U.S. v. Guy

• Decision Date: 30 October 1992
• Docket Number: No. 92-3139,92-3139
• Citation: 978 F.2d 934
• Parties: -5957, 92-2 USTC P 50,581 UNITED STATES of America, Plaintiff-Appellee, v. Garth GUY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 934

978 F.2d 934

70 A.F.T.R.2d 92-5957, 92-2 USTC P 50,581

UNITED STATES of America, Plaintiff-Appellee, v. Garth GUY, Defendant-Appellant.

No. 92-3139.

United States Court of Appeals, Sixth Circuit.

Argued Oct. 13, 1992.

Decided Oct. 30, 1992.

Gary R. Allen, Acting Chief (briefed), Gilbert S. Rothenberg, Marion E.M. Erickson (argued), U.S. Dept. of Justice, Appellate Section Tax Div., Washington, D.C., for plaintiff-appellee.

William W. Lamkin (argued), Lamkin, Van Eman, Trimble, Beals & Rourke, Columbus, Ohio, for defendant-appellant.

Before: KENNEDY and MILBURN, Circuit Judges; and POTTER, Senior District Judge. ^*

KENNEDY, Circuit Judge.

Defendant appeals the order of the District Court granting summary judgment in favor of plaintiff United States in this action to recover an erroneous tax refund. The District Court entered a judgment against the defendant in the amount of $276,079.99 plus statutory interest. Defendant argues on appeal that the District Court erred in granting summary judgment to plaintiff because plaintiff should be equitably estopped from recovering the erroneous refund, defendant was denied the right to full and fair discovery, and defendant's joint return was invalid. For the reasons set forth below, we AFFIRM the judgment of the District Court.

I.

Defendant Garth Guy and Holly Guy were married in 1972. During the year 1983, the Guys resided in a community property state. ¹ Defendant was the sole earner of all the income attributable to the Guys during 1983. During this time, the Guys were experiencing marital difficulties and on March 14, 1984, they executed a separation agreement.

On April 16, 1984, Garth and Holly Guy filed an application for an automatic extension of time to file their joint income tax return for the year 1983. With the joint application, defendant sent a payment of $488,000 representing the 1983 joint income taxes estimated to be owed by Garth and Holly Guy. The source of the funds used to make the payment was income earned by the defendant during this year. When the IRS received the payment, it credited the entire amount to the defendant's account because his taxpayer identification number appeared first on the application for an extension of time.

In August of 1984, the Guys filed another joint application for additional time in which to file their 1983 tax return. This second joint application was also granted. On October 16, 1984, defendant filed a joint income tax return for himself and his wife Holly (for 1983), reporting adjusted gross income of $1,103,020 and total tax liability of $474,508. Defendant signed this return and he also signed Holly's name with the notation "by G.G., atty in fact."

Also in October of 1984, Holly Guy submitted what was purported to be a 1040 return for 1983, claiming married-filing-separately status, zero income, and zero tax liability. Included with this return was a typed statement from Holly Guy explaining that she had refused to sign the joint income tax return filed by defendant because she was unable to verify the information it contained. The note further indicated that Holly intended to file a joint return as soon as she could gain access to the necessary books and records.

On March 15, 1985, the Superior Court of California, County of Monterey, entered a judgment dissolving the Guy's marriage. On August 15, 1985, defendant filed an amended income tax return for the year 1983 in which he claimed married-filing-separately status. This return reported only one-half the amount of income defendant had reported on the joint return filed in 1984, but claimed credit for the entire $488,000 payment made with the first application for extension. As a result, defendant claimed entitlement to a refund of $248,751.25. With this return, defendant attached a statement explaining that because Holly had "disclaimed his authority" and filed a separate return for 1983, he was filing his own separate return, claiming only one-half the income he earned. Defendant further claimed that he should be credited with the entire $488,000 payment because it was made from his separate property rather than community property of the marriage.

On January 8, 1986, the California Superior Court issued a decision regarding the division of property incident to defendant's divorce from Holly. In addition to holding the first separation agreement invalid, the court held that defendant was to pay certain amounts to Holly for child support, spousal support, and her share of community property. On July 28, 1987, the court issued another decision amending the January 8th decision. This amended decision held that defendant would pay Holly a certain amount in settlement of all arrearages owing for child support, spousal support, and property division. The decision also contained the following clause:

Garth Guy shall pay and hold Holly Guy harmless from any other debts accumulated by him during the period of the marriage; provided, however, each party shall be responsible for any federal and/or state income tax that may be owed by that party because of any federal and/or state income tax returns filed by that party.

On December 28, 1987, based upon the refund claim made by the defendant in his amended return for 1983, the IRS refunded $276,079.99. ² On December 22, 1989, the United States filed suit against defendant to recover the refund, which the government contended was erroneously made. On October 17, 1990, the government filed a motion for summary judgment. On January 16, 1991, defendant filed a motion to compel discovery, seeking information as to the IRS's course of conduct, its failure to comply with its own regulations, and the legal basis for the refund. On September 25, 1991, without ruling on the defendant's motion to compel discovery, the District Court granted the government's motion for summary judgment. On December 26, 1991, the District Court entered an amended judgment against defendant in the amount of $276,079.99 plus statutory interest from December 28, 1987 (the date of the refund). This appeal followed.

II.

This Court reviews a grant of summary judgment de novo, making all reasonable inferences in favor of the non-moving party. EEOC v. University of Detroit, 904 F.2d 331, 332 (6th Cir.1990). Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to summary judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). The inquiry is whether there is sufficient evidence supporting a factual dispute that a judge or jury is required to "resolve the parties' differing versions of the truth at trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) (quoting First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288-89, 88 S.Ct. 1575, 1592, 20 L.Ed.2d 569 (1968)).

III.

The defendant argues that the District Court erred in granting summary judgment for the government because the government should be equitably estopped on all of its claims against the defendant. The traditional elements required to invoke equitable estoppel are a definite misrepresentation by one party, intended to induce some action in reliance, and which does reasonably induce action in reliance by another party to his detriment. Heckler v. Community Health Services, 467 U.S. 51, 59, 104 S.Ct. 2218, 2223, 81 L.Ed.2d 42 (1984); United States v. Varani, 780 F.2d 1296, 1304 (6th Cir.1986). Defendant contends that equitable estoppel applies because his attorney contacted the IRS by letter and by phone to determine whether the IRS intended to take any action regarding his 1983 tax returns. Defendant claims that he received certain oral assurances from the IRS official who responded to his inquiries, namely that "the IRS would never pursue him on this issue," and that the IRS would not seek to collect any additional funds from him regarding his 1983 tax liability. Further, defendant argues that he changed his financial position in reliance on the IRS's assurances. Defendant claims that he took into account the tax refund in agreeing to the property settlement with his wife, and that a significant portion of the statutory interest awarded in this case directly results from the IRS's own delay and repeated assurances that they would take no further action.

A.

It is well established that estoppel cannot be used against the government on the same terms as against private parties. Office of Personnel Management v. Richmond, 496 U.S. 414, 419, 110 S.Ct. 2465, 2468, 110 L.Ed.2d 387 (1990) ³; Heckler, 467 U.S. at 60, 104 S.Ct. at 2224; United States v. River Coal Co., Inc., 748 F.2d 1103, 1108 (6th Cir.1984) (ordinarily the United States is not estopped by acts of individual officers and agents); Housing Authority of Elliott County v. Bergland, 749 F.2d 1184, 1190 (6th Cir.1984) (equitable estoppel generally is not available against the government). At the very minimum, some affirmative misconduct by a government agent is required as a basis of estoppel. Richmond, 496 U.S. at 421, 110 S.Ct. at 2469; River Coal, 748 F.2d at 1108.

In Heckler, the Supreme Court reiterated the general rule "that those who deal with the government are expected to know the law and may not rely on the conduct of government agents contrary to the law." Heckler, 467 U.S. at 63, 104 S.Ct. at 2225 (protection of the public fisc requires that those who seek public funds act with scrupulous regard for the requirements of law). In the case at issue, Treas.Reg. § 1.6013-1(a) supplies the applicable law:

A husband and wife may elect to make a joint return under section 6013(a) even though one of the spouses has no gross income or deductions.... For any taxable year with respect to which a joint return has been filed, separate returns shall not be made by the spouses after the time for filing the return of either has...