Schlabach v. Internal Revenue Service
Filing
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ORDER DENYING PLAINTIFF'S MOTION FOR RECONSIDERATION PURSUANT TO RULE 59(a)(2); denying ECF No. 27 Motion for Reconsideration. The Court certifies that an appeal of this Order could not be taken in good faith. See 28 U.S.C. § 1915(a)(3); Fed. R. App. P. 24(a)(3)(A). Signed by Judge Salvador Mendoza, Jr. (TR, Case Administrator) (Service of Notice on parties not registered as users of the Court CM/ECF system accomplished via USPS mail.)
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FILED IN THE
U.S. DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
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May 16, 2019
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
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SEAN F. MCAVOY, CLERK
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JOHN SCHLABACH,
No. 2:18-cv-00053-SMJ
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Plaintiff,
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v.
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ORDER DENYING PLAINTIFF’S
MOTION FOR
RECONSIDERATION PURSUANT
TO RULE 59(a)(2)
UNITED STATES OF AMERICA, and
its agents,
Defendant.
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Before the Court, without oral argument,1 is pro se Plaintiff John Schlabach’s
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Motion for Reconsideration Pursuant to Rule 59(a)(2), ECF No. 27. Schlabach asks
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the Court to reconsider its March 25, 2019 order granting Defendant the United
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States of America’s converted motion for summary judgment, ECF No. 25. Having
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reviewed the file and relevant legal authorities, the Court denies Schlabach’s motion
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for reconsideration.
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Schlabach cites Federal Rule of Civil Procedure 59(a)(2) as authority for his
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motion for reconsideration. ECF No. 27 at 1. But that rule governs a motion for a
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new bench trial. See Fed. R. Civ. P. 59(a)(2). Because Schlabach filed his motion
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Because oral argument is unnecessary, the Court decides Schlabach’s motion
without it. See LCivR 7(i)(3)(B)(iii).
ORDER DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION
PURSUANT TO RULE 59(a)(2) - 1
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for reconsideration within twenty-eight days of entry of judgment in favor of the
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United States, the Court construes it as a motion to alter or amend the judgment
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under Rule 59(e). See Rishor v. Ferguson, 822 F.3d 482, 489–90 (9th Cir. 2016);
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Am. Ironworks & Erectors, Inc. v. N. Am. Constr. Corp., 248 F.3d 892, 898–99 (9th
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Cir. 2001).
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Altering or amending a judgment under Rule 59(e) “is an ‘extraordinary
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remedy’ usually available only when (1) the court committed manifest errors of law
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or fact, (2) the court is presented with newly discovered or previously unavailable
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evidence, (3) the decision was manifestly unjust, or (4) there is an intervening
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change in the controlling law.” Rishor, 822 F.3d at 491–92 (quoting Allstate Ins.
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Co. v. Herron, 634 F.3d 1101, 1111 (9th Cir. 2011)); accord McDowell v. Calderon,
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197 F.3d 1253, 1255 n.1 (9th Cir. 1999) (en banc). Schlabach fails to meet this
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standard.
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Schlabach argues the Court erred by relying on an irrelevant declaration and
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irrelevant exhibits from an Internal Revenue Service (“IRS”) agent who lacks
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personal knowledge to testify or authenticate documents. ECF No. 27 at 2–5. Thus,
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Schlabach objects to this evidence under Federal Rules of Evidence 401, 602, 901,
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and 902. Id. But Schlabach raises this objection for the first time in his motion for
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reconsideration. See Kona Enterprises, Inc. v. Estate of Bishop, 229 F.3d 877, 890
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(9th Cir. 2000) (stating a motion to alter or amend a judgment under Rule 59(e)
ORDER DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION
PURSUANT TO RULE 59(a)(2) - 2
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“may not be used to raise arguments or present evidence for the first time when they
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could reasonably have been raised earlier in the litigation”); accord Rishor, 822
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F.3d at 492.
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While Schlabach claims he raised this objection earlier, his contention was
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not evidentiary in nature. He wrote, “ECF No. 22-2 . . . In its entirety contains
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unsubstantiated false, inflammatory, discriminatory, racist, slanderous, and
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prejudicial claims against me and I hereby object to their admission into the court
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record.” ECF No. 24 at 2. The Court addressed his contention, noting, “Schlabach
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makes bald assertions objecting to the[ IRS agent’s] explanations but presents no
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significant probative evidence to genuinely dispute them.” ECF No. 25 at 15.
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Schlabach never previously objected on grounds of relevance, personal knowledge,
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or authentication.
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Regardless, Schlabach’s evidentiary analysis is incorrect. The evidence is
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relevant because it tends to make it more probable that Schlabach is liable for
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frivolous filing penalties. See Fed. R. Evid. 401. The IRS agent had personal
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knowledge of the matters to which she testified because they are based on her
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professional experience in the IRS Frivolous Return Program as well as her own
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review and analysis of records in Schlabach’s file. See ECF No. 22-2 at 2–7; Fed.
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R. Evid. 602. The IRS agent authenticated those records by demonstrating she has
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knowledge of them and they are what they purport to be—“true and correct
ORDER DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION
PURSUANT TO RULE 59(a)(2) - 3
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cop[ies]” of “[p]ertinent information contained in the [IRS Frivolous Return
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Program’s] Master Action History for John Schlabach.” ECF No. 22-2 at 6; see also
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Fed. R. Evid. 901(a)(1). The Court did not err.
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Schlabach argues the Court erred by relying on the IRS agent’s declaration
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because it said “there is no evidence.” ECF No. 27 at 3. He is mistaken, as the
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declaration says no such thing. See ECF No. 22-2.
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Schlabach argues the Court erred by ignoring his affidavit, which
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“completely contradicts” the IRS agent’s declaration. ECF No. 27 at 3–5. Contrary
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to Schlabach’s assertion, the Court considered the entire record, cited his filings
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numerous times, and ultimately concluded, under the applicable legal standard, that
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he “failed to point to specific facts establishing a genuine dispute of material fact
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for trial” and “failed to introduce the significant probative evidence required to
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defeat summary judgment.” ECF No. 25 at 18; see also id. at 2. The Court noted
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“Schlabach makes bald assertions objecting to the[ IRS agent’s] explanations but
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presents no significant probative evidence to genuinely dispute them.” Id. at 15. The
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Court also explained that, “to the extent Schlabach has identified genuine factual
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disputes, they are not material because they do not affect the outcome of this
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litigation.” Id. at 18. Throughout the process, the Court “[v]iew[ed] all evidence and
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dr[e]w[] all reasonable inferences in the manner most favorable to Schlabach.” Id.
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His claims still failed. See id.
ORDER DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION
PURSUANT TO RULE 59(a)(2) - 4
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Schlabach argues the Court erred by granting summary judgment in favor of
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the United States without giving him an opportunity to obtain discovery. ECF No.
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27 at 2–4. But Schlabach is not entitled to discovery where, as here, the Court
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(1) lacks subject matter jurisdiction over three out of his four claims, and
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(2) concludes his fourth claim is, as a matter of law, based on a frivolous tax position
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that a reasonable person would know is meritless and reflects indefensible tax
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evasion. See ECF No. 25 at 5, 7, 12, 16, 18. Discovery would not change either of
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the Court’s determinations. The factual disputes Schlabach raises are immaterial to
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the determinative issues in this case.
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Schlabach argues the Court erred because the tax position he took could not
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be frivolous where he cited to a valid federal statute. ECF No. 27 at 3. As the Court
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noted, “Schlabach begins with the correct premise that currency is a redeemable
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obligation of the United States. But from there, Schlabach distorts matters by
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claiming the United States’ obligation to redeem currency automatically offsets his
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tax obligation to the United States.” ECF No. 25 at 11–12; see also id. at 15–16.
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This distortion, the Court concluded, “is frivolous . . . because it lacks any objective
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basis in fact or law.” Id. at 16. It is irrelevant that Schlabach subjectively believed
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his tax position was correct. Id. at 16–17. A reasonable person would know
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Schlabach’s tax position is meritless and reflects indefensible tax evasion. Id. at 16.
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Schlabach argues the Court erred by assuming, without evidence, that the tax
ORDER DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION
PURSUANT TO RULE 59(a)(2) - 5
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assessments were validly made in accordance with mandated procedures. ECF No.
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27 at 3–4. The decision rests on ample evidence, as the Court previously directed
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both parties to “submit all evidence pertinent to the summary judgment motion, as
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it relates to the specific facts outlined.” ECF No. 19 at 12–13. The United States
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then submitted the IRS agent’s declaration, which “explains how IRS personnel
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followed supervisor approval procedures in determining argument codes 16 and 30
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apply to Schlabach’s position.” ECF No. 25 at 14–15. While the United States did
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not submit all evidence that conceivably could have been submitted, what it
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submitted was sufficient to meet its burden of proving Schlabach is liable for
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frivolous filing penalties. See id. at 7–9, 17–18. Nothing more was required.
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Considering all, no grounds exist for the Court to grant Schlabach the
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extraordinary remedy of altering or amending the judgment under Rule 59(e). The
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Court will not reconsider the judgment in favor of the United States.
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Accordingly, IT IS HEREBY ORDERED:
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1.
Plaintiff’s Motion for Reconsideration Pursuant to Rule 59(a)(2), ECF
No. 27, is DENIED.
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2.
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The Court certifies that an appeal of this Order could not be taken in
good faith. See 28 U.S.C. § 1915(a)(3); Fed. R. App. P. 24(a)(3)(A).
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//
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//
ORDER DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION
PURSUANT TO RULE 59(a)(2) - 6
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IT IS SO ORDERED. The Clerk’s Office is directed to enter this Order and
provide copies to pro se Plaintiff and Defendant’s counsel.
DATED this 16th day of May 2019.
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SALVADOR MENDOZA, JR.
United States District Judge
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ORDER DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION
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