UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA,
Plaintiff-Appellee,

v.
                                                                     No. 95-2827
ANCEL LITTLE; CLARA LITTLE; BETTY
ANN LAPPO,
Defendants-Appellants.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Frederic N. Smalkin, District Judge.
(CA-92-2548-S)

Argued: October 28, 1996

Decided: December 23, 1996

Before WILKINSON, Chief Judge, and RUSSELL
and HALL, Circuit Judges.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: W. Michel Pierson, Baltimore, Maryland, for Appellants.
Janet A. Bradley, Tax Division, UNITED STATES DEPARTMENT
OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: Loretta
C. Argrett, Assistant Attorney General, Gary R. Allen, Jonathan S.
Cohen, Lynne Ann Battaglia, United States Attorney, Tax Division,
UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Ancel Little, Clara Little, and Betty Ann Lappo appeal an order of
the district court denying their motion for costs and attorney's fees
under 26 U.S.C. § 7430. Because the district court did not abuse its
discretion in declining to shift fees, we affirm.

I.

Ancel Little was sued three times by the United States for nonpay-
ment of income taxes from 1960 through 1968. The government won
all three times, and judgments were entered in district court on these
dates and in these amounts:

          January 28, 1976        - $4,163.97
          March 31, 1977          - $5,325.40
          January 13, 1978        - $116,761.83

The judgments were not immediately satisfied, apparently because
the government could not find property on which to execute. In 1980,
the government discovered that Little owned real estate in Anne
Arundel County, Maryland, though the land was titled in the names
of Clara Little and Betty Ann Lappo. The government brought an
action to foreclose on this property. A consent judgment was entered
on February 5, 1982, in which the property was declared to be subject
to the liens of the 1976-1978 judgments, but execution of those judg-
ments would be stayed on condition that Little make annual payments
of $50,000 on December 1, 1982 and 1983, and a final lump sum pay-
ment on the same date in 1984.

Little defaulted when he failed to make any payment on December
1, 1982. He did pay $10,000 on May 26, 1983, and another $10,000
in September of that year, but he has never paid another cent.

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The government filed a new suit to foreclose its judgment liens on
the property on September 10, 1992.1 The defendants moved to dis-
miss. According to Fed. R. Civ. P. 69(a), procedure on execution of
judgment follows the local state practice unless a federal statute con-
trols. Under Maryland law, a money judgment expires after twelve
years, unless the judgment holder renews his judgment for another
twelve years. Md. R. Civ. P. 2-625. The government had not renewed
its judgments against Little. Because 14 1/2 years had passed since
even the most recent judgment, the defendants argued that execution
upon them was barred. The government argued that the 1982 consent
judgment was a new judgment into which the 1976-1978 judgments
were merged.

The district court disagreed with the government, citing Maryland
law that a final order in an action to execute on a judgment does not
trigger a new twelve-year period of limitations. Brooks v. Preston,
106 Md. 693, 68 A. 294 (1907). On the other hand, the court noted
that because the parties agreed to stay execution of the 1976-1978
judgments if Little paid in specified installments, the period during
which the stay was in effect should be deleted from the twelve years.
The district court assumed that the stay was in effect from February
5, 1982, through December 1, 1984, when Little was scheduled to pay
the final installment. By deleting two years and ten months from the
calculation, the district court found the action timely as to the 1978
judgment by two months.

Little answered and then moved for summary judgment. The gov-
ernment so moved as well. With the aid of facts outside the pleadings,
Little was able to show the court that the stay did not last as long as
the court had supposed. When Little defaulted -- on December 1,
1982 -- the stay ended by its own terms. Even if Little's May and
September 1983 part payments are taken into account, the stay could
not have lasted long enough (fall 1984) to avoid the limitations bar.

The district court nonetheless found the action timely. A judgment
is considered a "specialty" under Maryland law. Md. Cts. & Jud. Proc.
Code Ann. § 5-102(a). The very next subsection states:
_________________________________________________________________
1 By this time, Little's tax debt, with accumulated interest, had grown
to over a half-million dollars.

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          (b) Suspension of time. -- A payment of principal or
          interest on a specialty suspends the operation of this section
          [the twelve-year limitations period] as to the specialty for
          three years after the date of payment.

The district court reasoned that the twelve-year limitations period had
stopped running for three years after Little's May 1983 payment, and
that therefore the suit was timely. Because Little had no defense on
the merits, the court entered summary judgment directing the sale of
the property in satisfaction of the 1978 judgment.

The defendants moved to alter or amend the judgment. They cited
Allied Funding v. Huemmer, 96 Md.App. 759, 626 A.2d 1055 (1993),
in which the court rejected a construction of § 5-102(b) like the dis-
trict court's:

          In our view, the salutary effect of § 5-102(b) is simply to
          guarantee at least the same three-year period of limitations
          following the part payment of principal or interest on a spe-
          cialty that the law has always provided for the part payment
          of principal or interest on a simple contract. The statute does
          not state that the 12-year statute of limitations on a specialty
          is stopped for three years following such payment and then
          restarted but only that its operation, or application, is sus-
          pended for three years. Therefore, the 12-year statute of lim-
          itations on the specialty continues to run concurrently with
          the grace period. In suspending the operation, or application,
          of the 12-year limitation period for three years after a part
          payment, § 5-102(b) has, therefore, significance only during
          the last three years of the 12-year period. Only during such
          time would its effect be to extend the limitations period.

96 Md.App. at 769.

The district court denied the motion. Because Huemmer is an inter-
mediate court decision, the court stated that it was not necessarily a
controlling interpretation of Maryland law, and the district court's
own reading of § 5-102(b) "appears to be more corroborating" than
the Huemmer court's.

                     4
The defendants appealed to this court, which reversed. United
States v. Little, 52 F.3d 495 (4th Cir. 1995). We held that, although
a district court is not bound by decisions of lower state courts in the
same absolute manner that it is bound by the highest state court, in
the absence of "persuasive data" that the highest court would decide
otherwise, the court should follow the lower court's interpretation.
See West v. American Telephone & Telegraph Co., 311 U.S. 223
(1940). We saw no such data, and we therefore held that Huemmer
controlled. The government advanced several alternative arguments,
which we also rejected.

On remand, after the district court entered summary judgment for
the defendants, they moved for an award of over $12,000 in costs and
attorney's fees under § 7430 of the Internal Revenue Code. The dis-
trict court denied the motion, and Little et al. appeal again.

II.

Section 7430 is very similar to the Equal Access to Justice Act2--
the government "may" be liable for costs and fees if its "position" was
not "substantially justified." The major difference is that the burden
of proof is on the defendant-taxpayer. § 7430(c)(4)(A)(i). Review of
the district court's decision is for abuse of discretion. Bowles v.
United States, 947 F.2d 91, 94 (4th Cir. 1991).

We cannot say that the district court's denial of costs and fees is
an abuse of discretion. The key statutory provision,§ 5-102(b), could
easily be read as the district court read it. As the district court
observed:

        In any event, as precedent too numerous to cite makes
        clear, the mistakenness of the Government's position is not
        to be confused with its unreasonableness. In all litigation
        involving questions of law, there is one right -- and one
        wrong -- position. If the Government just happens to be
        wrong, yet still advances, as here, a reasonable argument,
        the prevailing party is not entitled to fee shifting.
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2 28 U.S.C. § 2412.

                      5
We agree. Moreover, we note that § 7430's permissive language
("the prevailing party may be awarded") recognizes that fee-shifting
is at bottom an exercise in equity. Little does not dispute that he actu-
ally owes the government a great debt, and he can count himself
lucky to have avoided paying it. Under such circumstances, especially
in the absence of bad faith or harassing conduct by the government,
the district court could decline to shift fees. The judgment is affirmed.

AFFIRMED

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