United States v. Hughes

Background

After a bench trial, the court entered judgment against Timberly Hughes on March 6, 2023. Hughes appealed to the Ninth Circuit, and the appeal remained pending when she filed this motion.

Because an appeal was pending, the district court could not grant relief from the final judgment under Federal Rule of Civil Procedure 60(b) without a remand from the appeals court. Rule 62.1 nevertheless allows a district court to make an “indicative ruling”: it may state that it would grant a Rule 60(b) motion if the appeals court remands the case, state that the motion raises a substantial issue, defer consideration, or deny the motion.

Hughes’s Motion

Hughes asked for an indicative ruling that the court would grant relief under Rule 60(b). She relied on 31 C.F.R. § 1010.350(c)(4)(iv), which she contended showed that bank-to-bank settlements did not have to be reported and were not subject to Internal Revenue Service penalties. She also submitted a letter from her bank confirming that certain loans were bank-to-bank transfers. Hughes argued that these amounts should not have been included in the penalty calculation.

She asserted that excluding the amounts would reduce the penalties for 2012 from $147,300 to $19,269.69 and the penalties for 2013 from $90,825 to $9,826.83.

Reasonable Time

The court first held that Hughes did not file the motion within a reasonable time. She filed it on January 29, 2024, nearly 11 months after judgment was entered. Before judgment, she had repeatedly argued that the penalty calculation improperly included amounts related to non-taxable loans. The court also noted that the United States had cited a regulation related to the one Hughes relied on, and that the court had previously identified her failure to cite authority supporting exclusion of the bank-originated entries.

Although Hughes was not represented by counsel, the court found that the delay was unreasonable.

Newly Discovered Evidence and Mistake

Rule 60(b)(2) permits relief based on newly discovered evidence when the evidence could not have been discovered earlier through due diligence and would likely have changed the case’s outcome. The court held that Hughes did not meet those requirements because she could have found the regulation and obtained the bank letter earlier through due diligence.

Rule 60(b)(1) permits relief for mistake, inadvertence, surprise, or excusable neglect. The court held that Hughes’s failure to cite the regulation earlier, and her failure to obtain the bank letter earlier, reflected a lack of diligence and did not justify relief under that provision.

Other Extraordinary Circumstances

Rule 60(b)(6) is a catch-all provision for other reasons that justify relief. The court explained that this provision is used sparingly and requires extraordinary circumstances that prevented a party from taking timely action to prevent or correct an erroneous judgment. The court held that Hughes had not shown such circumstances.

Disposition

The court denied Hughes’s Rule 62.1 motion. It did not issue the requested indication that it would grant Rule 60(b) relief if the appeals court remanded the case.