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PUONGPUN SANANIKONE v. UNITED STATES OF AMERICA

November 30, 2010

PUONGPUN SANANIKONE,
PLAINTIFF,
v.
UNITED STATES OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

MEMORANDUM AND ORDER AND RELATED COUNTERCLAIMS Plaintiff Puongpun Sananikone ("Sananikone"), a former official of American Steel Frame, Inc. ("ASFI") has sued the government for (1) a refund of taxes that were assessed against and collected from him; and (2) the abatement of the Trust Fund Recovery Penalty under 26 U.S.C. § 6672 ("TFRP") that was imposed upon him. (ECF No. 1.)

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In its Answer (ECF No. 9), Defendant/Counterclaimant United States ("United States" or "government") counterclaimed against Counterclaim Defendant Jacob Intveld ("Intveld"), another ASFI executive, to reduce to judgment an outstanding tax assessment made against him pursuant to the TFRP for ASFI's withholding income and social security taxes ("trust fund taxes"). Intveld answered the United States' Counterclaim and counterclaimed for a refund of an overpayment of employment taxes and the abatement of the TFRP for the taxable periods ending June 30, 2000, September 30, 2000, December 31, 2000, and June 30, 2001. (ECF No. 21.)

Presently before the Court is a Motion for Summary Judgment brought by the United States against Intveld pursuant to Federal Rule of Civil Procedure Rule 56.*fn1 (ECF No. 85.) For the reasons set forth below, the United States' Motion will be denied.*fn2

BACKGROUND*fn3

ASFI was a commercial and residential light-gauge steel-truss manufacturing and installation company based in Stockton, California.

In February, 2000, ASFI hired Intveld as its Vice President of Manufacturing and Operations ("Operations VP"). Intveld's duties and responsibilities were solely in the production area, relating to the operations of the manufacturing processes. He did not hire or fire any employees. He reported to Paul Ta ("Ta"), Executive Vice President and Chief Executive Officer of ASFI.

On February 17, 2000, the ASFI Board of Directors ("Board") authorized Intveld as a signatory on ASFI's checking account. Intveld did not learn of this authorization, nor act upon it, until June, 2000, when Ta asked him to sign some checks. Also during February of 2000, the Board gave Intveld specific authority to negotiate a sale of ASFI's stock to Dietrich Industries. No sale, however, transpired from those negotiations. Intveld's specific authority in that regard terminated after sixty days.

On May 31, 2000, Inveld became President of ASFI, with the understanding that he would be President in name only and his duties at ASFI would not change.*fn4 Following his appointment as President, Intveld reported to both Ta and [Board Chairman] Sananikone. Because ASFI's anti-fraud policy required two signatures on all business checks written, Intveld, as an authorized signatory, often signed checks presented to him.

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However, in all instances Intveld claims he neither prepared the checks nor exercised any authority over which checks were later released for payment. Intveld did not have any knowledge of what happened to the checks after he signed them. In November, 2000, Intveld was appointed as a member of ASFI's Board. He attended four board meetings while employed by ASFI and gave a "President's Report" at each of them.

In January, 2001, ASFI's bookkeeper, Charlene Amarante ("Amarante") informed Intveld for the first time that payroll tax returns had not been filed for the second, third, and fourth quarters of 2000 and asked him to sign them. Intveld told Amarante that "preparing and signing payroll tax returns were outside his authority" and immediately contacted Sananikone to apprise him of the delinquent returns. Mem. P. & A. Opp'n Mot. Summ. J. 7. Sananikone told Intveld that he would "speak to Ta and take care of it." Id.

According to Intveld, Ta occasionally showed him a list of suppliers and asked that he identify those suppliers that had to be paid in order to avoid halting production. Intveld indicated which suppliers met that criteria and gave the list back to Ta. Intveld never made any decisions about which creditors to pay. The list did not include any creditors other than production suppliers. In February, 2001, Intveld used his personal credit card to cover payroll when Amarante informed him that Ta failed to deposit funds needed to cover payroll checks.

During the second quarter of 2001, Ta and Amarante attempted to negotiate a settlement of past due trust fund taxes by meeting with J.K. Harris. They were told that ASFI had to pay the trust fund taxes for the next two quarters as they became due and J.K. Harris would attempt to negotiate a settlement with the Internal Revenue Service ("IRS") for the remaining delinquent periods. Intveld never met with anyone regarding the delinquent trust fund taxes or negotiated with anyone to settle the debt. When Ta refused to pay the taxes for the first quarter of 2001, Amarante informed Intveld. Dr. Nguyen Vo ("Vo"), a shareholder and director of ASFI, met with Intveld and Ta and instructed Ta to sign the tax return and accompanying check for payment. Intveld witnessed Ta's signature on both.

On July 10, 2001, prior to a Board meeting, Intveld attempted to resign from ASFI because he anticipated that Ta would again refuse to pay the delinquent second quarter's trust fund taxes. During the meeting, Ta indeed refused to pay them. "Sananikone and Vo assured Intveld that they would take care of

[T]a and the payroll tax issue." Mem. P. & A. Opp'n Mot. Summ.

J. 8. Intveld resigned in August, 2001, citing the company's ongoing delinquent taxes as the reason. Intveld was asked to continue working at ASFI until a new president was transitioned. He agreed to do so. Intveld left ASFI in September of 2001.

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STANDARD

The Federal Rules of Civil Procedure provide for summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). One of the principal purposes of Rule 56 is to ...


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