Waltner v. United States

• Decision Date: 10 February 2020
• Docket Number: No. CV-19-04679-PHX-DGC,CV-19-04679-PHX-DGC
• Parties: Steven T. Waltner; and Sarah Van Hoey, Plaintiffs, v. United States, Defendant.
• Court: U.S. District Court — District of Arizona

Steven T. Waltner; and Sarah Van Hoey, Plaintiffs, v. United States, Defendant.

No. CV-19-04679-PHX-DGC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

February 10, 2020

ORDER

Pro se Plaintiffs Steven Waltner and Sara Van Hoey, who formerly were married, have sued the United States seeking tax refunds from the 2013 through 2017 tax years. Plaintiffs assert nine claims in their complaint. Doc. 1. The government moves to dismiss most of the claims for lack of subject matter jurisdiction and moves for summary judgment on several claims. Doc. 19. The government also requests that the case be stayed pending a ruling on its motion. Doc. 20. Plaintiff Sarah Van Hoey has filed a Rule 56(d) declaration requesting an opportunity to conduct discovery before responding to the motion. Doc. 32. The government opposes the request. Doc. 38. For reasons stated below, the Court will deny Van Hoey's Rule 56(d) request and grant in part the government's motion to stay.

I. Background.

Plaintiffs assert the following claims in their complaint: refund claims regarding their 2013, 2014 and 2015 joint tax returns (Counts 1-3); refund claims regarding Van Hoey's 2016 return (Count 4) and Plaintiffs' 2017 returns (Counts 5-6); a damages claim under 26 U.S.C. § 7433 (Count 7); and injunctive and mandamus relief claims (Counts 8-9). Doc. 1 ¶¶ 29-135; see Doc. 22 at 2.¹ The government moves to dismiss Count 1 and Counts 3 through 9 for lack of subject matter jurisdiction. Doc. 19-1 at 2. The government alternatively moves for summary judgment on Counts 1 through 6 based on collateral estoppel. Id.

Van Hoey seeks to conduct discovery before fully responding to the government's motion, and has filed a declaration pursuant to Rule 56(d). Doc. 32. The government argues that Van Hoey's request for discovery should be denied because she does not identify the specific facts she believes discovery would reveal, nor does she explain how any such facts are essential to responding to the government's motion. Doc. 38 at 4.

II. Rule 56(d) Standard.

"Rule 56(d) offers relief to a litigant who, faced with a summary judgment motion, shows the court by affidavit or declaration that 'it cannot present facts essential to justify its opposition.'" Michelman v. Lincoln Nat'l Life Ins., 685 F.3d 887, 899 (9th Cir. 2012) (quoting Fed. R. Civ. P. 56(d)). A district court has discretion to grant relief under Rule 56(d) and may "(1) defer considering the [summary judgment] motion or deny it; (2) allow time to obtain affidavits or declarations or to take discovery; or (3) issue any other appropriate order." Fed. R. Civ. P. 56(d); see Michelman, 685 F.3d at 892, 899; Singh v. Am. Honda Fin. Corp., 925 F.3d 1053, 1076 (9th Cir. 2019). The party seeking Rule 56(d) relief "bears the burden of showing that '(1) [she] has set forth in [declaration] form the specific facts [she] hopes to elicit from further discovery; (2) the facts sought exist; and (3) the sought-after facts are essential to oppose summary judgment." Martin v. James River Ins., 366 F. Supp. 3d 1186, 1189 (D. Nev. 2019) (quoting Family Home & Fin. Ctr., Inc. v. Fed. Home Loan Mortg. Corp., 525 F.3d 822, 827 (9th Cir. 2008)); seeNidds v. Schindler Elevator Corp., 113 F.3d 912, 921 (9th Cir. 1996) ("The burden is on the party seeking additional discovery to proffer sufficient facts to show that the evidence sought exists, and that it would prevent summary judgment."); Garrett v. City & Cty. of S.F., 818 F.2d 1515, 1518 (9th Cir. 1987) (the party seeking to conduct discovery "must make clear what information is sought and how it would preclude summary judgment"). "Failure to comply with these requirements is a proper ground for denying discovery and proceeding to summary judgment." Family Home, 525 F.3d at 827 (citations omitted).

III. Van Hoey's Rule 56(d) Declaration.

Van Hoey has prepared a thorough draft response to the government's motion, but claims there are several areas where she lacks information needed to complete the response. Doc. 32 ¶ 13. The Court will address each area she identifies.

A. Count 4 - Van Hoey's 2016 Refund Claim.

In Count 4, Van Hoey alleges that she is entitled to a refund of amounts applied from the 2016 tax year to a penalty that was assessed for the 2007 tax year. Doc. 1 ¶¶ 75-82. The government provides Internal Revenue Service ("IRS") records indicating that the 2016 overpayments of $3,107.93 and $92.63 were applied to frivolous return penalties assessed for 2007. See Doc. 19-1 at 11. The government argues that the Court lacks subject matter jurisdiction to refund the overpayments alleged in Count 4 because Van Hoey still owes a balance of $11,299.44 on the penalties assessed for 2007. Id. (citing Diamond v. United States, 603 F. App'x 947, 949 (Fed. Cir. 2015)). The government alternatively argues that it is entitled to summary judgment on Count 4 because the Tax Court fully adjudicated the 2007 penalty assessments. Id. at 5-7, 11.

Van Hoey claims that the government does not identify the three penalties to which the 2016 overpayments were applied. Doc. 32 ¶ 5. But the government makes clear that the overpayments were applied to the "three $5,000.00 Section 6702 penalties assessed for 2007." Doc. 19-1 at 11. The government's supporting declaration explains that "on January 8, 2018, the IRS reassessed the three Section 6702 penalties against Ms. Van Hoey in the aggregate amount of $15,000.00[,]" that each of the "three referencedreassessed Section 6702 penalties was in the amount of $5,000.00[,]" and that the "overpayments of $3,107.93 and $92.63 were applied from Ms. Van Hoey's 2016 tax year to the reassessed Section 6702 penalties and . . . there is still a balance owed of $11,299.44" Doc. 19-6 ¶ 9 (citing Ex. D).

Van Hoey has not shown that discovery regarding the Section 6702 penalties assessed for 2007 is essential to oppose the government's motion on Count 4. See Sec. & Exch. Comm'n v. Stein, 906 F.3d 823, 833 (9th Cir. 2018) ("The facts sought must be 'essential' to the party's opposition to summary judgment, and it must be 'likely' that those facts will be discovered during further discovery[.]") (citations omitted); Stevens v. Corelogic, Inc., 899 F.3d 666, 678 (9th Cir. 2018) ("A party seeking to delay summary judgment for further discovery must state what other specific evidence it hopes to discover and the relevance of that evidence to its claims.") (citation omitted).

Van Hoey asserts that the IRS Form 4340 the government relies on for 2007 "is a mess[.]" Doc. 32 ¶ 5.² She further claims that in order to "get a complete picture of what happened on the 2007 account," she "will need to see the ICS History Transcript from March 1, 2017[.]" Id. ¶ 5(a). But Van Hoey fails to specify the facts she hopes to discover and explain why any such facts would preclude summary judgment.

B. Count 6 - Van Hoey's 2017 Refund Claim.

In Count 6, Van Hoey alleges that she is entitled to a refund of the $1,183.57 overpayment for 2017 which the IRS applied to a penalty assessed for the 2004 tax year. Doc. 1 ¶¶ 95-104. She claims that "[i]t is unclear from the Form 4340 what penalty [the] 2017 overpayment was applied to . . . and [she] would need to discover further facts before deciding whether it is best to withdraw or concede Count 6, or whether [she] could respond more fully in opposition to the [government's motion] on this count." Doc. 32 ¶ 10. Van Hoey further claims that she "should be allowed to discover whether it is theusual practice of the IRS to record court sanctions assessed in one year to the tax account of another year 12 years prior." Id. ¶ 12.

The government provides IRS records indicating that that the 2017 "overpayment of $1,184.00 was applied to the $5,000.00 Section 6702 penalty assessed for Ms. Van Hoey's 2004 year and the $15,000.00 Tax Court sanction assessed against her in that year." Doc. 19-1 at 12 (citing Doc. 19-6 ¶ 10, Ex. E). The government argues that any discovery on the issues Van Hoey raises regarding Count 6 would be irrelevant because there is no reference to the 2017 overpayment in the Plaintiffs' March 23, 2018 claim for refund and the Court therefore lacks jurisdiction over the 2017 overpayment. Doc. 38 at 8 (citing Doc. 19-1 at 12-13). Van Hoey fails to address the requested discovery in the context of the government's motion to dismiss, and has not otherwise shown that the discovery is essential to oppose the motion.

C. Alleged Discrepancies in Forms 4340.

Van Hoey claims that she has "observed some very troubling discrepancies, changes, re-wording, deletions, additions, and inconsistencies in . . . Forms 4340 for tax years 2004, 2005, and 2007," but she does not describe the purported discrepancies. Doc. 32 ¶ 6. She seeks to determine "what changes were made, when, and by whom[,]" but does not explain why the information sought is necessary to respond to the government's motion. Id. The information Van Hoey seeks is "'the object of mere speculation,' which is insufficient to satisfy [Rule 56(d)]." Stein, 906 F.3d at 833 (quoting Ohno v. Yasuma, 723 F.3d 984, 1013 n.29 (9th Cir. 2013)); see Margolis v. Ryan, 140 F.3d 850, 854 (9th Cir. 1998) (finding a continuance for discovery unwarranted where the plaintiff's affidavit was "based on nothing more than wild speculation").

Van Hoey further asserts that the Forms 4340 "can be changed, at will, or on instruction, by IRS employees[.]" Doc. 32 ¶ 7. This Circuit has held that such forms "are highly probative, and are sufficient, in the absence of contrary evidence, to establish that . . . notices and assessments were properly made." United States v. Zolla, 724 F.2d808, 810 (9th Cir. 1984); see Hughes v. United States, 953 F.2d 531, 535 (9th Cir. 1992) ("Official certificates, such as Form 4340, can constitute proof of the fact that the assessments actually were made.") (citing Zolla). Van Hoey's conclusory assertion that the Forms 4340 are "untrustworthy and self-serving" is not...