Source: https://openjurist.org/959/f2d/241/rivera-v-commissioner-internal-revenue-service
Timestamp: 2019-12-12 22:21:43
Document Index: 615870514

Matched Legal Cases: ['§ 7443', '§ 7443', '§ 2', '§ 6103', '§ 552', '§ 6103', '§ 455', '§ 7443', '§ 7443', '§ 6103', '§ 552']

959 F2d 241 Rivera v. Commissioner Internal Revenue Service | OpenJurist
959 F. 2d 241 - Rivera v. Commissioner Internal Revenue Service
959 F2d 241 Rivera v. Commissioner Internal Revenue Service
Delores P. RIVERA; Robert Pease; S. Madalene Pease;
Thomas A. Duffy; Ann D. Duffy; Stanley Downs;
Janae Downs; Gregory H. Abeson; Arline
H. Abeson, Petitioners-Appellants,
No. 91-70086.
We review the tax court's denial of these motions for abuse of discretion. See, e.g., Molloy v. Wilson, 878 F.2d 313, 315 (9th Cir.1989) (denial of motion to vacate judgment will be reversed only upon clear showing of abuse of discretion); Transgo, Inc. v. AJAC Transmission Parts Corp., 768 F.2d 1001, 1014 (9th Cir.1985) (denial of motion for new trial or motion to amend judgment reviewed for abuse of discretion), cert. denied, 474 U.S. 1059 (1986); Parkinson v. Commissioner, 647 F.2d 875, 876 (9th Cir.1981) ("The Tax Court's denial of a motion for reconsideration will not be overturned on appeal absent a clear abuse of discretion.").
Abeson argues that, because the initial tax court petitions were filed prior to October 25, 1982, the chief judge of the tax court exceeded his statutory authority under 26 U.S.C. § 7443A(b)(4) in assigning Abeson's case to be heard by a special trial judge. Abeson also argues that § 7443A(b)(4) violates the Appointments Clause of the Constitution, art. II, § 2, cl. 2. Abeson's counsel conceded in oral argument, however, that Freytag v. Commissioner, 111 S.Ct. 2631, 2638-39, 115 L.Ed.2d 764, 779-88 (1991), is controlling, and that Freytag rejected both arguments.
However, Hessler's earlier testimony merely demonstrates that he was concerned that answering certain questions might violate either Fed.R.Crim.P. 6(e) or 26 U.S.C. § 6103. Because Hessler's earlier testimony does not establish that he knew of a specific 1978-79 grand jury investigation, that testimony is not in conflict with his subsequent testimony that he was unaware of any pre-1981 grand jury investigation of Berg.
C. Testimony of Mary Pappas
D. Declaration of Judge Ruwe
Abeson next argues that Judge Panuthos made several findings of fact ("core Abeson findings") which Panuthos knew were false. Because these factual findings were not clearly erroneous, see Mayors v. Commissioner, 785 F.2d 757, 759 (9th Cir.1986), the tax court did not abuse its discretion in declining to accept Abeson's contentions.
Abeson argues that those findings are contradicted by two letters sent by the U.S. Attorney's office to the Tax Division of the Department of Justice. In the first letter, dated February 28, 1979, the Assistant U.S. Attorney wrote that "[t]his [U.S. Attorney's] office would, therefore, request to extend the scope of its Grand Jury investigation of Mr. Berg to include the years 1974 through 1977." On August 30, 1979, after learning that the IRS's Chief Counsel opposed the request for an extension of the grand jury, the U.S. Attorney "decided not to prosecute Mr. Berg for the calendar year 1973," and instead to "clos[e] the case on him."
3. Findings Pertaining to the Refund Checks
Abeson points to a Memorandum of Interview, which is an IRS-prepared summary of a 1974 interview between two IRS Special Agents and Berg. The summary states that "[a]ll of the clients [Berg] saw after March 31, 1974 gave a power of attorney and specific instructions for use of refund." This statement does not put the IRS on notice that Berg was actually negotiating his client's refund checks. A standard power of attorney allows a return preparer, such as Berg, to receive his clients' refund checks. Thus, the existence of a power of attorney does not, in and of itself, indicate that Berg was then negotiating those checks.
IV. Due Process Violations
Although Abeson alleges due process violations, the gravamen of his argument is that the tax court erred in the application of an evidentiary privilege. We review evidentiary rulings for abuse of discretion and will not reverse absent some prejudice. Roberts v. College of the Desert, 870 F.2d 1411, 1418 (9th Cir.1989).
Abeson argues that the tax court erred by failing to engage in the requisite independent de novo review of the Commissioner's determination pursuant to 5 U.S.C. § 552(b)(7) and 26 U.S.C. § 6103(b)(2) to withhold documents. See Long v. United States IRS, 742 F.2d 1173, 1182-83 (9th Cir.1984). Rather, claims Abeson, the tax court either never received the documents to review at all or the court ignored the documents.
Abeson next argues that Judge Panuthos erred by failing to recuse himself pursuant to 28 U.S.C. § 455. We review a denial of a recusal motion for abuse of discretion. Preston v. United States, 923 F.2d 731, 733 (9th Cir.1991).
Abeson first alleges that recusal was appropriate because Judge Panuthos knowingly allowed the witness Frazier to perjure herself. We rejected a similar argument in United States v. Studley, 783 F.2d 934, 939 (9th Cir.1986), where Studley alleged that the district court judge knew that IRS agents had perjured themselves, but did nothing. We noted that the prejudice alleged to justify a recusal motion "must result from an extrajudicial source; a judge's prior adverse ruling is not sufficient cause for recusal." Id. Because the allegation in Studley involved the judge's performance while presiding over Studley's case, we held that the allegation was not extrajudicial and therefore could not form the basis for a request for recusal. Id. Similarly, Abeson's allegation does not involve prejudice arising from an extrajudicial source, and thus the denial of the recusal motion was not an abuse of discretion.
Abeson next argues that recusal was appropriate because of consistent misconduct by Judge Panuthos, which led to the transfer of this case to Tax Court Judge Fay. This argument is frivolous. Judge Panuthos, as a special trial judge, does not have statutory authority to render a final decision in cases assigned pursuant to 26 U.S.C. § 7443A(b)(4). See 26 U.S.C. § 7443A(c); Freytag, 111 S.Ct. at 2636 n. 3, 115 L.Ed.2d at 777. This case, therefore, was required to be transferred from Judge Panuthos so that the tax court could render a decision, and such a transfer in no way demonstrates that Judge Panuthos engaged in misconduct.
Abeson also argues that the Abeson decision should be vacated, and a new trial granted, pursuant to Fed.R.Civ.P. 60(b)(3), which allows a decision to be vacated when a party has discovered "fraud ..., misrepresentation, or other misconduct of an adverse party." Such "fraud on the court" "may occur when the acts of a party prevent his adversary from fully and fairly presenting his case or defense." Abatti v. Commissioner, 859 F.2d 115, 118 (9th Cir.1988). The tax court's denial of the motion to vacate was not an abuse of discretion. See Molloy, 878 F.2d at 315.
Abeson first argues that Judge Ruwe and Judge Panuthos acted together to prevent Judge Ruwe from testifying. There is no evidence that Judge Ruwe perpetrated fraud or misrepresentation on the court, however. Abeson argues that Judge Ruwe committed perjury in his declaration, but, as discussed supra Part II(D), that argument is not supported by any evidence. The allegation that Judge Panuthos acted to prevent Judge Ruwe from testifying also lacks evidentiary support. While Judge Panuthos both quashed the subpoena of Judge Ruwe, and made an evidentiary ruling that precluded a memo written by Judge Ruwe from being admitted into evidence, there is no evidence that Judge Panuthos perpetrated any fraud or misrepresentation. Additionally, Rule 60(b)(3) applies only to fraud committed by an adverse party, and Judge Panuthos was not the adverse party in this case; the IRS was.
Abeson also contends that Judge Panuthos committed fraud on the court when he refused to admit into evidence a memo written by Judge Ruwe on the basis of the government process privilege, 26 U.S.C. § 6103(b)(2) and 5 U.S.C. § 552(b)(7)(E). Abeson, however, has failed to demonstrate that Judge Panuthos's evidentiary rulings were an abuse of discretion, see supra Part IV, let alone that Judge Panuthos fraudulently refused to admit evidence.