Opinion
10703-19 10704-19
10-06-2021
CFM INSURANCE, INC., Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Mark V. Holmes, Judge
These cases have been assigned to this division of the Court. The major issue in them is the viability of a microcaptive-insurance arrangement under the Code, and they need to be put on a pretrial-order track. There is also a pending motion in docket number 10703-19 to compel document production.
Calendaring the Cases
Both parties reasonably ask the Court to set aside two weeks of in-person trial time. Petitioners suggest either no trial date at this time or maybe one in late summer 2022. Respondent says he'll be ready anytime after mid-March 2022.
The Court's capacity for in-person trials continues to be quite low. They are possible in Chicago (the designated place of trial for the cases), but the only window of availability for a two-week trial opens on April 25, 2022. This should allow ample time for all the parties to get ready.
This division's practice in represented cases is to give the parties an opportunity to negotiate a pretrial order on their own, and it will do so here.
Respondent's Motion to Compel
Respondent moved on September 17, 2021 in petitioner CFM's case to compel more complete responses to his document-production requests. CFM then supplemented its responses, but not to respondent's satisfaction.
The requests themselves seek obviously discoverable information, and would normally trigger a form order to compel. (The one minor exception is request 20, which seeks "all documents not produced . . . that petitioner believes [are] relevant to any matters at issue in this case or that petitioner expects to introduce at trial." This either seeks the subjective beliefs of petitioner's counsel, which treads on work-product privilege; or jumps the gun on exchange of trial exhibits, which the Court will establish a much later deadline for in its pretrial order.)
Petitioner's initial response featured overbroad objections (e.g., "vague, overly broad, and unduly burdensome") of the sort no longer permitted under the current Federal Rules of Civil Procedure. Their supplemental response apparently produced a tiny number of actual documents, but many more specific responses that state "petitioners have been unable to locate any documents responsive to this request for tax years 2010-2016." Inasmuch as this includes numerous categories of pertinent email traffic and even such routine documents as corporate resolutions, respondent suspects that petitioner is not complying with the requests or has an unusual attitude toward corporate recordkeeping. This suspicion has probably been reinforced by a claim in the response that a migration of email systems in 2016 means that no emails from before 2016 exist.
It is possible that many of these emails are recoverable from the captive's manager/promoter -- respondent has already proceeded with discovery on that front. It is highly likely that the Court will entertain motions for discovery through depositions under Rule 74(c) and that we will expect discovery to extend to questions of evidence spoliation, given the consequences that topic might have on factfinding in these cases. It is certain that the Court will extend its practice of incorporating recent improvements in the Federal Rules of Civil Procedure governing discovery into its pretrial orders in these cases.
It is therefore
ORDERED that these cases are calendared for trial at a special session of the Court starting at 10:00 a.m., on Monday, April 25, 2022, in Room 3908 of the Kluczynski Federal Building, located at 230 South Dearborn Street, Chicago, Illinois, 60604. This order constitutes official notice to the parties of that trial. It is also
ORDERED that on or before December 6, 2021 the parties shall file a joint status report proposing a pretrial order that shall include dates for at least the following events:
1. Deadlines for any remaining informal and formal discovery.
2. Identification of each witness expected to be called by name, address, qualifications of the witness, and a brief summary of the expected testimony of each such witness.
3. Deadline for filing discovery motions.
4. Deadline for exchange and lodging with the Court of any expert witness reports.
5. Deadline for filing any motions concerning stipulations of fact.
6. Deadline for submitting any dispositive motions.
7. Deadline for submitting any other pretrial motions (e.g., motions in limine to exclude evidence or to shift the burden of proof).
8. Identification and exchange of any exhibits that each party may offer into evidence as part of his case in chief (excluding only exhibits to be used solely for impeachment).
9. Lodging of stipulations of fact with Court. 10. Submission of trial memoranda with Court.
It is also
ORDERED that respondent's September 17, 2021 motion to compel production of documents is granted as to requests 1-14 and 18-19, and petitioner CFM shall, on or before November 5, 2021, serve on counsel for respondent those documents requested in respondent's request for the production of documents served on CFM on June 7, 2021. It is also
ORDERED that if CFM does not fully comply with the provisions of this order, the Court may impose sanctions under Tax Court Rule 104, which may include dismissal of this case and entry of a decision against it. It is also
ORDERED that all parties in these cases shall comply with Federal Rules of Civil Procedure 34(b)(2)(B) and (C) and Rule 45(a)(4) in their preparation of these cases for trial.