FBAR Obligation Vacated (For Now) in US v Solomon

FBAR Judgment Vacated (For Now) in US v Solomon Round 2

In the case of US vs. Solomon, the Court had initially ruled in favor of the United States against Defendant for Penalties stemming from FBAR violations. Namely, that under 31 USC 5314, Defendant was alleged to have violated her Foreign Bank and Financial Account reporting obligations for multiple years — by not filing the FBAR. As a result, the United States sought to assess penalties for 6-years (the maximum allowed under statute) for a total of $200,000. This penalty represented a $10,000 penalty per account, per year (the current FBAR penalty amount is up to $13,640.). Later in the case, the US Government moved for Partial Summary Judgment, which was granted — but now, the judgment has been vacated so Defendant can have the opportunity to defend herself in accordance with various affirmative defenses in relation to her FBAR obligations. Presumably, the Government does not want the Defendant to successfully appeal on a technicality (in this case the technicality refers to the underlying briefing schedule) and therefore wants to re-open the case and avoid any doubts that may result in a successful appeal by Defendant.

Partial Summary Judgment 11/1/2021

• • • THIS MATTER comes before the Court upon Defendant’s Motion for Partial Summary Judgment (the “Motion”) [ECF No. 11] and Plaintiff’s Cross-Motion for Partial Summary Judgment (the “Cross-Motion”) [ECF No. 19]. The Court denied Defendant’s Motion and granted Plaintiff’s Cross-Motion in a separate order [ECF No. 64]. In accordance with Federal Rule of Civil Procedure 58, the Court hereby

ORDERS and ADJUDGES as follows:

1. 1. 1. Judgment is entered in favor of Plaintiff United States and against Defendant Evelyn Solomon in the amount of $240,465.75 (inclusive of a late-payment penalty of $34,684.93, in addition to the FBAR penalty assessment of $200,000.00, and pre-judgment interest of $5,780.82). Such prejudgment interest on the FBAR penalty assessment and late-payment penalties are provided for under 31 U.S.C. § 3717(a)(1) and 31 U.S.C. § 3717(e)(2) respectively. The prejudgment interest and late-payment penalties accrued from and after December 12, 2018, and to the date of entry of this judgment. Post-judgment interest on the FBAR penalty assessment shall accrue pursuant to 28 U.S.C. § 1961(a) and post-judgment late payment penalties shall accrue pursuant to 31 U.S.C. § 3717(e)(2) and 31 C.F.R. §§ 5.5(a) and 901.9, until the judgment is paid in full.

      2. The Clerk of Court is directed to CLOSE this case. Any pending motions are DENIED AS MOOT.

Motion to set Aside Judgment (US v Solomon) 

• • • The United States moves the Court to vacate the judgment entered against Defendant Evelyn Solomon because unresolved issues must be decided before judgment can be entered. The defendant was not given the opportunity to present evidence to support or disprove all the affirmative defenses she asserted in her answer. The United States fears this is reversible error, which will result in a remand from the Eleventh Circuit if it is not rectified beforehand. The United States requests that the parties be allowed one week to file summary judgment motions on the remaining affirmative defenses, with responsive briefing following the schedule in the local rules. 

Procedural History

• • • The United States filed its complaint alleging that Solomon owes the United States for penalties asserted under 31 U.S.C. § 5321. ECF No. 1.

    • Solomon filed her answer on February 1, 2021, and in it asserted five affirmative defenses. ECF No. 9.

    • On the same day, Solomon moved for partial summary judgment on her 1st and 4th affirmative defenses: statute of limitations and proper calculation of the FBAR penalty. ECF No. 11.

    • The United States responded to Solomon’s motion and cross moved for summary judgment on the same two issues. ECF No. 18. Solomon filed a response on March 16, 2021. ECF No. 32.

    • Briefing on these two issues concluded on March 23, 2021, when the United States replied. ECF No. 37. The Court heard oral argument on the motions on May 5, 2021.

    • While the parties were briefing the motions for partial summary judgment, the Court entered a scheduling order that set a discovery deadline of August 10, 2021, and a pretrial motion deadline of September 24, 2021. ECF No. 24.

    • On Solomon’s unopposed motion at ECF No. 58, the Court reset the discovery deadline to September 15, 2021, and the summary judgment motion deadline to November 1, 2021. ECF No. 60. On October 27, 2021, the Court issued a decision on the motions for partial summary judgment. ECF No. 64.

    • The Court entered final judgment on November 1, 2021, which was the deadline for the parties to move for summary judgment. See ECF Nos. 60 and 67. 

Argument

• • • A court may vacate a judgment under Rule 59(e) or Rule 60(b) when there is a “need to correct clear error or manifest injustice.” Socialist Workers Party v. Leahy, 957 F. Supp. 1262, 1263 (S.D. Fla. 1997); Scheck v. Burger King Corp., 798 F. Supp. 692, 693 (S.D. Fla. 1992). Here, there is clear error because the parties were not given notice, as required by Rule 56, to produce all their evidence before the Court decided summary judgment. See Fed R. Civ. P. 56(f)(3); Massey v. Cong. Life Ins. Co., 116 F.3d 1414, 1417 (11th Cir. 1997).

    • The result is that Solomon was not given an opportunity to present evidence on all her affirmative defenses. The parties only briefed the two that Solomon presented in her motion for partial summary judgment. Case 9:20-cv-82236-AMC Document 72 Entered on FLSD Docket 11/09/2021 Page 3 of 5 4 To be clear, the United States’ position is that the Court was correct to deny Solomon’s request to file an untimely brief on the statute of limitations issue. See ECF Nos. 61, 62, 63, and 66. Indeed, there is no question that the parties had the chance to fully brief Solomon’s first and fourth affirmative defenses.

    • The Court need not hear arguments “which could, and should, have been made previously.” McGuire v. Ryland Grp., Inc., 497 F. Supp. 2d 1356, 1358 (M.D. Fla. 2007) quoting Scelta v. Delicatessen Support Servs., Inc., 89 F. Supp. 2d 1311, 1320 (M.D. Fla. 2000). Still, the Court’s favorable decision on those issues is not enough to grant summary judgment for the United States. Solomon has not presented evidence or argument on her remaining affirmative defenses. Nor was she given the notice required under Rule 56. Fed. R. Civ. P. 56(f).

    • The United States is confident that it can prove its case in a complete motion for summary judgment. And it is prepared to file one in short order. Indeed, Solomon should also be prepared because the deadline to do so was the same day that the Court entered the final judgment. See ECF Nos. 60 and 67.

Motion to Vacate GRANTED

Accordingly, it is hereby ORDERED AND ADJUDGED as follows:

• • • 1. Plaintiff’s Motion to Vacate Judgment [ECF No. 72] is GRANTED.

    • 2. The Judgment entered in favor of Plaintiff against Defendant Evelyn Solomon [ECF No. 67] is hereby VACATED.

    • 3. The Clerk shall REOPEN this case.

    • 4. The parties shall file any motions for summary judgment addressing Defendant’s second, third, and fifth affirmative defenses [ECF No. 9 pp. 4–5] on or before 1 In the event there were any doubt as to the Court’s exercise of jurisdiction to grant this Motion, the Court hereby states that it would grant the motion if a remand were necessary. Fed. R. Civ. P. 62.1(a)(3).

  • The parties shall file responses in opposition to the motions for summary judgment on or before December 6, 2021. The parties shall file replies supporting the motions for summary judgment on or before December 13, 2021.

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