U.S. v. MacPhail, No. C2-00-621.

• Decision Date: 25 February 2004
• Docket Number: No. C2-00-621.
• Citation: 313 F.Supp.2d 729
• Parties: UNITED STATES of America, Plaintiff, v. Angus N. MacPHAIL, et al., Defendant.
• Court: U.S. District Court — Southern District of Ohio

313 F.Supp.2d 729

UNITED STATES of America, Plaintiff, v. Angus N. MacPHAIL, et al., Defendant.

No. C2-00-621.

United States District Court, S.D. Ohio, Eastern Division.

February 25, 2004.

Michael W. Davis, U.S. Department of Justice, Washington, DC, for Plaintiff.

Michael John Johrendt, Johrendt Cook & Eberhart, Harvey Dunn, James Edward Davidson, Schottenstein Zox & Dunn, Columbus, OH, for Defendant.

MEMORANDUM AND ORDER

HOLSCHUH, District Judge.

Plaintiff United States of America asserts a cause of action under 26 U.S.C. § 7405(b) seeking recovery from Defendant Angus MacPhail of an income tax overpayment refund. This matter is currently before the Court on Plaintiff's Motion for Summary Judgment on this claim against Defendant MacPhail. (Docket No. 45). For the reasons below, the Court hereby grants Plaintiff's motion for summary judgment against Defendant MacPhail.

I. Background

Initially, Plaintiff asserted claims against both Defendant MacPhail and Sarah Crane for recovery of an erroneous refund or credit respectively, but this Court entered Judgment in Ms. Crane's favor on June 2, 2003 when it granted her motion for summary judgment on Plaintiff's claim against her for an erroneous credit and Defendant MacPhail's cross-claim against her for indemnity.¹ Therefore, only Plaintiff's claim against Defendant MacPhail for an erroneous refund remains. The factual background of this case was set forth in detail in this Court's Memorandum and Order of June 2, 2003. (Record at 41). The facts in the record have not changed since that order, therefore the Court incorporates below many of those same facts in examining the current motion.

Defendant MacPhail and Ms. Crane signed a Separation Agreement on April 9, 1997 that required them to file a joint tax return with the Internal Revenue Service ("IRS") for the year 1996. On April 15, 1997, an IRS Form 4868 was filed requesting an extension of time to file their 1996 joint tax return. With the request for extension was a check for $490,000.00 drawn on the Crane family partnership, Stanbery, Ltd. On July 1, 1997, Ms. Crane and Defendant MacPhail's marriage was terminated. Subsequently, on October 15, 1997, they filed their joint tax return for the year 1996. Although Defendant MacPhail and Ms. Crane owed $190,464.00 at the close of the 1996 tax year, the Stanbery payment of $490,000.00 on April 15, 1997 left them with an overpayment in the amount of $300,427.00 on their 1996 return. The IRS reduced this amount by $891.00, leaving a net overpayment of $299,536.00, which the parties elected to be applied to the estimated tax liability for the following tax year, as had been their practice during their years of marriage.

For the 1997 tax year, Defendant MacPhail filed his individual return, which reflected taxable income of $10,675.00 and a corresponding tax liability of $1,275.00. Although Defendant MacPhail did not claim the overpayment of $299,536.00, the IRS applied this overpayment to his 1997 return and correspondingly issued a refund check in the amount of $299,536.00 on June 8, 1998. Subsequently, Ms. Crane filed her individual 1997 tax return and claimed credit for the entire carried-over 1996 overpayment of $299,536.00. Although initially the IRS refused to give Ms. Crane credit for the 1996 overpayment, it eventually did credit her the entire amount of the overpayment. The IRS subsequently demanded that Defendant MacPhail return the amount refunded on June 8, 1998 that was based on the 1996 overpayment of $299,536.00, but Defendant MacPhail refused to do so. Consequently, the IRS had both refunded the $299,536.00 to Defendant MacPhail and credited the $299,536.00 to Ms. Crane. As a result, the IRS initiated the current action to recoup this double payment, of which only the action against Defendant MacPhail remains.

In the Court's previous order granting summary judgment in favor of Ms. Crane, the Court found that Ms. Crane was the sole source of the 1996 overpayment. Therefore the credit was not erroneous, and she was entitled to summary judgment as a matter of law. In making this finding, the Court found that Ms. Crane's family partnership, Stanberry Ltd., made the estimated tax payment of $490,000.00 and that Defendant MacPhail had no proprietary interest in Stanberry Ltd. nor had he contributed in any way to this estimated payment. Because Ms. Crane was the sole source of this estimated tax liability payment, she was, as a result, entitled to the 1996 overpayment in the amount of $299,536.00.

II. Standard of Review

Federal Rule of Civil Procedure 56(c) provides that summary judgment shall be granted:

if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.

Under this standard, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see also Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir.1984).

Summary judgment will not lie if the dispute about a material fact is genuine; "that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. The purpose of the procedure is not to resolve factual issues, but to determine if there are genuine issues of fact to be tried. Lashlee v. Sumner, 570 F.2d 107, 111 (6th Cir.1978). Therefore, summary judgment will be granted "only where the moving party is entitled to judgment as a matter of law, where it is quite clear what the truth is ... [and where] no genuine issue remains for trial, ... [for] the purpose of the rule is not to cut litigants off from their right of trial by jury if they really have issues to try." Poller v. Columbia Broadcasting Sys., 368 U.S. 464, 467, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962) (quoting Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620, 627, 64 S.Ct. 724, 88 L.Ed. 967 (1944)); accord County of Oakland v. City of Berkley, 742 F.2d 289, 297 (6th Cir.1984).

In making this inquiry, the standard to be applied by the Court mirrors the standard for what was formerly referred to as a directed verdict. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson, 477 U.S. at 250, 106 S.Ct. 2505. In Anderson, the Court noted that:

[T]he "genuine issue" summary judgment standard is "very close" to the "reasonable jury" directed verdict standard: "The primary difference between the two motions is procedural; summary judgment motions are usually made before trial and decided on documentary evidence, while directed verdict motions are made at trial and decided on the evidence that has been admitted." Bill Johnson's Restaurants, Inc. v. NLRB, 461 U.S. 731, 745, n. 11, 103 S.Ct. 2161, 76 L.Ed.2d 277 (1983). In essence, though, the inquiry under each is the same: whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.

Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505. Accordingly, although summary judgment should be cautiously invoked, it is an integral part of the Federal Rules, which are designed "to secure the just, speedy and inexpensive determination of every action." Celotex, 477 U.S. at 327, 106 S.Ct. 2548 (quoting Fed.R.Civ.P. 1). In a motion for summary judgment, the moving party bears the "burden of showing the absence of a genuine issue as to any material fact, and for these purposes, the [evidence submitted] must be viewed in the light most favorable to the opposing party." Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970) (footnote omitted); accord Adams v. Union Carbide Corp., 737 F.2d 1453, 1455-56 (6th Cir.1984), cert. denied, 469 U.S. 1062, 105 S.Ct. 545, 83 L.Ed.2d 432 (1984). Any inferences to be drawn from the underlying facts contained in such materials must also be considered in the light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); Watkins v. Northwestern Ohio Tractor Pullers Ass'n, 630 F.2d 1155, 1158 (6th Cir.1980). Additionally, "unexplained gaps" in materials submitted by the moving party, if pertinent to material issues of fact, justify denial of a motion for summary judgment. Adickes, 398 U.S. at 157-60, 90 S.Ct. 1598.

If the moving party meets its burden and adequate time for discovery has been provided, summary judgment is appropriate if the non-moving party fails to make a showing sufficient to establish the existence of a genuine issue of material fact as to an element essential to their case and on which they will bear the burden of proof at trial. Celotex, 477 U.S. at 322, 106 S.Ct. 2548. The existence of a mere scintilla of evidence in support of the opposing party's position is insufficient; there must be evidence on which the jury could reasonably find for the opposing party. Anderson, 477 U.S. at 252, 106 S.Ct. 2505.

III. Analysis

Plaintiff asks this Court to grant summary judgment against Defendant MacPhail based on its prior order, which found that Ms. Crane was the sole source of the 1996 overpayment. Plaintiff contends that based on this finding, Defendant MacPhail must have been erroneously refunded $299,536.00 because only one party was entitled to a refund/credit of the 1996 overpayment. (Pl.'s Reply at 1). Defendant does not dispute the finding that Ms. Crane was the sole source of the overpayment nor does he contend that he was in fact entitled to the entire 1996 overpayment and subsequent refund in the amount of $299,536.00. Defendant argues,...