Opinion
4855-20
12-14-2023
ROBERT Y. DIAZ & BRITTANY L. DIAZ, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Albert G. Lauber, Judge
This case is calendared for a remote trial at 3:00 p.m. Eastern Standard time on December 14, 2023, at a special session for which Denver, Colorado, is listed as the place of trial. The trial will be limited to the question of whether petitioners signed the IRS closing agreement involved in this case.
In March 2023, pursuant to Rule 147, respondent issued a trial subpoena to Raytheon Co., which employed petitioner-husband at the relevant times. The subpoena requested that Raytheon produce all documents from petitioner-husband's personnel file that contained his signature. Raytheon supplied to respondent's counsel more than a dozen documents in response to the subpoena.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
The documents Raytheon produced included copies of petitioner-husband's U.S. passports, forms verifying the identities of his spouse and dependent children, requests for cash travel benefits, authorizations for payroll deductions, MOUs regarding the conditions of his employment, employee time card forms, an acknowledgment of changes in benefits, a residential tenancy agreement, and his notice of resignation from Raytheon effective August 2017. One of the documents was Raytheon's original copy of the closing agreement at issue, bearing what purport to be the signatures of petitioner-husband and petitioner-wife.
The documents thus produced were accompanied by a "Certification of Records" executed on November 2, 2023, by Liz Lewis, a Raytheon Senior Manager for Program Business Operations. Ms. Lewis has certified under penalty of perjury that she is a current Raytheon employee; that she has been employed by Raytheon since June 2013; that she has personal knowledge of Raytheon's record-keeping system; and that the documents produced in response to the subpoena are "authentic business records of Raytheon" that were "kept in the course of Raytheon's regularly conducted business activities."
Respondent's counsel supplied to petitioner-husband copies of the documents thus produced, proposing that they be included as Exhibit 19-J to a Stipulation of Facts. Petitioner-husband objected to including any of the documents in evidence, stating: "I want [the] formal testimony [of Ms. Lewis] on the record in open court and to have an opportunity to cross-examine her. On said cross-examination, I intend to ask a series of questions about her work habits and routine practices."
On December 7, 2023, respondent filed a Motion in Limine to admit the documents produced from Raytheon's personnel files into evidence as Exhibit 19-R. We issued an Order granting the Motion, agreeing that respondent had satisfied the requirements of the Federal Rules of Evidence (FRE) for admitting business records into evidence. On December 12, 2023, petitioners filed an Objection to Motion in Limine, which we will characterize as a Motion for Reconsideration of Order. We will deny petitioners' Motion for Reconsideration as such.
Proceedings in the Tax Court are conducted in accordance with the Federal Rules of Evidence (FRE). See § 7453; Rule 143. Hearsay evidence is inadmissible unless an exception applies. FRE 802. A statement is hearsay if the declarant made the statement outside of the current trial or hearing and a party offers the statement to prove the truth of a matter asserted. FRE 801(c).
One exception to the rule against hearsay is the business records exception. FRE 803(6). To qualify for this exception, the record at issue must have been made at or near the time by (or from information transmitted by) someone with knowledge; must be kept in the course of a regularly conducted activity of a business or organization; and must have been made as part of the regular practice of that activity. FRE 803(6)(A)-(C). These conditions may be established by a certification that complies with FRE 902(11). See FRE 803(6)(D).
The personnel records produced by Raytheon are "business records" as defined in FRE 803(6). They were attested to in a Certification of Records executed by a Raytheon employee knowledgeable about the company's record-keeping practices. That certification complies with the requirements of FRE 902(E)(11). And the records, to the extent they contain signatures of petitioner-husband and petitioner-wife, are plainly relevant to the issue to be tried-whether the signatures on the closing agreement are their signatures.
Petitioners are not entitled to cross-examine Raytheon's custodian of records about "her work habits and routine practices." The certification procedure contemplated by the FRE would be meaningless if every custodian of records were required to take the stand and be cross-examined about his or her work habits. Ms. Lewis's certification establishes that the documents Raytheon produced constitute "business records" maintained in its personnel files. Those documents are thus admissible into evidence under the FRE 803(6) exception to the hearsay rule. Petitioner-husband is free to contend that the signatures on one or more of these documents are not actually his signatures. But Ms. Lewis's certification establishes that the documents (such as they are) are business records taken from Raytheon's personnel files and thus ex-cepted from the hearsay rule.
In the Motion for Reconsideration petitioners allege that Ms. Lewis forged petitioner-husband's signature on the closing agreement and that "[a]ny and all records that were . . . controlled by [her] are suspect." Petitioners supply no support for this allegation. It is highly implausible that Ms. Lewis forged the signatures on petitioner-husband's U.S. passports, travel requests, time cards, payroll deduction authorizations, resignation letter, and other routine documents contained in his personnel file. As noted earlier, petitioners are free to contend that the signatures appearing on the closing agreement contained in Raytheon's file (or appearing on other Raytheon personnel records) are not theirs. The Court will decide these factual questions on the basis of all the testimony and documentary evidence submitted at trial.
In the Motion for Reconsideration petitioners "demand that [Ms. Lewis] be compelled to testify regarding this document [viz. the closing agreement] at trial." This demand is unavailing. If petitioners wished to call Ms. Lewis as a witness, they were required to have indicated their intention to do so in a Pretrial Memorandum, a document they did not file. The standing pretrial order for this case informed the parties that "[w]itnesses must be identified in the pretrial memorandum with a brief summary of their anticipated testimony. Witnesses who are not identified will not be permitted to testify at the trial without a showing of good cause." Petitioners alternatively demand an opportunity "to cross-examine Ms. Lewis." They of course may cross-examine any witness called by respondent. But respondent's pretrial memorandum, filed on November 24, 2023, did not indicate any intention to call Ms. Lewis as a witness.
We generally do not exercise our discretion to grant reconsideration absent a showing of substantial error or unusual circumstances. See Estate of Quick v. Commissioner, 110 T.C. 440, 441 (1998); CWT Farms, Inc. v. Commissioner, 79 T.C. 1054, 1057 (1982), aff'd, 755 F.2d 790 (11th Cir. 1985). Petitioners' Motion does not satisfy this high standard. See Estate of Quick v. Commissioner, 110 T.C. 440, 441 (1997); Brannon's of Shawnee, Inc. v. Commissioner, 69 T.C. 999, 1000-01 (1978). The documents contained in Exhibit 19-R are clearly relevant and they meet the conditions for admissibility under the business records exception to the hearsay rule. See FRE 803(6)(A)-(D). Ms. Lewis executed a certification under penalty of perjury that meets the requirements of FRE 902(11), and we will not permit petitioners to go behind her role as Raytheon's custodian of records to question the circumstances in which those records were maintained.
Upon due consideration, and for cause, it is
ORDERED that the document filed December 12, 2023, at docket entry #53, is recharacterized as Petitioners' Motion for Reconsideration of Order. It is further
ORDERED that Petitioners' Motion for Reconsideration of Order is denied.