Opinion ID: 209404
Heading Depth: 2
Heading Rank: 1

Heading: The Tax Claims

Text: Mr. Stephanatos argues that the court’s decision to dismiss the case for lack of subject matter jurisdiction is clearly erroneous “because the defendant acknowledged the existence of the legal claims before the court.” The Court of Federal Claims, however, has inherent power to determine whether it has jurisdiction, even when the parties agree otherwise. See Folden v. United States, 379 F.3d 1344, 1354 (Fed. Cir. 2004). The Court of Federal Claims correctly determined that it did not have subject matter jurisdiction over Mr. Stephanatos’s claims for a refund of the taxes and penalties 2008-5091 3 assessed for 1999 and 2000. Mr. Stephanatos chose to bring those claims before the Tax Court first, and when he did so, he put the entire matter into the hands of that court. Erickson v. United States, 309 F.2d 760, 767 (Ct. Cl. 1962) (“[T]he Tax Court’s jurisdiction, once it attaches, extends to the entire subject of the correct tax for the particular year.”). Thus, the Court of Federal Claims properly dismissed these claims. While Mr. Stephanatos did not bring his claim for tax years 1992 and 2004–2006 before the Tax Court, he did bring the 1992 tax claims before the District Court for the District of New Jersey. Those claims were dismissed with prejudice (as were tax years 1999 and 2000) under Fed. R. Civ. Pro. 12(b)(1), and the Court of Federal Claims held that it was barred from hearing the claims by principles of res judicata. Challenging this dismissal under Fed. R. Civ. Pro. 12(b)(1), Mr. Stephanatos correctly points out that a case dismissed for lack of subject matter jurisdiction has not received a final judgment on the merits for purposes of res judicata. See Lewis v. United States, 70 F.3d 597, 602–04 (Fed. Cir. 1995). This is true even where a court purports to dismiss a case with prejudice. See, e.g., Scott Aviation v. United States, 953 F.2d 1377, 1378 (Fed. Cir. 1992) (“Without jurisdiction, the Claims Court cannot presume to dismiss the complaint with prejudice.”). Whenever possible, then, frivolous claims should be dismissed under Fed. R. Civ. Pro. 12(b)(6) for failure to state a claim upon which relief can be granted, which is a final adjudication on the merits. Lewis, 70 F.3d at 602–03 (recognizing this as the “general rule”). Nonetheless, we affirm the court’s decision to dismiss, because we agree with every court that has evaluated these claims—the claims are obviously frivolous and without merit. 2008-5091 4 The discussion above applies with equal force to Mr. Stephanatos’s claims for tax and penalty refunds from 2004–2006. For the 2004 and 2005 claims, the Court of Federal Claims treated the government’s motion under Fed. R. Civ. Pro. 12(b)(1) as a Fed. R. Civ. Pro. 12(b)(6) motion and dismissed the claims. Stephanatos, 81 Fed. Cl. at 442. The 2006 claims were dismissed for the same reasons. In discussing this result, the court stated that “[t]he many efforts that [Mr. Stephanatos] has made to persuade courts of the merits of his position have been uniformly unsuccessful. His position with respect to these later tax years can fare no better here.” Id. at 444. In other words, although the tax year might be different, the argument made regarding what taxes and penalties Mr. Stephanatos owes remains the same. As such, the Court of Federal Claims correctly dismissed his 2004–2006 claims under Fed. R. Civ. Pro. 12(b)(6).