2010 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 7-7-2010 

# U SA v . Rudolph I sley P r e c e de n t i al or N on-P r e c e de n t i al : N on-P r e c e de nt i al D ocke t N o . 09-2017

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w . vi l l a no va . e du . Re c omme nde d C it at ion " U SA v . R udo lp h I sley " (2010). 2010 D e cisio n s . P ape r 1008. http://d i git alc ommon s .l a

w . vi l l a nova . e du/thir dc ir c uit_2010/1008NO T PRECEDEN TI AL

U N IT E D S T A T E S C O U R T O F A P P E A L S F O R T H E T H IR D C IR C U IT N o. 09- 2017

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fort he D i s t r i ctof N ew J er s ey ( D . C . N o. 2- 99- cv- 04449 ) D istric t Ju d g e : H o n o ra b le W ill iam J. M a rtin i

Subm i t t ed U nderT hi r d C i r cui tL A R 34. 1( a)

J ul y2, 2010 B efor e: SL O V I T E R , B A R R Y and H A R D I M A N , C i r cui tJ udges

( Fi l ed: J ul y7, 2010)

_____ OP I NI ON2

S L O V IT E R , C i r cui tJudge . T hi s i s t he s econd a ppeal t o t hi s cour tbyR udol ph I s l eyand hi s w i fe El ai ne ( t he “I s l ey s ”) i n t hei rext ended di s put e w i t h t he I nt ernal R evenue Ser vi ce ( “I R S”) . M anyof th e b a c k g ro u n d f

a c ts a re s e t f

o rt h in o u r o ri g in a l o p in io n , U ni t ed Stat es v. I

s l ey , 20 3 F. A pp’ x 406 ( 3d C i r . 2006) , and w e r epea tonl yw hati s nece s s aryfort hi s opi ni on. T he I s l ey s ar gue, i n es s ence , t hatvar i ous paym ent s m ade t o t he I R S byt he trus t ee of a cons ol i dat ed bankrupt cyw hi ch i ncl uded R udol ph I s l eyw er e notpr oper l yat t r i but ed and t hatas a r es ul tt he I R S m ayhave mi s cal cul at ed R udol ph’ s pr es entt ax l i abi l i t y . T he D i s t r i ctC our tfound thatal l of the r el evantpaym ent s w er e ade quat el yacc ount ed forand d is m is s e d th e Is le y s ’ c o m p la in t. I . Backg r ound R udol ph, R onal d, and O ’ K el l yI s l eyw er e mem ber s of a musi c gr oup cal l ed the I s l eyB r ot her s . I n 1984, eac h br ot herfi l ed a pe t i t i on forbankrupt cyunderC hapt er11, w h ich w as later co n v erted to a C h ap ter 7 p roc ee d ing . T h e ind ividu al estates w ere cons ol i dat ed. I n 1991, t he bankrupt cycour tent er ed a c ons entor derdet erm i ni ng t he ext entof the I R S’ s cl ai m s fori ncome t axes , pr e- pet i t i on i nt er es tand pena l t i es agai ns tt he I s l eybr ot her s forcert ai n y ear s , and the bankrupt cyt rus t ee pa i d t hos e amount s fr om t he a s s e t s o f t h e c o n s o l i d a t e d e s t a t e . Ov e rt h e n e x tf e w y e a r s , t h e t ru s t e e r e mi t t e d t o t h e I RS se v e n c h e c k s to talin g $ 3 ,0 8 6 ,3 3 8 .6 0 (th e “ p o st-c o n se n t o rd e r” “ m o n e y ” o r “ c h e c k s” ) toA “C er t i fi cat e of A s s es s m ent s , Paym en ts and O t her 1 M at t er s , . . . i s a comput ergener ated for m t hatr efl ect s t he t axes as s es s ed t o and pai d byt he t axpay eri n a part i cul ary ear . ” U ni t ed St at es v. Ji m enez , 513 F. 3d 62, 79 n. 4 ( 3d C i r . 2008) . T he part i es acknow l edge thatt hes e document s ar e r egul ar l yus ed as evi dence in ta x c a s e s . 3 b e a p p lie d to s u b s e q u e n t ta x lia b iliti e s o f th e Is le yb ro th e rs a n d th e c o n s o lid a te d e s ta te . I n 1999, t he governm enti ni t i at ed thi s pr ocee di ng agai ns tt he I s l ey s t o col l ect pos t - pet i t i on i nt er es t , as w el l as pos t - pet i t i on i ncome t axes . T he D i s t r i ctC our tgr ant ed t he I R S summ aryj udgm entr egar di ng t he I s l ey s ’ l i abi l i t i es . T heyappea l ed, ar gui ng, as r el evanther e, t hatt her e w as a genui ne i s s ue of mat er i al fac tw i t h r es pectt o th e IR S ’s a llo c a tio n o f

th e tru ste e ’s p a ym e n ts. W e re m a n d e d b e c a u se o f o u r “ d isc o m f

o rt” w i t h r egar d t o “the uns et t l ed mat t erof the I R S’ s al l ocat i on of the trus t ee’ s paym entof $1, 683, 015. 70. ” I

s l ey , 2 0 3 F . A p p ’x a t 4 0 9 . O n r emand, t he I R S offer ed i nt o evi dence I R S Form 4340s ( C er t i fi cat es of A s s es s m ent s , Paym ent s , and O t herSpeci fi ed M at t er s ) , s how i ng t hatt hr ee of t he s even 1 p o st-c o n se n t o rd e r c h e c k s, a d d in g u p to $ 1 ,6 5 9 ,8 2 6 .7 8 , w e re a ttribu ted to th e tax liab ili ty of the cons ol i dat ed es t at e for1991. I tfol l ow s t hatt he I R S account ed fort he moneyfr om th re e p o st-c o n se n t o rd e r c h e c k s th a t ad d e d u p to a p p ro x im a telyth e $ 1 ,6 8 3 ,0 1 5 .7 0 o f p o stcons entor derm oneyt hatw as notat t r i but ed t o t he br ot her s ’ acc ount s . A l t hough t he t ot al of thos e che cks w as $23, 188. 92 l es s t han the amountt hatt he I s l ey s had as s er t ed w as unacc ount ed for , i . e. , $1, 683, 015. 70, nei t herpar t ys ubs t ant i at ed the exi s t ence of that4

amount as t he D i s t r i ctC our tper m i t t ed, and the I R S m oved the D i s t r i ctC our tt o det erm i ne t hatal l of the pos t - cons entor derpaym ent s had bee n pr oper l yacc ount ed for , and t o re -e n te r j u d g m e n t o n its b e h a lf. I n t hei rr es pons e, t he I s l ey s s ubm i t t ed an a ffi davi tfr om an expe r tw ho s t at ed that t he governm enthad “pr ovi ded tr ans cr i pt s of i t s r ecor ds t hatdi s cl os ed thatt he fi r s tt hr ee paym ent s aggr egat i ng $1, 659, 826. 78 w er e def i ni t i vel yal l ocat ed t o pay[the cons ol i dat ed es t at e’ s t ax] l i abi l i t i es . . . [butt hatt he] paper s do notpr ovi de pr oof of the al l ocat i on of t he [r emai ni ng] $1, 426, 482. 05, bal ance . ” A pp. at119. T hus , t he I s l ey s ar gued thatt he I R S needed t o acc ountfort he ent i r etyof the moneydi s t r i but ed byt he pos t - cons entor der c h e c k s . I n i t s r epl y , t he I R S poi nt ed outt hatt he $1, 683, 015. 70 fi gur e w as one thatt he I s l ey s t hemsel ves had off er ed t o t hi s cour tas t he amountof unac count ed- forfunds and t h a tt h e I s l e ys h a d n e v e re x p l a i n e d h o w t h e y h a d a r r i v e d a tt h a ts u m , a n d t h a tt h e I s l e ys h a d a lre a d yc o n c e d e d th a t $ 1 ,7 5 6 ,8 1 5 .7 2 o f th e p o st-c o n se n t p a ym e n ts w e re a ttribu ted to t he br ot her s ’ t ax l i abi l i t i es , t hus for ecl os i ng r eexa m i nat i on of thati s s ue. T he governm ent addi t i onal l yas s er t ed thatt he moneyfr om t he r emai ni ng fourchec ks , t ot al i ng $1, 426, 482. 05, w as i n fac tacc ount ed forbyr efe r ence t o t he ans w er s t o i nt err ogat or i es p ro v id e d to th e Is le y s b yth e g o v e rn m e n t. For i t s par t , t he D i s t r i ctC our tpoi nt ed outt hatt hi s cour thad r emanded for r e s o l u t i o n o f

“ h o w t h e [ I R S ] a l l o c a t e d $ 1 , 6 8 3 , 0 1 5 . 7 0 i n p a ym e n t s a l l e g e d l y r e m i t t e d b y”T he D i s t r i ctC o u rt had j ur i s di ct i on under28 U . S. C . §§ 2 1 3 4 0 a n d 1 3 4 5 , a n d th is c o u rt h a s ju ri s d ic tio n u n d e r 2 8 U .S .C . § 1 2 9 1 . T he Isl ey s addi t i onal l yacknow l edge that , on occa s i on,

3 s om e court s of appe al s have he l d t hata fa i l ur e t o obj ectt o s i m i l ar a lle g e d e v id e n tia ry e rr o rs c o n s titu te s a w a iv e r. See, e. g, G as aw ay v . N w . Mu t. L ife In s . C o ., 26 F. 3d 957, 960 ( 9t h C ir . 1 9 9 4 ) . T he g o v e rn m e n t, h o w e v e r, d o e s n o t p re s s a w a iv e r a rg u m e n t. 5 th e b a n k ru p tcy tru ste e . A p p . at 2 . T h e C o u rt th e n h e ld th a t th e g o v e rn m e n t h a d p ro p e rly d e m o n stra ted th e c o rre c t allo c a tio n o f $ 1 ,6 5 9 ,8 2 6 .7 8 o f

th o se p a ym e n ts. A s n e ith e r p a rty ca m e f o rw ard w ith ev iden ce reg ard ing the d iffe ren ce o f $ 2 3 , 1 8 8 . 9 2 , the D istri ct C o u rt o rd e re d th e c a s e d is m is s e d . I I . A n a ly sis 2 W e f ind n o erro r. T he I s l ey s ar gue thatt he D i s t r i ctC our terr ed i n cons i der i ng as s um m aryj udgm ent evi dence t he I R S Form 4340s bec aus e thos e form s w er e notpr oper l ys el f- authent i cat i ng underFeder al R ul e of Evi dence 902 ( s el f authent i cat i on) and/ orpr oved underFeder al R ul e of Ci vi l Pr ocedur e 44 ( pr ovi ng an off i ci al r ecor d) . B eca us e the I s l ey s di d notobj ect to th e s e d o c u m e n ts b e f

o re th e D is tr ic t C o u rt , o u r r e v ie w is f o r p la in e rr o r. See U

ni t ed Stat es v. Moo re , 375 F. 3d 259, 262 ( 3d C i r . 2004) ; Fed. R . E vi d. 103( d) . T he 3 governm entconce des t hatt he For m 4340s “l acke d t he s eal neede d fors el f- authent i cat i on u n d er F ed era l R u le of

E v iden ce 9 0 2 , ” A p p ell ee ’s B r. at 31 , an d arg u es in stead that there6

w as pr obat i ve evi dence s uffi ci entt o s uppor t“a f i ndi ng t hatt he mat t eri n ques t i on i s w hat i t s pr oponentcl ai m s , ” Fed. R . E vi d. 901( a) . T hi s cour thas hel d t hat“ci r cumst ant i al evi dence m ay. . . s uffi ce t o authent i cat e a doc um ent. . . [and that ] [t ] he bur den of pr oof forauthent i cat i on i s s l i ght. . . . [as ] [a] l l t hati s r equi r ed i s a founda t i on fr om w hi ch the f a c t-f in d e r c o u ld leg iti m a telyin f e r th a t th e e v id e n c e is w h a t th e p ro p o n e n t cla im s it to be. ” McQ ueene

y v. W i lm i ngt on Trus tC o. , 779 F. 2d 916, 928 ( 3d C i r . 1985) ( i nt ernal c ita tio n s a n d q u o ta tio n s o m itte d ). H er e, t he I s l ey s m ake no e ffor tt o cas tdoubton t he ac tual authent i ci t yof the for m s . M or eover , t he I s l ey s ’ ow n expertdi d notques t i on t hei rappea r ance ors ubs t ance in a n yw a y . A ttac h e d to th e f o rm s a re C e rtific a tes o f O f f icia l R e c o rd a ttribu ted to K a t h l e e n B u s h n e l l , a F i e l d D i r e c t o rf o rt h e I R S ; t h e f

o r m s a r e s i g n e d b y D e n i s e B r a d l e y, an A ccount i ng O per at i ons M anage ratt he I R S. T he D epart m entof J us t i ce a t t or ney rep rese n ti n g the IR S in this ca se su b m itted a n af fid av itasse rt ing that the d o cu m en ts are w h a t th e ya p p e a r to b e . T h e re f o re , w e c a n n o t h o ld th a t th e D istric t C o u rt p lain lye rre d in re ly in g o n th e F o rm 4 3 4 0 s. E v e n if th e re w e re p lain e rro r, w e w o u ld still d e c lin e to r emand as t he I s l ey s have must er ed no s how i ng of ac tual pr ej udi ce r egar di ng t he a u th e n tic ity o f

th e f o rm s . T he I s l ey s addi t i onal l yas s er ti n a footnot e thatt he D i s t r i ctC our terr ed by cons i der i ng t he governm ent ’ s ans w er s t o i nt err ogat or i es , appar ent l ybeca us e the i nfor m at i on i n t he ans w er s w as notbas ed on the per s onal know l edge of t hei rcr eat orand7

beca us e the ans w er s w er e notpr oper l yauthent i cat ed. A s an i ni t i al m at t er , i ti s notcl ear w hethert he D i s t r i ctC our tr el i ed on the ans w er s t o i nt err ogat or i es i n i t s deci s i on. I n any e v e n t , b e c a u s e t h e I s l e y s d i d n o to b j e c tt o t h e a d mi s s i b i l i t yo f t h e a n s we r s e i t h e r , we a g a in re v ie w f

o r p la in e rr o r. T h e Isle y s f

a il t o re sp o n d to th e g o v e rn m e n t’s a rg u m e n t th a t th e a n sw e rs to i nt err ogat or i es w er e i n fac t“dec l ar ed true underpenal t yof per j ur ybyB ruce Cl ark, an I R S t echni cal s uppor tadvi s orw ho w as fami l i arw i t h t he I R S’ s appl i cat i on of the bankrupt cypaym ent s . ” A ppel l ee’ s B r . at33. M or eover , t he I s l ey s t hemsel ves s ubm i t t ed t he i nt err ogat or i es as an att achmentt o a dec l ar at i on m ade i n s uppor tof thei row n m ot i on fors um m aryj udgm ent , and ther efor e i nvi t ed anyerr ort he D i s t r i ctC our tm ayhave made in re lyin g o n th e m a s a u th e n tic . S e e U n itedS ta tes v . C o n so le , 1 3 F . 3 d 6 4 1 , 6 6 0 (3d C ir . 1 9 9 3 ). F u rth er, th e Isley s o ff er n o thing b u t spe cu lat ion that the in terrog atories a re a n y th in g b u t au th e n tic a n d a c c u ra te, o r th a t th e ir a d m iss io n w a s o th e rw ise p re ju d icia l in a n ym e a n in g f

u l w a y . T he D i s t r i ctC our tr evi ew ed the For m 4340s and hel d t hat$1, 659, 826. 78 of the $3, 086, 338. 60 s ubm i t t ed byt he trus t ee t o t he I R S w as i n fac tacc ount ed foras havi ng been a t t r i but ed t o t he t ax l i abi l i t i es of the cons ol i dat ed es t at e. T he I s l ey s ’ r emai ni ng ar gum ent , es s ent i al l y , i s t hatt he moneyfr om t he otherfourpos t - cons entor derchec ks w as nots at i s fac t or i l yacc ount ed for . A s t he governm entpoi nt s out , how ever , t hat ques t i on w as notpr es ent ed t o t he D i s t r i ctC our ton r emand becaus e the I s l ey s had al r eady8

conce ded thatt he r emai ni ng m oneyw as acc ount ed foras at t r i but ed t o t he t ax l i abi l i t i es of th e b ro th e rs . P a rd in i v. A lleg h e ny In ter m e d ia te U n it , 524 F. 3d 419, 423 ( 3d C i r . 2008) (“ It is a x io m a tic th a t o n re m a n d f o r f u rth e r p ro c e e d in g s a f

ter d e c isio n b ya n a p p e llate cou rt , t he tr i al cou rtm ustproceed i n acco rdance w i t h the m and at e and t he law of the case as e stab li sh ed o n ap p ea l. ” (c it ati o n an d q u o tat ion o m itted)). T o be s ur e, t her e ar e s om e i ncongrui t i es i n t he r ecor d, s uch as t he di ffe r ence of $23, 188. 92 betw een the amount of m oneyt hatt he I s l ey s as s er t ed w as unacc ount ed foron t he form erappea l and the thr ee c hecks t hatt he I R S show ed on r emand as havi ng been at t r i but ed t o t he t ax l i abi l i t i es of the es t at e. T hi s di s cr epanc yi s t he r es ul tof the fa ctt hat th e s u m s th a t th e Is le y s p ro f f e re d to th is c o u rt o n th e f ir s t a p p e a l w e re e rr o n e o u s . See I s l ey , 203 F. A pp’ x at407. I n fac t , i tappea r s t hatt he I s l ey s err ed i n cal cul at i ng bot h t he s uppos edl yunacc ount ed form oney( $1, 683, 015. 70 as oppos ed t o $1, 659, 826. 78) and the amount of m oneyat t r i but ed t o t he br ot her s ’ l i abi l i t i es ( $1, 756, 815. 72 as oppos ed t o about $ 1 ,4 2 6 ,5 1 1 .8 2 ). D es pi t e thes e i ncongrui t i es , w e w i l l notal l ow t he I s l ey s t o us e thei row n m i s t akes to re o p e n a n iss u e th a t th e yc o n c e d e d , es p e c iallyw h e n th e yh a v e sh o w n n o a p p re c iab le pr ej udi ce. I n t he form erappea l w e ac cept ed as t rue and r el i ed upon the I s l ey s ’ gener al conce s s i on t hatal l of the pos t - cons entor derm oney , exce ptfor$1, 683, 015. 70, w as ac co u n ted f

o r. W e the ref

o re rem an d ed so lel yto reso lve th e “ u n sett led m att er o f th e IR S ’s al l ocat i on of the trus t ee’ s paym entof [the] $1, 683, 015. 70, ” i d. a t 4 0 9 , ev e n w h ile9

r ecogni zi ng t he I s l ey s had made a mi s t ake s om ew her e i n t hei rcal cul at i ons . A s t he governm entar gues , “[u] ndert he r emand or der , t he D i s t r i ctC our t ’ s s um m aryj udgm ent e sta b lish in g tax p a y e r’s o u tsta n d in g liab ili tyw o u ld [ th e re f o re ] sta n d u n a ltere d , u n les s it w er e det er m i ned on r emand t hatal l ors om e of the $1, 683, 015. 70 s houl d have be en, but w a s n o t, a p p lie d to ta x p a y e r’ s a c c o u n t.” A p p e lle e ’s B r. a t 2 2 . “The l aw of the ca s e doctr i ne ‘ l i m i t s r el i t i gat i on of an i s s ue once i thas been deci ded’ i n an ea r l i ers t age of t he s ame l i t i gat i on. ” H am i l t on v. Leavy , 322 F. 3d 776, 786- 87 ( 3d C i r . 2003) ( quot i ng I n r e C ont ’ lA i r l i nes , I

nc. , 2 7 9 F . 3 d 2 2 6 , 2 3 2 (3d C ir . 2002) ) . A l t hough t hatdoctr i ne i s i nt ended t o pr om ot e fi nal i t y , cons i s t ency , and j udi ci al e c o n o m y , id . at 78 7 , itn o n ethe less all o w s fo r reco n side rati o n o f a n issue w h en there exi s t s new evi dence , s uper veni ng l aw , orcl earerr ort hatw oul d cr eat e mani fes ti nj us t i ce in th e e a rl ie r d e c is io n , I n r e C i t y of P hi l a. Li t ig. , 158 F. 3d 711, 718 ( 3d C i r . 1998) (c itatio n o m itt e d ). H o w e v e r, “if th e e v id e n c e a t th e tw o sta g e s o f lit ig a tio n is

‘ s ubs t ant i al l ys i m i l ar , ’ ori f the evi dence att he l at t ers t age pr ovi des m or e s uppor tfort he deci s i on m ade e ar l i er , t he l aw of the ca s e doctr i ne w i l l appl y . ” H am i l t on , 322 F. 3d at787 ( ci t at i on om i t t ed) . E ven i f the governm ent ’ s acc ount i ng devi at es fr om t he t ot al s of acc ount ed forand unac count ed forpos t - cons entor derm oneyas s er t ed byt he I s l ey s on t he for m erappea l – as i tnece s s ar i l ym us ti n or dert o be ac cur at e – the I s l ey s have of fer ed no new evi dence of m ani fes ti nj us t i ce ors how n t hatr e- l i t i gat i on of thi s i s s ue w oul d s erve a n yp u rp o s e a t a ll.10 I I I . C oncl usi on For t he r eas ons s t at ed above , t hi s cour tw i l l aff i r m t he j udgm entof the D i s t r i ct C o u rt .