Opinion ID: 765233
Heading Depth: 2
Heading Rank: 3

Heading: Possible Waiver of the Fraud Issue

Text: 15 We question, first of all, whether the fraud theory now argued by the government was indeed fairly raised in the district court. As stated by the Supreme Court: 16 It is the general rule, of course, that a federal appellate court does not consider an issue not passed upon below. In Hormel v. Helvering, 312 U.S. 552, 556 (1941), the Court explained that this is essential in order that parties may have the opportunity to offer all the evidence they believe relevant to the issues... [and] in order that litigants may not be surprised on appeal by final decision there of issues upon which they have had no opportunity to introduce evidence. 17 Singleton v. Wulff, 428 U.S. 106, 120 (1976).Nowhere in its answer, summary judgment papers or trial evidence did the government offer proof of fraud. Accordingly, nowhere did Mrs. Cotler offer any contrary proof. The government argues, nevertheless, that this issue was raised below. But in its briefs it points only to one entry in the government's Proposed Findings and Conclusions submitted to the district court shortly before trial, but not adopted by the judge. Upon being questioned further about this at oral argument before us, government counsel indicated that near the end of his argument at the district court, the United States Attorney again mentioned this issue. From our inspection of the record below, it appears that actually the issue was raised by the lawyer for The Mildred Cotler Trust, et al., who stated that: 18 There is one other issue that was raised in [the government's] proposed findings and conclusions I received last week that I didn't really expect, but I would just like to comment on, and that is that the position that because these tax returns 1972, 1973 tax returns were fraudulent then there is an exception to the statute of limitations with respect to the collection of any tax for that year. . . .I would like to actually ask if I could amend my proposed finding of fact because this issue wasn't raised prior to me sending in my proposed finding of fact . . . .There was no finding of fraud with respect to these tax returns . . . . 19 In other words, The Mildred Cotler Trust, et al., did not feel they were fairly presented with the issue, and given a chance to respond to the belated fraud allegations before the district court. The proposed findings were not submitted until four and one-half years after the suit was filed and only one week before trial. The district court did not respond to their request, and accordingly, The Mildred Cotler Trust, et al., did not amend their proposed findings of fact, or offer any evidence on point.To our reading the district court ignored the issue as if irrelevant. 20 It would be difficult, based on these circumstances, to find that the issue was fairly raised in the district court, and that The Mildred Cotler Trust, et al., had an adequate opportunity to present its own evidence on this issue.We find it difficult to decide whether this issue was duly advanced before the district court, and therefore preserved for appeal.We hesitate, however, to treat the issue as waived, especially as it can be readily decided on this record against the party that had the burden of proof, and may have waived the issue. In these circumstances, we therefore exercise our discretion to decide this issue, even if deemed raised for the first time on appeal.See, e.g., Singleton, 428 U.S. at 120; Bornholdt v. Brady, 869 F.2d 57, 68 (2d Cir. 1989).