This morning, the Federal Circuit issued a precedential opinion in a pro se tax dispute decided by the Court of Federal Claims. Over a dissent by Judge Newman, the court affirmed both a dismissal of the case and a denial of a motion for leave to amend the underlying complaint. Here are the introductions to the opinions.
Steffen v. United States (Precedential)
This appeal is the latest in a protracted litigation spanning more than three decades in the federal courts. Pro se appellants Terri L. Steffen and Paul A. Bilzerian are a married couple seeking an $8.2 million tax refund pursuant to 26 U.S.C. § 1341. The money in dispute stems from transactions that Mr. Bilzerian made in 1985 and 1986 related to the purchase and sale of certain common stocks, for which he was convicted of securities fraud. Because the appellants’ complaint does not entitle them to the legal remedy they seek, we affirm the decision of the United States Court of Federal Claims granting the government’s motion to dismiss and denying leave to amend the complaint.
Newman, Circuit Judge, dissenting.
The Court of Federal Claims dismissed this tax refund appeal on the pleadings and with prejudice, on the ground of absence of jurisdiction or failure to state a claim. The dismissal was without prior notice to the plaintiffs of any defect in their complaint, and without opportunity to cure the defect, which was the omission from the complaint of the numbers of the applicable sections of the Tax Code.
In its dismissal, the Court of Federal Claims did not discuss the merits of this tax refund claim; this appeal to the Federal Circuit is solely on the question of the dismissal with prejudice, without notice and without opportunity to amend the complaint. Thus in their briefs neither the appellant nor the government discussed the merits of the tax refund claim.
Nonetheless, my colleagues now decide the tax refund claim, and on this basis they rule that the Court of Federal Claims was correct in dismissing the complaint for lack of jurisdiction. My colleagues ignore that the facts are not presented and the law is not argued. There has been no decision by the Court of Federal Claims. Thus the courts deny these taxpayers their right to judicial review of the IRS decision; on a ground so shaky that the government never raised it in the Court of Federal Claims, although the government filed three motions to dismiss. This is not full and fair judicial process.
The only question before us is the dismissal with prejudice because the complaint did not cite the sections of the Tax Code, and refusal of the proffered amended complaint. The government does not now support the reasoning of the Court of Federal Claims, and devotes most of its argument to impugning the character of these plaintiffs. My colleagues on this panel undertake a sua sponte decision of the tax refund claim as their reason for supporting the improper dismissal.
The panel majority decides the tax refund claim without briefing, without a record, without argument, without trial and without decision. These plaintiffs are thus evicted from the protection of the laws, for their claim has never had judicial review. As Justice John Marshall observed:
The very essence of civil liberty certainly consists in the right of every individual to claim the protection of the laws, whenever he receives an injury. One of the first duties of government is to afford that protection.
Marbury v. Madison, 5 U.S. 137, 163 (1803). The principle of protection by judicial review is the foundation of a nation ruled by law. Chambers v. Balt. & Ohio R.R. Co., 207 U.S. 142, 148 (1907) (“The right to sue and defend in the courts” is “[i]n an organized society . . . the right conservative of all other rights, and lies at the foundation of orderly government.” This right “is one of the highest and most essential privileges of citizenship”).
These plaintiffs are now deprived of this constitutional right, without notice and without sound reason. I respectfully dissent.