United States v. Wanland

          ORDER

          KENDALL J. NEWMAN UNITED STATES MAGISTRATE JUDGE

         INTRODUCTION

         In this civil action, the United States seeks a determination that assessments of defendant Donald M. Wanland, Jr’s federal tax liabilities for certain tax years between 1996-2003 were not discharged in bankruptcy, and also seeks to reduce such tax assessments to a judgment. (ECF No.1.)^[1]

         Presently pending before the court is defendant’s “motion for summary judgment, motion for judgment, and motion to dismiss complaint.” (ECF No. 78.) The United States has opposed the motion, and defendant filed a reply brief. (ECF Nos. 82, 85.) After carefully considering the written briefing, the court’s record, and the applicable law, the court DENIES the motion.

         DISCUSSION

         Defendant’s motion purports to seek summary judgment, judgment on the pleadings, and/or dismissal of the action pursuant to Federal Rules of Civil Procedure 12(c), 16(f), 37(c), 41(b), and 56. However, when properly construed, the motion actually seeks reconsideration of prior court orders addressing two legal issues: (1) whether the United States’ complaint is barred by res judicata; and (2) whether the action should be dismissed due to the United States’ purported ongoing discovery abuses.^[2] Upon requesting reconsideration of a prior order, a party must show, inter alia, “what new or different facts or circumstances are claimed to exist which did not exist or were not shown upon such prior motion, or what other grounds exist for the motion.” E.D. Cal. L.R. 230(j). For the reasons discussed below, the court concludes that defendant has not made an adequate showing that reconsideration is warranted as to either issue. Each legal issue is addressed separately below.

         Res Judicata

         Over two years ago, in the context of defendant’s motion to dismiss the action pursuant to Federal Rule of Civil Procedure 12(b)(6), the court rejected defendant’s argument that the complaint is barred by the doctrine of res judicata. (ECF Nos. 22, 27.) The court explained that:

Defendant essentially reasons that his June 8, 2011 bankruptcy discharge included the tax liabilities at issue in this action, and that the United States is therefore collaterally estopped from raising the issue of whether or not the taxes were dischargeable in this action. That argument lacks merit, because a discharge under 11 U.S.C. § 727 “does not discharge an individual debtor from any debt-for a tax…with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax….” 11 U.S.C. § 523(a)(1)(C).

(ECF No. 22 at 6.) The court further observed that, “although the Ninth Circuit has apparently not squarely addressed the issue, other courts have persuasively held, based on an analysis of the applicable statutes and bankruptcy rules, that the United States is not required to obtain a ruling on the non-dischargeability of a tax debt pursuant to section 523(a)(1)(C) in the underlying bankruptcy case to prevent its discharge.” (Id.)

Debts listed in §§ 523(a)(2), (a)(4) and (a)(6) are automatically discharged in bankruptcy unless a creditor objects to their dischargeability by filing an adversary proceeding. Fed.R.Bankr.P. 4007 (advisory committee notes). A creditor who wishes to object to the dischargeability of a debt under §§ 523(a)(2), (a)(4) or (a)(6) must file a complaint within sixty (60) days of the first scheduled meeting of creditors. Fed.R.Bankr.P. 4007(c)…Those debts excluded from discharge not listed in §§ 523(a)(2), (a)(4) or (a)(6), including certain tax debts, are automatically excepted from discharge…As a result, a complaint to determine the dischargeability of a debt, other than a debt listed in §§ 523(a)(2), (a)(4) or (a)(6), may be filed at any time. Fed.R.Bankr.P. 4007(b).

(ECF No. 22 at 6 [quoting In re Walls, 496 B.R. 818, 825-26 (N.D. Miss. 2013) (citation omitted); see also In re Range, 48 Fed. App’x 103, at *5 & n.2 (5th Cir. 2002) (unpublished)].) The court noted that:

[T]he operative complaint alleges sufficient facts to permit the court to draw a reasonable inference that defendant willfully attempted to evade or defeat payment of the tax liabilities at issue. Accepting such factual allegations as true for purposes of a motion to dismiss under Rule 12(b)(6), it follows that these taxes would not have been automatically discharged upon issuance of the discharge under 11 U.S.C. § 727. Defendant does not contend that the bankruptcy court actually made any specific findings regarding the dischargeability of these tax liabilities as part of an adversary proceeding in the bankruptcy action. As such, at least based on the present ...