IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 1, 2009
No. 08-30964 Charles R. Fulbruge III
Clerk
UNITED STATES OF AMERICA
Plaintiff-Appellant
v.
ELLEN HUNT FLOWERS ; ELIZABETH HUNT CURNES ;
HOUSTON BUNKER HUNT ; MARY HUNT HUDDLESTON
Defendants-Appellees
Appeal from the United States District Court
for the Western District of Louisiana
Before JONES, Chief Judge, and HIGGINBOTHAM and HAYNES, Circuit
Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
The United States appeals the judgment of a federal district court granting
summary judgment to the defendants-appellees, relatives of Turner Hunt Lewis,
the disposition of whose estate forms the basis of this case. This is the second
time these parties have come before us. They are differently arranged than they
were the previous time, when another panel of this court dismissed the claim for
lack of subject matter jurisdiction.1 We will affirm the district court’s rejection
of the government’s claims.
I
This court’s earlier opinion presented the factual scenario and legal
backdrop, but we review the basics. The story begins in the late 1980s, when
Caroline Hunt and her husband Nelson filed for bankruptcy and, in light of their
inability to pay sizeable back taxes owed to the I.R.S., reached an agreement
providing, in relevant part, that any future monies inherited by Caroline would
be turned over in partial payment of her tax debt, up to the total of $90 million,
the amount of the I.R.S.’s non-dischargeable bankruptcy claim.2
Caroline was a niece of the unmarried, childless, and intestate 84-year-old
Turner Hunt Lewis, who upon his death stood to leave a significant sum to his
heirs. Taking her place among Lewis’s closest surviving relatives, Caroline
would have inherited nearly $5 million, a third of his fortune, upon his death.
However, six days before Lewis died on October 13, 2002 of the severe
pneumonia from which he had been suffering for months, two of his nephews
petitioned for interdiction, and they received an immediate, seven-day
temporary order of interdiction on October 7. They were appointed his curators.3
A hearing that would have considered extending interdiction was scheduled for
1
Lewis v. Hunt, 492 F.3d 565 (5th Cir. 2007) (dismissing claims against the United
States on jurisdictional grounds).
2
The Northern District of Texas bankruptcy court approved the arrangement on
December 18, 1989. The I.R.S. had made assessments against the Hunts for eight years of
unpaid income taxes as well as other tax-based activity; the total assessment was over $112
million.
3
Richard N. Lewis was appointed Curator, and William J. Lewis Undercurator. The
two also served as trustees of the Turner Hunt Lewis Trust, which they established as
curators.
2
October 14, but was rendered moot by Lewis’s passing the day before. During
the term of interdiction, Lewis’s curators established a trust in Lewis’s name,
transferred all of his assets into it, and, in the action here challenged by the
I.R.S., provided that upon Lewis’s death, “Any property that would have
devolved to Caroline Lewis Hunt shall vest in her descendants as if she
predeceased Turner Hunt Lewis.” The Louisiana court approved this course of
action by a judgment of homologation; the I.R.S. was not notified of any of the
proceedings.
The effect, and presumably the intent, of this course of action was to pass
the estate to family who had no such tax obligation. Its legality is challenged
here. The government has filed this federal suit claiming that the curators’
course of action was in fact contrary to Louisiana state law and that we should
protect its rights by striking down the trust provision in favor of Caroline’s
descendants and awarding Caroline the money she should have inherited, to be
remitted to the I.R.S. according to the 1989 agreement.
We confess the considerable difficulty of understanding the basis under
which this claim proceeds. In answering this question, we note what the United
States has not alleged. The United States has not argued that any party
committed tax fraud or violated any other specific internal revenue law with
relation to the Turner Hunt Lewis Trust. The United States does not argue that
Caroline or Nelson Hunt violated their agreement with the I.R.S. In essence, the
government asks that we sit as a general court of review for a seven year old
Louisiana district court trust law decision because it has the ultimate effect of
redirecting the path of funds to a path beyond the reach of the federal
government.
But the government has no claim to money that Caroline Hunt did not
inherit, and the state court judgment decided no right of the government.
3
Rather, it decided the authority of Lewis’s representatives to dispose of his
property. Had Turner Hunt Lewis omitted Caroline Hunt from his will, the
government would have had no recourse. His representatives did omit her. If
their decision was effective, the matter ends. And a solemn judgment of a
Louisiana state court with jurisdiction over the interdiction approved the
omission of Caroline Hunt and is unchallenged. We see no reasoned basis for
our authority to review that judgment and the I.R.S. offers none.
The government’s creditor relationship with the interdiction and state
court judgment raises questions of standing and failure to state a claim. These
issues are here not easily disentangled. Congress has given the I.R.S. access to
federal courts to collect taxes, and – while this case pushes the outer limits of
that license – we will reach the merits and affirm the district court’s rejection of
the government’s claim. Ultimately, the government is unable to demonstrate
any entitlement to the disputed moneys by virtue of its contract with Caroline
Hunt.
AFFIRMED.
4
HAYNES, Circuit Judge, concurring.
I generally concur with the majority’s resolution of this case. I write
separately because my reasoning differs somewhat from that of the majority.
This case presents the potential for complicit parties to create bad law.
Here, while their uncle lay ill in a hospital room, two nephews went to court and,
within the space of about a week, obtained orders that not only temporarily
preserved Lewis’s estate, but also allowed them, essentially, to write a will for
a man who arguably had not wanted to do so for himself despite his considerable
wealth and advanced age. He died too soon for full proceedings regarding his
competency to be conducted. The effect of the Louisiana proceeding was to cut
out one niece from what otherwise would have been her inheritance. Of course,
in this case, all indications are that the nephews acted with the full blessing of
Caroline, the affected niece. But not all cases will involve such harmonious
concerted action designed to avoid an unrelated party. One might view this case
differently had Caroline been surreptitiously deprived of a $5 million inheritance
right against her will by the last-minute machinations of competing heirs.
Either way, however, Louisiana law provides a remedy for the excluded
former heir apparent or, arguably, her creditor. Under article 2004 of the
Louisiana Code of Civil Procedure, a Louisiana trial court’s judgment of
homologation is subject to challenge in an action for annulment. L A. C ODE C IV.
P ROC. ART. 2004 (2009). Specifically, Louisiana law allows interested parties,
like Caroline or someone standing in her shoes, to seek annulment for up to one
year from her discovery that a judgment was secured by ill practices. Under La.
Code Civ. Proc. art. 2004, then, this case could have had a solid foundation from
which a federal court could have reviewed the judgment of the Louisiana trial
court. If it had a factual basis to do so, all the I.R.S. needed to do was bring an
action for annulment under the Louisiana statute. That action arguably could
5
have been filed in the federal district court under the broad “tax collection” grant
of subject matter jurisdiction provided by 26 U.S.C. § 7402(a). But, as noted by
the majority, the I.R.S. did not bring that case.
Instead, the I.R.S. has never raised La. Code Civ. Proc. art. 2004 as the
foundation of this suit nor has it asked this court directly to annul the judgment
of the Louisiana trial court for “ill practices” or otherwise. Instead, the I.R.S.
brought this action for declaratory relief and injunction as a collateral attack on
the homologation judgment. Louisiana law expressly prohibits annulment under
these circumstances. As discussed in the commentary to La. Code Civ. Proc. art.
2004, the Louisiana legislature has adopted the jurisprudential requirement
that actions for annulment based on ill practices may not proceed by way of
collateral attack. L A. C ODE C IV. P ROC. ART. 2004, cmt. (d); see also Russland
Enters., Inc. v. City of Gretna, 727 So. 2d 1223 (La. Ct. App. 1999) (holding La.
Code Civ. Proc. art. 2004 actions must be brought as independent, direct suits).
Instead, such an assault on a settled judgment must be brought as a direct
action with the express purpose of securing nullification. Russland, 727 So. 2d
at 1226. As such, while we could have had a reasoned basis to review the state
court’s judgment, we do not have such authority under the demand for
declaratory and injunctive relief that the I.R.S. chose to pursue.
Accordingly, while my analysis is somewhat different, I concur in the
result, and I join in affirming the judgment of the district court which dismissed
this case with prejudice.
6