FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS [Hon. Rya W. Zobel, U.S. District Judge]
E. Hoyt, with whom Hoyt Legal, LLC was on brief, for
C. Pett, Attorney, Tax Division, United States Department of
Justice, with whom Caroline D. Ciraolo, Acting Assistant
Attorney General, Richard Farber, Attorney, Tax Division, and
Carmen M. Ortiz, United States Attorney, were on brief, for
Thompson, Selya and Kayatta, Circuit Judges.
appeal requires us to construe and apply 31 U.S.C. §
3713 (commonly known as the federal priority statute). We
conclude that the statute says what it means and means what
it says. Since the court below accorded the statute its plain
meaning and applied it in that manner, we affirm that
court's entry of judgment in favor of the United States.
start with a sketch of the factual background and travel of
the case. Robert Reitano died in July of 2002, survived by
his wife (appellant Marci McNicol) and four minor children.
At the time of his death, Reitano owed over $340, 000 in
unpaid federal income tax liabilities. Since these
liabilities exceeded the value of his estate, the estate was
assets of the estate consisted almost entirely of stock in
two corporations: Sophia Gale, Inc. (100% owned by
Reitano's estate) and RR Fishing Corp. (50% owned by
Reitano's estate and 50% owned by the appellant). Each
corporation owned a fishing vessel as its sole asset, and the
value of the stock in each corporation was coextensive with
the value of that vessel.
30, 2002 - shortly after Reitano's death - the appellant
transferred the Sophia Gale shares to herself. The appellant
was appointed executrix of Reitano's estate in January of
the following year and, on April 11, she transferred the RR
shares to herself. These share transfers were effected
without consideration and, when the appellant effected them,
she was admittedly aware of Reitano's unpaid tax debts.
in 2003, the Internal Revenue Service (IRS) completed its
assessment of taxes, penalties, and interest owed by
Reitano's estate. That assessment totaled $342, 538.93.
The IRS contacted the appellant about this debt and, in
October of 2003, formally submitted a probate claim.
was paid, and in November of 2006, the IRS again contacted
the appellant. The parties attempted to resolve the matter,
but negotiations stalled: in 2008, the appellant told the IRS
that she would no longer cooperate. The IRS countered by
serving the appellant with a formal notice of potential
liability under the federal priority statute. See 31
U.S.C. § 3713(b).
course, the government repaired to the United States District
Court for the District of Massachusetts and sued
Reitano's estate and the appellant, both individually and
in her capacity as executrix of the estate. Its two-count
complaint sought both to reduce to judgment the estate's
unpaid federal tax liability and to secure judgment against
the appellant, personally, for transferring assets of the
estate to herself without first paying the estate's
federal tax debts.
some preliminary skirmishing (not relevant here), the parties
cross-moved for summary judgment. The district court granted
the government's motion and denied the appellant's
cross- motion. The claim against the estate and against the
appellant as executrix was essentially uncontested: no one
challenged the government's assessment of the amount
owed. The claim against the appellant, in her individual
capacity, was contested. With respect to that claim, the
district court concluded that the appellant was liable up to
the value of the transferred assets.
appellant moved for reconsideration of the award against her
in her individual capacity. The district court summarily
denied that motion and thereafter entered a judgment holding
the estate and the appellant as executrix liable for $351,
218.98, and holding the appellant, individually, liable for
$125, 938. This timely appeal followed. In it, the
appellant challenges only the district court's ...