1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 UNITED STATES OF AMERICA, Case No.: 3:13-cv-1827-DMS-NLS
12 Plaintiff, ORDER DENYING DEFENDANT’S 13 v. MOTION TO LIFT ORDER OF PERMANENT INJUNCTION 14 MICHAEL I. TURNER, 15 Defendant. 16 17 On December 8, 2021, Defendant Michael Turner (“Defendant” or “Turner”) filed 18 a motion to lift the permanent injunction entered by this Court on April 30, 2014. (ECF 19 No. 26.) That injunction, to which Defendant consented, enjoins Defendant from engaging 20 in federal tax preparation services. (ECF No. 21.) Plaintiff United States of America filed 21 an opposition (ECF No. 28), and Defendant filed a reply. (ECF No. 29.) The matter is fully 22 briefed and submitted on the papers. (ECF No. 30.) For the reasons set forth below, 23 Defendant’s motion is denied. 24 I. 25 BACKGROUND This case began when the United States filed a civil complaint against Turner on 26 August 7, 2013. (ECF No. 1.) The United States alleged that Turner repeatedly prepared 27 tax returns that unlawfully understated his customers’ tax liability, and thus sought to 28 1 enjoin him from preparing others’ federal tax returns. (Id.) Turner stipulated to entry of 2 the permanent injunction on April 29, 2014 (ECF No. 20), after being charged and 3 convicted in a parallel criminal case, United States v. Turner, 13-cr-3808 (S.D. Cal. 2013). 4 In that case, Turner pleaded guilty to a violation of 26 U.S.C. §7206(1) (willfully making 5 a false statement on a tax return) for omitting taxable income when filing his own tax return 6 and acknowledged in his plea agreement that he had falsified federal income tax returns 7 for third parties. (United States v. Turner, 13-cr-3808, ECF No. 8.) Turner was sentenced 8 in March 2014 in that case to three years of probation and ordered to pay restitution in the 9 sum of $66,821.54. (Id., ECF No. 22.) 10 II. 11 DISCUSSION 12 Rule 60(b) provides, in pertinent part, that a court may relieve a party from a final 13 judgment, order, or proceeding where: “(5) the judgment has been satisfied, released, or 14 discharged; it is based on an earlier judgment that has been reversed or vacated; or applying 15 it prospectively is no longer equitable; or (6) any other reason that justifies relief.” Fed. R. 16 Civ. P. 60(b). Here, Defendant seeks relief under Rule 60(b)(5) based on equity, and under 17 Rule 60(b)(6) based on extraordinary circumstances.1 18 A. Rule 60(b)(5) 19 The Supreme Court has held that Rule 60(b)(5) can provide relief from a judgment 20 that is no longer equitable when there is “a significant change in facts or law,” and the 21 revision is “suitably tailored to the changed circumstance.” Rufo v. Inmates of Suffolk Co., 22 502 U.S. 367, 393 (1992). Where the movant consented to the order, they generally cannot 23 rely on circumstances anticipated at the time of the order and bear a “heavy burden” to 24 25 26 1 Plaintiff also argues for relief by analogizing to 18 U.S.C. § 3582(c)(1)(A)(i), which 27 concerns modification of prison sentences. However, the instant motion involves only the injunction against Turner in this civil case, not Turner’s related criminal conviction. The 28 1 show grounds for relief. Id. The Ninth Circuit has clarified that “Rufo sets forth a general, 2 flexible standard for all petitions brought under the equity provision of Rule 60(b)(5).” 3 Bellevue Manor Assocs. v. United States, 165 F.3d 1249, 1255 (9th Cir. 1999). Rule 4 60(b)(5) requires the Court to “take all the circumstances into account” id. at 1256, 5 including the public interest and the judiciary’s interest in the finality of judgments. Id. at 6 1253, 1257; S.E.C. v. Coldicutt, 258 F.3d 939, 942 (9th Cir. 2001). Changed circumstances 7 that make compliance with a judgment “substantially more onerous” can be grounds for 8 relief under Rule 60(b)(5). Coldicutt, 258 F.3d at 942. 9 1. Changed Circumstances 10 Here, Turner argues the changed circumstance is his economic hardship, caused by 11 the caregiving responsibilities he undertook for his wife, his wife’s passing and related loss 12 of family income, and now his caregiving responsibilities for his stepson. (ECF No. 26-1 13 at 3–4.) Turner avers that these conditions have rendered him unable to find employment 14 and placed him in financial difficulty, but that lifting the permanent injunction would allow 15 him to once again earn income from tax preparation. (Id. at 4–6.) 16 The United States correctly points out in its opposition that “Turner’s motion does 17 not provide information about what efforts, if any, he has made to find employment outside 18 of preparing tax returns.” (ECF No. 28 at 4.) While Turner provides additional information 19 in his reply (ECF No. 29), he fails to demonstrate that his current circumstances warrant 20 equitable relief. Turner provides emails chronicling his attempts to find various types of 21 work. (ECF No. 29-4.) The emails date from 2012—before the instant injunction was 22 ordered—up to March 3, 2020. (Id. at 1.) However, even the most recent emails reference 23 only Turner’s responsibilities caring for his wife, not his current situation since his wife 24 passed in July 2020 and he began caring for his stepson in October 2020. These emails 25 show Turner declining to interview for full-time jobs that require travel, which were 26 understandably not compatible with caring for his wife. (Id. at 1–2.) They do not show 27 recent attempts to obtain part-time employment, or work that can be done partially or 28 wholly remotely, which has become more common since the COVID-19 pandemic. 1 Further, Turner’s reply notes his stepson does not contribute financially to the household 2 but it does not address what other support his stepson receives, such as In-Home Supportive 3 Services (with Turner or another as the caregiver), which might free up Turner’s time to 4 work or provide needed income. 5 The Court acknowledges that Turner’s situation is a challenging one, but he has not 6 demonstrated that equity requires lifting the instant injunction given the other options 7 available to Turner to support himself and his stepson. While Turner notes complying with 8 the injunction is now “substantially more onerous,” his family commitments make work 9 generally more onerous, not abstaining from tax return preparation specifically. See 10 Coldicutt, 258 F.3d at 942. As noted in the opposition, “It is not onerous to require Turner 11 to engage in any other means of earning a living besides preparing taxes …” (ECF No. 28 12 at 9, emphasis added). Turner’s motion itself notes that “Tax return preparation offers him 13 a means” to earn income, not that it is his only option to do so, or that the injunction limits 14 his employment or income-earning generally. (ECF No. 26-1 at 4, emphasis added). 15 Thus, Turner has not shown his current caregiving responsibilities foreclose the 16 possibility of work besides tax return preparation such that the current injunction is no 17 longer equitable. There are other types of flexible work beyond tax preparation, which 18 would allow Turner to earn income without modifying an injunction that enjoins only the 19 specific activity in question. Further, the public interest in the integrity of the tax system 20 and the judicial interest in the finality of judgments weigh against dissolving the injunction. 21 See Bellevue, 165 F.3d at 1265–67 (noting the Court must take all circumstances into 22 account). 23 2.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 UNITED STATES OF AMERICA, Case No.: 3:13-cv-1827-DMS-NLS
12 Plaintiff, ORDER DENYING DEFENDANT’S 13 v. MOTION TO LIFT ORDER OF PERMANENT INJUNCTION 14 MICHAEL I. TURNER, 15 Defendant. 16 17 On December 8, 2021, Defendant Michael Turner (“Defendant” or “Turner”) filed 18 a motion to lift the permanent injunction entered by this Court on April 30, 2014. (ECF 19 No. 26.) That injunction, to which Defendant consented, enjoins Defendant from engaging 20 in federal tax preparation services. (ECF No. 21.) Plaintiff United States of America filed 21 an opposition (ECF No. 28), and Defendant filed a reply. (ECF No. 29.) The matter is fully 22 briefed and submitted on the papers. (ECF No. 30.) For the reasons set forth below, 23 Defendant’s motion is denied. 24 I. 25 BACKGROUND This case began when the United States filed a civil complaint against Turner on 26 August 7, 2013. (ECF No. 1.) The United States alleged that Turner repeatedly prepared 27 tax returns that unlawfully understated his customers’ tax liability, and thus sought to 28 1 enjoin him from preparing others’ federal tax returns. (Id.) Turner stipulated to entry of 2 the permanent injunction on April 29, 2014 (ECF No. 20), after being charged and 3 convicted in a parallel criminal case, United States v. Turner, 13-cr-3808 (S.D. Cal. 2013). 4 In that case, Turner pleaded guilty to a violation of 26 U.S.C. §7206(1) (willfully making 5 a false statement on a tax return) for omitting taxable income when filing his own tax return 6 and acknowledged in his plea agreement that he had falsified federal income tax returns 7 for third parties. (United States v. Turner, 13-cr-3808, ECF No. 8.) Turner was sentenced 8 in March 2014 in that case to three years of probation and ordered to pay restitution in the 9 sum of $66,821.54. (Id., ECF No. 22.) 10 II. 11 DISCUSSION 12 Rule 60(b) provides, in pertinent part, that a court may relieve a party from a final 13 judgment, order, or proceeding where: “(5) the judgment has been satisfied, released, or 14 discharged; it is based on an earlier judgment that has been reversed or vacated; or applying 15 it prospectively is no longer equitable; or (6) any other reason that justifies relief.” Fed. R. 16 Civ. P. 60(b). Here, Defendant seeks relief under Rule 60(b)(5) based on equity, and under 17 Rule 60(b)(6) based on extraordinary circumstances.1 18 A. Rule 60(b)(5) 19 The Supreme Court has held that Rule 60(b)(5) can provide relief from a judgment 20 that is no longer equitable when there is “a significant change in facts or law,” and the 21 revision is “suitably tailored to the changed circumstance.” Rufo v. Inmates of Suffolk Co., 22 502 U.S. 367, 393 (1992). Where the movant consented to the order, they generally cannot 23 rely on circumstances anticipated at the time of the order and bear a “heavy burden” to 24 25 26 1 Plaintiff also argues for relief by analogizing to 18 U.S.C. § 3582(c)(1)(A)(i), which 27 concerns modification of prison sentences. However, the instant motion involves only the injunction against Turner in this civil case, not Turner’s related criminal conviction. The 28 1 show grounds for relief. Id. The Ninth Circuit has clarified that “Rufo sets forth a general, 2 flexible standard for all petitions brought under the equity provision of Rule 60(b)(5).” 3 Bellevue Manor Assocs. v. United States, 165 F.3d 1249, 1255 (9th Cir. 1999). Rule 4 60(b)(5) requires the Court to “take all the circumstances into account” id. at 1256, 5 including the public interest and the judiciary’s interest in the finality of judgments. Id. at 6 1253, 1257; S.E.C. v. Coldicutt, 258 F.3d 939, 942 (9th Cir. 2001). Changed circumstances 7 that make compliance with a judgment “substantially more onerous” can be grounds for 8 relief under Rule 60(b)(5). Coldicutt, 258 F.3d at 942. 9 1. Changed Circumstances 10 Here, Turner argues the changed circumstance is his economic hardship, caused by 11 the caregiving responsibilities he undertook for his wife, his wife’s passing and related loss 12 of family income, and now his caregiving responsibilities for his stepson. (ECF No. 26-1 13 at 3–4.) Turner avers that these conditions have rendered him unable to find employment 14 and placed him in financial difficulty, but that lifting the permanent injunction would allow 15 him to once again earn income from tax preparation. (Id. at 4–6.) 16 The United States correctly points out in its opposition that “Turner’s motion does 17 not provide information about what efforts, if any, he has made to find employment outside 18 of preparing tax returns.” (ECF No. 28 at 4.) While Turner provides additional information 19 in his reply (ECF No. 29), he fails to demonstrate that his current circumstances warrant 20 equitable relief. Turner provides emails chronicling his attempts to find various types of 21 work. (ECF No. 29-4.) The emails date from 2012—before the instant injunction was 22 ordered—up to March 3, 2020. (Id. at 1.) However, even the most recent emails reference 23 only Turner’s responsibilities caring for his wife, not his current situation since his wife 24 passed in July 2020 and he began caring for his stepson in October 2020. These emails 25 show Turner declining to interview for full-time jobs that require travel, which were 26 understandably not compatible with caring for his wife. (Id. at 1–2.) They do not show 27 recent attempts to obtain part-time employment, or work that can be done partially or 28 wholly remotely, which has become more common since the COVID-19 pandemic. 1 Further, Turner’s reply notes his stepson does not contribute financially to the household 2 but it does not address what other support his stepson receives, such as In-Home Supportive 3 Services (with Turner or another as the caregiver), which might free up Turner’s time to 4 work or provide needed income. 5 The Court acknowledges that Turner’s situation is a challenging one, but he has not 6 demonstrated that equity requires lifting the instant injunction given the other options 7 available to Turner to support himself and his stepson. While Turner notes complying with 8 the injunction is now “substantially more onerous,” his family commitments make work 9 generally more onerous, not abstaining from tax return preparation specifically. See 10 Coldicutt, 258 F.3d at 942. As noted in the opposition, “It is not onerous to require Turner 11 to engage in any other means of earning a living besides preparing taxes …” (ECF No. 28 12 at 9, emphasis added). Turner’s motion itself notes that “Tax return preparation offers him 13 a means” to earn income, not that it is his only option to do so, or that the injunction limits 14 his employment or income-earning generally. (ECF No. 26-1 at 4, emphasis added). 15 Thus, Turner has not shown his current caregiving responsibilities foreclose the 16 possibility of work besides tax return preparation such that the current injunction is no 17 longer equitable. There are other types of flexible work beyond tax preparation, which 18 would allow Turner to earn income without modifying an injunction that enjoins only the 19 specific activity in question. Further, the public interest in the integrity of the tax system 20 and the judicial interest in the finality of judgments weigh against dissolving the injunction. 21 See Bellevue, 165 F.3d at 1265–67 (noting the Court must take all circumstances into 22 account). 23 2. Suitably Tailored Relief 24 Turner’s requested relief is also not suitably tailored as he seeks to dissolve the entire 25 civil injunction; and, even if the Court so ordered, it is not clear that Turner would again 26 be allowed to prepare tax returns. Turner must reapply for a preparer tax identification 27 number (“PTIN”), which the IRS may not grant given his felony conviction for tax return 28 fraud. See 31 C.F.R. § 10.8 (preparers must have a PTIN); 31 C.F.R. § 10.50(a) (the IRS 1 may suspend or disbar practitioners for sanctionable conduct); 31 C.F.R. § 10.51(a)(1) 2 (conviction under the Federal tax laws is sanctionable conduct). 3 The IRS does allow petitions for reinstatement. 31 C.F.R. § 10.81. Turner argues 4 that the IRS approves a high percentage of these petitions, but his source refers to petitions 5 by individuals suspended or disbarred by the IRS itself and does indicate whether any of 6 these petitioners also had criminal convictions. See Office of Professional Responsibility 7 Annual Report Fiscal Year 2018, available at https://www.irs.gov/pub/irs-pdf/p5638.pdf. 8 While Turner argues that he should be granted the opportunity to petition the IRS, he 9 concedes that even the full dissolution of the injunction by this Court may not enable him 10 to again prepare third party tax returns. (ECF No. 29 at 6.) Turner appears to have faced significant personal challenges and undertaken much 11 caring for others, while demonstrating remorse for his criminal fraud. His desire to earn 12 additional income through work is commendable. However, he has not met his “heavy 13 burden” to show he requires relief from an order to which he consented when the possibility 14 of lost income from tax preparation was foreseeable. Rufo, 502 U.S. at 393. 15 B. Rule 60 (b)(6) 16 Rule 60(b)(6) allows a party to seek relief from judgment for “any other reason that 17 justifies relief.” Fed. R. Civ. P. 60(b)(6). It is a “catchall provision” that applies only when 18 the reason for granting relief is not covered by any of the other reasons set forth in Rule 19 60. United States v. Washington, 394 F.3d 1152, 1157 (9th Cir. 2005), overruled on other 20 grounds by United States v. Washington, 593 F.3d 790 (9th Cir. 2010). The catchall “has 21 been used sparingly as an equitable remedy to prevent manifest injustice and is to be 22 utilized only where extraordinary circumstances prevented a party from taking timely 23 action to prevent or correct an erroneous judgment.” Id. (internal quotation marks omitted). 24 Here, Rule 60(b)(6) is inapplicable. As 60(b)(6) is a catchall provision, relief under 25 that section must be for a reason beyond those elsewhere enumerated by the Rule. 26 Equitable relief from prospectively enforcing a judgment is separately listed under 60(b)(5) 27 and appropriately argued under that Rule by Turner. However, Rule 60(b)(6) requires 28 “extraordinary circumstances” that prevent the party from litigating the case. Washington, ! F.3d at 1157. That is not the case here, where Plaintiff's situation is one of changed 2 circumstances after judgment. 3 Il. 4 CONCLUSION AND ORDER 5 For the foregoing reasons, Defendant’s motion to lift the order of permanent 6 injunction is denied without prejudice. 7 IT IS SO ORDERED. g Dated: May 17, 2022 □ gf, p a Yn: 9 Hon. Dana M. Sabraw, Chief Judge 10 United States District Court 1] 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28