In Re: Anthony J Nicolaus

Filing 14

MEMORANDUM Opinion and Order. The bankruptcy courts ruling denying Anthony J Nicolaus application for an award of fees and expenses is reversed. This case is remanded to the bankruptcy court for further proceedings consistent with this order. Signed by Chief Judge Leonard T Strand on 3/8/2022. (des)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
CENTRAL DIVISION
ANTHONY J. NICOLAUS,
Debtor-Appellant,
vs.
UNITED STATES OF AMERICA,

No. C21-3010-LTS
MEMORANDUM
OPINION AND ORDER ON
BANKRUPTCY APPEAL

Creditor-Appellee.

This case is before me on an appeal (Doc. 1) by debtor Anthony J. Nicolaus from
a decision (Doc. 6-1) of the United States Bankruptcy Court for the Northern District of
Iowa in favor of creditor-appellee United States of America (the government). Nicolaus
argues that the bankruptcy court erred by determining that a position taken by the
government before that court was substantially justified pursuant to 26 U.S.C. § 7430.
The issues on appeal have been fully briefed and submitted. See Docs. 6, 10, 11.
I.

BACKGROUND

Nicolaus filed a Chapter 7 bankruptcy petition on December 30, 2015.

On

February 11, 2016, the Internal Revenue Service (IRS) filed a second proof of claim (the
claim), in the amount of $92,877.89, that listed a post office box address in Philadelphia,
Pennsylvania, under the heading: “Where should notices to the creditor be sent?” Doc.62 at 23-27. On January 26, 2017, Nicolaus filed an objection to the claim. Id. at 28-31.
He mailed the objection and the response deadline notice to the Philadelphia post office
box listed on the claim. Id. at 87. Upon learning that his first mailing did not include a
copy of the actual objection, Nicolaus sent a new mailing, that included the objection, to

the same post office box on February 22, 2017. Id. at 87-88. The United States Postal
Service did not return either mailing as undeliverable. Id. at 88.
The deadline for the IRS to respond to Nicolaus’ objection passed with no
response. As such, on March 17, 2017, the bankruptcy court sustained the objection and
disallowed the claim. Id. at 36. The court expressly found that “notice has been given.”
Id. No further action was taken with regard to the claim until December 21, 2017, when
the government filed a motion to set aside or vacate the bankruptcy court’s order
sustaining Nicolaus’ objection. Id. at 39. The government argued that the bankruptcy
court’s order was erroneous because Nicolaus “failed to serve the objection to claim or
any notices on the United States,” such that “the Court lacked personal jurisdiction over
the United States for lack of service of process.” Id.
On February 8, 2018, the bankruptcy court filed an order granting the motion to
vacate. Doc. 6-2 at 120-33. The court noted a split of authority on the issue of whether
the prior version of Federal Rule of Bankruptcy Procedure 3007, which was in effect at
all relevant times, implicitly required service according to Rule 7004. Id. at 124-29.
Under Rule 7004, service on the government may be made by mail “addressed to the
civil process clerk at the office of the United States attorney for the district in which the
action is brought and by mailing a copy of the summons and complaint to the Attorney
General of the United States at Washington, District of Columbia.” Fed. R. Bankr. P.
7004(b)(4). Nicolaus did not serve process according to Rule 7004. However, he argued
that the notice he did send was sufficient under Rule 3007 or, in the alternative, that the
bankruptcy court had jurisdiction over his objection because the IRS submitted to that
court’s jurisdiction by filing its claim. Id. at 124, 130. After discussing the competing
case law, the bankruptcy court concluded “that the greater weight of authority, and the
more persuasive authority, supports the United States’ position.” Id. at 124-29.
Nicolaus appealed to this court, which affirmed the bankruptcy court’s ruling. Id.
at 297, 314. Nicolaus then appealed to the Eighth Circuit Court of Appeals, which
reversed the ruling and remanded Nicolaus’ case to the bankruptcy court with directions
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to reinstate its prior order sustaining Nicolaus’ objection to the IRS’s claim. In re
Nicolaus, 963 F.3d 839, 458 (8th Cir. 2020). The court held that the version of Rule
3007 in effect at the relevant time required only that notice be served on the creditor
submitting the proof of claim (the IRS). Id. at 456. Based on this ruling, the court found
it unnecessary to consider Nicolaus’ alternative argument that the bankruptcy court
obtained personal jurisdiction over the government once the IRS filed a proof of claim.
Id. at 455 n.1.
On remand to the bankruptcy court, Nicolaus filed an application for award of fees
and expenses in the amount of $39,206.75. Doc. 6-1 at 3. The parties stipulated that
“the only issue to be resolved by the Court is whether the United States’ positions were
‘substantially justified,’ as defined by 26 U.S.C. § 7430(c)(4)(B).” Doc. 6-2 at 178.
The bankruptcy court denied Nicolaus’ application, finding that the government met its
burden of proving that its position was substantially justified. Doc. 6-1 at 9-10. Nicolaus
then filed this timely appeal.
II.

APPLICABLE STANDARDS

Under 26 U.S.C. § 7430, the “prevailing party” in an action involving the
determination, collection or refund of any federal tax may seek an award of “reasonable
litigation costs,” which can include attorney fees. See 26 U.S.C. § 7430(a)(2) and
(c)(1)(B)(iii); see also Center for Fam. Med. v. United States, 614 F.3d 937, 940 (8th
Cir. 2010). As the Eighth Circuit has explained:
“The term ‘prevailing party’ means any party ... which – (I) has
substantially prevailed with respect to the amount in controversy, or (II) has
substantially prevailed with respect to the most significant issue....” Id. at
§ 7430(c)(4)(A)(i). However, “[a] party shall not be treated as the
prevailing party in a proceeding ... if the United States establishes that the
position of the United States in the proceeding was substantially justified.”
Id. at § 7430(c)(4)(B)(i).

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Center for Fam. Med., 614 F.3d at 940. “In determining whether the government’s
position is ‘substantially justified,’ the district court should make ‘only one threshold
determination for the entire civil action.’” United States v. Hurt, 676 F.3d 649, 652 (8th
Cir. 2012) (quoting Comm’r v. Jean, 496 U.S. 154, 159 (1990)). As such, I must
consider whether the government’s “position as a whole was substantially justified.” Id.
at 653.1
Congress copied the “not substantially justified” language from the Equal Access
to Justice Act (EAJA). Kenagy v. United States, 942 F.2d 459, 464 (8th Cir. 1991).
“Thus, where the wording is consistent, courts read the EAJA and § 7430 in harmony.”
Id. In considering whether the government’s position was substantially justified, a court
must “take into account whether the United States has lost in courts of appeal for other
circuits on substantially similar issues.” 26 U.S.C. § 7430(c)(4)(B)(iii). “The position
of the United States is substantially justified if it has a reasonable basis in both law and
fact, a determination made on a case by case basis.” Ctr. for Fam. Med., 614 F.3d at
941 (quoting Kaffenberger v. United States, 314 F.3d 944, 960 (8th Cir.2003)).
“Substantially justified means ‘justified to a degree that could satisfy a reasonable
person.’” Bale Chevrolet Co. v. United States, 620 F.3d 868, 872 (8th Cir. 2010). “A
substantially justified position need not be correct so long as ‘a reasonable person could
think it correct, that is, if it has a reasonable basis in law and fact.’” Bah v. Cangemi,
548 F.3d 680, 683–84 (8th Cir. 2008) (quoting Pierce v. Underwood, 487 U.S. 552, 566
n.2 (1988)).

1

See also Roanoke River Basin Ass’n v. Hudson, 991 F.2d 132, 138-39 (4th Cir. 1993) (“when
determining whether the government's position in a case is substantially justified, we look beyond
the issue on which the petitioner prevailed to determine, from the totality of circumstances,
whether the government acted reasonably in causing the litigation or in taking a stance during
the litigation”); United States v. Johnson, 920 F.3d 639, 649-50 (10th Cir. 2019) (adopting a
“holistic” approach rather than an “issue-by-issue analysis” in determining “whether there was
a ‘reasonable basis both in law and fact’ for the Government’s overall position in the litigation”);
Morreale v. Comm’n of Internal Revenue, 122 T.C.M. (CCH) 80, 2021 WL 2981714, at *5
(T.C. July 15, 2021) (adopting the Johnson standard).

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“The government has the burden to establish its position was substantially
justified.” 26 U.S.C. § 7430(c)(4)(B)(i). The denial of an application for fees under §
7430 is reviewed for abuse of discretion. See Center for Fam. Med., 614 F.3d at 941.
The bankruptcy court’s findings of fact are reviewed for clear error while its conclusions
of law are reviewed de novo. Tri-State Financial, LLC v. First Dakota Nat’l Bank, 538
F.3d 920, 923-24 (8th Cir. 2008).
III.
A.

DISCUSSION

The Bankruptcy Court’s Ruling
Nicolaus argued that the government’s position was not substantially justified

because United States Supreme Court precedent supports his argument that the
government submitted to the bankruptcy court’s jurisdiction when the IRS filed its proof
of claim. Doc. 6-1 at 5-6, 8-9. The bankruptcy court disagreed, explaining that because
both the bankruptcy court and the district court had previously determined that United
Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 275 (2010), did not apply, the
government’s argument against jurisdiction was substantially justified. Id. at 8-9. The
bankruptcy court noted that the Eighth Circuit did not address this personal jurisdiction
argument. Id. at 8. However, the bankruptcy court found that Nicolaus had failed to
respond to the government’s argument that it was “the real party in interest—not the
IRS—and thus the United States is excluded from the general [jurisdictional] rule
regarding the consequences of filing a proof of claim.” Id. at 9. The bankruptcy court
reiterated that it had previously accepted that argument and did so again. 2 Id. Without
expressly addressing it, the bankruptcy court necessarily rejected Nicolaus’ additional
argument that “the IRS cannot be substantially justified where it tells debtors to send

2

By contrast, the Eighth Circuit held that “[t]he ‘claimant’ here was the IRS, which indisputably
received a copy of Nicolaus’ objection by mail. Nothing else was required.” Doc. 6-2 at 456.

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notice to one location only to show up in court and tell them that the notice was
insufficient.” Doc. 6-1 at 6.
B.

What was the Government’s Litigation Position?
Before addressing the parties’ arguments, it is important to clarify the

government’s litigation position regarding its motion to vacate. This is because the
government argues that its bankruptcy-rules-based argument, not Nicolaus’ personal
jurisdiction argument, was “the actual position in dispute.” Doc. 10 at 11-12. The
government’s stated position in its motion to vacate was:
Pursuant to Fed. R. Civ. P. 60(b)(4), made applicable to bankruptcy cases
through Fed. R. Bankr. P. 9024, the United States respectfully moves the
Court to set aside or vacate the Order Sustaining Debtor’s Objection to IRS
Proof of Claim No. 2 . . . entered on March 17, 2017. The order is void
because the debtor, Anthony J. Nicolaus, failed to serve the objection to
claim or any notices on the United States. Accordingly, the Court lacked
personal jurisdiction over the United States for lack of service of process.
The Court should set aside or vacate the order sustaining the objection to
claim, require service of the objection to claim, and set a discovering
schedule to resolve the objection to claim.
Doc. 6-2 at 39 (emphasis added). The government’s supporting brief included two
sections of arguments: (1) “Nicolaus failed to serve the objection to claim and the notice”
and (2) “[t]he Court lacked jurisdiction to bind the United States to its order sustaining
the objection to claim, and the order is void.” Id. at 43, 46. The government concluded
by asserting that Nicolaus’ “failure to serve the United States prevented this Court from
obtaining personal jurisdiction over the United States. Consequently, the Court’s order
sustaining Nicolaus’ objection to claim is void as to the United States.” Id. at 48.
Thus, the government’s position necessarily raised both (1) whether Rule 3007
required Nicolaus to serve process on the government (not merely the IRS) and (2)
whether that particular service was required for the bankruptcy court to have personal
jurisdiction over the IRS for purposes of its claim. Further, while the Eighth Circuit
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ultimately found it unnecessary to address the personal jurisdiction argument, Nicolaus
did raise that argument in response to the government’s original motion to vacate, his
first appeal to this court and his appeal to the Eighth Circuit. Doc. 6-2 at 104-07, 23944, 344-55. The personal jurisdiction argument has been “an actual position in dispute”
throughout this case.

C.

Was the Government’s Position Substantially Justified?
As discussed above, the government asked the bankruptcy court to set aside or

vacate its prior order sustaining Nicolaus’ objection to the IRS’s claim pursuant to Federal
Rule of Civil Procedure 60(b)(4). On Nicolaus’ motion for fees and costs, it is the
government’s burden to show that its Rule 60(b)(4) motion was substantially justified.
1.

Cases Cited by the Parties

In its brief to the bankruptcy court, the government did not specifically argue that
the bankruptcy court lacked personal jurisdiction over the claimant as a result of the
government’s rules-based argument. See Doc. 6-2 at 169-73. The government did not
discuss this issue until addressing Nicolaus’ first appeal to this court, citing to previous
bankruptcy court and district court rulings and providing its own analysis of the cases
Nicolaus relies on for his personal jurisdiction argument. Doc. 10 at 13-17.
Starting with Wiswall v. Campbell, 93 U.S. 347 (1876), the United States contends
that it does not control because it “did not involve the filing of a proof of claim by the
United States or the IRS” and “bankruptcy laws have changed dramatically since 1876.”
Doc. 10 at 15. However, Nicolaus cites Wiswall only for the general principle that filing
a proof of claim subjects a creditor to the jurisdiction of the court. Id. at 14. Wiswall
states:
Every person submitting himself to the jurisdiction of the bankrupt court in
the progress of the cause, for the purpose of having his rights in the estate
determined, makes himself a party to the suit, and is bound by what is
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judicially determined in the legitimate course of the proceeding. A creditor
who offers proof of his claim, and demands its allowance, subjects himself
to the dominion of the court, and must abide the consequences.
Id. at 351. While the modern Rules of Bankruptcy Procedure were not in existence at
the time, the Court recognized that certain procedures should be followed to standardize
the bankruptcy claim process. Id. The current Rules of Bankruptcy Procedure, which
are the current iteration of those procedural rules, do not expressly impact the general
jurisdictional principle set forth in Wiswall.3
In fact, the Supreme Court has cited to this principle multiple times, including in
Gardner v. State of New Jersey, 329 U.S. 565 (1947). The government notes that
Gardner “specifically concerned waiver of sovereign immunity and involved a
determination of lien priority, which would today require an adversary proceeding under
Rule 7001(2) of the Federal Rules of Bankruptcy Procedure.” Doc. 10 at 15. The
government then argues that “under the service of process rules for adversary
proceedings, Nicolaus would have been required to serve a copy of his claim objection
(or complaint) on the United States Attorney General and Under States Attorney for the
Northern District of Iowa.” Id. This misses the point. Under Wiswall, as reiterated in
Gardner, changes in procedural rules do not affect the underlying personal jurisdiction
that attaches once a creditor submits a claim to a bankruptcy court.
In Katchen v. Landy, 382 U.S. 323 (1966), the Court stated that “a creditor who
offers a proof of claim and demands its allowance is bound by what is judicially
determined.” Id. at 334. While the procedures at issue in Katchen have changed, the
general principle still remains. Id. at 326-27, 333-34 (noting that “[t]he crux of the

3

The United States does not contest Nicolaus’ citation to United States v. Whiting Pools, Inc.,
462 U.S. 198 (1983), as support for his argument that the IRS is a creditor and an entity under
the Bankruptcy Code, although it does argue that this status is not relevant for determining
whether its argument was substantially justified.

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dispute here concerns the mode of procedure for trying out the preference issue” and
explaining that once the preference issue has been decided, “it can hardly be doubted that
there is also summary jurisdiction to order the return of the preference”).
As for United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (2010), the
government notes that the prior bankruptcy court and district court opinions did not find
it to be controlling. Doc. 10 at 16. The government quotes from this court’s prior ruling,
filed before Nicolaus’ appeal to the Eighth Circuit, stating that Espinosa “stands for the
limited proposition that a confirmed plan is binding on all parities-in-interest that received
adequate notice even if the plan violates some parts of the Bankruptcy Code.” Id.
(quoting Nicolaus, 2019 WL 97034, at **16-17).
In Espinosa, the debtor obtained several federally guaranteed student loans and
later filed for Chapter 13 bankruptcy. Espinosa, 559 U.S. at 264. He then “filed a plan
with the Bankruptcy Court that proposed to discharge a portion of his student loan debt,
but he failed to initiate the adversary proceeding as required for such discharge” by the
applicable bankruptcy rules. Id. at 263-64. Under those rules, “the party seeking the
determination must initiate by serving a summons and complaint on his adversary.” Id.
Nonetheless, the creditor did receive notice of the plan and did not object to the
plan or file an appeal after the bankruptcy court confirmed the plan. Id. at 264. Years
later, however, “the creditor filed a motion under Federal Rule of Civil Procedure
60(b)(4) asking the Bankruptcy Court to rule that its order confirming the plan was void
because the order was issued in violation of the Code and Rules.” Id. The creditor
argued that the bankruptcy court violated the Bankruptcy Code and the applicable
bankruptcy rules because it did not conduct an adversary proceeding and find an undue
hardship before discharging Espinosa’s student loan interest. Id. The creditor also
argued that “its due process rights had been violated because Espinosa failed to serve it
with the summons and complaint the Bankruptcy Rules require as a prerequisite to an
adversarial proceeding.” Id.
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The Supreme Court ultimately granted certiorari to consider “whether the
Bankruptcy Court’s order confirming Espinosa’s plan is ‘void’ under Federal Rule of
Civil Procedure 60(b)(4) because the Bankruptcy Court confirmed the plan without
complying with [statutory] requirements.” Id. at 269. The Court explained that Rule
60(b)(4) allows a court to vacate a final judgment only if that judgment is void, meaning
it is “so affected by a fundamental infirmity that the infirmity may be raised even after
the judgment becomes final.” Id. at 270. The list of such infirmities is “exceedingly
short; otherwise, Rule 60(b)(4)’s exception to finality would swallow the rule.” Id.
Thus, “Rule 60(b)(4) applies only in the rare instance where a judgment is premised
either on a certain type of jurisdictional error or on a violation of due process that deprives
a party of notice or the opportunity to be heard.” Id. at 271. The Court noted that
federal courts “generally have reserved relief only for the exceptional case in which the
court that rendered judgment lacked even an ‘arguable basis’ for jurisdiction.” Id.
While the creditor did not argue that the bankruptcy court’s error was
jurisdictional, as does the government in this case, the Supreme Court noted that “[s]uch
an argument would fail in any event,” for two reasons. Id. First, the statutory undue
hardship finding “is a precondition to obtaining a discharge order, not a limitation on the
bankruptcy court’s jurisdiction.” Id. Second, “the requirement that a bankruptcy court
make this finding in an adversary proceeding derives from the Bankruptcy Rules, see
Rule Proc. 7001(6), which are ‘procedural rules adopted by the Court for the orderly
transaction of its business’ that are ‘not jurisdictional.’” Id. at 272 (citing Kontrick v.
Ryan, 540 U.S. 443, 454 (2004)).
The Court also addressed the issue of whether the bankruptcy court denied the
creditor due process when it confirmed Espinosa’s plan despite his failure “to serve the
summons and complaint the Bankruptcy Rules require for the commencement of an
adversary proceeding.” Id. The Court concluded that Espinosa’s failure deprived the
creditor of a right granted by a procedural rule. Id. However, because the creditor had
actual notice, this did not amount to a violation of the creditor’s due process rights. Id.
10

Here, the government did not make a constitutional due process argument but,
instead, argued that Nicolaus’ failure to comply with a procedural rule deprived the
bankruptcy court of jurisdiction over a creditor that had already sought relief from the
bankruptcy court by filing a proof a claim. While the creditor in Espinosa did not make
this type of jurisdictional argument, the Court made it clear that either a personal
jurisdiction argument or a due process argument would have failed:
Rule 60(b)(4) does not provide a license for litigants to sleep on their rights.
United had actual notice of the filing of Espinosa’s plan, its contents, and
the Bankruptcy Court’s subsequent confirmation of the plan. In addition,
United filed a proof of claim regarding Espinosa’s student loan debt,
thereby submitting itself to the Bankruptcy Court’s jurisdiction with respect
to that claim. See Langenkamp v. Culp, 498 U.S. 42, 44, 111 S. Ct. 330,
112 L.Ed.2d 343 (1990) (per curiam).
Id. at 275.
2.

Other Relevant Cases

One set of relevant cases involves the impact of filing a proof of claim on a party’s
right to a jury trial. In Langencamp, the Supreme Court explained that “the creditor’s
claim and the ensuing preference action by the trustee become integral to the restructuring
of the debtor-creditor relationship through the bankruptcy court’s equity jurisdiction. As
such, there is no Seventh Amendment right to a jury trial.” 498 U.S. at 44-45 (internal
citations omitted) (emphasis in original). The Court held that “[r]espondents filed claims
against the bankruptcy estate, thereby bringing themselves within the equitable
jurisdiction of the Bankruptcy Court. Consequently, they were not entitled to a jury trial
on the trustee’s preference action.”

Id. at 45.

The Eighth Circuit recognized the

jurisdictional impact of filing a claim, as explained by Langencamp and Katchen, when
it held that the successful withdrawal of a bankruptcy claim before an adversarial
proceeding commences legally nullifies the bankruptcy court’s equitable jurisdiction.
Smith v. Dowden, 47 F.3d 940, 941-42, 944 (8th Cir. 1995).
11

Other cases discuss the impact of filing a claim on a foreign or sovereign party’s
consent to jurisdiction. See, e.g., Gardner, 329 U.S. 565 (discussed above); In re Simon,
153 F.3d 991, 996-97 (9th Cir. 1998) (relying on Langenkamp and Katchen to hold that
when a banking company incorporated in Hong Kong filed a proof of claim, it “forfeited
any right it had to claim that the court lacked the power to enjoin [it] from commencing
a post-bankruptcy collection proceeding against the debtor’); In re PNP Holdings Corp.,
99 F.3d 910, 911 (9th Cir. 1996) (per curiam) (holding that Bankruptcy Rule 7004(e),
addressing the service of summons and personal jurisdiction over foreign defendants,
does not affect the general principle that “a person may consent to personal jurisdiction
expressly or by implication regardless of the existence of the power to serve process”);
Arecibo Community Health Care, Inc. v. Commonwealth of Puerto Rico, 270 F.3d 17,
25-26 (1st Cir. 2001) (relying also on Gardner, Langenkamp, and Katchen to hold that
when instrumentalities of Puerto Rico filed a proof of claim in bankruptcy court, that
state had waived “its Eleventh Amendment immunity by availing itself of the jurisdiction
of the federal courts”).
Still other cases have addressed the effect of filing a proof of claim on an
interrelated case. In one case, for example, the Eighth Circuit noted that “the filing of
proofs of claims on ordinary debts triggers an adjudication process to determine the
validity, amount, and priority of the claims, and the bankruptcy court considers any
objections after notice and hearing.” In re Rose, 187 F.3d 926, 929 (8th Cir. 1999).
The court relied on this principle to find that when a party filed a proof of claim and
invoked the authority of the bankruptcy court, that party “waived its immunity in related
proceedings required to adjudicate the dischargeability of those claims.” Id. at 929-30.
The court noted that “[f]ederal jurisdiction over a bankruptcy estate differs from
jurisdiction over a party to litigation.” Id. at 930 n.8. It cited Gardner’s statement that
“[i]t is traditional bankruptcy law that he who invokes the aid of the bankruptcy court by
offering a proof of claim and demanding its allowance must abide by the consequences
of that procedure. . . . The whole process of proof, allowance, and distribution is, shortly
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speaking, an adjudication of interests claimed in a res.” Id. (citing Gardner, 329 U.S.
at 573-74).
Thus, multiple courts addressing a variety of procedural situations have recognized
that the act of filing a claim in a bankruptcy case subjects the creditor to the bankruptcy
court’s jurisdiction and binds the creditor to the outcome.4
3.

Analysis

As noted above, to be excused from the payment of costs and fees under 26 U.S.C.
§ 7430, the government must prove that its position in this case, as a whole, had a
reasonable basis in law and fact. See United States v. Hurt, 676 F.3d 649, 652 (8th Cir.
2012) (requiring a single “substantial justification” determination for the entire action);
Ctr. for Fam. Med., 614 F.3d 937, 941 (8th Cir. 2010) (describing the standard for
substantial justification); 26 U.S.C. § 7430(c)(4)(B)(i) (placing the burden on the
government to prove substantial justification). As established by the caselaw discussed
above, the IRS subjected itself to the bankruptcy court’s jurisdiction by filing a proof of
claim. The government has cited to no persuasive or controlling caselaw to the contrary.
Under Rule 60(b)(4), which the government invoked when filing its motion to
vacate, a judgment may be voided only if it was “so affected by a fundamental infirmity
that the infirmity may be raised even after the judgment becomes final.” Espinosa, 559
U.S. at 270. Mailing an objection to the address provided by the IRS in its own proof

4

This is also recognized in various secondary authorities. See, e.g., H. Jeffrey Schwartz &
Doron P. Kenter, Filing a Proof of Claim: Pitfalls and Precautions, Westlaw Practical Law
Practice Note W-004-2098 (last updated Jan. 21, 2021) (explaining that “the act of filing a proof
of claim constitutes a party’s consent to the jurisdiction of the bankruptcy court to adjudicate
both: matters pertaining to the claim itself and related matters, including claims by the debtor
against the creditor” (cleaned up)); Leslie R. Masterson, Waiving the Right to a Jury: Claims,
Counterclaims, and Informal Claims, 85 Am. Bankr. L.J. 91, 110 (2011) (noting that “[w]hen
a creditor files a proof of claim against the bankruptcy estate, he triggers the claims allowance
process, thereby subjecting himself to the equitable jurisdiction of the bankruptcy court and
losing any right to try his claim before a jury”).

13

of claim, rather than to other recipients allegedly prescribed by a rule of procedure, is
not such a fundamental infirmity as to dissolve the bankruptcy court’s jurisdiction to rule
on the claim. As such, the government failed to meet its burden to show that a reasonable
basis in law existed for its motion under Rule 60(b)(4) to vacate the bankruptcy court’s
ruling for lack of personal jurisdiction and its position as a whole was not substantially
justified. The bankruptcy court erred in denying Nicolaus’ application for an award of
fees and expenses.
IV.

CONCLUSION

For the reasons set forth herein, the bankruptcy court’s ruling (Doc. 6-1) denying
Nicolaus’ application for an award of fees and expenses is reversed. This case is
remanded to the bankruptcy court for further proceedings consistent with this order.

IT IS SO ORDERED.
DATED this 8th day of March, 2022.

__________________________
Leonard T. Strand, Chief Judge

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