NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

_____________ No s . 15

- 2003, 15

- 2004

_____________ VI DERIVATIVES LLC BY VIFX LLC ITS TAX MATTERS PARTNER BY RICHARD G. VENTO ITS TAX MATTERS PARTNER , Appellant in case no. 15

- 20 03

v. UNITED STATES OF AMERICA; DIRECTOR VIRGIN ISLANDS BUREAU OF INTERNAL REVENUE

_____________ VIFX LLC BY RICHARD G. VENTO ITS TAX MATTER PARTNER , Appellant in case no. 15

- 2004

v. UNITED STATES OF AMERICA

_____________ On Appeal fr om t he District Court of the Virgin Islands (D.C. No s
. 3

- 06

- cv
- 00 0 12; 3

- 06

- cv
- 0 0 013 ) District Judge: Honorable Juan R. S á nchez

______________ Argued: May 1 7 , 2016

______________2 Before: FUENTES, ∗ VANASKIE, and RESTREPO, Circuit Judges

. (Filed: Octob er 21, 2016 ) Amy Adelson , Esq. Suite 096 43 West 43rd Street New York, NY 10036 Nathan Z. Dershowitz, Esq. [ARGUED] 415 East 37th Street, 18J New York, NY 10016 Joseph M. Erwin, Esq. 100 Crescent Court Suite 700 Dallas, TX 75201 Attorney s for Appellan t s VI Derivatives LLC by VIFX LLC Its Tax Matters Partner by Richard G. Vento Its Tax Matters Partner ; VIFX LLC by Richard G. Vento Its Tax Matter Partner

Melissa Briggs, Esq. Teresa E. McLaughlin, Esq. [ARGUED] Jennifer M. Rubin, Esq. United States D epartment of Justice Tax Division 9 50 Pennsylvania Avenue, N.W. P.O. Box 502 Washington, DC 20044

Attorneys for Appellee United States of America Barry J. Hart, Esq. Winston & Strawn LLP 1700 K Street N

. W

. Washington, DC 20006

∗ The Honorable Julio M. Fuentes assumed senior status on July 18, 2016.3 Carol L. Thomas

- Jacobs, Esq. Office of Attorney General of Virgin Islands Department of Justice 34

- 38 Kronprindsens Gade GERS Complex, 2nd Floor St. Thomas, VI 00802 Attorneys for Appellee Director Virgin Islands Bureau of Internal Revenue

______________ OPINION ∗ ∗

______________ RESTREPO , Circuit Judge

. In these consolidated appeals, Appellant s V.I. Derivatives, LLC and VIFX, LLC (collectively, “LLCs”) challenge the District Court’s order s denying their motions to dismiss for lack of subject matter jurisdiction. W e a gree with the District Court that the
LLCs ’ challenges to the District Court’s subject matter jurisdiction were barred by res judicata, and, therefore, we will affirm

. I The tax dispute underlying these consolidated appeals began when a technology
compa ny founded by Richard Vento was sold . As a result of the sale, the Vento family
and several Vento

- related entities rea lized $180 million in capital gains in tax year 2001

.

∗ ∗ This disposition is not an opinion of the full Court and , pursuant to I.O.P. 5.7 , does not constitute binding precedent.4 Claiming residency in the United States Virgin Islands (“USVI”), Richard and Lan a Vento, their three daughters, and the LLCs, filed their respective 2001 income tax return s with the Virgin Islands Bureau of Internal Revenue (“VIBIR”), rather than with the Internal Revenue Service (“IRS”). On October 14, 2005, the Commissioner of th e IRS issued notices of final partnership administrative adjustments (“FPAAs”) to the LLCs for the 2001 tax year , and
issued notices of deficiency of federal income tax to the individual members of the Vento family

. 1 Richard Vento, tax matters partner for the LLCs, then filed in District Court for the Virgin Islands petitions for readjustment of both FPAAs (hereinafter referred to as the “federal proceedings”)

. Around the same time , the VIBIR issued territorial notices of deficiency to the Vento family members and FPAA s to various other related entities, including the LLCs,
for the 2001 tax year

. P etitions were filed in District Court challenging these FPAAs and deficiency notices (hereinafter referred to as the “territorial proceedings”)

. The territor ial proceedings were consolidated with the federal proceedings in District Court , and the United States was permitted to intervene in the territorial cases

. In June 2010, after the parties conducted extensive discovery on residency issues,

t he District Court held a bench trial to determine whether the individual Vento family
members were bona fide residents of the USVI as of December 31 , 2001 , for income tax
purposes
. The District Court held, in a February 2011 opinion , which was amended in

1 The FPAAs challenged certain part nership items reported on the LLCs ’ informational tax returns, which reported the LLCs’ income and losses.5 April 2011, that none of the Ventos were USVI residents

. Soon thereafter, the District Court issued judgments dismissing the territorial proceedings (hereinafter referred to as
the “April 2011 Judgment s ”) , since the territorial proceedings were premised on the
Vento family’s residency in the USVI . The Ventos and the VIBIR filed timely appeals in
this Court challenging the District Court’s residency opinion and the April 2011 Judgments

. While those appeals were pending, and w ith residency decided by the District
Co urt, the parties conducted s ome discovery in the federal proceedings on the underlying

tax liability issues. At the close of this discovery period, the United States moved for summary judgm ent against the LLCs on liability issues

. 2 The District Court gra nted the motions on December 13, 2011, and entered judgment s in the federal proceedings on January 9, 2012 (hereinafter referred to as the “January 2012 Judgments”)

. 3 The LLCs filed timely appeals of the District Court’s residency opinion and the January 2012 Judgments

. This Court consolidated the pending appeals , and o n April 17, 2013, a three

- judge panel affirmed , in a precedential opinion, the District Court’s April 2011 opinion that
three of the Ventos

– daughters Nicole, Gail, and Renee

– were not bona fide USVI
residents for tax purposes . But the panel reversed the District Court’s decision as to

2 Specifically, the United States moved for partial summary judgment against the LLCs on the merits of the adjustments determined in the FPAAs relat ing to the Market Linked Deposit (MDL) tax shelter and related transactions.

3 The District Court considered the judgments final since the government conceded all other penalties determined in the FPAAs.6 parents Richard and Lana Vento, concluding that they were bona fide USVI residents

. Vento v. Dir. of V.I. Bureau of Internal Revenue , 715 F.3d 455 (3d C ir. 2013) (hereinafter referred to as the “Vento Residency Decision”)

. With respect to the LLCs, the panel concluded in a footnote: “The District Court made no findings with respect to the Vento partnerships. Because those partnerships are pass

- through e ntities . . . , they do not have residencies separate from their owners.” Id. at 479 n.22 (citation omitted)

. The panel’s j udgment in the Vento Residency Decision, entered by the Clerk of Court, stated that the
District Court’ s April 2011 J udgment was re versed in part and affirmed in part. 4
T he three Vento daughters petitioned this Court for rehearing of the residency appeals . The rehearing petition was denied in June 2013. No party to the consolidated appeals sought certiorari in the United States S upreme Court

. A full year later, the LLCs filed motions in District Court seeking to dismiss the federal proceedings for lack of subject matter jurisdiction. The District Court denied the motions on March 31, 2015, holding that res judicata barred the LL Cs’ challenge s to the court’s subject matter jurisdiction , because the Vento Residency Decision constituted a final judgment on the merits for the LLCs’ consolidated cases . These timely appeals
followed.

4 The opinion and judgment issued in connection wi th the Vento Residency Decision refer to a singular April 2011 Judgment by the District Court. See App. 253

- 56 (“[I]t is now hereby ORDERED and ADJUDGED that the judgment of the District Court of the Virgin Islands entered April 19, 2011 . . . is hereby R EVERSED IN PART and AFFIRMED IN PART.”). It is understood that the Vento Residency Decision impacted the numerous April 2011 Judgments entered by the District Court in the territorial proceedings.7 II 5
It is well

- settled law that subject matter jur isdiction cannot be forfeited or waived, and that it can be challenged at any stage of litigation before final judgment, even if that challenge is raised for the first time on appeal. Ashcroft v . Iqbal , 556 U.S. 662, 671 (2009); see In re Kaiser Grp. Int ’ l Inc., 399 F.3d 558, 565 (3d Cir. 2005)

. But it is equally well

- settled law that when a federal court reaches final judgment on the merits, “the issue of its subject matter jurisdiction is res judicata even though it was not litigated or, indeed, even th ough the decree was totally uncontested.” Hodge v. Hodge , 621 F.2d 590, 592 (3d Cir. 1980) (stating that “unless more than the private interests of the litigants is at stake, even the issue of subject matter jurisdiction must at some point be
laid to rest ”)

. The LLCs contend in these appeals that there are no final judgment s in their cases

to which a res judicata defense can attach ; therefore, their late challenge s to the District Court’s subject matter jurisdiction are not yet foreclosed . We disagree.
In their appeals of the District Court’s residency decision and the January 2012 Judgments, the LLCs raised only one issue: the bona fide residency of each individual Vento family member , which would ultimately determine the residency of the LLCs.
T he V ento Residency Decision explicitly decided this issue , and thus fully resolved not only the appeals of the April 2011 Judgment s , but also resolved the LLCs’ appeals of the

5 We have jurisdiction to review these final order s of th e District Court pursuant to 28 U.S.C. § 1291. Our review of whether the district court was vested with subject matter jurisdiction is plenary. Brown v. Francis , 75 F.3d 860, 864

- 65 (3d Cir. 1996).8 January 2012 Judgments, since the LLCs did not “have residencies separate from their owners.” App. 253. Significantly, neither the opinion nor the judgment issued in conne ction with the Vento Residency D ecision indicated that the LLCs’ cases were being remanded to the
District Court for fu rther proceedings on the merits; nowhere in the opinio n or the accompanying judgment does the word “remand” appear. I f we look beyond the particular language chosen and focus on the substance of the opinion, the LLCs fare no better. The Vento Residency Decision did not provide any instructions to the District
Court or suggest that other proceedings or new findings in the LLCs’ actions were
necessary. In short, neither the panel’s opinion nor its judgment indicated that the
District C ourt had any additional work left to do with respect to the LLCs’ cas es
. Indeed, because residency was the only issue challenged on appeal by the LLCs and residency was fully resolved in the Vento Residency Decision, what remained was simply the administrative task, presumably to be handled by the IRS and VIBIR, of
calcu lating the LLCs’ respective tax assessments consistent with the Vento Residency
Decision. 6 Accordingly, as the District Court’s order explained, final judgments on the

6 We have explained, albeit in a slightly different cont ext, that a decision should be considered final “if only a ‘ministerial’ task remains for the district court to perform,” such as a “mechanical and uncontroversial” c alculation of damages. Skretvedt v. E.I. DuPont De Nemours , 372 F.3d 193, 200 n.8 (3d Cir . 2004) (internal quotation marks omitted)

.9 merits, to which the res judicata defense could attach, existed in the federal proceedi ngs once the time to appeal the Ven to Residency Decision expired, at the very latest

. 7

III For the foregoing reasons, we agree with the District Court’s determination that the LLCs’ subject matter jurisdiction challenge s are barred by res judicata. Acc ordingly,

we affirm

.

7 W hile it has no bearing on our holding today , we note that it was the LLCs that invoked the District Court’s subject matter jurisdiction in the first place by filing the underlying complaints, and the LLCs tha t reiterated the District Court’s proper subject matter jurisdiction in their appeals of the District Court’s residency decision and the corresponding April 2011 and January 2012 Judgments.