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Santangelo v. United States

United States District Court, S.D. Mississippi, Northern Division

March 19, 2014



DANIEL P. JORDAN, III, District Judge.

This tax-refund action is before the Court on the cross-motions of the parties for summary judgment. Plaintiffs Anthony J. Santangelo, Jr. and June Lenoir, acting as co-excecutors of the Estate of Natalie Santangelo, filed this suit seeking a refund of $152, 903. Once discovery was completed, Plaintiffs filed a motion for summary judgment [28] seeking that amount, in addition to attorneys' fees and costs associated with bringing suit. Defendant the United States opposes the motion, maintains that the tax was properly paid, and likewise moved for a summary judgment [29] determination in its favor. The parties have responded in opposition to the cross-motions, and replies have been filed.

These submissions reveal that the material facts underlying this action are not in dispute, and that the parties agree the matter is suited for summary judgment. See Pls.' Resp. [123]; Def.'s Opp'n [124]. The Court, having considered the memoranda and submissions of the parties, along with the pertinent authorities, finds that the tax was correctly paid and no refund is due. Therefore, Plaintiffs' motion is denied; Defendant's motion is granted.

I. Facts and Procedural History

Natalie Santangelo owned 21, 534 shares of common stock in HCA, Inc. The stock was divided into two certificates-one for 7, 178 shares and one for 14, 356 shares. Rather than turn the certificates over to a broker or bank, Santangelo maintained possession of the physical stock certificates.

In November 2006, HCA merged with Hercules Acquisition Corporation. As part of the merger agreement, all common stock holders would receive $51 per share and their stock would be cancelled. Pursuant to the merger agreement, HCA was required to immediately deposit the funds with a paying agent, and there is no dispute in the record evidence that this occurred on November 20, 2006. This meant Santangelo was eligible to receive $1, 098, 234 as of that date. To collect, Santanagelo was required to surrender the physical stock certificates or follow the steps outlined in the merger agreement for stockholders who had misplaced or lost their certificates.

Despite the funds being available in November 2006, neither Santangelo, nor her daughter Rita, who had power-of-attorney, took any action to obtain the proceeds prior to her death on March 29, 2007. In other words, they took no steps to obtain the funds during the disputed tax year. After Santangelo's death in November 2007, the stock certificate for 7, 178 shares was located and redeemed, with the proceeds being deposited in the Estate account on January 8, 2008. The second stock certificate for 14, 356 shares was never found. The Estate therefore followed the steps outlined for a lost certificate, culminating in a final payment on October 19, 2009.

Meanwhile, HCA, as it did with all of its prior stockholders, issued a Form 1099 indicating that Santangelo received taxable proceeds in the full amount in 2006. In October 2007, after Santangelo's death, her Estate secured the assistance of accountant Alice Van Ryan and filed her 2006 tax return. Following the advice of Ryan, the Estate claimed as income on the 2006 return the full $1, 098, 234 reflected on the Form 1099.

The Estate now believes that was a mistake. The co-executors insist the income should not have been claimed in 2006, because it was not actually received in 2006.[1] So Plaintiffs seek a refund of overpayment as to the 2006 return in the amount of $152, 903. The United States counters that the income was properly claimed on the 2006 tax return because it was constructively received and no refund is due.

The parties' cross-motions for summary judgment are fully briefed. The Court has jurisdiction over the parties and subject matter and is prepared to rule.

II. Standard

Summary judgment is warranted under Rule 56(a) of the Federal Rules of Civil Procedure when evidence reveals no genuine dispute regarding any material fact and that the moving party is entitled to judgment as a matter of law. The rule "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

The party moving for summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Id. at 323. The nonmoving party must then "go beyond the pleadings" and "designate specific facts showing that there is a genuine issue for trial.'" Id. at 324 (citation omitted). In reviewing the evidence, factual controversies are to be resolved in favor of the nonmovant, "but only when... both parties have submitted evidence of contradictory facts." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When such contradictory facts exist, the court may "not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). Conclusory allegations, speculation, unsubstantiated assertions, and legalistic arguments have never constituted an adequate substitute for specific facts showing a genuine issue for trial. TIG Ins. Co. v. Sedgwick James of Wash., 276 F.3d 754, 759 (5th Cir. 2002); Little, 37 F.3d at 1075; SEC v. Recile, 10 F.3d 1093, 1097 (5th Cir. 1993).

Finally, it must be noted that Plaintiffs offer a number of factual arguments for which they offered no citation to the record evidence. Rule 56(c)(1) states that a party asserting that a fact "is genuinely disputed must support the assertion by: (A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations..., admissions, interrogatory answers, or other materials." (emphasis added). And Rule 56(c)(3) states that "[t]he court need consider only the cited materials, but it may consider other materials in the record." "If a party fails to properly support an assertion of fact... the ...

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