The government commenced this action to have the conveyance in trust declared fraudulent so that it may foreclose upon the trust properties. The government moved for summary judgment. In response, the Bryants argued that there were genuine issues of material fact regarding whether Mrs. Bryant is entitled to the innocent spouse defense, see 26 U.S.C. Sec. 6013(e)(1), and whether the conveyance in trust was fraudulent. The district court 1 granted the government's motion, concluding that Mrs. Bryant was barred by the Tax Court's earlier decision from raising the innocent taxpayer defense and that the conveyance was fraudulent as a matter of law under governing Arkansas law. The Bryants appeal, arguing the two issues decided by the district court. We affirm.
1. Mrs. Bryant joined in petitioning the Tax Court to redetermine proposed tax deficiencies and penalties asserted against her and her husband. The Tax Court ultimately entered a final decision determining the Bryants' tax liabilities for the tax years at issue. The doctrine of res judicata bars Mrs. Bryant from now relitigating claims and defenses that were raised or that could have been raised in the Tax Court. See Commissioner v. Sunnen, 333 U.S. 591, 597, 68 S.Ct. 715, 719, 92 L.Ed. 898 (1948). The doctrine applies, at least with respect to the tax years at issue, even though the Tax Court's final decision was entered pursuant to an agreement between the parties. See United States v. International Bldg. Co., 345 U.S. 502, 505-06, 73 S.Ct. 807, 809, 97 L.Ed. 1182 (1953). The district court correctly concluded that Mrs. Bryant is barred from raising the innocent spouse defense to the tax deficiencies and penalties determined by the Tax Court. 2 Accord Edwards v. United States, 792 F.Supp. 474 (W.D.Va.1991); see also United States v. Maxwell, 459 F.2d 22 (5th Cir.1972) ().
2. Arkansas law determines whether the United States as a tax creditor may set aside the Bryants' conveyance in trust as fraudulent. See United States v. Ressler, 433 F.Supp. 459, 463 (S.D.Fla.1977), aff'd, 576 F.2d 650 (5th Cir.1978), cert. denied, 440 U.S. 929, 99 S.Ct. 1265, 59 L.Ed.2d 485 (1979). The Arkansas statute applicable when the transfer was made provided that "[e]very conveyance ... made or contrived with the intent to hinder, delay or defraud creditors ... shall be void." Ark.Stat.Ann. Sec. 68-1302 (Repl.1979) (...
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