Etter v. Commissioner, Docket No. 22946-87.

• Court: U.S. Tax Court
• Writing for the Court: Parker
• Citation: Etter v. Commissioner, 61 T.C.M. 1772 (T.C. 1991)
• Decision Date: 05 February 1991
• Docket Number: Docket No. 22946-87.
• Parties: James F. Etter and Mary Louise H. Etter v. Commissioner.

61 T.C.M. 1772

T.C. Memo. 1991-43

James F. Etter and Mary Louise H. Etter v. Commissioner.

Docket No. 22946-87.

United States Tax Court.

Filed February 5, 1991.

B.W. Enlow, for the petitioners. Willard N. Timm, Jr., for the respondent.

Supplemental Memorandum Opinion

PARKER, Judge:

This case is before us on petitioners' motion to vacate or revise decision. The issue in the case was whether Solomon Co., petitioner James F. Etter's¹ employer, had granted him stock options pursuant to a qualified or a nonqualified plan. Before petitioner exercised these options, Solomon Co. had merged into Service Merchandise. We held that petitioner had failed to establish that the option was granted under a qualified incentive stock option plan (Etter v. Commissioner [Dec. 46,942(M)], T.C. Memo. 1990-552, filed October 23, 1990). On October 25, 1990, the Court entered its decision for the respondent.

On November 26, 1990, petitioners timely filed a motion pursuant to Rule 162, Tax Court Rules of Practice and Procedure, in which they ask the Court to vacate or revise its decision and grant a new or further trial. As the basis for this motion, petitioners assert that they had "extreme difficulties" in producing documents for trial, and that they were only recently able to obtain the desired information. Petitioners state that "The law firm of Skadden, Arps, Slate, Meaghan (sic) & Flom, counsel to Service Merchandise, graciously consented to search their files and have furnished the materials now offered as exhibits and submitted in support of this motion." Petitioners proffer five documents in support of this motion.

Document 1 is a Form S-3 Registration Statement under the Securities Act of 1933, filed by Service Merchandise with the Securities and Exchange Commission on September 17, 1982. A copy of this document was sent to Roger S. Aaron, Esq., at the law firm of Skadden, Arps, Slate, Meagher & Flom. Document 2 appears to be a letter, dated August 12, 1982, from Skadden, Arps, Slate, Meagher & Flom to Stewart Kresge, attorney, concerning shares for the options to purchase shares of Solomon Co. outstanding at the time of the merger with Service Merchandise. Document 3 is a handwritten document entitled "1980 & Officers Stock Options @ 8/11/82." Document 4 purports to be the stock option plan agreement that was annexed to Mr. Etter's employment contract. Petitioners admit that "read alone" this agreement "sheds no light on the issue of the identity of the Plan to which it refers." Document 5 is entitled "Form of Stock Option under 1980 Stock Option Plan" and is provided only for the sake of comparison. Petitioners do not disclose when they first requested these documents from the law firm of Skadden, Arps, Slate, Meagher & Flom. Petitioners also do not explain why they could not have obtained these documents from that law firm prior to trial.

In Boryan v. United States, 884 F.2d 767, 771 (4th Cir. 1989) [89-2 USTC ¶ 13,814], the Fourth Circuit held:

in order to support a motion for reconsideration, "the movant is obliged to show not only that this evidence was newly discovered or unknown to it until after the hearing, but also that it could not with reasonable diligence have discovered and produced such evidence at the hearing." Evidence that is available to a party prior to entry of judgment, therefore, is not a basis for granting a motion for reconsideration as a matter of law. [Emphasis in original; citations omitted.]

Although Boryan dealt with Rules 59 and 60 of the Federal Rules of Civil Procedure, we have held that cases interpreting these rules are precedents in regard to motions for reconsideration and motions to vacate decisions under Tax Court Rules 161 and 162. Estate of Kraus v. Commissioner [89-1 USTC ¶ 13,808], 875 F.2d 597, 602 (7th Cir. 1989), affg. in part, revg. in part a Memorandum Opinion and Order of this Court [Dec. 44,697(M)]; Pietanza v. Commissioner [Dec. 46,909(M)], T.C. Memo. 1990-524, 60 T.C.M. 948, 949, 90 P-H Memo T.C. par. 90,524 at 2565. See also Selwyn Operating Corp. v. Commissioner [Dec. 3832], 11 B.T.A. 593, 595 (1928) (party requesting reconsideration must "show affirmatively that the failure to ascertain the additional facts prior to the hearing was due to no lack of diligence on his part").

Petitioners have given no explanation as to why, prior to 1990, they were unable to obtain copies of a 1982 public record. Nor have they explained why Skadden, Arps, Slate, Meagher & Flom was only recently able to provide documents that have been in its possession for the last eight years. Petitioners merely note that they were unable to locate the necessary documents prior to trial and that petitioners' original counsel apparently had the same difficulty. Petitioners correctly note that this Court was inclined to impose sanctions for their original counsel's failure to comply with the Court's order to produce documents, but had no occasion to do...