Opinion
10703-19 10704-19
04-05-2022
CFM INSURANCE, INC., et al., Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Mark V. Holmes Judge
These cases were assigned to this division of the Court and are set for trial at a special session later in the spring. There are a large number of motions pending, some in only one of the cases and some in both.
This order disposes of the motions pending in both cases.
Motion for Protective Order Pursuant to Rule 103
Petitioners filed this motion because they objected to respondent's first set of interrogatories. Respondent had moved to compel responses to these interrogatories, but then the parties settled their differences and we denied respondent's motion to compel as moot.
That moots this motion as well.
Respondent's Motion to Compel Production of Documents
After early rounds of discovery turned up massive gaps in petitioners' electronic recordkeeping, the Court spoke with the parties and petitioners assured us and respondent that retrieval efforts are being continued. Some of the retrieved records have apparently been produced and exchanged. Respondent nevertheless moved to compel the production of documents to gauge whether spoliation has occurred. This is reasonable under the circumstances and the Court will grant this motion.
Petitioners' Motion to Compel Responses to Interrogatories
In this motion, petitioners seek to compel responses to interrogatories. Interrogatories 3 and 4 sought the names and other information about respondent's possible nonexpert witnesses. In his response to this motion, respondent stated that he'd since produced this information in accord with the deadline for doing so in the Court's pretrial order. That makes this part of petitioners' motion moot.
Petitioners also seek a more complete answer to interrogatory 13. This interrogatory sought the identification of "the Bates number prefix used by Artex when producing the category 6 documents to respondent." This cryptic interrogatory refers to category numbers that respondent used throughout a mass of production outside of discovery-motion practice. Respondent identified "category 6" documents as "ESI [electronically stored information] obtained pursuant to a summons to Artex in connection with one or more taxpayers other than petitioners." (Emphasis added.)
Petitioners state they want this information to enable them to identify any category 6 documents that respondent tries to introduce at trial. Respondent demurs because he promises that he will not use these documents at trial. He's put that promise in writing and promises to be able to identify the provenance of any evidence used only for impeachment.
The Court concludes that this extremely marginal request is not calculated to produce admissible evidence or to lead to the production of admissible evidence and so will deny the request.
Petitioners' Motion to Compel Production of Documents
This motion seeks the production of two different classes of documents. The first are five unredacted emails that respondent has already produced, but which petitioners suspect may have something to do with the supervisory-approval issue under IRC § 6751.
The second are more than 1100 documents that respondent obtained through a summons to a third party in investigations of other taxpayers, but which mention some key words that petitioners asked respondent to use as search terms. (It is one of the hazards of using a name like "CFM" that it turns out to be a suffix in unrelated URLs, as well as a suffix in old Macintosh operating software.) Respondent reasonably points out that it has already produced the documents that the third party produced in response to his summons specifically seeking information about CFM and the Prestas.
Common to both groups of documents is that petitioners' motion seeking their production is late. Under our pretrial order, motions to compel discovery had to be filed within 50 days of the date of service of the underlying discovery. Petitioners' document-production requests were served on December 14, 2021; their motion was filed on February 17, 2022.
The first group of documents at issue in this motion is notably small in number and may be central to the section 6751 issue. The Court always prefers decisions on the merits, and so will order in camera review of these documents.
The second group of documents is much larger, highly likely to include duplication of documents already produced, and would be especially burdensome for respondent to review for privilege and then produce. The Court notes respondent's representation that he will not seek to introduce any such documents at trial. In light of these factors, we will enforce the discovery deadline and deny petitioners' motion as to these documents.
To sum up, it is
ORDERED that petitioners' December 10, 2021 motion for a protective order is denied as moot. It is also
ORDERED that respondent's December 15, 2021 motion to compel production of documents is granted. Petitioners shall, on or before April 22, 2022, serve on counsel for respondent the documents requested in respondent's second request for production of documents served on petitioners on November 10, 2021. It is also
ORDERED that petitioners' February 17, 2022 motion to compel responses to interrogatories is denied as moot as to interrogatories 3 and 4, and denied as to interrogatory 13. It is also
ORDERED that petitioners' motion to compel production of documents is denied except as to the five documents identified in paragraph 18 of petitioners' motion-the documents that respondent has already produced in redacted form in response to petitioners' document request number 17. Respondent shall, on or before April 14, 2022, submit unredacted copies of these documents to the Court for an in camera review. Respondent shall submit these documents in two sets, one redacted and one unredacted, both in double-sealed envelopes marked "FOR JUDGE'S EYES ONLY."