U.S. v. White
| Decision Date | 02 May 2005 |
| Docket Number | CIV.A. No. 1:04-CV1901MHS. |
| Parties | UNITED STATES of America, Plaintiff, v. James W. WHITE, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Georgia |
Laura Kennedy Bonander, U.S. Attorney's Office, Atlanta, GA, Michael N. Wilcove, U.S. Department of Justice, Washington, DC, for Plaintiff.
Shawn David Scott, William Charles Buhay, Weinberg Wheeler Hudgins Gunn & Dial, Atlanta, GA, for Defendant.
Presently before the Court are the parties' cross motions for summary judgment. The Court's rulings are set forth below.
This case involves liability for failing to pay withheld employment taxes. The tax code and the regulations thereunder require employers to withhold taxes from employees' paychecks. These withheld funds constitute a trust in favor of the United States, and the employer is liable for any amounts withheld. Officers responsible for the collection and payment of these withheld taxes, who willfully fail to do so, are personally liable for a "penalty" equal to the amount of the delinquent taxes. Smith v. United States, 894 F.2d 1549, 1553 (11th Cir.1990). The government brought this action against defendant to reduce liability to judgment for a "penalty" imposed pursuant to 26 U.S.C. § 6672.1
On May 3, 1993, defendant filed for bankruptcy under Chapter 11. The bankruptcy court confirmed defendant's reorganization plan on May 18, 1994. On July 4, 1994, a delegate of the Secretary of the Treasury assessed a § 6672 penalty against defendant for $109,724.30.2 The basis for the assessment was that defendant was the person responsible for collecting, accounting for, or paying over withheld taxes for employees of W.C.C., Inc., for the last quarter of 1991 and the last three quarters of 1992. The bankruptcy court entered a final decree in defendant's case on December 12, 1994. The government filed no other assessments against defendant for the amount it seeks in this case.
Defendant now moves for summary judgment arguing that the government's claim in this case is barred by the statute of limitations. He argues that the government's assessment on July 4, 1994, is void because it was filed in violation of the automatic stay provisions of 11 U.S.C. § 362, and that the government failed to file any other assessments under § 6672 against him within the three-year statute of limitations. The government contends that the assessment is not void, and therefore, that the government's claim was filed within the applicable time period.
The government also moves for summary judgment arguing that the assessment is presumed correct and defendant is unable to rebut the presumption of correctness. Defendant reiterates that the government's claim is time barred, the government's own evidence reveals that defendant does not owe taxes, and that the government has failed to carry its burden of proving that defendant willfully failed to pay the alleged debt.
Rule 56 of the Federal Rules of Civil Procedure Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
The movant bears the initial responsibility of asserting the basis for his motion. Celotex, 477 U.S. at 323, 106 S.Ct. 2548; Apcoa, Inc. v. Fidelity National Bank, 906 F.2d 610, 611 (11th Cir.1990). However, the movant is not required to negate his opponent's claim. The movant may discharge his burden by merely "`showing' — that is, pointing out to the district court — that there is an absence of evidence to support the non-moving party's case." Celotex, 477 U.S. at 325, 106 S.Ct. 2548. After the movant has carried his burden, the non-moving party is then required to "go beyond the pleadings" and present competent evidence designating "specific facts showing that there is a genuine issue for trial." Id. at 324, 106 S.Ct. 2548. While the court is to view all evidence and factual inferences in a light most favorable to the non-moving party, Samples v. City of Atlanta, 846 F.2d 1328, 1330 (11th Cir.1988), "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) (emphasis in original).
A fact is material when it is identified by the controlling substantive law as an essential element of the non-moving party's case. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. An issue is genuine when the evidence is such that a reasonable jury could return a verdict for the nonmovant. Id. The nonmovant Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). An issue is not genuine if it is unsupported by evidence, or if it is created by evidence that is "merely colorable" or is "not significantly probative." Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505. Thus, to survive a motion for summary judgment, the non-moving party must come forward with specific evidence of every element material to that party's case so as to create a genuine issue for trial.
The Rule 56 standard is not affected by the filing of cross motions for summary judgment: "The court must rule on each party's motion on an individual and separate basis, determining, for each side, whether a judgment may be entered in accordance with the Rule 56 standard." 10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2720 at 335-36 (3d ed.1998). Cross-motions may, however, be probative of the absence of a factual dispute where they reflect general agreement by the parties as to the controlling legal theories and material facts. See United States v. Oakley, 744 F.2d 1553, 1555 (11th Cir.1984).
A bankruptcy petition filed under Chapter 11 will automatically stay proceedings for collection against the debtor. See 11 U.S.C. § 362(a); Bronson v. United States, 46 F.3d 1573, 1577 (Fed.Cir.1995) (). A stay under the act, other than a stay against property,3 terminates either when the case is closed, dismissed, or if the case is under Chapter 11, at the time when the discharge is granted or denied. 26 U.S.C. § 362(c)(2). A discharge relieves the debtor from all debts that arose before the date of the order for relief. 11 U.S.C. § 727. The discharge occurs when the court confirms the reorganization plan, unless the plan or the court's order states otherwise or the debt cannot be discharged. 11 U.S.C. §§ 1141(d)(1) and (d)(2).
On May 3, 1993, when defendant filed a personal bankruptcy petition pursuant to Chapter 11 of the U.S. Bankruptcy Code, all proceedings, including tax assessments, for collection against defendant were automatically stayed. See 11 U.S.C. § 362(a)(6) (1993).4 The parties dispute when the stay was lifted.
The government argues that the stay was lifted on May 18, 1994. On that date, the government argues that defendant received a discharge when the bankruptcy court confirmed the reorganization plan, and this discharge lifted the automatic stay. With the stay lifted, the government argues that its tax assessment against defendant on July 4, 1994, was valid and filed within the three-year statute of limitations. It was then required to bring this suit to reduce liability to judgment within ten years of the date the penalty was assessed, or by July 4, 2004. See 26 U.S.C. § 6502(a). The government argues that since this action was filed on June 30, 2004, it is within the statute of limitations.
Defendant argues that the stay was not lifted until December 12, 1994, or July 17, 1994, at the earliest. First, assuming that the assessment was against him individually, defendant argues that the employment taxes were nondischargeable, and therefore, that the stay was not lifted until the case was closed or dismissed on December 12, 1994. Second, defendant argues that even if the debt was dischargeable, it was not discharged until July 17, 1994, because the reorganization plan attached to the court's confirmation order provided that the plan would not become effective until that date. Thus, regardless of whether the debt was dischargeable, defendant avers that the government's § 6672 penalty assessment on July 4, 1994, was void because it was made in violation of the automatic stay. Because the government made no other assessments under § 6672 against him, defendant argues that the government failed to file an assessment within the three-year statute of limitations.
Viewing all evidence and factual inferences in the light most favorable to the government, the Court finds that defendant's debt was nondischargeable. According to 11 U.S.C. § 1141(d)(2), the confirmation of a plan does not discharge the debtor from any debt excepted from discharge under § 523 of the same title. Section 523 provides that a discharge under § 1141 does not discharge an individual debtor from any debt for a tax of the...
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