United States Court of Appeals
For the First Circuit
No. 06-2200
ROBERT and KATHLEEN HAAG,
Plaintiffs, Appellants,
v.
UNITED STATES OF AMERICA,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
Before
Boudin, Chief Judge,
Campbell, Senior Circuit Judge,
and Howard, Circuit Judge.
Timothy J. Burke with whom Burke & Associates was on brief for
appellants.
John Schumann, Tax Division, Department of Justice, with whom
Eileen J. O'Connor, Assistant Attorney General, Michael J.
Sullivan, United States Attorney, and Johathan S. Cohen, Tax
Division, Department of Justice, were on brief for appellee.
April 3, 2007
BOUDIN, Chief Judge. In 2002, the United States filed in
the district court a tax collection action against taxpayers Robert
and Kathleen Haag, seeking to reduce to judgment federal tax
assessments against them. Federal tax liens were filed against the
Haags in November 2003. In January 2006, the district court
entered judgment against the Haags in the amount of approximately
$1.85 million.
In October 2004, while the tax collection action was
pending, the Haags brought suit in the district court against the
United States. They charged that they had been deprived of their
statutory right to a Collection Due Process ("CDP") hearing with
respect to the federal tax liens filed against them because the
Internal Revenue Service ("IRS") had allegedly failed to notify the
Haags of their right to such a hearing.1
The Internal Revenue Code requires that the IRS, within
five business days after filing notice of a federal tax lien, send
notification to the taxpayer informing him inter alia of his right
to request within thirty days a CDP hearing before the IRS, which
must be conducted by an IRS appeals officer not previously involved
with the unpaid tax. 26 U.S.C. § 6320 (2000). The aim of the
statute is to "afford taxpayers adequate notice of collection
1
The Haags' amended complaint sought damages under 26 U.S.C.
§ 7433, injunctive relief mandating a CDP hearing, and declaratory
relief. The new suit was consolidated with the government's
collection action.
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activity and a meaningful hearing before the IRS deprives them of
their property." S. Rep. No. 105-174, at 67 (1998).
Initially, the government's counsel in the district court
believed that the required notification had not been sent to the
Haags and told the district court at a scheduling conference that
the government would provide the Haags with a substitute hearing.
Thereafter, a government lawyer newly assigned to the case
discovered in his files print-outs of notification letters, one
addressed to Robert Haag, the other to Kathleen Haag, both dated
November 21, 2003.
The government moved for summary judgment before Judge
Keeton, who was then presiding over the consolidated cases. The
government affiant asserted that she had accessed the IRS's
computerized database and printed copies of the letters from
electronic data maintained by the IRS in its regular course of
business. Each electronic copy had a certified mail number that
corresponded to receipts obtained from the U.S. Postal Service
bearing Mr. Haag's signature and indicating delivery on December 4,
2003.
The Haags responded by filing a motion to compel
settlement agreement (viewing the government's earlier decision to
provide the Haags with a substitute CDP hearing as a settlement
offer accepted by the Haags) and a motion to disqualify the
Department of Justice from representing the government. The case
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was subsequently transferred to Judge Young, who granted the
government's motion for summary judgment and dismissed the Haags'
action. The Haags appeal and we affirm.
The Haags' action rested primarily on the premise that
they had not received the statutory notice. The government was
entitled to summary judgment if the record, taken in the light most
favorable to the nonmovants, showed that there is "no genuine issue
of material fact" and that "the moving party is entitled to a
judgment as a matter of law." Fed. R. Civ. Pro. 56(c). Our review
of the grant of summary judgment is de novo. Iverson v. City of
Boston, 452 F.3d 94, 98 (1st Cir. 2006).
The government's affidavits were sufficient, absent
contrary evidence, to show that notification letters were sent to
the Haags in a timely manner, which is the government's initial
burden. 26 U.S.C. § § 6320(a)(2). Indeed, the evidence of
receipts signed by Robert Haag support the conclusion that the
letters were in fact received at the Haag residence. Kathleen Haag
does not claim that such notice, if it occurred, was insufficient
as to her.
The IRS computerized records would be admissible at trial
and are a conventional method of proving correspondence under the
business records exception to the hearsay doctrine. Fed. R. Evid.
803(6); see also, e.g., United States v. Moore, 923 F.2d 910, 914-
15 (1st Cir. 1991); United States v. Hayes, 861 F.2d 1225, 1228-29
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(10th Cir. 1988). A government deponent described the operation of
the computer-generated system of sending letters; and an affiant
described the location in an IRS computer of copies of the letters
sent to the Haags with certified mail numbers matching the numbers
on the receipts signed by Robert Haag.
The Haags argue the government failed to show that the
letters were actually placed into the envelopes sent to them, but
deposition testimony of a government employee describes the
ordinary procedures, which explicitly include the mailing of the
letters in cases like the Haags'; and, absent affirmative evidence
to the contrary, the inference is that the procedure was followed
in this case and that the envelope did not arrive empty. Godfrey
v. United States, 997 F.2d 335, 338 (7th Cir. 1993).
Of course, Robert Haag could have offered an affidavit
that the envelopes did arrive empty or contained something other
than the proper notices and that might have generated a genuine
issue of fact. But he did not: he merely claimed not to remember
what was inside the envelopes. Haag's lack of memory in these
circumstances is hardly affirmative evidence of non-receipt that
might bar summary judgment for the government.
The Haags say that neither the government's affiant nor
its deponent had personal knowledge that the letters were placed in
the envelopes, but the presence of the information in the computer
system and the nature of ordinary practice were established based
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on personal knowledge, and that was enough to infer what actually
happened. The Haags suggest that other government employees would
have testified in their favor; but the suggestion is pure
speculation and does not defeat summary judgment. Iverson, 452
F.3d at 98.
The Haags say that, before the case was transferred to
Judge Young, Judge Keeton had found that the government's evidence
failed to support summary judgment, noting that the docket sheet
for a December 15, 2005, hearing that states: "REK rules that
11/21/03 letter does not provide proof of notice." In fact, the
transcript shows that Judge Keeton chose not to rule on the summary
judgment motion and instead merely permitted the Haags additional
time for discovery.
The Haags also contest the district court's denial of
their motion to enforce a supposed settlement agreement to provide
a substitute hearing; as already noted, the government counsel
unilaterally proposed the substitute hearing before discovering
that letters had been sent. There does not appear to have been any
formal agreement, but a substitute CDP hearing was held in August
2005. The Haags say it was not an adequate hearing.
The government's provision of a hearing was based on a
mistaken assumption, encouraged by the Haags' lawsuit, that the
government had not provided original notice. The Haags were not
entitled to the hearing at all and have not shown why the allegedly
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unsatisfactory hearing left them worse off than no hearing at all.
There may be situations where it would be unfair for the government
to back away from process it mistakenly offered; this is not one of
them.
Nor is there anything to the Haags' motion to disqualify
the Justice Department from representing the government. The
gravamen is the refusal of government counsel to accept the Haags'
February 2006 offer of $300,000 to resolve a government claim six
times larger. The Haags say that they were entitled to have an
"unbiased" officer consider the offer, but their claim rests on CDP
hearing requirements which do not apply to counsel litigating in
the district court.
There is one final wrinkle. While this appeal was
pending, Robert Haag filed with us a suggestion of bankruptcy (his
own). Although neither side has argued that Robert Haag's appeal
is barred by the automatic stay, 11 U.S.C. § 362 (2000), that
provision where it applies binds the court itself. Even if the
automatic stay did apply to Robert Haag's case, it would have no
impact on that of Kathleen Haag.
On its face, the automatic stay provided by
section 362(a)(1) applies only to actions "against the debtor."
The suit brought by the government in 2002 against Robert Haag
could qualify, but the district court's final judgment in that
matter was not appealed; we have before us only an appeal by the
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Haags of a suit they themselves brought, not a suit "against the
debtor."
Occasionally, a court has held that an action brought by
a debtor should be re-characterized as a further phase of a suit
against the debtor. In particular, the Ninth Circuit held, in
disagreement with three other circuits, that a debtor's de novo
action in the Tax Court to redetermine a tax deficiency should be
treated as a "continuation" of an administrative proceeding against
the debtor and so stayed.2
There is much to be said for the mechanical rule followed
by the plurality of circuits; Congress chose to stay only actions
against the debtor and not those by him even though each can have
adverse effects on the estate and other third party interests.
This case--where a looser approach has not been urged and Haag did
in fact get notice--is no occasion for a departure from the
statutory terms.
Affirmed.
2
Compare Delpit v. Comm'r, 18 F.3d 768, 770-71 (9th Cir.
1994), with Rhone-Poulenc Surfactants and Specialities, LP v.
Comm'r, 249 F.3d 175, 180 (3d Cir. 2001); Roberts v. Comm'r, 175
F.3d 889, 894-95 (11th Cir. 1999); Freeman v. Comm'r, 799 F.2d
1091, 1092-93 (5th Cir. 1986) (per curiam).
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