Opinion
11581-20
05-15-2024
STEVEN FELLER & LOUISE FELLER, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
CHRISTIAN N. WEILER JUDGE.
On December 14, 2023, respondent filed a Motion to Compel Responses to Interrogatories, in which respondent seeks an order from the Court compelling petitioners to file a supplementary response to Interrogatory Number 3. On January 5, 2024, petitioners filed a response to respondent's Motion to Compel, opposing the relief sought, indicating they are unable to answer the Interrogatory, and contending this Court has already ruled on the issue in its Order served on June 23, 2023.
On June 27, 2022, respondent served his First Interrogatories to Petitioners, which includes Interrogatory Number 3. Interrogatory Number 3 asks petitioners to identify the business component of each project "with specificity." On July 18, 2022, petitioners responded to the First Interrogatories. On July 29, 2022, respondent filed his first Motion to Compel Responses to Interrogatories. On May 23, 2023, this case was assigned to the undersigned. By Order dated June 23, 2023, this Court denied, in part, respondent's first Motion to Compel.
The Courts' prior Order, which found Interrogatory Number 3 to be unduly burdensome, was predicated upon the parties' agreement to a sample methodology to be used in selecting some projects. The parties were directed to file status reports on or before July 14, 2023, in which they were to propose a sampling method. Unfortunately, in the July status reports, parties were unable to agree as to a sampling method for discovery and trial purposes. By Order dated August 10, 2023, the Court again requested status reports from the parties in this case.
On October 20 and 21, 2023, the parties filed separate status reports, again indicating they were unable to come to an agreement as to sampling. A sampling method for discovery and trial purposes is selected through an agreement between the parties; there is no such agreement here. Respondent insists on conducting discovery as to each project. Petitioners insist on sampling for both discovery and trial. The Court cannot compel a sampling method to be used; however, the Court can limit the scope of discovery and acknowledges that sampling is an efficient method for resolution of this case.
The Court held a conference call with the parties on February 14, 2024, to discuss whether the parties have come to an agreement on a non-binding plan for discovery related to some (rather than all) of the projects in question. At the conclusion of the call, the parties agreed to confer and file a status report within 45 days.
On February 16, 2024, the Court issued an order directing the parties to file a status report, identifying those projects for which discovery will be conducted, or in the alternative, request another status call with the Court. Separate status reports were filed on April 26, 2024, with respondent proposing that the Court select 6-10 projects from a list of 333 total projects, as reflected on Exhibit A to respondent's April 26, 2024, status report.
The Court held a status call with the parties on May 8, 2024. During the call, both parties advised that mutual selection of a representative sample by the parties per a Stipulation of Settled Issues has failed. Respondent again suggested that the Court select 6-10 projects from a list of 333 total projects, reflected on Exhibit A to respondent's April 26, 2024, status report, as a non-binding plan for discovery related to some (rather than all) of the projects in question. Petitioners indicated how Exhibit A would first need to be updated or corrected prior to any selection being made by the Court. Petitioners also indicated how their preference was to proceed with discovery on the original projects selected during the IRS audit of petitioners.
Petitioner advised during the call that 9 projects were selected in the audit. Previously we were advised the number was 5-6 projects. However, there is nothing specifically in the record to identify the projects originally selected by IRS to audit.
As we previously stated, and since the parties cannot come to an agreement as to sampling, the Court is inclined to select a limited number of projects for discovery and possible trial, which can be used as a non-binding test case for potential settlement of all remaining projects. Since petitioners are willing to proceed with discovery and a potential non-binding test litigation on the original projects selected during the IRS audit of petitioners, the Court is inclined to proceed in this manner.
Considering the foregoing, it is
ORDERED respondent's Motion to Compel, filed on December 14, 2023, is granted in part, in that, on or before June 12, 2024, petitioners are to supplement their response to Interrogatory #3 and identify all business components for each of the projects originally selected during the IRS audit of petitioners. It is further
ORDERED that discovery shall proceed with respect to each of the projects identified by petitioners in their supplemental answer to Interrogatory #3; and on or before August 23, 2024, the parties are to advise the Court by written joint status report (or separately if preferred), as to the progress made with respect to said discovery on these identified projects. It is further
ORDERED that respondent's Motion to Compel, filed on December 14, 2023, is otherwise denied.