Opinion
Civil Action 20-cv-03017-CNS-KLM
02-06-2023
UNITED STATES OF AMERICA, Plaintiff, v. DAVID C. BADER, Defendant.
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
KRISTEN L. MIX, MAGISTRATE JUDGE
This matter is before the Court on the United States' Motion for Summary Judgment [#50] (the “Motion”). The Motion [#50] has been referred to the undersigned pursuant to 28 U.S.C. § 636(b)(1) and D.C.COLO.LCivR 72.1. See [#51]. The Court has reviewed the Motion [#50], the Responses [#53, #54, 56, #59], the Replies [#55, #61], the entire case file, and the applicable law, and is sufficiently advised in the premises. For the reason set forth below, it is respectfully recommended that the Motion [#50] be granted.
“[#50]” is an example of the convention the Court uses to identify the docket number assigned to a specific paper by the Court's case management and electronic case filing system (CM/ECF). This convention is used throughout this Recommendation.
Mr. Bader's initial Responses [#53, #54] appear to be identical. The Court notes that these Responses were filed only after the Court issued an Order to Show Cause [#52] as to why Defendant had not filed a timely Response to the Motion [#50]. The most recent Response [#59] was filed as a result of the Court's Order [#57] of January 4, 2023, directing Mr. Bader to file a Response in compliance with District Judge Charlotte N. Sweeney's Practice Standards. Id. at 1-2.
I. Introduction
The United States commenced this action on October 7, 2020, seeking to reduce to judgment certain outstanding federal tax liabilities assessed against Defendant David C. Bader (“Mr. Bader”) pursuant to 26 U.S.C. § 7402(a). See Compl. [#1]. The instant Motion [#50] seeks summary judgment in favor of the United States and against Mr. Bader for the relief sought in the Complaint [#1]; namely, judgment against Mr. Bader for the 2004 through 2007 tax years in the amount of $735,621.31, plus statutory interest under 26 U.S.C. §§ 6621 & 6622 and 28 U.S.C. § 1961(c)(1), any other additions accruing from August 19, 2022 to the date of payment; and costs incurred in this proceeding. Motion [#50] at 8. Mr. Bader is proceeding pro se in this matter.
The Court must construe liberally the filings of a pro se litigant. See Haines v. Kerner, 404 U.S. 519, 520-521 (1972). In doing so, the Court should not be the pro se litigant's advocate, nor should the Court “supply additional factual allegations to round out a . . . complaint or construct a legal theory on a [pro se party's] behalf.” Whitney v. New Mexico, 113 F.3d 1170, (10th Cir. 1997) (citing Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991)). In addition, a pro se litigant must follow the same procedural rules that govern other litigants. Nielsen v. Price, 17 F.3d 1276, 1277 (10th Cir. 1994).
II. Material Facts
At the outset, the Court notes that even though Mr. Bader was advised on two separate occasions to file a Response admitting or denying the United States' facts in its Statement of Undisputed Facts [#50], as required by Judge Sweeney's Practice Standards, (see Order to Show Cause [#52]; Order [#57]), Mr. Bader's Responses, including his most current Response [#59], are not in compliance with those Practice Standards. Specifically, Civ. Practice 7.1D(b)(4) requires that any party opposing a motion for summary judgment “shall, in a section of the brief styled 'Response to Statement of Undisputed Material Facts,' admit or deny the movant's asserted facts[,]” and “any denial shall be accompanied by a brief factual explanation of the reason(s) for the denial and a specific reference to material in the record supporting the denial.” Id..
Mr. Bader's most recent Response [#59] stated that he “would neither admit or deny on the grounds that the United States have [sic] admitted they [sic] do not have first hand knowledge, stating the information came from third parties.” Id. at 1. According to Mr. Bader, this means the entire Motion [#50] is supported only by hearsay. Id. However, according to Judge Sweeney's Practice Standards:
The sole purpose of these procedures is to establish facts and determine which of them are in dispute. Legal argument is not permitted here and should be reserved for separate portions of the briefs.Id. Mr. Bader was thus required to admit or deny the United States facts, regardless of any legal argument, and his failure to deny any of the facts or support a denial with any evidence means that the facts must be deemed admitted. See Fed.R.Civ.P. 56(e)(2).
This assumption is appropriate because the United States supported its facts with evidence as required by Fed.R.Civ.P. 56(c)(1), which Mr. Bader did not refute in any manner by affidavit or otherwise as required by Rule 56 and Judge Sweeney's Practice Standards. While Mr. Bader questions whether the United States' documentary evidence is correct (Response [#59] at 1), he offers no facts or evidence to support such an inquiry. Mr. Bader also did not provide a “Statement of Additional Disputed Facts[,]” with each fact being supported by evidence, as required to assert additional disputed facts, meaning that there are no contrary facts on record. See Fed.R.Civ.P. 56(c); Practice Standards, Section III.E.5.
Thus, the Court relies on the undisputed facts as set forth in the Motion . In October 2020, the United States filed its Complaint [#1], seeking judgment against Mr. Bader for unpaid federal income tax assessments for the 2004, 2005, 2006, and 2007 tax years. In response to the complaint, Mr. Bader filed a series of Motions to Dismiss [#19, #21, #23], which were denied. Order [#27]. Mr. Bader eventually filed an answer in September 2021, which contained only general denials and did not set forth any specific facts or defenses to the United States' claims. See Answer [#28].
In June 2022, the United States served requests for admissions, interrogatories, and requests for production of documents on Mr. Bader. Watson Decl. [#50-3], Exs. I- K. Mr. Bader failed and refused to respond to the United States requests for admissions, interrogatories, and requests for production of documents. Bader Dep. [#50-4] at 36:2238:9.
The United States' requests for admissions included the following requests:
1. Please admit that the Certificate of Assessments and Payments (IRS Form 4340) (SSN redacted) attached hereto as Exhibit “A” for the federal income tax liabilities of David Bader for the calendar year 2004 is true, accurate, and correct.
2. Please admit that the Certificate of Assessments and Payments (IRS Form 4340) (SSN redacted) attached hereto as Exhibit “B” for the federal income tax liabilities of David Bader for the calendar year 2005 is true, accurate, and correct.
3. Please admit that the Certificate of Assessments and Payments (IRS Form 4340) (SSN redacted) attached hereto as Exhibit “C” for the federal income tax liabilities of David Bader for the calendar year 2006 is true, accurate, and correct.
4. Please admit that the Certificate of Assessments and Payments (IRS Form 4340) (SSN redacted) attached hereto as Exhibit “D” for the federal income tax liabilities of David Bader for the calendar year 2007 is true, accurate, and correct.
5. Please admit that the assessments for tax, penalties, interest and other statutory additions set forth in the table contained in Paragraph No. 9 of the United States' Complaint (ECF No. 1) accurately reflects the true and correct federal tax liabilities for David Bader for the years 2004-2007.
6. Please admit that David Bader has received regular mail delivery from the United States Postal Service at PO Box 7053, Loveland, CO 80537 at all times from January 1, 2004 to the present.
7. Please admit that on or about May 17, 2010, David Bader received a Notice of Deficiency letter from the Internal Revenue Service at his post office box with respect to his federal income tax liabilities for the calendar year ending December 31, 2004 (Copy of the Notice of Deficiency, SSN Redacted, attached as Exhibit “E”).
8. Please admit that on or about May 17, 2010, David Bader received a Notice of Deficiency letter from the Internal Revenue Service at his post office box with respect to his federal income tax liabilities for the calendar year ending December 31, 2005 (Copy of the Notice of Deficiency, SSN Redacted, attached as Exhibit “F”).
9. Please admit that on or about May 17, 2010, David Bader received a Notice of Deficiency letter from the Internal Revenue Service at his post office box with respect to his federal income tax liabilities for the calendar year ending December 31, 2006 (Copy of the Notice of Deficiency, SSN Redacted, attached as Exhibit “G”).
10. Please admit that on or about August 30, 2010, David Bader received a Notice of Deficiency letter from the Internal Revenue Service at his post office box with respect to his federal income tax liabilities for the calendar year ending December 31, 2007 (Copy of the Notice of Deficiency, SSN Redacted, attached as Exhibit “H”).
11. Please admit that David Bader has not filed a Federal Income Tax Return for the tax year 2004.
12. Please admit that David Bader has not filed a Federal Income Tax Return for the tax year 2005.
13. Please admit that David Bader has not filed a Federal Income Tax Return for the tax year 2006.
14. Please admit that David Bader has not filed a Federal Income Tax Return for the tax year 2007.See [#50-13].
Instead of meaningfully responding to the United States' requests, Mr. Bader simply repackaged the requests and mailed them back to counsel for the United States. Bader Dep. [#50-4] at 36:22-38:9. His failure to properly respond to these requests for admission means that they are deemed admitted. See Fed. R. Civ. Pro. 36(a)(3) (“A matter is admitted unless, within 30 days after being served, the party to whom the request is directed serves on the requesting party a written answer or objection addressed to the matter and signed by the party....”)
Mr. Bader earned income but failed to file federal income tax returns for the 2004 through 2007 tax years. Smith Decl. [#50-1] & 4. Based upon information provided by third parties, the IRS conducted an audit, determined the amount of tax Mr. Bader owed, and mailed a statutory notice of deficiency to Bader for each of those years. Id. ¶¶ 5-6 and Ex. A (Form 4340 for 2004); Ex. B (Form 4340 for 2005; Ex. C (Form 4340 for 2006); Ex. D (Form 4340 for 2007); Ex. E (Notice of Deficiency for 2004; Ex. F (Notice of Deficiency for 2005); Ex. G (Notice of Deficiency for 2006); Ex. H (Notice of Deficiency for 2007); Bader Dep. [#50-4] at 30:8-20; 31:12-18; 32:2-9; 32:14-19.
Despite timely notice and demand for payment of the tax assessments described above, Mr. Bader neglected, failed, or refused to make full payment of the assessed amounts to the United States. Smith Decl. [#50-1] & 7.
The total amount due for the 2004, 2005, 2006, and 2007 tax years is as follows:
Smith Decl. [#50-1] ¶¶ 8-16.
Tax Period
Type of Tax
Outstanding Balance As Of July 31, 2022
2004
1040
$305,936.42
2005
1040
$233,630.28
2006
1040
$202,999.46
2007
1040
$38,651.49
TOTAL:
$783,253.45
II. Standard of Review
The purpose of a motion for summary judgment pursuant to Fed.R.Civ.P. 56 is to assess whether trial is necessary. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Pursuant to Fed.R.Civ.P. 56(a), summary judgment should be entered if the pleadings, the discovery, any affidavits, and disclosures on file show Athat there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. An issue is genuine if the evidence is such that a reasonable jury could resolve the issue in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is material if it might affect the outcome of the case under the governing substantive law. Id.
The burden is on the movant to show the absence of a genuine issue of material fact. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670-71 (10th Cir. 1998) (citing Celotex, 477 U.S. at 323). When the movant does not bear the ultimate burden of persuasion at trial, the movant may make its prima facie demonstration [of the absence of a genuine issue of material fact] simply by pointing out to the [C]ourt a lack of evidence for the nonmovant on an essential element of the nonmovant's claim. Id. at 671. If the movant carries the initial burden of making a prima facie showing of a lack of evidence, the burden shifts to the nonmovant to put forth sufficient evidence for each essential element of his claim such that a reasonable jury could find in his favor. See Anderson, 477 U.S. at 248. The nonmovant must go beyond the allegations and denials of his pleadings and provide admissible evidence, which the Court views in the light most favorable to him. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); Panis v. Mission Hills Bank, N.A., 60 F.3d 1486, 1490 (10th Cir. 1995) (citing Celotex, 477 U.S. at 324).
Conclusory statements based merely on conjecture, speculation, or subjective belief are not competent summary judgment evidence. Bones v. Honeywell Int'l, Inc., 366 F.3d 869, 875 (10th Cir. 2004). The nonmoving party's evidence must be more than a mere reargument of [his] case or a denial of an opponent's allegations or it will be disregarded. See 10B Charles Alan Wright et al., Federal Practice and Procedure' 2738 (4th ed. 2017). Additionally, “[w]hen opposing parties tell two different stories,” one of which is “contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment.” Scott, 550 U.S. at 380.
III. Analysis
Under 26 U.S.C. § 7402(a), district courts have the authority to render judgments “as may be necessary or appropriate for the enforcement of the internal revenue laws.” To reduce an assessment to judgment, the United States “generally establishes a prima facie case when it shows a timely assessment of the tax due, supported by a minimal evidentiary foundation, at which point a presumption of correctness arises.” United States v. McMullin, 948 F.2d 1188, 1192 (10th Cir. 1991). A presumption of correctness attaches to the assessment “once some substantive evidence is introduced demonstrating that the taxpayer received unreported income.” Id. “This presumption will permit judgment in the [government's] favor unless the opposing party produces substantial evidence overcoming it. Id.
The United States can meet its burden of establishing a prima facie case through introduction of proof of the tax assessments in the form of self-authenticating Certificates of Assessments, Payments and Other Specified Matters, also known as Forms 4340. Forms 4340 “are routinely used to prove that a tax assessment has in fact been made [and] are presumptive proof of a valid assessment.” Guthrie v. Sawyer, 970 F.2d 733, 737 (10th Cir. 1992) (citations and internal quotations omitted). “If a taxpayer does not present evidence indicating to the contrary, a district court may properly rely on the forms to conclude that valid assessments were made.” Id. at 737-38.
Here, the United States has produced evidence demonstrating the validity of the income tax assessments for 2004, 2005, 2006, and 2007 against Bader, as well as the amount he owes for those assessments. The United States has produced Forms 4340 to show the underlying validity and accuracy of the assessments. Mr. Bader's argument that he “has not seen the statute that give form 4340 its merit” (Response [#59] at 1), does not offer a sufficient legal challenge to preclude summary judgment. The United States has also submitted notices of deficiency for each of the tax periods that the IRS sent to Mr. Bader, as well as “INTSTDs,” which are transcripts from the IRS that calculate the amount the taxpayer owes on a particular assessment and include in the outstanding balance interest that has accrued but has not yet been assessed by the IRS. See Reply [#59] at 2. These documents were authenticated by IRS Revenue Officer Amber M. Smith in her declaration, which she signed under the penalty of perjury. See Smith Decl., [#50-2]. Accordingly, the Court finds that the United States has met its evidentiary burden, and that it is entitled to have Mr. Bader's income tax assessments reduced to judgment.
In so finding, the Court notes that Mr. Bader has failed to raise any legitimate defense to the United States' claims. Mr. Bader's argument that the tax assessments are invalid because they are based on third party hearsay is without merit. As noted previously, Mr. Bader did not submit any facts or evidence that he contested the notices of deficiencies submitted to him every year. Moreover, as also noted previously, Forms 4340 “are presumptive proof of a valid assessment.” Guthrie v. Sawyer, 970 F.2d 733, 737 (10th Cir. 1992) (citations and internal quotations omitted). Thus, regardless of where the information in the tax Forms may have come from, the United States presented them to Mr. Bader who did not dispute them, and Mr. Bader did not present any evidence indicating that the Forms were inaccurate or invalid in any way, despite his opportunity to do so. Accordingly, this Court “may properly rely on the forms to conclude that valid assessments were made.” Id. at 737-38.
In further support of this finding, when given the opportunity to raise defenses on the merits in response to the United States' Requests for Admission, Mr. Bader did not respond but instead repackaged the requests and mailed them back to the United States. As stated above, pursuant to Fed.R.Civ.P. 36(a)(3), A[a] matter is admitted unless, within 30 days of being served, the party to whom the request is directed serves on the requesting party a written answer or objection addressed to the matter....“. Fed.R.Civ.P. 36(a)(3); De Gomez v. Adams County, No. 20-cv-01824-CMA-NYW, 2022 WL 1439113, at *5 (May 6, 2022). If a matter is admitted under the above rule, it “is conclusively established unless the court on motion permits withdrawal or amendment of the admission.” De Gomez, 2022 WL 1439113, at *5 (quoting Fed.R.Civ.P. 36(b)).
Thus, the United States' Requests for Admission, which asked that Mr. Bader admit the liabilities and amounts due on the tax assessments at issue in this matter, are deemed admitted. Thus, it is admitted that (1) Mr. Bader did not file federal income tax returns for the 2004-2007 tax years; (2) he received notices of deficiency from the IRs for the 2004-2007 tax years; (3) the Forms 4340 submitted with this Motion are valid and accurate; and (4) the assessments for tax, penalties, interest and other statutory additions set forth in the table contained in Paragraph No. 9 of the United States' Complaint (ECF No. 1) accurately reflects the true and correct federal tax liabilities for the 2004-2007 tax years. Thus, in addition to Mr. Bader's failure to raise any defense to the assessments at issue, his own admissions establish that the United States is entitled to summary judgment.
IV. Conclusion
Based upon the foregoing, IT IS HEREBY RECOMMENDED that the United States' Motion for Summary Judgment [#50] be GRANTED. In accordance therewith, IT IS RECOMMENDED that judgment enter in favor of the United States and against Defendant David Bader in the amount of amount of $735,621.31, plus statutory interest under 26 U.S.C. §§ 6621 & 6622 and 28 U.S.C. § 1961(c)(1), and any other additions accruing from August 19, 2022 to the date of payment; and costs incurred in this proceeding.
IT IS FURTHER ORDERED that pursuant to Fed.R.Civ.P. 72, the parties shall have fourteen (14) days after service of this Recommendation to serve and file any written objections in order to obtain reconsideration by the District Judge to whom this case is assigned. A party's failure to serve and file specific, written objections waives de novo review of the Recommendation by the District Judge, Fed.R.Civ.P. 72(b); Thomas v. Arn, 474 U.S. 140, 147-48 (1985), and also waives appellate review of both factual and legal questions. Makin v. Colo. Dep't of Corr., 183 F.3d 1205, 1210 (10th Cir. 1999); Talley v. Hesse, 91F.3d 1411, 1412-13 (10th Cir. 1996). A party's objections to this Recommendation must be both timely and specific to preserve an issue for de novo review by the District Court or for appellate review. United States v. One Parcel of Real Prop., 73 F.3d 1057, 1060 (10th Cir. 1996).