Arismendy v. The United States et al

Filing 18

MEMORANDUM AND ORDER entered. It is ORDERED that the Memorandum and Order [Doc. # 9] and Final Order of Dismissal [Doc. # 10] are VACATED. It is furtherORDERED that the Petition to Quash Summons [Doc. # 1] is DENIED as moot. This action is DISMISSED without prejudice. A separate Final Order will issue. (Signed by Judge Nancy F Atlas) Parties notified. (wbostic, 4)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
§
§
§
v.
§
§
UNITED STATES COMMISSIONER §
OF INTERNAL REVENUE, et al.
§
Defendants.
§

August 04, 2017
David J. Bradley, Clerk

KELLY ANN ARISMENDY,
Petitioner,

CIVIL ACTION NO. 4:17-1139

MEMORANDUM AND ORDER
Petitioner Kelly Ann Arismendy, who proceeds pro se, commenced this civil
action by filing a Petition to Quash Summons [Doc. # 1]. On June 30, 2017, this
Court issued a Memorandum and Order [Doc. # 9] granting the Government’s motion
to dismiss for lack of subject matter jurisdiction. Petitioner now has filed a Motion
to Reinstate [Doc. # 13], to which the Government filed a timely Response [Doc.
# 17]. Having considered the parties’ filings, the applicable legal authorities, and all
matters of record, the Court concludes that Petitioner’s Motion to Reinstate should be
granted, that her Petition to Quash Summons should be denied as moot, and that this
action should be dismissed without prejudice.
The Summons challenged by Petitioner was issued by the IRS and directed at

J.P. Morgan Chase (“Chase”), seeking records related to Petitioner’s tax liability.1
Petitioner has argued consistently that she was entitled to, and had not received, notice
of the Summons. The Government previously argued, and the Court held in its
Memorandum, that Petitioner was not entitled to notice because the Summons fit
under statutory exceptions:
[The notice requirements] shall not apply to any summons . . . issued in
aid of the collection of (i) an assessment made or judgment rendered
against the person with respect to whose liability the summons is issued;
or (ii) the liability at law or in equity of any transferee or fiduciary of any
person referred to in clause (i) . . .
26 U.S.C. § 7609(c)(2)(D). See Government Response [Doc. # 6], at 5 (“The
provisions of Section 7609 do not apply to the summons at issue in this civil action
because the summons was issued to JP Morgan Chase Bank in aid of collection of tax
liabilities assessed against Petitioner”). The Summons invoked this exception on its
face, stating “Under IRC 7609(c)(2)(D), this summons is exempt from notice
requirements pertaining to third party summonses,” and specifically requested “data
relating to the tax liability or the collection of the tax liability … concerning the
[Petitioner].” Summons, at 1.

1

Summons [Doc. # 6-1], at 1 (Summons is captioned “In the matter of Kelly Ann
Arismendy” and orders Chase to produce and testify regarding records “relating to the
tax liability or the collection of the tax liability” concerning Petitioner, or “for the
purpose of inquiring into any offense connected with the administration or
enforcement of the internal revenue laws concerning [Petitioner]”).
2

Petitioner’s current briefing argues that the exceptions in Section 7609(c) do
not apply to her case because she has no outstanding tax liability and no legal
relationship with any person with any person against whom a tax assessment has been
made. Memorandum of Law [Doc. # 14] (citing Ip v. United States, 205 F.3d 1168
(9th Cir. 2000)). The Summons directed at Chase apparently pertained to a mortgage
that Petitioner obtained from Chase for real property that Petitioner purchased from
Michael Palma.

Petitioner identifies Palma as “the real subject of the IRS

investigation.” Memorandum of Law [Doc. # 14], at 2 ¶ 10b. She represents that she
has never been married to Palma, has no joint accounts with Palma, and that Palma is
not on the mortgage. Id.
The Government now concedes that Petitioner was entitled to notice of the
Summons at issue.

Although the Government previously relied upon the notice

exceptions in Section 7609(c)(2)(D), it now represents that there is no valid
“assessment” against Petitioner, as the statutory language requires:
9.
The investigation of petitioner includes her potential liability as an
alter-ego/nominee/transferee of a related taxpayer [Palma] with an
assessed liability.
10. However, although the investigation is ongoing, there has not been
an assessment made against petitioner as an alterego/nominee/transferee.
11. Therefore, because there is neither a valid assessment to be
collected against petitioner, nor an assessment made against petitioner
3

as a transferee, petitioner was entitled to notice of the summons issued
to JP Morgan on March 27, 2017.
Response [Doc. # 17], at 3, ¶¶ 9-11.
Based on the Government’s concession that no liability was assessed against
Petitioner and that Petitioner was entitled to notice, this Court’s previous rulings will
be vacated.
The Government further states that it has not received records from Chase and,
given its failure to comply with the notice requirements, will not seek enforcement of
the Summons. Response [Doc. # 17], at 1 (“Respondent hereby withdraws the
summons at issue in this case and will not seek enforcement of the summons”).
Because this representation by the Government moots the relief sought in the Petition
to Quash Summons, the Petition will be denied as moot.
Therefore it is hereby
ORDERED that the Memorandum and Order [Doc. # 9] and Final Order of
Dismissal [Doc. # 10] are VACATED. It is further
ORDERED that the Petition to Quash Summons [Doc. # 1] is DENIED as
moot. This action is DISMISSED without prejudice.
A separate Final Order will issue.
SIGNED at Houston, Texas, this 4th day of August, 2017.

4

NAN Y F. ATLAS
SENIOR UNI
STATES DISTRICT JUDGE