Opinion
13925-17
08-28-2023
LAKEPOINT LAND II, LLC, LAKEPOINT LAND GROUP, LLC, TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Christian N. Weiler, Judge
This case is currently calendared for trial at a special session of the Court to commence on October 2, 2023, in Atlanta, Georgia. On July 18, 2023, petitioner filed a Motion in Limine, requesting that the Court exclude documentary evidence identified in respondent's Motion for Reconsideration, respondent's Response to petitioner's Motion for Reconsideration, and respondent's Response to petitioner's Motion to Impose Sanctions.
Absent stipulation to the contrary, this case is appealable to the U.S. Court of Appeals for the Eleventh Circuit, and we thus follow its precedent. See Golsen v. Commissioner, 54 T.C. 742, 756- 57 (1970), aff'd, 445 F.2d 985 (10th Cir. 1971).
I. Argument of the Parties
In the Motion in Limine, petitioner contends that these documents were not produced in response to petitioner's Second Request for Interrogatories or in petitioner's First Request for Production of Documents, which was in violation of this Court's Order served on February 2, 2023. Petitioner's Motion in Limine also requests that this Court grant the Motion and preclude respondent from relying on and using any evidence related to his compliance with section 6751(b) which was not provided to petitioner on or before February 21, 2023.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C. (I.R.C.), in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure.
In his response to petitioner's Motion in Limine, respondent opposes the relief being sought, and he contends that such relief is inappropriate since the deadline to exchange all trial documents has not passed and that the cases cited by petitioner are instances in which the Court excluded newly produced documents on the eve of trial. See Barkley Co. v. Commissioner, 89 T.C. 66, 70 (1987). Therefore, according to respondent, the prejudice to petitioners (if any) is minimal and this Court should decide this case based on all of the facts.
II. Analysis
While titled as a Motion in Limine, petitioner's motion is essentially a Motion to Impose Sanctions under Rule 104, since it seeks to preclude respondent from using at trial (or otherwise) one or more documents not produced in discovery. Under Rule 104(c), if a party fails to obey an order made by the Court with respect to Rule 72, which concerns the production of documents, the Court may make such orders as to the failure that are just, including certain enumerated orders. Rule 104(c)(2) permits us, upon a party's failure to comply with an order of the Court with respect to Rule 72, to "prohibit[] such party from introducing designated matters in evidence." See Zaklama v. Commissioner, T.C. Memo. 2012-346, at *33-34; McCanless v. Commissioner, T.C. Memo. 1987-573, 54 T.C.M. (CCH) 1111, 1114.
We also have the inherent power to regulate and supervise proceedings in any case in our Court to ensure the integrity of the judicial process. See Dixon v. Commissioner, 132 T.C. 55, 102-03 (2009); Williams v. Commissioner, 119 T.C. 276, 282 (2002). We may rely on our inherent power to impose a sanction where other sources of the power to sanction are not "up to task" to do so, even if existing statutes or procedural rules sanction the same conduct. Chambers v. NASCO, Inc., 501 U.S. 32, 49-50 (1991); Dixon, 132 T.C. at 102-03.
Although we take issue with some of the conduct during discovery by respondent's counsel, we do not find that respondent failed to obey this Court's order served on February 2, 2023. After accounting for any prejudice to petitioner, we are committed to a course that does not result in undue prejudice to respondent, which is consistent with the just, speedy, and inexpensive determination of this case. Rule 1(d). Although the documents in question were not furnished by February 21, 2023, the response deadline imposed under this Court's Order served on February 2, 2023, it is unclear whether the documents furnished by respondent in response to petitioner's Motion to Impose Sanctions were responsive to the pending discovery. For example some of these documents may contain privileged communications (e.g., Exhibit 3 - email between Ms. Stafford and Mr. Bissell). There were also extenuating circumstances present and respondent's counsel now handling respondent's discovery responses related to the section 6751(b) issue has changed.
Considering the foregoing, we find it is inappropriate to restrict respondent's ability to introduce at trial, evidence related to their burden of production and compliance with section 6751(b). We also find that petitioner has failed to meet its burden of proof under Rule 104(c) and that it has not established a clear prejudice to the use of these documents at trial. See Allnutt v. Commissioner, T.C. Memo. 2002-311, 2002 WL 31875119, at *8.
We leave open, however, petitioner's right at trial to exclude from evidence documents and materials that would have been responsive to petitioner's Second Request for Interrogatories or First Request for Production of Documents, which have not already been submitted to petitioner as of the date of this Order.
Therefore, it is
ORDERED that petitioner's Motion in Limine, filed on July 18, 2023, is denied.