Opinion
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09-11-2024
SKYLAB SERIES OF FORTRESS INSURANCE, LLC, ET AL., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Ronald L. Buch Judge.
These consolidated cases are currently set for trial at the special session of the Court scheduled to commence on February 10, 2025, in Phoenix, Arizona. Pending before us is the Commissioner's Motion to Compel Responses to Interrogatories filed on July 18, 2024. The Commissioner's Motion seeks information relating to the financial activity of the parties and entities owned or controlled by the parties.
Court rules and orders may put constraints on discovery, and responding parties are protected from producing privileged information. Some of the Commissioner's discovery exceeds limits set by the Court's rules, some conflicts with a previously entered scheduling order, and some seeks privileged information. Accordingly, we will grant the Commissioner's Motion to Compel only in part.
Background
As required by Rule 70(a)(1) and Branerton Corp. v. Commissioner, 61 T.C. 691 (1974), the parties began discovery by engaging in informal discovery requests in late 2023. On April 9, 2024, the Commissioner served on petitioners a First Request for Admissions consisting of 104 numbered admissions. On May 8, 2024, petitioners responded with a denial of all or part of 61 of those admissions.
The Commissioner served petitioners with additional informal discovery requests on May 7th, 10th, and 13th of 2024. The Commissioner did not receive responses to these informal requests, and petitioners do not claim they responded to these informal requests. On June 11, 2024, pursuant to Rule 72, the Commissioner served petitioners with Second, Third, and Fourth Requests for Interrogatories.
The Commissioner filed a Motion to Compel Responses to Interrogatories pursuant to Rules 71(c) and 104(b) on July 18, 2024. Petitioners filed a response to Commissioner's Motion requesting an extension until August 5, 2024, to respond to Commissioner's Second and Third Requests for Interrogatories and denial of the Motion with respect to the Commissioner's Fourth Request for Interrogatories.
Discussion
A party generally may obtain discovery of information that is not privileged and is relevant to the subject matter of the case. Rule 70(a)(1) and (b); Rule 72(a). The Court applies the standard of relevancy liberally when it comes to matters of discovery, and a party challenging a discovery request has the burden of establishing that the requested information being sought is not discoverable. Dynamo Holdings Ltd. P'ship v. Commissioner, 143 T.C. 183, 189 (2014).
Discovery includes interrogatories, requests for production of documents, and depositions. Rule 70(a)(1). Without leave of the Court, a party may serve "no more than 25 written interrogatories, including all discrete subparts...." Rule 71(a). This limit does not apply to expert discovery, and it can be expanded with leave of the Court. Rule 71(a) and (d). With respect to consolidated cases, "discovery may be had by any party to the consolidated case." Rule 70(a)(3).
The work product doctrine may protect documents from disclosure. "The work product doctrine is distinct from and broader than the attorney-client privilege, which protects only communications between the attorney and client." Hartz Mountain Indus., Inc. v. Commissioner, 93 T.C. 521, 526 (1989). Rule 70(c)(3)(B) protects against the disclosure of documents containing "mental impressions, conclusions, opinions, or legal theories of a party's counsel or other representative concerning the litigation."
Second Request for Interrogatories
The Commissioner served petitioners with a Second Request for Interrogatories on June 11, 2024. Petitioners' response noted that they were in the process of finalizing their response to the Commissioner's Second Request for Interrogatories and that they expected "complete response [to] be provided to Respondent by August 5, 2024." Petitioners did not object to any of the requests in the Second Request for Interrogatories. We therefore grant the Commissioner's Motion with respect to the Second Request for Interrogatories to the extent petitioners have not already complied.
Third Request for Interrogatories
The Commissioner served petitioners with a Third Request for Interrogatories on June 11, 2024. Petitioners' response raised two objections. They objected because some of the information sought is subject to protection as work product. Further, petitioners objected because some of the discovery sought information pertaining to experts notwithstanding a scheduling order with specific deadlines for expert discovery. To the extent not covered by these objections, petitioners requested an extension until August 2, 2024 to provide a response to the interrogatories.
Requests 1 and 3 of the Third Request for Interrogatories request information that is protected by work product doctrine and that accelerates the pretrial schedule. The requests seek information about petitioners' expert witnesses that is expected to be in the expert witness report. The Court ordered pretrial deadline for exchange of expert witness reports, in accordance with Rule 143(g), was set for November 8, 2024. These requests accelerate the deadline set forth in the pretrial schedule. The Commissioner also seeks information relevant to preparing for trial, such as the documents petitioners intend to show the expert during the trial and potential issues with admissibility of the witnesses testimony. This information is protected under the work product doctrine as strategies for trial. And the timing for exchange and identification of trial exhibits is governed by the previously entered scheduling order. See Rule 70(c)(3)(B). We therefore sustain petitioners' objections for requests 1 and 3.
Requests 2 and 4 through 9 of the Third Request for Interrogatories do not fall within the work product doctrine and do not accelerate the deadlines set forth in the pretrial schedule. Petitioners raised no other objections in their Response and noted they would be able to complete their responses by August 2, 2024. We therefore grant the Commissioner's Motion with respect to requests 2 and 4 through 9 of the Third Request for Interrogatories to the extent petitioners have not already complied.
Fourth Request for Interrogatories
The Commissioner served petitioners with a Fourth Request for Interrogatories on June 11, 2024. Petitioners objected the Commissioner's Fourth Request for Interrogatories under Rule 71(a). The Fourth Request for Interrogatories have three requests that ask for information with respect to each Request for Admission that petitioner denied completely or in part. Petitioners denied in part or completely 61 of those requests for admissions.
The Fourth Request for Interrogatories is in violation on the number of interrogatories. See Rule 71(a). By making 3 inquires about 61 denied in part or completely requests for admissions, the Commissioner has in effect tacked on an additional 183 interrogatories onto his previous set of requests. We sustain petitioners objections to the Commissioner's Fourth Request for Interrogatories.
Accordingly, it is
ORDERED that the Commissioner's Motion to Compel Responses to Interrogatories is granted in part as stated herein. It is further
ORDERED that, to the extent petitioners' response is not complete, they shall supplement their response to Commissioner's Second and Third Request for Interrogatories by September 27, 2024.