US v. Hodgekins

• Decision Date: 11 August 1992
• Docket Number: Cause No. S91-530M.
• Citation: 805 F. Supp. 653
• Parties: UNITED STATES of America, Plaintiff, v. Barry J. HODGEKINS, Defendant.
• Court: U.S. District Court — Northern District of Indiana

805 F. Supp. 653

UNITED STATES of America, Plaintiff, v. Barry J. HODGEKINS, Defendant.

Cause No. S91-530M.

United States District Court, N.D. Indiana, South Bend Division.

August 11, 1992.

COPYRIGHT MATERIAL OMITTED

Clifford D. Johnson, Asst. U.S. Atty., South Bend, Ind., Peter Sklarew, Douglas W. Snoeyenbos, Trial Atty., Tax Div., U.S. Dept. of Justice, Washington, D.C., for plaintiff.

Stephen A. Seall, Gerald F. Lutkus, Barnes & Thornburg, South Bend, Ind., for defendant.

MEMORANDUM AND ORDER

MILLER, District Judge.

In the second and third quarters of 1985 Josam Manufacturing, Inc. ("Josam") failed to pay all the taxes deducted from its employees' payroll. The United States brought this action against Barry J. Hodgekins pursuant to 26 U.S.C. § 6672, seeking $793,162.96 for Josam's tax liability. Mr. Hodgekins now seeks summary judgment, claiming that the statute of limitations in 26 U.S.C. § 6501(a) bars this action. Mr. Hodgekins also seeks summary adjudication of summary judgment motion because the government's response brief was not timely filed, and an order striking the untimely brief. Finally, the government moves for leave to file a rebuttal brief in opposition to summary judgment or, in the alternative, for an order striking portions of Mr. Hodgekins' reply brief.

I.

Before addressing the merits of the summary judgment motion, the court turns to the motion for summary adjudication and the motion to strike.

A.

Following the April 20 telephonic pretrial conference, the court set forth a briefing schedule embodied in the Memorandum of Status Conference and Scheduling Order:

Following discussion, the court directed that the defendant's summary judgment motion based on waiver and statute of limitations be filed by May 13, 1992, with the plaintiff's response being due by June 8, 1992, and any reply being due seven days thereafter. A telephonic hearing on that motion was scheduled for July 16, 1992 at 9:00 a.m. (E.S.T.), with the court to establish the call.

Counsel who briefed the pending motions represented the parties at the hearing.

Mr. Hodgekins' summary judgment motion was filed on May 13. On June 9, after ascertaining that the government had not filed a response on June 8, Mr. Hodgekins moved for summary adjudication of the motion for summary judgment pursuant to Fed.R.Civ.P. 56(e) and District Rules 9(a) and 11. The government's response arrived and was filed on June 10, and Mr. Hodgekins moved to strike the response as untimely.

A party moving for summary judgment is entitled to summary judgment when the movant demonstrates that no genuine issue of fact exists and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. Once the movant makes such a showing, the burden shifts to the opposing party to demonstrate the existence of a genuine issue. Lujan v. National Wildlife Federation, 497 U.S. 871, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990); Sims v. Mulcahy, 902 F.2d 524, 540 (7th Cir.), cert. denied, ___ U.S. ___, 111 S.Ct. 249, 112 L.Ed.2d 207 (1990). If the opposing party fails to do so, the court should enter summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Fitzpatrick v. Catholic Bishop of Chicago, 916 F.2d 1254, 1256 (7th Cir.1990). Under this standard, Mr. Hodgekins claims that he has demonstrated the absence of a genuine issue, and the government has failed to come forward with evidence that any facts are in actual dispute.

Under District Rule 9(a):

Failure to file an answer brief or reply brief within the time prescribed shall be deemed a waiver of the right to make such filing and shall subject the motion to summary ruling.

District Rule 11 provides that:

This Court will presume that the facts as claimed by the moving party are admitted to exist without controversy, except as and to the extent that such facts are actually in good faith controverted in the "statement of genuine issues" filed in opposition to the motion....

Mr. Hodgekins asks the court to apply these rules and determine the summary judgment motion without reference to the government's response.

The government's counsel states that it was his understanding that the court's use of the term "due" meant that he was allowed to serve his response by mail on June 8. He contends that his response was timely, and, alternatively, that his untimely response resulted from a good faith misinterpretation of the court's memorandum and constituted "excusable neglect" within the meaning of Fed.R.Civ.P. 6(b)(2) ("the court for cause shown may at any time in its discretion ... (2) upon motion made after the expiration of the specified period permit the act to be done where the failure to act was the result of excusable neglect"). The government's counsel further states that he recalls advising the court during the April 20 status conference that he would need to work on the response during the weekend falling on June 6 and 7, and that he believed the court understood that he would not be mailing the motion until June 8. The government's counsel is apparently mistaken, however, for the court reporter's notes reveal no exchange of this nature.

The government claims that under Fed. R.Civ.P. 5(d), in absence of an order for filing by a date certain, compliance with deadlines is measured by service of papers. Rule 5(d) provides that "all papers after the complaint required to be served upon a party, together with a certificate of service, shall be filed with the court within a reasonable time after service...."

It appears plausible that the government's counsel could have been confused by the wording of the memorandum, although the court interprets "due" to mean that the response should have been filed with the court on the date due. The government did not ignore its obligation to respond, however, and striking a response mailed, but not filed, on the date is a heavy-handed remedy. Accordingly, the court declines to strike the government's response. In the future, any order stating that a paper is "due" by a date certain means that the paper must be filed with the clerk's office by the close of business on that date.

B.

The government seeks leave to file a rebuttal brief on the following grounds: (1) the reply and affidavits raise new arguments that the government could not have anticipated; (2) the reply goes beyond the scope of the government's response; (3) the reply cites cases the government has not had an opportunity to address; (4) the discussion of the cases cited in the reply is misleading, one case is cited for a proposition it does not support, and one case cited is not on point; (5) the reply mischaracterizes the government's arguments; (6) the reply falsely asserts that the government made certain admissions and supports this assertion with selective quotations from the response; and (7) the reply suggests impropriety by the government's counsel.

The court believes that it can ascertain from a reading of the initial, response, and reply briefs those cases which support the parties' arguments without further enlightenment from the government's rebuttal brief. The court also finds it unnecessary to look to a rebuttal to determine whether the government has made admissions in its response and whether the reply raises new arguments.

Judicial economy requires that the briefing on this motion stop at some point. Both parties have had an adequate opportunity to make their arguments, and the court will not entertain further briefing. In addition, the court will not strike any portions of the reply brief.

II.

Mr. Hodgekins seeks summary judgment in his favor, claiming that the statute of limitations bars this action. Mr. Hodgekins began working for Josam in August 1984, and was assigned to supervise the transfer of Josam's productions facilities. He owns no Josam stock and claims to have no responsibility over tax or financial matters.

Josam filed a bankruptcy petition on August 31, 1985. On November 25, 1985, the Internal Revenue Service ("IRS") proposed a 100% tax penalty assessment against Mr. Hodgekins in the amount of $544,660.96, reflecting federal employment taxes allegedly withheld but not paid by Josam in the second quarter of 1985. The IRS proposed a second 100% penalty assessment of $302,526.92 for the third quarter of 1985.

Mr. Hodgekins filed a protest to the proposed assessments on January 30, 1987, and reached a settlement with the Indianapolis appeals office of the central region of the IRS, through Ted Dreiser, an IRS appeals officer in South Bend. The parties agreed that the case should be closed without the assessment of the proposed 100% penalty.

Pursuant to the agreement, Mr. Hodgekins executed IRS Form 2750, entitled "Waiver Extending Statutory Period for Assessment" and IRS Form 2751, entitled "Proposed Assessment of 100 Percent Penalty." The parties stipulated that the total penalty to be assessed was "none". A clause on the reverse side of Form 2751 read:

It is being recommended that your case be closed without the assessment of the 100 percent penalty at this time. Your case is subject to reopening at the request of the Department of Justice in the event refund litigation is initiated and it is decided to interplead potentially responsible persons.

Mr. Hodgekins' attorney sought to modify this clause, but Mr. Dreiser informed him that the IRS forms could not be changed. Mr. Hodgekins therefore executed the waiver with the understanding that it would not be changed. He also understood that the clause was necessary only in the event that any witnesses changed their stories with respect to Josam's taxes. Mr. Hodgekins believed that he waived the statute of limitations only if another person connected with Josam filed a refund action and the government added all potentially responsible persons as defendants in that action.

Mr. Dreiser signed Forms 2750 and 2751 on March 14, 1988. Ten days later, John Marvel, Associate Chief of...