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Shore v. Brown

September 3, 2008

WILMA SHORE, PLAINTIFF,
v.
KEVIN M. BROWN, ACTING COMMISSIONER OF INTERNAL REVENUE SERVICE OF UNITED STATES OF AMERICA ET AL., DEFENDANTS.
UNITED STATES OF AMERICA, COUNTER-CLAIMANT,
v.
WILMA SHORE, ET AL., COUNTER-DEFENDANTS.



The opinion of the court was delivered by: Sandra M. Snyder United States Magistrate Judge

ORDER VACATING HEARING SET FOR SEPTEMBER 5, 2008, ON COUNTER-CLAIMANT'S MOTION FOR DEFAULT JUDGMENT AND TAKING MOTION OFF CALENDAR WITHOUT PREJUDICE TO REFILING THE MOTION IN CONFORMITY WITH THIS ORDER INFORMATIONAL ORDER TO COUNTER-CLAIMANT AND TO COUNTER-CLAIMANT'S COUNSEL, McGREGOR W. SCOTT, JAMES E. WEAVER, AND LAUREN M. CASTALDI, RE: SANCTIONS

Counter-claimant United States of America (USA) is proceeding with counsel with a civil counterclaim in this action. On July 15, 2008, USA filed a motion for default judgment on the counterclaim that was set to be heard on September 5, 2008. The matter has been referred to the undersigned Magistrate Judge pursuant to 28 U.S.C. § 636(b) and Local Rule 72-302(c)(19).

Because of defects in the original briefing in support of the motion that was submitted by USA's counsel, McGregor W. Scott, James E. Weaver, and Lauren M. Castaldi, it was necessary for the Court and its staff to expend scarce resources*fn1 not in addressing the merits of the underlying motion, but rather in instructing counsel to provide adequate support for its motion. Specifically, the Court had to remind counsel of the necessity of defining the elements of the claim or claims upon which USA sought to recover and providing specific authority therefor in connection with the determination of the legal sufficiency of the counterclaim, as distinct from merely referring to a pleading that in turn refers to a statute by number. Further, similar reminders had to be set forth regarding the relief sought and the necessity of making a showing and providing authority in connection with the determination that the Court must make pursuant to Fed. R. Civ. P. 54(b).*fn2

The Court gratefully acknowledges that the supplemental brief filed on August 25, 2008, does contain several paragraphs that actually quote relevant portions of the governing statute (26 U.S.C. § 6672) and even set forth some case law defining the terms in the statute and elements of recovery. (Supp. Brief at p. 7, lines 17 through 27 to p. 8, lines 1-11.) Likewise, the Court is delighted that counsel generously referred to authority concerning the burdens of proof and persuasion and methods of establishing a prima facie case, although no precise application of particular probative documents to particular elements of the prima facie case (e.g., responsible party, willfulness, etc.) were systematically attempted in this context. (Id. at p. 9, ll. 10-28, p. 10, ll. 1-13.)

However, the entire package, consisting of the initial motion and supporting papers, and all the supplemental papers that the Court had to solicit, does not address the issues in the case adequately and with sufficient organization, specificity, and accuracy to permit the Court to proceed to consider the motion on the merits with sufficient confidence or efficiency.

In various instances, counsel either misrepresent the state of the record, or do not adequately refer to the location of items in the record; the Court is not sure which is the case and is not willing to spend more resources at this point in order to determine which it is.

For example, it is stated that there are assessments against the taxpayer Shore for federal tax liability and associated penalties for Gregory Shore for various tax periods. The first periods mentioned are June 30, 1997, and September 30, 1997. (Memo. p. 4, ll. 23-24; Supp. Memo. p. 4, ll. 8-9, p. 9, ll. 1-4.) The reference to supporting documents is to the declaration of Lauren M. Castaldi, Exhibits 1-17. However, the Court finds no assessments for tax periods ending June 30, 1997, and September 30, 1997. The difficulty of discerning the nature of the problem is compounded by counsel's failure to refer to specific exhibits and further failure to identify specific pages of the exhibits that constitute the pertinent assessments and portions thereof; this failure appears to be repeated throughout the submitted papers.*fn3 Further, there are no explanations of the entries or the columns in the assessment documents, which do not line up vertically under either "Assessment" or "Payment" categories. The purpose of providing exhibits to support assertions as to documentary proof is undercut by the absence of clear and meaningful references to the documents and basic explanations needed to determine if the document indeed sets forth what is claimed by counsel. The Court also notes that it has not received tabbed courtesy copies.

Again, it is stated that it is alleged in the counterclaims that Counter-defendants were responsible persons in all three entities, namely, Dean's Materials, Inc., Dean R. Shore, Inc., and Cybergate Com., Inc. (Memo. p. 2, ll. 21-27.) The reference is not accompanied by any citation to the portions of the counterclaims containing the allegations. After sifting through the counterclaims, the Court has been unable to locate an allegation that the Counter-defendants were responsible persons with respect to Cybergate Com., Inc. (Ctrclms. ¶¶ 6, 8.)

Just as fundamentally, counsel appear to have failed to appreciate that the undersigned Magistrate Judge will be required to set forth findings and recommendations as to each counter-defendant separately, and as to each part of the overall sum requested for each counter-defendant. Even if as to the entire amount claimed the government were validly entitled to judgment, the Court could not merely inform the District Judge that the overall amount sought was fine, and provide a string citation of record references. Over the years of presiding over motions for default judgment, the undersigned Magistrate Judge has observed that the parties have regularly employed meaningful units of organization of analysis and argument. For example, each party is discussed separately; the law is applied to the facts of the case in a logical and clear fashion, with each element of a claim defined, and all the supporting documentation relating to that element summarized in one location and with accurate and specific references to the allegations of the pertinent pleading or to supporting evidentiary matter. Where chronology is important (such as in the present case, where there are numerous separate tax periods regarding which documentation is submitted), the proof is also organized chronologically and is accompanied by helpful and comprehensive references to all the supporting documentation. Otherwise, the Court's time is wasted, and the Court is thrust into the role of the advocate in hunting for authority and factual matter to make out the claims that are rightfully counsel's responsibility, and not the Court's.

However, counsel apparently expect the Court to sift through pages of exhibits and declarations with respect to each tax period, shuffling back and forth to find assessments, calculations of interest, pertinent additional proof from interviews, and so forth. This is hardly conservative of the resources of the Court. At the very least, treatment of each taxpayer, and of each unit of the counterclaim (such as a tax period), should be segregated. Further, all probative matter as to each element of the claim or recovery should be cited, with page numbers and even line numbers if possible, in a fashion that proceeds logically and economically with respect to each unit.

Finally, as the Court has previously specifically informed Counter-claimant and its counsel, it is established that if a party states multiple claims but seeks judgment on only some of them, or seeks judgment against fewer than all of the parties defendant, and the moving party does not notify the Court that the other claims and/or parties have been or will be dismissed, then the moving party should specify in the application the claims upon which, and the parties against whom, judgment is sought. All pertinent information regarding the status of the case as to all the parties should be submitted to the Court. Further, the party should provide authority and analysis sufficient to support both a request that the Court make a finding pursuant to Fed. R. Civ. P. 54(b) that there is no just cause for delay, and a direction that a final judgment on some of the claims and/or against some of the parties should be entered. It is not appropriate to expect the Court to sift through the docket to discern the status of the case, or to undertake to support the party's application in the first instance.

This information was given to counsel in the Court's order of August 11, 2008. Despite the presence of an underlying claim against USA, and despite the fact that similar claims for overlapping periods concerning the same business entities are involved in the counterclaims against all Counter-defendants, the only contribution that counsel made in response to the Court's specific direction was to note the following:

The United States has not asked for an entry of default judgment against Wilma Shore, as she has been an active participant in this litigation. (Footnote omitted.) (Supp. Brief p. 3, ll. 11-12.) In a footnote, counsel stated:

With respect to Ms. Shore, the United States is awaiting responses to its First Set of Requests for Production served on ...


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