Court Opinion

ID: 6336630
Source: CourtListenerOpinion
Date Created: 2022-04-29 21:01:31.992107+00
Date Added: 2024-06-11T09:24:16.108259
License: Public Domain

In the Gnited States Court of Federal Clauns

No. 17-115T
(Filed April 29, 2022)

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MICHAEL & PHYLLIS GRUNTZ, *
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Plaintiffs, *

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v. *

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THE UNITED STATES, *
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Defendant. *

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Michael & Phyllis Gruntz, Vero Beach, Fla., pro se.

Jennifer Dover Spriggs, Court of Federal Claims Section, Tax Division,
Department of Justice, with whom were David A. Hubbert, Deputy Assistant
Attorney General, David I. Pincus, Section Chief, and Mary M, Abate, Assistant
Chief, all of Washington, D.C., for defendant.

ORDER

WOLSKI, Senior Judge.

This case was brought by pro se plaintiffs Michael & Phyllis Gruntz, seeking
a refund of less than $17,000 in taxes paid (plus interest) for calendar year 2011,
due to alleged legal and music business expenses. See Compl. at 1-3, 6, 11, 18. As
the discovery cut-off approached, the plaintiffs indicated that they would soon have
counsel for this matter to defend them in their depositions, but the lawyer identified
neither appeared here nor responded to the government’s communications. Def.’s
Mot. to Enlarge Fact Discovery, ECF No. 12 at 1-3. The discovery period was
extended to allow plaintiffs the opportunity to obtain a lawyer. Order (Apr. 16,
2018), ECF No. 13 at 1. Two months later, the plaintiffs indicated that the lawyer
advising them was hesitant to join our court’s bar and appear on their behalf, in
part due to costs but primarily due to an unconventional expectation that
nonmutual offensive collateral estoppel would apply against the federal

 

 
government. See Def.’s Mot. for Leave, ECF No. 15 at 1-2 (discussing U.S. Tax
Court case involving My. Gruntz’s sister); but see United States v. Mendoza, 464
U.S. 154, 162 (1984) (holding “that nonmutual offensive collateral estoppel simply
does not apply against the Government”).

At the government’s request, the plaintiffs were ordered to either enter an
appearance by an attorney or file a status report indicating they would continue to
represent themselves. Order (Jan. 31, 2019), ECF No. 16 at 1. They timely filed a
status report repeating their incomplete understanding of collateral estoppel
doctrine and indicating that their attorney would not be entering an appearance at
that time. Pls” Status Rep., ECF No. 17 at 3-5.

On September 24, 2021, the government filed a motion to dismiss this case
due to the plaintiffs’ failure to prosecute it, under Rule 41(b) of the Rules of the
United States Court of Federal Claims (RCFC). See ECF No. 19. Although the
government noted in passing its inability to schedule depositions, id. at 2, its
primary focus was on its dissatisfaction over the pro se plaintiffs’ responses to other
discovery requests, see id. at 5-9. Instead of requesting a new discovery cut-off, re-
noticing depositions, or moving to compel discovery cooperation under RCFC 37{(a),
the government sought dismissal under RCFC 41(b), because of plaintiffs’ desire
that Mr. Gruntz’s sister’s Tax Court case be resolved first---again, due to their
confusion regarding how collateral estoppel operates. See id. at 9-10, The
government uncharitably characterized plaintiffs’ February 28, 2019 status report
as being “in contravention” of the Court’s January 31, 2019 order, see id. at 3,
although the former appropriately identified the plaintiffs as proceeding pro se, see
Pls.’ Status Rep. at 1, 5.

In any event, after the deadline for a response to the government’s motion
had passed with no word from the plaintiffs, they were tracked down at a new
mailing address, at which they were served with an order allowing them to file a
response to the motion on or by February 25, 2022. Order (Feb. 8, 2022), ECF No.
25 at 1. Although plaintiffs were on notice that failure to respond “will result in
their case being dismissed for failure to prosecute under RCFC 41(b),” id., no
response was received and the case was dismissed, Order (Mar. 7, 2022), ECF No.
26 at 1.

Under the circumstances of this case, the Court determined that a dismissal
without prejudice was appropriate. Jd. This is hardly an uncommon treatment of
pro se litigants in our court. See, e.g., Shapiro v. United States, No. 18-1780T, 2020
WL 3805918, at *3 (Fed. Cl. June 15, 2020); Benitez v. United States, No. 20-1055C,
2020 WL 8106628, at *2 (Fed. Cl. Jan. 18, 2020); Patterson v. United States, No. 15-
1090C, 2016 WL 2858868, at *1 (Fed. Cl. May 11, 2016); Bazile v. United States, No.
15-1020C, 2016 WL 1306415, at *1 (Fed. Cl. Apr. 1, 2016); Reeves v. United States,

2.
No. 14-777C, 2015 WL 5120985, at *1 (Fed. Cl. Aug. 31, 2015).! The government,
however, has filed a motion to alter or amend judgment pursuant to RCFC 59(e),
seeking to change the dismissal to one with prejudice. See Mot. to Alter or Amend
J. (Def.’s Mot.), ECF No. 28 at 1-7. It argues that the requested alteration is
“necessary to prevent manifest injustice.” See id, at 5 (quoting Magnum Opus
Techs., Inc. v. United States, 94 Fed. Cl. 553, 555 (2010)). The government
recognizes that such injustice must be “apparent to the point of being almost
indisputable,” Def.’s Mot. at 5-6 (quoting Pacific Gas & Elec. Co. v. United States,
74 Fed. Cl. 779, 785 (2006)), and that the Court’s power to dismiss a matter under
RCFC 41(b) is “broad and discretionary,” id. at 7 (quoting Burbank Coll. of Ct.
Reporting, Inc. v. United States, 30 Fed. Cl. 100, 106 (1998)).

The government, however, fails to identify any “manifest injustice” resulting
from the dismissal without prejudice of a tax refund lawsuit concerning a tax year
from eleven years ago, filed by pro se litigants with apparently one day remaining of
the limitations period. See Compl. at 1, 5; 26 U.S.C. § 6532(a)(1). Defendant argues
that a plaintiff’s “failure to prosecute its case amounts to an implicit admission that
it is unable to meet its burden of proof,” warranting an adjudication on the merits.
Def’s Mot. at 6. But this cannot always be the case, for RCFC 41() on its face
authorizes a departure from that default position: “Unless a dismissal order states
otherwise, a dismissal under this subdivision .. . operates as an adjudication on the
merits.” RCFC 41(b) (emphasis added). To be sure, when a party fails to oppose a
dispositive, merits-based motion, dismissal with prejudice under RCFC 41(b) would
seem an appropriate resolution of the matter. But in this case, the discovery delays
due to the pro se plaintiffs’ confusion about the applicability of collateral estoppel
would typically have resulted in a discovery order of some sort, and warranted
dismissal only because they failed to respond to the government’s motion.”

The government also speculates that “a dismissal with prejudice would
potentially have collateral estoppel effect on” claims for refunds concerning other
tax years. Def.’s Mot. at 6-7. On this point, the government seems to share
plaintiffs’ unrealistic expectations concerning the use of collateral estoppel in tax

 

1 This approach was even followed when a corporation’s counsel withdrew from a
case and the counsel identified as his replacement failed to enter his appearance to
oppose a motion to dismiss the case. Strand Elec. Serv. Co. v. United States, 14 Cl.
Ct. 763, 766 (1988).

2 The Court notes that plaintiffs did respond to the government’s RCFC 59€)
motion, by a letter which was filed as their opposition to that motion. See ECF No.
30. Although this opposition rests on a misunderstanding of their appeal rights, it
confirms the Court’s suspicion that plaintiffs were not aware of the motion to
dismiss the case before the Court issued the February 8, 2022 order.

-3-
refund claims, as it is “confined to situations where the matter raised in the second
suit is identical in all respects with that decided in the first proceeding.” Comm ’r of
Internal Revenue v. Sunnen, 333 U.S. 591, 599-600 (1948). Its applicability is thus
highly unlikely, given the vintage of the claims in question and the fact that the
plaintiffs have no other pending refund claims in our court. In any event, the
potential need to defend claims for tax refunds involving the same parties hardly
works a “manifest injustice,” considering that, in a case relied upon by the
government, Def.’s Mot. at 5—6, the loss of $8.7 million in damages did not satisfy
this standard. See Pacific Gas & Elec. Co., 74 Fed. Cl. at 785.

Finally, the government stresses that it “expended significant resources
attempting to litigate in good faith the issues raised in the complaint in this case.”
Def.’s Mot. at 6. Defendant apparently fails to appreciate the irony in this
argument, as it chose to expend additional resources, and commandeer those of the
court, pursuing the exotic contention that a dismissal of a pro se case without
prejudice can result in a manifest injustice warranting alteration. In these
circumstances, it cannot. Upon reflection, perhaps the Court should have denied
the RCFC 41(b) motion as moot, and made it clear that the failure to prosecute the
case rested on the lack of an opposition to that motion, and not the matters that
motion concerned. But that is not the alteration defendant seeks. For the reasons
stated above, the government’s motion to alter or amend judgment is DENIED.

IT IS SO ORDERED.

GALL.

. WOLSKI
Late udge