United States of America v. Stanley

Filing 85

ORDER denying 64 Motion for Reconsideration ; denying 67 Motion ; denying 79 Motion for Reconsideration ; denying 81 Motion to Stay Proceedings; denying 83 Motion for Reconsideration. Signed by Honorable David C. Bramlette, III on 7/10/2013 (PL)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
UNITED STATES OF AMERICA

PLAINTIFF(S)

V.

CIVIL ACTION NO. 5:11cv117-DCB-RHW

MARKUS BRENT STANLEY

DEFENDANT(S)
OPINION AND ORDER

This cause is before the Court on Defendant Markus Brent
Stanley’s Motion for Reconsideration of the April 25, 2013 Order
[docket no. 64], Motion for Relief from the April 25, 2013 Order
[docket no. 67], Motion for Reconsideration of the June 19, 2013
Order [docket no. 79], Motion to Stay [docket no. 81] the present
proceedings

in

light

of

his

bankruptcy case, and

Motion

for

Reconsideration [docket no. 84].1 Having carefully considered these
Motions, the Government’s responses thereto, applicable statutory
and case law, and being otherwise fully advised in the premises,
the Court will deny each of the Motions.
ANALYSIS
I.

Motions for Reconsideration of the April 25, 2013 Order
Stanley’s primary challenge to the April 25, 2013 Order,

raised in his first Motion and repeated with more vigor in his
second, is that his bankruptcy discharge order prevents the United

1

Stanley’s three final motions will not be ripe by the time
this case is scheduled to go to trial. Although the Court will rule
on the issues raised in these motions in order to clarify the
issues for trial, the United States may respond as provided by the
local rules if it deems a response necessary.

States from now seeking to reduce his tax liabilities for the years
1998-2004 to judgment.2 Now that he has called this matter to the
Court’s attention by motion, the Court acknowledges that Stanley
did state in his answer that the United States failed to initiate
timely adversarial proceedings in his bankruptcy case and therefore
should be estopped from attempting to reduce his tax liabilities to
judgment. See Answer (Second Affirmative Defense), docket no. 11.
But he never raised this argument in either of responses to the
Government’s Motion for Summary Judgment. Nor did he move for
summary judgment on this basis.
Instead, in his initial response to the Government’s Motion
for Summary Judgment, Stanley argued that (1) he did not willfully
attempt to evade or defeat his taxes and (2) the Government’s
Motion was late. In part because he was right on the second point,
the Court allowed him to file a second response to the Government’s
Motion. In his second response, Stanley argued that he did not
willfully attempt to evade or defeat his taxes, and the Court
concluded that there was a genuine issue as to whether the failure
to pay his taxes was willful. Stanley never questioned the Court’s
authority to make this ruling or suggest that this determination
should be anything other than de novo.

2

Stanley appears to be asking for the Court to rule that the
United States cannot reduce his tax liabilities to judgment as a
matter of law because those liabilities were discharged in
bankruptcy.
2

Now, shortly before trial, Stanley claims that this Court did
not have the authority to make its summary-judgment determination
because the United States’s case is essentially an untimely appeal
of the bankruptcy court’s order of discharge. He asserts that this
Court should review the bankruptcy court’s
clear

error

and

argues—without

“findings of fact” for

attaching

any

supporting

evidence—that “[a]t all times relevant hereto, the Bankruptcy Court
was fully cognitive of the two prong test set out in [Coney] and
granted a discharge of Stanley’s tax liability after a careful
review of Stanley’s conduct and a thorough evaluation of his state
of mind and credibility as a witness.” Pl.’s Br. at 64-1. The
United States is correct that an affirmative defense should be
raised by motion. See Local Rule 7(b)(2)(A). Moreover, because this
argument could have been raised in either of his responses to the
Government’s Motion for Summary Judgment, but was not, Stanley
waived this argument. Therefore there is no basis on which this
Court should grant either Rule 59(e) or Rule 60(b) relief. See
Brown v. Illinois Central R. Co., Inc., 480 F. App’x 753, 754 (5th
Cir. 2010).
In the alternative, the Court denies Stanley’s Motions on
their merits. As to the bankruptcy issue, it is not the absence of
evidence alone that discredits Stanley’s argument. The discharge
order itself, which was produced by the Government in support of
its Motion for Summary Judgment, indicates that Stanley’s tax debts

3

were not discharged in bankruptcy. See Discharge Order (Official
Form 18), docket no. 31-34 at 2. That order provides, “[s]ome of
the common types of debts which are not discharged in a chapter 7
bankruptcy are: (a) debts for most taxes.” Id. (emphasis in the
order). And now, as further confirmation, the United States has
produced other documentation from the bankruptcy court proceedings
indicating that the bankruptcy court was fully cognitive of the §
523(a) discharge issue and did not grant Stanley a discharge of tax
liability.3 April 13, 2010 Agreed Order, docket no. 78-1.
At the time the Court denied the United States’s Motion for
Summary Judgment, it was in a position similar to the trial court
in Coney, which determined that “[t]he bankruptcy court was not
presented with and did not rule on the dischargeability of the
Defendants’

tax

liability.”

United

States

v.

Coney,

2011

WL

1103631, at *1 (E.D. La. March 22, 2011).4 Thus, the trial court

3

In response to the Government’s Motion stating that the
bankruptcy court had improvidently entered an order establishing a
deadline for raising
§ 523(a) discharge, the bankruptcy court
entered an agreed order expressly providing that the Government
could raise the issue at a latter date. April 13, 2010 Agreed
Order, docket no. 78-1. There is no indication that the bankruptcy
court’s discharge order, which was entered after the April 13, 2010
Agreed Order, altered or superceded the Agreed Order. Moreover, the
Agreed Order is consistent with the Fifth Circuit’s understanding
of the operation of § 523(a)(1)(C): “a tax liability excepted from
discharge under § 523(a)(1)(C) . . . is non-dischargeable as a
matter of law, and no additional action is required by the
creditor.” In re Range, 48 F. App’x 103, at *5 (5th Cir. Aug. 20,
2002) (unpublished table decision).
4

The Fifth Circuit also clearly understood Coney’s procedural
posture, noting that “[a]fter the bankruptcy court entered the
4

considered it appropriate to resolve the issue de novo. Id. In his
Motions for Reconsideration, Stanley has provided no evidence to
support the contention that “the Bankruptcy Court . . . granted a
discharge of Stanley’s tax liability after a careful review of
Stanley’s conduct and a thorough evaluation of his state of mind
and credibility as a witness.” Pl.’s Br. at 64-1. Nor is there any
legal

precedent

whether

his

tax

that

counsels

liabilities

against
should

be

this

Court

reduced

determining

to

judgment.

Therefore, the Court will not alter its summary-judgment ruling in
light of Stanley’s new dischargeability argument.
In addition to the dischargeability argument, Stanley has
asserted a variety of other last-minute theories. As to collateral
estoppel, equitable estoppel, or res judicata, those arguments fail
simply because he has not included evidence to support them. Put
simply, there is no evidence that any issue in the present case was
adjudicated by the bankruptcy court. Likewise, Stanley has also
alleged that the United States has engaged in “tax profiling,” but
this claim is without merit, again, because he has not supported
this argument with legal precedent or with evidence.5 Also, Stanley

discharge order, the Government filed the instant suit to reduce
the Coneys’ unpaid tax assessments to judgment.” United States v.
Coney, 689 F.3d 365, 370 (5th Cir. 2012).
5

Stanley instead opts for statements like “[t]he IRS as an
agency has created a systemic culture fraught with abuse of power,
discriminatory practices and the use of intimidation in their rabid
pursuit of the collection of taxes from the American public.”
Def.’s Br. at 2 (no citation provided), docket no. 69.
5

makes a legally unsupported statue-of-limitations argument. The
United States instituted the present case within the applicable
ten-year limitations period. See 26 U.S.C. § 6502(a)(1).
II.

Motion to Stay Proceedings in Light of Stanley’s Bankruptcy
Case
Relatedly,

Stanley

asks

the

Court

to

stay

the

present

proceedings because the issue of whether his state taxes were
discharged in bankruptcy is currently before the bankruptcy court.
In

support

of

this

argument,

Stanley

relies

mainly

on

the

Government’s argument in one of its briefs which suggested that
Stanley acknowledged his taxes were not discharged when he asked
the bankruptcy court on November 14, 2011 to determine whether his
state

taxes

were

discharged

by

the

bankruptcy

court

order.

Regardless of whether this is still a live issue before the
bankruptcy court—a matter that is unclear from the record—Stanley
has not provided the Court with any relevant law to support a stay
in this matter, other than to repeat his argument that the present
case is an untimely appeal of the bankruptcy court discharge order.
The Court finds that the principles underlying that argument and
those underlying his reasoning for a stay are similar. As stated
above, in the absence of any contrary evidence, the issue before
the Court is procedurally proper and that issue will be resolved at
the upcoming bench trial on July 23, 2013.
III. Motion for Reconsideration of the June 19, 2013 Order
Next, Stanley asserts that the Court should reconsider its
6

finding that (1) he does not have a right to trial by jury on the
issue of dischargeability and (2) he waived his right to a jury
trial. Notably, Stanley does not attack the Court’s findings that
formed the foundation of the Order. Instead, he asserts that this
Court has become unduly biased against him and that it would be
“constitutionally egregious” to proceed with the bench trial. This
assertion—that the Court is biased against him—is based on a
misunderstanding of the Court’s April 25, 2013 Order, and more
fundamentally, what the Court was doing at the summary-judgment
stage. After weighing all the evidence presented by both parties,
the Court acknowledged that the issue at the summary-judgment stage
was

a

close

one

but

concluded

that

Stanley

should

have

the

opportunity to present his case at trial inasmuch as there is a
disputed issue as to the intent behind his failure to pay his
taxes. Thus the Defendant will have a full and fair opportunity to
present his case at the upcoming bench trial. As it did at the
summary-judgment

stage,

the

Court

will

consider

all

evidence

presented, including any new admissible evidence, in making its
findings of fact and conclusions of law.
As for disregarding the “mens rea” requirement, which was
raised in his briefing on other Motions for Reconsideration,
Stanley has misconstrued the Court’s statement of the law. The
Court

stated

that

requirement—whether

he

the
tried

relevant
to

7

evade

statute’s
his

taxes—is

conduct
heavily

dependant on his intent, suggesting that whether he violated the
conduct requirement was inextricably linked to whether he violated
the mental-state requirement. As demonstrated above, far from being
disregarded, Stanley’s state of mind was and is critical—central,
even—to the Court’s inquiry. In fact, it was the basis for the
Court’s denial of summary judgment. See April 23, 2013 Order,
docket

no.

61

at

11

(“The

Court

harbors

the

slightest

of

reservations as to Stanley’s intent and therefore finds that the
United States did not carry its summary-judgment burden . . . .”)
(emphasis added). But, just as it was at the summary-judgement
stage, whether Stanley willfully attempted to evade or defeat his
taxes will be—in fact, it must be—evaluated based on all admissible
evidence regarding Stanley’s conduct during the years in question.
IV.

Motion for Reconsideration because the Court is allegedly
applying the wrong “standard of care” in this case
Finally, the argument contained in Stanley’s latest submission

is difficult to understand. To attempt to summarize it, first,
Stanley appears to argue that he knew that he should pay his taxes
but could not pay them because his bipolar disorder “controlled”
his impulse not to pay his taxes. Next, he seems to assert that
this consequence of his bipolar disorder—that he could not control
his actions—should be given special weight in the context of this
§ 523(a) action because bipolar disorder is a “covered condition”
under the ADA. In response, the Court briefly points out only that
(1) Stanley’s factual claim—that he could distinguish between right
8

and

wrong

but

could

not

control

his

actions—is

based

on

an

extremely liberal reading of Dr. Steinberg’s expert report6 and (2)
his legal argument is based on a misrepresentation of the law.7
Stanley’s final Motion for Reconsideration will be denied.
CONCLUSION
IT IS THEREFORE HEREBY ORDERED that Defendant’s Motion for
Reconsideration [docket no. 64], Motion for Relief [docket no. 67],

6

Dr. Steinberg stated: “Dr. Stanley was manifesting symptoms
of Bipolar II Disorder at the time of his alleged offenses. These
symptoms were severely interfering with his personal and
professional life at the time.” See Expert Report, docket no. 56-9
at 14.
7

That Stanley represented to the Court that language taken
from a petition for writ of certiorari to the United States (which
was denied) was the holding of the United States Supreme Court is
a misrepresentation. Compare Def.’s Br. at 3, with In re Greenberg,
1998 WL 34095269, at *6 (Nov. 23, 1998). He also wrongly states,
without any explanation as to where he derived this notion, that
“in 1984 Congress amended the American’s with Disability Act [sic]
(ADA) to include bipolar disorder as a covered condition.” Def.’s
Br. at 2 (citing 42 U.S.C. § 12010, et seq.). Stanley may or may
not qualify as disabled under the ADA, but qualifying in this
context is not a matter of having a listed, covered condition, as
it is with obtaining social security benefits. And finally he
claims that “the Florida Supreme Court has ruled that where an
Attorney misappropriates his client’s money and his bipolar manic
depressive disease caused or contributed to his misappropriation of
the funds it must follow the mandate of the ADA when deciding
discipline.” Def.’s Br. at 3 (citing generally to The Florida Bar
v. Clement, 662 So. 2d 690 (Fla. 1995)). Inasmuch as Stanley’s
imperative to “follow the mandate of the ADA” can be construed that
the ADA should have some bearing on the outcome of a nondiscrimination lawsuit, the Florida Supreme Court expressed the
opposite view: “Although Clement suffers from a disability as
defined by the ADA, the ADA does not prevent this Court from
sanctioning Clement . . . . [E]ven if any of Clement’s actions
occurred when he could not distinguish right from wrong, the ADA
would not necessarily bar this Court from imposing sanctions.” The
Florida Bar v. Clement, 662 So. 2d 690, 699-70 (Fla. 1995).
9

Motion

for

Reconsideration

[docket

no.

79],

Motion

to

Stay

Proceedings [docket no. 81], and Motion for Reconsideration [docket
no. 84] are DENIED. Further, with respect to Stanley’s request that
the Court certify either the April 25, 2013 Order or the June 19,
2013 Order for interlocutory appeal, that request is denied.
Stanley has

not

shown

that

“there

is substantial

ground

for

difference of opinion” on either of the issues contained in those
orders for which he claims certification is warranted. 28 U.S.C. §
1292(b).
So ORDERED, this the 10th day of July, 2013.

/s/ David Bramlette
UNITED STATES DISTRICT JUDGE

10