United States District Court, N.D. California, San Jose Division
ORDER DENYING PLAINTIFF'S MOTION “UNDER
RULE 59 TO ALTER THE JUDGMENT AND FOR NEW TRIAL” Re:
Dkt. No. 74
J. DAVILA United States District Judge
Interior Glass Systems, Inc. (“Interior Glass”)
brings the instant motion “under Rule 59 to alter the
judgment and for new trial” (Dkt. No. 74) after the
court entered a judgment partially in its favor within this
action for recovery of tax penalties. Defendant United States
of America (the “Government”) opposes the
jurisdiction arises pursuant to 28 U.S.C. § 1346. The
court has carefully considered the parties' pleadings and
the record in conjunction with the arguments made at the
hearing on March 23, 2017. Because Interior Glass has not
presented a viable basis for post-judgment relief, its motion
will be denied for the reasons that follow.
court does not repeat the extensive factual recitation
contained in the summary judgment order (Dkt. No. 70), but
mentions some basic background information for context.
Glass is a glass-installation company located in San Jose,
and is owned by Mike Yates. In 2012, the Internal Revenue
Service (“IRS”) imposed a $40, 000 penalty on
Interior Glass for failing to disclose its participation in
two programs involving tax deductions of life insurance
premiums: the Insured Security Program (“ISP”)
and the group term life insurance plan (“GTLP”)
offered by the Association for Small, Closely-Held Business
Enterprises. Both of those programs were marketed to Interior
Glass by the same individual, Lawrence Cronin.
Glass participated in the ISP in 2008 and in the GTLP in
2009, 2010 and 2011. The IRS imposed a $10, 000 penalty under
26 U.S.C. § 6707A for each of those tax years because it
considered the ISP and the GTLP as “listed
transactions” subject to Notice 2007-83. In relevant
part, Notice 2007-83 targets “certain trust
arrangements claiming to be welfare benefit funds and
involving cash value life insurance policies” which
were “being promoted to and used by taxpayers to
improperly claim federal income and employment tax
benefits.” Notice 2007-83 applies to “listed
transactions, ” which are defined as “any
transaction” having four enumerated elements, or
“any transaction that is substantially similar to such
2013, Interior Glass paid the $40, 000 penalty and interest
of $430.12. It then filed an unsuccessful refund claim with
the IRS, and commenced the instant action in December 2013.
this court, Interior Glass and the Government moved for
summary judgment or partial summary judgment. Dkt. Nos. 30,
31, 36. The court held an initial hearing on the motions but
requested supplemental briefing from both sides. Dkt. Nos.
59, 61. Another motion hearing was subsequently held, after
which Interior Glass submitted an additional brief. Dkt. No.
August 12, 2016, the court issued a written order (1)
granting the Government's first motion for partial
summary judgment, (2) granting in part and denying in part
the Government's second motion for summary judgment, and
(3) granting in part and denying in part Interior Glass'
motion for summary judgment. Because the Government withdrew
opposition to a refund of the 2008 penalty, summary judgment
was granted to Plaintiff on that issue. However, the court
determined the Government was entitled summary judgment for
the remaining years' penalties based on a finding that
the GTLP was “substantially similar” to a
“listed transaction” and thereby subject to
Notice 2007-83. In accordance with these determinations, a
$10, 000 judgment was entered in favor of Interior Glass.
Dkt. No. 71.
instant motion followed.
its title as one to alter the judgment as well as one for
“new trial, ” Interior Glass' motion can only
arise under Federal Rule of Civil Procedure 59(e) because no
trial occurred in this action. Merrill v. Cty. of
Madera, 389 Fed.Appx. 613, 615 (9th Cir. 2010)
(“[A] Rule 59(a) motion for new trial is not available
on claims or causes of actions for which Plaintiffs never
received a trial.”); United States v. 1982 Sanger
24' Spectra Boat, 738 F.2d 1043, 1046 (9th Cir.
1984) (“[T]he moving party's label for its motion
is not controlling . . . . Rather, the court will construe
it, however styled, to be the type proper for the relief
requested.”). The argument that Rule 59(a)(2) applies
under these circumstances is unpersuasive. See Taylor v.
Knapp, 871 F.2d 803, 805 (9th Cir. 1989) (holding that
“reconsideration of summary judgment is appropriately
brought under . . . Rule 59(e)”); see also Huerta
v. AT&T Umbrella Ben. Plan No. 1, No.
3:11-cv-01673-JCS, 2012 U.S. Dist. LEXIS 178353, at *6-7,
2012 WL 6569369 (N.D. Cal. Dec. 17, 2012) (“Because the
Court never held a trial, but rather granted summary judgment
in favor of Defendant, a request for a “new
trial” pursuant to Rule 59(a)(2) is procedurally
general, there are four basic grounds upon which a Rule 59(e)
motion may be granted: (1) if such motion is necessary to
correct manifest errors of law or fact upon which the
judgment rests; (2) if such motion is necessary to present
newly discovered or previously unavailable evidence; (3) if
such motion is necessary to prevent manifest injustice; or
(4) if the amendment is justified by an ...