Opinion
21-1026
09-03-2021
UNITED STATES OF AMERICA, Plaintiff - Appellee, v. KEVIN D. TEBEDO, Defendant-Appellant, and EL PASO COUNTY, COLORADO; LORETTTA J. TEBEDO, Defendants.
(D.C. No. 1:19-CV-00969-REB-KMT) (D. Colo.)
Before TYMKOVICH, Chief Judge, KELLY, and HOLMES, Circuit Judges.
ORDER AND JUDGMENT [*]
Timothy M. Tymkovich Chief Judge
This appeal involves the government's action pursuant to 26 U.S.C. §§ 7402 and 7403, and 28 U.S.C. §§ 1340 and 1345, against Kevin D. Tebedo to collect past-due taxes, penalties, and interest. After the district court granted the government's motion for summary judgment and entered judgment against Mr. Tebedo, he filed this appeal challenging the court's earlier order denying his motion to dismiss the complaint. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.
A pro se notice of appeal is considered filed on behalf of the signer and the signer's spouse unless it clearly indicates otherwise. Fed. R. App. P. 3(c)(2). Here, the notice of appeal indicates it was filed on behalf of both Mr. Tebedo and his wife, but none of the documents filed in this appeal suggest she intends to appeal, and the briefs plainly identify him as the sole appellant. Accordingly, she is not a party to the appeal. Cf. Becker v. Montgomery, 532 U.S. 757, 766 (2001) (explaining that Rule 3(c)(2) "was designed to prevent the loss of a right to appeal through inadvertent omission of a party's name when it is objectively clear that the party intended to appeal" (brackets and internal quotation marks omitted)).
BACKGROUND
This is Mr. Tebedo's second appeal to this court in his long-standing effort to avoid his tax obligations. The first appeal involved his petition to the United States Tax Court seeking a redetermination of the Commissioner of Internal Revenue's assessment of his tax deficiency for the 2007 through 2012 tax years. The day the Tax Court case was set for trial, Mr. Tebedo was outside the courtroom but refused to appear for trial after the court told his privately hired court reporter that it would rely on an official court reporter to prepare the official transcript. As a result of his failure to appear, the Tax Court dismissed Mr. Tebedo's petition for failure to prosecute, see Tax Ct. R. 149(a), and entered a decision upholding the Commissioner's assessment and determining the amount of the deficiency. Mr. Tebedo moved to vacate or revise the decision pursuant to Tax Court Rule 162, arguing that he was unfairly deprived of the opportunity to have a private reporter transcribe the proceedings. The Tax Court denied the motion.
We affirmed the Tax Court's decision, characterizing Mr. Tebedo's appeal as "frivolous." Tebedo v. Comm'r (Tebedo I), 676 Fed.Appx. 750, 751 (10th Cir. 2017). In affirming the dismissal of Mr. Tebedo's petition, we held that "any issue concerning the court reporter [was] not . . . preserved for appellate review" because he failed to appear at trial and object to the court's decision to proceed with the official reporter. Id. at 751 n.2. And because Mr. Tebedo's only contention on appeal was that the Tax Court's decision should be vacated based on the court-reporter ruling, we held he "waived any substantive complaints" about the merits decision upholding the Commissioner's assessment. Id. at 752 n.3.
The government then filed this collection action against Mr. Tebedo and his wife, seeking to reduce the assessment plus additional penalties and interest to judgment and to foreclose federal tax liens on their home in partial payment of the delinquent taxes. Mr. Tebedo, through counsel, filed a motion to dismiss (MTD) pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). He argued the district court lacked subject matter jurisdiction and the government failed to state a claim because the Tax Court decision was procured by fraud as a result of alleged discrepancies between Mr. Tebedo's hired court reporter's description of her conversation with the Tax Court judge about whether she would be permitted to transcribe the proceedings and the Tax Court's findings in its dismissal order. In particular, the MTD focused on an alleged discrepancy about whether the court merely told her she could not be the official reporter or whether it also refused to allow her to sit in the public area of the courtroom and take down a verbatim record solely for Mr. Tebedo's use. According to Mr. Tebedo, that discrepancy and the Tax Court's refusal to allow his reporter to transcribe the trial showed the court's decision in favor of the Commissioner violated his right to due process and was obtained by fraud. Based on that theory, Mr. Tebedo maintained that the Tax Court decision was void and could not be used as the basis either for the district court's jurisdiction or the government's collection action. Shortly after the government responded to the MTD and moved for Rule 11 sanctions, Mr. Tebedo's counsel moved to withdraw.
A magistrate judge denied the government's motion for sanctions, granted counsel's motion to withdraw, and issued a report and recommendation that the MTD be denied for three reasons: (1) preclusion principles barred Mr. Tebedo from relitigating his tax liability and the court-reporter issue; (2) any misunderstanding by Mr. Tebedo's hired reporter about the scope of the Tax Court's ruling did not give rise to a due process violation or establish that the Tax Court's merits decision was obtained by fraud; and (3) the validity of the Tax Court decision did not affect the district court's subject matter jurisdiction over the collection action.
Mr. Tebedo, now pro se, filed objections to the report and recommendation. The district court overruled his objections, adopted the magistrate judge's recommendation, and denied the motion to dismiss. The court concluded that claim preclusion barred Mr. Tebedo from collaterally attacking the Tax Court decision and that his "conspiracy-laced" arguments concerning the court-reporter issue were "wholly without merit." R., Vol. 1 at 236. The court also denied Mr. Tebedo's motions for reconsideration and for an evidentiary hearing, which parroted the motion to dismiss.
Following discovery, the district court granted summary judgment for the government, holding it was entitled to both a judgment for the unpaid taxes and an order enforcing its tax liens against the real property at issue. Mr. Tebedo appeals the orders denying his motion to dismiss and his motion for an evidentiary hearing, but he does not appeal the summary judgment order.
DISCUSSION
Based on the same arguments he made in the district court about alleged discrepancies between the Tax Court's findings and what his hired court reporter said about the scope of the court-reporter ruling, Mr. Tebedo maintains the district court erred by denying his MTD. The government argues that each of the reasons the magistrate judge and the district court gave for denying the MTD was sound. We conclude the court correctly denied the MTD on claim preclusion grounds and do not address the parties' other arguments.
A. Legal Standards
We review de novo a district court's denial of a motion to dismiss under either Rule 12(b)(1) or Rule 12(b)(6). Kenney v. Helix TCS, Inc., 939 F.3d 1106, 1108 (10th Cir. 2019), cert. denied, 141 S.Ct. 241 (2020). We review the decision not to hold an evidentiary hearing for abuse of discretion. United States v. Moya, 676 F.3d 1211, 1214 (10th Cir. 2012).
The doctrine of claim preclusion "prevents a party from litigating a legal claim that was or could have been the subject of a previously issued final judgment." Johnson v. Spencer, 950 F.3d 680, 693 (10th Cir. 2020) (brackets and internal quotation marks omitted). "For claim preclusion to apply, three elements must exist: (1) a final judgment on the merits in an earlier action; (2) identity of parties or privies in the two suits; and (3) identity of the cause of action in both suits." Id. (brackets and internal quotation marks omitted).
Even when these three elements are met, however, claim preclusion does not apply if the party resisting it did not have a "full and fair opportunity to litigate the claim in the prior action." Id. (internal quotation marks omitted). This exception to claim preclusion "centers on the fundamental fairness of preventing the party from relitigating an issue he has lost in a prior proceeding." Sil-Flo, Inc. v. SFHC, Inc., 917 F.2d 1507, 1521 (10th Cir. 1990). It applies "only where the requirements of due process were not afforded-where a party shows a deficiency that would undermine the fundamental fairness of the original proceedings." Lenox MacLaren Surgical Corp. v. Medtronic, Inc., 847 F.3d 1221, 1243 (10th Cir. 2017) (citation and internal quotation marks omitted). "The fairness of the prior proceeding is determined by examining any procedural limitations, the party's incentive to fully litigate the claim, and whether effective litigation was limited by the nature or relationship of the parties." Id. (internal quotation marks omitted).
Preclusion principles apply to Tax Court decisions. Comm'r v. Sunnen, 333 U.S. 591, 597-98 (1948); see also United States v. Annis, 634 F.2d 1270, 1272 (10th Cir. 1980) (holding that taxpayer whose deficiency and lien amount had been determined in prior Tax Court case was "barred by the doctrine of res judicata from relitigating his [tax] liability" in subsequent district court foreclosure proceeding).
B. Application
The record establishes that the three claim preclusion requirements are satisfied here. The Tax Court's decision determining the amount of Mr. Tebedo's tax deficiency was a decision on the merits. See Tax Ct. R. 123(d) (providing that the dismissal of a petition for failure to prosecute and an adverse decision rendered as a consequence of dismissal "operate as an adjudication on the merits"). The decision is plainly final-we affirmed it in Tebedo I, and the time for Mr. Tebedo to seek further review has passed. The parties in the two cases are the same-Mr. Tebedo and the United States. And both cases involve the same issue-Mr. Tebedo's tax liability for the 2007 to 2012 tax years.
The Commissioner, as the official charged with assessment and collection of taxes on the United States' behalf, see 26 U.S.C. § 7803(a)(2)(A), was the respondent in the Tax Court case.
Mr. Tebedo's appellate briefs do not address the preclusion issue head on, focusing instead on the merits of his argument that the Tax Court decision was procured by fraud. As in the district court, his arguments on appeal are based entirely on the alleged discrepancies between the Tax Court's findings and his hired court reporter's interpretation of the court-reporter ruling. Construing his pro se briefs liberally, see Ledbetter v. City of Topeka, 318 F.3d 1183, 1187 (10th Cir. 2003), we interpret his argument to be that claim preclusion does not apply because he did not have a full and fair opportunity to litigate his procured-by-fraud argument in the Tax Court case.
But there is no doubt that Mr. Tebedo had an opportunity to litigate the matter before the Tax Court issued its merits decision-he could have appeared for trial, raised the issue with the court directly, and sought clarification about what the court told his hired reporter and whether she could take an unofficial record of the proceedings for his use. Doing so might have obviated his procured-by-fraud argument altogether. But he chose not to appear for trial, thereby forgoing his opportunity to raise the court-reporter issue in the Tax Court at the appropriate time.
As we understand his argument, Mr. Tebedo maintains he did not have a full and fair opportunity to litigate his claim about the alleged discrepancies because he was unaware of them until after the Tax Court dismissed his petition and his hired court reporter submitted her most recent affidavit on the topic. But claim preclusion "applies to all claims arising from the same underlying transaction even where the new claims are based on newly discovered evidence, unless the evidence was either fraudulently concealed or it could not have been discovered with due diligence." Lenox MacLaren, 847 F.3d at 1244 (internal quotation marks omitted). Had Mr. Tebedo appeared for trial, he could have clarified the scope of the court-reporter ruling. Having chosen not to do so, he cannot complain now that he had no way of knowing about the alleged discrepancies and did not have an opportunity to litigate the issue.
We also understand Mr. Tebedo's argument as maintaining that claim preclusion does not apply because no court has addressed his claim on the merits. He complains that in denying his motion to vacate, the Tax Court merely relied on its findings about that issue in its earlier order dismissing his petition. He takes issue with our holding in Tebedo I that he failed to preserve the issue for review by not raising a timely objection at trial. And he says the district court in the collection action "dismissed [the claim] out-of-hand relying on [the Tax Court's order]." Aplt. Br. at 2-3. But the adjudication-on-the-merits requirement in the claim preclusion context requires that the underlying action be adjudicated on the merits, not that the specific legal issue sought to be raised in a subsequent proceeding was adjudicated on the merits. See Lucky Brand Dungarees, Inc. v. Marcel Fashions Grp., Inc., 140 S.Ct. 1589, 1594 (2020) (explaining that "claim preclusion prevents parties from raising issues that could have been raised and decided in a prior action-even if they were not actually litigated. If a later suit advances the same claim as an earlier suit between the same parties, the earlier suit's judgment prevents litigation of all grounds for, or defenses to, recovery that were previously available to the parties, regardless of whether they were asserted or determined in the prior proceeding" (internal quotation marks omitted)). And Mr. Tebedo's disagreement with the prior adverse rulings does not mean he did not have a full and fair opportunity to litigate his procured-by-fraud claim. See Sil-Flo, Inc., 917 F.2d at 1521.
It may be that Mr. Tebedo's argument is based on a conflation of claim preclusion and issue preclusion principles. "Under the doctrine of claim preclusion, a final judgment forecloses successive litigation of the very same claim, whether or not relitigation of the claim raises the same issues as the earlier suit. Issue preclusion, in contrast, bars successive litigation of an issue of fact or law actually litigated and resolved in a valid court determination essential to the prior judgment, even if the issue recurs in the context of a different claim." Taylor v. Sturgell, 553 U.S. 880, 892 (2008) (citation and internal quotation marks omitted).
Mr. Tebedo has not established that "the requirements of due process were not afforded" in the Tax Court proceeding-he has not identified any procedural limitations on his ability to raise the court-reporter issue at trial, argued that he lacked an incentive to raise a timely objection, suggested that effective litigation of the issue was limited by the nature or the parties' relationship, or otherwise shown that his failure to litigate the issue at trial was the result of "a deficiency that . . . undermine[d] the fundamental fairness of [that] proceeding[]." See Lenox MacLaren, 847 F.3d at 1243 (internal quotation marks omitted). Accordingly, the district court properly denied his MTD on claim preclusion grounds. See Annis, 634 F.2d at 1272.
We acknowledge Mr. Tebedo's assertion in his appellate briefs that a claim that a judgment was obtained by fraud may be raised "at any time, in any court" under Fed.R.Civ.P. 60(b)(3). Reply Br. at 6; see also id. at 1, 3; Opening Br. at 5. To the contrary, a Rule 60(b)(3) motion must be filed in the court that issued the challenged judgment within a year after entry of the judgment. Fed.R.Civ.P. 60(b)(3), (c)(1). Moreover, Rule 60 does not apply in the Tax Court-the court that issued the challenged court-reporter decision-and Mr. Tebedo did not seek the equivalent of Rule 60(b)(3) relief in the Tax Court. See Tax Ct. R. 1(b) (providing that the Tax Court Rules "govern the practice and procedure in all cases and proceedings before the [Tax] Court" and that when "there is no applicable rule of procedure, the Court . . . may prescribe the procedure, giving particular weight to the Federal Rules of Civil Procedure to the extent that they are suitably adaptable to govern the matter at hand"). In any event, whether Mr. Tebedo could have sought relief from the Tax Court decision under Rule 60(b)(3) is immaterial to whether the claims he raised in his MTD were barred by the doctrine of claim preclusion.
Finally, Mr. Tebedo has offered no reasoned ground on which we might conclude the district court abused its discretion either in deciding the MTD without holding a hearing or denying his post-decision motion for an evidentiary hearing.
CONCLUSION
We affirm the district court's order denying Mr. Tebedo's motion to dismiss.
[*] After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist in the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.