November 25, 1997
DAVID W. FULLER, APPELLANT
ELIZABETH F. FAIR, PROTHONOTARY OF MERCER COUNTY, PENNSYLVANIA, AND INTERNAL REVENUE SERVICE OF THE UNITED STATES, APPELLEES
Appeal from the Order of the Court of Common Pleas of Mercer County, Civil Division, at No. 1996-773.
Before: Popovich, Hudock and Hester, JJ.
FILED: NOVEMBER 25, 1997
From March of 1991 through April of 1993, the Internal Revenue Service of the United States (IRS) filed a total of eight notices of federal tax liens with the Prothonotary of Mercer County against David W. Fuller (Appellant). These liens, the aggregate of which equal $244,296.68, reflect Appellant's unpaid individual federal income tax liabilities for the years 1984 through 1991.
In 1994, the United States District Court for the Western District of Pennsylvania considered the substantive validity of the liens. Thereafter, on October 10 of that year, the court affirmed the liens' underlying validity. See Gaertner v. Fuller, 1994 U.S. Dist. LEXIS 16403, 1994 WL 758345.
On March 6, 1996, Appellant filed a "Petition for Removing Notices of Lien" in the Court of Common Pleas of Mercer County. In support thereof, Appellant alleged that the IRS had not complied with the filing mandates prescribed by Pennsylvania law and that the liens were, therefore, inoperative. More particularly, Appellant averred that the lien notices should be stricken because they were not certified by the Secretary of the Treasury or his delegate in accordance with the Uniform Federal Lien Registration Act, 74 P.S. section 157-4, which provides as follows:
Section 157-4. Execution of notices and certificates
Certification of notices of liens, certificates or other notices affecting Federal liens by the Secretary of the Treasury of the United States, or his delegate, or by any official or entity of the United States responsible for filing or certifying of notice of any other lien, entitles them to be filed, and no other attestation, certification or acknowledgment is necessary.
74 P.S. section 157-4.
On April 26, 1996, the trial court issued a rule to show cause why the liens should not be stricken. This rule was directed to the Pittsburgh District Office of the IRS although, at this time, the United States was not a party to the action. In response to the rule, the United States filed a notice of removal of Appellant's petition to the United States District Court for the Western District of Pennsylvania. Appellant, in turn, filed a motion to remand the proceedings to the Mercer County Court of Common Pleas.
Finding that the underlying petition alleged a violation of state law filing requirements, and did not question the substantive validity of the liens, the District Court granted Appellant's petition. Upon remand, the trial court ordered that the IRS be joined as a party to the action. Thereafter, the parties filed briefs on the merits of the action.
By order dated January 30, 1997, the court denied Appellant's petition. Initially, the court noted that the filing requirements of the disputed statute were enacted to establish the priority of third party creditors' claims against a taxpayer. The liens are operative against the individual taxpayer upon proper notice of unpaid taxes without regard to whether the lien notices are filed. Therefore, the court held, because a determination as to whether the notices were properly filed could have no impact upon Appellant's legal rights, he lacked standing to litigate the claim. Moreover, the court continued, a review of the applicable law revealed that the IRS did in fact comply with the applicable filing requirements.
On February 10, 1997, Appellant filed a timely post-trial motion in which he argued that the court erred by not giving effect to the plain meaning of the statute. By order dated February 25, 1997, the court denied Appellant's post-trial motion due to the fact that motions for post-trial relief may not be filed pursuant to the rules governing petition practice in Pennsylvania.
On February 28, 1997, Appellant filed the instant direct appeal to this Court. Therein, Appellant alleged that the trial court erred in holding that the IRS liens were properly filed in accordance with 74 P.S. section 157-4. On June 20, 1997, the IRS filed a motion to dismiss the appeal for mootness. In support thereof, the IRS argued that on February 8, 1997, after the Mercer County Court entered its order but while post-trial motions were pending, the United States Bankruptcy Court for the Western District of Pennsylvania decided the issue of whether the IRS complied with the statutory mandates at issue.
By order dated September 5, 1997, this Court denied the IRS' petition without prejudice. After thorough review of this case's protracted tautology, we hold that Appellant has fully and finally litigated the instant issue in Bankruptcy Court and, therefore is legally precluded from asserting the same in this forum.
On June 10, 1996, three months after he filed the instant petition in the Court of Common Pleas of Mercer County, Appellant filed his third voluntary petition in bankruptcy. In March of 1996, in connection with this bankruptcy litigation, Appellant filed a "Complaint to Determine Validity of Tax Liens and Objection to Proof of Claim" in the United States Bankruptcy Court for the Western District of Pennsylvania. Therein, Appellant argued, inter alia, that the filing of the liens was procedurally deficient and, therefore, fatally defective. Specifically, Appellant averred that the
IRS's Notices of Federal Tax Lien for the years 1984 through 1991 filed with the Prothonotary of Mercer County, Pennsylvania, are invalid because the Notices "are not certified by the Secretary of the Treasury of the United States or his delegate as required by Pennsylvania law (74 P.S. 157-1 et seq.)"
Fuller v. U.S., 204 B.R. 894, 896 (1997).
While acknowledging that the issue of whether the liens were filed in accordance with Pennsylvania law was currently pending in federal district court, the Bankruptcy Court nonetheless stated that the "issue was not addressed in the Debtor's previous bankruptcy case, but can be disposed of at this time." Id. at 899. Thereafter, the court summarily rejected Appellant's claim that, pursuant to 74 P.S. section 157-4, the Secretary of the Treasury or his delegate must certify federal tax lien-notices.
Instead, quoting the statute's plain language, the court held that the lien notices may also be certified by "any official or entity of the United States responsible for filing or certifying" such notices. Additionally, the court cited with approval to the case of Tweedy v. United States, 26 F.3d 132 (9th Cir. 1994), in which the court held that the petitioner's similar argument was frivolous.
Therefore, because the United States proffered sufficient evidence that the persons who signed the disputed liens were authorized to do so, the court held that Appellant's "position with respect to the validity of the filed liens is without merit." Id.
In the instant appeal, Appellant presents the same legal argument and requests the same relief as he previously sought in the bankruptcy action. Since the bankruptcy court rendered a final decision on the merits of this claim, we hold that the prior decision precludes further litigation of this matter. See, e.g., Menna v. St. Agnes Medical Center 456 Pa. Super. 301, , 690 A.2d 299, 302 (1997) (a party is estopped from relitigating an issue if a final judgment has been reached on the merits by a court of competent jurisdiction and the party raising the issue was a party in the prior action who, at that time, had a full and fair opportunity to litigate the issue in question.)
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