United States v. Wanland

UNITED STATES OF AMERICA, Plaintiff, v. DONALD M. WANLAND, JR., Defendant.

No. 2:13-cv-2343-KJM-KJN PS

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

September 25, 2017

AMENDED FINDINGS AND RECOMMENDATIONS

INTRODUCTION

Presently pending before the court is the United States' renewed motion for summary judgment. (ECF No. 76.) Defendant Donald M. Wanland, Jr., who proceeds without counsel, has opposed the motion, and the United States filed a reply brief. (ECF Nos. 83, 84.)¹ After carefully considering the parties' written briefing, the court's record, and the applicable law, the court recommends that the United States' motion be GRANTED.²

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BACKGROUND

On September 26, 2013, defendant, a now-suspended California attorney, was convicted by a jury of 28 criminal counts, including attempt to evade and defeat the payment of tax (1 count); the removal, deposit, and concealment of property subject to levy (24 counts); and willful failure to file income tax returns (3 counts). Defendant was subsequently sentenced to a term of imprisonment on March 25, 2014; the judgment in the criminal case was entered on March 28, 2014; and defendant filed a notice of appeal on April 7, 2014. Thereafter, on July 27, 2016, the Ninth Circuit Court of Appeals affirmed the judgment in all respects. See United States of America v. Donald M. Wanland, Jr., 2:09-cr-8-LKK, ECF Nos. 263, 266, 301-03, 335-37.³

The United States commenced the instant civil action on November 13, 2013, seeking a determination that, pursuant to 11 U.S.C. § 523(a)(1)(C), assessments for defendant's federal tax liabilities for certain tax years were not discharged in bankruptcy, as well as seeking to reduce such tax assessments to judgment. (See generally Complaint, ECF No. 1 ["Compl."].) The United States essentially alleges that defendant was assessed as owing taxes in excess of $1 million for the tax years of 1996, 1997, 1998, 2000, 2001, 2002, and 2003; that he was aware of his duty to pay such taxes; but that he "willfully attempted to evade or defeat payment of his federal tax liabilities" and "voluntarily, consciously, and intentionally concealed his assets from, and/or placed his assets out of the reach of, the United States." (Compl. ¶¶ 6, 11-17.) According to the United States, defendant operated a successful law practice and lived an extravagant lifestyle with luxury cars and large expenditures on hotels and resorts, but nonetheless refused to sell his assets to satisfy tax liabilities, failed to honor IRS levies issued to his law firm and another of his partnerships, paid other creditors instead of the United States, used nominee bank accounts in the name of a partnership for personal banking, and concealed nominee accounts from his accountants and the IRS when submitting sworn Collection Information Statements. (Compl. ¶¶ 14-17.)

Defendant denies all liability for the United States' claims in this action, asserting, inter alia, that any tax liabilities were discharged in bankruptcy. (ECF No. 28.)

LEGAL STANDARD

Federal Rule of Civil Procedure 56(a) provides that "[a] party may move for summary judgment, identifying each claim or defense--or the part of each claim or defense--on which summary judgment is sought." It further provides that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).⁴ A shifting burden of proof governs motions for summary judgment under Rule 56. Nursing Home Pension Fund, Local 144 v. Oracle Corp. (In re Oracle Corp. Sec. Litig.), 627 F.3d 376, 387 (9th Cir. 2010). Under summary judgment practice, the moving party:

always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting then-numbered Fed. R. Civ. P. 56(c)). "Where the non-moving party bears the burden of proof at trial, the moving party need only prove that there is an absence of evidence to support the non-moving party's case." In re Oracle Corp. Sec. Litig., 627 F.3d at 387 (citing Celotex Corp., 477 U.S. at 325); see also Fed. R. Civ. P. 56 advisory committee's notes to 2010 amendments (recognizing that "a party who does not have the trial burden of production may rely on a showing that a party who does have the trial burden cannot produce admissible evidence to carry its burden as to the fact").

If the moving party meets its initial responsibility, the opposing party must establish that a genuine dispute as to any material fact actually exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86 (1986). To overcome summary judgment, the opposing party must demonstrate the existence of a factual dispute that is both material, i.e., it affects theoutcome of the claim under the governing law, see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Mgmt., Inc., 618 F.3d 1025, 1031 (9th Cir. 2010), and genuine, i.e., "'the evidence is such that a reasonable jury could return a verdict for the nonmoving party,'" FreecycleSunnyvale v. Freecycle Network, 626 F.3d 509, 514 (9th Cir. 2010) (quoting Anderson, 477 U.S. at 248). A party opposing summary judgment must support the assertion that a genuine dispute of material fact exists by: "(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . . , admissions, interrogatory answers, or other materials; or (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact."⁵ Fed. R. Civ. P. 56(c)(1)(A)-(B). However, the opposing party "must show more than the mere existence of a scintilla of evidence." In re Oracle Corp. Sec. Litig., 627 F.3d at 387 (citing Anderson, 477 U.S. at 252).

In resolving a motion for summary judgment, the evidence of the opposing party is to be believed. See Anderson, 477 U.S. at 255. Moreover, all reasonable inferences that may be drawn from the facts placed before the court must be viewed in a light most favorable to the opposing party. See Matsushita, 475 U.S. at 587; Walls v. Cent. Contra Costa Transit Auth., 653 F.3d 963, 966 (9th Cir. 2011). However, to demonstrate a genuine factual dispute, the opposing party "must do more than simply show that there is some metaphysical doubt as to the material facts...Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial.'" Matsushita, 475 U.S. at 586-87 (citation omitted).

DISCUSSION

The United States seeks summary judgment as to all claims in this action. Before turning to the merits of the United States' claims, the court first addresses certain preliminary argumentsraised by defendant.

Request for Stay of the Action

Defendant once again requests that the action be stayed (1) pending the outcome of his criminal appeal; and (2) to allow for additional discovery to be completed.

In a previous order issued back in 2014, the court carefully reviewed the applicable law concerning a stay of civil proceedings in light of ongoing criminal proceedings, and denied defendant's request to stay this action. (ECF Nos. 22, 27.) In his present request, defendant merely recycles the same arguments that he previously made and were rejected in the court's prior order. Moreover, since the issuance of that order, a Ninth Circuit panel on July 27, 2016, affirmed the judgment in defendant's criminal case in all respects. Furthermore, defendant's petitions for panel rehearing and rehearing en banc were also denied on October 14, 2016, and the Ninth Circuit's mandate in the criminal case issued on October 25, 2016. As such, defendant's criminal case provides no basis for staying this civil action.

Defendant's argument that the case should be stayed to allow him to conduct further discovery also lacks merit. Even though the United States' former counsel, Gerald Role, unquestionably failed to adhere to his discovery obligations, the United States has already been adequately sanctioned. Furthermore, as the court previously explained, defendant was ultimately not prejudiced by the United States' discovery misconduct, and defendant himself was dilatory in conducting his discovery during a unilaterally extended discovery period and in bringing any discovery issues before the court. (See ECF Nos. 68, 75, 87.) The court's reasoning was outlined in detail in the cited prior orders and is incorporated here by reference. No further discovery sanctions are warranted, discovery is long closed, and no extension of discovery is warranted.

Jurisdictional Issues

As an initial matter, defendant contends that the court lacks jurisdiction over this action, because it was not properly authorized. That argument is devoid of any merit. Official letters attached to the December 18, 2015 Declaration of W. Carl Hankla (present counsel for the United States) demonstrate that the action was authorized by appropriate delegates of the Secretary of the Treasury and the Attorney General of the United States. (See ECF No. 67, Exs. 1, 2); see also 26U.S.C. §§ 7401, 7402; Palmer v. United States Internal Revenue Service, 116 F.3d 1309, 1311 (9th Cir. 1997) ("The government has produced redacted copies of two letters, which taken together, show that the government complied with these statutory requirements.").

Defendant next argues that the discharge injunction in defendant's previous bankruptcy case deprives this court of...