Barnhill v. U.S.
| Decision Date | 23 September 1993 |
| Docket Number | Nos. 92-3556,93-1683,s. 92-3556 |
| Citation | 11 F.3d 1360 |
| Parties | Jerrell E. BARNHILL, Plaintiff-Counterclaim Defendant-Appellee, v. UNITED STATES of America, Defendant-Counterclaimant-Appellant, v. SECURITY PACIFIC BUSINESS CREDIT, INC., Counterclaim Defendant-Appellee. In the Matter of Douglas W. SNOEYENBOS and Stephen T. Lyons, Petitioners, v. Hon. Robert L. MILLER, Jr., United States District Judge for the Northern District of Indiana, Jerrell E. Barnhill, Security Pacific Business Credit, Inc., and United States of America, Respondents. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Edward L. Volk (argued), John F. Lake, Newby, Lewis, Kaminski & Jones, LaPorte, IN, for Jerrell E. Barnhill.
Michael L. Paup (argued), Gary R. Allen, John A. Dudeck, Jr., Dept. of Justice, Tax Div., Appellate Section, Washington, DC, Clifford D. Johnson, Asst. U.S. Atty., South Bend, IN, for U.S.
George E. Herendeen, Allen, Fedder, Herendeen & Kowals, South Bend, IN, for Security Pacific Business Credit, Inc.
Douglas W. Snoeyenbos, pro se.
Stephen T. Lyons, pro se.
Before FLAUM and KANNE, Circuit Judges, and ESCHBACH, Senior Circuit Judge.
Today we examine a tax case gone awry. On the third day of jury trial in this suit between Jerrell Barnhill, Security Pacific Business Credit, Inc. (Security), and the United States (Government), Barnhill and Security made a motion for judgment in their favor on all claims based on alleged misconduct by the Government's trial lawyers. Finding a "remarkable lack of candor" on the Government lawyers' part, the district court granted the motion and entered judgment against the Government. The Government now brings direct appeal. The Government trial attorneys (hereinafter "Petitioners") implicated by the district court separately seek relief and have petitioned this court, pro se, for a writ of mandamus vacating the district court's determinations regarding their conduct. Pursuant to a May 3, 1993, order of this court, we consider these matters together after having heard argument on the direct appeal. We now reverse the district court's judgment for Barnhill and Security and remand No. 92-3556. We deny the petition for mandamus sought in No. 93-1683.
This case began familiarly enough as a taxpayer suit to recover partial payment of a penalty assessed pursuant to Sec. 6672 of the Internal Revenue Code. When Josam Manufacturing Co. (Josam) failed to pay fully withholding taxes due for the second and third quarters of 1985, the Internal Revenue Service (IRS) assessed a 100% penalty against Barnhill, Josam's Vice President of Finance, as a responsible person of Josam who willfully failed to pay over the taxes. After Barnhill made partial payment and filed suit in United States District Court, the Government counterclaimed against him for the unpaid balance of the assessment--about $800,000--plus interest. The Government also filed a counterclaim against Security, Josam's lender, to recover a portion of the unpaid taxes pursuant to I.R.C. Sec. 3505.
Trial began on the morning of Monday, April 6, 1992, before Judge Miller in the South Bend Division of the Northern District of Indiana. However, the chain of events precipitating Judge Miller's decision to grant judgment in favor of Barnhill and Security stretches back to the previous week. Edward Volk, Barnhill's counsel, had sent a subpoena by certified mail to Mark Nolen, an IRS appeals officer from Indianapolis who had had prior dealings with Josam (on matters not at issue in this case). The subpoena directed Nolen to appear at trial in South Bend at 9 a.m. on Monday, April 6. Some time after receiving the subpoena, Nolen called Volk's office to ascertain why he was being summoned. Volk returned Nolen's call, explained that the matter related to Josam, and told Nolen that he was needed to authenticate certain documents that had been authored or received by him. Volk also advised Nolen that he need not appear until Tuesday at 9 a.m.
On Friday, April 3, one of the Government's trial counsel, Douglas Snoeyenbos, telephoned Volk to discuss the subpoena of Nolen. Precisely what was said in this conversation is the subject of some disagreement. Snoeyenbos maintains that he told Volk that Nolen's testimony would be irrelevant and for that reason the Government would likely file a motion to quash the subpoena. Volk asserts that Snoeyenbos also asked him how Nolen had been served and fell silent for several seconds once told that service was effected by certified mail. Snoeyenbos denies that he and Volk ever discussed the method of service or whether it was defective and recounts that they only spoke about the relevance of Nolen's testimony. 1 In any event, following his conversation with Volk, Snoeyenbos called Nolen at home and indicated that he did not yet know if Nolen would need or be allowed to testify and told Nolen that he would let Nolen know on Monday if he should appear at trial on Tuesday morning.
On Monday afternoon, following adjournment of the first day of trial, Snoeyenbos and Lyons returned to their hotel in South Bend and discovered unexpectedly that Nolen had checked into the room adjacent to Snoeyenbos'. That evening the three dined together. Snoeyenbos and Lyons indicated that they would not discuss the case with Nolen, but they did instruct him that he should not appear to testify the next morning because service was defective. On Tuesday morning Nolen left South Bend without speaking to Petitioners and returned to Indianapolis.
Meanwhile, Volk and counsel for Security, George Herendeen, decided to attempt to effectuate personal service on Nolen. Herendeen arranged for a process server to serve Nolen with a subpoena at his home in Indianapolis on Monday evening. When the server arrived at Nolen's house that night, he was told, apparently by Nolen's son, that Nolen was staying at a hotel in South Bend until the following day. By the next morning, this information had been relayed to Herendeen and Volk.
On Tuesday morning, Herendeen telephoned the IRS office in Indianapolis to inquire as to Nolen's whereabouts. 2 Told that Nolen was in South Bend, Herendeen left a message that Nolen should call him lest a U.S. Marshal be sent to insure his presence at trial. When he arrived at his office Tuesday afternoon, Nolen received the message. Concerned, he called the U.S. Attorney's office in South Bend to clarify what he should do. Somewhat later, Snoeyenbos received a written message in court that Nolen had phoned and was concerned that he may be required to appear. 3
At 3:53 p.m. Volk called Nolen to testify (despite knowing that Nolen had not appeared that morning at the court). After it became clear to all that Nolen was not present, a sidebar conference was held. Volk informed the court about the subpoena and the previous week's conversations with Nolen and Snoeyenbos. Volk said that Snoeyenbos had told him that he (Snoeyenbos) would instruct Nolen not to appear and that he would file some sort of motion in that vein. Herendeen then asked Snoeyenbos if he knew where Nolen was. Snoeyenbos said that he did not know, and Lyons shrugged.
After the jury was excused for the day, the court resumed discussion of the matter. Judge Miller opened by asking Snoeyenbos to "[t]ell me what you know." Snoeyenbos began by recounting his version of the Friday conversation with Volk. This exchange followed:
The Court: What do you know about Mr. Nolen's failure to appear? Did you have a conversation with him?
Snoeyenbos: It is my understanding, Judge, that Mr. Nolen received in the mail a subpoena. It is further my understanding that under Rule 45 such subpoenas must be delivered in person.
The Court: Let me go back to my question. Did you advise him that he needn't appear?
Snoeyenbos: Yes, I did, Judge.
Judge Miller then turned to Herendeen for his comments. Herendeen told of his attempt to serve process personally on Nolen the previous evening, acknowledging that he was informed that Nolen was staying in South Bend until Tuesday, and he related his conversation earlier that day with Nolen's office. Herendeen also stated that he thought "effectively the government is hiding a witness."
Volk spoke next, devoting the bulk of his comments to a defense of the propriety of his communication with Nolen (which Snoeyenbos had questioned). He concluded, however, by saying: "I would like the court to inquire to find out whether the representatives of the United States government in this courtroom today know that Mr. Nolen is here in South Bend, and if they know where he is, where he is staying, and if either of them have had any contact with Mr. Nolen since 9:00 o'clock Monday morning when the original subpoena was set for." This colloquy then took place:
The Court: Thank you, Mr. Volk. Mr. Snoeyenbos, back to you.
Snoeyenbos: Well, Judge, if you have any questions I would be happy to answer them.
The Court: Do you know where he is?
Snoeyenbos: No, sir, I do not.
The Court: You looked at the clock before you answered. Do you know where he was this afternoon?
Snoeyenbos: No, I do not. I can guess.
The Court: Well, I'm going to make what at this point will be a strong suggestion, and if all works out perhaps we will have it. It will be the last discussion about it.
I'm going to strongly suggest that the government have Mr. Nolen here tomorrow morning at 9:30.... It may well be that the testimony is cumulative at this point. That is a decision which I have been unable to make because something has happened to Mr. Nolen. The record before me strongly suggests that he may be reachable in South Bend if the right person inquires, that he--Well, I'm going to leave it at that.
I strongly suggest that the government have Mr. Nolen here tomorrow morning in response to the subpoena. If that doesn't develop, I guess we will have to...
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