Messer v. Commissioner of Internal Revenue

F I L E D
United States Court of Appeals
Tenth Circuit

OCT 11 2002
UNITED STATES COURT OF APPEALS
PATRICK FISHER
TENTH CIRCUIT Clerk

ALAN R. MESSER; DRENDA L.
MESSER; ALTA HOLDINGS; ARMI
ENTERPRISES TRUST, FRED
SALISBURY, Trustee; BAKER
HOLDINGS 1; BAKER HOLDINGS
2; COFFMAN HOLDINGS;
COFFMAN 2; EMERY HOLDINGS;
HEALER TRUST, AN ASSOCIA- Nos. 00-9013, 00-9014, 00-9015,
TION; HEALER TRUST, also known 00-9016, 00-9017, 00-9018
as Healer Investments Trust; JUDSON 00-9019, 00-9020, 00-9021
HOLDINGS; MESSER 00-9022, 00-9023, 00-9024
CHIROPRACTIC CENTER, P.C.; MT. 00-9025, 00-9026, 00-9027
VIEW HOLDINGS; TERRY 00-9028, 00-9029
HOLDINGS; WEDGEWOOD (Tax Court Nos. 11882-99, 11883-99,
HOLDINGS 1; WEDGEWOOD 11884-99, 11885-99, 11886-99,
HOLDINGS 2; WISCONSIN, 11887-99, 11888-99, 11889-99,
LIMITED, 11890-99, 11891-99, 11892-99,
11893-99, 11894-99, 11895-99,
Petitioners - Appellants, 11896-99, 11897-99, 11898-99)

v.

COMMISSIONER OF INTERNAL
REVENUE,

Respondent - Appellee.
 ORDER AND JUDGMENT *

Before SEYMOUR, HENRY, and BRISCOE, Circuit Judges.

This order and judgment deals with seventeen consolidated cases

concerning redeterminations of deficiencies and penalties, all of which were

settled shortly before trial in the Tax Court. The court entered stipulated

decisions in each of the seventeen cases. These decisions were final orders that

disposed of all claims of all parties. Petitioners consented to their entry, without

reserving a right to appeal them, or making them in any way conditional. The

petitioners filed no post-decision motions for a new trial or to vacate or revise any

of the decisions, as they might have done under Rules 161 and 162 of the Tax

Court Rules of Practice and Procedure.

Fourteen of the seventeen decisions gave petitioners all the relief they had

sought, thus defeating appellate jurisdiction in those cases. 1 In the remaining

*
After examining appellant’s brief and the appellate record, this panel has
determined unanimously that oral argument would not materially assist the
determination of this appeal. See Fed. R. App. P. 34(a)(2) and 10th Cir. R.
34.1(G). The case is therefore submitted without oral argument. This order and
judgment is not binding precedent, except under the doctrines of law of the case,
res judicata, or collateral estoppel. The court generally disfavors the citation of
orders and judgments; nevertheless, an order and judgment may be cited under the
terms and conditions of 10th Cir. R. 36.3.
1
Petitioners in these cases (Nos. 00-9014 through 00-9020, 00-9022, 00-
9023, and 00-9025 through 00-9029) have conceded that they “obtained [a]

-2-
three, we conclude that there is appellate jurisdiction to rule on these cases and

we affirm the stipulated decisions entered by the tax court.

“[A] decree, which appears by the record to have been rendered by consent

is always affirmed, without considering the merits of the cause.” Swift & Co. v.

United States, 276 U.S. 311, 324 (1928) (quoting Nashville, Chattanooga & St.

Louis Ry. Co. v. United States, 113 U.S. 261, 266 (1885)); see also Mock v. T.G.

& Y. Stores Co., 971 F.2d 522, 526 (10th Cir. 1992). There are three exceptions

to this general rule barring appeal of consent judgments. A party may appeal

where he can establish he did not actually consent, where he can show fraud in

the procurement, or where the court entering the judgment lacked subject matter

jurisdiction over the case. Swift, 276 U.S. at 324. None of these exceptions apply

to the cases before us.

Moreover, while one may reserve the right to appeal a consent decree,

Mock, 971 F.2d at 5275, the parties did not do so here. Rather, they settled

without expressing any reservations. As the Supreme Court has explained, a

settlement is a compromise to end the litigation.

Consent decrees are entered into by parties to a case after careful
negotiation has produced agreement on their precise terms. The
parties waive their right to litigate the issues involved in the case and
thus save themselves the time, expense, and inevitable risk of

finding in conformity with the Settlement Agreement . . . [and] do not oppose
dismissal of their respective appeals.” Aplt’s Resp. at 2, ¶ 3.

-3-
 litigation. Naturally, the agreement reached normally embodies a
compromise; in exchange for the saving of cost and elimination of
risk, the parties each give up something they might have won had
they proceeded with the litigation. Thus the decree itself cannot be
said to have a purpose; rather the parties have purposes, generally
opposed to each other, and the resultant decree embodies as much of
those opposing purposes as the respective parties have the bargaining
power and skill to achieve. For these reasons, the scope of a consent
decree must be discerned within its four corners, and not by
reference to what might satisfy the purposes of one of the parties to
it. Because the defendant has, by the decree, waived his right to
litigate the issues raised, a right guaranteed to him by the Due
Process Clause, the conditions upon which he has given that waiver
must be respected, and the instrument must be construed as it is
written, and not as it might have been written had the plaintiff
established his factual claims and legal theories in litigation.

United States v. Armour Co., 402 U.S. 673, 681-82 (1971) (emphasis added).

Notwithstanding they have settled the matter, petitioners nonetheless

contend that after entering into the consent judgments, they discovered further

information that would alter the calculation of the deficiencies owed. They argue

that it would constitute a manifest injustice to prevent them from reopening the

case to reassess these calculations. Aplt. Br. at 5. As support for this argument,

petitioners rely on cases holding that a court has discretion to consider on appeal

issues not raised in the court below. However, none of the cases cited by

petitioners involved judgments ordered by consent; they are therefore all

distinguishable from the cases at issue here. Petitioners have no right to appeal

simply because they subsequently decided they could have reached a better

outcome than the one to which they agreed.

-4-
 Accordingly, as to the fourteen cases over which we do not have

jurisdiction, we DISMISS the appeals. As to the three cases over which we do

have jurisdiction, we AFFIRM the decisions of the Tax Court.

ENTERED FOR THE COURT

Stephanie K. Seymour
Circuit Judge

-5-