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United States v. Mooney

United States District Court, D. Minnesota

April 19, 2018

United States of America, Plaintiff,
v.
William J. Mooney, et al., Defendants.

          REPORT AND RECOMMENDATION

          Leo I. Brisbois, United States Magistrate Judge.

         This matter comes before the undersigned United States Magistrate Judge upon Plaintiff's Motion for Summary Judgment, [Docket No. 119], and upon referral from the Honorable Susan Richard Nelson. (Order of Referral [Docket No. 126]). A hearing was held on March 15, 2018, after which the motion was taken under advisement. [Docket No. 145].

         For the reasons discussed herein, the Court recommends that Plaintiff's Motion for Summary Judgment, [Docket No. 119], be GRANTED as set forth below.

         I. Introduction

         On July 28, 2016, Plaintiff the United States of America initiated the present action by filing its Complaint. (Compl. [Docket No. 1]). Plaintiff's Complaint seeks to “reduce federal tax and penalty assessments to judgment and enforce federal tax liens on property located in this district.” (Id.).

         The facts underlying the present case have been set forth by this Court many times, and those facts will not be repeated here. (See, Orders [Docket Nos. 36, 47]; Report and Recommendations [Docket Nos. 74, 112]). The facts are recounted herein only to the extent necessary for the present motion.

         II. Standard of Review

         Summary judgment is appropriate when the evidence demonstrates that there is no genuine issue of material fact such that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Smutka v. City of Hutchinson, 451 F.3d 522, 526 (8th Cir. 2006). A disputed fact is “material” if it might affect the outcome of the case, and a factual dispute is “genuine” if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         The moving party bears the burden of bringing forward sufficient admissible evidence to establish that there are no genuine issues of material fact and that the movant is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The evidence must be viewed in the light most favorable to the nonmoving party, and the nonmoving party must be given the benefit of all reasonable inferences to be drawn from the underlying facts in the record. Mirax Chem. Prods. Corp. v. First Interstate Commercial Corp., 950 F.2d 566, 569 (8th Cir. 1991). However, the “facts must be viewed in the light most favorable to the nonmoving party only if there is a ‘genuine' dispute as to those facts.” Scott v. Harris, 550 U.S. 372, 380 (2007) (emphasis added).

         While the burden of demonstrating the absence of any genuine issue of material fact rests on the moving party, the nonmoving party may not rest on mere allegations or denials in their pleadings; rather, the non-moving party must set forth specific admissible evidence-based facts showing the existence of a genuine issue. Forrest v. Kraft Foods, Inc., 285 F.3d 688, 691 (8th Cir. 2002). If the moving party satisfies its burden, Rule 56(e) requires the non-moving party to respond by submitting admissible evidentiary materials that designate “specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); United of Omaha Life Ins. Co. v. Honea, 458 F.3d 788, 791 (8th Cir. 2006) (quoting Fed.R.Civ.P. 56(e)). “Naked assertions, unsubstantiated by the record, ” made in rebuttal do not amount to sufficient evidence to preclude summary judgment. Dutton v. University Healthcare Sys., L.L.C., 136 Fed. App'x 596 (5th Cir. 2005) (unpublished decision); see also, Simms v. McDowell, No. 4:08cv-60-M, 2009 WL 3160353, at *5 (W.D.Ky. Sept. 25, 2009) (holding that speculation that someone lied in an affidavit is “insufficient to defeat a motion for summary judgment.”). “A properly supported motion for summary judgment is not defeated by self-serving affidavits.” Frevert v. Ford Motor Co., 614 F.3d 466, 473 (8th Cir. 2010) (quoting Bacon v. Hennepin Cty. Med. Ctr., 550 F.3d 711, 716 (8th Cir. 2008)). “Rather, the plaintiff must substantiate allegations with sufficient probative evidence that would permit a finding in the plaintiff's favor.” Id. at 473-74. A plaintiff may not merely point to unsupported self-serving allegations, but must substantiate allegations with sufficient probative evidence that would permit a finding in the plaintiff's favor. Wilson v. Int'l Bus. Mach. Corp., 62 F.3d 237, 241 (8th Cir. 1995); Smith v. International Paper Co., 523 F.3d 845, 848 (8th Cir. 2008).

         Further, the court is not bound to blindly adopt a non-moving party's version of the facts. “When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for the purpose of ruling on a motion for summary judgment.” Scott, 550 U.S. at 380. “If the moving party supports the motion with evidence, the opposing party must rebut it or the court can consider the fact undisputed.” Irish v. U.S. Dept. of Justice, Civ. No. 11-2703 (MJD/JJK), 2013 WL 451314, at *2 (D. Minn. Jan. 3, 2013) (citing Fed.R.Civ.P. 56(e)(2)), adopted by, 2013 WL 452576, rev'd on other grounds, 564 Fed. App'x 259 (8th Cir. 2014).

         The movant is entitled to summary judgment where the nonmoving party has failed “to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp., 477 U.S. at 322. No. genuine issue of fact exists in such a case because “a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.” Id. at 323. “The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.” Anderson, 477 U.S. at 252; Davidson & Associates v. Jung, 422 F.3d 630, 638 (8th Cir. 2005). “Mere allegations, unsupported by specific facts or evidence beyond the nonmoving party's own conclusions, are insufficient to withstand a motion for summary judgment.” Thomas v. Corwin, 483 F.3d 516, 526-27 (8th Cir. 2007). If the nonmoving party relies on conclusory allegations, and fails to present evidence supporting a necessary element of a claim, then that claim cannot survive summary judgment. Beyer v. Firstar Bank, N.A., 447 F.3d 1106, 1108 (8th Cir. 2006).

         “Although pro se pleadings are to be construed liberally, pro se litigants are not excused from failing to comply with substantive and procedural law.” Burgs v. Sissel, 745 F.2d 526, 528 (8th Cir. 1984); see, Quam v. Minnehaha Cty. Jail, 821 F.2d 522, 522 (8th Cir. 1987).

         III. PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT. [DOCKET NO. 119].

         The United States' present motion seeks an Order of this Court entering summary judgment in its favor on all raised claims. (Mot. for Summary Judgment [Docket No. 119]). Specifically, the United States seeks to have the tax liens assessed against Defendants reduced to judgment, a finding that the United States has valid and subsisting liens against Defendants' property, and an Order directing the Defendants' property be sold.

         “Tax assessments made by the IRS are presumed correct, and the taxpayer bears the burden of proving, by a preponderance of the evidence, that the assessment is erroneous.” N.S. State Univ. v. United States, 255 F.3d 599, 603 (8th Cir. 2001). In the present case, the United States in support of its Motion submitted assessments in the form of the sworn declarations of IRS Revenue Officers Richard Wallin and Shawn Kennedy, as well as, Certifications of Assessments and Payments which provide a transactional history of the relevant tax years. Certificates of Assessment and Payments, such as those submitted in the present case, are assessments that have long enjoyed the presumption of correctness by the Courts. See, e.g., United States v. Hanson, No. 3-cv-6562 (ADM/JSM), 2005 WL 3116099, at *2 (D. Minn. Apr. 21, 2005) (citing United States v. Gerads, 999 F.2d 1255, 1256 (8th Cir. 1993)).

         Defendants have failed to proffer any admissible evidence to rebut the assessments presented by the United States in the present case. As discussed more fully below, in response to the United States' Motion for Summary Judgment, Defendants have only offered meaningless and routinely rejected tax protestor documents. (See, [Docket Nos. 128-130, 132-134, 140, 141, 144]). Although the assertions in those documents have been repeatedly dismissed by the Court, at the March 15, 2018, motions hearing on the present motion, Defendants relied on the documents they had submitted; argued that the Court should recognize their right to “subrogation”; and without specifics, argued that no one had stated a claim against the “fictional” persons named in the present action. However, Defendants have failed to present any admissible evidence in an attempt to rebut the presumption of correctness of the IRS tax assessments in the present case.

         Accordingly, the assessments proffered by the United States regarding the amount of Defendants' tax liabilities in the present case are presumed correct. See, e.g., Hanson, 2005 WL 3116099, at *2 (citing Gerads, 999 F.2d at 1256).

         However, neither this presumption nor Defendants' failure to submit any admissible evidence to rebut the United States' Motion for Summary Judgment, [Docket No. 119], means that the United States' Motion is to be granted by default. Rather, the Court must still ensure that the United States has presented the evidence demonstrating it is entitled to judgment in the present case.

         A. Defendants' Income Tax Assessments

         In 2002 and 2003, Defendants filed joint tax returns. (Richard Wallin Decl., [Docket No. 123], at ¶ 4). Those returns were subsequently audited by the IRS, and the IRS found that certain payments which had been paid into a trust in 2002 and 2003 should have been reported as income which resulted in additional taxes owed. (Id.). Subsequently, a delegate of the Secretary of Treasury made assessments against Defendants for income taxes, interest, and penalties for the 2002 and 2003 tax year which as of June 9, 2016, maintained an unpaid balance of $24, 065.46. (Certifications of Assessment and Payments, [Docket No. 108], at Gov't's Ex. 1, Gov't's Ex. 2). The IRS sent notices of the above assessments and demands for payments to Defendants. (See, Id. at Gov't's Ex. 1, Gov't's Ex. 2).

         In 2004, William Mooney did not file a federal income tax return. (Wallin Decl., [Docket No. 123], at Gov't's Ex. 35). After Mr. Mooney failed to file a tax return for the 2004 year, the IRS recreated his income and expenses for that tax year, and a delegate of the Secretary of Treasury made an assessment against Mr. Mooney for income taxes, interest, and penalties for the 2004 tax year. (Id.). Mr. Mooney was sent notice of the assessment, an explanation of how the assessment was calculated, and a demand for payment. (Id.; Certification of Assessment and Payments, [Docket No. 108], at Gov't's Ex. 3). As of June 9, 2016, Mr. Mooney had a tax liability for the 2004 tax year in the amount of $30, 546.41. (Certification of Assessment and Payments, [Docket No. 108], at Gov't's Ex. 3).

         In 2013 and 2014, Defendants again filed joint tax returns. (Richard Wallin Decl., [Docket No. 123], at ¶ 7). A review by the IRS of Defendants' 2013 and 2014 joint tax returns found additional taxes being owed based on Defendants' self-reported income. Subsequently, a delegate of the Secretary of Treasury made assessments against Defendants for income taxes, interest, and penalties for the 2013 and 2014 tax year which as of June 9, 2016, maintained an unpaid balance of $3, 138.66. (Certifications of Assessment and Payments, [Docket No. 108], at Gov't's Ex. 4, Gov't's Ex. 5). The IRS sent notices of the above assessments and demands for payments to Defendants. (See, Id. at Gov't's Ex. 4, Gov't's Ex. 5).

         As noted above, these tax assessments are presumed correct. See, e.g., N.S. State Univ., 255 F.3d at 603; Hanson, 2005 WL 3116099, at *2. And Defendants have failed to proffer any admissible evidence to rebut or dispute the assessments presented by the United States in the present case. Accordingly, the United States is entitled to summary judgment such that the federal income tax liability assessments against Defendants should be reduced to judgment.

         As of January 1, 2018, the assessments made against Defendant William Mooney, including federal income taxes, interest, and penalties, for the 2002, 2003, 2004, 2013, and 2014 tax years maintains a balance of $63, 355.21. (Kennedy Decl., [Docket No. 122], at ¶ 5). As of January 1, 2018, the assessments made against Defendant Joni Mooney, including federal income taxes, interest, and penalties, for the 2002, 2003, 2013, and 2014 tax years maintains a balance of $30, 240.11. (Kennedy Decl., [Docket No. 122], at ¶ 5).

         B. Defendants' Civil Penalty Assessments

         In 2009, Defendants filed joint tax returns for the 2004, 2005, 2006, 2007, and 2008 tax years. (Wallin Decl., [Docket No. 123], at Gov't's Exs. 30-34). Upon receipt and inspection of those tax returns, a delegate of the Secretary of the Treasury determined that the joint tax returns for the 2004, 2005, 2006, 2007, and 2008 tax years which were all filed in 2009 were each frivolous. (Wallin Decl., [Docket No. 123], at Gov't's Exs. 30-34). Accordingly, the delegate of the Secretary of the Treasury assessed a penalty for each frivolous tax return. (Wallin Decl., [Docket No. 123], at Gov't's Exs. 30-34).

         As noted above, these tax penalty assessments are presumed correct. See, e.g., N.S. State Univ., 255 F.3d at 603; Hanson, 2005 WL 3116099, at *2. And Defendants have failed to proffer any admissible evidence to rebut or dispute the penalty assessments presented by the United States in the present case. Accordingly, the United States is entitled to summary judgment such that the federal tax penalty liability assessments against Defendants should be reduced to judgment.

         As of June 9, 2016, the penalty assessment against Defendant William Mooney for filing frivolous tax returns for the 2004, 2005, 2006, 2007, and 2008 tax years was $34, 928.99. (Certifications of Assessment and Payments, [Docket No. 108], at Gov't's Exs. 6-10). The IRS sent notices of the above assessments and demands for payments to Defendant William Mooney. (See, Id. at Gov't's Exs. 6-10). As of January 1, 2018, the penalty assessment against Defendant William Mooney for ...


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