Court Opinion

ID: 4210338
Source: CourtListenerOpinion
Date Created: 2017-10-10 16:01:03.847543+00
Date Added: 2024-06-11T13:26:05.128007
License: Public Domain

FILED
                                                                     United States Court of Appeals
                      UNITED STATES COURT OF APPEALS                         Tenth Circuit

                             FOR THE TENTH CIRCUIT                         October 10, 2017
                         _________________________________
                                                                         Elisabeth A. Shumaker
                                                                             Clerk of Court
UNITED STATES OF AMERICA,

      Plaintiff - Appellee,

v.                                                         No. 17-2052
                                               (D.C. No. 2:09-CV-00752-JCH-WPL)
BILL MELOT, a/k/a Billy R. Melot;                            (D. N.M.)
KATHERINE L. MELOT,

      Defendants - Appellants.
                      _________________________________

                             ORDER AND JUDGMENT *
                         _________________________________

Before LUCERO, BALDOCK, and MORITZ, Circuit Judges.
                  _________________________________

      Proceeding pro se, 1 Billy and Katherine Melot appeal the district court’s order

denying their motion for relief from judgment. The Melots also request leave to

proceed in forma pauperis (IFP) on appeal. We grant their motions to proceed IFP,

but we affirm the district court’s denial of their motion for relief from judgment.

      *
         After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
submitted without oral argument. This order and judgment isn’t binding precedent,
except under the doctrines of law of the case, res judicata, and collateral estoppel.
But it may be cited for its persuasive value. See Fed. R. App. P. 32.1; 10th Cir. R.
32.1.
       1
         We liberally construe pro se pleadings, but we won’t act as the Melots’
advocate. See James v. Wadas, 724 F.3d 1312, 1315 (10th Cir. 2013).
      Together, the Melots owe the federal government over $20 million in unpaid

federal income and excise tax, and Billy is currently serving a 14-year prison

sentence for tax evasion. In July 2014, with authorization from the district court, the

government foreclosed on the Melots’ real property and equipment, sold it for $1.125

million, and applied the proceeds to the Melots’ tax debt. This appeal arises from the

latest installment in the “ongoing saga of litigation” related to the Melots’ unpaid

taxes from 1987 through 1993. R. vol. 1, 122; see, e.g., United States v. Melot, 606 F.

App’x 930 (10th Cir. 2015) (unpublished) (affirming order confirming sale of

foreclosed property); United States v. Melot, 562 F. App’x 646 (10th Cir. 2014)

(unpublished) (affirming order reducing tax debt to money judgment); United States

v. Melot, 732 F.3d 1234 (10th Cir. 2013) (affirming Billy’s convictions and

remanding for resentencing).

      A year and a half after the foreclosure and sale, the Melots filed a motion for

relief from judgment under Federal Rule of Civil Procedure 60(b)(5) and (6), asking

the district court to set aside the government’s money judgment against them because

enforcing it was no longer equitable. After the government responded, the magistrate

judge made proposed findings and recommended denying the motion. Despite the

Melots’ objections to the proposed findings and recommendation, the district court

agreed with the magistrate judge and denied the motion. The Melots appeal.

      Rule 60(b) allows a district court to provide relief from a final judgment in

certain circumstances, including when “applying [the judgment] prospectively is no

longer equitable” or for “any other reason that justifies relief.” Fed. R. Civ. P.

                                            2
60(b)(5), (6). But a Rule 60(b) motion isn’t a substitute for a direct appeal, and a

district court should only grant relief from judgment in exceptional circumstances.

Lebahn v. Owens, 813 F.3d 1300, 1306 (10th Cir. 2016). On appeal, we review the

district court’s denial of a Rule 60(b) motion for an abuse of discretion, meaning that

we will only reverse if the district court’s decision was based on a legal or factual

error or was otherwise arbitrary or unreasonable. Amoco Oil Co. v. EPA, 231 F.3d

694, 697 (10th Cir. 2000).

      The Melots first argued for relief from judgment under Rule 60(b)(5), asking

the district court to grant them relief from the tax judgment because “applying [it]

prospectively is no longer equitable.” Aplt. Br. 5. But the Rule 60(b)(5) language that

the Melots rely on doesn’t allow a court to provide relief from any judgment, even

assuming it’s inequitable; it only allows for relief from judgments that have

prospective application or effect. See Dowell ex rel. Dowell v. Bd. of Educ., 8 F.3d

1501, 1509 (10th Cir. 1993) (citing Twelve John Does v. District of Columbia, 841

F.2d 1133, 1138 (D.C. Cir. 1988)).

      A judgment that has prospective application or effect is one that is “executory”

or involves “the supervision of changing conduct or conditions.” Twelve John Does,

841 F.2d at 1138–39 (citing United States v. Swift & Co., 286 U.S. 106 (1932), and

Pennsylvania v. Wheeling & Belmont Bridge Co., 59 U.S. (18 How.) 421 (1856)). For

example, injunctions are usually executory and have prospective application because

they restrain or compel particular conduct; they are directed toward the future and

require court supervision. See id. at 1139.

                                              3
      A money judgment, on the other hand, simply remedies a past wrong; it isn’t

executory and doesn’t require the court to supervise any future changing conditions.

See id. Indeed, “[m]ost courts have agreed that a money judgment does not have

prospective application, and that relief from a final money judgment is therefore not

available under the equitable leg of Rule 60(b)(5).” Stokors S.A. v. Morrison, 147

F.3d 759, 762 (8th Cir. 1998); see, e.g., DeWeerth v. Baldinger, 38 F.3d 1266, 1275

(2d Cir. 1994); Gibbs v. Maxwell House, 738 F.2d 1153, 1155–56 (11th Cir. 1984);

Marshall v. Bd. of Educ., 575 F.2d 417, 425 (3d Cir. 1978).

      The Melots nonetheless argue that the money judgment has prospective

application because it continues to accrue interest. But the Melots cite no authority

for the proposition that the accumulation of interest makes a judgment prospective,

and we haven’t located any. “Virtually every court order causes at least some

reverberations into the future, and has, in that literal sense, some prospective

effect . . . .” Twelve John Does, 841 F.2d at 1138. But only orders that are executory

and require court supervision of future changing conditions are prospective for the

purpose of determining whether relief is available under Rule 60(b)(5). Money

judgments don’t meet that definition—the accrual of interest doesn’t require

additional court supervision. As such, the money judgment against the Melots doesn’t

have prospective application; the district court therefore didn’t abuse its discretion by

concluding that relief from judgment wasn’t available under Rule 60(b)(5).

      Alternatively, the Melots argued for relief from judgment under Rule

60(b)(6)—the catch-all provision that allows a court to provide relief for “any other

                                            4
reason that justifies [it].” Fed. R. Civ. P. 60(b)(6). This provision applies “only in

extraordinary circumstances and only when necessary to accomplish justice.”

Cashner v. Freedom Stores, Inc., 98 F.3d 572, 579 (10th Cir. 1996); see Buck v.

Davis, 137 S. Ct. 759, 772 (2017).

      The Melots argue that the circumstances here are extraordinary because the

IRS hasn’t updated its internal records and thus has been sending them inaccurate

bills. They specifically allege two inaccuracies. First, the Melots insist that the IRS

hasn’t applied the proceeds from the sale of their property to their tax bill. But this

allegation lacks merit; the government filed account statements in the district court

showing that it has applied the proceeds to the Melots’ accounts.

      Second, the Melots point out that the IRS originally assessed a higher amount

of unpaid income tax against Billy (around $18 million) than what the district court

eventually reduced to judgment (around $8.7 million). And according to Billy, the

IRS bills he received in August 2016 still showed the original, higher amount owed. 2

But even if we assume that the Melots received inaccurate IRS bills, that fact doesn’t

justify granting their requested relief and excusing them from paying the judgment

they owe. The government has acknowledged that it can’t require the Melots to pay

      2
         The government told the district court that the IRS hadn’t yet updated its
internal records to reflect the final judgment because, as of the date of those bills, the
Melots’ appeals of the judgment and orders of sale were ongoing. The government
then noted that the judgment and orders of sale had since become final, so the IRS
would “be instructed to adjust the Melots’ tax accounts in accordance with” the
district court’s judgment. R. vol. 1, 106 n.10.
                                            5
more than what the district court ordered. And the inaccurate billing isn’t resulting in

any real harm: the Melots aren’t currently paying these allegedly incorrect bills.

      Finally, the Melots argue that their circumstances are extraordinary because

they will never be able to pay the judgment against them. But there’s nothing unusual

about being unable to pay a judgment. Thus, neither the inaccurate billing nor the

Melots’ inability to pay is sufficiently unusual or compelling to justify granting relief

from the judgment, even if we consider these factors together. See Cashner, 98 F.3d

at 580. The district court therefore didn’t abuse its discretion in denying relief under

Rule 60(b)(6).

      Accordingly, we affirm the district court’s judgment. However, we grant the

Melots’ motions to proceed IFP and remind them of their obligation to continue

making payments until the filing fee is paid in full. See 28 U.S.C. § 1915(b).

                                            Entered for the Court

                                            Nancy L. Moritz
                                            Circuit Judge

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