United States Bankruptcy Appellate Panel

For the Eighth Circuit

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No. 16-6022

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In re: David Eugene Yuska

lllllllllllllllllllllDebtor

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David Eugene Yuska

lllllllllllllllllllll Plaintiff - Appellant

v.

Iowa Department of Revenue

lllllllllllllllllllll Defendant - Appellee

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Appeal from United States Bankruptcy Court 

for the Northern District of Iowa - Cedar Rapids

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Submitted: April 19, 2017

Filed: May 8, 2017

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Before SALADINO, Chief Judge, KRESSEL and NAIL, Bankruptcy Judges. 

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Kressel, Bankruptcy Judge.
2

David Eugene Yuska appeals from an order of the bankruptcy court 1granting 

the Iowa Department of Revenue’s motion for summary judgment and dismissing 

his adversary proceeding. We affirm.

BACKGROUND

Yuska filed a Chapter 13 bankruptcy petition on September 29, 2014. The 

case was later converted to a Chapter 7 case. On February 9, 2015, Yuska filed a 

complaint against the Iowa Department of Revenue, asking the bankruptcy court to 

set aside the department’s tax assessments for tax years 2004-2013. 

The department filed an answer and asserted defenses of issue and claim 

preclusion among others. It also filed a motion asking the bankruptcy court to abstain 

from hearing the constitutional question and the legality of the department’s 

assessment procedure. It filed another motion asking the court to dismiss Yusuka’s 

claim regarding the 2007 tax assessment based on claim preclusion because on 

November 29, 2012, an administrative law judge already decided the issue and 

Yuska did not appeal that decision. It later moved for summary judgment of the 

entire proceeding arguing that there were no genuine issues of material fact about 

the amount of taxes assessed. 

Yuska filed numerous responses to the department’s motions. Yuska made 

general legal argument as to the constitutionality of the Iowa income tax statute. He 

argued that the income tax statute was unconstitutional under Article VII, Section 7 

of the Iowa constitution. He argued that Iowa Code 422.5 that imposes taxes is 

unconstitutionally vague because it does not state the object of the tax as required 

by the constitution but instead another section of Chapter 422 provides the object. 

 1 The Honorable Thad J. Collins, Chief Judge, United States Bankruptcy Court for The Northern 

District of Iowa.
3

He also argued that the department improperly relied on information from the 

Internal Revenue Service because that information doesn’t show that it was derived 

from the United States Internal Revenue Code and he doesn’t owe income tax under 

the Internal Revenue Code. He also argued that he is no longer a citizen because he 

renounced his U.S. citizenship and Iowa residency and appeared in court on behalf 

of “ens legis,” a legal entity that does not owe taxes. 

After many continued hearings and extensions for submissions requested by 

Yuska and granted by the bankruptcy court, the court held a hearing on April 26, 

2016 and took the matter under advisement. On May 12, 2016, before the court made 

a determination of the motion, Yuska filed a motion to file new evidence. The court 

denied the motion and entered an order stating that no further briefing or 

supplements would be considered by the court. 

In its July 6, 2016 order, the bankruptcy court concluded that there were no

genuine issues of material fact. Yuska resided in Iowa and received rental income, 

wages, salaries, interest, dividends, capital gains and other income while living in 

Iowa for the tax years in question, but he did not pay Iowa income taxes.

The bankruptcy court concluded that, in Iowa, an administrative 

determination is given the same preclusive effect as the judgment of a court. The 

court held that Yuska’s claim that he does not owe income tax liability for 2007 is 

barred by claim preclusion because the bankruptcy court cannot determine the taxes 

or the legality of the 2007 tax liability that have been decided by the administrative 

law judge. The court also held that Yuska’s challenge to the department’s right and 

authority to tax or the department’s assessment procedure is barred by issue

preclusion because those arguments were also considered and rejected by the 

administrative law judge. 
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The bankruptcy court also considered and rejected Yuska’s other legal 

arguments. The court held that Yuska’s argument that the income tax statute is 

unconstitutional because it does not state the object to which the tax is to be applied 

and required looking to multiple sections to find the tax and object, unpersuasive 

because Iowa income statute has been upheld by the Iowa Supreme Court as 

constitutional. 

The court also rejected Yuska’s argument that the department did not properly 

calculate his tax liability because he doesn’t owe any taxes under the Internal 

Revenue Code. The court held that the “Iowa income tax uses the federal taxable 

income number to determine the amount of tax owing” and Yuska’s “Iowa tax 

liability is not tied to his federal tax liability.” The court also held that the fact that 

Yuska declared that he renounced his U.S. citizenship does not excuse tax liability 

and is not an effective renunciation of citizenship. Anyway, the court found Yuska 

is a tax payer for the tax years in question. 

The court also rejected Yuska’s argument that it was improper for the 

department to impose the “75% fraud penalty for tax years 2011-2013 because the 

department found that he had a clear pattern of intentionally and repeatedly 

concealing his income, continuously failing to submit income tax returns, and 

evading paying taxes when” assessed. The court held that the department provided 

clear and convincing evidence that showed the fraud penalties were proper. The 

court also rejected Yuska’s argument that the bankruptcy court did not have 

jurisdiction over him because he was a minor during the adversary proceeding and 

when the department made the assessment. The court granted the department’s 

summary judgment motion and dismissed the adversary proceeding.
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ISSUES ON APPEAL

Yuska appeals the bankruptcy court’s order granting summary judgment to 

the department.

2 Yuska raises three main issues on appeal. He asserts that the 

bankruptcy court improperly denied his motion to file newly discovered evidence. 

He argues that the Iowa income tax statute is unconstitutional because the statute 

does not have an object for the tax in the same statute as required by the Iowa 

constitution. He also states that the income tax statute is void for vagueness and 

therefore unconstitutional. 

ANALYSIS

Standard of Review

We review a bankruptcy court’s grant of summary judgment de novo. In re 

Farmland Indus., Inc., 408 B.R. 497, 503 (B.A.P. 8th Cir. 2009) (8th Cir. 2011)

(Citing Schaaf v. Residential Funding Corp., 517 F.3d 544, 549 (8th Cir.2008)). The 

applicability of collateral estoppel is a question of law which we also review de novo.

Id. (Citing United States v. Brekke, 97 F.3d 1043, 1046–47 (8th Cir.1996); Osborne 

v. Stage (In re Stage), 321 B.R. 486, 491 (8th Cir. BAP 2005)).

Denial of Motion to Submit New Evidence 

Yuska argues that it was improper for the bankruptcy court to deny his motion 

to file newly discovered evidence. Because the motion would be untimely under 

either Fed. R. Civ. P. 52 or 59, we construe that motion as one under Fed. R. Civ. P. 

60(b)(2) made applicable through Fed. R. Bank. P. 9024. The court’s denial of the

motion to submit new evidence is reviewed for abuse of discretion. Harley v. Zoesch,

413 F.3d 866, 870 (8th Cir.2005); Broadway v. Norris, 193 F.3d 987, 989 (8th 

 2 Yuska requested an oral argument. We hold that it will not be helpful to this appeal. 
6

Cir.1999). A moving party must show that newly discovered evidence is material 

and would probably produce a different result. Greyhound Lines, Inc. v. Wade, 485 

F.3d 1032, 1036 (8th Cir. 2007).

Yuska’s motion did not deal with newly discovered evidence at all, but was 

just an attempt to make more arguments for why the income statute was void for 

vagueness. The bankruptcy court did not abuse its discretion in denying the motion. 

Additionally, Yuska was given ample time to supplement his case. He had from 

November 16, 2015, when the department filed its motion and until April 26, 2016’s 

hearing date, to file additional documents. Yuska was afforded numerous extensions 

to file additional documents and rescheduled hearings. We think the bankruptcy 

court’s patience resembled that of Job. 

Motion for Summary Judgment 

“Summary judgment is appropriate only when all the evidence presented 

demonstrates that there is no genuine issue as of any material fact and the moving 

party is entitled to judgment as a matter of law.” Jafarpour v. Shahrokhi, (In re 

Shahrokhi), 266 B.R. 702, 706 (B.A.P. 8th Cir. 2001). In a summary judgment 

motion, the initial burden of proof is on the moving party to demonstrate “that there 

is an absence of evidence to support the nonmoving party's case.” Jafarpour 266 

B.R. at 706 (Quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325(1986)). Once this 

is met, the burden then shifts to the nonmoving party “to go beyond the pleadings 

and by her own affidavits, or by the depositions, answers to interrogatories, and 

admissions on file, designate specific facts showing that there is a genuine issue for 

trial.” Id. (Internal quotation omitted). The bankruptcy court carefully considered 

the facts asserted by both parties and determined that the facts were undisputed. We 

agree.
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Claim Preclusion

The doctrine of res judicata, also known as claim preclusion is a question of 

law which we review de novo. United States v. Brekke, 97 F.3d 1043, 1046–47 (8th 

Cir.1996); Osborne v. Stage (In re Stage), 321 B.R. 486, 491 (B.A.P. 8th Cir. 2005).

Claim preclusion “provides a valid and final judgment on a claim precludes a second 

action on that claim or any part of it.” Spiker v. Spiker, 708 N.W.2d 347, 353 (Iowa 

2006). Therefore, the rule “applies to every matter which was offered and received 

to sustain or defeat the claim or demand.” Id. It also applies to any other admissible 

matter which could have been offered for that purpose, foreclosing litigation of 

matters that have been litigated. Id. The party against whom preclusion is asserted 

had a “full and fair opportunity” to litigate the claim or issue in the first action. Id. 

Thus, the party seeking to invoke the doctrine of claim preclusion must 

establish three elements: (1) “the parties in the first and second action were the 

same”; (2) “the claim in the second suit could have been fully and fairly adjudicated 

in the prior case”; and (3) “there was a final judgment on the merits in the first 

action.” Id. (Citing Arnevik v. Univ. of Minn. Bd. of Regents, 642 N.W.2d 315, 319 

(Iowa 2002) (citations omitted).

We hold that the bankruptcy court did not err when it gave a res judicata effect 

to Yuska’s claim. Under Iowa law, the administrative law judge’s determinations 

are given the same preclusive effect as the judgment of a court. George v. D.W. 

Zinser Co., 762 N.W.2d 865, 868 (Iowa 2009). The court properly held that the 

administrative law judge’s decision was a prior judgment rendered by a court of 

competent jurisdiction that was a final judgment on the merits. Yuska raised the 

same cause of action as he did when he challenged the 2007 assessment in the 
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administrative proceeding, and both parties in that action and this case were the 

same. 

Issue Preclusion

The doctrine of collateral estoppel or issue preclusion “prevents parties to a 

prior action in which judgment was entered from relitigating in a subsequent action 

issues raised and resolved in the previous action.” Hunter v. City of Des Moines, 300 

N.W.2d 121, 123 (Iowa 1981). Therefore, “when an issue of fact or law is actually 

litigated and determined by a valid and final judgment, and the determination is 

essential to the judgment, the determination is conclusive in a subsequent action 

between the parties, whether on the same or a different claim.” Id.

The party seeking to invoke the doctrine of issue preclusion must establish the 

following four elements: (1) “the issue concluded must be identical”; (2) “the issue 

must have been raised and litigated in the prior action”; (3) “the issue must have 

been material and relevant to the disposition of the prior action”; and (4) “the 

determination made of the issue in the prior action must have been necessary and 

essential to the resulting judgment.” Id. 

We hold that the bankruptcy court did not err when it applied collateral 

estoppel to Yuska’s claim regarding the constitutionality of Iowa’s income statute 

and the department’s assessment procedures because that same issue was litigated 

before and decided by the administrative law judge. The administrative law judge 

made a determination about the issue that was an essential decision in that action. Its 

determinations have the same preclusive effect as the judgment of a court. George, 

762 N.W.2d at 868. Yuska’s challenge to the income statute and the department’s 

procedure are collaterally estopped.
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Void for Vagueness 

Yuska argues that the Iowa income statute is void for vagueness and therefore 

unconstitutional. Yuska is making this argument for the first time on appeal. We

normally do not consider new arguments on appeal. Krigel v. Sterling National Bank

(In re Ward), 230 B.R. 115, 118 (B.A.P. 8th Cir. 1999) (Citing Forbes v. Forbes (In 

re Forbes), 218 B.R. 48, 51 (B.A.P. 8th Cir. 1998). However, we may consider the 

new argument if it merely constitutes a shift in approach. Id. (Citing Universal Title 

Uns. Co. v. United States, 942 F. 2d 1311, 1314 (B.A.P. 8th Cir. 1991)). We also 

have discretion to consider an issue for the first time on appeal “when the argument 

involves a purely legal issue in which no additional evidence or argument would 

affect the outcome of the case.” Id. 

Yuska’s argument that the Iowa income statute is not constitutional because 

it is void for vagueness is not merely a shift in approach. This argument requires 

factual support. Nevertheless his argument still fails because the Iowa Supreme 

Court has upheld the income statute as constitutional on numerous occasions. Hale 

v. Iowa Bd. Of Assessment and Revenue, 271 N.W. 168, 174 (Iowa 1937); Vilas v. 

Iowa State Bd. of Assessment and Revenue, 273 N.W. 338, 346 (Iowa 1937). 

Additionally, the Rooker-Feldman doctrine prevents the bankruptcy court and us 

from reviewing the state supreme court’s decisions.

Other Arguments 

Yuska argues that Iowa is not a state and therefore he doesn’t owe taxes. We 

disagree. We hold that Iowa is a state. He also argues that he is not a citizen of the 

U.S. or a resident of Iowa and therefore doesn’t owe taxes. But even if that were 

true, non-citizens must pay taxes, too. Yuska’s other arguments are frivolous and we 

reject them. 
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CONCLUSION

We find no error in the bankruptcy court’s legal conclusions or its decision. 

Accordingly, we affirm.

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