702 F. App'x 615
9th Cir.
2017

Howard E. May; et al., Petitioners-Appellants, v. Commissioner of Internal Revenue, Respondent-Appellee.

No. 16-71777, No. 16-72186

United States Court of Appeals, Ninth Circuit.

November 16, 2017

616

Submitted November 14, 2017 * San Francisco, California. Leonard L. BEST and Evelyn R. Best, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.

ulent concealment and UCL claims are based on omissions, not affirmative misrepresentations, Appellants contend that they do not need to show that all First American‘s representations “were uniformly made to all members of the proposed class.” See Davis-Miller v. Auto. Club of S. Cal., 201 Cal. App. 4th 106, 125, 134 Cal. Rptr.3d 551 (2011); Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581, 595 (9th Cir. 2012). We disagree.

On appeal, Appellants pursued only one fraudulent concealment theory, arguing that First American‘s marketing materials and contracts were deceptive because First American made partial representations to the class but suppressed some material facts about their warranty plans. See LiMandri v. Judkins, 52 Cal. App. 4th 326, 336, 60 Cal.Rptr.2d 539 (1997) (describing four circumstances of actionable fraudulent concealment under California law). Because Appellant‘s theory of fraudulent concealment tethers the materiality of First American‘s omissions to what First American represented to the putative class, Appellants cannot avoid the requirement, articulated in Mazza v. American Honda Motor Company, 666 F.3d 581 (9th Cir. 2012) and Berger v. Home Depot USA, Inc., 741 F.3d 1061 (9th Cir. 2014), abrogated on other grounds, Microsoft Corp. v. Baker, — U.S. —, 137 S.Ct. 1702, 1715, 198 L.Ed.2d 132 (2017), that all class members have some exposure to the representations. See also Mirkin v. Wasserman, 5 Cal. 4th 1082, 1093 n.4, 23 Cal. Rptr.2d 101, 858 P.2d 568 (1993) (concluding that plaintiffs cannot “through clever pleading” transform “every fraud case based on material misrepresentation ... into a material omissions case“). The district court did not clearly err in concluding that not all putative class members had been exposed to “any representations about First American, much less the alleged misrepresentations.”

To the extent that Appellants could have pursued class certification on alternative concealment theories, see LiMandri, 52 Cal. App. 4th at 336, Appellants forfeited these arguments by not raising them to the district court or in the appellate briefs and at oral argument. Appellants did not seek class certification, for example, under California Insurance Code section 332, which imposes a duty to disclose on an insurer. It is not clear what additional facts, if any, First American would have had to disclose to class members to satisfy section 332, or whether a class under section 332 would be sufficiently uniform and cohesive to merit certification. Neither this alternative theory nor any other is before us.

2. Nor did the district court abuse its discretion in denying Appellants leave to amend to add a claim under California Insurance Code section 12760. The district court denied Appellants’ motion for leave to amend as moot because Appellants sought leave to amend the Third Amended Complaint, when the operative complaint was the Consolidated Complaint. Because Appellants cannot amend a complaint that is no longer valid, the district court did not abuse its discretion in denying the motion.

AFFIRMED.

Donald MacPherson, Attorney, The MacPherson Group, Phoenix, AZ, for Petitioner-Appellant

Bruce R. Ellisen, Randolph Lyons Hutter, Esquire, Attorney, DOJ—U.S. Department of Justice, Tax Division/Appellate Section, Washington, DC, William J. Wilkins, Chief Counsel, Internal Revenue Service, Washington, DC, for Respondent-Appellee

Before: THOMAS, Chief Circuit Judge, PAEZ, Circuit Judge, and SAVAGE,** District Judge.

MEMORANDUM ***

In this consolidated appeal, taxpayers Leonard L. Best, Evelyn R. Best, Howard E. May, the Estate of Judith A. May, and personal representative Marcia M. May (“Taxpayers“) appeal the Tax Court‘s decision upholding proposed levies to collect unpaid federal income tax liabilities and upholding penalties pursuant to 26 U.S.C. § 6673(a)(1). We have jurisdiction pursuant to 26 U.S.C. § 7482(a)(1), and we affirm. Because the parties are familiar with the history of this case, we need not recount it here.

I

The Tax Court did not err in sustaining levies to collect Taxpayers’ delinquent taxes. Taxpayers requested collection due process hearings when IRS notified them that the levies would be imposed. See 26 U.S.C. § 6330(b). During the hearings, the IRS Appeals Office appropriately verified “that the requirements of any applicable law or administrative procedure ha[d] been met.” § 6330(c)(2)(A). Because they already had been afforded an opportunity to contest liability, Taxpayers were not entitled to do so following notification of the levies. § 6330(c)(2)(B). Further, Taxpayers agreed to their underlying liability in both cases. Taxpayers’ arguments against sustaining the levies are unsupported by law or fact.

II

The IRS Appeals Office did not err in producing only Taxpayers’ account transcripts during their collection due process hearings. Under 26 C.F.R. § 301.6203-1, a taxpayer is entitled to “the pertinent parts of the assessment which set forth the name of the taxpayer, the date of assessment, the character of the liability assessed, the taxable period, if applicable, and the amounts assessed.” This regulation is “a permissible interpretation of [26 U.S.C.§] 6203, and we are therefore bound to give it deference.” Koff v. United States, 3 F.3d 1297, 1298 (9th Cir. 1993). When Taxpayers received their account transcripts, they received “the pertinent parts of the assessment.” 26 C.F.R. § 301.6203-1.

Additionally, the taxpayers’ subsequent receipt of the Forms 4340 prior to trial in the Tax Court fulfilled the Commissioner‘s section 6203 obligation to furnish taxpayers with copies of the IRS records of assessment. Form 4340 is sufficient to show that the assessments were proper. Koff, 3 F.3d at 1297.

Nor was the Appeals Office required to provide Taxpayers with a specific, signed delegation order for the Forms 4340. There is no requirement under IRS laws or regulations that the taxpayer receive a copy of the delegation of authority order from the Secretary to the person who signed the verification required under section 6330(c)(1).

III

The Tax Court did not abuse its discretion in imposing penalties under 26 U.S.C. § 6673(a)(1)(B). Taxpayers maintained “frivolous or groundless” positions when they argued that they were entitled to receive particular documents. 26 U.S.C. § 6673(a)(1)(B). Consistent with Koff, 3 F.3d 1297, IRS has reasonably classified these positions as frivolous. See Rev. Rul. 2007-21, 2007-1 C.B. 865; IRS Notice 2010-33, 2010-17 I.R.C. 609. Because § 6673(a)(1)(B) is indifferent to a taxpayer‘s state of mind, Taxpayers cannot escape penalty by advancing a defense of good faith reliance on counsel.

AFFIRMED.

Notes

*
The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2).
**
The Honorable Timothy J. Savage, United States District Judge for the Eastern District of Pennsylvania, sitting by designation.
***
This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.
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