decided as corrected. second correction: July 30, 1993.
Appeal from the United States District Court for the Northern District of Texas. D.C. DOCKET NUMBER CA3-89-2853-C. JUDGE Sam R. Cummings
Before Reavley and Garwood, Circuit Judges, and Lake*fn1, District Judge.
This is a Taxpayer Bill of Rights case. Information Resources, Inc. sued the United States, claiming that the Internal Revenue Service (IRS) erroneously filed tax liens on its property and failed to timely release those liens. Following a bench trial, the district court awarded Information Resources $1,000. Information Resources appeals, claiming that the district court erred in (1) rejecting its demand for a jury trial, (2) awarding only $1,000 in damages, and (3) failing to award attorney's fees. We affirm.
Information Resources sells computer software. It was delinquent in paying its federal employee withholding taxes for the fourth quarter of 1988. On April 10, 1989, Information Resources received a Notice of Intent to Levy, indicating that the IRS could file a notice of tax lien if Information Resources did not satisfy its tax liability within ten days. On or about April 18, 1989, Information Resources hired a tax expert, David Salinas, to assist in settling this matter with the IRS. On April 20, 1989, David Salinas met with IRS Officer Kriss Brooks. According to Information Resources, Brooks promised that he would not file a notice of federal tax lien or institute an enforced collection action if Information Resources paid the taxes by April 24, 1989. Despite this alleged agreement, Brooks initiated on April 21, 1989 the IRS procedures necessary to file notices of tax lien. On April 24, 1989, Information Resources delivered to Brooks a company check covering the unpaid taxes plus accrued interest and penalties. Brooks accepted the check but did not attempt to prevent the filing of the notices of federal tax liens. On April 25, 1989, the notices of federal tax liens were filed in the Dallas County Clerk's Office and the Texas Secretary of State's Office, pursuant to Brooks's request of April 21, 1989.
After several attempts by Salinas to obtain a release, the IRS finally issued a Certificate of Release of Federal Tax Lien on September 22, 1989. Some time after the issuance of the tax lien, Salinas wrote the district director of the IRS requesting his acknowledgment that the IRS erroneously filed the liens against Information Resources. In October 1989, the IRS sent a letter to Information Resources apologizing for the "erroneous" filing of the liens.
In November 1989, Information Resources brought this lawsuit pursuant to I.R.C. §§ 7432 and 7433, claiming that the IRS erroneously filed liens on its property and failed to timely release those liens. Information Resources asserts that IRS's wrongful conduct caused it to lose a lucrative business deal with Ward Petroleum Company for the sale of a computer software package. According to Information Resources, Ward Petroleum was interested in purchasing a software package until it discovered the federal tax liens. In addition to seeking lost profits, Information Resources seeks to recover the expenses that it incurred in hiring Salinas to negotiate the release of the tax liens.
In January 1991, the district court entered summary judgment in favor of the government on the ground that Information Resources failed to exhaust its administrative remedies. On appeal, this court held that the administrative remedy available under I.R.C. § 7432 was inadequate and that Information Resources had no administrative remedies under I.R.C. § 7433 to exhaust. 950 F.2d 1122.*fn2 This court reversed the district court's summary judgment and remanded the action. Id. at 1128.
On remand, the district court denied Information Resources's demand for a jury trial. At trial, the government defended against both liability and damages. Following the bench trial, the district court determined that the IRS negligently failed to release the liens against Information Resources (§ 7432) and recklessly or intentionally disregarded the IRS regulations concerning the release of the liens (§ 7433). The district court found that Information Resources's failure to obtain Ward Petroleum's business was not due to the filing of the tax liens. Accordingly, the district court did not award Information Resources any damages for lost profits. The district court did, however, award Information Resources $1,000 for expenses incurred in hiring Salinas to negotiate release of the tax liens. Finally, the district court denied Information Resources's request for the attorney's fees that it incurred in pursuing this lawsuit.
Information Resources appeals, arguing that (1) it has a right to a jury trial, (2) the district court erred in awarding only $1,000, and (3) the district court erred in not awarding attorney's fees.
Information Resources brought this action pursuant to I.R.C. §§ 7432 and 7433, which Congress enacted in 1988 as part of the Taxpayers Bill of Rights. Section 7432 provides:
(a) In general.--If any officer or employee of the [IRS] knowingly, or by reason of negligence, fails to release a lien under section 6325 on property of the taxpayer, such taxpayer may bring a civil action for damages against the United States in a district court of the United States.
(b) Damages.--In any action brought under subsection (a), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the sum of--
(1) actual, direct economic damages sustained by the plaintiff which, but for the actions of the defendant, would ...