Berkery v. Comm'r of Internal Revenue

• Decision Date: 16 February 1988
• Docket Number: 22182-82.,Docket Nos. 13900-82
• Citation: 90 T.C. No. 20,56 USLW 2480,90 T.C. 259
• Parties: JOHN BERKERY, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
• Court: U.S. Tax Court

56 USLW 2480

90 T.C. 259

90 T.C. No. 20

JOHN BERKERY, Petitioner

v.COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket Nos. 13900-82

22182-82.

United States Tax Court

Filed February 16, 1988.

Petitioner was indicted for violating Federal drug laws. Petitioner was not arrested upon being indicted because he was a fugitive from justice. Petitioner presently remains a fugitive from justice. HELD, petitioner's residence for purposes of section 7482(b) was in Philadelphia, Pennsylvania, at the time the petitions in these cases were filed. Brewin v. Commissione r, 72 T.C. 1055, 1059 (1979), revd. and remanded on other issue 6 39 F.2d 805 (D.C. Cir. 1981). HELD FURTHER, these cases are dismissed because petitioner is a fugitive from justice. Molinaro v. New Jersey, 396 U.S. 365 (1970) (per curiam). Ronald F. Kidd, Thomas W. Ostrander, and Mark E. Cedrone, for the petitioner.

Ina S. Weiner and Lynn L. Casimir, for the respondent.

WELLS, JUDGE:

For the taxable year 1980, respondent determined a deficiency in petitioner's Federal income tax in the amount of $364,237.29 and an addition to tax under section 6653(a) ¹ in the amount of $18,211.85. For the taxable year 1981, respondent determined a deficiency in petitioner's Federal income tax in the amount of $209,606.00, an addition to tax under section 6651(a)(1) in the amount of $20,961.00, and an addition to tax under section 6653(a)(1) in the amount of $10,480.00. ²

The issue presented for our decision are as follows:

(1) Whether petitioner's legal residence for purposes of section 7482(b) was located in Philadelphia, Pennsylvania at the time the petitions in these cases were filed;

(2) Whether these cases should be dismissed because petitioner is a fugitive from justice;

(3) Whether respondent violated grand jury secrecy rules, and if so, whether the violation causes certain evidence relied upon by respondent to be excluded and the burden of going forward in these cases on the issues concerning deficiencies in Federal income taxes to shift to respondent; and

(4) Whether petitioner failed to report taxable income for taxable years 1980 and 1981 from alleged transactions in violation of Federal drug laws, and is liable for the aforementioned deficiencies in and additions to Federal income taxes.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found. The stipulations and exhibits attached to the stipulations are incorporated herein by reference.

Petitioner claimed a legal residence in Philadelphia, Pennsylvania, at the time he filed his petitions with this Court.

On January 13, 1982, petitioner was indicted for violating Federal drug laws. Petitioner was not arrested upon being indicted because he was a fugitive from justice at such time. Petitioner presently remains a fugitive from justice. ³

Petitioner wishes to pick and choose which of the benefits and burdens of United States legal system apply to him. Petitioner's contemptuous behavior toward the Federal courts, however, disentitles him to call upon the resources of this Court in the instant cases. Molinaro v. New Jersey, 396 U.S. at 366. We deem that behavior sufficient cause to exercise our discretion to dismiss these cases. Rules 123(b), 123(d). Thus, we will enter a decision for respondent for the full amount of the deficiencies in and additions to Federal income taxes determined by respondent. If, however, within thirty days after this written opinion has been served, petitioner submits himself to the jurisdiction of the Federal courts for purposes of a trial on the charges for which he has been indicted and files a motion with this Court to vacate these cases, we will consider his cases on the merits of the other issues he has advanced. In view of our dismissal of petitioner's cases, we need not now expend our resources any further to consider those issues.

To reflect the foregoing,

Decision will be entered for the respondent.

Reviewed by the Court.

STERRETT, NIMS, KORNER, HAMBLEN, CLAPP, SWIFT, JACOBS, GERBER, WRIGHT, PARR, WWIIIAMS, and WHALEN, JJ., agree with this majority opinion.

SHIELDS, J., dissents.

RUWE, J., did not participate in the consideration of this case.

CONCURRENCE OF JUDGE HAMBLEN

HAMBLEN, J., CONCURRING:

I agree with the majority, but Judge Whitaker raises important issues in his dissent which impel me to respond. For the reasons set forth below, I believe that the majority properly assumes that we have the power to dismiss these cases due to the petitioner's fugitive status, and that the power was properly applied.

POWER OF THE COURT

Section 7453 provides, in relevant part, that ‘the proceedings of the Tax Court and its divisions shall be conducted in accordance with such rules of practice and procedure * * * as the Tax Court may prescribe * * *.‘ Rule 123(b), promulgated pursuant to section 7453, provides, ‘For failure of a petitioner properly to prosecute or to comply with these Rules or any order of the Court OR FOR OTHER CAUSE WHICH THE COURT DEEMS SUFFICIENT, the Court may dismiss a case at any time and enter a decision against the petitioner.‘

In the instant cases, the majority simply has interpreted the language contained in Rule 123(b), ‘or for other cause which the Court deems sufficient, ‘ to allow the Court to dismiss a case due to a taxpayer's status as a fugitive from justice. The majority's use of Rule 123(b) is based upon a long line of civil cases in which Molinaro v. New Jersey, 396 U.S. 365 (1970) (per curiam) was applied by various Federal courts.

Nevertheless, the dissent states, ‘The majority's action is not predicated upon express statutory authority,‘ and ‘If we have the power to deny petitioner access to our court, we must support that action upon our inherent powers as do Article III courts.‘ I do not think the Court must rely upon inherent powers to dismiss the instant cases. See Braley v. Campbell, 832 F.2d 1504, 1510 (10th Cir. 1987) (‘Because we have specific statutes and rules that authorize the imposition of monetary sanctions on attorneys, we need not explore the entire parameters of the courts' inherent power to impose sanctions.‘). ¹ Instead, the majority's action in these cases is authorized by our rules of court, promulgated pursuant to the statutory delegation of power by Congress. The Federal courts that have based their application of Molinaro on inherent powers apparently were required to do so because there was not a rule of court that was broad enough to support the courts' application of Molinaro. See, e.g., Ali v. Sims, 788 F.2d 954, 959 (3d Cir. 1986) (‘At all events, the principles of Molinaro intersect with the principles underlying Fed.R.Civ.P. 37 & 41, which render a party's misconduct a basis for the dismissal of his case. ‘). ²

Furthermore, the dissent's reliance upon Eash v. Riggins Trucking Inc., 757 F.2d 557 (3d Cir. 1985) (en banc), for the proposition that we do not have the power to dismiss the instant cases, appears misplaced.

In Eash, the Court of Appeals for the Third Circuit decided that a district court had the authority to order an attorney to pay the government the cost of impaneling a jury as a sanction for the attorney's abuse of the judicial process. The court in Eash set forth an analysis of the historical use of the term ‘inherent power,‘ stating that the term had been used in three general fashions. Eash v. Riggins Trucking Inc. v. Commissioner, 757 F.2d at 560-564. The first use of that term was referred to by the court as ‘irreducible inherent authority,‘ and the second use of that term was referred to by the court as those ‘powers 'necessary to the exercise of all others.’ ‘ 757 F.2d 562. The third use of the term ‘inherent power‘ was referred to as powers necessary only in the practical sense of being useful.‘ 757 F.2d 563. The discussion in Eash of the three uses of the term ‘inherent power‘ apparently was set forth to identify the various sources of inherent power and to analyze the ability of Congress to affect the courts' inherent power through legislation.

After summarizing a portion of Eash, the dissent suggests that the power is within the third category of inherent power set forth in Eash. The dissent then states, ‘The inherent powers recognized in our rules and by our actions are only those which enable the Tax Court to operate — THOSE WHICH ARISE OUT OF NECESSITY AND ARE ESSENTIAL TO PERFORMANCE OF OUR STATUTORY RESPONSIBILITIES. ‘ (Emphasis supplied.) The quoted sentence from the dissent appears to suggest that our rules and decisions do not indicate specifically that we have any powers that are within the third category. To the contrary, our rules set forth specific powers that fall within the third category. For example, our rules allow us to order the payment of counsel fees in specific situations. Rules 33(b), 70(e)(2), 81(g)(2), 90(d)(2), 104(c)(4), 121(f). ³ The power to award attorney's fees is given as an example by the court in Eash of powers falling within the third category. Eash v. Riggins Trucking Inc., 757 F.2d at 563, citing Alyeska Pipeline Service v. Wilderness Society, 421 U.S. 240, 259 (1975).

I also take issue with the dissent's assertion that the majority's action in these cases is not taken for the purpose of protecting our process from abuse. Petitioner's attempt to litigate the cases at bar while he remains a fugitive from justice is offensive. Allowing petitioner to litigate in this court at HIS discretion would undermine the dignity of this Court and the Federal judicial system as a whole, and would therefore undermine the position of respect occupied by both this Court and the judicial system. Thus, dismissal of the instant cases does protect our process from abuse. Moreover, to the extent Article III courts apply Molinaro to encourage a fugitive to submit to the jurisdiction of the judicial system in a criminal case or otherwise enforce a court's jurisdiction in a criminal case, we would frustrate the policy underlying the action taken by...