Court Opinion

ID: 6350940
Source: CourtListenerOpinion
Date Created: 2022-06-17 19:00:33.473528+00
Date Added: 2024-06-11T09:15:43.526058
License: Public Domain

Appellate Case: 20-9002     Document: 010110698617      Date Filed: 06/17/2022     Page: 1
                                                                                 FILED
                                                                     United States Court of Appeals
                       UNITED STATES COURT OF APPEALS                        Tenth Circuit

                               FOR THE TENTH CIRCUIT                         June 17, 2022
                           _________________________________
                                                                        Christopher M. Wolpert
                                                                            Clerk of Court
  ALLEN R. DAVISON, a/k/a Allen Reed
  Davison, II,

        Petitioner - Appellant,

  v.                                                         No. 20-9002
                                                        (CIR No. 014765-15L)
  COMMISSIONER OF INTERNAL                             (United States Tax Court)
  REVENUE,

        Respondent - Appellee.
                       _________________________________

                               ORDER AND JUDGMENT *
                           _________________________________

 Before BACHARACH, BALDOCK, and EID, Circuit Judges.
                  _________________________________

        Allen R. Davison appeals pro se a Tax Court decision holding him liable for

 penalties under Internal Revenue Code § 6700. Because Davison did not file a notice

 of appeal following the Tax Court’s decision and we decline to give effect to his

 previously filed premature notice of appeal, we dismiss his appeal for lack of

 appellate jurisdiction.

        *
         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 This order and judgment is not binding
 precedent, except under the doctrines of law of the case, res judicata, and collateral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: 20-9002    Document: 010110698617        Date Filed: 06/17/2022      Page: 2

 I.    Background

       Davison is a lawyer and formerly a certified public accountant. From 1999 to

 2010, he was the key legal and tax planning advisor to Cash Management Systems

 (CMS). CMS marketed so-called “tool plan” tax shelters to companies with

 employees who supply their own tools. A tool plan purports to recharacterize part of

 an employee’s existing wages as “tool pay” that is fully or partially tax exempt.

 Davison provided advice about the tax benefits of CMS’s tool plans in written

 memoranda, and he prepared executive summaries that were provided to CMS’s

 customers. He also reviewed CMS’s marketing materials.

       In June 2014, the IRS assessed penalties against Davison of $18,000 each for

 2009 and 2010 under 26 U.S.C. § 6700, which authorizes penalties for the promotion

 of abusive tax shelters, see Nat’l Commodity & Barter Ass’n v. Gibbs, 886 F.2d 1240,

 1249 (10th Cir. 1989). The assessed penalties represented 50% of the fees that CMS

 paid Davison for those years. Davison also consented to an injunction permanently

 enjoining him from promoting tool plans or advising customers that tool plans are

 consistent with the tax laws.

       After the IRS issued a notice of determination, Davison timely petitioned the

 Tax Court for review. To establish Davison’s liability, the Commissioner needed to

 prove that Davison (1) organized (or assisted in the organization of) an entity,

 investment plan or any other arrangement, or participated (directly or indirectly) in

 the sale of any interest in an entity, investment plan, or any other arrangement, and

 (2) made material statements concerning the tax benefits to be derived from that

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 entity, plan, or arrangement that Davison knew or had reason to know were false.

 See 26 U.S.C. § 6700(a). Following a trial, the Tax Court issued its Memorandum

 Findings of Fact and Opinion (MFFO) on May 14, 2020. It found that the

 Commissioner had proven both elements for liability under § 6700 and that the

 penalties were properly assessed and correctly calculated. The MFFO indicated that

 a “[d]ecision will be entered for respondent.” Aplee. App., Vol. 6 at 1349.

       Davison filed a notice of appeal (NOA) on June 1, 2020. The Commissioner

 moved to stay briefing in the appeal, asserting that Davison’s NOA was premature

 because the Tax Court had not yet entered a decision in the case. The Commissioner

 took the position (which he now disavows) that Davison’s NOA would automatically

 ripen upon issuance of a final decision by the Tax Court. Meanwhile, Davison had

 not submitted several of the required preliminary filings in this court. We took the

 Commissioner’s motion under advisement, but we suspended briefing in the appeal

 and ordered Davison, by July 13, 2020, to file his docketing statement and either pay

 the filing fee or move to proceed without prepayment of costs and fees (ifp motion),

 warning that his appeal may be dismissed if he failed to do so. We advised Davison

 that, upon his compliance with these requirements, he could also file a response to

 the Commissioner’s motion, in which he should address whether his appeal should be

 dismissed for lack or jurisdiction or abated pending further action by the Tax Court.

       Davison did not comply. Following a deficiency notice, he submitted only a

 deficient brief. We then ordered Davison to comply with the court’s requirements by

 August 3, 2020, again warning that his appeal may be dismissed. He filed only a

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 deficient ifp motion. Finally, after giving Davison another week to comply and his

 failure to do so, we dismissed his appeal for failure to prosecute on August 18, 2020,

 and issued the mandate. Davison submitted a motion to reconsider the dismissal on

 September 21, 2020, which we received but did not file, subject to his filing a

 docketing statement and a response to the Commissioner’s motion to stay briefing.

 He took no action at that time.

       The Tax Court entered its decision in Davison’s case on March 5, 2021

 (Decision). He did not file a new NOA in the Tax Court. He instead moved in this

 court on July 6, 2021, to reinstate his appeal. Davison stated (inaccurately, based

 upon his September 2020 motion to reconsider) that he had learned in May 2021 that

 his appeal had been dismissed. He also claimed that his legal blindness made it

 difficult to comply with procedural requirements. We declined to rule on Davison’s

 motion until he had filed his docketing statement and an ifp motion. After filing his

 docketing statement and submitting the appellate filing fee, he renewed his motion to

 reinstate the appeal on August 23, 2021. We granted the motion, recalled our

 mandate, and reinstated Davison’s appeal. But in a separate order, we directed the

 parties to brief whether the Tax Court’s May 14, 2020, MFFO was an appealable

 decision, and if not, whether the appeal ripened following the Tax Court’s Decision

 on March 5, 2021.

 II.   Discussion

       We hold that the Tax Court’s MFFO was not an appealable decision and that

 Davison’s NOA, which he filed before the Tax Court’s Decision, was therefore

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 premature. Although we have discretion to give effect to Davison’s premature NOA,

 we decline to do so for the reasons explained in this order and judgment. And

 because Davison failed to file an NOA within 90 days of the Tax Court’s Decision,

 we lack jurisdiction over his appeal. See Okon v. C.I.R., 26 F.3d 1025, 1026-27

 (10th Cir. 1994) (dismissing appeal for lack of jurisdiction where NOA was not

 timely filed under 26 U.S.C. § 7483 and Fed. R. App. P. 13(a)); see also Bowles v.

 Russell, 551 U.S. 205, 209-13 (2007) (holding that statutory time limits for taking an

 appeal are “mandatory and jurisdictional,” id. at 209 (internal quotation marks

 omitted)).

       A.     The Tax Court’s MFFO was not a Final, Appealable Decision and
              Davison’s NOA was Premature

       We recently held in Minemyer v. C.I.R., 995 F.3d 781, 785 (10th Cir. 2021),

 that the Tax Court’s MFFO was not a final decision. Similar to the MFFO in this

 case, the MFFO in Minemyer specified that “an appropriate decision will be entered.”

 Id. (emphasis added, brackets and internal quotation marks omitted). In concluding

 that the MFFO “was not a ‘decision’ within the meaning of the Internal Revenue

 Code,” we considered the definitions of “decision” and “report” in the Code. Id. We

 noted that “a ‘report’ [is defined to] include the Tax Court’s findings of fact or

 opinion or memorandum opinion,” and that “the Code, Tax Court Rules, and

 Supreme Court caselaw all distinguish a Tax Court’s ‘reports’ from its ‘decisions.”

 Id. We therefore dismissed the appeal for lack of appellate jurisdiction because the

 Tax Court had not yet issued a decision in that case. Id. at 785 & n.2.

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       Davison advances conflicting arguments: (1) that the MFFO was a final,

 appealable decision, 1 and (2) that his NOA was premature. But he does not

 distinguish our ruling in Minemyer, under which the Tax Court’s MFFO in this case

 was not a final, appealable decision. Davison’s NOA filed before the Tax Court’s

 Decision was therefore premature.

       B.     We Have Discretion to Give Effect to a Premature NOA in a Tax
              Court Appeal

       Federal Rule of Appellate Procedure 4(a)(2) provides that a prematurely filed

 NOA will ripen upon the entry of a final judgment by a district court. See Fed. R.

 App. P. (4)(a)(2) (“A notice of appeal filed after the court announces a decision or

 order--but before the entry of the judgment or order--is treated as filed on the date of

 and after the entry.”). But Federal Rule of Appellate Procedure 14 excludes Rule 4

 from the appellate rules that govern Tax Court appeals. See Fed. R. App. P. 14 (“All

 provisions of these rules, except Rules 4, 6-9, 15-20, and 22-23, apply to appeals

 from the Tax Court.” (emphasis added)). And Federal Rule of Appellate Procedure

 13, which specifically governs Tax Court appeals, does not include a provision the

 same as or similar to Rule 4(a)(2) with regard to the ripening of a premature NOA.

 See Fed. R. App. P. 13. Thus, there is no court rule providing that a premature NOA

       1
          Davison maintains that the Commissioner treated the Tax Court’s MFFO as
 final and enforceable by engaging in collection efforts. But he does not provide any
 citation to the record, nor does he clarify whether any collection efforts predated the
 Tax Court’s issuance of its Decision on March 5, 2021. In any event, the
 Commissioner has consistently taken the position in this court that the MFFO was not
 a final, appealable decision and that Davison’s NOA was premature.
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 from a Tax Court ruling will ripen upon the entry of a final decision. The question,

 then, is whether, in the absence of such a Rule, this court still has discretion to give

 effect to a premature NOA filed before the Tax Court has issued a decision. We hold

 that we do.

       The Supreme Court has recognized that Rule 4(a)(2) “was intended to codify a

 general practice in the courts of appeals of deeming certain premature notices of

 appeal effective.” FirsTier Mortg. Co. v. Invs. Mortg. Ins. Co., 498 U.S. 269, 273

 (1991). The Court explained that “[t]he Rule recognizes that, unlike a tardy notice of

 appeal, certain premature notices do not prejudice the appellee and that the technical

 defect of prematurity therefore should not be allowed to extinguish an otherwise

 proper appeal.” Id. Citing the Rule’s Advisory Committee notes and the cases cited

 therein, the Court concluded it “was intended to protect the unskilled litigant who

 files a notice of appeal from a decision that he reasonably but mistakenly believes to

 be a final judgment, while failing to file a notice of appeal from the actual final

 judgment.” Id. at 276.

       This court was among those that had a practice, before Rule 4(a)(2), of

 deeming certain premature notices of appeal to be effective. In Morris v. Uhl &

 Lopez Eng’rs, Inc., 442 F.2d 1247, 1250-51 (10th Cir. 1971), we recognized our

 authority to refuse to dismiss an appeal on the ground that the NOA was premature.

 The appellant in that case had filed his NOA after the entry of judgment against him

 but while other claims in the case remained pending. Id. at 1250. The appellees

 moved to dismiss the appeal for lack of jurisdiction. Id. But we chose to exercise

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 jurisdiction, and while the appeal remained pending, the district court entered a final

 judgment. The appellant did not file a new NOA at that time. Id. We explained our

 decision to deny the appellees’ motion to dismiss the appeal:

               In our view, the notice of appeal had capacity in the circumstances to
       provide jurisdictional basis that would entitle this Court to refuse, as it did,
       to make dismissal of the appeal out-of-hand and to allow the notice to ripen
       into full effectiveness as to the rendered judgment, since it seemed apparent
       that the judgment would remain unchanged in its form and content; that its
       lack of technical formal finality would become dispelled in natural course
       and within a not undue period of time; and that no prejudice could result to
       any one from so dealing with the notice.
       ...

               We accordingly hold that this Court properly could refuse at the time
       to dismiss the appeal on the notice that was filed; that it had the right to
       continue the notice in effect, to retain jurisdiction of the appeal thereunder
       in the natural ripening of the judgment into formal finality, and to deal with
       the merits of the appeal thereon unless intervening elements or events
       should give defeasance to the effect or application of the notice; and that
       the present renewed motion of [the appellees] for dismissal should be and
       hereby is overruled.
 Id. at 1250-51; see also Lewis v. B.F. Goodrich Co., 850 F.2d 641, 645 (10th Cir.

 1988) (reaffirming Morris after promulgation of Rule 4(a)(2)).

       We have not explicitly recognized our discretion to recognize a premature

 NOA from the Tax Court. The Ninth Circuit did so in Feistman v. C.I.R., 587 F.2d

 941, 943 (9th Cir. 1978) (stating in Tax Court appeal that “[t]his court has said that

 recognition of premature notices of appeals is within the court’s discretion.”). We

 agree that our authority to give effect to a premature NOA extends to an appeal from

 the Tax Court.

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       C.      We Decline to Exercise our Discretion to Give Effect to Davison’s
               Premature NOA

        In Feistman, the court stated it would not exercise its discretion to recognize a

 premature NOA “unless equity dictates we should.” Id. And it declined to do so in

 that case because the Tax Court clerk had notified the taxpayers, after the court

 issued its decision, that their first NOA was premature and that they needed to file a

 new NOA within 90 days of the final decision. Id. at 942-43. We agree that, while

 we have discretion to recognize a premature NOA, we are not obligated to do so.

 And we decline to do so in this case.

        As we have noted, the Commissioner originally took the position that

 Davison’s premature NOA would ripen upon the Tax Court’s issuance of a decision,

 apparently on the assumption that his appeal would remain pending until entry of the

 Tax Court’s Decision. But the Commissioner now asserts that Davison’s NOA did

 not ripen because his appeal had already been dismissed for failure to prosecute in

 August 2020, well before the Tax Court issued its Decision on March 5, 2021.

 Davison does not address this issue. We agree with the Commissioner.

        In Morris, we concluded we “had the right to continue the [premature] notice

 in effect, to retain jurisdiction of the appeal thereunder in the natural ripening of the

 judgment into formal finality . . . unless intervening elements or events should give

 defeasance to the effect or application of the notice.” 442 F.2d at 1250-51.

 Defeasance, most generally, means “[a]n annulment or abrogation.” Defeasance,

 Black’s Law Dictionary (11th ed. 2019). In Lewis, we cited the reasoning in Morris

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  when applying Rule 4(a)(2), and we stated that the court “will consider [an] appeal

  on its merits rather than dismiss for lack of jurisdiction” “when a district court has

  adjudicated all remaining outstanding claims before this appellate court acts to

  dismiss the appeal.” 850 F.2d at 645 (emphasis added).

        In contrast to the facts in Morris, we did not retain jurisdiction in Davison’s

  appeal until the Tax Court issued its Decision. We instead dismissed the appeal

  based on Davison’s failure to prosecute almost seven months before the Tax Court’s

  Decision. That dismissal was an event that intervened to “give defeasance to the

  effect or application of the notice.” Morris, 442 F.2d at 1251. Moreover, although

  we chose to recall the mandate and reinstate Davison’s appeal, the equities do not

  dictate that we now recognize his premature NOA. See Feistman, 587 F.2d at

  943. Despite Davison’s assertions otherwise, he is not, by analogy, like “the

  unskilled litigant” described in FirsTier Mortg., 498 U.S. at 276. Although he is

  proceeding pro se, he is an attorney. Cf. Mann v. Boatright, 477 F.3d 1140, 1148 &

  n.4 (10th Cir. 2007) (declining to apply the same liberality to a pro se pleading filed

  by a licensed attorney). Additionally, the Tax Court’s MFFO explicitly stated that a

  “[d]ecision will be entered,” Aplee. App., Vol. 6 at 1349, signaling that the MFFO

  was not the court’s decision. The Commissioner’s motion to stay briefing in the

  appeal likewise alerted Davison that his NOA was premature. Yet long after we

  dismissed his appeal for failure to prosecute, he did not file a new NOA when the

  Tax Court eventually issued its Decision. He had 90 days from March 5, 2021, to do

  so. See 26 U.S.C. § 7483; Fed. R. App. P. 13(a)(1)(A). Davison did not even seek to

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  reopen this appeal within that 90-day period; rather, he filed his first motion on

  July 6, once again without the preliminary filings we ordered him to complete before

  dismissing his appeal the previous year. Under these circumstances, Davison cannot

  reasonably but mistakenly believe that his premature NOA remains effective. Cf.

  FirsTier Mortg., 498 U.S. at 276 (noting that Rule 4(a)(2) “was intended to protect

  the unskilled litigator who files a notice of appeal from a decision that he reasonably

  but mistakenly believes to be a final judgment, while failing to file a notice of appeal

  from the actual final judgment”).

  III.   Conclusion

         We dismiss Davison’s appeal for lack of appellate jurisdiction.

                                              Entered for the Court

                                              Allison H. Eid
                                              Circuit Judge

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