*1 SHAPIRO; Bernard ESTATE OF Pitchford;
Clyde Steven R. E.
Scow, Plaintiffs-Appellants, America,
UNITED STATES
Defendant-Appellee.
No. 08-17491. Appeals,
United States Court
Ninth Circuit. Dec.
Argued and Submitted 22, 2011.
Filed Feb. *2 individuals, (argued), cohabitating between re- Youngquist John M. San Fran- we cisco, CA, Feurzeig Feurzeig, verse. Donald L. CA, LLP, Chavin, Francisco,
Mark & San appellant.
for the Background I. and Jonathan S. (argued) Barthel Carol Shapiro and and Chenchark met Cohen, Department States of Jus- began shortly dating thereafter. Chenc- Division, DC, tice, Washington, for the Tax They hark moved in Shapiro with appellee. together lived twenty-two next
years, they During but never married. Chenchark relationship, provided homemaking Shapiro, including services to cooking, cleaning, and managing household such as the employees, gardener *, E. Before: ROBERT COWEN A. Shapiro paid and housekeeper. for Chenc- TASHIMA, WALLACE and BARRY G. hark’s living expenses provided and SILVERMAN, Judges. Circuit weekly with a spending allowance. Chenc- hark contributed no financial to the assets SILVERMAN; Opinion by Judge household. Partial and Partial Concurrence Dissent In learning that was Shapiro after Judge TASHIMA. woman,
involved with another OPINION court, sued Shapiro in Nevada state claim- contract, ing implied breach of and express SILVERMAN, Judge: Circuit quantum fiduciary duty, breach of Bernard Shapiro and Cora Jane Chenc- meruit. According com- Chenchark’s twenty-two hark lived together years, plaint, Shapiro agreed pool she and had they but never married. Over those twen- their and to equally resources share ty-two cooked, cleaned, years, Chenchark each others’ assets. and managed their household. When up, broke palimony against Shapiro she filed a suit on February died him in state court. While the suit was while Chenchark’s action pending. was still pending, Shapiro’s he died. In the context of this estate filed an estate tax return $10,602,238 tax Shapiro’s May paid refund lawsuit filed es- 2001 and in estate tate, tax district court held that Chenc- and generation-skipping transfer tax. not, hark’s homemaking services did as a The Estate against continued defend law, claim, matter of provide September sufficient consider- and in Chenchark’s ation a cohabitation jury contract verdict in returned favor of Chenchark, Estate, Shapiro between specifically finding Shapiro and that therefore, an deduction for not Chenchark did enter into ex- value of claim properly press ap- Chenehark’s was contract. implied disallowed. pealed, appeal Because district court’s pending while was holding premised upon claim, was parties misconstruc- settled Chenchark’s tion of regarding along Nevada law contracts lawsuit in she another which * Cowen, designation. The E. Honorable Robert Senior Cir- Circuit, Judge sitting by cuit for the Third will, approximately against Chenchark’s claim did contested § 2053, qualify as a deduction under million. $1 according the district court. settling time after In some June *3 judicially further held that the Estate was claim, an the Estate filed Chenchark’s Shapiro estopped arguing from that among seeking, tax return amended estate agree- employment entered an to deduct million adjustments, $8 other sorts, ment of homemak- with Chenchark’s of the taxable estate under from the value ing services because as 2053(a)(3) for § Chenchark’s 26 U.S.C. position had opposite Estate taken the return, amended claim. Based on the defending against lawsuit. Chenchark’s approximately a refund of Estate claimed The IRS disallowed de- million. $3.5 claim, II. Discussion only
duction for Chenchark’s $361,483 as result of unrelated refunded A. Standard of Review adjustments. “We the district review court’s brought
In the Estate suit August novo, grant summary judgment de seeking ap- court refund of federal whether, viewing determine the evidence proximately According million. to the $2 light in the to the most favorable non- expert an valued complaint, Estate’s party, moving genuine there are issues just at over million Chenchark’s claim $5 fact material and whether the lower court Shapiro’s as of date of death. The correctly applied the relevant substantive complaint in- Estate later amended law.” Fed. v. Trade Comm’n Network relief, seeking clude an additional claim (9th Inc., 1127, 1138 Depot, 617 F.3d Servs. in property for the decrease value refund Cir.2010). by pendens due to notices of lis recorded Shapiro’s properties during on We the district court’s ap review pendency lawsuit. In its judicial plication estoppel for abuse of sought the Estate complaint, amended Fitch discretion. Abercrombie & Co. v. $4,863,480. total refund Creek, (9th Inc., Moose 486 F.3d The and the United filed Estate States .2007). Cir summary judgment. cross-motions court ruled in district favor of B. Consideration “[wjithin States, that, holding facts, determining
uncontested
no evidence exists that
In
the value of the taxable
calculating
contributed
estate for
anything
purposes
Chenchark ever
oth-
love,
owed,
support,
er than
amount of
the tax
management of
estate
code
relationship.
against
household to the
allows a deduction for “claims
... as
provide
These factors do not
estate
are allowable
the laws of
sufficient
support
jurisdiction
which the
contractual
agreement.”
being
The district
went on to is
administered.”
U.S.C.
2053(a).
against
conclude
“because Chenchark did not
In the case of claims
make sufficient contributions to
the estate
on a
that are founded
provide
agreement,
consideration for the
this deduction is limited “to
Shapiro,”
she
extent
received from
there “was no the
were contracted bona
them,
money
and for
[and]
contract between
fide
consider-
was,
she
in the
in ation in
worth.”
sought
Contract Action
Id.
2053(c)(1)(A).
fact,
a gift
Shapiro.”
gift,
from
As a
Here,
Hay
the district court concluded
In
Hay,
100 Nev.
678 P.2d
as a matter of
law
Chenchark’s con
(1984),
the Nevada Supreme Court
twenty-two
tributions
to the
adopted
holding
Marvin’s
and ruled that
Estate —
years
cooking, cleaning,
and other
unmarried
cohabitants
sue to enforce
homemaking services—did not constitute
contracts concerning property rights.
Id.
consideration to
sufficient
allow the Estate
at 674. Even an implied contract to share
against
her claim
to deduct
it. The dis
property, in which
agree-
the terms of the
ruling
did not base its
trict court
on an
conduct,”
ment are
“manifested
rather
2053(c)(l)(A)’s
§of
application
require
words,
than
stated
is enforceable.
Id.
*4
the underlying promise
ment
or The court
right
reaffirmed the
of cohabi-
agreement be contracted
adequate
“for an
tants to contract in Western States Con-
and full
consideration in
or mon
struction,
1059 Homemaking pro- services such as those property to share promise sideration quantified can be by Chenchark vided Nevada law. point a value attached them. Our have Supreme Nevada Although the not of simply that these services are sufficiency has not addressed Court law, value as a matter of as zero homemaking services as consideration believed. apparently district property, to share California contract perform have held that cases say if a This is not to even sup services is homemaking determines that Chenchark’s factfinder See, e.g., a contract. Chiba port such “adequate full supported by claim was Greenwald, 156 67 Cal. Cal.App.4th consideration,” necessarily Estate is (2007) Marvin, 134 (citing Rptr.3d it seeks. entitled 5); n. P.2d at 113 Whor Cal.Rptr. Rather, is a the value of Chenchark’s claim Cal.App.3d Dillingham, 202 ton v. summary judg precludes factual issue that (1988). And Ari Cal.Rptr. (and the claim ment. value of which, law, like Nevada and Califor zona corresponding allowable estate tax deduc *5 nia, of unmarried co recognizes right tion) remains for the district court to de property, to share to contract habitants on remand. her claim termine Whether ade homemaking services constitute (as eventually it was worth million was $1 quate consideration for such a contract. for) or other is for settled some amount 923, Lee, 10, 712 P.2d v. Ariz. Carroll 148 decide. this the district court to Under (1986). if It makes no difference 926-27 claim val precedent, court’s must be “unlike exchanged services.” parties Shapiro’s ued as of the date of death. See Supreme the Nevada Id. at 926. Given C.I.R., F.2d Van Home v. 720 Estate of Hay adoption through Marvin Court’s (9th Cir.1983); 1114, v. Prapstra 1116 Construction, think we States (9th Western States, 680 F.2d 1254 United join would those likely it that Nevada is Cir.1982). reason, For this Chenchark’s holding courts in California and Arizona testimony from this case—as deposition homemaking can be services dissenting colleague our ir quoted by —is property-sharing consideration of her claim. relevant the valuation We agreement cohabitants. between not made statements were Chenchark’s court’s disagree with the district therefore than seven after years until more not, mat that Chenchark did as a holding All that known at Shapiro’s death. was law, provide ter sufficient consideration death was that the time law. a contract under Nevada plausible claim had asserted Nevada law. argues that Chenc- The United States it is claim is not deductible because hark’s Estoppel C. Judicial by “adequate and full con- supported not Es holding In that the money’s worth.” addition sideration any amount for disagree government’s tate could not deduct not with We do 2053(c)(1)(A), lack of a claim claim because of the point Chenchark’s court also held agreement, like the district on a founded claim, only judicial estoppel prohibited “to that deductible Chenchark’s homemak arguing fide that Chenehark’s contracted bona from [it the extent was] provided for the ing services adequate and full consideration and for Shapiro and alleged agreement between worth” —but the district money or equally others’ specific issue. share each never this court reached property. specifically summary district court in the mo- judgment The addressed held: tions. judicial application estoppel The grant We affirm the district court’s appropriate in this case. Estate is The summary judgment on the Estate’s posi- taking barred from inconsistent claim for a refund related the notices tions in accordance with the doctrine of this pendens. Us The Estate abandoned judicial It cannot over-claim estoppel. it in failing opposition claim to raise it. against the value of the suit the United States’ motion for complete it paid value is what for suit settle- summary judgment. See Shakur v. Schri ment, and no more. (9th ro, Cir.2008) (“We 514 F.3d positions defending The Estate’s previously plaintiff have held that a has against not in- Chenchark’s lawsuit were ‘abandoned claims them raising any positions consistent with it took before in opposition to [the defendant’s] motion
the district in this case. See Yanez summary judgment.’”) (quoting Jen States, (9th v. F.2d 326-27 Riverside, Cnty. kins 398 F.3d Cir.1993). consistently The Estate took (9th Cir.2005)). n. 4 position contract claim had in against it, fact been asserted a fact that no Expenses E. Administrative one denies. The within Estate was As claim Estate’s for a refund rights yet-to-be- deduct value of the related to the pendens, notices lis right determined claim without waiving *6 court district did not address the Estate’s validity in contest the of the claim state claim for a deduction of ex- administrative 20.2053-l(b)(3) Reg. § court. Treas. Cf. 2053(a)(l)(i). penses § the Also like (2000) (“An on item be entered the claim, pendens lis the Estate failed return for though deduction its exact raise this issue in opposition to the United known, amount is not then provided it is States’ motion summary judgment. certainty, ascertainable with reasonable the But in States noted its answer- and will paid.”).1 be ing brief that objection it has no a remand to allow the district court ad- D. Lis Notices of Pendens deductibility the dress of administrative In granting the United States’ motion expenses. we Therefore instruct dis- the for summary judgment, the district court trict court to address this issue on remand. did not the address Estate’s claim that it was entitled to a refund a of as result the III. Conclusion reduction in property by value the caused pendens by notices lis reasons, filed the foregoing For we RE- on a Shapiro’s properties. number of But the grant VERSE district court’s of sum- it entered judgment against Estate on mary judgment the on the Estate’s claim that claim, this along the rest the case. it is entitled to deduct the value of Chenc- On appeal, argues claim; the that dis- hark’s summary judg- AFFIRM trict court in granting summary erred on ment the claim for Estate’s a refund judgment on this claim arising because it was not out of the pendens notices lis regulation 1. The Shapi- in effect at regulations changed, the time in requir- that required ro’s death ing Estate value the estate to wait and see about the value death, contested, claim as date unliquidated of the even if there of a claim. See Treas. (d) (as 2009). were uncertainty § about the We Reg. amount. note 20.2053-1 amended in by supported be full consider- Shapiro’s properties on recorded money’s worth.2 ation Chenehark; and REMAND. gov- The estate tax issue this case is on its own costs party shall bear Each Although § 2053. by 26 U.S.C. erned
appeal. majority is correct 26 U.S.C. PART, AFFIRMED IN REVERSED 2053(a) ‘claims a deduction for “allows PART, AND REMANDED. IN are ... as allowable against estate jurisdiction ... under the laws TASHIMA, Judge, concurring Circuit ” administered,’ being the estate is which part dissenting part: 1057, valid claim is Maj. Op. at state law majority’s disposition agree I with the deduction, necessary condition ex- administrative pendens and the Us necessarily not a sufficient one. Sec- but in Parts I concur penses issues. therefore requires also be deduct- tion 2053 majority opinion. See and II.E II.D ible, claims on “founded however, disagree, I at 1060-61. Maj. Op. agreement[ ] be limited the extent majority’s analysis disposition with the contracted for an were appeal, in this primary of the issue claim for feder- of the valuation Chenehark 2053(c)(1)(A).3 26 U.S.C. worth[.]” I re- purposes. al therefore merely requirement This satisfied Part II.B of spectfully dissent from “legally binding a claim because Maj. Op. at 1057- majority opinion.1 See against [an] enforceable estate” Comm’r, state law. 304 U.S. Taft (1938); 891, L.Ed. see 58 S.Ct. majority reverses district Stapf, upon a United States v. 375 U.S. holding premised “was also because (A (1963) 248, 11 regarding 84 S.Ct. L.Ed.2d 195 of Nevada law misconstruction against claim an estate cohabiting individu- deduction contracts between case, solely on the Maj. Op. predicated how- not be at 1056. This “should als....” *7 legally that a ever, finding of con- or claim is does not turn on issues state law, law, governing tax and the the state laws but on federal enforceable under tract wills.”). validity of We of ma- the contracts genuine has raised no issue Estate “the gone it the have so far as to state that fact as to whether has met terial according pro- legal of the relevant estate tax existence requirement ” i.e., vision, underlying purposes local law is that the claim to immaterial See, v. grounds. e.g., Crowe 1. I the court’s on alternate Because would affirm district 406, (9th claim under County Diego, the Chenehark 432 disallowance San 608 F.3d 2053, unnecessary § it to Cir.2010). U.S.C. I find 26 issue, judicial in estoppel discussed reach the Maj. Op. Part II.C. See at 1059-60. 2053, § claim be deductible under the 3. To "con- supporting must also be the deduction supposed 2. district court’s misconstruc- The U.S.C. tracted bona fide.” 26 In the of Nevada law is also immaterial. tion case, 2053(c)(1)(A). § from the In this aside context, summary judgment de our review is question of whether Chenchark’s consider- "may and we affirm the district court's novo supported would ation have contract any ground [grant summary judgment on of] (to nothing say Nevada Law of a by Jet supported the record.” Hawn v. Exec. 2053), by § clear that it is no means Inc., (9th Cir. Mgmt., F.3d 1155 615 it. a contract there was fact to 2010). assuming the Accordingly, even however, need, issue no reach this There is mistaken its construction district was law, the discussed herein. we are to affirm reasons of Nevada contract free 1062 Comm’r, tax. v. 148 who are the natural objects
the estate Giannini sons one’s Cir.1945) (9th bounty.” (emphasis Id. F.2d added).4 Thus, as we have held in previously the 2053: context deductions under requirement statute’s that deduc- promises agreements exceptional on or be Under circumstances it tions based by a claim by be that someone who supported full consideration might otherwise inherit the from dece- protect worth is based on a need to the limitation, dent should be deductible under section tax. this estate Without there simply 2053. If claim is sub- “prevent be nothing would testators terfuge legacy, for a nondeductible from estates depleting their transform- if is supported ‘adequate claim objects natural of their ing bequests ’ the consideration bounty Leopold into deductible claims.” v. if a non-zero which augmented is sum States, (9th 510 F.2d Cir. estate, decedent’s then it would seem 1975). any Accordingly, contract between be deduction should allowed. decedent someone who would be a particular or not a claim Whether object bounty natural of his deductible, then, depend will on the facts with suspicion, requiring exception- viewed in each case. al circumstances to be treated as some- added) thing “simply than an agreement (emphasis other at (ellipsis Id. 623-24 testamentary disposition per- original) make a (quoting Hartshorne v. ty relationships It is neither unusual nor unreasonable within their domestic because diverge tax federal law to from state contract recognize a failure estate of the tax to regard, law this because two bodies of claims; property deduction for their fair col- very protecting law are concerned with differ- hampered by lection of the tax estate is not Although pro- ent state interests. law often recognition that unmarried individuals protections vides for unmarried individuals legal protection need of the economic ar- contract, partners through from their it does rangements made within their domestic rela- protect so in order reliance interests of tionships. expected long-standing individuals who their Further, rightly wrongly, policy as a relationships prop- would last and held their Congress choice of bestows See, erty with in accordance this reliance. special couples status on married that it does e.g., Michoff, W. States Constr. Nev. See, ("[T]his couples. e.g., not bestow on unmarried (1992) 840 P.2d 2032A(e)(2) ("The protect expecta- court must 26 U.S.C. the reasonable term 'member respect means, tions of unmarried cohabitants family’ with respect of the concerning property to transactions individual, their only (A) an ancestor such indi- — *8 tax, contrast, rights.”). by The estate de- is vidual, (B) individual, (C) spouse the of such a See, signed prevent e.g., tax avoidance. individual, lineal descendant of such of such States, 1012, N.Y. Bank v. United 526 F.2d of spouse, parent individual’s or of a of such (3d Cir.1975) (denying a 1018 deduction un- individual, (D) spouse any or the of lineal § der 2053 that be enforceable under (C).”); subparagraph descendant described in require- state law because it not did meet the 2043(b) (providing § relinquishments that of law, of even ments federal where was there rights marital are not consideration "in mon- suspect no reason to that the intent of a money’s ey except purposes or of worth” per- transaction “was establish a situation 2516, requirements § § 2053 where which taxes, mitting the evasion of estate [because] governs agreements, written certain divorce type to sanction a in a this case met); 2056(a) ("[T]he § are value of the tax- avoidance”). encourage could tax estate ... be able shall determined deduct- specifically, More is not it unreasonable to ing gross from the value of the estate an have different the rules in different contexts equal any amount to the value of interest in presented by the facts this case. Co- property passes habiting partners passed which or protec- not has from the would lose their inequitable proper- surviving spouse....”). tion from an allocation of decedent to his
1063
Hartshorne),
(In
money money’s
to a value in
or
402 reducible
re Estate
Comm’r
worth,
affection, promise
(2d Cir.1968)).5
love and
as
2n.
594-95
F.2d
etc.,
wholly
marriage,
disregarded,
is
be
Chenchark,
roman
Shapiro’s long-term
as
trans
property
and the entire value of the
Shapiro’s
object of
is a natural
partner,
tic
the
gift.”);
ferred constitutes
amount
the
in his will.6
provided for
bounty, who was
(“Nor
301.6323(h)-l(a)(3)
§
26 C.F.R.
that her claim was
testified
affection, promise of
or
marriage,
love and
“if
any
Shapiro’s
on
based
not
a
other consideration
reducible to
him
would be tak
thing happened
[she]
money
money
in
or
value
consideration
Accordingly, the test set
care of.”
en
worth.”);
money’s
also Harris
see
applies
here.
Leopold
forth
107-08,
Comm’r,
U.S.
71
340
S.Ct.
from the
text
As
clear
(“The
(1950)
181,
While some of the authori- above-cited Scow, and Steven R. of the one co-execu- appear suggest ties where the Estate, tors of the testified that there was provided motivation for services was love agreement Shapiro no between affection, Chenc- the entire value of the ser- pool hark to their assets. vices are for tax purposes discounted even monetary value, had there is no if Thus, the Estate genu- has raised a reason to decide that issue in this case. ine issue material fact to support its assuming Even that anything Chenchark contention that Chenchark’s claim against provided Shapiro out of love affec- Estate, assuming arguendo that it was tion support would full its fide,9 contracted bona was supported value, dollar presented the Estate has no money’s worth for the genuine evidence that here would create purpose federal tax law. I Accordingly, issue of material fact that Chenchark en- affirm would the district court on this is- hanced the value of the Estate in sue. Although worth. there is evidence that Chenchark supervised Shapiro’s household reasons, For I foregoing dissent staff, maid, including gardener, and a majority’s from the reversal of the district man, pool cooked, cleaned, and that she grant summary court’s judgment to the provided support Shapi- emotional government on the Chenchark claim. ro,8 presented no that evidence these services have a cash value what
that cash value would be.
Further, the Estate did not controvert
the government’s statement summary motion for judgment that
“[djuring the entire time Chenchark lived Shapiro, she ... never contributed
any money or other assets material
value to relationship.” Perhaps more
importantly, the Estate itself represented gave monetary nothing
value to relationship. It represented note, however, I stated supra. 9. See footnote *10 deposition that "I didn't in the work home. I had a maid.”