Court Opinion

ID: 6345758
Source: CourtListenerOpinion
Date Created: 2022-06-01 16:00:25.244222+00
Date Added: 2024-06-11T09:15:04.502424
License: Public Domain

Appellate Case: 21-3135     Document: 010110691332       Date Filed: 06/01/2022    Page: 1
                                                                                  FILED
                                                                      United States Court of Appeals
                       UNITED STATES COURT OF APPEALS                         Tenth Circuit

                              FOR THE TENTH CIRCUIT                           June 1, 2022
                          _________________________________
                                                                         Christopher M. Wolpert
                                                                             Clerk of Court
  UNITED STATES OF AMERICA,

        Plaintiff - Appellee,

  v.                                                         No. 21-3135
                                                    (D.C. No. 2:19-CV-02241-JWL)
  JERRY LAMBERD,                                               (D. Kan.)

        Defendant - Appellant,

  and

  WYANDOTTE COUNTY,

        Defendant.
                          _________________________________

                              ORDER AND JUDGMENT*
                          _________________________________

 Before MATHESON, KELLY, and CARSON, Circuit Judges.
                   _________________________________

        Jerry Lamberd appeals the district court’s denial of his motion for relief from

 judgment. See United States v. Lamberd, 541 F. Supp. 3d 1274, 1275 (D. Kan.

 2021). Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

        *
         After examining the briefs and appellate record, this panel has determined
 unanimously that oral argument would not materially assist in the determination of
 this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
 ordered submitted without oral argument. This order and judgment is not binding
 precedent, except under the doctrines of law of the case, res judicata, and collateral
 estoppel. It may be cited, however, for its persuasive value consistent with
 Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Appellate Case: 21-3135     Document: 010110691332         Date Filed: 06/01/2022     Page: 2

                                   I. BACKGROUND

        The United States (“Government”) brought suit against Lamberd asserting

 that, as the sole member of Pro-Tec Roofing Supply, LLC, which had not elected to

 be taxed as a corporation, Lamberd personally owed Pro-Tec’s unpaid employment

 and unemployment taxes plus penalties and interest for certain tax years prior to

 2009. After discovery, the district court issued a pretrial order that included

 stipulations to the fact of the assessments and to the court’s subject matter

 jurisdiction under 28 U.S.C. §§ 1340 and 1345 and 26 U.S.C. §§ 7402 and 7403. The

 Government then moved for summary judgment, supporting its claims with

 Certificates of Assessments. In response, Lamberd contended only that the amounts

 owed were not presumptively correct. The district court granted summary judgment

 to the Government on both of its claims (one for the amount owed and one for

 enforcement of a tax lien on real property Lamberd owned). Lamberd did not appeal

 that judgment.

        Almost eleven months later, Lamberd filed a motion under Federal Rule of

 Civil Procedure 60(b)(4). He argued that Treasury Regulation § 301.7701-2(a),

 which the Government had relied on in deeming Pro-Tec a disregarded entity for

 employment tax purposes, was invalid. In relevant part, the regulation provides that,

 for the time periods at issue here (before 2009), “[a] business entity with only one

 owner is classified as a corporation or is disregarded; if the entity is disregarded, its

 activities are treated in the same manner as a sole proprietorship, branch, or division

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 of the owner.” Treas. Reg. § 301.7701-2(a).1 Lamberd contended that the regulation

 was invalid under a Chevron analysis2 because it allowed an assessment to be made

 against him personally without the showing Congress required in 26 U.S.C.

 § 6672(a)—that he was a responsible person who willfully failed to pay over taxes an

 employer withholds, see Slodov v. United States, 436 U.S. 238, 244–45 (1978)

 (explaining § 6672(a)). He urged that an assessment based on an invalid regulation is

 itself invalid, and lacking a valid assessment, the district court lacked subject matter

 jurisdiction and its judgment was void.

       The district court denied the motion because: (1) Lamberd had not shown that

 an invalid regulation deprives a district court of subject matter jurisdiction; (2) he

 provided no authority to support his argument that a valid tax assessment is a subject

 matter jurisdiction prerequisite under the Case or Controversy Clause, U.S. Const.

 art. III, § 2; (3) subject matter jurisdiction cannot be attacked collaterally under

       1
          For wages paid on or after January 1, 2009, a single-owner business entity is
 not disregarded as an entity separate from its owner but is instead treated as a
 corporation for employment tax purposes. See Treas. Reg. § 301.7701-2(c)(2)(iv)
 (setting out special rules for employment tax purposes); id. § 301.7701-2(e)(5)
 (establishing applicable dates for paragraph (c)(2)(iv) regarding wages paid on or
 after various dates beginning with January 1, 2009).
       2
          Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984).
 When considering the validity of a regulation under Chevron, “[w]e ask first whether
 Congress has spoken to the precise question at issue. If so, we must apply the
 unambiguous meaning of the statute. If, however, the statute is ambiguous on the
 issue, we will defer to an agency’s reasonable interpretation.” Am. Fed’n of Gov’t
 Emps., Loc. 1592 v. Fed. Lab. Rels. Auth., 836 F.3d 1291, 1295 (10th Cir. 2016)
 (citations and internal quotation marks omitted).
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 Rule 60(b)(4); (4) Lamberd did not show there was no arguable basis for subject

 matter jurisdiction; and (5) he did not show that the regulation should be invalidated.

                                      II. DISCUSSION

        We review de novo the denial of a Rule 60(b)(4) motion. Gschwind v. Cessna

 Aircraft Co., 232 F.3d 1342, 1345 (10th Cir. 2000). Rule 60(b)(4) provides that the

 court may relieve a party from a final judgment if “the judgment is void.” “A

 judgment is void for Rule 60(b)(4) purposes if the rendering court was powerless to

 enter it.” Gschwind, 232 F.3d at 1346 (internal quotation marks omitted). But “this

 occurs only where there is a plain usurpation of power, when a court wrongfully

 extends its jurisdiction beyond the scope of its authority.” Id. (internal quotation

 marks omitted). “A court does not usurp its power when it erroneously exercises

 jurisdiction[;] . . . error in interpreting a statutory grant of jurisdiction is not

 equivalent to acting with total want of jurisdiction.” Id. Instead, “[t]here must be no

 arguable basis on which the court could have rested a finding that it had

 jurisdiction.” Id. (emphasis added) (brackets and internal quotation marks omitted).

 “In the interest of finality, the concept of setting aside a judgment on voidness

 grounds is narrowly restricted.” V. T. A., Inc. v. Airco, Inc., 597 F.2d 220, 225

 (10th Cir. 1979).3

        3
         The district court stated that because Lamberd could have challenged subject
 matter jurisdiction on “direct review” but did not, he could not challenge it “by
 collateral attack under Rule 60.” Lamberd, 541 F. Supp. 3d at 1277. The district
 court found support for that conclusion in Chicot County Drainage District v. Baxter
 State Bank, 308 U.S. 371, 376 (1940), where the Supreme Court said that questions
 of subject matter jurisdiction are “open to direct review” but “may not be assailed
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       Lamberd has not addressed, let alone met, the “no arguable basis” standard.

 At least three statutes, all of which the Government relied on in its complaint,

 provided the district court with an arguable basis on which it could have found

 subject matter jurisdiction: 26 U.S.C. § 7402, which confers jurisdiction on the

 district courts in all cases involving “the enforcement of the internal revenue laws”;

 28 U.S.C. § 1340, which provides district courts with “original jurisdiction of any

 civil action arising under any Act of Congress providing for internal revenue”; and

 28 U.S.C. § 1345, which vests district courts with “original jurisdiction of all civil

 actions, suits or proceedings commenced by the United States.”4 The novelty of

 collaterally.” Chicot County, however, did not involve a Rule 60(b)(4) motion
 alleging a void judgment due to lack of subject matter jurisdiction in the suit in which
 the motion was filed. Rather, it involved a later challenge, in a separate action, to the
 district court’s subject matter jurisdiction in an earlier action involving the same
 parties. See id. at 372–73, 378 (setting out procedural posture), 376–78 (rejecting
 collateral attack in separate action as barred by res judicata). And we have said that
 “[i]t is quite true that a judgment may be collaterally attacked under 60(b)(4) when
 the rendering court was powerless to enter it. But this remedy is not available to
 correct mere legal error.” V. T. A., Inc., 597 F.2d at 226. Gschwind’s “no arguable
 basis” standard gave substance to V. T. A.’s principles. Hence, subject matter
 jurisdiction may be challenged by a Rule 60(b)(4) motion, but success depends on
 meeting the Gschwind standard.
       4
          The Government also asserted, and Lamberd stipulated, that the district court
 had jurisdiction under 26 U.S.C. § 7403. That statute authorizes the United States to
 bring a civil action “[i]n any case where there has been a refusal or neglect to pay any
 tax, or to discharge any liability in respect thereof,” § 7403(a), and requires the
 district court “to adjudicate all [such] matters,” § 7403(c). But this court, albeit in an
 unpublished, non-precedential decision, has determined that § 7403 is not
 jurisdictional. See LNV Corp. v. Hook, 638 F. App’x 667, 670–71 (10th Cir. 2015).
 However, even if § 7403 were jurisdictional, it would only add support for our
 conclusion that the district court had an arguable basis for finding it had subject
 matter jurisdiction.
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 Lamberd’s invalid-regulation argument—particularly whether the regulation, if

 invalid, affects subject matter jurisdiction— demonstrates that the district court did

 not usurp its power to adjudicate the case by failing to conjure up and resolve the

 same argument sua sponte. See Johnson v. Spencer, 950 F.3d 680, 697–98 (10th Cir.

 2020) (holding that the district court had an arguable basis for asserting subject

 matter jurisdiction even if it erred in failing to consider sua sponte an argument

 whose jurisdictional nature was unclear); see also Aplt. Opening Br. at 15 (admitting

 that invalidity argument is novel).

       We next reject Lamberd’s contention that if § 301.7701-2(a) is invalid, then

 there was no case or controversy between the parties that would satisfy Article III of

 the Constitution. To the contrary, whether the regulation and resulting tax

 assessments were valid surely bears the hallmarks of a case or controversy, and if

 Lamberd had raised the issue, the district court arguably would have had jurisdiction

 to decide it. See, e.g., Littriello v. United States, 484 F.3d 372, 375–79 (6th Cir.

 2007) (upholding district court’s determination that § 301.7701-2 is valid under

 Chevon analysis); Guthrie v. Sawyer, 970 F.2d 733, 737–38 (10th Cir. 1992)

 (explaining that burden is on taxpayer to present evidence to rebut “presumptive

 proof of a valid assessment” set out in Certificates of Assessment (internal quotation

 marks omitted)).

       Lamberd’s reliance on United States v. Wilkes, 946 F.2d 1143 (5th Cir. 1991)

 and Stephenson v. Brady, No. 90-3042, 1991 WL 22835 (4th Cir. Feb. 26, 1991)

 (unpublished), does not alter our conclusion that the district court had an arguable

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 basis for finding it had subject matter jurisdiction because those cases are readily

 distinguishable. Wilkes explained that “[i]n order to prevail in a suit to reduce a tax

 assessment to judgment, the IRS must show that there does in fact exist a

 timely-made and unextinguished assessment.” 946 F.2d at 1148 (emphasis added).

 There was no suggestion that extinguishment of an assessment means there is no case

 or controversy. And in Stephenson, the court held that there was no case or

 controversy because the Government had not assessed a penalty under a regulation

 the taxpayer sought to have declared invalid. 1991 WL 22835 at *1–2. Here, the

 Government’s assessments using § 301.7701-2(a) were at the heart of its case and

 supplied the necessary case or controversy. Thus, Lamberd has not shown that the

 Case or Controversy Clause provides any basis for Rule 60(b)(4) relief on the theory

 that § 301.7701-2(a) is invalid.5 Furthermore, nothing in Wilkes or Stephenson

 supports Lamberd’s position that a valid assessment is required for jurisdiction under

 28 U.S.C. §§ 1340 or 1345 or under 26 U.S.C. § 7402, and he offers no other support

 for that position. And as we have noted, “there is no requirement in the Internal

 Revenue Code that before liability for employment taxes accrues, a notice of

 deficiency or assessment be given.” Marvel v. United States, 719 F.2d 1507, 1514

 (10th Cir. 1983).

       5
         As the district court noted, at least three circuits have upheld the regulation
 under Chevron. See Littriello, 484 F.3d at 374; McNamee v. Dep’t of Treasury,
 488 F.3d 100, 109–10 (2d Cir. 2007); Kandi v. United States, 295 F. App’x 873, 874
 (9th Cir. 2008). We need not and do not express any opinion on the issue.

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       Finally, although Lamberd’s stipulation in the pretrial order that the district

 court had subject matter jurisdiction is not controlling, see Prier v. Steed, 456 F.3d

 1209, 1214 (10th Cir. 2006), his agreement that the district court had such

 jurisdiction supports a determination that the district court had an arguable basis for

 exercising subject matter jurisdiction over this action.

                                  III. CONCLUSION

       We affirm the district court’s order denying Lamberd’s Rule 60(b)(4) motion.

                                             Entered for the Court

                                             Paul J. Kelly, Jr.
                                             Circuit Judge

                                             8