GEORGE C. YOUNG, Senior United States District Judge.
This case came before the Court on February 26, 2003 for hearing on appeal of the September 23, 2002 Order of the Bankruptcy Court reaffirming on remand its earlier Order dated August 2, 2001 sustaining debtor Ronald D. Nutt's objection to Claim No. 3 of the Internal Revenue Service.
Background:
An earlier appeal of the same issues involved in this case was previously considered in full by the undersigned in Case No. 6:01-Cv-1223-06-JGG. That case was fully briefed and argued by counsel and a decision made by this Court on June 5, 2002 which remanded the case to the Bankruptcy Court by Order. (See attached Order, Doc. #19 filed in Case No. 6:01-cv-1223-06-JGG).
Thereafter on September 23, 2002, the Bankruptcy Court, again after further briefing by counsel and a hearing thereon, entered its Order reaffirming its August 2, 2001 Findings of Fact and Conclusions of Law sustaining Ronald Nutt's objection to Claim 3 of the Internal Revenue Service. (See attached copy of Bankruptcy Court Order dated September 23, 2002).
The Bankruptcy Court September 23, 2002 Order was transmitted to the District Court and filed in the original appeal file, Case No. 6:01-cv-1223. Immediately thereafter, Appellant, United States of America, timely filed an appeal from the September 23, 2002 Order which was given Case No. 6:02-cv-1346, and assigned to a different judge in this Court.
On December 3, 2002, the undersigned, unaware that the second appeal had been filed, given a different case number and assigned to another judge, entered an order affirming the bankruptcy court Order of September 23, 2002, on the ground that this Court was unable to find that the factual findings of the Bankruptcy Judge were clearly erroneous.
Appellant thereafter filed in Case No. 6:01-cv-1223-Orl-06-JGG its Motion to Alter or Amend Order (Doc. #23, filed December 17, 2002). A hearing will held on that motion on January 22, 2003, during which hearing the motion was granted by the undersigned and this Court's December 3, 2002 Order was vacated on the grounds that it was premature and improper in light of the new appeal. A written order reaffirming the Court's oral ruling was entered on January 8, 2003.
Appellee, Ronald Nutt then filed in this case (6:02-Civ-1346), his Motion Requesting Reassignment, or Alternatively, Motion to Dismiss Pending Appeal (Doc. #9, filed December 20, 2002). On January 22, 2003 Judge Anne Conway granted the motion in part as to reassignment and the case was reassigned to the undersigned.
With that background, this court heard oral argument of counsel in these effectively consolidated cases on February 26, 2003.
Standard of Review:
This court is required to review the facts in this case under the clearly erroneous standard, and to review the conclusions of law under the de novo standard.
Government counsel argued that the bankruptcy court had erred in failing to make specific findings that the Debtor willfully failed to pay over trust funds based on the totality of the evidence in the case showing that Debtor's business was in serious financial condition and that it was unable to pay creditors. The Government alleges that such inability to be able to stay current with its creditors, which is not in dispute, should have been notice to Debtor that the payroll trust fund taxes were not being paid as well.
However, the Bankruptcy Judge in his Findings of Fact and Conclusions of Law dated August 2, 2001, at page 13 held:
"The totality of the circumstances indicate that Nutt acted in good faith in regard to the trust fund taxes. Nutt immediately paid the first quarter payroll taxes with his personal funds, contacted the IRS regarding a repayment schedule for the second, third and fourth quarters, remained current on the accruing payroll taxes after October 31, 1995, and made no payments to other creditors from unencumbered funds upon learning of the unpaid payroll taxes."
It appears to this Court that there has been no substantive change in the issues and/or parties in this case and that the facts remain as they were during consideration of the first appeal. When this Court entered its remand order, the sole issue for reconsideration by the Bankruptcy Court was whether Debtor's failure to know taxes were not being paid was due to a reckless disregard of a known or obvious risk of non-payment in light of the Eleventh Circuit's decision in Malloy v. United States, 17 F.3d 329 (11th Cir. 1994) specifically as it related to one portion of John Conner's March 21, 2000 deposition regarding a letter of a former Hallmark employee, Michael Storey.
On remand the Bankruptcy Court again reviewed the deposition testimony of John Conner. The Bankruptcy Court found that while Conner testified in his deposition about the letter from Michael Story, neither the factual underpinnings of Conner's deposition, nor Michael Storey's letter were offered or introduced into evidence during the trial of this matter and that therefore the factual basis could not be reached. The Bankruptcy Court further found that even if they had been, that testimony would have been subject to a hearsay objection. The decision to not introduce such evidence was a tactical choice made by the United States and it is improper for this Court to consider any matters which were not a part of the underlying trial record.
As there is no new information for consideration, it is the opinion of this Court that the facts have been fully considered on appeal and again on remand to the Bankruptcy Court. This Court is unable to find that the factual findings of the Bankruptcy Judge as set forth in the August 2, 2001 Findings of Fact, as further reaffirmed by the September 23, 2002 Order, are clearly erroneous. Accordingly, it is
ORDERED that the August 2, 2001 Findings of Fact and Conclusions of Law of the Bankruptcy Court, as reaffirmed following remand by bankruptcy Court Order dated September 23, 2002, are AFFIRMED. The Clerk of Court is directed to close this case by entering an appropriate judgment.
SO ORDERED.