Opinion
16721-19
03-01-2022
RICHARD R. FOOTE, TRANSFEREE, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Tamara W. Ashford Judge
On April 21, 2021, petitioner filed a Motion for Leave to File Motion to Vacate Decision Out of Time (motion for leave) and lodged a Motion to Vacate Decision (motion to vacate). In his motion to vacate petitioner requests that, pursuant to Rule 162, we vacate the decision we entered on February 1, 2021. We entered that decision pursuant to an agreement of the parties. On July 6, 2021, pursuant to the Court's June 7, 2021, Order, respondent filed a response, objecting to the motion for leave and the motion to vacate.
Unless otherwise indicated, all Rule references are to the Tax Court Rules of Practice and Procedure.
The parties notified the Court of their agreement by a joint stipulation of settled issues, which they filed on October 28, 2020. This case had been calendared for trial at the remote Session of the Court commencing on November 2, 2020, in Boston, Massachusetts. By Order served on the parties on October 29, 2020, the undersigned judge struck the case for trial from the November 2, 2020, Boston, Massachusetts Trial Session, retained jurisdiction over the case, and ordered the parties to electronically submit to the Court an agreed stipulated decision document on or before January 27, 2021. On December 29, 2020, the parties submitted a proposed stipulated decision. The terms of the parties' agreement as set forth in the joint stipulation of settled issues were the same as those set forth in the December 29, 2020, proposed stipulated decision and in the Court's February 1, 2021, decision.
The decision to grant a motion to vacate (or revise) a decision under Rule 162 lies within the discretion of the Court. Kun v. Commissioner, T.C. Memo. 2004-273, slip op. at 5 (citing Vaughn v. Commissioner, 87 T.C. 164, 166-167 (1986)), aff'd without published opinion, 157 Fed.Appx. 971 (9th Cir. 2005). The Court generally will not grant a Rule 162 motion without a showing of unusual circumstances or substantial error, such as mistake, inadvertence, surprise, excusable neglect, newly discovered evidence, fraud, or other reason justifying relief. See, e.g., Fed.R.Civ.P. 60(b); Brannon's of Shawnee, Inc. v. Commissioner, 69 T.C. 999 (1978); Taylor v. Commissioner, T.C. Memo. 2017-212, at *7 (and cases cited thereat).
The Court has applied a more stringent standard when evaluating motions to enter decisions or to vacate settlement agreements where the litigants shortly before trial have agreed to a settlement and caused a vacation of the trial; in such cases, we have held that the settlements are enforceable unless the moving party can show a lack of formal consent, mistake, fraud, or some similar ground. Brewer v. Commissioner, T.C. Memo. 2005-10, slip op. at 4 (and cases cited thereat). Here, five days before the trial of this case during the Court's November 2, 2020, Boston, Massachusetts Trial Session, the parties informed the Court that they had come to an agreement and resolved this case, and the case was stricken for trial from that trial session as a result. Accordingly, just like in Brewer, we will hold petitioner to the more stringent standard.
Petitioner advances several reasons that the Court's February 1, 2021, decision should be vacated. None are convincing.
We are granting, however, petitioner's motion for leave. See infra p. 4.
As an initial matter, we note that petitioner's reasons are largely dependent on what had been occurring procedurally in a related case in this Court which was assigned to another judge. See Transupport, Inc. v. Commissioner, Docket No. 16422-18L (Transupport case). Petitioner is one of several officers of Transupport, Inc. (Transupport), and up until January 13, 2022, the Transupport case, a collection due process case, had been pending before this Court. On January 13, 2022, the Court entered a stipulated decision in the Transupport case, ordering and deciding that the notice of determination issued to Transupport on July 23, 2018, for its income tax liabilities for the 2006-2008 taxable years, and upon which that case was based, are sustained in full. That decision also reflects that the collection of those liabilities will be made in accordance with the terms of a payment plan set forth in a closing agreement entered into between Transupport's officers and the Internal Revenue Service (IRS) on or about December 1, 2020 (2020 closing agreement). Thus, to the extent petitioner in this case relies on the Transupport case for vacation of the Court's February 1, 2021, decision, such reliance is mooted or without merit because of the agreed upon resolution and closure of the Transupport case.
Petitioner alleges that the Court's February 1, 2021, decision should be vacated because respondent breached the terms of the 2020 closing agreement by commencing collection actions against him. According to petitioner, the collection action was a so-called "Collection Notice" that the IRS issued to him on March 29, 2021. Contrary to petitioner's allegation, there was no breach by respondent because the so-called "Collection Notice" issued to petitioner was not a collection action.
The 2020 closing agreement provides that the IRS "shall not take any collection actions" against petitioner so long as Transupport is current with its obligations under the payment plan, and the closing agreement defines "collection actions" to "include but are not limited to the following:" (1) a "request [for] any financial information" from petitioner; (2) issuing "a summons seeking financial information" relating to petitioner; (3) serving "a levy seeking the seizure of any real or personal property" of petitioner or in which petitioner has an interest; or (4) filing "a lien securing the Service's interest in any real or personal property" of petitioner or in which petitioner has an interest. The so-called "Collection Notice" issued to petitioner was merely correspondence reminding petitioner of the total amount due for his 2007 taxable year. Indeed, the notice is labeled "REMINDER - YOU STILL OWE" and then includes the statement that "[i]f you already paid your balance in full or arranged for an installment agreement, please disregard this notice." The 2020 closing agreement is that arrangement.
Even if the issuance of the March 29, 2021, notice had been a violation of the 2020 closing agreement, the violation does not warrant vacating the Court's February 1, 2021, decision; the appropriate relief would be for the IRS to administratively reverse any collection action taken on the basis of the notice.
Another reason petitioner advances for vacating the Court's February 1, 2021, decision is that "[c]onfusion and uncertainty caused by * * * the COVID-19 pandemic" led to the 2020 closing agreement and the February 1, 2021, decision. While we are sympathetic to the many hardships that the COVID-19 pandemic has created for many people, petitioner has not identified any circumstances whatsoever that would have changed his assessment of the hazards of a trial and prevented him from prosecuting his case. Indeed, at no time before the scheduled trial of this case did petitioner inform the Court that he was unable to prosecute his case (or desired a continuance of his case) because of the COVID-19 pandemic. Only now does petitioner assert that the COVID-19 pandemic prevented him from effectively prosecuting his case.
Contrast this with the statement in petitioner's motion to vacate that he "diligently prepared for trial". Yet nevertheless, he still goes on to remark "that a virtual trial would bring further disadvantage to * * * [co-petitioner] Harold Foote and cause particular hardship for Harold Foote", who is an octogenarian living in Florida. On March 2, 2020, this case was consolidated for trial, briefing, and opinion with Dkt. Nos. 16751-19, 16729-19, 16727-19, and 16716-19, which, like this case, involve the respective liabilities of Harold Foote and Transupport's other officers as transferees of Transupport. The Court is baffled by petitioner's statements; the Court does not see how, assuming arguendo, the Court's February 1, 2021, decision was to be vacated, a likely in-person trial in Boston, Massachusetts (his requested place of trial) would be less burdensome for Harold Foote than any remote trial.
In summary, petitioner has not shown a lack of formal consent, mistake, fraud, or some similar ground which would warrant vacating the Court's February 1, 2021, decision. Upon due consideration, it is hereby
ORDERED that petitioner's Motion for Leave to File Motion to Vacate Decision, filed on April 21, 2021, is granted. It is further
ORDERED that the Clerk of the Court shall file petitioner's Motion to Vacate Decision, lodged on April 21, 2021, as of the date of this Order. It is further
ORDERED that petitioner's Motion to Vacate Decision, filed as of the date of this Order, is denied.