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Susan Rose, Utah Bar. No. 7985 ATTORNEY FOR THE PLAINTIFFS 9553 South Indian Ridge Drive Sandy, Utah 84092 Phone/fax (801) 545-0441 UNITED STATES COURT OF FEDERAL CLAIMS Danny C. Simons and Sally J. Simons Plaintiffs, vs. UNITED STATES OF AMERICA, Defendant. Case No. 06-115 Judge Susan Braden
PLAINTIFFS' REPLY TO THE DEFENDANTS' OPPOSITION TO THE PLAINTIFFS' MOTION TO STRIKE THE DEFENDANT'S RULE 12 MOTION TO DISMISS, _____________________________________________________________________ NOW COME THE PLAINTIFFS, by and through undersigned counsel, under RCFC 7 and Rule 12(f) to reply to the Defendants opposition to the Plaintiffs motion to strike the Defendants Rule 12 Motion to Dismiss, as based upon the memorandum of fact and law in support thereof as attached hereto.
So Signed this 5th day of June, 2006 _______________________________ Susan Rose, Utah Bar. No. 7985 Counsel for the Plaintiffs 9553 S. Indian Ridge Drive Sandy, Utah 84092 (801) 545-0441 [email protected]
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Susan Rose, Utah Bar. No. 7985 ATTORNEY FOR THE PLAINTIFFS 9553 South Indian Ridge Drive Sandy, Utah 84092 Phone/fax (801) 545-0441 UNITED STATES COURT OF FEDERAL CLAIMS Danny C. Simons and Sally J. Simons Plaintiffs, vs. UNITED STATES OF AMERICA, Defendant. Case No. 06-115 Judge Susan Braden
MEMORANDUM IN SUPPORT OF THE PLAINTIFFS' REPLY TO THE DEFENDANTS' OPPOSITION TO THE PLAINTIFFS' MOTION TO STRIKE THE DEFENDANT'S RULE 12 MOTION TO DISMISS _____________________________________________________________________
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TABLE OF CONTENTS I. The Government stipulates to the fact that there are two contracts at issue, both involving over $10,000, but falsely claims the Simons are attacking both of them (D. Brf. 6) .........................................2
II. The Governments core position is baseless and misleading and the government knows it, as it misrepresents the Plaintiffs' position to the court. ....3
III. The Simons do challenge the validity of the 2001 handwritten document the government calls a contract. ............................................................5 IV. A Consent Decree can be attacked if it is void for lack of subject matter jurisdiction. .....................................................................................5 V. The government's position as to the use of Rule12(f) and 7 is bogus as well and prohibited by judicial estoppel. ............................................................7 VI. Equitable Tolling is wholly justified here, based upon not only concealed records, but also for the false claims, baseless liens and levies, an offer in compromise signed under duress, bad faith litigation and usurpation of the District Court's authority, to successfully profit the government at the Simons expense. .9 CONCLUSION....................................................................................18 PRAYER FOR RELIEF ........................................................................19 TABLE OF AUTHORITIES Anthony v. United States, 987 F.2d 670 (10th Cir. 1992).................................16 Boling v. United States, 220 F.3d 1365, 1373 (Fed. Cir. 2000)..........................11 Bowen v. City of New York, 476 U.S. 467, 481-482 (1986).............................11 Carney v. U. S. , 462 F.2d 1142, (1972).....................................................6 Chevron U.S.A., Inc. v. United States, 923 F.2d 830, 834 (Fed. Cir. 1991)............10 Holmberg v. Armbrecht, 327 U.S. 392, 397 (1946).......................................11 Hurt v. U. S. 70 F.3d 1261 (4th Cir. 1995)...................................................16 Klamath & Modoc Tribes v. United States, 174 Ct. Cl. 483, 488 (1966)...............7
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Kurio v. U. S., 429 F. Supp. 42, 1970.STX.0000028
United States v. Lane, 303 F.2d 1, 4 (5th Cir. 1962).......................................6 U.S. Philips Corp. v. Sears Roebuck & Co., 55 F.3d 592 (Fed. Cir. 1995).............9 Woodrum v. Southern Railway Co., 750 F.2d 876, 1985.C11.41890 http://www.versuslaw.com ¶47...............................................................7 28 U.S.C. § 1346(a)(2)),
RCFC 1 RCFC 11 RCFC 12(f) RCFC 7
1 18 1,8,9 1,8,9
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U. S. Attorneys Civil Resource Manual 47 Court of Federal Claims litigation. http://www.usdoj.gov/usao/eousa/foia_reading_room/usam/title4/civ00047.htm...
(1 Corbin §86; 1 Williston §72)...................................................5
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NOW COME THE PLAINTIFFS, by and through undersigned counsel, under RCFC 7 and Rule 12(f) to reply to the Defendants opposition to the Plaintiffs motion to strike the Defendants Rule 12 Motion to Dismiss, as based upon the memorandum of fact and law as follows: As an initial matter, the most important RCFC Rule is Rule 1. All other rules are to be construed for the purposes of Rule 1 to promote a `speedy' and `just' processing of a case. If a party is able to filing into the Court that contain material that is `irrelevant' or `harrassing' or casts a party or counsel in a false light, then the pleading will result only in prolonged and unnecessary litigation that wastes the Court's limited resources. Often Motions to Strike are characterized as time wasters. However, if they stop initially a practice of placing before this Court `fantasy' legal arguments that consist of irrelevant case law not on point or false allegations unsupported by the evidence, that opposing counsel has a duty to research, and either admit or deny, then litigation is simplified and expedited tremendously. No party should be made to bare the burden of unwinding such filings to preserve the truth, a Court's duty to determine, unnecessarily. Such is merely the type of `harrassment' that the motion to strike was designed to eliminate from all further consideration. It keeps the issues simple. There simply is no excuse for the government to not know the facts when the Simons have provided over 200 pages of their administrative and Court files referenced by page to facts. Reasonable inquiry, obliged by RCFC Rule 11, becomes very simple and reasonable. All the research has been done and provided to the government. If there is a dispute, the government can identify easily the document or information or evidence that is in error. That has not been done in the government's motion to dismiss. Instead untruthful, bare allegations, with
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inappropriate law not on point, has been provided to confuse the issues and waste the Courts time, and obliterate the Simons's rights if the Court relies on it. IV. The Government stipulates to the fact that there are two contracts at issue, both involving over $10,000, but falsely claims the Simons are attacking both of them (D. Brf. 6). 1983's Contract 1. The Simons are not attacking the validity of the 1983 multiple year 1973, 1974
and 1972 package settlement agreement to resolve a dispute (P. App. pg. 28, 22), memorialized in two Tax Court decisions (P. App. pg. 12-15), based upon identical underlying IRS drafted Tax Court Rule 155 computations attached to each as mandated (P. App. pg. 16-20) that interlink all three years mathematically and legally by income averaging. 2. The government doing RCFC Rule 11 reasonable inquiry knows this, AND
knows the Simons fully paid. The Simons provided the government with all their records to show them as referenced by page numbers in the verified amended complaint. [1]
1
The Simons marshall their evidence of a contract and full payment in 1983 with : a) Expert report of CPA Bryan Bolander, current president of the Utah Association of CPA's, b) provision of the District Counsel's decision (P. app. pg. 28); c) their original return for 1974 (P. App. pg. 31); d) their letters of offer to settle all three years as a package inseparable by year( P. App. pg. 22, 25); e) their calculation showing how the $49, 546.55 that was collected one time on October 21, 1983 by Rev. Officer Dal Lawsen, and paid about Nov. 8, 1983, fully satisfied the entire three years, using Rev. Proc. 83-7 with its eight place factoring table, coming to within .07 cents of what was paid, for all taxes, penalties, and restricted interest (P. App. pg. 52), f) the Computer readouts for 1974 (P. App. pg. 100) and 1973(P. App. pg. 97-99) showing that one working day after Mr. Lawsen's obtaining Mr. Simons' agreement to pay the entire amount, the IRS closed the account with a TC 300 and zero assessment and a TC 340 restricted interest code, and Hold Codes 2 and 3 that would prevent notices from issuing (P. App. pg. 104) and the placing of the entire payment with over about $2000 in additional penalties unknown to the Simons at the time into 1973's file, leaving all three years, on the computer closed out; g) the form 872 extending the statutes of limitation until a time certain, (P. App. pg. 58), and an internal quick assessment request form
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V. The Governments core position is baseless and misleading and the government knows it, as it misrepresents the Plaintiffs' position to the court. 3. The government's assertion in the Motion to Dismiss and in its response that the
government did nothing wrong (d. mot. To dismiss. Pg. 10), and in their response to the motion to strike that the Simons did not pay a Tax Court deficiency (d. resp. brief. Pg. 6); and the statement that the Simons do not identify any conduct of the government that tricked them into allowing a deadline for filing a claim under the Tucker Act as early as 1988 (d. brf. Pg. 10) (countered by government's recognition of the Simons claims of withholding evidence and falsely claiming they owed d. brf. Pg. 12), are all bare allegations that are unfounded on any evidence whatsoever. As such, these assertions attempt to obtain this Court's reliance to eliminate and further harm, and damage the reputation of the Simons who fully paid all along, complicate the litigation beyond what is necessary and so their entire response and motion to dismiss is based on a falsehood and should be stricken without further consideration. 4. Since the government admits there was a 1983 contract, and if it was fully paid,
then the breaches of the fiduciary duty to forebear further collections should be redressed with the Simons. Significantly, not one piece of evidence on the planet exists showing the Simons did not fully pay for all three years in 1983, or the government would have produced in the last 25 years of collection activity. It is no longer a question of fact. signed by a manager, showing the assessment would be purposely after the Assessment Statute Expiration Date (P.App.pg. 5) so not only would the 1974 account be ZERO `d out, there could be no further collections on the 1974 account, standing alone h) the information that the IRS computer is incapable of posting unique settlements and netting of interest to the master file computer accurately, due to statutes programmed into it. (P. App. pg. 119-121) and the government's report Netting of Interest on Tax Overpayments and Underpayments Attached app. pg.7 showing netting of interest as in multiple year computations, or as here where claims are identified and forgiven at the same time (P. App. pg. 29), is impossible on the computer.
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5.
The Simons expressly fact by fact, document by document show a chain of
continuous breaches from 1988 through even now the current disavowal of the Simons full payment, by the IRS threatening repeatedly enforced collection actions, seizure, levy, lien, (P. App. pg. 71a-74) to make the Simons sign an offer in compromise, while demanding records the Simons did not have, but the government not only had, but copied. (P. App. pg. 68), and later had access to in litigation (P. app. pg. 63). The levies were placed on their bank accounts in 1988 (P. App. pg. 81-83) before they received the obligatory prior notice of intent to levy (P. App. pg. 80) and similarly with the initial lien in 1988 (P. app. pg. 85) . These were the basis for the 1992 quiet title action (P. App. pg. 180) file for year 1974. VI. The Simons do challenge the validity of the 2001 handwritten document the government calls a contract. 4. The Simons do challenge the handwritten 2001 document as an agreement as 1) it
was not signed by a person with delegated authority (P.App. pg. 222);[2] 2) it was `declared' a binding agreement by a District Court with absolutely no declaratory judgment authority under 28 U.S.C. 2201 and 2202 (p. App. pg. 228-230); 3) the DOJ rewrote the handwritten document redefining a key word `worldwide', to exclude some parties and issues (P. App. pg. 207), and then objected to a judgment based on the handwritten document (P.App. pg. 209), showing a lack of unequivocal acceptance and no meeting of the minds (1 Corbin §86; 1 Williston §72. ); 4) the very foundational prerequisite for a District Court's jurisdiction is a timely assessment (26 U.S.C. 6213,
2
The Government is bound to a contract compromising a tax controversy only if the contract was expressly approved by the appropriate Government officials precisely in the manner required by statute, 26 U. S. C. §7122. See, generally, United States v. Feinberg [67-1 USTC ¶9176], 372 F. 2d 352 (3d Cir. 1965), aff'd on rehearing en banc, 372 F. 2d 352, 359 (1967). 4
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6501), and here there were none [3]; 5) equitably the 1983 contract was paid, so what possible material consideration such as forebearance can the government give... none. VII. A Consent Decree can be attacked if it is void for lack of subject matter jurisdiction. 5. An Appellate Court has no more jurisdiction than the District Court. Congress
has determined only one Court in this Country is to hear contract claims involving the United States, exclusively, and that is this Court under what is known as the Tucker Act. Under the "Little Tucker Act," 28 U.S.C. § 1346(a)(2)), this Court's exclusive jurisdiction over claims against the United States for amounts exceeding $10,000 "founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages not sounding in tort." Id. And "the district courts shall not have jurisdiction of any civil action or claim against the United States founded upon any express or implied contract with the United States." Id. Congress also expressly bars District Courts from using their Declaratory Judgment powers "with respect to Federal taxes other than actions brought under section 7428 of the Internal Revenue Code of 1986." 28 U.S.C. 2201(a). 6) When more than $10,000 in damages is claimed, in a contract dispute, the Court of Federal Claims possesses exclusive jurisdiction in these cases. 28 U.S.C. § 1491. Agreements comprising tax litigation are `contracts' and contract rules apply. Here, there
Ripley v. Commissioner, 103 F.3d 332 (4th Cir.) 1996.C04.43538
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are two in question, one in 1983 (P. App. pg. 12-21) and in 2001, (P. App. pg. 130) . See, United States v. Lane, 303 F.2d 1, 4 (5th Cir. 1962). 7) The government relies on Carney v. U. S. , 462 F.2d 1142, (1972) for saying this
Court can not declare the District Court actions void. D. brief pg. 5. As the government says, "Congress has not amended the Tucker Act since the Court of Claims decision in Carney to grant this Court the "independent and substantive equity jurisdiction" which would be necessary to declare a district court judgment void. Carney, 462 F.2d at 1144." Df. Brf. Pg. 5. It did not need amendment. 8) The assumption that this Court has no equity jurisdiction is an "ancient but
inaccurate shibboleth." Quinault Allottee Ass'n v. United States, 453 F. 2d 1272, 1274 n.1 (Ct. Cl. 1972). The Court does not have the to grant specific equitable remedies, but "[t]his principle does not preclude the courts from exercising equitable powers as an incident of our general jurisdiction" Pauley Petroleum, Inc. v. United States, 591 F.2d 1308, 1315 (Ct. Cl. 1979) (citing Klamath & Modoc Tribes v. United States, 174 Ct. Cl. 483, 488 (1966)) (internal citations omitted). Plaintiffs in this case ask nothing more of this Court than the exercise of its equitable power incident to their claim for moneydamages against the federal government, a claim which lies squarely within this courts contract law jurisdiction. This is in error. In Woodrum v. Southern Railway Co., 750 F.2d 876, 1985.C11.41890 http://www.versuslaw.com ¶47, the 11th Circuit found that a District Court could not entertain a Rule 60 motion for fraud unless the Court had initial jurisdiction. ".... Rule 60(b) itself, for by its terms the Rule only preserves otherwise existing jurisdiction, but does not create it anew."
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Id. With proof of a lack of jurisdiction in the District Court, in a Rule 60 motion, the District Court could arguably be unable to rule on it, as per Woodrum's analysis. As the government notes, "When the prior judgment is attacked in a different court, "The new Court must be one having `independent and substantive equity jurisdiction" as the action is equitable in nature." Citing Carney." D. brief pg. 4. This Court, by the Little Tucker Act, has `independent and substantive' exlcusive authority to declare purported `contracts' as declared by the District Court as a basis for a judgment, valid or void. Did the government know this. Yes, it did, so the representation to the Court is to misuse this Court's resources and to waste the Plaintiffs. With harassing litigation of the type barred by Rule 11. "Although the general rule is that jurisdiction is established at the time of filing, there is precedent that a claim which is for less than $10,000 when filed but is accruing so that it will be for more than $10,000 at the time of judgment is within the exclusive jurisdiction of the Court of Federal Claims. Goble v. Marsh, 684 F.2d 12 (D.C. Cir. 1982). It is settled that a plaintiff may remain in the district court under the Tucker Act even if his damages exceed $10,000 as long as he waives all recovery in excess of $10,000. E.g., Stone v. United States, 683 F.2d 449, 451 (D.C. Cir. 1982)." U. S. Attorneys Civil Resource Manual 47 Court of Federal Claims litigation. http://www.usdoj.gov/usao/eousa/foia_reading_room/usam/title4/civ00047.htm. If this Court turns the case back to the District Court, upon motion to the District Court, it Will have to return the case to this court, or the Plaintiffs can appeal into the Federal Circuit Court. The government's position is countered by their own manual. V. The government's position as to the use of Rule12(f) and 7 is bogus as well and prohibited by judicial estoppel. 9) While the language of Rule 12(f) refers to striking pleadings, the Court has authority under the rule to strike inappropriate matter in other filings, as well. Pigford v. Veneman,
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215 F.R.D. 2, 4 n.1 (D.D.C. 2003) ("Although Rule 12(f) applies by its terms only to 'pleadings,' courts occasionally have applied the Rule to filings other than those enumerated in Rule 7(a) of the Federal Rules of Civil Procedure.") (citing Cobell v. Norton, No. 96-1285, 2003 WL 721477 (D.D.C. Mar. 3, 2003)); Larouche v. Department of the Treasury, No. 91-1655, 2000 WL 805214 (D.D.C. Mar. 21, 2000) (striking declaration that contained information that was irrelevant, speculative and redundant under Rule 12(f) and Rule 56(e)). 10) In Pigford, the Court relied on its "liberal discretion" under Rule 12(f) to strike scandalous and unsupported allegations made by plaintiffs' class counsel against a Department of Justice lawyer in a response filed in connection with a motion to reopen late claims. Id. at 4-5. The Court also found that "'the filing of a document containing such language is one form of harassment prohibited by Rule 11,'" and relied on that independent authority to strike class counsel's response to the motion to strike, in which scandalous accusations were repeated. Id. (citation omitted); see also Fed. R. Civ. P. 11(b) (attorney filing papers certifies that the papers are, inter alia, not being filed "for an improper purpose, such as to harass"). Thus, Plaintiffs' uninformed argument that Rule 12(f) does not apply to filings other than pleadings has been expressly rejected by Courts, and the Department of Justice was fully aware of this point of law. Its only conceivable purpose would be an attempt to mislead the Court. Lest this Counsel be charged with plagerism, the foregoing arguments were raised successfully by the government in the Norton v. Cobell brief they filed and were reproduced here with much of the government's own wording. Attachment pg. 14-15. http://www.usdoj.gov/civil/cases/cobell/docs/txt/12112003_reply.txt)
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"Judicial estoppel" applies when a party takes a later position that is inconsistent with a former position in the same dispute, on which the party had been successful and had prevailed based on the former position. See U.S. Philips Corp. v. Sears Roebuck & Co., 55 F.3d 592 (Fed. Cir. 1995) (party is estopped from taking an opposite procedural position in a second case involving the same patent, after being successful with the contrary position in an earlier case. This argument that the Simons could not move the Court to strike under Rules 12(f) and 7 were in bad faith, and the government knew this. VI. Equitable Tolling is wholly justified here, based upon not only concealed records, but also for the false claims, baseless liens and levies, an offer in compromise signed under duress, bad faith litigation and usurpation of the District Court's authority, to successfully profit the government at the Simons expense. 11. The government says, gee, no one gets the statutes tolled because the government withheld their records. D. br. 10-11. The statute of limitations for a claim against the United States `arises' or begins to run when 'all events have occurred to fix the Government's alleged liability, entitling the claimant to demand payment . . . .'" [4] Moreover, "[u]nder federal law governing statutes of limitation, a cause of action accrues when all events necessary to state a claim have occurred." Chevron U.S.A., Inc. v. United States, 923 F.2d 830, 834 (Fed. Cir. 1991). The final acts occurring necessitating a full statement of claim occurred when the IRS once again billed the Plaintiffs in March, 2004 for year 1974 in violation of the 2002 District Court ordered decree ( P. App. 215-216 ), for about $4100 dollars (P. App. 139-139a), and then attempted to refund about $23.17
4
Nager Elec. Co. v. United States, 177 Ct. Cl. 234, 240, 368 F.2d 847, 751 (1966), reh'g denied, 184 Ct. Cl. 390, 396 F.2d 977 (1968)); Lins v. United States, 231 Ct. Cl. 579, 582, 688 F.2d 784, 786 (1982), cert. denied, 459 U.S. 1147 (1983); Oceanic Steamship Co. v. United States, 165 Ct. Cl. 217, 225 (1964).
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(P. App. 139-139a ), March, 2004 that Plaintiffs returned due to gross error for what was owed to them. 12. Here, `all events necessary to fix the Government's liability' occurred when the District Court denied the Simons challenge to its jurisdiction on July 31, 2002 (P. App. pg. 215-216), relying on the government's assertions, and denying the Simons' late discovered new evidence, and the Dec. 2003 Tenth Cir. ruling denying relief. 13. And prior to the 2002 payment, was the 2000 disgorgement of the Simons' agency
file for year 1974, showing key documents had been concealed from the Simons and their tax professionals and the District Court. (P. App. pg. 117-118; 123-125; 126-127). The Simons action here is timely filed within six years of this date. 14. Likewise, another event, fixing the government's liability, occurred, when the DOJ replaced a debt on the IRS computer readout that expired 60 days after the March 28, 1995 final judgment, in 1995 (P. App. pg. 110, Attachment pg. 5a) when the Federal Rules of Appellate Procedure Rule 4, 60 day statute of limitations for government to file a notice of appeal of a March, 1995 judgment in favor of the Simons, ran. P. App. pg. 110-111; 193-194). It was further fixed, when DOJ attorney represented to the District Court that the DOJ had fully accepted a 2001 `handwritten' offer upon which the District Court relied. P. App. pg. 227. The record of the District Court shows the typewritten alleged `acceptance' of a `handwritten' offer (P. App. pg. 130, to pay for a `worldwide' settlement for all claims against everyone (P. app. pg. 221-222), redefined `worldwide' so as to not apply to all parties and all claims, (P. App. pg. 131, 207-208). By law, no contract could form. Corbin, Williston, supra at pg. 5.
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15. The District Court stated in regards to any 2001 alleged deal, "it was not what the Department of Justice wanted" (id. pg. 228), and understood that Jeffery Snow's signature on the handwritten offer would not bind the government (P. App. pg. 222), and saw the government's objection to any order based on the `handwritten' document (P. App. pg. 205-206b), saw the Department of Justice's typewritten rewording of the handwritten offer, narrowing the term `worldwide' dramatically (P. App. pg. 207-208), the government's objection to any judgment based on a handwritten document (P. App. pg. 209), the Simons response showing they raised their jurisdictional claims and had not preferred settlement and were merely paying as ordered, (P. App. pg. 209-213), and then the IRS' complete disregard of any alleged `agreement' or District Court's judgment, by its March, 2004 further billing of the Plaintiffs for $4100 dollars after their obedient $55,000 payment. (P. App. 139-139a) All the foregoing shows a lack of unequivocal acceptance necessary for a ` meeting of the minds'. Kurio, infra, Corbin, Williston supra. The District Court's finding that "there is no dispute that each party to this action agreed to the settlement agreement "(P. App. pg. 203-205) is simply in error. P. App. pg. 205206b compare with 219-220, and 205. 16. The question then arises as to what conditions `toll' the statutes of limitation such that a citizen may bring a claim against the government after the six year time frame. There are six circumstances that will toll the statutes of limitation: (1) when there has been fraud or concealment of information (Holmberg v. Armbrecht, 327 U.S. 392, 397 (1946)), equitable tolling occurs (P. App. pg. 68, 63, 118-119, 123-125, 126-129); (2) the continuing claims doctrine, Boling v. United States, 220 F.3d 1365, 1373 (Fed. Cir. 2000) where in each of the breaches is a new claim in a chain of events, (3) when an internal
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policy, unpublished, is illegal and claimants were not on notice to the policy as part of the cause for their legal injury (Bowen v. City of New York, 476 U.S. 467, 481-482 (1986)), here the Service Center Replacement System Phase III Implementation policy nationally, with a flip of a switch so to speak, reversed litigation freeze TC 520 (Appendix pg. 5) with closing codes of 85, as was on the Simons closed account (P.App. pg. 104) to unsuspend them from collections, which occurred Dec. 1984). This policy was not published, not in the federal register, and was worded in computereze so it was hidden as a way for the Simons to explain their account;. (4) equitable estoppel, the `laundering' of a false claim the Simons owed into a `legitmate' debt by the government's misuse of the District court's authority, so the IRS may make new claims under 26 U.S.C. 108, and claims may continue for another ten years, if not by current personnel, by later personnel; ((5) the deprivation to the Plaintiffs of any decision, order, or judgment administratively, or in District Court explaining facts and conclusions of law in an impartial tribunal ( P. App.pg. 228-130) untainted from their late produced evidence; (6) the 2004 refusal of the government to give the Simons anything other than a $23.17 refund, rejected by the Simons as in error after again billing the Simons in March, 2004 (P. App. 139-139a) in violation of any District Court's orders. 17. There is no dispute that the Simons met the prerequisites of this Court by filing a form 843, rebate of all the money owed to them by the government under `contract', not taxes. P. App. pg. 3. The IRS gave the Simons $23.17 refund, and Simons filed here for redress. P. App. pg. 139-139a, 4. Equitable Tolling Due to Fraud or Concealment of Documents
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18.
As with the Kurios, in Kurio v. U. S., 429 F. Supp. 42,
1970.STX.0000028
"The returns sought by plaintiff from the Government were material and relevant because they were the best evidence of the facts on which this issue turned. [ P. App. pgs. 9, 123] They were immediately accessible to all participating IRS and Justice Department personnel, any of whom could have determined their location by computer search in the regional Service Center or the National Computer Center and obtained them by oral request. [P. App. pg. 63, 68]. See Treas. Reg. §§ 301.6103(a)-1(e), -1(h). They were sought by plaintiff through duly ordered, established, and well understood discovery procedures [and FOIA and Privacy Act requests]. Nevertheless, they were not furnished and this increased plaintiff's burden of proving his case beyond that contemplated by the Congress and the courts. In effect, plaintiff was deprived the opportunity of satisfying his burden of proof on an important part of his case." Kurio v. U. S. , ¶39 [notes by Plaintiffs]. 19. Once the government filed its 1992 complaint,
"The Government as a litigant is, of course, subject to the rules of discovery." [citations omitted]. The Government therefore had no right to ignore plaintiff's discovery demands. {P. App. pg. 123-125]. Moreover, as representatives of the Government, all personnel connected with the litigation, including counsel, had an obligation "to be frank and fair and disclose all the facts." [citations omitted]. Kurio, ¶37 21. 20. As with Kurio, once "the mistakes were finally discovered, the Government
[and District Court] failed promptly to admit them. The resulting snarl is now before the Court for resolution." Kurio ¶ 15.
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22.
The District Counsel's decision is vital to understanding the Simons were
not `owing taxes', but consenting to payments to settle the dispute by a contract involving over $10,000. [5] 23. The CPA reviewing the agreement could understand and track through the
amounts and numbers to verify the actual agreement agreed with offers and acceptance and finally payment only- with this District Counsel's Decision, and the Original returns, and letters of offer of settlement for a `package' agreement inseparable by year, and the IRS underlying work documents that. (P. App. pg. 8-9). Here, the CPA found all the numbers and issues track through, and the IRS never mentioned interest in any of their documents, not likely to be an oversight. P. App. pg. 24. These documents also show the Simons were consenting to amounts either reported later, or not received in the year the IRS claimed, and to allowing the government to reach into a stat closed year, and consenting to a negligence penalty, for `purposes of settlement.' P. App. pg. 27-29. No evidence showed how the Simons were paying `taxes', so much as money to resolve a dispute. P. App. pg. 9-10. The CPA relied on documents concealed until 2000.
5
There is some credence to this view, as the District Counsel's decision states for 1972, ` Though the taxpayer would be able to prove that most of the $18, 460.16 in promissory notes was not received that year [1972], he is conceding the non deductibility of those notes for purposes of settlement.' (P. App. pg. 29). For 1973, the District Counsel states, " The respondent agrees to reduce the dollar amount for commissions, received by the petition in 1973 by $29, 500.00. The petition was able to show in the criminal case that $21,500.00 of this amount allegedly received in 1973 was properly reported in subsequent years. It is highly unlikely that the government could now prove that this $21,500.00 should be included in the commission income for 1973. There is also an $8000 decrease agreed to by the Appeals Officer in his Supporting Statement. In addition, the petitioner has consented to the negligence penalty under 6653(a)." (id.) For 1974, the Simons consented to a minor negligence penalty and the changes in taxes on form 886-A (P. App. pg. 17) as referenced in the District Counsel's Decision (P. App. pg. 30, is only $1647. Notably, the form 5278 as drafted by the IRS for the Tax Court's Rule 155 computation, shows it is a `settlement' computation. (P. App. pg. 17).
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25.
Revenue Officer Don Thurman had minimally the original returns and District
Counsel's decision in 1988. Revenue Officer notes on 6-18-88 "Also recd Orig. of 7412 return- 1 ½ inches thick copy & return later- Sent to RO Aide to copy." (P. App. pg. 68). On 7-11-88 the Rev. Officer notes show "Return copied- Info shows case went to tax court & District Council agreed to settle by clearance of major penalties & minor tax changes. Apparently 1972 & 1973 are closed satisfied. Appears to be no open issues on 1974". (P. App. pg. 68). Rev. Officer Thurman did not give these documents to the Simons Tax Professionals, while affirmatively asserting the Simons owed for tax year 1974, and under the duress of threats had them sign an offer in compromise. [6] 26. The Revenue Officer knew and understood that without the Simons evidence of the
IRS being in error, the Simons could not prove the IRS was in error. P. App. pg. 71a. Department of Justice Attorney Kirk Lusty who filed the 1992 complaint for collection of the year 1974, also had access to the Simons records and did not produce their original returns, any notices of assessment. P. App. pg. 63, 123, 125. And Rev. Officer Thurman notes a meeting where `Dal sd, could do easily [collections] on IMF'. (P. App. pg. 76). If
a. 8/18/88 "Warned of ECA if not resolved levy, seizure, summons". (P. Am. Complt. Ap. 70) a. 8/17/88 "Warned of ECA ...) id. b. 9/1/88 `Told him I will proceed with ECA, levy summons, etc." Id. at pg. 71a c. 9/8/88 "...Dennis Larsen chewed on my ear for a long time with all the reasons why I shouldn't take ECA on assets or summons... told him without any evidence bal due was in error I must proceed with ECA" . Id. d. 11/21/88 "Warned of possible suit or other enforcement..." Id. pg. 72) e. 1/12/89 ".... Otherwise I proceed with ECA" Id. pg. 73 f. The IRS had levied all the Simons' bank accounts on about 10/18/88 (P. Am. Complt. Ap. 81-84 without a PRIOR notice of levy issued 1/10/89 (P. Am. Complt. Ap. 80).
6
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the withheld documents did not show the government in error, then there would have been no harm in releasing them. The Simons' Due Diligence in Obtaining their Records 27.. The Simons Tax Professionals sought and had a right to their records,[7]Kurio supra. Anthony v. United States, 987 F.2d 670 (10th Cir. 1992); Hurt v. U. S. 70 F.3d 1261 (4th Cir. 1995). (the government has a duty to deal honorably with its citizens.) 29. Additionally, the Simons made numerous FOIA and Privacy Act requests. (P.
App. pg. 163-179). It is evident from the record they produced that they were misled in to believing (a) there were no extensions signed by them. Compare P. App. pg. 137-138, with 58. (b) their were no responsive records in either the Service Center or District Office (Id. pg. 167), (c) they requested their record under the wrong statute, (Id. pg. 169), (d) and were told that 26 U.S.C. 6404 expressly prohibits any taxpayer initiated requests The Simons show previous CPA at the time in 1983 and again in 1988, Dennis Larsen states by affidavit that he asked for the history of the account and never received it (P. App. pg. 118) and that he met with the Problems Resolution person and that he "received no information as to what code sections or regulations were being used for their collection effort, why there was a five year silence of no collections after payment for the settlement amount, or documents from the IRS. ... Every attempt was consciously made to provide Revenue Officer Don Thurman with information he needed. " P. App. pg. 118. The Simons letter to Rev. Officer Don Thurman likewise shows his belief that Mr. Thurman had no documents and he was trying to provide Mr. Thurman with what Mr. Thurman was demanding. (P. App. pg. 79) The Simons previous counsel, Patricia White, current dean of the Sandra Day O'Connor School of Law at Arizona State University, likewise attests by affidavit that she asked for the original and amended returns for 1972, 1973 and 1974, and written notices of assessment to no avail. "Throughout the period during which Affiant represented Mr. Simons, Affiant was never able to determine from any document which she examined what the underlying substantive tax issues were which led to the determination of deficiency assessed against the Taxpayer. " P. App. pg. 123, 125. Current counsel attests by affidavit that the original returns, proof of a late assessment for tax year 1974, District Counsel's decision was not received until after about Feb. 15, 2000 as a result of a FOIA/Privacy Act request to Special Procedures function of the IRS. (P. App. pg. 127, 128). After the box of documents where the IRS was disgorging the Simons' administrative file was received, tax experts reviewed the file, taking additional time to understand the meaning of the documents. Id.
7
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for abatement and on the Computer there was no evidence of any requests for abatement pending for 1974, (Id. pg. 171), (e) and the Problems Resolution person, Revenue Officers, DOJ attorneys, IRS offices and service centers, all failed to inform the Simons to look in Special Procedure function. (P. App. pgs. 117-118, 122-129, and163-179.) Special Procedures function was not listed on public IRS organization charts. Not only is record concealment onerous, but the Simons made claims of affirmative misrepresentations upon which they could not know their claims. 30. Only after Feb. 15, 2000 could the Simons and Tax Professionals understand
fully what documents were withheld, and that the IMF computer readout was defective, and that the certificate of assessment (required under 26 U.S.C. 6215) provided in a 1992 District Court action, P. App. pg. 182-183, a legal gateway to the Courts, begins with a 725-1983 statutorily late assessment, due to the lack of the posting of a form 872 extension TC 560 on the computer and lack of production of the form 872 under FOIA/Privacy Act or in discovery, along with the necessary and essential original returns, and district counsel's decision explaining the deal. Attachment pg. 5, 9. 31). Mr. Thurman records "Dal sd- could do on IMF easily". In other words, the
defective computer readout could be used for collections rather than the records, that Rev. Officer Thurman had, copied, dis not disclose, along with other personnel, beginning in June of 1988.(P.App.pg. 68) 32). Concealment, purposeful or negligently, also occurred by not posting key
transactions to the Simons' computer master file, thereby making it defective. Missing from the Master File are the codes for the Notice of Deficiency, TC 494, the signed extension of the statutes of limitation TC 560, the 1988 levies and liens, TC 582, such
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that Tax Professionals reviewing the Computer readout would not know precisely what was happening to the Simons administratively. (See P. App. pg. 100-109) . Attachment pg. 4-5. According to the GAO, without these codes, and corresponding Document Locator Number, the Simons could not request their production from the IRS offices. (P. App. pg. 116, 129). Notably, finally on March 1, 2002, the IRS admits that there is only one notice issuance date, that being in 1975, for which the Simons promptly paid. (P App. pg. 100, 109, 110) . Hold codes through out the 1974 computer readout hold notices, (id. ) (attachment pg. 1). Restricted interest codes TC 340 throughout the 1974 account likewise hold notices. (Id.) (attachment 4, 10). RCFC at Rule 11 reads as follows: (b) Representations to Court. By presenting to the court (whether by signing, filing, submitting, or later advocating) a pleading, written motion, or other paper, an attorney or unrepresented party is certifying that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, (1) it is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation; (2) the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; (3) the allegations and other factual contentions have evidentiary support, or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and (4) the denials of factual contentions are warranted on the evidence, or, if specifically so identified, are reasonably based on a lack of information or belief. CONCLUSION Base upon the foregoing, the Simons reply that their motion to strike a disengenous and ill founded Motion to Dismiss based on unfounded bogus arguments, inaccurate facts so numerous as to no be able to be fully listed in these 20 pages, legal positions proffered that contradict within the same document, legal arguments the government successfully raised in prior litigation, are, on their face, filed for the improper purpose of depriving a
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legitimately harmed tax payer citizens, privy to contract with the United States, from obtaining nothing more than their monetary damages. There is not one reason legitimately given this Court as to why in fairness and justice it should dismiss the Simons' complaint, why it did not state its claims with specificity, why tolling of the statutes is not wholly justified, why this Court is not the proper court, all presented in Byzantine design of baseless facts, inapplicable law, that would require about a hundred pages to unwind. The government filings are causing an unnecessary delay in this Court's performance under Rule 1, to hold the government to task for its actions that the Simons had no ability to identify and know enough to state a claim until at least after Feb. 15, 2000, by contract. PRAYER FOR RELIEF For about 25 years or more the Simons have been held out to be dishonest, a fraud, someone who isn't right with their government, and it is scandalous, untrue, and absolutely should not be continued here. They have a duty to themselves and family for the children and grandchildren to clear their name. As an officer of the Court, this filing is to notify the court that litigation in violation of Rule 11 is occurring. The government's $23.17 refund, is at least the IRS' acknowledgement that a refund is due. There is no other Court on the face of the earth authorized by congress to hear claims arising from government stipulated two contracts. Based on the foregoing, the Simons ask this Court to strike all the government's baseless, misleading, disingenuous, unsupported by evidence, harassing, scandalous Motion to dismiss, and to strike their response, made in this Court, and hold the government to dealing frankly and forthrightly with this Court, admitting the Simons paid for their 1983 contract, and that there can be
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no other after or this Court will be supporting the government profiting from their breach. The Simons, are hard working taxpaying citizens that kept their deal in 1983 and have been nothing short of legally thrashed by a government unrestrained by any laws due to concealment of their records, baseless bare allegation pleadings and documents created administratively based on nothing short of deception, scandalous to their reputation, and they further pray for this Court to provide them with all the relief they are entitled to have in equity and under the law, including sanctions for having to file this motion. So Signed this 14th day of June, 2006 ______________/s/_________________ Susan Rose, Utah Bar. No. 7985 Counsel for the Plaintiffs 9553 S. Indian Ridge Drive Sandy, Utah 84092 (801) [email protected] It is understood by Counsel that this case is an electronic file case and service to opposing counsel will be performed by the Court.
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5A
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA _________________________________ ELOUISE PEPION COBELL, et al., Plaintiffs, v. ) ) ) ) ) ) GALE A. NORTON, Secretary of the ) Interior, et al., ) ) ) Defendants. _________________________________) DEFENDANTS' REPLY MEMORANDUM IN FURTHER SUPPORT OF THEIR MOTION TO STRIKE PLAINTIFFS' REPLY AND NOTICE OF SUPPLEMENTAL INFORMATION SUBMITTED IN SUPPORT OF THEIR CONSOLIDATED MOTION FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION Defendants respectfully submit this reply memorandum in further support of their motion to strike the reply brief and "notice of supplemental information" filed by Plaintiffs in support of their motion for a temporary restraining order and preliminary injunction.1 In their opposition brief,2 Plaintiffs misconstrue the law governing motions to strike, and concede that the notice they filed, consisting of a letter from a New Jersey Congressman to the Attorney General, is devoid of 1 Plaintiffs' Reply To Interior Defendants' Opposition To Plaintiffs' Consolidated Motion For A Temporary Restraining Order And Preliminary Injunction (Oct. 24, 2003) ("Plaintiffs' Reply"); Plaintiffs' Notice Of Supplemental Information In Support Of Plaintiffs' Consolidated Motion For Temporary Restraining Order And Motion For Preliminary Injunction (Oct. 28, 2003) ("Plaintiffs' Notice"). 2 Plaintiffs' Opposition To Defendants' Motion To Strike Plaintiffs' Reply And Plaintiffs' Notice Of Supplemental Information Submitted In Support Of Their Consolidated Motion For A Temporary Restraining Order And Preliminary Injunction And Plaintiffs' Request For The Court To Consider Sanctions Sua Sponte For Filing A Frivolous Motion (Dec. 1, 2003) ("Plaintiffs' Opposition"). Case No. 1:96CV01285 (Judge Lamberth) any legal or factual weight that could make it relevant to this motion. The motion to strike should be granted. ARGUMENT As argued in Defendants' moving papers,3 neither Plaintiffs' Reply nor Plaintiffs' Notice is authorized by Local Civil Rule 65.1(c), which governs the briefing of preliminary injunction applications and expressly contemplates only an application and [pg 14]
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opposition, unless leave is sought. See LCvR 65.1(c).4 Moreover, even if such filings were permitted under the rule, both the reply and the notice suffer from independent defects that require that they be stricken. Plaintiffs' Reply is rife with false personal attacks that violate Federal Rule 12(f), as well as the rules of civility that are supposed to govern litigation before this Court. Defendants' Motion to Strike at 2-4; see LCvR 83.8(b)(6)(v) (requiring counsel to be familiar with the D.C. Bar Voluntary Standards for Civility in Professional Conduct). With respect to Plaintiffs' Notice, it consists only of the personal opinions of a New Jersey Congressman and, as such, has no legal or factual relevance to the application before the Court. Defendants' Motion To Strike at 4. These defects require that both Plaintiffs' Reply and Plaintiffs' Notice be stricken. In response, Plaintiffs raise two arguments. First, Plaintiffs argue that, notwithstanding the specific briefing requirements for preliminary injunction applications set forth in Local Civil Rule 3 Defendants' Motion To Strike Plaintiffs' Reply And Plaintiffs' Notice Of Supplemental Information Submitted In Support Of Their Consolidated Motion For A Temporary Restraining Order And Preliminary Injunction (Nov. 17, 2003) ("Defendants' Motion To Strike"). 4 Local Rule 65.1(c) requires that a preliminary injunction application be supported by all affidavits on which plaintiff intends to rely, and that the opposition be filed, with all supporting affidavits, within 5 days after service of the application. 2 65.1(c), the general briefing rules of Local Civil Rule 7(d) apply to such applications. Plaintiffs' Opposition at 2. Second, Plaintiffs contend that Rule 12(f) authorizes striking only a pleading, not a reply or a notice. Id. at 2-3 n.3. As to the substance of their "notice," Plaintiffs do not dispute that it lacks even marginal factual or legal relevance to the preliminary injunction application. See id. at 3 (stating that "Plaintiffs simply provided information to this Court" concerning the opinions of a New Jersey Congressman). Plaintiffs' Notice and Plaintiffs' Reply Should Be Stricken Under Local Rule 65.1 I. Local Civil Rule 65.1(c) reflects a conscious effort by the Court to delineate, in a manner distinct from the general motions provisions of Rule 7, the form and timing for briefing preliminary injunction applications. Thus, for example, while Rule 7(b) allows an opposition to a motion to be filed within 11 days of service of the motion, Rule 65.1(c) requires an opposition to a preliminary injunction application to be filed within 5 days of service of the application. Given the specific requirements enumerated by the Court for preliminary injunction applications, it is illogical to conclude that a reply brief on such an application, nowhere authorized in Rule 65.1, is permitted under Rule 7. It is less plausible, still, to conclude that a "notice of information" or other invented filings may be submitted (without limitation on number, type or timing) in purported support of a preliminary injunction application, notwithstanding the fact that the Court specifically itemized the briefing it wished to permit on such an application.5 Had the Court wished to invite reply briefs (or notices attaching irrelevant information) in the preliminary injunction context, there is every reason to believe that it would have explicitly done so in Rule 65.1, and included appropriate timing provisions governing such submissions. It did not. 5 Indeed, Plaintiffs do not argue that their notice is authorized by any rule. 3 II. Contrary To Plaintiffs' Statement Of The Law, Federal Rule 12(f) Is Not Limited To Pleadings Plaintiffs' second argument is equally unavailing. This Court has recognized that,[pg.15]
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while the language of Rule 12(f) refers to striking pleadings, the Court has authority under the rule to strike inappropriate matter in other filings, as well. Pigford v. Veneman, 215 F.R.D. 2, 4 n.1 (D.D.C. 2003) ("Although Rule 12(f) applies by its terms only to 'pleadings,' courts occasionally have applied the Rule to filings other than those enumerated in Rule 7(a) of the Federal Rules of Civil Procedure.") (citing Cobell v. Norton, No. 96-1285, 2003 WL 721477 (D.D.C. Mar. 3,2003)); Larouche v. Department of the Treasury, No. 91-1655, 2000 WL 805214 (D.D.C. Mar. 21, 2000) (striking declaration that contained information that was irrelevant, speculative and redundant under Rule 12(f) and Rule 56(e)). In Pigford, this Court relied on its "liberal discretion" under Rule 12(f) to strike scandalous and unsupported allegations of racism made by plaintiffs' class counsel against a Department of Justice lawyer in a response filed in connection with a motion to reopen late claims. Id. at 4-5. The Court also found that "'the filing of a document containing such language is one form of harassment prohibited by Rule 11,'" and relied on that independent authority to strike class counsel's response to the motion to strike, in which scandalous accusations were repeated. Id. ciitation omitted); see also Fed. R. Civ. P. 11(b) (attorney filing papers certifies that the papers are, inter alia, not being filed "for an improper purpose, such as to harass"). Thus, Plaintiffs' uninformed argument that Rule 12(f) does not apply to filings other than pleadings has been expressly rejected by this Court. 4 It bears mention that this latest episode of derogatory name calling carries on a now wellestablished practice by Plaintiffs. It has recently been held that such a seedy form of litigation has no place in this Court: [Class counsel's] charges of racism are plainly scandalous within the meaning of the Rule, in that they 'improperly cast[ ] a derogatory light' on a dedicated government attorney who has done his best to navigate the deep and murky waters of this litigation. The accusations are indefensible and have no place in filings with this court. Because the accusations of racism in the [class counsel] filings are unsupported by facts or evidence, constitute a form of harassment, and are scandalous, the Court will grant defendant's motion to strike [class counsel's] Response Regarding Mail Delays and sua sponte will strike [class counsel's] Response to the Motion to Strike, based both on Rule 11 and Rule 12(f) of the Federal Rules of Civil Procedure. Pigford, 215 F.R.D. at 4-5 (citation omitted). Yet, in this litigation, virtually every document filed by Plaintiffs is littered with the same unsupported and indefensible personal attacks that have no purpose other than to "improperly cast a derogatory light" on anyone associated with the Defendants.6 To allow Plaintiffs to continue this pattern with reckless abandon, and without consequence, makes a mockery of the rules that were specifically promulgated to prohibit such conduct. The Court should exercise its authority under those rules to put an end to the practice in this litigation. 6 Plaintiffs' brief in opposition to the motion to strike is no exception. See Plaintiffs' Opposition at 3 (referring to opposing counsel's behavior as "deviant"); id. at 4 (falsely stating that opposing counsel "lies to this Court and violates court orders"). [pg. 16]
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5 III. Plaintiffs Concede That Their Notice Lacks Any Legal Or Factual Relevance To The Application Before The Court Plaintiffs do not contest that the letter they filed, in which a New Jersey Congressman expresses his personal opinions concerning this litigation to the Attorney General, is neither factual evidence nor legal authority that could have any relevance to their application for a preliminary injunction. See Plaintiffs' Opposition at 3-4 (conceding that the notice "simplyprovided information" and "merely informs this Court" concerning the personal views of a congressman). That Plaintiffs continue to defend the submission of the letter in spite of this concession is unsupportable; that they move for sanctions against Defendants for seeking to strike this irrelevant material is frivolous.7 Plaintiffs' Notice should be stricken, and the sanctions request denied.8 7 Plaintiffs' motion for sanctions takes the familiar form of a boilerplate paragraph at the end of their opposition brief asking that the Court to "sua sponte" award them such relief. See Plaintiffs' Opposition at 4. Apparently unaware (or heedless) of the fact that the term "sua sponte" refers to action on the Court's own initiative, these requests are a transparent attempt to avoid the requirements for seeking sanctions under Federal Rule 11 and, therefore, they violate that rule. On that basis as well, their request is defective. 8 Insofar as the sanctions motion is made with respect to Defendants' request that the Court strike Plaintiffs' Reply, it is equally baseless for the reasons discussed supra in Sections I and II. 6 CONCLUSION For each of the foregoing reasons, and for the reasons set forth in Defendants' Motion To Strike, Plaintiffs' Reply and Plaintiffs' Notice should be stricken. Because Plaintiffs' Opposition includes a lengthy quotation of the irrelevant letter attached to their notice, and also repeats Plaintiff
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