Opinion
No. 5:01-CV-407-F(2)
November 30, 2001
ORDER
Pro Se Plaintiff Warren Richard Follum initiated the instant action seeking relief from tax levies/liens imposed on his property. The tax levies/liens arise out of the plaintiff's tax deficiency for 1990, 1991, 1992, and 1993; such deficiency was the subject of actions filed in Follum v. Commissioner, No. 7975-96, 1996 WL 601854, 72 T.C.M (CCH) 1076 (October 22, 1996), aff'd 128 F.3d 118 (2nd Cir. 1997), and Follum v. United States of America, 98-1 U.S.T.C. ¶ 50,410 (W.D.N.Y. 1998).
Follum now asserts that he is entitled to relief, under 28 U.S.C. § 2410, from the tax liens/levies because the Government never provided him with Notice of Assessment and Demand for Payment, as required by 26 U.S.C. § 6303. The Government has moved to dismiss the current action, contending that it is barred by res judicata. The parties have fully briefed the motion to dismiss and it is now ripe for disposition.
Prior Litigation
Follum was assessed income tax liability for the 1990, 1991, 1992, and 1993 tax years, pursuant to defaulted statutory notices of deficiency. On April 29, 1996, the plaintiff filed a petition to the United States Tax Court (the "1996 Action"), requesting the tax court to redetermine his tax liability and to restrain the Internal Revenue Service ("IRS") from administratively collecting his taxes through tax liens or levies. As a basis for his petition, Follum argued that the IRS's notice of deficiency was defective in that it was not mailed to Follum's "last known address," as required by 26 U.S.C. § 6212. Rejecting Follum's argument, the tax court held that the IRS did satisfy the statutory notice requirements, and concluded: "Because petitioner failed to file a timely petition for redetermination, it follows that we lack authority to restrain respondent from collecting taxes for the years in question." Follum, 1996 WL 601854 at *3. In a per curiam opinion, the Second Circuit affirmed the Tax Court's decision. See 128 F.3d 118 (2nd Cir. 1997).
Subsequently, in 1998, Follum initiated a quiet title action (the "1998 Action"), under 28 U.S.C. § 2410, in the District Court for the Western District of New York. In that action, Follum contended that the IRS had improperly assessed his tax liability for 1990, 1991, 1992, and 1993. Specifically, he argued that the 1990 and 1991 tax assessments were barred by the three-year statute of limitation provided in 26 U.S.C. § 6501(a), and further claimed that the disputed assessments were null and void because notice was not properly provided, in violation of § 7605(b). Rejecting Follum's request to enjoin the Government from "proceeding with tax levy/liens against [him] for the tax years 1990, 1991, 1992, and 1993," the district court held that § 2410 did not allow a tax payer to collaterally attack the substantive validity of the underlying tax assessment that led to the lien or levy. See Follum, 98-1 U.S.T.C. ¶ 50,210 ("[W]hat plaintiff is seeking in this case is a declaration by this Court that he does not have to pay the taxes that the IRS says he owes. Such a challenge is clearly substantive . . . and therefore cannot be brought under § 2410."). Thus, the district court refused to enjoin the Government from administratively collect the plaintiff's tax liability.
The Instant Action
Follum once again comes before the courts seeking § 2410 relief from his 1990, 1991, 1992, and 1993 tax liability. In the instant action, Follum asks the court to remove the Government's tax liens/levy from his property because the IRS failed to provide proper Notice and Demand, as required by 26 U.S.C. § 6303(a). Specifically, the plaintiff contends that he did not receive § 6303 notice ("First Notice"), and that the IRS did not send the notice to his last known address. Accordingly, Follum "requests relief in denying the Commissioner her awesome power of lien and levy without judicial intervention." Plaintiff's Response to Motion to Dismiss, at 3.
Follum admits that he received § 6330 Notice of Intent to Levy ("Second Notice"). Thus, Follum is not challenging procedural irregularities in the seizure or sale of his property.
Motion to Dismiss
In its motion to dismiss, the Government argues that plaintiff's action is barred by res judicata. The court agrees.
The doctrine of res judicata, also called claim preclusion, provides that "a final judgment on the merits bars further claims by the parties or their privies on the same cause of action," Montana v. United States, 440 U.S. 147, 153 (1979), and this bar applies to "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." Brown v. Felsen, 442 U.S. 127, 131 (1979). In the instant action, the court finds that the plaintiff seeks to assert a new basis of relief from tax liability that was "previously available" to him in his prior lawsuits. Accordingly, the court finds that the doctrine of res judicata is applicable.
There are three requirements that must be satisfied before the doctrine of res judicata is applicable: (1) the parties to subsequent litigation must be the same as, or in privity to, those in the prior litigation; (2) the claims in the subsequent litigation must be the same in substance as those in the prior litigation; and (3) the prior litigation must have resulted in a final judgment on the merits. See Nevada v. United States, 463 U.S. 110, 129-130 (1983).
There can be no doubt that the first requirement is met in the instant action. Follum was the plaintiff in both prior actions and the Government was the defendant.
With respect to the substance of the instant action, the court finds that the plaintiff is seeking exactly the same relief that he attempted to obtain in the 1998 Action: § 2410 relief from the Government's administrative tax collection procedures. In the 1998 Action, Follum sought to enjoin the imposition of tax liens/levies on his property by contending that IRS's tax assessment was null and void. In the instant action, Follum reasserts that notice was deficient and requests the court to remove the tax liens/levies from his property. Any way it is sliced, the plaintiff has sought the same relief in each action: "a declaration by the Court that he does not have to pay the taxes that the IRS says he owes." Follum, 98-1 U.S.T.C. ¶ 50,410. Even assuming that the plaintiff's § 6303 defense is different from his prior defenses, Follum had the opportunity to assert such defense in the previous actions and, for whatever reason, he did not.
Finally, the court finds that the subject of the prior litigation resulted in a final judgment on the merits. In the 1998 Action, the district court concluded that Follum was entitled to no relief under § 2410 because § 2410 permits only challenges to procedural irregularities in the seizure and sale of property, not challenges to the underlying tax assessment. Here, Follum again attacks the underlying assessment. Regardless of which basis Follum asserts to attack the underlying tax assessment — i.e., violation of § 6212, 7605(b), or § 6303 — it is obvious that such a collateral attack is not permitted under § 2410, a finding upon which the district court based its decision in the 1998 Action. Thus, the plaintiff's present action is barred by res judicata.
Accordingly, the Government's Motion to Dismiss is ALLOWED. The Clerk of Court is DIRECTED to close this case and remove the matter from the court's docket.
JUDGMENT IN A CIVIL CASE
Decision by Court. This action came to trial or hearing before the Court. The issues have been tried or heard and a decision has been rendered.
IT IS ORDERED AND ADJUDGED that the Government's Motion to Dismiss is ALLOWED. The Clerk of Court is DIRECTED to close this case and remove the matter from the court's docket.