Opinion
No. 77-3174.
June 26, 1980.
Henry Hill, Bronson, Bronson McKinnon, San Francisco, Cal., for petitioners-appellants.
M. Carr Ferguson, Washington, D.C., on brief; Murray S. Horwitz, Washington, D.C., argued, for respondent-appellee.
Petition to Review a Decision of the Tax Court of the United States.
This case presents a question of first impression for this court. At issue is the interpretation of the Civil Rights Attorney's Fees Awards Act of 1976 (Act), 42 U.S.C. § 1988, as it applies to a taxpayer who is the prevailing party in the Tax Court in a dispute with the Internal Revenue Service. This action involves a request for $2,500 in attorney's fees made by Steven M. Kipperman after he was the prevailing party in the Tax Court on the substantive tax issue. Kipperman contends that the Tax Court erred when it concluded that the portion of the Act authorizing awards of attorney's fees in tax cases is not applicable to a suit instituted by a taxpayer in the Tax Court. We affirm.
The facts are undisputed. In 1973, Kipperman was an equal partner in a partnership that claimed an investment tax credit on its purchase of personal property from one of its partners. The Internal Revenue Service, relying on Treasury Income Tax Regulation § 1.48-3(a)(2)(ii), asserted a deficiency against Kipperman in the amount of $182.77. Kipperman then petitioned the United States Tax Court to redetermine the deficiency. The Tax Court granted Kipperman's motion for summary judgment in a memorandum opinion relying on its previous decisions in Moradian v. Commissioner of Internal Revenue, 53 T.C. 207 (1969), and Holloman v. Commissioner of Internal Revenue, T.C. Memo 1975-309, 34 T.C.M. 1354 (1975), aff'd, 551 F.2d 987 (5th Cir. 1977). On March 28, 1977, Kipperman filed a motion for attorney's fees in the amount of $2,500. On May 18, 1977, the Tax Court entered an order and decision denying the motion.
The Civil Rights Attorney's Fees Awards Act of 1976, as amended, provides in pertinent part:
In any action or proceeding to enforce a provision of sections 1981, 1982, 1983, 1985 and 1986 of this title, title IX of Public Law 92-318, or in any civil action or proceeding, by or on behalf of the United States of America, to enforce, or charging a violation of, a provision of the United States Internal Revenue Code, or title VI of the Civil Rights Act of 1964, the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as a part of the costs.
42 U.S.C. § 1988. At issue in this case is the meaning of the phrase "any civil action or proceeding, by or on behalf of the United States." We hold that the effect of this phrase is that Kipperman must be (1) cast in the role of a defendant, (2) in a lawsuit, in order to recover attorney's fees. Therefore, Kipperman may not recover the $2,500 sought as attorney's fees.
This court has recently concluded that § 1988 requires that a taxpayer be cast in the role of a defendant before he can recover attorney's fees. Klotz v. United States, 602 F.2d 920 (9th Cir. 1979). In Klotz, while the taxpayer brought a refund suit and was initially cast in the role of a plaintiff, a counterclaim by the government cast the taxpayer in the role of a defendant. A vast majority of the courts construing § 1988 have reached the conclusion that the taxpayer must possess "defendant status." Key Buick Co. v. Commissioner of Internal Revenue, 613 F.2d 1306 (5th Cir. 1980); Alfonso v. United States, 613 F.2d 1309 (5th Cir. 1980); Jones v. United States, 613 F.2d 1311 (5th Cir. 1980); Prince v. United States, 610 F.2d 350 (5th Cir. 1980); Patzkowski v. United States, 576 F.2d 134 (8th Cir. 1978); Aparacor, Inc. v. United States, 571 F.2d 552, 215 Ct.Cl. 596 (1978); Hunter v. United States, 474 F. Supp. 763 (S.D.N.Y. 1979); Johnson v. C. I. R., 468 F. Supp. 461 (M.D.Fla. 1979); Institutional Agencies Corp. v. United States, 78-2 USTC ¶ 9723 (W.D.Mo. 1978); Monarch Cement Co. v. United States, 458 F. Supp. 384 (D.Kan. 1978); Better Beverages, Inc. v. United States, 78-2 USTC ¶ 9644 (S.D.Tex. 1978); Bryant v. United States, 456 F. Supp. 174 (E.D.Pa. 1978); Jones v. United States, 79-1 USTC ¶ 9120 (E.D.Tex. 1978); Sutton, et al. v. United States, 78-2 USTC ¶ 9485 (E.D. Tenn. 1978); Engel v. United States, 448 F. Supp. 201 (W.D.Pa. 1978); Richman v. United States, 447 F. Supp. 929 (N.D.Ill. 1978); Jacobsen v. United States, 78-1 USTC ¶ 9323 (W.D.Tex. 1978); Holcomb v. United States, 78 F.R.D. 527 (E.D.Wis. 1978); Lieb v. United States, 77-2 USTC ¶ 9752 (E.D.Okla. 1977); Schulken Brothers Paper Stock Co. v. United States, 77-2 USTC ¶ 9712 (C.D.Cal. 1977); In Re Kline, 429 F. Supp. 1025 (D.Md. 1977); United States v. Garrison Construction Co., Inc., 77-2 USTC ¶ 9705 (N.D.Ala. 1977); Haskin v. United States, 444 F. Supp. 299 (C.D.Cal. 1977); contra: In Re Slodov, 79-1 USTC ¶ 9215 (N.D.Ohio 1979); but see Levno v. United States, 440 F. Supp. 8 (D.Mont. 1977).
Only the Fifth Circuit has addressed the exact fact situation presented in this case where the taxpayer petitions the Tax Court, as opposed to paying the tax and seeking a refund in the Court of Claims or in a United States District Court. Key Buick Co., supra. We follow the Fifth Circuit and conclude that a taxpayer who petitions the Tax Court for relief is cast in the role of a plaintiff. Absent a counterclaim by the government or some other circumstance that would cast the petitioner in the role of a defendant, the taxpayer may not recover attorney's fees even if he is the prevailing party. A taxpayer may not claim that he is cast in the role of a defendant merely because the government initiated an audit of the taxpayer or filed a Notice of Deficiency. The phrase "civil action or proceeding" means litigation, Key Buick, supra; Prince v. United States, supra; Aparacor, Inc. v. United States, supra, and the government must be the moving party in that litigation. In this case, the "civil action or proceeding" was brought "by or on behalf of" Kipperman, not the government. We conclude that the Tax Court properly denied the motion for attorney's fees. We need not address the question of whether the government's position on the substantive issue was "frivolous or vexatious." Klotz v. United States, supra.
AFFIRMED.