San Nicolas v. Director of the Department of Revenue and Taxation

• Court: District Court, D. Guam
• Decided: September 20, 2022
• Docket: 1:20-cv-00049
• Status: Unknown

Opinion

THE HONORABLE JOHN C. COUGHENOUR 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 FOR THE TERRITORY OF GUAM 8 MICHAEL F.Q. SAN NICOLAS and CIVIL CASE NO. 20-0049 9 KATHRYN K. SAN NICOLAS, ORDER 10 Petitioners, 11 v. 12 DIRECTOR OF THE DEPARTMENT OF REVENUE AND TAXATION, 13 Respondent. 14 15 This matter comes before the Court on Petitioners’ motion to enforce a purported 16 settlement agreement (Dkt. No. 31). Having considered the briefing and the relevant record, and 17 finding oral argument unnecessary, the Court DENIES the motion for the reasons explained 18 herein. 19 Petitioners brought suit challenging the Guam Department of Revenue and Taxation’s 20 2016 tax deficiency notice. (Dkt. No. 1; see Dkt. No. 1-1 (notice of deficiency).) The Court set a 21 May 2022 bench trial. (Dkt. No. 10.) However, during a preliminary pretrial conference, the 22 parties notified the Court they were close to a resolution and later told the Court they had 23 reached an agreement. (Dkt. Nos. 13, 20, 22.) Upon the Court’s subsequent receipt of their joint 24 status report, the Court vacated the trial date and set a June 2022 status conference. (Dkt. Nos. 25 20, 22, 23.) 26 1 During the conference, Respondent informed the Court that the parties had, in fact, not 2 yet finalized their agreement. (See Dkt. No. 26 (entry of proceeding).) Petitioners asserted 3 otherwise, contending they had come to an agreement on all material terms. (Id.) Petitioners then 4 moved for leave to seek enforcement of this agreement, which the Court granted. (See Dkt. No. 5 28.) 6 In this instance, the Court is sitting in the capacity of a United States Tax Court. See 7 Forbes v. Maddox, 339 F.2d 387, 388 (9th Cir. 1964); Simpao v. Govt. of Guam, 2005 WL 8 6777982, slip op. at 2 (D. Guam 2005). As such, Petitioners argue that it may compel 9 Respondent to comply with the agreement Petitioners believe they already reached. (See Dkt. 10 Nos. 2–4, 40 at 1–2.) While it is true that the Court may, in some instance, compel such action, 11 the burden of proof falls on the movant to demonstrate the existence of a binding agreement. See 12 FPL Group, Inc. v. C.I.R., 95 T.C.M. (CCH) 1562 (2008). This, of course, requires a meeting of 13 the minds on all material terms. Sergy v. Comm’r, 60 T.C.M. (CCH) 548 (1990). 14 Having now reviewed the parties’ legal argument and evidence (Dkt. Nos. 31, 32, 34, 38, 15 40), it appears clear the Court cannot provide Petitioners the relief they seek. This is because 16 Petitioners (a) fail to provide sufficient evidence to support a meeting of the minds (in fact the 17 evidence suggests the opposite) and, (b) regardless, the Court lacks jurisdiction to compel 18 Respondent to address the crux of their remaining disputed issue—terms associated with the 19 imposition of statutory interest on a settled tax obligation (for which the interest is not yet 20 computed or assessed). 21 From the beginning of negotiations, Respondent indicated that it had no discretion 22 regarding the starting date for the imposition of statutory interest. (See Dkt. Nos. 34-1 at 2 23 (Respondent’s initial communication indicating that statutory interest would be due).) 24 Nevertheless, Petitioners provided markups suggesting they believed otherwise. (See Dkt. No. 25 34-3 at 3, 5 (Petitioner’s mark ups).) But Respondent indicated, in no uncertain terms, that it 26 could not agree to Petitioners’ mark ups. (Dkt. No. 34-4 at 2–3 (e-mail communications 1 regarding same). For reasons not clear to the Court, Petitioner ignored this contention in 2 concluding that an agreement had been reached. (See generally Dkt. Nos. 31, 32, 40.) 3 Ignoring a disputed term does not make it undisputed. And a binding agreement cannot 4 result from willful ignorance. If, for no other reason, this would violate the “mirror image” rule. 5 See, e.g., Blas v. Cruz, 2009 Guam 12, ¶ 19 (Guam 2009); see also Sergy 60 T.C.M. (CCH) 548 6 (discussing the need for a “complete meeting of the minds as to all details of the settlement.”). 7 Even if Petitioners had presented evidence sufficient to support a binding agreement on the 8 calculation of interest, the Court lacks jurisdiction to abate such interest and, by extension, 9 compel Respondent to agree to terms deviating from the statutory requirements associated with 10 the calculation and assessment of interest. This is because, sitting in the capacity of the Tax 11 Court, the Court’s jurisdiction is limited to the abatement of assessed interest—not negotiated 12 interest. See Hinck v. U.S., 550 U.S. 501, 508 (2007); Kersh v. C.I.R., 98 T.C.M. (CCH) 458 13 (2009). 14 For the foregoing reasons, the Court DENIES Petitioners’ motion (Dkt. No. 31). The 15 parties are ORDERED to meet and confer and file a joint status report within thirty days of this 16 Order containing a proposed case management schedule for this matter. 17 18 DATED this 20th day of September 2022. A 19 20 21 John C. Coughenour 22 UNITED STATES DISTRICT JUDGE

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