Opinion
No. 99-2003, C/W 99-2229, SECTION F
April 20, 2001
MINUTE ENTRY
Before the Court is the Motion of the United States of America to Vacate Stay. For the reasons that follow, the motion is granted.
The Court is familiar with the facts of this case. The petitioner, Zbigniew Emilian Mazurek, moved to quash a summons which the IRS, on behalf of the French Tax Authority, served on Bank One. The United States cross-moved for a declaration that the summons is valid and enforceable. On November 20, 2000, this Court adopted Magistrate Judge Louis Moore's Report and Recommendation in which he concluded that the government's motion for an order enforcing the IRS summons be granted and that the petitioner's motion to quash be denied.
The summons seeks all records in the bank's possession, custody, or control relative to all accounts held or controlled by or on behalf of the petitioner. The IRS issued the summons pursuant to Article 27 of the Convention Between the Government of the United States and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Tax on Income (the Treaty), which provides that the United States can obtain tax information requested by French authorities using the methods available in a United States tax case.
Thereafter, the petitioner filed a notice of appeal and requested a stay pending appeal. The Court entered an Order granting the petitioner's motion for a stay on January 16, 2001. Throughout the course of these proceedings, and particularly in support of his motion for a stay pending appeal, the petitioner has argued that the summons at issue here is unenforceable because there is no ongoing investigation of his French tax liability, maintaining that the investigation is stayed pending his appeal of the French authorities' determination of his residency status. In granting the petitioner's motion to stay, the Court recognized that the question whether the summons was properly issued pursuant to the Treaty, given the petitioner's allegations, was "a serious matter that could impact foreign relations," and as such, found that the petitioner had presented a substantial case on the merits.
In these circumstances, the Court found that the balance of equities favored imposition of a stay. Thus, the Court granted a stay under the standard enunciated in Ruiz v. Estelle, 650 F.2d 555, 565 (5th Cir. Unit A June 1981) ("[T]he movant need only present a substantial case on the merits when a serious legal question is involved and show that the balance of the equities weighs heavily in favor of granting the stay."), rather than the stricter standard of Hilton v. Braunskill, 481 U.S. 770, 776 (1987) (providing four factors for determining whether a case should be stayed pending an appeal: (1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will suffer irreparable injury absent a stay; (3) whether issuance of a stay would substantially injure the other parties; and (4) whether the public interest would be served by a stay).
The government now moves to vacate the stay because of new evidence indicating that the petitioner's appeal concerning his residency status was resolved unfavorably to him on March 15, 2000. As proof, it submits the affidavit of Carol A. Dunahoo, Director, International, Internal Revenue Service, who is authorized to act as the Competent Authority of the United States for the purpose of administering all exchange of information programs under tax treaties and exchange of information agreements.
In light of this new evidence before the Court, the Court deems it appropriate to vacate the stay. The petitioner has not attempted to refute the government's showing that the residency issue has been resolved in the French system; not only has he failed to offer evidence to the contrary, he has he not even alleged that the appeal has not been resolved. In these circumstances, this Court can no longer conclude that there is a serious question as to whether the summons was properly issued under the Treaty and that the petitioner has presented a substantial case on the merits. Therefore, a stay is now inappropriate under the standard set forth in Ruiz v. Estelle, 650 F.2d 555, 565 (5th Cir. Unit A June 1981). Likewise, a stay would be improvident under the standard of Hilton v. Braunskill, 481 U.S. 770, 776 (1987). Considering this new evidence, the petitioner has not made a strong showing of success on the merits. Furthermore, he will not be irreparably injured without a stay. In light of these considerations, and mindful of the government's interest in prompt compliance with its treaty obligations, the Court concludes that a stay is unwarranted in this case.
Although neither party raised the issue, the Court observes that it possesses subject matter jurisdiction to vacate the stay. Although the filing of a notice of appeal ordinarily divests a district court of jurisdiction, "a district court maintains jurisdiction as to matters not involved in the appeal." Farmhand, Inc. v. Anel Eng'g Indus., 693 F.2d 1140, 1145 (5th Cir. 1982). Neither party has appealed this Court's Order imposing a stay. Moreover, "[t]he district court maintains jurisdiction as to other matters, such as ordering stays or modifying injunctive relief." Id. at 1146.
Rather, he argues only that the affidavit is hearsay and thus is inadmissible. The Court finds the petitioner's argument unpersuasive. The sworn declaration of Ms. Dunahoo, the Competent Authority of the United States, is sufficiently reliable for purposes of this motion. The government's showing that the petitioner's residency appeal has been resolved is sufficient to shift the burden to the petitioner to show otherwise.
Enforcement of the summons would not moot the petitioner's appeal to the Fifth Circuit. See Church of Scientology v. United States, 506 U.S. 9, 12-13 (1992).
Accordingly,
IT IS ORDERED that the Motion of the United States of America to Vacate Stay is GRANTED. The stay entered on January 16, 2001, is vacated effective seven days from the entry of this Order.