Koopmann v. United States ( 2021 )

In the United States Court of Federal Claims
WILLIAM KOOPMANN, et al.,
Plaintiffs,
No. 09-cv-333 T
v.
Filed: January 8, 2021
THE UNITED STATES,
Defendant.
For Plaintiffs: William C. Brashear, Jr., Dawsonville, Georgia, and William Koopmann,
Lovettsville, Virginia, Plaintiffs pro se
For Defendant: Jason Bergmann, United States Department of Justice, Tax Division, Court of
Federal Claims Section, Washington, D.C.
ORDER
On September 30, 2020, this Court entered two memoranda and orders granting
Defendant’s motions to dismiss Plaintiffs William Brashear and William Koopmann (Plaintiffs)
from this action. See Koopmann v. United States, 150 Fed. Cl. 290 (2020) (dismissing Mr.
Brashear) (hereinafter Brashear Order); see also Koopmann v. United States, 150 Fed. Cl. 299(2020) (dismissing Mr. Koopmann) (hereinafter Koopmann Order). On October 30, 2020,
Plaintiffs, proceeding pro se, jointly filed a motion for reconsideration. “Motion for
Reconsideration (informal)” (ECF No. 365) (Pls.’ Mot. for Recons.) at 1. For the reasons set forth
below, Plaintiffs’ Motion for Reconsideration is DENIED.
BACKGROUND
This case has a lengthy litigation history, discussed in both the Koopmann and Brashear
Orders. See generally Brashear Order 292-94; Koopmann Order at 301-03. The Court provides a
brief summary of the background of this action for ease of reference.
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The Federal Insurance Contributions Act (FICA), I.R.C. §§ 3101–3128, establishes a tax
that is assessed by the Government based on wages paid to workers, and the money collected from
the FICA tax is used to fund the Social Security and Hospital Insurance (HI) program. The wages,
and subsequent taxes, at issue concern a special timing rule. See Treas. Reg. § 31.3121(v)(2)-
1(a)(2). Pursuant to the special timing rule, Plaintiffs paid a one-time tax on their deferred
compensation plans at retirement. Def.’s Mot. Dismiss Pl. Koopmann Exhibit A at 4 (ECF No.
248-2) (April 29, 2002 letter from Jackie Sobota (United Airlines Pension Audit Representative)
to William Koopmann); Pl. Brashear Admin. Cl. at 6, 8 (ECF No. 113). United paid the FICA
taxes on behalf of Plaintiffs and subsequently recouped the amounts by deducting them from
Plaintiffs’ nonqualified plan benefits. Pl. Brashear Admin. Cl. at 6; Def.’s Mot. Dismiss Pl.
Koopmann Ex. A at 4. At the time of Mr. Koopmann’s retirement in 2001, the estimated present
value of his nonqualified deferred compensation plan benefits was $415,025.91, and United paid
$6,017.88 in FICA taxes on Mr. Koopmann’s behalf. Def.’s Mot. Dismiss Pl. Koopmann Ex. A
at 3-4. At the time of Mr. Brashear’s retirement in 2000, the estimated present value of his
nonqualified deferred compensation plan benefits was $348,136.84, and United paid $5,047.98 in
FICA taxes on Mr. Brashear’s behalf. Pl. Brashear Admin. Cl. at 5-6. On December 9, 2002, after
Plaintiffs’ retirement, United Airlines filed a Chapter 11 bankruptcy petition. Def. Ans. ¶ 13 (ECF
No. 112). As a result of United’s bankruptcy proceedings, United’s obligation to pay Plaintiffs’
deferred compensation was discharged, with a portion of Plaintiffs’ benefits never having been
paid. Pl. Brashear Admin. Cl. at 4; Pl. Koopmann’s Resp. to Def.’s Mot to Dismiss at 4, 5-6 (ECF
No. 308) (Pl. Koopmann Resp.). Specifically, Mr. Koopmann paid the tax on $415,025.91 worth
of non-qualified deferred compensation, of which he only received $248,393. Def.’s Mot. Dismiss
Pl. Koopmann Ex. A at 3. Likewise, Mr. Brashear paid the tax on $348,136.83 worth of non-
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qualified deferred compensation, of which he only received $166,657.17. Pl. Brashear Admin. Cl.
at 5-6, 9-13.
In 2007, Plaintiffs filed administrative claims for refunds. Pl. Brashear Admin. Cl. at 3-14
(filing a claim for refund on June 4, 2007); Pl. Koopmann Resp. at 4 (signing the claim for refund
on August 5, 2007). Both refund claims were unsuccessful; and, on May 26, 2009, Mr. Koopmann,
filed a lawsuit in the United States Court of Federal Claims against the United States seeking, inter
alia, a refund of a portion of the FICA taxes paid relating to his nonqualified deferred
compensation plan benefits. See Complaint, Koopmann v. United States, 09-cv-333 (ECF No. 1)
(Compl.). 1
On September 30, 2020, this Court dismissed both Mr. Brashear and Mr. Koopmann’s
complaints. See Brashear Order at 299; Koopmann Order at 307. On October 30, 2020, Plaintiffs
filed a joint motion for reconsideration of this Court’s two decisions dismissing their complaints.
Mot. for Recons. (ECF No. 365). Plaintiffs make four main arguments in their Motion. First,
Plaintiffs allege that, in dismissing their respective cases, the Court failed to recognize certain facts
and only relied on Defendant’s evidence to reach its opinions in the Koopmann Order and Brashear
Order. Mot. for Recons. at 1-2. Second, Plaintiffs allege that their cases are distinguishable from
Balestra v. United States, 803 F.3d 1363, 1366 (Fed. Cir. 2015). Id. Third, Plaintiffs allege that
Defendant’s arguments related to the statute of limitations were untimely. Id. at 2. Fourth,
Plaintiffs allege that the Court, in its orders dismissing Plaintiffs, misapplied the special timing
rule at 26 C.F.R. § 31.3121(v)(2)-1(a)(1). Mot. for Recons. at 2.
1
Mr. Brashear did not sign the Koopmann complaint. Instead, under a previous judge overseeing
this case, on September 3, 2009, Mr. Brashear was permitted to file a “Plaintiff Information Sheet,”
which incorporated Mr. Koopmann’s complaint by reference. See ECF No. 60 at 3.
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DISCUSSION
Motions for reconsideration are governed by Rule 59(a)(1) of the Rules of the United States
Court of Federal Claims (Rule(s) or RCFC). Pursuant to Rule 59(a)(1), a court, in its discretion,
“may grant a motion for reconsideration when there has been an intervening change in the
controlling law, newly discovered evidence, or a need to correct clear factual or legal error or
prevent manifest injustice.” Biery v. United States, 818 F.3d 704, 711 (Fed. Cir. 2016) (internal
citation and quotation omitted). A motion for reconsideration must also be supported “by a
showing of extraordinary circumstances which justify relief.” Id. (citing Caldwell v. United States,
391 F.3d 1226, 1235 (Fed. Cir. 2004)). Such a motion “may not be used to relitigate old matters,
or to raise arguments or present evidence that could have been raised prior to the entry of
judgment.” Exxon Shipping Co. v. Baker, 554 U.S. 471, 485 n.5 (2008) (internal quotations
omitted). “The decision whether to grant reconsideration lies largely within the discretion of the
[trial] court.” Yuba Natural Res., Inc. v. United States, 904 F.2d 1577, 1583 (Fed. Cir. 1990).
First, Plaintiffs allege that the Court did not recognize that Plaintiffs were seeking a
“straight refund of taxes paid that were more than the law required” and that the Court relied only
on Defendant’s evidence. Pls.’ Mot. for Recons. at 2. However, contrary to Plaintiffs assertions,
the Court considered all evidence before it and fully recognized that Plaintiffs were seeking a tax
refund. See Brashear Order at 292 (“William C. Brashear, Jr. seeks a tax refund in the amount of
$2,631.45 . . .”); Koopmann Order at 301 (“William Koopmann[] seeks a tax refund in the amount
of $2,416 . . .”). The Court, indeed, thoroughly addressed the noted arguments.
Plaintiffs also argue that “[n]o evidence was cited to support the allegation that they sought
a re-valuation, and any citations were intentionally confusing or referenced only Defendant’s false
allegations, which were rebutted in responses filed afterward.” Pls.’ Mot. for Recons. at 2. In fact,
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the Court’s descriptions of Plaintiffs’ arguments in both orders dismissing Plaintiffs are well
supported. As reflected in the Court’s September 30, 2020 Memorandum and Order dismissing
Mr. Koopmann’s claims, the Court considered, at minimum, the Complaint, Plaintiff’s Response
to Defendant’s Motion to Dismiss Koopmann Dkt 248 (ECF No. 308), and Mr. Koopmann’s
“Plaintiff Information Sheet” (ECF No. 61). See Koopmann Order at 301. Additionally, each time
the Court analyzed Mr. Koopmann’s arguments, the Court cited to Mr. Koopmann’s filings. See
e.g., Koopmann Order at 301 (stating two of Mr. Koopmann’s arguments and citing Plaintiff’s
Response to Defendant’s Motion to Dismiss Koopmann Dkt 248 both times), at 304 (reiterating
several of Mr. Koopmann’s arguments and citing Mr. Koopmann’s filings in each instance). 2 As
reflected in the Court’s September 30, 2020 Memorandum and Order dismissing Mr. Brashear’s
claims, the Court again considered, at minimum, Mr. Brashear’s filings when analyzing and
discussing his arguments. See e.g., Brashear Order 292, 294 (referencing Mr. Brashear’s
Administrative Claim (ECF No. 113) each time the Court described Mr. Brashear’s arguments),
292, 296 (referencing both Mr. Brashear’s cross-motion for summary judgment (ECF No. 117)
and Mr. Brashear’s reply to Defendant’s motion for summary judgment (ECF No. 119) when
addressing the merits of Mr. Brashear’s arguments). It is simply incorrect to say that this Court
ignored Plaintiffs’ arguments; to the contrary, this Court took Plaintiffs’ arguments very seriously.
Plaintiffs next argue that the Court erred in interpreting their claims for refund “so as to
conform to [Balestra v. United States, 803 F.3d 1363 (Fed. Cir. 2015)], in which the appellant
claimed his employer’s 3-year [bankruptcy], prior to his retirement, made the fair value of his
2
In its September 30, 2020 Memorandum and Order dismissing Mr. Koopmann, the Court cited
“Pl. Mot. at 3-4.” This citation is incorrect and should be “Pl. Resp. at 3-4.” See Koopmann Order
at 304. The Court will make the noted correction.
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rights virtually worthless.” Pls.’ Mot. for Recons. at 1. The Court’s reference to Balestra was
made in the alternative. Specifically, the Court found:
[T]he Federal Circuit has already rejected [Plaintiffs’] arguments related to the
Treasury Department’s application of the special timing rule in the identical
situation. Balestra, 803 F.3d at 1369-1373 . . . . In Balestra, a retired United
Airlines pilot brought a suit seeking a FICA tax refund. Like the present case,
[Plaintiffs] paid FICA taxes on retirement benefits [they] never received due to
United Airlines’ bankruptcy. [Plaintiffs] challenged the Treasury Department’s
application of the special timing rule, which taxed plaintiff’s deferred
compensation at the ‘present value’ as of the date of plaintiff[s’] retirement but also
‘prohibited consideration of an employer’s financial condition (e.g., bankruptcy) in
calculating the amounted deferred.’ Balestra, 803 F.3d at 1365 (citing 26 C.F.R. §
31.3121(v)(2)-1(c)(2)(ii)).
Brashear Order at 298-99; Koopmann Order at 307. As the Court noted, even if Plaintiffs’ claims
were not barred by the statute of limitations, the Federal Circuit’s holding in Balestra—that the
Treasury’s interpretation of the special timing rule does not provide an adjustment for subsequent
bankruptcies—closes any avenue for Plaintiffs to succeed on the merits. See id.Third, Plaintiffs allege that they were denied refunds for “‘no basis’ or wording in the law,
that specifically allowed for refunds of 1031v2 [sic] taxed FICA benefits, and failure to file timely
refund requests.” Pls.’ Mot. for Recons. at 2. Plaintiffs go on to argue that, “[t]he Government
did not defend the first reason in 11 1/2 years, and the Court did not address that ‘reason’ for
denial.” Id. While Plaintiffs’ argument is somewhat difficult to comprehend at first, their “no
basis in law” argument appears to focus on the Treasury’s interpretation of the term “amount
deferred” in 26 C.F.R. § 31.3121(v)(2)-1(c)(2)(ii). To the extent Plaintiffs are making this
argument, it fails under Balestra, in which the Federal Circuit held that the Treasury’s
interpretation is reasonable. 803 F.3d at 1371. As previously noted, this Court is bound by the
Federal Circuit’s determination. See Koopmann Order at 307; Brashear Order at 298-99. Next,
to the extent that Plaintiffs allege that Defendant’s arguments related to the statute of limitations
were untimely, this argument is also without merit. Plaintiffs could have, but did not, bring this
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argument in their responses to Defendant’s motions to dismiss, and a motion for reconsideration
is not the place for a movant to bring a new argument previously available to be made. See Exxon
Shipping Co. v. Baker, 554 U.S. 471, 485 n.5 (2008) (Motions for Reconsideration ‘“may not be
used to relitigate old matters, or to raise arguments or present evidence that could have been raised
prior to the entry of judgment”’ (quoting 11 Wright & Miller, Federal Practice and Procedure §
2810.1, pp. 127–128 (2d ed.1995)).
Further, Defendant’s Motions to Dismiss were timely. Mr. Koopmann filed his Complaint
on May 26, 2009 (see Compl.); after several extensions of time, Defendant first filed its motion to
dismiss on March 5, 2010 (see ECF No. 48). As discussed in the Koopmann Order, this case was
transferred to the undersigned judge on April 10, 2020. See ECF No. 137; Koopmann Order at
301. This Court then held a status conference on May 7, 2020, during which the Court asked
whether Defendant wished to supplement Defendant’s Motion to Dismiss Mr. Koopmann’s
complaint (ECF No. 48) and, given the ten-year passage of time since filing, whether Mr.
Koopmann wished to supplement his responses to that motion (ECF Nos. 53, 57). See Transcript
of May 7, 2020 Status Conference at 13:8-22:3 (ECF No. 219) (May 7, 2020 Tr.); Koopmann
Order at 301 n.1. During the status conference, Defendant’s counsel verified that the previously
assigned judge did not rule on Defendant’s March 5, 2010 Motion to Dismiss. See May 7, 2020
Tr. at 10:23-11:6; Koopmann Order at 301 n.1. Accordingly, the Court directed the Defendant to
update its motion to dismiss, originally filed on March 5, 2010. See May 7, 2020 Tr. at 11:7-13:6;
May 11, 2020 Scheduling Order (ECF No. 184) (denying as moot Defendant’s previously filed
Motion to Dismiss); Koopmann Order at 301 n.1. Likewise, Mr. Brashear filed his Administrative
Claim on May 23, 2017. See ECF No. 113. Shortly thereafter, on June 23, 2017, Defendant filed
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a motion to dismiss Mr. Brashear’s claims. Def.’s Mot. to Dismiss Pl. Brashear’s Claims (ECF
No. 114). Defendant timely filed both of its motions to dismiss pursuant to Rule 12(a).
Finally, Plaintiffs allege the Court ignored Plaintiffs’ challenge to “the application of the
time statute to more than one year . . . .” Pls.’ Mot. for Recons. at 2. Plaintiffs misunderstand how
the special timing rule in 26 C.F.R. § 31.3121(v)(2)-1(a)(1) operates. The special timing rule
applies to wages received from a non-qualified deferred compensation plan, such as the plan at
issue in this present action. See Balestra, 803 F.3d at 1366 (internal citations and quotations
omitted). 3 Under the “special timing rule,” FICA tax is assessed only once—at the later of either:
(A) the date services are performed or (B) the date when there is no substantial risk of forfeiture
of the rights to such amount. See 26 C.F.R. § 31.3121(v)(2)-1(a)(1) (tracking I.R.C. §
3121(v)(2)(A)). There is “no substantial risk of forfeiture,” if
an amount deferred is considered reasonably ascertainable on the first date on
which the amount, form, and commencement date of the benefit payments
attributable to the amount deferred are known, and the only actuarial or other
assumptions regarding future events or circumstances needed to determine the
amount deferred are interest and mortality.
26 C.F.R. § 31.3121(v)(2)-1(e)(4)(i)(B). The deferred benefits are taxed at their “present value,”
which is computed with reference to actuarial projections concerning life expectancy and a
discount rate which accounts for the time value of money but does not account for the risk of
employer default. See 26 C.F.R. § 31.3121(v)(2)-1(c)(2)(ii); see also Balestra, 803 F.3d at 1371.
In other words, the rule attempts to estimate the total value of the compensation plan; and,
consequently, the taxpayer only pays the tax once and does not pay a tax on the amount the
taxpayer receives each year. In Balestra, the United States Court of Appeals for the Federal Circuit
3
“Both Congress and Treasury define ‘nonqualified deferred compensation plan.’” See Balestra,
803 F.3d 1366 (citing 26 U.S.C. § 3121(v)(2)(C) (Congress’s definition); 26 C.F.R. §
31.3121(v)(2)-1(b) (Treasury’s definition)). The parties agree that the plan at issue is such a non-
qualified deferred compensation plan.
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found the Treasury’s statutory interpretation—that the “amount deferred” is defined in terms of
“present value”—to be reasonable. Balestra, 803 F.3d at 1371. Additionally, the relevant statute
of limitations requires that a federal tax refund claim must be filed either within three years of
filing the return or within two years of paying the tax, whichever is later. See I.R.C. § 6511(a).
Here, Mr. Brashear paid the present value of his FICA taxes in 2000 when he retired (Brashear
Admin Cl. at 6, 8), and Mr. Koopmann paid the present value of his FICA taxes when he retired
in 2001. Def.’s Mot. Dismiss Pl. Koopmann Ex. A at 3-4 (ECF No. 248-2). Following their one-
time payment at retirement, Plaintiffs were not required to pay further taxes on this compensation
plan. It is undisputed that Plaintiffs filed for a refund of these tax payments and that I.R.C. § 6511
applies to Plaintiffs’ claims. Therefore, the Court correctly applied the statute of limitations for
tax refunds, I.R.C. § 6511(a), to both Plaintiffs’ claims.
As Plaintiffs have not identified an “intervening change in the controlling law, newly
discovered evidence, or a need to correct clear factual or legal error or prevent manifest injustice,”
discussed in Biery, 818 F.3d at 711, and required by Rule 59, this Court must deny Plaintiffs’
Motion for Reconsideration.
CONCLUSION
For the reasons set forth above, this Court DENIES Plaintiffs’ Motion for Reconsideration
(ECF No. 365).
IT IS SO ORDERED.
s/Eleni M. Roumel
ELENI M. ROUMEL
Chief Judge
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