Menu    7 ABR 178

This document features "pop up" footnotes. To view the footnote, click the footnote icon [ ] To clear the footnote, click CLOSE.



IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA




In re LAWRENCE RAY McCUBBINS,)
a/k/a Larry McCubbins,)
)
Debtor.)
______________________________________________)
LAWRENCE RAY McCUBBINS,)
)
Plaintiff/Appellant,)
)
vs.)
)
UNITED STATES OF AMERICA,)
INTERNAL REVENUE SERVICE,)USDC Appeal
)No. A01-0035-CV (HRH)
Defendant/Appellee.)
______________________________________________)


Adv. Case No. A93-00284-002 (HAR)

BANCAP No. 99-3060




DECISION ON APPEAL


In an adversary proceeding before the bankruptcy court, plaintiff Lawrence Ray McCubbins has appealed 1. Footnote the judgment 2. Footnote of the court dismissing his complaint with prejudice.


Underlying the judgment are three orders of the bankruptcy court. The first granted partial summary judgment in favor of the United States on the issue of whether or not plaintiff's debt for federal income taxes for the years 1976-78 7 ABR 179   TOP   and 1980-87 had been discharged in bankruptcy. 3. Footnote In so ruling, the bankruptcy judge held in abeyance the question of whether or not the Internal Revenue Service was entitled to levy upon plaintiff's pension funds. The bankruptcy judge modified this order, raising the question of whether or not plaintiff had sufficiently participated in underlying tax court proceedings for the doctrine of collateral estoppel to apply to the results of those tax court proceedings. 4. Footnote The matter having been reexamined, by further order the bankruptcy court determined that plaintiff participated in the tax court litigation, actively defending against the affirmative allegations of the Internal Revenue Service on the issue of fraud. 5. Footnote This order had the effect of readopting the bankruptcy court's initial order granting summary judgment on the issue of discharge.


Finally, and after further proceedings, the bankruptcy court granted the United States' further motion for summary judgment, holding that plaintiff's pension plan was fully vested prior to any levy by the Internal Revenue Service. 6. Footnote The bankruptcy court in substance held that plaintiff's plan proceeds were subject to levy by the Internal Revenue Service, and judgment dismissing the adversary complaint of plaintiff was entered.


7 ABR 180   TOP  

The appeal to this court followed, and the briefs of the parties have now been received. 7. Footnote


Discerning what issues plaintiff would raise on appeal is well nigh impossible. As a consequence, the court has reviewed this matter for the purpose of ascertaining whether there were any issues suggested by the actions of the bankruptcy court which could fairly be the subject of review. Based upon its examination of the record, the court is satisfied that there were no genuine disputes of fact material to the issues decided by the bankruptcy court. Accordingly, it was appropriate for the bankruptcy court to consider and rule upon the legal issues presented by plaintiff's adversary complaint as challenged by the United States' motions for summary judgment.


The court reviews the bankruptcy judge’s orders on motion for summary judgment employing the de novo standard of review based upon the evidence considered in the light most favorable to the party against whom summary judgment was granted. Carolco Television, Inc. v. National Broadcasting Co., 963 F.2d 1269, 1271-1272 (9th Cir.), cert. denied, 506 U.S. 918 (1992).

The record is clear that plaintiff filed a false tax return for the year 1976, and that he filed no federal income tax returns for the years 1977 or 1978, nor for the years 1980 through 1987. It is undisputed that plaintiff's pension from 7 ABR 181   TOP   the Operating Engineers Employees Retirement Fund vested prior to any levy upon the fund by the Internal Revenue Service.



The record before the bankruptcy court--and in particular the declaration of Kaye Hill, filed July 14, 2000 8. Footnote --reflects the nature and extent of plaintiff's participation in the tax court proceedings; and the memorandum opinion of the tax court reflects that the decision of that court was made on the merits with the participation of plaintiff (petitioner before the tax court). 9. Footnote


The bankruptcy court properly concluded that this case is not controlled by Palmer v. United States, 207 F.3d 566 (9th Cir. 2000). Plaintiff materially participated in the tax court proceedings, and the doctrine of res judicata precludes him from contesting the decision of the tax court to the effect that he engaged in fraudulent conduct with respect to federal income taxes owed for 1976, 1977, and 1978. Because of plaintiff's fraudulent conduct, tax liabilities for those three years are not discharged by virtue of 11 U.S.C. § 523(a)(1)(C).


With respect to years in which plaintiff filed no tax return (1977, 1978, and 1980 through 1987), 10. Footnote any tax liability owed by plaintiff was not discharged pursuant to 11 U.S.C. § 523(a)(1)(B)(i).


7 ABR 182   TOP  

Finally, with respect to the collection efforts of the Internal Revenue Service, the tax code provides that taxes may be collected by levy upon "all property and rights" belonging to the taxpayer. 26 U.S.C. § 6331. Subsection 6334(c) of the code provides that:


Notwithstanding any other law of the United States (including Section 207 of the Social Security Act), no property or rights to property shall be exempt from levy other than the property specifically made exempt by Subsection (a).


Subsection 6334(a) exempts certain property from levy, but it does not exempt ERISA qualified pension plans such as that of the Operating Engineers Employees Retirement Fund.


Having conducted its own de novo review of the decisions of the bankruptcy court in this case, the orders and judgment of the bankruptcy court are affirmed.



DATED at Anchorage, Alaska, this 27th day of August, 2001.



              H. Russel Holland, Judge
              District of Alaska



N O T E S:

1.    RoA No. 82.

2.    RoA No. 72.

3.    RoA No. 24.

4.    RoA No. 28.

5.    RoA No. 47.

6.    RoA No. 70.

7.    Clerk's Docket Nos. 14, 15 & 16.

8.     Supplemental Designation of Record on Appeal, Attachment No. 7, Clerk's Docket No. 11.

9.     Supplemental Designation of Record on Appeal, Attachment No. 3, Exhibit 1, Clerk's Docket No. 11.

10.     Supplemental Designation of Record on Appeal, Declaration of Blair, Attachment No. 3, Exhibit 2, Clerk's Docket No. 11.