Justia Civil Procedure Opinion Summaries

Plaintiffs-appellants Donald Kipnis, Lawrence Kibler, Barry Mukamal and Kenneth Welt,appealedthe district court’s Federal Rule of Civil Procedure 12(b)(6) dismissal of their complaint against defendants-appellees Bayerische Hypo-Und Vereinsbank, AG and HVB U.S. Finance, Inc. (collectively, “HVB”) as barred by the applicable statutes of limitations. This appeal arose out of the parties’ participation in an income tax shelter scheme known as a Custom Adjustable Rate Debt Structure (“CARDS”) transaction. In short, Plaintiffs alleged that HVB and its co-conspirators defrauded Plaintiffs by promoting and selling CARDS for their own financial gain. Plaintiffs “paid a heavy price in damages” as a result of HVB’s wrongdoing, including “substantial fees (and interest payments)” they paid HVB and other CARDS Dealers to participate in the CARDS strategy and “hundreds of thousands of dollars in ‘clean-up’ costs” they incurred after HVB failed to advise them to amend their tax returns. Consequently, Plaintiffs sought to recover the “damages that reasonably flow” from HVB’s misconduct. These damages included fees they paid to HVB and other CARDS Dealers, attorney’s fees and accountant’s fees incurred in litigating against the IRS, back taxes and interest paid by Plaintiffs, punitive damages, treble damages, and attorney’s fees and costs incurred in the instant action. The district court rejected Plaintiffs’ argument that their claims did not accrue until November 1, 2012, because they did not sustain any damages until the tax court issued its final decision. By December 5, 2001 (plaintiffs’ mandatory repayment date) Plaintiffs had sustained part of the damages they sought to recover, including the fees they paid to HVB.The district court found Plaintiffs’ reliance on the Florida Supreme Court’s decision in "Peat, Marwick, Mitchell & Co. v. Lane," (565 So. 2d 1323 (Fla. 1990)), to be misplaced, and dismissed Plaintiffs’ complaint as time-barred. The parties agreed that Florida law controlled the sole issue in this appeal: when did Plaintiffs’ claims against HVB accrue for purposes of the statutes of limitations. It was not clear under Florida law when Plaintiffs first suffered injury, and thus when their claims against HVB accrued for purposes of the applicable statutes of limitations. Because the relevant facts were undisputed, and this appeal depended wholly on interpretations of Florida law regarding the statute of limitations, the Eleventh Circuit certified a question of Florida law to the Florida Supreme Court. View "Kipnis v. Bayerische Hypo-UND Vereinsbank, AG" on Justia Law

Edwin B. Lumpkin, Jr. appealed several Circuit Court orders dismissing three cases he had initiated challenging property-tax assessments made by the Jefferson County Board of Equalization and Adjustments. Lumpkin owned and operated Metro Mini Storage, a chain of self-storage facilities with locations throughout the Birmingham metropolitan area. In 2012, Lumpkin received notice from Jefferson County regarding the assessed value of three of his properties located in that county. Believing the assessed values of these properties to be too high, Lumpkin elected to protest their valuation, and the Board heard his arguments. Acting pro se, Lumpkin filed three appeals in the Jefferson Circuit Court (one for each of the three locations), arguing that the Board's decisions did not reflect the true market value of the properties and that a reduction in assessed value was warranted based on the evidence he had presented. Because Lumpkin's appeals are governed by section 40-3-25 and because he failed to comply with all the requirements of section 40-3-25 for perfecting his appeals, the Supreme Court concluded the trial court properly dismissed the cases. View "Lumpkin, Jr. v. Alabama" on Justia Law

The Fresno County Assessor audited the partnership regarding personal property for tax years 1994-2001, which resulted in assessment of additional taxes for farm equipment. In 2007, the partnership attempted to apply for changed assessment to cancel the assessment under Revenue and Taxation Code section 4986 on the ground that it did not own that personal property. The Assessment Appeals Board returned the applications as untimely. In 2010, the partnership sought a declaratory judgment that the subject properties did not exist and the assessments should be cancelled. The trial court dismissed on the ground that it was seeking to enjoin the collection of property taxes in violation of the California Constitution. The court concluded that the partnership was required to first pay the tax and then seek a refund. By checks in 2011-2012, the partnership paid the disputed taxes in full, with penalties and interest. The partnership’s refund claims were rejected, so it filed suit. The trial court concluded that the partnership was required to seek reduction of the assessment and that the action was barred for failure to do so. The court of appeal reversed, noting the partnership’s argument that it did not own the assessed property on the applicable dates, so that the assessments were “nullities.” View "Williams & Fickett v. Cnty. of Fresno" on Justia Law

In June 2011 the Department of Revenue assessed additional individual, sales, and corporate taxes against taxpayers Southside, Inc. d/b/a Wines, Etc. and Barry and Sarabeth Artz. They appealed a Board of Tax ruling without satisfying the statutory requirements of paying the disputed taxes under protest before appealing or posting a surety bond with their appeal. Because the chancery court lacked appellate jurisdiction to hear the appeal, the chancellor granted the Department of Revenue’s motion to dismiss. Finding no reversible error, the Supreme Court affirmed.View "Southside, Inc. d/b/a Wines, Etc. v. Mississippi Department of Revenue" on Justia Law

FFRF, a Wisconsin-based organization of atheists and agnostics, gives its co-presidents housing allowances. They paid income tax on that portion of their salaries. Neither sought to exclude this income on their tax returns and neither has claimed a refund. FFRF and the co-presidents challenged the parsonage exemption, 26 U.S.C. 107, which allows a minister to receive tax-free housing from his church, whether by giving the minister access to a church-owned residence or by giving the minister an allowance to obtain housing. Plaintiffs conceded that they lacked standing to challenge section 107(1), covering in-kind housing, but argued that they had standing to challenge section 107(2), which applies to rental allowances. The district court agreed and held that the subsection is an unconstitutional establishment of religion under the First Amendment. The Seventh Circuit vacated with instructions to dismiss. A person suffers no judicially cognizable injury merely because others receive a tax benefit that is conditioned on allegedly unconstitutional criteria, even if that person is otherwise “similarly situated” to those who receive the benefit. Only a person that has been denied such a benefit can be deemed to have suffered a cognizable injury. The plaintiffs were not denied the parsonage exemption.View "Freedom From Religion Found., Inc. v. Lew" on Justia Law

This appeal was the second appeal in a dispute between Taxpayer-appellant J. Clark Bundren, M.D. and appellees City of Tulsa and Tulsa Hills, LLC. The two issues in that case were: (1) whether Taxpayer should have been allowed to intervene in a declaratory judgment proceeding to determine the legality of certain public expenditures and financing; and (2) whether the appeal was moot because the appellees, Tulsa Industrial Authority, City of Tulsa Oklahoma, and Tulsa Hills, L.L.C. (TIA, City, and TH, respectively), obtained a declaratory judgment after Taxpayer was prohibited by the trial court from intervening. The Supreme Court denied the motion to dismiss the appeal for mootness and held that Taxpayer's claim for equitable relief presented by a motion to intervene was not made moot by the judgment rendered during the appeal. The Supreme Court affirmed the trial court's order that denied Taxpayer's motion to intervene as a qui tam plaintiff, but reversed the trial court's order denying a motion to intervene in which Taxpayer sought equitable relief. The case what then remanded for further proceedings. On remand, the trial court ordered Taxpayer to file his "Petition in Intervention" on or before August 16, 2012. On August 15, 2012, Taxpayer complied with the order by filing the petition. On September 14, 2012, the appellees each filed separate motions to dismiss, and asserted that the bondholders were necessary parties. Several months later, the trial court granted the motions to dismiss and allowed Taxpayer twenty days to file an amended petition. The court included the requirement that if Taxpayer filed an amended petition seeking to enjoin the City from making payments to the bondholders who purchased the bonds used to finance the underlying transaction, then the Taxpayer must provide notice of the amended petition to the bondholders and file proof of such notice with the court. Taxpayer filed an amended petition, and the appellees responded with separate motions to dismiss. The trial court again dismissed Taxpayer's petition on the basis that Taxpayer did not provide notice to bondholders as necessary parties to the lawsuit, and that Taxpayer did not state a claim on which relief could be granted. The trial court found that the bondholders were necessary parties to the action and if not joined, the present parties to the action would face a substantial risk of incurring multiple and potentially inconsistent obligations. The court again dismissed without prejudice the causes of action for declaratory and injunctive relief for failure to comply with the court's prior order and for failure to join all parties necessary "to a just adjudication of this matter." The court allowed Taxpayer twenty days to file an amended petition, and ordered that if Taxpayer did not amend the petition within that time, the action would be dismissed with prejudice to all the claims. Instead of amending the petition, Taxpayer filed an Application to Assume Original Jurisdiction and Petition for Writ of Prohibition and Mandamus to the Supreme Court. The trial court entered a final order of dismissal. The dispositive issue of this matter was whether Taxpayer had to include bondholders as necessary parties to this case. The Supreme Court concluded he did, and affirmed the trial court. View "Tulsa Industrial Authority v. City of Tulsa" on Justia Law

The Patient Protection and Affordable Care Act requires almost everyone to have health insurance and is enforced by a tax that most businesses must pay if they fail to provide insurance as a benefit, or that anyone not covered by an employer’s plan must pay in lieu of purchasing insurance, 26 U.S.C.4980H, 5000A. The Internal Revenue Service has stated that it will collect the tax in 2014 from uninsured persons, but not from certain businesses. Plaintiffs, a physician and an association of physicians, claimed violation of the separation of powers and the Tenth Amendment. Because they did not complain about their own taxes, the district court dismissed for lack of standing. The Seventh Circuit affirmed. Rejecting an argument that the challenged policies change demand for plaintiffs’ services, the court noted that plaintiffs “appear to believe” that insurance is free to workers--that wages do not adjust to reflect pensions, insurance, and other benefits. By the same logic, they could litigate any tax policy. In a market economy everything is connected to everything else through the price system. To allow a long, intermediated chain of effects to establish standing is to abolish the standing requirement. The Constitution’s structural features are not open to litigation by persons who do not suffer particularized injuries. Plaintiffs, who do not accept insured patients, want to reduce, not increase the number of persons who carry health insurance. Someone else would be more appropriate to argue that the IRS has not done what it should to accomplish the statute’s goal of universal coverage.View "Ass'n of Am. Physicians & Surgeons, Inc. v. Koskinen" on Justia Law

The government sued to enforce tax assessments against the Zabkas and tax liens against their property and against property of partnerships to which they had transferred assets. The district court ruled that the assessments (several million dollars) were valid and that, when the IRS made the assessments, the liens had attached to all the Zabkas’ personal property and to all their rights to property, including their ownership interests in the partnerships. The government sought appointment of a receiver. The court denied motions to reconsider calculation of the unpaid assessments, and directed the clerk to enter judgment. The order is captioned “Judgment in a civil case” and states: “Judgment is entered in favor of the Plaintiff.” The docket entry adds: “CASE TERMINATED.” The Zabkas appealed. The Zabkas filed another appeal from a subsequent order, which directed the government to propose a receiver. The judge ordered appointment of the receiver proposed by the government. The defendants appealed that order. They later appealed approval of property sales by the receiver and an order awarding interim compensation to the receiver. The Seventh Circuit concluded that it had jurisdiction only over the appeal from the appointment of the receiver and affirmed that order, which was the last order in the first proceeding and so completed that proceeding. View "United States v. Zabka" on Justia Law

Expedia (and several other hotel booking websites, collectively, "Petitioners") has been subject to approximately 80 underlying lawsuits by states, counties, and municipalities (collectively, taxing authorities) for purportedly failing to collect the right amount of local occupancy taxes from its hotel customers. Expedia tendered most of the suits to its insurer, Zurich, although some were tendered late. Zurich refused to defend Expedia on a number of grounds, including late tender and that the underlying suits may be excluded from the policies' coverage. The trial court declined to make a determination of Zurich's duty to defend Expedia, instead ordering discovery that Expedia claimed was prejudicial to the underlying actions. Petitioners sought adjudication of their summary judgment motion concerning their respective insurers' duty to defend them in cases brought by local taxing authorities. They further requested a stay of discovery in the coverage action that could prejudice them in the underlying litigation. Upon review of the matter, the Washington Supreme Court held that the trial court erred by delaying adjudication of Zurich's duty to defend Expedia. Accordingly, the Court vacated the trial court's order. The case was remanded to the trial court to determine Zurich's duty to defend Expedia in each of the 54 underlying cases subject to Expedia's motion. The trial court was furthermore ordered to stay discovery in the coverage action until it could make a factual determination as to which parts of discovery are potentially prejudicial to Expedia in the underlying actions. View "Expedia, Inc. v. Steadfast Ins. Co." on Justia Law

Andrie Inc. brought an action in the Court of Claims, seeking a refund of use taxes it had paid under protest for the years 1999 through 2006 after an audit by the Department of Treasury determined that Andrie had understated the taxes it owed for that period under the Use Tax Act (UTA). In order to be entitled to the exemption from the use tax, a taxpayer must show that the sales tax was both due and paid on the sale of that tangible personal property. Because Andrie did not submit any evidence that sales tax had been paid, Andrie was not entitled to the use tax exemption. The Court of Appeals judgment was reversed to the extent it held that the use tax could never be levied on property if the purchase of that property was subject to sales tax. View "Andrie, Inc. v. Dept. of Tresasury" on Justia Law