United States v. Theodore Lee ( 2018 )

FILED
NOT FOR PUBLICATION
JAN 11 2018
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 15-16869
Petitioner-Appellee, D.C. No.
2:12-cv-01994-GMN-PAL
v.
THEODORE FREDERICK LEE, MEMORANDUM*
Respondent-Appellant.
Appeal from the United States District Court
for the District of Nevada
Gloria M. Navarro, Chief Judge, Presiding
Argued and Submitted November 15, 2017
San Francisco, California
Before: RAWLINSON and BYBEE, Circuit Judges, and SMITH,** Chief District
Judge.
Theodore Frederick Lee (Lee or Appellant) appeals from the district court’s
orders and accompanying judgment granting the United States’ (Government or
Appellee) motion to dismiss on mootness grounds and denying Lee’s motion for
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable William E. Smith, Chief United States District Judge
for the District of Rhode Island, sitting by designation.
reconsideration. We review de novo the district court’s grant of a motion to
dismiss for lack of jurisdiction. Viewtech, Inc. v. United States, 653 F.3d 1102,
1103–04 (9th Cir. 2011). The denial of a motion for reconsideration is reviewed
for abuse of discretion. Tracht Gut, LLC v. Los Angeles Cty. Treas. & Tax
Collector (In re Tracht Gut, LLC), 836 F.3d 1146, 1150 (9th Cir. 2016). We
affirm.
In the course of the Internal Revenue Service’s (IRS) investigation of Lee, it
issued an administrative summons with respect to his federal income tax liabilities
for 2006. When Lee did not comply, the Government filed a petition to enforce the
administrative summons in the United States District Court for the District of
Nevada. Subsequent to the Government filing its petition to enforce, but prior to
the district court entering an enforcement order, Lee complied with the summons
by producing the documents and testimony requested. This prompted the
Government to move to dismiss on the basis of mootness, a motion the district
court granted. Pursuant to Rules 59 and 60 of the Federal Rules of Civil
Procedure, Lee moved for reconsideration of the district court’s dismissal order;
however, that motion was denied.
First, Lee argues that the district court erred in finding that Lee’s compliance
with the IRS summons mooted any continuing interests or controversies. Lee’s
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argument is not persuasive. “An Article III federal court has ‘no authority to give
opinions upon moot questions or abstract propositions, or to declare principles or
rules of law which cannot affect the matter in issue in the case before it.’” United
States v. Golden Valley Elec. Ass’n, 689 F.3d 1108, 1112 (9th Cir. 2012) (quoting
Church of Scientology of Cal. v. United States, 506 U.S. 9, 12 (1992)). “If an
intervening circumstance deprives the plaintiff of a ‘personal stake in the outcome
of the lawsuit,’ at any point during litigation, the action can no longer proceed and
must be dismissed as moot.” Genesis Healthcare Corp. v. Symczyk, 133 S. Ct.
1523, 1528 (2013) (quoting Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477–78
(1990)). Here, Lee voluntarily complied with the IRS summons, which was the
subject action prior to the Court issuing an enforcement order. This voluntary
production of the records sought was an intervening circumstance that rendered the
action moot.
IRS summonses are not self-enforcing. See 26 U.S.C. § 7604. The IRS,
therefore, must seek enforcement from a federal district court. United States v.
Gilleran, 992 F.2d 232, 233 (9th Cir. 1993); see also United States v. Clarke, 134
S. Ct. 2361, 2367 (2014) (“Congress made enforcement of an IRS summons
contingent on a court’s approval.”). In the context of such proceedings, “the
district court is strictly limited to enforcing or denying IRS summonses.” United
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States v. Jose, 131 F.3d 1325, 1329 (9th Cir. 1997). Lee’s compliance with the
IRS summons took both options off the table. Because Lee’s compliance with the
summons obviated any need for an enforcement order by the district court, the
district court correctly dismissed the case as moot.
Lee relies on Church of Scientology, 506 U.S. at 12–13, to suggest that
despite compliance, a district court may retain the authority to exclude or return the
evidence covered by the summons. Church of Scientology is distinguishable. In
that case, the district court entered a summons-enforcement order, and the
requested materials were delivered to the IRS while an appeal from that order was
pending. Id. at 10–11. Indeed, unlike here where compliance occurred before the
district court ruled on the Government’s petition, in Church of Scientology the
validity of the summons was still under review when compliance occurred.
Nothing remained for the district court to do once Lee complied. Thus, Church of
Scientology is inapposite.
Additionally, we are unpersuaded by Lee’s suggestion that he has a due
process right to seek suppression of the records he voluntarily produced prior to an
enforcement order. Because a taxpayer may challenge an IRS summons at an
enforcement hearing, “[t]he taxpayer therefore has no liberty or property interest
protectable by due process prior to the enforcement of the summons.” Gilleran,
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992 F.2d at 233–34 (emphasis added). Lee’s additional arguments, which largely
attack the validity and good-faith nature of the summons, are not properly before
the Court and, in any event, do not alter our mootness determination. We have
considered Lee’s additional averments and deem them to be without merit.
Finally, it was not an abuse of discretion for the district court to deny Lee’s
motion for reconsideration because Lee has failed to demonstrate any ground
sufficient for reconsideration. See Sch. Dist. No. 1J v. ACandS, Inc., 5 F.3d 1255,
1262–63 (9th Cir. 1993) (outlining standard of review and grounds justifying
reconsideration).
Accordingly, the orders of the district court are AFFIRMED.
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