David S. Paresky v. United States

995 F.3d 1281

• Court: Court of Appeals for the Eleventh Circuit
• Decided: April 30, 2021
• Docket: 19-14589
• Status: Published

Opinion

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[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 19-14589 ________________________

D.C. Docket No. 1:18-cv-23569-KMW

DAVID S. PARESKY, LINDA K. PARESKY,

Plaintiffs - Appellants,

versus

UNITED STATES OF AMERICA,

Defendant - Appellee.

________________________

Appeal from the United States District Court for the Southern District of Florida ________________________

(April 30, 2021)

Before LAGOA, HULL, and MARCUS, Circuit Judges.

LAGOA, Circuit Judge: USCA11 Case: 19-14589 Date Filed: 04/30/2021 Page: 2 of 16

David Paresky and Linda Paresky appeal the district court’s order dismissing

their amended complaint for lack of subject matter jurisdiction over their standalone

claim for overpayment interest allegedly owed to them by the government. This

appeal presents a matter of first impression within our Circuit and asks this Court to

determine whether 28 U.S.C. § 1346(a)(1) confers jurisdiction, concurrent with the

United States Court of Federal Claims, over a taxpayer’s civil action against the

government solely for overpayment interest owed to the taxpayer. Because we find

that the statutory language of § 1346(a)(1) does not confer such jurisdiction, we

affirm the district court’s dismissal of the Pareskys’ amended complaint.

I. FACTUAL AND PROCEDURAL BACKGROUND

As alleged in the amended complaint, the Pareskys are victims of Bernie

Madoff’s Ponzi scheme and “paid millions of dollars in taxes on income that they

later learned was fictitious.” In an attempt to partially recoup their losses, the

Pareskys filed multiple claims with the Internal Revenue Service (“IRS”) in late

2009 to recover taxes that were overpaid for the tax years of 2003, 2004, 2005, 2006,

and 2007. Specifically, they filed amended returns for tax years 2005 through 2007,

seeking refunds for taxes overpaid on income in those years, and they filed a Form

1045 seeking separate refunds arising from a carryback of the Madoff theft losses

from 2008 to be applied to the tax years of 2003 through 2007. The IRS received

the Form 1045 on January 4, 2010. On March 3, 2010, the IRS sent the Pareskys a

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letter rejecting their Form 1045. The Pareskys’ accountant then sent the IRS a

response letter, which the IRS agreed with and accepted. On April 2, 2010, the IRS

requested Forms 6251 for several of the Pareskys tax years, which their accountant

supplied on the same date.

The Pareskys received tentative refunds of approximately ten million dollars

for tax years 2003 through 2007 in April and May 2010. The Pareskys, however,

asserted that they were also entitled to interest on the tax overpayments, claiming

that the IRS had exceeded the statutory forty-five-day limitations period in Internal

Revenue Code (“I.R.C.”) § 6611(e)(2) to process and issue them tentative refunds

for each tax year. They pursued their overpayment interest claim with the IRS,

which issued the Pareskys a September 4, 2014, letter determining that they were

not entitled to any additional interest. The Pareskys filed a formal claim against the

IRS on September 10, 2014, and the IRS issued a formal claim denial letter on

September 24, 2015. The denial letter stated that they could file suit within two

years after the mailing of the denial letter.

Almost two years later, on September 15, 2017, the Pareskys filed a complaint

in the Court of Federal Claims, asserting that the government owed them

overpayment interest for the tax years at issue. On December 29, 2017, the

government moved to dismiss the complaint for lack of subject matter jurisdiction.

In its motion, the government argued that the Pareskys’ claim was governed by the

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Tucker Act, which provides that the Court of Federal Claims “shall have jurisdiction

to render judgment upon any claim against the United States founded either upon

the Constitution, or any Act of Congress,” 28 U.S.C. § 1491, and that the Pareskys

had failed to file their complaint within the six-year limitations period for claims

under the Tucker Act, see id. § 2501 (“Every claim of which the United States Court

of Federal Claims has jurisdiction shall be barred unless the petition thereon is filed

within six years after such claim first accrues.”), as they waited approximately seven

years and four months to file their complaint.1 The Pareskys opposed the motion to

dismiss and, alternatively, moved to transfer the case.

The Court of Federal Claims denied the government’s motion to dismiss as

moot after finding that it lacked jurisdiction over the Pareskys’ claim because it was

untimely under the Tucker Act. The Court of Federal Claims, however, transferred

the case to the Southern District of Florida because it was not evident how the

Southern District of Florida or this Court would address jurisdiction over a

standalone claim for overpayment interest.

Following the transfer of the case, the Pareskys filed an amended complaint

seeking $535,595.95 in overpayment interest from the government, alleging that the

1 We note that the IRS’s September 24, 2015, formal denial letter was issued months before the expiration of the six-year deadline for filing a claim under the Tucker Act, and the Pareskys therefore had an opportunity to file their claim against the government within the Tucker Act’s statutory limitations period. See 28 U.S.C. § 2501. 4 USCA11 Case: 19-14589 Date Filed: 04/30/2021 Page: 5 of 16

district court had jurisdiction over their overpayment interest claim pursuant to 28

U.S.C. §§ 1346 and 1491. The government moved to dismiss the amended

complaint under Federal Rule of Civil Procedure 12(b)(1), arguing that the district

court lacked jurisdiction over standalone overpayment interest claims of more than

$10,000, or, alternatively, that even if the district court had jurisdiction, the Pareskys

had failed to timely file administrative claims for all the tax years at issue except for

2007. The Pareskys opposed the motion, asserting that the district court had

jurisdiction over standalone overpayment interest claims under § 1346(a)(1), that the

government was equitably estopped from challenging the timeliness of their

administrative claims, and that their claims were timely.

The district court referred the government’s motion to dismiss to a magistrate

judge, who issued a Report and Recommendation recommending that the

government’s motion be granted in part. The magistrate judge concluded that the

district court had jurisdiction over a claim for overpayment interest pursuant to

§ 1346(a)(1), principally relying on the Sixth Circuit’s decision in E.W. Scripps Co.

& Subsidiaries v. United States, 420 F.3d 589, 593 (6th Cir. 2015), which

determined that the statutory language of § 1346(a)(1) encompassed such standalone

overpayment interest claims. Because the Pareskys had not timely filed

administrative claims with the IRS for the tax years 2003 through 2006, however,

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the magistrate judge recommended the overpayment interest claim as to those tax

years be dismissed for lack of subject matter jurisdiction.

After the parties filed separate objections to the magistrate judge’s Report and

Recommendation, the district court issued an order declining to adopt the Report and

Recommendation and dismissing the amended complaint for lack of subject matter

jurisdiction. In its order, the district court explained that, during the objections

period, the Second Circuit issued its decision in Pfizer Inc. v. United States, 939 F.3d

173 (2d Cir. 2019), which disagreed with the Sixth Circuit’s analysis in Scripps,

including its reliance on Flora v. United States, 362 U.S. 145 (1960), and concluded

that § 1346(a)(1) did not confer jurisdiction to district courts over standalone

overpayment interest claims. The district court found Pfizer’s analysis to be “more

reasoned and persuasive,” as Scripps relied on “an arguably strained reading of

[§] 1346(a)(1) and an overbroad reading of dicta in Flora to permit a taxpayer to

recover a sum that it never paid to the [g]overnment.”

The Pareskys moved for reconsideration of the district court’s order and also

filed their notice of appeal with this Court. We held the notice of appeal in abeyance

pending the district court’s ruling on the Pareskys’ reconsideration motion. The

district court subsequently denied the motion for reconsideration and entered final

judgment for the government. This timely appeal ensued.

II. STANDARD OF REVIEW

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“In reviewing a district court’s dismissal of a complaint under Rule 12(b)(1)

for lack of subject matter jurisdiction, we review the district court’s legal

conclusions de novo.” Houston v. Marod Supermarkets, Inc., 733 F.3d 1323, 1328

(11th Cir. 2013).

III. ANALYSIS

On appeal, the Pareskys argue that the district court erred in dismissing their

amended complaint for lack of subject matter jurisdiction. The Pareskys contend

that the plain language of 28 U.S.C. § 1346(a)(1) confers jurisdiction to district

courts over standalone overpayment interest claims and urge this Court to adopt the

reasoning of the Sixth Circuit in Scripps. In response, the government asserts that

the district court correctly relied on the Second Circuit’s analysis in Pfizer, which

was subsequently adopted by the Federal Circuit in Bank of America Corp. v. United

States, 964 F.3d 1099 (Fed. Cir. 2020).

Because the issue before us involves a question of statutory interpretation,

“we begin ‘where all such inquiries must begin: with the language of the statute

itself,’ giving ‘effect to the plain terms of the statute.’” United States v. Henco

Holding Corp., 985 F.3d 1290, 1297 (11th Cir. 2021) (quoting In re Valone, 784

F.3d 1398, 1402 (11th Cir. 2015)). “[T]o determine ‘the plain meaning of the

statute,’” we consider “the ‘particular statutory language at issue’” as well as “the

language and design of the statute as a whole.” Wachovia Bank, N.A. v. United

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States, 455 F.3d 1261, 1267–68 (11th Cir. 2006) (quoting Tello v. Dean Witter

Reynolds, Inc., 410 F.3d 1275, 1278 (11th Cir. 2005)). Additionally, “[w]hen

examining the plain and ordinary meaning of a statute, ‘one of the ways to figure out

that meaning is by looking at dictionaries in existence around the time of

enactment.’” United States v. Chinchilla, 987 F.3d 1303, 1308 (11th Cir. 2021)

(quoting Equal Emp. Opportunity Comm’n v. Catastrophe Mgmt. Sols., 852 F.3d

1018, 1026 (11th Cir. 2016)); accord Ruiz v. Wing, 991 F.3d 1130, 1138 (11th Cir.

2021) (explaining that “absent a definition of a term contained in [a statute], we look

to the common usage of words for their meaning” and that “[d]ictionary definitions

speak to common usage” (quoting People for Ethical Treatment of Animals, Inc. v.

Miami Seaquarium, 879 F.3d 1142, 1146–47 (11th Cir. 2018))).

Section 1346(a)(1) provides:

The district courts shall have original jurisdiction, concurrent with the United States Court of Federal Claims, of:

(1) Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws . . . .

Thus, under the plain language of the statute, for a district court to have concurrent

jurisdiction over a standalone overpayment interest claim such as the one asserted

by the Pareskys, the claim must be a civil action for the recovery of (1) “any internal

revenue tax alleged to have been erroneously or illegally assessed or collected,” (2) 8 USCA11 Case: 19-14589 Date Filed: 04/30/2021 Page: 9 of 16

“any penalty claimed to have been collected without authority,” or (3) “any sum

alleged to have been excessive or in any manner wrongfully collected under the

internal revenue laws.” Id. If an overpayment interest claim does not fall into one

of these categories, then the Court of Federal Claims has exclusive jurisdiction over

the claim under the Tucker Act. See 28 U.S.C. § 1491(a)(1) (“The United States

Court of Federal Claims shall have jurisdiction to render judgment upon any claim

against the United States founded either upon the Constitution, or any Act of

Congress . . . .”).

Internal Revenue Code § 6611 governs overpayment interest on a taxpayer’s

overpayment of taxes to the government. Section 6611(a) provides that “[i]nterest

shall be allowed and paid upon any overpayment in respect of any internal revenue

tax” and thus provides a taxpayer “with the necessary substantive waiver of

sovereign immunity to allow it to seek overpayment interest from the United States.”

See Pfizer, 939 F.3d at 176. If the taxpayer files a claim for a credit or refund for

any overpayment and the government refunds such overpayment within forty-five

days of the filing of the claim, however, “no interest shall be allowed on such

overpayment.” I.R.C. § 6611(e)(2).

As two of our sister circuits have recognized—and the parties do not dispute—

a claim for overpayment interest does not fall within either of the first two categories

of § 1346(a)(1). See Pfizer, 939 F.3d at 176–77; Bank of Am., 964 F.3d at 1104.

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Internal Revenue Code § 6611 does not define overpayment interest as a tax assessed

against or collected from a taxpayer, and overpayment interest is thus not “any

internal revenue tax alleged to have been erroneously or illegally assessed or

collected.” 28 U.S.C. § 1346(a)(1). And this makes sense, since overpayment

interest, by its very nature, accrues only after a tax has been assessed and collected

from a taxpayer, and it is paid by the government to the taxpayer, not vice-versa.2

Similarly, overpayment interest is clearly not “any penalty” assessed against the

taxpayer “claimed to have been collected without authority.” Id.

Turning to the third category of § 1346(a)(1), in order for a district court to

have jurisdiction over an overpayment interest claim, overpayment interest must be

“any sum alleged to have been excessive or in any manner wrongfully collected

under the internal-revenue laws.” On this point, our sister circuits have split, with

the Sixth Circuit concluding that overpayment interest falls within the “any sum”

category, see Scripps, 420 F.3d at 596–98, and the Second and Federal Circuits

concluding that it does not, see Pfizer, 939 F.3d at 177–79; Bank of Am., 964 F.3d

at 1104–05, 1108–09. Because overpayment interest is clearly not “any sum alleged

to have been . . . in any manner wrongfully collected,” as the government does not

2 We agree with the Second Circuit that “[w]hile overpayment interest is related to the tax refund, it is not itself the subject of an action seeking a tax-related refund,” and “[s]imply because the government commits to compensating an overpaying party for the time value of that overpayment, does not render that interest payment a ‘tax.’” Pfizer, 939 F.3d at 176. 10 USCA11 Case: 19-14589 Date Filed: 04/30/2021 Page: 11 of 16

assess and collect overpayment interest from the taxpayer, we must determine

whether overpayment interest constitutes “any sum alleged to have been excessive”

as used in § 1346(a)(1).

The word “excessive” is defined as “[e]xceeding what is usual; ‘surpassing’;

exceedingly great,” Excessive, Oxford English Dictionary (2d ed. 1989), or as

“exceeding what is usual, proper, necessary, or normal,” Excessive, Merriam-

Webster’s Collegiate Dictionary (10th ed. 1993). Thus, § 1346(a)(1) confers

jurisdiction to the district courts over civil actions seeking to recover a sum alleged

to have been exceeding “what is usual” or the “usual, proper, necessary, or normal”

amount. The statutory use of the term “excessive” assumes that there exists an

amount that does not exceed the usual, proper, or normal amount and that therefore

cannot be recovered from the government. In the context of overpayment interest,

however, there is no amount of overpayment interest that would be proper for the

government to hold once the taxpayer is entitled to that interest under I.R.C. § 6611.

For example, in this case, once the government failed to refund the overpayment

within forty-five days of the Pareskys’ claim for overpayment of tax, see I.R.C.

§ 6611(e)(2), the Pareskys were entitled to be paid “[i]nterest . . . upon any

overpayment in respect of any internal revenue tax” by the government, see id.

§ 6611(a). The statute does not contemplate any amount of overpayment interest

that may be properly held by the government once the taxpayer becomes entitled to

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it. A conclusion that the “any sum” category of § 1346(a)(1) encompasses

standalone overpayment interest claims would change the plain and ordinary

meaning of the phrase “any sum alleged to have been excessive” to mean “any sum

alleged to have been wrongfully held.” We decline to interpret “excessive” contrary

to its plain and ordinary meaning in the context of this statute. See Ruiz, 991 F.3d

at 1138 (“‘[T]he ordinary-meaning rule is the most fundamental semantic rule of

interpretation.’ . . . While most words carry more than one dictionary definition,

‘[o]ne should assume the contextually appropriate ordinary meaning unless there is

reason to think otherwise.’” (last alteration in original) (citation omitted) (quoting

Antonin Scalia & Bryan A. Garner, Reading Law 69–70 (2012))).

Additionally, the word “sum” used in the phrase “any sum alleged to have

been excessive or in any matter wrongfully collected,” refers to an amount

previously paid to the government by a taxpayer; it therefore does not include

overpayment interest. The common usage of the word “sum” is a “quantity or

amount of money.” Sum, Oxford English Dictionary (2d ed. 1989). When read in

isolation, the term “sum” could refer to an amount of money not previously paid by

a taxpayer to the government. When read in the context of § 1346(a)(1) as a whole,

however, “sum” refers to an amount of money previously assessed against and

collected from the taxpayer. Specifically, the other two categories of § 1346(a)(1)

encompass claims seeking recovery of a “tax” or “penalty”—both of which are

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unquestionably amounts previously paid by the taxpayer to the government. Thus,

in § 1346(a)(1), “sum” finds itself traveling with “tax” and “penalty,” and we

therefore use the noscitur a sociis—“it is known by its associates”—canon of

construction to understand the meaning of “sum” as used in the statute. The noscitur

a sociis canon “is frequently employed where . . . ‘a string of statutory terms raises

the implication that the words grouped in a list should be given related meaning.’”

Miami Seaquarium, 879 F.3d at 1147 (quoting S.D. Warren Co. v. Me. Bd. of Env’t

Prot., 547 U.S. 370, 378 (2006)). A more colloquial understanding of the canon’s

import may be characterized as “birds of a feather flock together.” See Reading

Law, supra, at 195. Applying this canon of construction to § 1346(a)(1), “sum”

appears in a list of terms that describe amounts previously paid by a taxpayer to the

government—a “tax” and a “penalty.” Thus, when read in the context of the terms

used in the other two categories of § 1346(a)(1), which involve amounts of money

assessed, collected, and retained by the government, the statute’s “any sum”

category likewise refers to an amount of money assessed, collected, and retained by

the government. And, as noted above, overpayment interest is not such an amount.

Finally, the verb tense used in the statute—“alleged to have been excessive

or . . . wrongfully collected”—is the present perfect, which also indicates that the

“any sum” category refers to amounts previously paid by a taxpayer. § 1346(a)(1)

(emphasis added). The present-perfect tense is formed using “have” or “has” plus

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the past participle of a verb. “This tense sometimes represents an action as having

been completed at some indefinite time in the past . . . [b]ut sometimes, too, the

present perfect indicates that an action continues to the present . . . .” Bryan Garner,

Garner’s Modern English Usage 896 (4th ed. 2016). Under either usage—whether

fully completed or continuing to the present—the present-perfect tense describes

something that occurred in the past. Similar to grouping “sum” with “tax” and

“penalty,” this statutory language indicates that the amount to be recovered pursuant

to § 1346(a)(1) was assessed against and paid by the taxpayer at an earlier point in

time. Again, overpayment interest is not such an amount.

Read in context of the entire statute, the “any sum” category of § 1346(a)(1)

confers jurisdiction to the district court where a taxpayer seeks to recover an amount

of money he or she previously paid to the government that exceeds the usual, proper,

or normal amount of such a payment or was wrongfully collected by the government.

Overpayment interest does not fall into that category.

The Pareskys, however, ask us to follow the Sixth Circuit’s interpretation of

the Supreme Court’s dicta in Flora, which referenced “interest” when discussing

§ 1346(a)(1). See Scripps, 420 F.3d at 596–97. We find Scripps’s analysis,

including its discussion of Flora, unpersuasive. Rather, we agree with the Second

and Federal Circuits that Flora is inapplicable to the issue here. See Pfizer, 939 F.3d

at 177–78; Bank of Am., 964 F.3d at 1108–09. When “‘[r]ead properly,’ the Supreme

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Court in Flora . . . ‘plainly had additional tax assessments in view when it

mention[ed] ‘interest’ as a ‘sum’ under § 1346(a)(1),” as immediately following that

language, the Court found it “significant that many old tax statutes described the

amount which was to be assessed under certain circumstances as a ‘sum’ to be added

to the tax.” Bank of Am., 964 F.3d at 1108 (alterations and emphasis in original)

(first quoting Pfizer, 964 F.3d at 178, then quoting Flora, 362 U.S. at 149–50).

Indeed, “deficiency interest—not overpayment interest—fits squarely into the types

of assessments that may be added to a payment that are not strictly a ‘penalty’ or a

‘tax.’” Pfizer, 939 F.3d at 178 (emphasis in original). For example, suppose the

government may properly assess an amount of underpayment interest against the

taxpayer following an underpayment of taxes pursuant to I.R.C. § 6601,3 but the

taxpayer determines that the amount of underpayment interest assessed and paid is

too high. After following the administrative process for claims and refunds with the

IRS, the taxpayer, under § 1346(a)(1), could bring a claim against the government

in federal district court to recover the amount of underpayment interest that the

taxpayer alleges to have been excessive.

Accordingly, we conclude that § 1346(a)(1)’s “any sum” category does not

encompass standalone overpayment interest claims against the government and that,

3 I.R.C. § 6601 governs interest on underpayments of tax and provides that underpayment interest “shall be assessed, collected, and paid in the same manner as taxes.” I.R.C. § 6601(e)(1).

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under the Tucker Act, the Court of Federal Claims has exclusive jurisdiction over

such standalone claims exceeding $10,000. See 28 U.S.C. §§ 1346(a)(2), 1491. In

so doing, we reach the same conclusion as the Second and Federal Circuits. The

district court therefore correctly determined that it lacked jurisdiction over the

Pareskys’ overpayment interest claim and properly dismissed their amended

complaint.

IV. CONCLUSION

Because the district court lacked jurisdiction over the Pareskys’ standalone

overpayment interest claim, we affirm the district court’s dismissal of the amended

AFFIRMED.