United States v. Gill

Decision Date30 June 2021
Docket NumberCivil Action H-18-4020
Citation546 F.Supp.3d 538
Parties UNITED STATES of America, Plaintiff, v. Amarjit GILL, as Representative of the Estate of Jagmail S. Gill, and Amarjit Gill, Defendants.
CourtU.S. District Court — Southern District of Texas

Herbert W. Linder, U.S. Dept. of Justice, Tax Division, Dallas, TX, for Plaintiff.

Joshua David Smeltzer, Gray Reed & McGraw, Dallas, TX, Annapoorni R. Sankaran, Holland & Knight LLP, Houston, TX, Heather M. Elliott, Holland & Knight LLP, Washington, DC, for Defendants.


Gray H. Miller, Senior United States District Judge

Pending before the court is a motion to dismiss filed by Amarjit Gill, as the representative of the Estate of Jagmail S. Gill (the "Estate"). Dkt. 31. After considering the motion, response, reply, and applicable law, the court is of the opinion that the motion should be DENIED.


This memorandum opinion and order is about whether civil penalties assessed under 31 U.S.C. § 5321(a)(5)(B)(i) ("FBAR Penalties") survive death. The plaintiff, the United States of America (the "Government"), filed its complaint against Jagmail S. Gill on October 14, 2018. Dkt. 1. In the complaint, the Government asserted that Mr. Gill, who became a green card holder and was lawfully admitted to the United States in 1984 and then became a citizen of the United States in 2008, failed to report any of his foreign income on his originally filed U.S. income tax returns for 2005 through 2010. Id. He also did not disclose that he had signature authority, control or authority over, or an interest in numerous foreign bank accounts that had an aggregate balance of more than $10,000. Id. The Government asserts that this failure to file was non-willful. Id. The Internal Revenue Service assessed FBAR Penalties of $740,848 pursuant to § 5321(a)(5) for Mr. Gill's non-willful failure to timely file FBARs reporting his financial interest in the foreign bank accounts. Id. Gill did not timely pay these penalties, and the Government filed this lawsuit. Id.

The Government served Mr. Gill in London on December 19, 2019. Dkt. 8. Mr. Gill filed an answer on February 14, 2020. Dkt. 10. On March 30, 2020, Mr. Gill moved to consolidate a separately filed case against his wife, Amajit K. Gill, into this case. Dkt. 20. The court granted that motion. Dkt. 21. The complaint the Government filed against Ms. Gill is similar to the complaint filed against Mr. Gill, except the Government alleges an interest in fewer foreign bank accounts, and the FBAR Penalties assessed were $55,304.55. United States v. Gill , No. 4:18-cv-4032, Dkt. 1.

On May 14, 2020, the Government filed a "suggestion of death" in which it informed the court that Mr. and Ms. Gill's counsel had informed the Government on April 28, 2020, that Mr. Gill passed away on April 2, 2020, in the United Kingdom. Dkt. 22. On July 8, 2020, the Government filed a motion to appoint and substitute a personal representative for the estate of Jagmail S. Gill because no executor or personal representative had been appointed for Mr. Gill's estate due to the world pandemic. Dkt. 23. Mr. Gill's counsel filed an opposition, arguing that the Government's claims do not survive death, so no representative was needed. Dkt. 24. After the motion to fully briefed, the court issued an order in which it noted the "very unusual situation" and the need to be flexible. Dkt. 29. It decided to sua sponte stay the case until Mr. Gill's estate was opened and a representative appointed. Id. On March 15, 2021, counsel for Ms. Gill informed the court that she was officially appointed as the representative of Jagmail S. Gill's estate, and the court reopened the case. Dkt. 30.

On the same day counsel informed the court about the appointment of Ms. Gill as the representative of the Estate, the Estate filed its motion to dismiss. Dkt. 31. In the motion, the Estate argues that in the Fifth Circuit, survivability of claims under a federal statute turns on whether the "primary purpose" of the statute is remedial or penal; if it is remedial, it survives death, and if it is penal, it does not. Id. The Estate contends that the primary purpose of FBAR Penalties is to redress and deter general wrongs to the public and not individual wrongs. Dkt. 31. The Estate asserts that the penalties provide a recovery to the public, in general, not individual restitution, and that they are disproportionate to the alleged harm suffered by the Government, which, under the test the Estate contends applies, equates to the statute have a penal rather than remedial primary purpose. Id. The Estate asserts that because the statute's primary purpose is penal, the Government's claims against Mr. Gill went away when Mr. Gill died, and the claims against Mr. Gill's Estate should therefore be dismissed.

The Government argues that FBAR Penalties survive death pursuant to 28 U.S.C. § 2404. Dkt. 32. It argues, in the alternative, that FBAR Penalties are remedial, that the opinions of other courts that have held that they are remedial are persuasive and well-reasoned, that the penalties compensate the Government for harm, and that the cases relied upon by the Estate are not applicable. Id.

In reply, the Estate argues that 28 U.S.C. § 2404 is procedural and does not relate to the actual merits of the claim. Dkt. 33. As to the Government's other arguments, the Estate contends that the Government ignores critical cases and that its response does not alter the fact that the factors considered by the Fifth Circuit weigh in favor of finding that the non-willful FBAR Penalties were extinguished by Mr. Gill's death. Id.

The motion to dismiss is now ripe for disposition.


The Estate filed its motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. 31. " Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief.’ " Bell Atl. Corp. v. Twombly , 550 U.S. 544, 127 S. Ct. 1955, 1964–65, 167 L.Ed.2d 929 (2007). In considering a Rule 12(b)(6) motion to dismiss a complaint, courts generally must accept the factual allegations contained in the complaint as true. Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc. , 677 F.2d 1045, 1050 (5th Cir. 1982). The court does not look beyond the face of the pleadings in determining whether the plaintiff has stated a claim under Rule 12(b)(6). Spivey v. Robertson , 197 F.3d 772, 774 (5th Cir. 1999). "[A] complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, [but] a plaintiff's obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (citations omitted). The "[f]actual allegations must be enough to raise a right to relief above the speculative level." Id. The supporting facts must be plausible—enough to raise a reasonable expectation that discovery will reveal further supporting evidence. Id. at 556, 127 S. Ct. 1955, 1964–65. A complaint may also be dismissed under Rule 12(b)(6) " ‘on the basis of a dispositive issue of law.’ " Walker v. Beaumont Ind. Sch. Dist. , 938 F.3d 724, 734 (5th Cir. 2019) (quoting Neitzke v. Williams , 490 U.S. 319, 326, 109 S. Ct. 1827, 104 L.Ed.2d 338 (1989) ). "All questions of fact and any ambiguities in the controlling law must be resolved in the plaintiff's favor." Lewis v. Fresne , 252 F.3d 352, 357 (5th Cir. 2001).


The question addressed by the Estate's motion is whether the FBAR Penalties assessed against Mr. Gill survived his death. The court will first consider whether the penalties automatically survive pursuant to 28 U.S.C. § 2404 as the Government asserts. The court will then discuss, notwithstanding § 2404, the factors courts consider when determining whether a statute survives death. It will then consider, specifically, what FBAR Penalties are and why they are assessed. And finally, it will discuss the cases relied upon by the parties and determine whether the penalties assessed against Mr. Gill survive in light of this law.

A. Section 2404

The Government argues that its claims survive Mr. Gill's death under 28 U.S.C. § 2404 because it brought the claims before Mr. Gill died. Dkt. 32. Under this statute, a "civil action for damages commenced on or behalf of the United States or in which it is interested shall not abate on the death of a defendant but shall survive and be enforceable against his estate as well as against surviving defendants." 28 U.S.C. § 2404. The United States contends that the FBAR penalties are "damages" within the meaning of this statute because they are remedial in nature and that the claims thus survive Mr. Gill's death. Dkt. 32.

The Estate contends that § 2404 is a procedural rule allowing a civil action to continue against a defendant's estate. Dkt. 33. It asserts that the U.S. Supreme Court has held that an action against a deceased party cannot continue unless it is one that survives by law, and in the Fifth Circuit that requires that its primary purpose be remedial and not penal. Id. It points out that the Government was not required to refile its civil action against the defendant's estate under § 2404, which has nothing to do with whether the underlying claim survives death. Id.

Section 2404 specifically relates to a "civil action for damages." 28 U.S.C. § 2404. In United States v. Price , the Sixth Circuit clarified that one cannot simply label a civil action as one for damages for § 2404 to apply. 290 F.2d 525, 526 (6th Cir. 1961). Instead, "whether an action is one for damages or to enforce a penalty depends upon what is sought to be recovered by it." Id. It noted that under Sixth Circuit law, if the case was "brought to compensate for an injury to the United States, it is one for damages and does not abate the death of ...

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