United States of America v. Shriner et al

Filing 62

SECOND MEMORANDUM AND ORDER denying 28 Motion for Summary Judgment; and granting 29 United States' Motion for Summary Judgment. Signed by Judge Marvin J. Garbis on 3/12/14. (apls, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
UNITED STATES OF AMERICA
Plaintiff
vs.

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ROBERT SHRINER, et al.

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Defendants
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CIVIL ACTION NO. MJG-11-2929

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SECOND MEMORANDUM AND ORDER RE: SUMMARY JUDGMENT
The Court has before it Defendant Scott Larson Shriner's
Motion for Partial Summary Judgment [Document 28], the United
States' Motion for Summary Judgment [Document 29], and the
materials submitted relating thereto.

The Court has held a

hearing, had the benefit of the arguments of counsel for
Plaintiff and Defendant Scott Shriner,1 and invited, but did not
receive any post-hearing submissions.
In the Memorandum and Order Re: Summary Judgment [Document
58] the Court granted the United States' Motion for Summary
Judgment [Document 29] to the extent of $160,000 plus interest
from the date of assessment.

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[Document 58] at 2.

Defendant Robert Shriner did not file any response to any
of the motions and did not appear at the hearing.

I.

SUMMARY JUDGMENT STANDARD
A motion for summary judgment shall be granted if the

pleadings and supporting documents show "that there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law."

Fed. R. Civ. P.

56(a).
The well-established principles pertinent to summary
judgment motions can be distilled to a simple statement:

The

Court may look at the evidence presented in regard to a motion
for summary judgment through the non-movant's rose-colored
glasses, but must view it realistically.

After so doing, the

essential question is whether a reasonable fact finder could
return a verdict for the non-movant or whether the movant would,
at trial, be entitled to judgment as a matter of law.

See,

e.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986);
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Shealy v.
Winston, 929 F.2d 1009, 1012 (4th Cir. 1991).

Thus, in order to

defeat a motion for summary judgment, "the party opposing the
motion must present evidence of specific facts from which the
finder of fact could reasonably find for him or her."

Mackey v.

Shalala, 43 F. Supp. 2d 559, 564 (D. Md. 1999) (emphasis added).
When evaluating a motion for summary judgment, the Court
must bear in mind that the "summary judgment procedure is
properly regarded not as a disfavored procedural shortcut, but

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rather as an integral part of the Federal Rules as a whole,
which are designed 'to secure the just, speedy and inexpensive
determination of every action.'"

Celotex, 477 U.S. at 327

(quoting Rule 1 of the Federal Rules of Civil Procedure).
"Cross motions for summary judgment 'do not automatically
empower the court to dispense with the determination whether
questions of material fact exist.'" Equal Rights Center v.
Archstone Smith Trust, 603 F. Supp. 2d 814, 820 (D. Md. 2009)
(quoting Lac Courte Oreilles Band of Lake Superior Chippewa
Indians v. Voigt, 700 F.2d 341, 349 (7th Cir. 1983)).

Rather,

the court must examine each party's motion separately and
determine whether summary judgment is appropriate as to each
under the Rule 56 standard.

Desmond v. PNGI Charles Town

Gaming, L.L.C., 630 F.3d 351, 354 (4th Cir. 2011).

The court

may grant summary judgment in favor of one party, deny both
motions, or grant in part and deny in part each of the parties'
motions.

See Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir.

2003).

II.

Undisputed Facts
There is no genuine dispute regarding the following facts:
1.

On June 23, 2004, defendants Robert and Scott
Shriner were appointed by the Orphans' Court for
Anne
Arundel
County,
Maryland
as
coadministrators of the Estate of Carol Shriner who
died on June 3, 2004. [Document 28-1] at 1.

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2.

During her lifetime, Carol Shriner, the decedent,
failed to file federal income tax returns for the
years of 1997 and 2000 through 2003.
[Document
29-1] at 2.

3.

"In 2004, defendants Robert and Scott Shriner
engaged the law firm of Kraft & Jacobson ['the
Law Firm'] to represent the Estate and prepare
the decedent's outstanding tax returns." Id.

4.

"In May, 2005, the Estate filed [income tax]
returns on behalf of the decedent for 1997 and
2000 through 2003. The returns reported tax due,
and, on June 20, 2005 and June 27, 2005, the
Internal Revenue Service assessed tax liabilities
amounting to $276,908 . . . against the Estate."
Id.

5.

The Estate filed a power of attorney (IRS Form
2848) that authorized the Law Firm to represent
it and requested that the Internal Revenue
Service
("IRS")
send
all
notices
and
correspondence
regarding
the
Estate's
tax
liabilities to the Law Firm. See id.

6.

On numerous occasions prior to February 15, 2006,
the IRS notified the Law Firm of the outstanding
amounts of the Estate's unpaid tax liabilities
for tax years 1997 and 2000 through 2003. Id.

7.

"On February 15, 2006, the Estate reported to the
Orphans' Court that it made distributions to
Robert and Scott Shriner totaling $470,963."
However, "[a]s of February 15, 2006, . . . the
Estate was indebted to the United States in the
amount of $231,373, representing the total amount
due and owing by the Estate of Carol Shriner."
The $470,963 distribution left the Estate without
sufficient
assets
to
pay
the
income
tax
liabilities of Carol Shriner. See id. at 2-3.

8.

As of March 18, 2013, the Estate was indebted to
the United States for unpaid federal income taxes
and statutory additions to tax in the amount of
$333,292. Id. at 7.

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III. DISCUSSION
Section 3713 of Title 31 of the United States Code,
provides that "[a] representative of a person or an estate . . .
paying any part of a debt of the person or Estate before paying
a claim of the Government is liable to the extent of the payment
for unpaid claims of the Government."

31 U.S.C. § 3713(b).

Accordingly, Defendants – as personal representatives the Estate
of Carol Shriner – are personally liable for the unpaid tax
claim of the United States, to the extent of the distribution of
Estate assets, if:


They distributed assets of the Estate;



The distribution rendered the Estate insolvent
(unable to fully pay the outstanding taxes); and



The distribution took place after the Defendants
– as personal representatives of the Estate knew, or should have known, of the Government's
claim.

See United States v. Coppola, 85 F.3d 1015, 1020 (2d Cir. 1996).
Defendants do not deny that they distributed assets of the
Estate that rendered the Estate insolvent and unable to pay the
outstanding tax liability.

However, Defendants deny that they

had actual or constructive knowledge of the debt owed to the
United States.

This denial is not sufficient to establish a

genuine issue of material fact to warrant denial of summary
judgment.

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It is undisputed that the Law Firm represented the Estate
and the Defendants before the IRS by virtue of a Power of
Attorney and Declaration of Representative Form 2848 filed with
the IRS.

The Law Firm received multiple notices from the IRS

concerning the unpaid taxes prior to the distribution of Estate
assets at issue.

The Law Firm's knowledge of the unpaid taxes

is imputed to their clients.

See Chapman v. Merrill Lynch,

Pierce, Fenner & Smith, Inc., 597 F. Supp. 623, 627-28 (D. Md.
1984) ("[E]ven if plaintiffs did not know . . . of the
statements or omissions of defendant, it is clear that their
attorney did.

Such knowledge must be imputed to plaintiffs . .

. ."); Ryan v. Brady, 366 A.2d 745, 752 (Md. App. 1976)
("[N]otice to an attorney is notice to his client.”); cf.
Mansour v. Reeves Bldgs., Inc., 383 F. Supp. 482, 484-85 (S.D.
W. Va. 1973) ("Notice to, or knowledge of, an attorney for a
party to a legal proceeding of matters arising in the course of
the litigation or proceeding is ordinarily imputable to such
party."), aff'd sub nom. Mansour v. Reeves Bldg., Inc., 504 F.2d
812 (4th Cir. 1974).
The Court finds no merit in Defendant Scott Shriner's
contention that he relied on erroneous advice from the Law Firm
as to the extent of the liability and, therefore, cannot be

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bound by the Law Firm's knowledge.2

See United States v. Renda,

709 F.3d 472, 484 (5th Cir. 2013)("We follow the majority of
other courts in holding that a representative's actual knowledge
of a federal claim is sufficient, notwithstanding that
representative's reliance on the erroneous advice of counsel as
to how to address the claim."); cf. United States v. Boyle, 469
U.S. 241, 251 (1985) ("When an accountant or attorney advises a
taxpayer on a matter of tax law, such as whether a liability
exists, it is reasonable for the taxpayer to rely on that
advice. . . . By contrast, one does not have to be a tax expert
to know that tax returns have fixed filing dates and that taxes
must be paid when they are due. In short, tax returns imply
deadlines. Reliance by a lay person on a lawyer is of course
common; but that reliance cannot function as a substitute for
compliance with an unambiguous statute.")
Finally, Defendants have produced no evidence to establish
that there was some sort of settlement of the claim against
them.
2

Defendant Scott Shriner contends that Little v.
Commissioner of Internal Revenue, a decision of the United
States Tax Court, supports his claim that he cannot be held
personally liable for the income tax liability of the Estate
because he relied on the advice of counsel as to the amount of
the tax liability. The issue before the Tax Court in Liddle was
erroneous advice from counsel that "the estate had no income tax
liabilities." 113 T.C. 474, 480 (1999) (emphasis added).
However, in this case, there is no dispute that the Defendants
knew the Estate owed some income tax liability. Thus, Defendant
Scott Shriner's reliance on Little is inapposite.
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IV.

CONCLUSION
For the foregoing reasons:
1.

Defendant Scott Larson Shriner's Motion for
Partial Summary Judgment [Document 28] is DENIED.

2.

The United States' Motion for Summary Judgment
[Document 29] is GRANTED.

3.

Judgment shall be entered by separate Order.

SO ORDERED, on Wednesday, March 12, 2014.

/s/__________
Marvin J. Garbis
United States District Judge

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