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United States v. Today.Com Inc.

United States District Court, D. Arizona

February 24, 2016

United States of America, Plaintiff,
v. Incorporated, et al., Defendants.



Plaintiff United States of America moves for summary judgment against Defendant Nathan Gwilliam’s counterclaims for breach of contract and unjust enrichment. Doc. 52. The motion has been fully briefed (Docs. 60, 61) and no party has requested oral argument. The Court will grant the government’s motion.

I. Background.

Nathan Gwilliam acted as President, CEO and Chairman of the Board of Directors of from the time it was formed in February 1998. Doc. 13 at 3. In September 2011, the government filed a complaint against Gwilliam in the District of Utah alleging that he was liable for federal income and FICA taxes that failed to pay. Doc. 14-2. The only federal tax assessment at issue in the Utah case was made under 26 U.S.C. § 6672. Doc. 61, ¶ 2. The Utah court granted Gwilliam’s motion to dismiss based on the statute of limitations set forth in 26 U.S.C. § 6502(a). Doc. 60 at 2. The court awarded Gwilliam $10, 086 in attorneys’ fees and $315 in costs and expenses (Doc. 52-1), and the government appealed the dismissal to the Tenth Circuit.

On August 23, 2012, while the appeal was pending, Gwilliam’s lawyer made a settlement offer to the government. The offer stated, in relevant part: “As settlement of this matter, my client offers to waive his attorney’s fees in exchange for dismissal of the appeal.” Doc. 55-1. The government responded to the offer on August 24, 2012, stating: “We interpret your offer to be as follows: in exchange for the Government dismissing its appeal, your client will waive the judgment for attorneys’ fees he obtained from the District Court. If accepted, your offer will result in the filing of a dismissal of this appeal with prejudice.” Doc. 55-3. On August 31, 2012, the government accepted Gwilliam’s offer and the appeal was dismissed. Doc. 55-5.

In January 2015, the government filed this case. The First Amended Complaint alleges that failed to pay-over to the IRS federal employment taxes it had withheld from employees during the quarters ending December 31, 1998, March 31, 1999, and June 30, 1999, and also failed to pay the employer’s share of FICA taxes for these same quarters. Doc. 13, ¶ 51. also allegedly failed to pay federal unemployment taxes for the year ending December 31, 1998. Count one is asserted solely against and seeks a judgment for tax liabilities and penalties totaling $288, 149.48. Id. Count two alleges that sale of certain of’s assets to Gwilliam and his father constituted a fraudulent transfer, and seeks to avoid the transfer or attach other assets of Gwilliam. Id., ¶ 71. Count three alleges that the sale violated the trust fund doctrine, and seeks to hold Gwilliam liable. Id., ¶ 75. Count four alleges that Gwilliam has successor liability for the tax obligations of Id., ¶¶ 80-81. None of the claims is based on 26 U.S.C. § 6672 - the statute at issue in the Utah case.

Gwilliam argues that even though the present matter has a separate legal basis, the factual basis is the same because the government seeks to hold him personally liable for’s tax obligations. Doc. 60. He claims that his personal liability for’s tax obligations “was the subject of the settlement agreement in 2012, ” and that the government has breached the agreement by bringing this action. Id. at 4. Gwilliam also claims that the government has been unjustly enriched by the settlement agreement. Doc. 37 at 15.

II. Legal Standard.

A party seeking summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving party, shows “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Summary judgment is also appropriate “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322. Only disputes over facts that might affect the outcome of the suit will preclude the entry of summary judgment - the disputed evidence must be “such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

III. Analysis.

A. Breach of Contract.

Courts construe settlement agreements as contracts. Miller v. Fairchild Indus., Inc., 797 F.2d 727, 733 (9th Cir. 1986). When the United States is a party to a contract, “[f]ederal law controls the interpretation of [the] contract.” Klamath Water Users Protective Ass’n v. Patterson, 204 F.3d 1206, 1210 (9th Cir. 1999). Courts “will not look to extrinsic evidence to determine the[] meaning” of contractual terms when the terms “on their face have a clear and unambiguous meaning.” United States v. Clark, 218 F.3d 1092, 1095 (9th Cir. 2000).

The government correctly asserts that the language of the offer and acceptance letters is unambiguous. Gwilliam offered a straightforward quid pro quo - he would waive the judgment of attorneys’ fees in exchange for the government’s dismissal of its appeal. The offer did not discuss any other tax liabilities of Gwilliam or

The agreement was limited to the Utah case. As the government argues, Gwilliam could have addressed future exposure to tax liabilities by adding ...

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