United States v. Cromar ( 2020 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT March 26, 2020
_________________________________
Christopher M. Wolpert
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 19-4075
(D.C. No. 2:17-CV-01223-RJS)
PAUL KENNETH CROMAR; BARBARA (D. Utah)
ANN CROMAR,
Defendants - Appellants,
and
UTAH HOUSING FINANCE AGENCY;
UNIVERSAL CAMPUS FEDERAL
CREDIT UNION; STATE OF UTAH
TAX COMMISSION; UTAH COUNTY,
Defendants.
_________________________________
ORDER AND JUDGMENT *
_________________________________
Before HOLMES, PHILLIPS, and CARSON, Circuit Judges.
_________________________________
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Paul and Barbara Cromar, proceeding pro se, 1 appeal from the district court’s
orders granting default judgment to the United States on Mr. Cromar’s federal
income tax liabilities and foreclosing federal tax liens through a sale of his real
property. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.
BACKGROUND
Mr. Cromar did not file federal income tax returns for the 1999 through 2005
tax years and did not comply with requests for documentation by the Internal
Revenue Service (IRS). The United States filed an action against Mr. Cromar in
2017, seeking to reduce to judgment assessments against him for unpaid income
taxes and to foreclose tax liens through a sale of his real property in Cedar Hills,
Utah. The complaint also named as defendants those with a potential interest in the
property, including Mrs. Cromar, governmental entities, and a lending institution.
The Cromars refused to answer the complaint and, instead, challenged the
district court’s subject-matter jurisdiction and the government’s constitutional taxing
authority. After denying several such motions and objections, the court directed
them to answer the complaint and warned of possible sanctions if they continued
filing frivolous motions. Undeterred, the Cromars continued raising the same
jurisdictional arguments and refused to answer the complaint, even though the court
gave them multiple extensions of time. After rejecting the Cromars’ motions and
objections, the district court granted the government’s motion for entry of default
1
“[W]e liberally construe” the Cromars’ pro se briefs, “but we will not act as
[their] advocate.” James v. Wadas, 724 F.3d 1312, 1315 (10th Cir. 2013).
2
judgment. The Cromars moved to vacate the judgment based on the same
jurisdictional arguments. The district court denied the motion and entered an order
restricting their ability to file further documents without seeking and obtaining leave.
In its February 2019 order granting the government’s motion for default
judgment, the district court decreed: (1) Mr. Cromar owed more than $1 million in
tax liabilities; (2) his tax liabilities generated statutory liens on his property; and
(3) Mrs. Cromar, by virtue of her default, lacked an interest in the property. 2 After
the Cromars filed an interlocutory appeal, which we dismissed for lack of
jurisdiction, the district court entered an Order of Foreclosure and Judicial Sale,
decreeing that the tax liens be foreclosed and that Mr. Cromar’s property be sold free
and clear of any liens or other interests. The order also set procedures for the sale
and distribution of the proceeds and ordered the Cromars to vacate the property or be
evicted. This appeal followed. 3
DISCUSSION
The Cromars contend: (1) the district court erred in granting default judgment
to the United States because it lacked subject-matter jurisdiction and because the
2
The court also entered default judgment against a lending institution that
failed to answer the complaint. The other named defendants either disclaimed an
interest in the property or entered into a stipulation with the government.
3
While this appeal was pending, the Cromars filed several motions to stay the
district court proceedings, including: (1) to prevent the foreclosure and sale; (2) to
have their occupancy of the property restored; and (3) to prevent the district court
from confirming the sale and distributing the proceeds. We denied the first two
motions by separate orders, and we now deny the third motion, as noted below.
3
government lacks the authority to impose and collect federal income taxes; (2) the
district court denied the Cromars due process by not conducting a hearing prior to
ordering the sale of Mr. Cromar’s property; and (3) the district court lacked
subject-matter jurisdiction to order the Cromars evicted from the property.
Reviewing these questions of law de novo, see Chevron Mining Inc. v. United States,
863 F.3d 1261, 1269 (10th Cir. 2017), we conclude the Cromars’ contentions are
frivolous.
First, the district court properly noted it had subject-matter jurisdiction under
28 U.S.C. § 1340 (giving district courts jurisdiction over “any civil action arising
under any Act of Congress providing for internal revenue”), 28 U.S.C. § 1345 (giving
district courts jurisdiction over “all civil actions . . . commenced by the United
States”), 26 U.S.C. § 7402 (giving district courts jurisdiction to render judgments
“for the enforcement of the internal revenue laws” and cross-referencing 28 U.S.C.
§ 1340), and 26 U.S.C. § 7403 (giving district courts jurisdiction over an action to
enforce a tax lien). The Cromars contend these statutes are “vague and
non-specific,” Aplt. Opening Br. at 8, and apply only to “the enforcement of the
indirect Excise taxation of commodities and articles of commerce,” Aplt. Reply Br. at
8 (emphasis omitted). But they offer no coherent analysis, let alone authority, to
support such contentions. “The court will not consider such issues adverted to in a
perfunctory manner, unaccompanied by some effort at developed argumentation.”
United States v. Wooten, 377 F.3d 1134, 1145 (10th Cir. 2004) (internal quotation
marks omitted).
4
Next, in contesting the government’s authority over income tax laws, the
Cromars argue the district court should have required the government to identify “the
specific constitutional power to tax that is being exercised and pursued by the
plaintiff for enforcement by the court.” Aplt. Opening Br. at 5 (emphasis omitted).
Specifically, they contend the government needed to identify whether the income tax
was direct, and thus invalid without apportionment among the states, see U.S. Const.
art. I, §§ 2, 9, or indirect, and not subject to apportionment, see id. § 8.
As the government correctly notes, we have recognized “the Sixteenth
Amendment to the Constitution authorized a non-apportioned direct income tax on
United States citizens and that the federal tax laws as applied are valid.” Aplee. Br.
at 14 (citing United States v. Collins, 920 F.2d 619, 629 (10th Cir. 1990)). 4 See
generally U.S. Const. amend. XVI (“The Congress shall have power to lay and
collect taxes on incomes, from whatever source derived, without apportionment
among the several States, and without regard to any census or enumeration.”). We
also have found to be frivolous arguments similar to the Cromars’ contentions—that
“the income tax is a direct tax which is invalid absent apportionment” or that “the
Sixteenth Amendment to the Constitution is . . . invalid.” Lonsdale v. United States,
919 F.2d 1440, 1448 (10th Cir. 1990).
4
The Cromars insist Collins was “erroneously” decided. Aplt. Reply Br. at 7.
But that is not for us to consider. See United States v. Gaines, 918 F.3d 793, 796 n.3
(10th Cir. 2019) (noting one panel cannot “overrule another”).
5
Ultimately, “[i]t is unnecessary to delve into the difficult question of the
distinction between direct and indirect taxes because,” either under the Sixteenth
Amendment or Supreme Court cases pre-dating the amendment, “Congress has the
power to tax the income of individuals.” United States v. Stillhammer, 706 F.2d
1072, 1077 (10th Cir. 1983); see also Charczuk v. Comm’r, 771 F.2d 471, 473
(10th Cir. 1985) (holding “there is no question but that Congress has the
constitutional authority to impose an income tax”). We reiterate: “The Internal
Revenue Code was validly enacted by Congress and is fully enforceable.” United
States v. Dawes, 874 F.2d 746, 750 (10th Cir. 1989), overruled in part on other
grounds by United States v. Allen, 895 F.2d 1577 (10th Cir. 1990). Accordingly, the
Cromars’ strained argument regarding direct and indirect taxation is without merit.
Next, the Cromars contend their due process rights were violated when the
district court did not conduct an additional hearing prior to ordering the sale of
Mr. Cromar’s real property. Specifically, they argue the court failed to conduct a
pre-sale hearing required by 28 U.S.C. § 2001(b). Section 2001 establishes
procedures for the judicial sale of realty, but subsection (b) applies only to private
sales. See 28 U.S.C. § 2001(b) (requiring a hearing prior to the court “order[ing] the
sale of such realty or interest or any part thereof at private sale” and imposing
conditions that must be satisfied “[b]efore confirmation of any private sale”
(emphasis added)). The district court ordered Mr. Cromar’s property auctioned at a
public sale. See 28 U.S.C. § 2001(a) (providing “[a]ny realty or interest therein sold
under any order or decree of any court of the United States shall [generally] be
6
sold . . . at public sale” (emphasis added)); see also id. § 2002 (providing notice
requirements for “[a] public sale of realty or interest therein under any order,
judgment or decree of any court of the United States”). The Cromars’ reliance on
28 U.S.C. § 2001(b) is misplaced.
Similarly, the Cromars contend they were not given notice under
28 U.S.C. § 3202(b) of the right to a pre-sale hearing under § 3202(d). But those
provisions of the Federal Debt Collection Procedures Act (FDCPA), 28 U.S.C.
§§ 3001-3308, do not apply to a proceeding to collect income taxes brought under
26 U.S.C. §§ 7402 and 7403, see 28 U.S.C. § 3001(b) (“To the extent that another
Federal law specifies procedures for recovering on a claim or a judgment for a debt
arising under such law, those procedures shall apply to such claim or judgment to the
extent those procedures are inconsistent with this chapter.”); id. § 3003(b)(1) (noting
the FDCPA does not limit the government’s right “to collect taxes”). The Cromars’
claim that they were denied due process when the court failed to conduct a pre-sale
hearing lacks merit. 5
Finally, the Cromars contend the district court lacked jurisdiction to evict
them. They argue, without authority, that “[e]victions from property located within a
State of the United States of America are of course a matter of state law, not federal,
5
The Cromars also allege “they have never been allowed . . . a single
appearance or hearing in the entire civil action.” Aplt. Reply Br. at 26 (emphasis
omitted). But that plainly is incorrect. See R. Vol. I at 163-72 (transcript of initial
pretrial conference, reflecting the Cromars appeared by telephone and repeated the
arguments they made in their previously denied motion to dismiss).
7
unless the property is already owned or legally controlled by the United States.”
Aplt. Opening Br. at 25 (emphasis omitted). But in ordering the sale of property
encumbered by a tax lien, see 26 U.S.C. § 7403(c), the district court had the authority
to condition the sale “upon such terms and conditions as the court directs,” 28 U.S.C.
§ 2001(a), and “to render such judgments and decrees as may be necessary or
appropriate for the enforcement of the internal revenue laws,” 26 U.S.C. § 7402(a).
The district court, therefore, had jurisdiction to require the Cromars to vacate the
property and to order their removal if they refused to comply.
CONCLUSION
The district court’s orders are affirmed. The Cromars’ “Motion for Leave to
File Motion to Take Judicial Notice of Law” is denied. 6 Their “Motion for Leave of
the Court to Exceed Briefing Page Limitation” is granted, and their corresponding
“Motion to Enjoin Further Process in the District Court Pending Resolution of
Appeals and the Subject-Matter Jurisdiction Question” is denied as moot.
Entered for the Court
Joel M Carson III
Circuit Judge
6
In their motion for judicial notice, the Cromars request we take notice of
Brushaber v. Union Pacific Railroad Co., 240 U.S. 1 (1916). But the Cromars
already cited Brushaber in their briefs. And to the extent this sixteen-page motion
raises arguments ostensibly based on Brushaber, it is an impermissible attempt to
evade the length-limitations on their reply brief.
8