Estate of Austin D. Herrick v. USA

Filing 45

MEMORANDUM DECISION AND ORDER denying 39 Motion to Alter or Amend Judgment. Signed by Judge Dale A. Kimball on 5/19/2016. (eat)

______________________________________________________________________________
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

ESTATE OF AUSTIN HERRICK,
Plaintiff,

MEMORANDUM DECISION
AND ORDER

vs.
Case No. 2:12CV671DAK
UNITED STATES OF AMERICA,
Judge Dale A. Kimball
Defendant.

This matter is before the court on Defendant’s Motion to Alter or Amend Judgment
requesting this court to alter or amend its Judgment entered in this case March 28, 2016, as
amended by the Court’s Memorandum Decision and Order on March 31, 2016. The court
concludes that oral argument would not significantly aid in its determination of the present
motion. Therefore, based on the memoranda submitted by the parties and the law and facts
relevant to the motions, the Court enters the following order.
Defendant’s Motion to Alter or Amend Judgment
Rule 59(e) of the Federal Rules of Civil Procedure authorizes a motion to alter or amend
a judgment after its entry. However, "[a] Rule 59(e) motion to alter or amend the judgment
should be granted only to correct manifest errors of law or to present newly discovered
evidence." Phelps v. Hamilton, 122 F.3d 1309, 1324 (10th Cir. 1997) (internal quotation marks
omitted). A motion for reconsideration is an “inappropriate vehicle to reargue an issue

previously addressed by the court when the motion merely advances new arguments, or
supporting facts which were available at the time of the original motion. Absent extraordinary
circumstances, . . . the basis for the second motion must not have been available at the time the
first motion was filed.” Servants of the Paracletes v. Does, 204 F.3d 1005, 1012 (10th Cir.
2000). “When supplementing a Rule 59(e) motion with additional evidence, the movant must
show either that the evidence is newly discovered [and] if the evidence was available at the time
of the decision being challenged, that counsel made a diligent yet unsuccessful effort to discover
the evidence.” Committee For the First Amendment v. Campbell, 962 F.2d 1517 (10th Cir. 1992)
(citations omitted). “It is not appropriate to revisit issues already addressed or advance
arguments that could have been raised in prior briefing.” Servants of the Paracletes, 204 F.3d at
1012. A Rule 59(e) motion must be made upon grounds other than a mere disagreement with the
court’s decision and must do more than rehash a party’s former arguments that were rejected by
the court. Resolution Trust Corp. v. Greif, 906 F. Supp. 1446, 1456-57 (D. Kan. 1995)("A party
cannot invoke Rule 59(e) to raise arguments or present evidence that should have been raised in
the first instance or to rehash arguments previously considered and rejected by the court.").
In its motion, Defendant asserts that this court incorrectly applied Treasury Regulation §
1.911-7(a)(2)(i)(D)(2). This argument, however, only raises arguments Defendant should have
made in the original briefing of Plaintiff’s Motion for Summary Judgment. Defendant raised
Treasury Regulation § 1.911-7(a)(2)(i) in its opposition to Plaintiff’s motion. However, it failed
to address the subsection relevant to the facts of this case. It is inappropriate to raise arguments
in a motion to alter and amend a judgment that could and should have been raised in connection
with the original motion.
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In addition, even though Defendant failed to raise the arguments in prior briefing, the
court already addressed and rejected Defendant’s argument about whether the IRS had
discovered that Herrick failed to elect the foreign earned income exclusion. Defendant’s present
motion merely disagrees with the court’s prior analysis, another inappropriate ground for a Rule
59(e) motion. The court previously found that when the IRS prepared substitute tax returns for
Herrick, it discovered only that Herrick had failed to pay his taxes, not that Herrick had failed to
elect the exclusion. The record demonstrates that the IRS failed to apply the foreign earned
income exclusion to the substitute tax returns. There is no evidence in the record that the IRS
discovered that Herrick failed to elect the exclusion before Herrick’s estate filed a tax return
applying the exclusion. The cases Defendant cites in support of its argument, which the court
notes were available to Defendant at the time of the briefing of Plaintiff’s Motion for Summary
Judgment, do not persuade the court to change its prior decision. As the court previously
explained, the regulation does not refer to whether the IRS discovered that Herrick failed to file
his tax return or pay his taxes, the regulation clearly and specifically states that the IRS must
discover that Herrick failed to elect the exclusion. There is no evidence in the record
demonstrating that the IRS discovered that Herrick failed to elect the exclusion before the estate
filed returns applying the exclusion. Thus, Defendant has not provided any new evidence or law
that convinces the court that its prior ruling should be revisited.
Defendant also argues that the court should consider a new argument it advances that the
failure to file penalties and the failure to pay penalties assessed against Plaintiff pursuant to 26
U.S.C. § 6651(a) should not be capped at a combined 25% as Plaintiff advocated in its Motion
for Summary Judgment. Plaintiff’s Motion for Summary Judgment asked the court to determine
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the proper refund Defendant owed to Plaintiff and advocated for a combined 25% cap, Defendant
did not oppose Plaintiff’s argument during the briefing of the summary judgment motion, and
this court adopted Plaintiff’s position. Defendant could and should have raised the argument it
now raises in the briefing of Plaintiff’s motion. Defendant could have and should have provided
an alternative penalty calculation, but it chose not to do so. Under controlling Tenth Circuit law,
it is inappropriate for Defendant to raise the issue in a Rule 59(e) motion. The court, therefore,
concludes that there is no basis for altering or amending its prior ruling.
CONCLUSION
Based on the above reasoning, Defendant’s Motion to Alter or Amend Judgment
requesting this court to alter or amend its Judgment entered in this case March 28, 2016, as
amended by the Court’s Memorandum Decision and Order on March 31, 2016, is DENIED.
DATED this 19th day of May, 2016.
BY THE COURT:

DALE A. KIMBALL
United States District Judge

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