Chapin et al v. Blair et al

Filing 35

ORDER ON REPORT AND RECOMMENDATION. NOW THEREFORE IT IS HEREBY ORDERED that the Report and Recommendation entered on 8/5/2015 (Dkt. 33 ) is ADOPTED IN PART AND REJECTED IN PART as stated herein. IT IS FURTHER ORDERED that the Petitioners Motion to Q uash Third Party Summons (Dkt. 1 ) is DENIED and the Respondents Motion to Dismiss or Deny Petition to Quash (Dkt. 9 ) is GRANTED. Signed by Judge Edward J. Lodge. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

FRANK CHAPIN and S. GUTIERREZCHAPIN, aka SYDNEY CHAPIN and
SYDNEY GUITIERREZ-CHAPIN,

Case No. 2:14-CV-00443-EJL-REB
ORDER ON REPORT AND
RECOMMENDATION

Petitioners,
v.
UNITED STATES OF AMERICA,
Respondent.

INTRODUCTION
On August 5, 2015, United States Magistrate Judge Ronald E. Bush issued a Report
and Recommendation (“Report”), recommending that Petitioners’ Petition to Quash Third
Party Summons (Dkt. 1) be denied and Respondent’s Motion to Dismiss or Deny Petition to
Quash (Dkt. 9) be granted. (Dkt. 33.) Any party may challenge a magistrate judge’s proposed
recommendation by filing written objections to the Report within fourteen days after being
served with a copy of the same. See 28 U.S.C. § 636(b)(1); Local Civil Rule 72.1(b). The
district court must then “make a de novo determination of those portions of the report or
specified proposed findings or recommendations to which objection is made.” Id. The district
court may accept, reject, or modify in whole or in part, the findings and recommendations
made by the magistrate judge. Id.; see also Fed. R. Civ. P. 72(b). The Respondent filed
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objections to the Report. (Dkt. 34.) The matter is now ripe for the Court’s consideration. See
Local Civil Rule 72.1(b)(2); 28 U.S.C. § 636(b)(1)(B).
STANDARD OF REVIEW
Pursuant to 28 U.S.C. § 636(b)(1)(C), this Court “may accept, reject, or modify, in
whole or in part, the findings and recommendations made by the magistrate judge.” Where
the parties object to a report and recommendation, this Court “shall make a de novo
determination of those portions of the report which objection is made.” Id. Where, however,
no objections are filed the district court need not conduct a de novo review. In United States
v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003), the court interpreted the requirements
of 28 U.S.C. § 636(b)(1)(C):
The statute [28 U.S.C. § 636(b)(1)(C)] makes it clear that the district judge
must review the magistrate judge's findings and recommendations de novo if
objection is made, but not otherwise. As the Peretz Court instructed, “to the
extent de novo review is required to satisfy Article III concerns, it need not be
exercised unless requested by the parties.” Peretz, 501 U.S. at 939 (internal
citation omitted). Neither the Constitution nor the statute requires a district
judge to review, de novo, findings and recommendations that the parties
themselves accept as correct. See Ciapponi, 77 F.3d at 1251 (“Absent an
objection or request for review by the defendant, the district court was not
required to engage in any more formal review of the plea proceeding.”); see
also Peretz, 501 U.S. at 937-39 (clarifying that de novo review not required for
Article III purposes unless requested by the parties) . . . .
See also Wang v. Masaitis, 416 F.3d 993, 1000 & n.13 (9th Cir. 2005). Furthermore, to the
extent that no objections are made, arguments to the contrary are waived. See Fed. R. Civ.
P. 72; 28 U.S.C. § 636(b)(1) (objections are waived if they are not filed within fourteen days
of service of the Report and Recommendation). “When no timely objection is filed, the Court

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need only satisfy itself that there is no clear error on the face of the record in order to accept
the recommendation.” Advisory Committee Notes to Fed. R. Civ. P. 72 (citing Campbell v.
United States Dist. Court, 501 F.2d 196, 206 (9th Cir.1974)).
The Court has reviewed the entire Report as well as the record in this matter for clear
error on the face of the record and none has been found. The Court has also conducted a de
novo review of those portions of the Report to which the Respondent has objected and finds
as follows.
DISCUSSION
The full procedural background and facts of this case are properly articulated in the
Report and the Court incorporates the same in this Order. (Dkt. 33.) In short, the Petitioners
seek to quash an October 2, 2014 summons issued by Internal Revenue Service (“IRS”)
Agent Heather L. Blair to Mountain West Bank in Coeur d’Alene, Idaho. The summons
seeks production of materials related to Agent Blair’s income tax examination of Petitioners
Frank L. Chapin and Sydney Gutierrez-Chapin for the tax years ending in December of 20092012. In the Report, Magistrate Judge Bush concluded that the Respondent had made the
prima facie showing required for issuance and enforcement of the summons and that the
Petitioners had failed to show any abuse of process or bad faith. (Dkt. 33.) Accordingly, the
Report recommends denying the Petition to Quash the Summons and granting the
Respondent’s Motion to Dismiss. There were no objections filed as to those conclusions by
either party. This Court has reviewed those conclusions and is in agreement with the
reasoning and analysis of Magistrate Judge Bush and will adopt the same.
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The Respondent has filed an objection to the recommended limitations placed on the
enforcement of the summons as stated in the Report. (Dkt. 34.) Specifically, the Respondent
challenges the Report’s recommendation to limit the summons in order to address the general
concerns raised by the Petitioners in relation to certain payroll information. (Dkt. 33 at 11,
16.) Respondent argues there is no legal basis for such a limitation, the Petitioners’ concerns
are addressed in the IRS Code, and that to require the recommended limitations would
prevent the IRS from obtaining the necessary information to conduct its examination. (Dkt.
34.)
The Court has reviewed the objection de novo and finds that the recommended
limitations should not be imposed. While the Court is aware of the Petitioners’ general
concerns regarding disclosure of information about third parties, the fact of the matter is that
the Respondent has satisfied the prima facie showing that the IRS properly issued the
summons and the Petitioners have not shown any abuse of process or bad faith. That is all
that is required here. See Liberty Fin. Servs. v. United States, 778 F.2d 1390, 1392 (9th Cir.
1985) (per curiam) (stating the Powell prima facie requirements are minimal “because the
statute must be read broadly in order to ensure that the enforcement powers of the IRS are
not unduly restricted.”); see also United States v. Clarke, 134 S.Ct. 2361, 2367 (2014);
United States v. Powell, 379 U.S. 248, 252-58 (1964). As such, the Court does not adopt the
Report’s recommendation to limit the summons.

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ORDER
NOW THEREFORE IT IS HEREBY ORDERED that the Report and
Recommendation entered on August 5, 2015 (Dkt. 33) is ADOPTED IN PART AND
REJECTED IN PART as stated herein.
IT IS FURTHER ORDERED that the Petitioners’ Motion to Quash Third Party
Summons (Dkt. 1) is DENIED and the Respondent’s Motion to Dismiss or Deny Petition to
Quash (Dkt. 9) is GRANTED.
DATED: September 10, 2015

Honorable Edward J. Lodge
U. S. District Judge

ORDER- 5