Mission Primary Care Clinic, PLLC v. Director, Internal Revenue Service et al
Filing
123
ORDER granting 119 Motion for Reconsideration Signed by Honorable David C. Bramlette, III on 2/6/2012 (PL)
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI,
WESTERN DIVISION
UNITED STATES OF AMERICA,
Counterclaimant
VERSUS
CIVIL ACTION NO. 5:07-cv-162-DCB-JMR
MISSION PRIMARY CARE CLINIC, PLLC,
Counterclaim Defendant and
Cross-claimant, and
VICKSBURG PRIMARY CARE TEAM INC., and
MARKUS B. STANLEY
Cross-Claim Defendants on Counterclaim.
OPINION AND ORDER
This cause is before the Court on the Government’s Motion to
Reconsider Order and Enter Judgment Under Federal Rule of Civil
Procedure 58(d), or, in the alternative, Motion for Relief from
Judgment Under Federal Rule of Civil Procedure 60(a) or 60(b)(1).
Having carefully considered said Motion, the Defendant’s opposition
thereto, applicable statutory and case law, and being otherwise
fully advised in the premises, the Court finds and orders as
follows:
I. Summary of the Arguments
On
March
25,
2010,
Mission
Primary
Care
Clinic,
PLLC,
(“Mission”) appealed this Court’s grant of summary judgment in
favor of the United States. The Fifth Circuit upheld the Court’s
conclusion that Mission’s payments to Stanley constituted salary or
wages subject to the levy imposed by the United States but reversed
this Court’s determination that Stanley was not entitled to claim
the
statutory
“fallback”
exemption.
See
Mission
Primary
Care
Clinic, PLLC v. Dir., Internal Revenue Servs., 370 Fed. Appx. 536,
541-42 (5th Cir. July, 7, 2010) (unpublished op.)(citing 26 U.S.C.
§ 6334(d)(2)(B)). Accordingly, the Court of Appeals remanded the
cause,
instructing
this
Court
to
recalculate
the
amount
of
Mission’s liability. Id. at 542. Shortly thereafter, this Court
applied an exemption of $1,012.50--the per month amount to which
Mission claimed its liability should be reduced--for a three-month
period to reduce Mission’s liability to the United States by
$3,037.50.
The United States contends that the Court’s June 8, 2010 Order
(1) miscalculated
reaffirm
its
the
earlier
amount owed
finding
that
by
the
Mission,
United
(2)
failed
States
is
to
the
prevailing party in this case and (3) did not dispose of Mission’s
pending crossclaims against Vicksburg Primary Care Team, Inc.
(“VPCT”) and Markus B. Stanley. The United States asks the Court to
recalculate the amount owned by Mission and enter a final judgment
in its favor thereby disposing all of its claims against Mission.
Not wanting to incur further costs associated with the case,
Mission states, without explanation, that the Court correctly
calculated the exemption amount. Mission, however, does not dispute
that the United States was the prevailing party in this case and
2
therefore concedes that the Court’s earlier assessment of costs
still stands. Further, Mission’s response does not address the
status of their crossclaims against VPCT or Stanley. Mission’s
primary concern is that it should not have to pay interest that has
accrued on the judgment after June 8, 2010 since it has been “ready
and willing” to pay the judgment since that date. In rebuttal, the
United States objects to Mission’s claim that any interest should
be abated and asks the Court to reaffirm that prejudgment and
postjudgment interest runs from the date the Court entered its
original judgment.
II. Whether the Court’s July 8, 2010 Order Was a Final Judgment
Before the Court can address the merits of the United States’s
argument, it first must determine the status of the case at bar.
The United States has expressed confusion as to whether the Court’s
June 8, 2010 Order reducing Mission’s liability to the United
States [docket entry no. 115] should be construed as a final
judgment disposing of all of the claims against it, which would
qualify the Order as appealable. Additionally, the United States
questions
why
the
docket
sheet
indicates
that
the
case
was
terminated on July 13, 2009, even though Mission has crossclaims
pending against other Defendants.
The Court rendered its June 8, 2010 Opinion and Order pursuant
to the instruction of the Fifth Circuit, intending that Order to
reduce the amount of Mission’s liability to the United States;
3
however, the Court never set out its amended judgment in a separate
document as required by Rule 58(a). As it stands, the Court’s
original
judgment
technically
remains
in
effect,
although
it
directly conflicts with the June 8, 2010 Order. To rectify this
conflict, the Court will consider the United States’s present
Motion pursuant to its authority to revise previous, non-appealable
orders under Rule 54(b). See Johnson v. TCB Construction Co., Inc.,
2007 WL 37769, at *1 (S.D. Miss. 2007) (noting that the Court had
not entered a final judgment dismissing all claims against all
defendants and therefore should review the order pursuant to its
authority under Rule 54(b)), see also Moses H. Cone Mem. Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 12 & n.14 (1983).1 Following a
resolution of this matter, the Court will promptly amend its
original Judgment [docket entry no. 105] with a separate document
consistent with this Opinion and Order, thereby concluding all
claims between the United States and Mission. See FED. R. CIV. P.
1
Motions for reconsideration based on decrees or orders from
which an appeal lies, i.e., final judgments, are evaluated under
either Rule 59(e) or 60(a), depending on how quickly the motion for
reconsideration was filed after entry of the Court’s order, degree,
or judgment. See FED. R. CIV. PRO. 54(a) (emphasis added), 58(a);
Shepherd v. Int’l Paper Co., 372 F.3d 326, 328 n.1 (5th Cir. 2004).
If the order in question was appealable, the Government’s motion
would undoubtably be a Rule 60 motion--filed exactly a year after
the Order was entered--which has a more stringent standard of
review than a Rule 54(b) motion. See generally, Fed. R. Civ. P. 60.
Regardless, the Government would prevail even under a more
demanding standard because the Court clearly miscalculated the
exemption amount. See infra. Indeed, the standard of review makes
little difference in this case because the Court clearly erred in
its calculations.
4
58(a).
With respect to Mission’s remaining crossclaims, the United
States correctly points out that the docket sheet does not indicate
that these claims have been resolved. The Court has previously held
in this case that VPCT and Stanley lacked standing to challenge the
United States’s counterclaim against Mission, and, to the extent
that the United States is now asking the Court to take any action
regarding Mission’s counterclaims, by the same logic the Court
finds that the United States may not pursue Mission’s counterclaims
for indemnity from VPCT and Stanley. See March 6, 2009 Opinion and
Order at 6-7, docket entry 90. The Court is uncertain as to whether
Mission intends to prosecute its crossclaims once the amount of its
liability to the United States is finalized, but the Court will
leave that decision to Mission’s discretion. See July 13, 2009
Order at 3-4, docket entry no. 104. Accordingly, at this time the
Court will only resolve the issues remaining between the United
States and Mission.
III. Judgment Amount
The United States disputes both the amount of the personal
exemption applied by the Court and the length of time during which
the exemption applies, arguing that Stanley qualified for an
exemption of $729.17, not $1,012.50, and that this exemption
applies for a forty-three-day(43) period, not the entire three
5
months.
Under 26 U.S.C. § 6334(d)(2)(B), a taxpayer who fails to
provide proper documentation for his claimed exemptions is entitled
to an exemption “as if the taxpayer is a married individual filing
separately with only one personal exemption.” Mission Primary Care
Clinic, 370 Fed. Appx. at 542. In 2007, the personal exemption for
a married individual filing separately with only one personal
exemption was $729.17. See IRS Notice 2006-106, 2006-49 I.R.B.
1033, 2006-2 C.B., 2006 WL 3473247 (Table 1). Therefore, the Court
should have used this amount in reducing Mission’s liability to the
United States.2
Secondly, 26 C.F.R. § 301.6334-3(d) provides that “[i]n the
case of an individual who is paid or receives, wages, salary, and
other income other than on a weekly basis, the [amount exempt] from
levy under section 6334(a)(9) is the amount that as nearly as
possible will result in the same total exemption from levy for such
individual over that period of time . . . .”3 Mission made payments
2
In its original recalculation of liability, this Court
incorrectly relied on Mission’s claim that it was entitled to a
personal exemption amount of $1,012.50. The Court can find no
explanation as to how Mission arrived at this amount but notes that
$1,012.50 is the exemption amount for a individual taxpayer
claiming two exemptions. See IRS Notice 2006-106, 2006-49 I.R.B.
1033, 2006-2 C.B., 2006 WL 3473247 (Table 1).
3
26 U.S.C. § 6334(a)(9) defines the minimum exemption for
wages, salary, and other income as “[a]ny amount payable to or
received by an individual as wages or salary for personal services,
6
to Stanley on March 23, March 30, April 5 (two payments), April 10,
April 20, April 24, May 2, and May 4, 2007. Because Mission paid
Stanley on an other-than-weekly basis, there is no question that
the exemption should have been applied only from the dates between
March 23 to May 4--a forty-three-day (43) period--rather than for
the entire three months. Applying the correct exemption of $729.17
for the correct time-period of forth-three (43) days, the Court
finds the judgment should have been reduced by $1,043.27 and will
amend the judgment to $42,157.73 to reflect the correct amount
Mission owes the United States.4
IV. Costs and Interest
Next, the United States asks this Court to reaffirm the
assessment of costs and interests in its favor, and in rebuttal to
Mission’s response to this request, further requests that the Court
reaffirm that Mission owes interest starting from the date of the
or as income derived from other sources, during any period, to the
extent that the total of such amounts payable to or received by him
during such period does not exceed the applicable exempt amount
determined under subsection (d).”
4
The Court arrived at this calculation by multiplying $729.17
by 12, which equals $8,750.04. This amount, divided by 52, is
$168.27--the weekly exemption to which Mission was entitled.
Multiplying $168.27 by six--for the six work weeks during the
applicable period--equals $1009.62. A one-day daily exemption rate
of $33.65 ($168.27/5) was added to this amount, totaling $1,043.27,
to account for the full six weeks and one day that Mission was
entitled to claim the exemption. See IRS Notice 2006-106, 2006-49
I.R.B. 1033, 2006-2 C.B., 2006 WL 3473247 (Table 1).
7
judgment entered prior to appeal. Mission, for its part, does not
object to paying costs and interests; however, it requests, without
providing any supporting legal authority, that this Court abate any
interest on the judgment that may have accrued after the Court’s
entry of its June 08, 2010 Order because it contacted the IRS in an
effort to pay the judgment but was unable to do so.
Upon remand, an inferior court must follow the mandate of the
appellate court, including instructions regarding interest amounts.
Briggs v. Pennsylvania R. Co., 334 U.S. 304, 306 (1948); see also
FED. R. APP. P. 37 (advisory notes). This Court was instructed to
recalculate the amount of Mission’s liability to the United States.
In all other respects, the Fifth Circuit affirmed the Court’s
earlier Order, which assessed prejudgment and postjudgment interest
to the judgment amount.5 See Judgment, docket entry no. 105.
Mission cites no authority for its argument that the interest
should be abated from June 8, 2010 to the present, and the Court
can find no legal authority to support this position.
5
The Court of Appeals held that Mission waived any objection
to the imposition of interest on the judgment amount by not raising
their objections prior to appeal. See Mission Primary Care Clinic,
370 Fed. Appx. at 542 n. 3. To the extent that reversal “for
recalculation of Mission’s liability” is subject to Federal Rule of
Appellate Procedure 37(b), the Court interprets this footnote to
affirm the Court’s assessment of prejudgment and postjudgment
interest. In other words, the Court understands this footnote to
provide adequate “instructions about the allowance of interest.”
FED. R. APP. P. 37
8
Regarding costs awarded to the United States and interest
derived therefrom, this circuit follows the majority rule that
interest on costs accrues from the date of the judgment that
provides the basis for the award, rather than the date on which the
Court determines the amount of costs payable. See, e.g., Louisiana
Power & Light Co. v. Kellstrom, 50 F.3d 319, 331-32 (5th Cir.
1995); see also, Boehner v. McDermott, 541 F. Supp. 2d 310, 321-22
(D.D.C. 2008) (noting that the Fifth Circuit follows the majority
rule). The Court entered its judgment finding Mission liable to the
United States on July 13, 2009. Therefore, the Court finds that the
costs and interest awarded to the United States and the prejudgment
and postjudgment interests on the new liability amount should be
calculated pursuant to 26 U.S.C. § 6332(d)(1) from July 13, 2009,
the date the Court entered its final judgment.
V. Disposition
After reconsidering the June 8, 2010 Order, the Court finds
that it miscalculated the amount Mission may claim as exempt from
the IRS levy. Pursuant to the instruction of the Fifth Circuit,
Mission’s liability to the United States should be reduced by
$1,043.27.
Accordingly, the Court will enter a separate document
amending the amount of Mission’s total liability to the United
States to $42,157.73.
IT IS HEREBY ORDERED that Government’s Motion to Reconsider
9
Order and Enter Judgment [docket entry no. 119] is GRANTED.
The Court will enter an Amended Judgment reducing Mission’s
liability to the United States to $42,157.73.
SO ORDERED on this the 6th day of February, 2012.
/s/ David Bramlette
UNITED STATES DISTRICT JUDGE
10
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