Popovich v. Ind. Dep't of State Revenue
| Decision Date | 24 April 2014 |
| Docket Number | No. 49T10–1010–TA–53.,49T10–1010–TA–53. |
| Citation | 7 N.E.3d 406 |
| Parties | Nick POPOVICH, Petitioner, v. INDIANA DEPARTMENT OF STATE REVENUE, Respondent. |
| Court | Indiana Tax Court |
OPINION TEXT STARTS HERE
James K. Gilday, Gilday & Associates, P.C., Indianapolis, IN, Attorney for Petitioner.
Gregory F. Zoeller, Indiana Attorney General, Thomas D. Cameron, Deputy Attorney General, Indianapolis, In, Attorneys for Respondent.
ORDER ON PETITIONER'S FIRST MOTION TO COMPEL AND RESPONDENT'S MOTION FOR PROTECTIVE ORDER
This matter involves Nick Popovich's first Motion to Compel the Indiana Department of State Revenue to respond to fifty-three (53) of his discovery requests and the Department's Motion for Protective Order that seeks to protect from disclosure the information and documents requested by Popovich.1 The Court grants the parties' motions in part and denies them in part.2
In 2007, the Department audited Popovich for the 2002 through 2004 tax years. ( See Resp't App. Vol. I at 198, 206.) At the conclusion of the audit, the Department issued an investigation summary to Popovich explaining that because Popovich was not a professional gambler, he was not entitled to certain business expense deductions. (Resp't App. Vol. I at 206–15.) Accordingly, the Department issued Proposed Assessments to Popovich for additional income tax, interest, and penalties.3 ( See Resp't App. Vol. I at 231–40.)
Popovich protested the Department's Proposed Assessments. On August 3, 2010, after conducting a hearing, the Department issued a Letter of Findings (LOF) upholding each of the Proposed Assessments. (Resp't App. Vol. I at 196–205.)
On October 4, 2010, Popovich appealed to the Tax Court. On June 3, 2011, Popovich served the Department with his first set of discovery requests, which consisted of 19 requests for admission, 43 separately numbered interrogatories, and 21 separately numbered requests for production. ( See Pet'r Mot. Compel, Ex. A at 5–70.) In response, the Department objected to providing the information sought in 38 of the 43 interrogatories and 15 of the 21 requests for production because it was either protected as confidential information under Indiana Code § 6–8.1–7–1 or protected from disclosure by the work-product, attorney-client, and deliberative process privileges.4 (Pet'r Mot. Compel, Ex. A at 15–70.) In addition, the Department objected to all of these requests as oppressive, ambiguous, and unduly burdensome; compound questions; seeking legal conclusions; or seeking information that was equally available to Popovich from other sources. ( See Pet'r Mot. Compel, Ex. A at 15–70.)
On August 26, 2011, Popovich sent a nine (9) page Deficiency Notice to the Department asserting that its objections were improper and most of its answers were incomplete. ( See Pet'r Mot. Compel, Ex. B.) Popovich asked for a response within ten days and indicated a willingness to meet to discuss the matter as required under Indiana Trial Rule 26(F). ( See Pet'r Mot. Compel, Ex. B at 1, 9.) Four days later, the Department responded that it would supplement its discovery responses at a later date because the “artificially-created ten-day deadline” was unreasonable. ( See Pet'r Mot. Compel, Ex. C.)
On September 9, 2011, Popovich renewed the offer to schedule an informal Trial Rule 26(F) meeting to resolve the discovery disputes. ( See Pet'r Mot. Compel, Ex. D.) In response, the Department indicated that it would supplement its responses by October 21, 2011. ( See Pet'r Mot. Compel, Ex. E; Resp't App. Vol. IV at 963–64.) Popovich agreed to this timing on the conditions that the Department cure all alleged deficiencies and not raise additional objections or counter arguments to the discovery requests without advising Popovich of its intent to do so before the agreed deadline. ( See Pet'r Mot. Compel, Ex. F at 1–2.)
On October 21, 2011, the Department supplemented its discovery responses. All of the Department's supplemental responses provided the following additional language in support of its previously asserted objections:
The [Department] objects to the extent this Interrogatory improperly seeks matters protected by the work-product, attorney client, administrative judicial, or the deliberative process privilege(s). Furthermore, the [Department] objects to the Interrogatory to the extent it improperly seeks to pry into the hearing officer's decisionmaking process, and, therefore, will not lead to the discovery of admissible evidence. To allow such requests would violate the Indiana Supreme Court's adherence “to the general bar against probing the mental processes involved in administrative decisionmakers' deliberations.” See, e.g., Medical Licensing Bd. of Ind. v. Provisor, 669 N.E.2d 406, 409 (Ind.1996) ( citing Marion Co. Sheriff's Merit Bd. v. Peoples Broadcasting Corp., 547 N.E.2d 235, 240 (Ind.1989)). “[I]nquiries into the private motivation or reasoning of administrative decision-makers is a substantial intrusion into the functions of the other branches of the government.” Id. at 410 (Ind.1996) ()[ ]; Baseball, Inc. v. Ind. Dep't of State Revenue, 672 N.E.2d 1368, 1375–76 (Ind.Ct.App.1996); Ind. Trial Rule 26(B)(3).
( See, e.g., Pet'r Mot. Compel, Ex. G at 9–11.)
On November 9, 2011, Popovich sent the Department a twenty-one (21) page letter that outlined the alleged deficiencies in the Department's original and supplemental responses and stated that he was “not seeking to pry into the manner in which [the] hearing officer considered or evaluated any evidence in reaching his or her decision.” ( See Pet'r Mot. Compel, Ex. H at 20.) Popovich's letter also renewed the request for an informal Trial Rule 26(F) meeting and warned that without some resolution, the filing of a motion to compel was imminent. ( See Pet'r Mot. Compel, Ex. H at 21.)
The Department responded the next day, expressing surprise that Popovich still considered its original and supplemental responses deficient because the Department had fully complied with the discovery rules. ( See Pet'r Mot. Compel, Ex. I.) The Department stated its willingness to meet, but not until the week of December 5, 2011, given the holidays and scheduling conflicts. ( See Pet'r Mot. Compel, Ex. I.) Popovich responded the following week, explaining that while still willing to meet, the week of December 5th was too late to forestall his filing of a motion to compel. (Pet'r Mot. Compel, Ex. J.) On November 22, 2011, Popovich filed his first Motion to Compel.
On December 20, 2011, after attending an attorneys' conference with the Court, the Department supplemented its discovery responses. ( See Pet'r Reply Supp. Mot. Compel (hereinafter “Pet'r Reply Mot. Compel”) at 2–3 ¶¶ 7–15, Ex. L at 1–98.) This second set of supplemental responses did not provide any additional requested information or documents, but instead raised new objections, including the assertion that nearly all of Popovich's discovery requests were not relevant. ( See, e.g., Pet'r Reply Mot. Compel, Ex. L at 6–7.) Then, after the parties had another informal meeting, the Department provided a third set of supplemental discovery responses on December 30, 2011. ( See Pet'r Reply Mot. Compel at 3–4 ¶¶ 16–18, Ex. N at 1–7.) This third set of supplemental responses presented no new information or objections. ( See Pet'r Reply Mot. Compel, Ex. N at 1–7.)
On January 5, 2012, the Department filed a Motion for Protective Order for all of the discovery requests that were in dispute. ( See Resp't Mot. Protective Order at 2 ¶ 6.) On March 1, 2012, the Court held a hearing on the parties' Motions. Additional facts will be supplied as necessary.
“Discovery is the process by which the parties to an action ascertain the existence of material facts previously unknown.” Jacob v. Chaplin, 639 N.E.2d 1010, 1012 (Ind.1994) (citation omitted). Indiana's discovery rules are designed to allow a liberal exchange of information essential to litigate all relevant issues and to promote settlement. See Whitaker v. Becker, 960 N.E.2d 111, 115 (Ind.2012); Trost–Steffen v. Steffen, 772 N.E.2d 500, 512 (Ind.Ct.App.2002), trans. denied. Indeed, today's pretrial discovery procedures are intended to “ ‘make a trial less a game of blindman's bluff and more a fair contest with the basic issues and facts disclosed to the fullest practicable extent.’ ” Whitaker, 960 N.E.2d at 115 (citations omitted).
“Discovery is designed to be self-executing with little, if any, supervision of the court.” Trost–Steffen, 772 N.E.2d at 512 (citation omitted). When this process breaks down or is inadequate, however, Indiana's trial rules provide that the parties may request court intervention to compel a party to provide information or protect information from disclosure. Specifically, Indiana Trial Rule 37 states that “[a] party, upon reasonable notice to other parties and all persons affected thereby, may apply for an order compelling discovery[.]” Ind. Trial Rule 37(A). Trial Rule 26(C), which governs protective orders, provides in part:
Upon motion by any party or by the person from whom discovery is sought, and for good cause shown, the court in which the action is pending ... may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense[.]
Trial courts are accorded broad discretion in reviewing discovery enforcement motions. See Vernon v. Kroger Co., 712 N.E.2d 976, 982 (Ind.1999). The Tax Court functions as a trial court in appeals from final determinations of the Department; accordingly, it too is accorded broad discretion in reviewing the discovery enforcement motions at issue. See Hoosier Energy Rural Elec. Coop., Inc. v. Indiana Dep't of State Revenue, 572 N.E.2d 481, 486 (Ind.1991).
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