Opinion
23305-18
09-25-2024
RALPH M. OTTUSO, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
ELIZABETH A. COPELAND JUDGE
This case was heard on July 11, 2022, at the Court's Remote Special Trial Session where Washington, D.C. was listed as the place of trial. The case was then submitted on July 11, 2022, with the stipulation that the record would be held open until July 25, 2022, in order to receive certain additional evidence that was specified at trial.
Background
On July 24, 2022, the parties filed with the Court a joint Second Supplemental First Stipulation of Facts. That submission contained Exhibits 16-J (previously incorrectly labeled in the First Stipulation of Facts) and 25-P (a receipt presented as evidence during trial by Mr. Ottuso). On September 23, 2022, the Court ordered the record closed as of the filing of the Second Supplemental First Stipulation of Facts
However, beginning on July 11, 2022, Mr. Ottuso sent the Court a series of nine emails, six of which contained additional proposed evidentiary documents. On November 3, 2022, Mr. Ottuso filed a Motion to Reopen the Record, containing a series of documents that he asserts show that (1) Robert Waite, witness for Respondent and Mr. Ottuso's former accountant, testified untruthfully about the date he stopped working for Mr. Ottuso and did not prepare Mr. Ottuso's 2013 Schedule C competently, (2) he is entitled to greater depreciation expense for his 2014 tax year than what Respondent has allowed, (3) the Kubota tractor purchased in 2014 was used primarily in Mr. Ottuso's business, and (4) Mr. Ottuso is entitled to greater car and truck expenses for his 2014 tax year than what Respondent has allowed. Additionally, in his Seriatim Answering Brief, filed November 10, 2022, Mr. Ottuso attached documents that he asserts show that (5) his stove and fireplace business was incorporated as of February 14, 2014.
Respondent filed a response on December 16, 2022, opposing the Motion to Reopen the Record. Respondent supported his opposition with a thorough memorandum of law. Respondent also objected to admission or consideration of the purported incorporation documents, partly on the grounds that Mr. Ottuso had never before represented to Respondent or the Court that his business was ever incorporated.
Discussion
The decision to reopen the record after trial lies within the Court's discretion. Zenith Radio Corp. v. Hazeltine Rsch., Inc., 401 U.S. 321, 331-32 (1971); Butler v. Commissioner, 114 T.C. 276, 286-87 (2000). We will not grant a motion to reopen the record unless, among other requirements, the evidence relied on is not merely cumulative or impeaching, the evidence is material to the issues involved, and the evidence probably would change the outcome of the case. Butler, 114 T.C. at 287.
Beyond these threshold requirements, we will also consider (1) the moving party's diligence (or lack thereof) in presenting the new evidence and (2) the possible prejudice to the nonmoving party-in particular, whether the nonmoving party would be prevented from examining and questioning the evidence as it would have been able to during the trial. See, e.g., Degourville v. Commissioner, T.C. Memo. 2022-93, at *12; Flume v. Commissioner, T.C. Memo. 2020-80, at *31-32; Shuman v. Commissioner, T.C. Memo. 2018-135, at *23-24 (citing Levy v. Lexington Cty., 589 F.3d 708, 714-15 (4th Cir. 2009)).
It appears that the Federal Court of Appeals for the Second Circuit has not explicitly ruled on which factors are relevant to a trial court's decision whether to reopen the record. However, the Federal District Courts of the Second Circuit appear to consistently consider the following factors: "whether the moving party failed to submit evidence due to a lack of its own diligence, the extent to which the nonmoving party might be prejudiced by reopening [the record], and the interests of justice." Blain v. State Univ. of New York Downstate Med. Ctr., 2023 U.S. Dist. LEXIS 23974, at *5-6 (E.D.N.Y. Feb. 13, 2023) (citing Romeo v. Sherry, 308 F.Supp.2d 128, 138-39 (E.D.N.Y. 2004)).
This case is appealable to the Second Circuit Court of Appeals, absent a contrary stipulation by the parties. See I.R.C. § 7482(b)(1)(A). We therefore follow all on-point precedents of that court. See Golsen v. Commissioner, 54 T.C. 742, 757 (1970), aff'd, 445 F.2d 985 (10th Cir. 1971).
Mr. Ottuso's delay in submitting his additional documents is inexcusable. The notice of deficiency on which this case is based is dated August 20, 2018. Mr. Ottuso had from then until July 11, 2022, to provide Respondent and the Court with the evidence he thought relevant to rebutting Respondent's deficiency determinations. There is no indication in either Mr. Ottuso's Motion to Reopen the Record or his Seriatim Answering Brief that the additional documents were previously unavailable or could not have been obtained earlier through diligent search. Moreover, admitting these documents now would seriously prejudice Respondent, who has not had a chance to cross-examine Mr. Ottuso or other relevant persons on the documents' contents or authenticity. Mr. Ottuso has not pointed to any exceptional circumstances (that is, apart from his own lack of diligence) that might weigh in favor of the extraordinary remedy of holding a supplemental hearing to allow Mr. Ottuso and Respondent to properly introduce and challenge the additional documents.
For due consideration, and for cause, it is
ORDERED that Petitioner's Motion to Reopen the Record, filed on November 3, 2022, is denied.