Vexatious Litigant Can't Take No For An Answer

[The Observer]

MICHAEL F. HENRY,
Plaintiff-Appellant,
v.
UNITED STATES OF AMERICA AND
INTERNAL REVENUE SERVICE,
Defendants-Appellees.

Release Date: JANUARY 14, 2010


NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1

UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
CHICAGO, ILLINOIS 60604

Submitted November 12, 2009
Decided January 14, 2010/*/

Before
John L. Coffey, Circuit Judge
Ann Claire Williams, Circuit Judge
John Danie
l Tinder, Circuit Judge

Appeal from the United States District
Court for the Northern District of Illinois,
Eastern Division.

09 C 2230

Suzanne B. Conlon,
Judge.

ORDER

In April 2009, Michael Henry saw fit to continue his campaign of litigation against the IRS over the income taxes he owes for the 1999 tax year. Since 2002 Henry has filed multiple lawsuits in the Fifth Circuit and Seventh Circuit and continues to litigate his 1999 tax liability in the United States Tax Court. In December 2007, the Northern District of Illinois Executive Committee ("Executive Committee") issued an order that barred him from filing any new civil cases in its district. The trial judge dismissed Henry's complaint because it was in violation of the Executive Committee's order. Henry appeals, and we affirm the action of the Executive Committee.

From December 2006 to October 2007, Henry had filed six pro se civil cases in the Northern District of Illinois dealing with his 1999 tax liability. After receiving an unfavorable ruling in one of these law suits, Henry sent threatening e-mails addressed to the judge presiding over the case as well as a number of other government officials involved in his lawsuit. As a result of these threats, he was convicted of impeding and retaliating against federal officials engaged in their official duty in violation 18 U.S.C. section 115 and sentenced to 16 months' imprisonment. To curb Henry's habit of filing numerous civil cases dealing with the same subject matter (1999 tax liability) and combined with his sending threatening e-mails, the Executive Committee entered an order barring Henry from filing any new civil cases in the district. In re Michael F. Henry, No. 07 CV 7159 (N.D. Ill. Dec. 20, 2007) (unpublished order). As detailed in the order, the filing bar did not affect Henry's pending cases or apply to criminal or postconviction matters. Further, the Executive Committee authorized Henry to seek modification or rescission of the order after nine months. Id. Henry did not challenge the order, and in April 2009, he filed this suit in the Northern District. Once again the suit seeks to challenge and overturn his 1999 tax liability.

On appeal Henry complains that he did not receive notice of the Executive Committee's order and learned of the filing bar only after the court dismissed this suit in May 2009. Furthermore, Henry asserts that the Executive Committee's order is a violation of his Constitutional rights to due process and equal protection.

After review of the record, it is clear that the order was sent by certified mail to Henry's home address and was returned as undeliverable, presumably because Henry was incarcerated at the time. See United States v. Henry, No. 08-CR-19 (E.D. La. July 17, 2008), appeal dismissed, No. 08-30718, 2009 WL 2762364 (5th Cir. Sept. 1, 2009). "A paper is served under this rule by . . . mailing it to the person's last known address -- in which event service is complete upon mailing." Fed. R. Civ. P. 5(b)(2)(C). Furthermore, when Henry did learn about the Executive Committee's order, Henry did not file any papers requesting to reopen the time for filing an appeal. See FED. R. APP. P. 4(a)(6); In re Fischer, 554 F.3d 656, 656-57 (7th Cir. 2009). Rather, he filed a motion to modify the order, and in June 2009, the Executive Committee denied his motion and ordered that the filing bar remain in force for an additional nine months. In re Michael F. Henry, No. 07 CV 7159 (N.D. Ill. Jun. 17, 2009) (unpublished order). Henry did not appeal that decision either. See In re Chapman, 328 F.3d at 904 (holding that a filing restriction is a judicial order and, thus, appealable). Thus, Henry had sufficient opportunity to challenge the Executive Committee's order.

Courts have ample authority to curb abusive and repetitive litigation with the imposition of a number of filing restrictions, so long as the restrictions imposed are narrowly tailored to the nature and type of abuse and do not pose an absolute bar to the courthouse door. See In re Anderson, 511 U.S. 364, 365-66 (1994); Miller v. Donald, 541 F.3d 1091, 1096-98 (11th Cir. 2008); In re Chapman, 328 F.3d 903, 905 (7th Cir. 2003); In re Davis, 878 F.2d 211, 212-213 (7th Cir. 1989). We review filing restrictions under the abuse of discretion standard. Miller, 541 F.3d at 1096. In this case, the Executive Committee issued an order that was narrowly tailored to prevent Henry from continuing to file suits regarding his 1999 tax liability and stop his repetitive abusive conduct in the Northern District. Furthermore, the order is not an absolute bar as it also provides a provision under which the restriction may be lifted. Without this order, it is clear that Henry would continue to file new lawsuits regarding his 1999 tax liability as evidenced by the factual situation presented. "[T]he right of access to the federal courts is not absolute; rather, an individual is only entitled to meaningful access to the courts." In re Chapman, 328 F.3d at 905 (internal citations omitted). Thus, the court properly exercised its discretion in restricting Henry's ability to file and the trial judge correctly applied the order in dismissing this case.

We note that Henry's latest lawsuit repeats claims that he has already litigated and lost in this circuit and the Fifth Circuit. His contention that the IRS has engaged in improper "collection" practices rests entirely on his refusal to accept the fact that he owes back taxes. But as we explained to him when we affirmed the dismissal of an earlier complaint, civil remedies for improper collection activity, see 26 U.S.C. section 7432, 7433, cannot be used to disguise what is fundamentally a dispute about the underlying tax liability. See Henry v. United States, No. 07-3337, 276 Fed. App'x 503 (7th Cir. May 2, 2008); see also Hudson Valley Black Press v. IRS, 409 F.3d 106, 112-13 (2d Cir. 2005); Judicial Watch, Inc. v. Rossotti, 317 F.3d 401, 411 (4th Cir. 2003); Gandy Nursery, Inc. v. United States, 318 F.3d 631, 636 (5th Cir. 2003); Miller v. United States, 66 F.3d 220, 222-23 (9th Cir. 1995). Henry is currently litigating his 1999 tax liability in the Tax Court, which is the only forum which has jurisdiction to review the tax computation. See 26 U.S.C. section 6213(a), 6214; Redeker-Barry v. United States, 476 F.3d 1189, 1190-91 (11th Cir. 2007); Voelker v. Nolen, 365 F.3d 580, 581 (7th Cir. 2004).

Accordingly, we affirm the dismissal of Henry's lawsuit. We also warn him that his pursuit of any additional frivolous appeals may subject him to sanctions in this court as well. See FED. R. APP. P. 38; Szopa v. United States, 460 F.3d 884, 887 (7th Cir. 2006); Szopa v. United States, 453 F.3d 455, 456 (7th Cir. 2006); Ins. Co. of the W. v. County of McHenry, 328 F.3d 926, 929 (7th Cir. 2003).

AFFIRMED.

//*//

After examining the briefs and the record, we have concluded that oral argument is unnecessary. Thus, the appeal is submitted on the briefs and the record. See FED. R. APP. P. 34(a)(2).

[Pottapaug1938]

I wonder what this reetard's original tax bill was and how badly he has f'ed up his life.

Yeah, but think about how warm and fuzzy he feels, knowing that he is a Martyr For The Cause.

[LPC]

I don't think it's fair (or accurate) to describe this guy as a tp.

He was the subject of another thread in which I posted the following:

I did some background research once before on Henry, because he's come up before (not sure why or when).

As near as I can figure, he was brought in to be the CEO of a telecommunications company, and then discovered "cash flow problems," so he was asked to put up $2MM of his own money for $4MM of stock, with a non-recourse promissory note for the unpaid $2MM. It didn't do any good, because the company goes bankrupt and he's out the $2MM.

And somehow during the bankruptcy, he became personally liable for $50MM owed Cisco Systems for some switching circuits.

And then the IRS decided to audit his income tax returns and ignore the $2MM nonrecourse promissory note, giving him $2MM in income when the stock was issued to him. (This position is questionable, but I don't blame the IRS for taking it, because I'm not sure that a company's security interest in its own stock has any legal or economic significance.)

I'm not sure if this guy is dumb or unlucky or both, but he's got reason to be angry with a lot of people, and it seems to have pushed him over the edge.

[The Observer]

Edited title to remove the TP sobriquet.

[LPC]

Edited title to remove the TP sobriquet.

Very appropriate.

[LPC]

There are other threads about Michael Henry, and I'm adding this most recent court decision because (a) it's a civil matter and not a criminal matter, (b) it still relates to his 1999 income tax liability, and (c) he's still vexatious.

As you'll see, the decision below is about an income tax return after 1999, in which he claimed a refund, but the IRS withheld the refund and applied it to his 1999 income tax liability (which is routine). Henry didn't like it, sued, and in his pleadings with the court made what appears to be his usual accusations against opposing counsel, the IRS in general, and others, which the court didn't like and has ordered him to show cause why he shouldn't be sanctioned.

Michael Henry v. United States; No. 2:10-cv-04667 (U.S.D.C. E.D. La. 9/21/2011)

MICHAEL HENRY,
v.
UNITED STATES OF AMERICA,
INTERNAL REVENUE SERVICE

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

SECTION "N"

ORDER AND REASONS

Presently before the Court is the Government's motion seeking dismissal of the instant action (Rec. Doc. 6). In considering the motion, the Court has carefully and repeatedly reviewed Plaintiff's complaint, the parties' submissions relative to this motion, the related motions that Plaintiff has filed seeking sanctions, and the Court's April 12, 2011 Order. See Rec. Docs. 1, 6, 9, 10, 12, 15-18, and 21. Although Plaintiff's submissions are far from clear, and include various nebulous references to IRS levies, liens, and seizures of assets, the gravamen of his complaint is the Government's April 16, 2009 credit (or offset), pursuant to 26 U.S.C. § 6402(a), of the refund awarded Plaintiff, in Civil Action 02-968, against an unpaid tax assessment for tax year 1999.[1] Specifically, Plaintiff contends that the Government did not provide him with the notice required by 26 U.S.C. § 6303. See Complaint (Rec. Doc. 1).

Neither party's submissions clearly identify and/or explain each and every notice document that the Government had provided to Plaintiff, or the date(s) thereof, prior to the April 16, 2009 offset. Significantly, however, the Court of Appeals for the Seventh Circuit recently affirmed the Tax Court's determination that Plaintiff cannot challenge his liability for the unpaid assessment for tax year 1999, that the Government can proceed with collection, and that the offset about which Plaintiff complains is not a levy. See Henry v. Commissioner, Internal Revenue Service, No. 10-2165, 403 Fed. Appx. 105, 2010 WL 5018464 (7th Cir.)(affirming the Tax Court's April 26, 2010 decision in docket number 17055-08 L).[2] Furthermore, as reflected in the opinions of both the Seventh Circuit and the Tax Court, as well as this Court's April 30, 2007 judgment and the Fifth Circuit's May 6, 2008 opinion, Plaintiff clearly was on notice that the IRS sought payment of an additional $3.1 million for tax year 1999, and was acting to protect its interests, for several months, if not longer, in advance of the 2009 offset of the $122,839 refund (plus interest) at issue.

Given the foregoing, it is not apparent to this Court, on the showing made, that it can offer Plaintiff any relief relative to the April 2009 offset. Accordingly, for the reasons stated herein, IT IS ORDERED that the Government's motion is GRANTED to the extent that Plaintiff's claims are DISMISSED pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure.[3] Similarly, to the extent that Plaintiff's opposition memorandum (Rec. Doc. 10) purports to also be a motion for summary judgment, IT IS ORDERED that the motion is DENIED. Further, having carefully considered the parties' submissions, the Court finds that Plaintiff's motions seeking sanctions are without merit. Thus, IT IS FURTHER ORDERED that the motions (Rec. Docs. 9, 16, and 17) are DENIED.

Additionally, this Court has previously advised Plaintiff that it strongly condemns the inappropriate, irrelevant, malicious, and insulting comments regarding Government counsel and others that have been repeated in many of Plaintiff's prior submissions to this Court, and warned Plaintiff against such conduct. See March 29, 2010 Order (No. 02-968, Rec. Doc. 381, p. 4 of 6); June 21, 2010 Order and Reasons, (No. 02-968, Rec. Doc. 395, p. 11 of 11). Nevertheless, Plaintiff, in the memorandum that he submitted in response to the Government's motion, has again used inappropriate, malicious, and insulting language in referring to Government counsel.[4] See Rec. Doc. 10, pp. 8, 10 of 13. Such language likewise is prohibited by Rule 11 of the Federal Rules of Civil Procedure, and cannot be tolerated. Accordingly, IT IS FURTHER ORDERED that, within fifteen (15) days of the entry of this Order and Reasons, Plaintiff must explain, in writing, why a monetary sanction of $1500.00 should not be imposed against him for this conduct.

Lastly, as previously stated in the Court's March 29, 2010 Order (No. 02-968, Rec. Doc. 381, p. 4 of 6), June 21, 2010 Order and Reasons (No. 02-968, Rec. Doc. 395, p. 11 of 11), and April 12, 2011 Order (Rec. Doc. 21), IT IS FINALLY ORDERED that Plaintiff shall not file any additional motions in this action, or otherwise submit a complaint urging relief in this court, without first seeking leave of court to do so and certifying, in writing, that the proposed submission is not repetitive or duplicative and does not contain any inappropriate, irrelevant, malicious, and/or insulting comments. Failure to comply with this order may result in filings being stricken from the record and/or the imposition of significant financial and/or other sanctions, including payment of excess costs, expenses, and any attorney's fees under 28 U.S.C. § 1927.

New Orleans, Louisiana, this 20th day of September 2011.

Kurt D. Engelhardt
United States District Judge

FOOTNOTES

1 The Government uses the term "credit"; Plaintiff uses the term "offset." For simplicity, the Court likewise uses the term "offset."

2 Both decisions are attached as exhibits to the Government's reply memorandum (Rec. Doc. 15-1). The Tax Court's decision states, inter alia, that "the Appeals officer met the requirements of section 6330(c)." See Rec. Doc. 15-1, p. 9 of 9. Plaintiff references that statutory provision in his complaint. See Rec. Doc. 1, p. 3 of 10, ¶ 4.

3 The Court additionally notes the Government's assertion, pursuant to 28 U.S.C. §§ 1346(a)(1), 1402(a)(2), that venue is not proper in this district. See Rec. Doc. 6., at p. 5, n.7.

4 See Rec. Doc. 10, pp. 8 and 10 of 13.

END OF FOOTNOTES

(Bolding and underlining per original.)

[.]

monetary sanction of $1500.00

Same old stuff. Tiny penalties for giant morons who have been repeatedly warned, at great length. It never works.

Not that anything will work, but why fiddle around with peanuts? This is a District Court judge, for cripes sake. A federal judge tells me not to do something, I sure as hell don't do it. If I do it anyway, I'd expect to get stomped on by both federal feet. For good reason.

Start 'em out with a $10K warning if they repeat the behavior. Tell 'em it'll be $25K if they do it again. When they do it, nail 'em for the full amount. It might discourage some moron who is contemplating the same course of action who reads the case.

[Pottapaug1938]

monetary sanction of $1500.00

Same old stuff. Tiny penalties for giant morons who have been repeatedly warned, at great length. It never works.

Not that anything will work, but why fiddle around with peanuts? This is a District Court judge, for cripes sake. A federal judge tells me not to do something, I sure as hell don't do it. If I do it anyway, I'd expect to get stomped on by both federal feet. For good reason.

Start 'em out with a $10K warning if they repeat the behavior. Tell 'em it'll be $25K if they do it again. When they do it, nail 'em for the full amount. It might discourage some moron who is contemplating the same course of action who reads the case.

Amen!

[notorial dissent]

The other thing, that while the penalties, monetarily are serious, that implies / assumes that these bozos actually have a pot to p*** in, and my guess is that most of them don't, so the fine is pointless. What I don't understand is where they keep coming up with the filing fees to get them in to the messes they are in.