Opinion
Case No. 8:02-CV-1112-T-27EAJ
August 13, 2003
ORDER
Before the court are Motion By United States Of America To Compel Responses To Deposition Questions (Dkt. 33) filed on July 1, 2003, Motion By United States Of America To Compel Responses To Deposition Questions Propounded To Alexander Petroski (Dkt. 35) filed on July 1, 2003, Defendant's Motion To Quash Interrogatories (Dkt. 37) filed on July 1, 2003, Defendant's Second Motion To Quash Interrogatories (Dkt. 38) filed on July 1, 2003, Supplemental Memorandum In Support Of Motion By United States Of America To Compel Responses To Deposition Questions Propounded To Defendant (Dkt. 41) filed on July 8, 2003, and Motion By United States Of America For Order to Show Cause Why Sanctions Should Not Be Imposed Pursuant to Federal Rule Of Civil Procedure 37(b)(2) (Dkt. 44) filed on July 9, 2003.
A hearing was held on July 31, 2003.
I. Background
The United States (hereafter "Plaintiff" or "Government") filed its complaint against Donna Gwinn d/b/a Classic Custom Cleaners a/k/a Classic Cleaners ("Gwinn") for failure and refusal to honor Internal Revenue Service ("IRS") levies. Alexander Petroski ("Petroski"), allegedly an employee of Gwinn's, was allegedly assessed numerous times for tax liabilities. The Government alleges that Gwinn was served with notices of levy on February 8, 2001, for $5,018.17 and $22,272.05, for all funds, including salary and wages, in her possession and due to Petroski. The Government contends that at the time the notices of levy were served on Gwinn, she was in possession of property belonging to Petroski. Defendant appears pro se.
II. Procedural Background
The Government served its first interrogatories and request to produce to Gwinn on January 2, 2003. When Gwinn failed to respond, the Government filed its first motion to compel on February 25, 2003 (Dkt. 10). When Gwinn did not respond to the Government's motion, on March 20, 2003, this court ordered her to respond to the discovery and produce responsive documents within twenty (20) days (Dkt. 15). Additionally, the court warned Gwinn that although she is pro se. she is required to comply with the discovery rules, and her failure to do so could result in sanctions, including default judgment (Dkt. 15 at 2).
Instead of complying with the court's order, on April 9, 2003, Gwinn filed a motion to declare the Government's first interrogatories unserved because the Government had not provided her with an electronic copy in compliance with Local Rule 3.03(f) (Dkt. 16). On April 15, 2003, the Government filed a motion for sanctions under Rule 37(b)(2) asserting that Gwinn had failed to respond to both the interrogatories and the request to produce and requesting the court strike Gwinn's answers to certain paragraphs of the complaint (Dkt. 17). April 25, 2003, after consideration of those motions and responses, the court determined that Local Rule 3.03(f) does not require service of interrogatories electronically but rather encourages parties to serve questions on computer disk (Dkt. 21). Additionally, the court ruled that Gwinn's assertion that she had prepared responses to discovery but was awaiting the court's order on her motion to declare interrogatories unserved did not excuse her from compliance with the court's order requiring her to respond to discovery, especially the request to produce since there was no argument asserted with respect to it (Dkt. 21 at 5).
However, this court declined to assess sanctions since striking Gwinn's answer would have been tantamount to entry of judgment of default and such a drastic order was not "just" at that time. Instead, Gwinn was again cautioned that future non — compliance with the rules or orders of the court would result in sanctions (Dkt. 21 at 6).
Defendant Gwinn served responses to the discovery to the Government. On May 28, 2003, the Government filed a second motion to compel (Dkt. 26) asserting that Gwinn's responses were inadequate to numerous interrogatories and requests to produce. Defendant Gwinn failed to respond to the Government's second amended motion and, on June 18, 2003, the court entered an order granting the motion and ordering Gwinn to provide full and complete responses to the enumerated interrogatories and requests to produce within ten (10) days (Dkt. 32). The court also warned that Gwinn's failure to comply with the order would subject her to a show cause hearing as to why sanctions should not be imposed (Dkt. 32 at 3).
Meanwhile, on May 16, 2003, Gwinn filed a motion to dismiss for lack of evidence (Dkt. 22). Gwinn asserted that she is not in possession of any assets belonging to Alexander Petroski, and the Government has failed to produce any evidence to the contrary. On May 21, 2003, Gwinn filed an amendment to her motion to dismiss (Dkt. 23) wherein she asserted that the Government is on a fishing expedition and since the Government has not produced to her a certified copy of the lien against Petroski, any levy based upon that lien is invalid. The district judge denied Gwinn's motion as the court's consideration of a motion to dismiss is confined to the complaint (Dkt. 31). Moreover, the district court stated that Gwinn's arguments may be raised in a motion for summary judgment after the close of discovery. See Vining v. Runyon, 99 F.3d 1056, 1058 (11th Cir. 1996).
Since then, both Gwinn and Alexander Petroski were deposed by the Government on June 24, 2003. Both asserted the Fifth Amendment privilege against self-incrimination. The Government moves to compel their responses to certain questions posed during the depositions on the basis that they implicitly waived their Fifth Amendment privilege (Dkts. 33 and 35). The Government also moves for a show cause order seeking sanctions against Defendant by striking her pleadings for her alleged failure to comply with the court's previous orders requiring her to provide full and complete responses to interrogatories and request to produce (Dkt. 44). Defendant Gwinn meanwhile moves for an order quashing the interrogatories (Dkts. 37 38) on the basis that the levies are invalid because the Government has failed to produce to her the lien against Petroski.
III. Discussion A. Sanctions
Plaintiff maintains that after three orders (Dkts. 15, 21, and 32), Defendant has not adequately responded to Plaintiff's first interrogatories and first request for production, nor has she produced any of the requested documents, except for two bank statements.
The interrogatories at issue are: 4, 8, 9, 10, 11, 12, 15, 18, 20, 21, and 22. The requests to produce at issue are: 4, 5, 6, 7, 8, 10, 11, 12, 13, 14 and 15.
As a sanction for her failure to respond to discovery, Plaintiff requests that the court strike Gwinn's answers to paragraphs 5 and 18 of Plaintiff's complaint, conclusively establishing those facts. Paragraph 5 states that Alexander Petroski is an employee of Defendant. Paragraph 18 provides that at the time the notices of levy were served on Gwinn, she was in possession of property or obligated with respect to Alexander Petroski. Additionally, paragraph 18 states that since the date of the notices of levy, Petroski continued his employment with Gwinn and has continued to earn salary or wages subject to the levies. Plaintiff argues that this sanction is warranted because these are the facts that the Government seeks to prove through the discovery requests to which Gwinn has failed to respond.
At the July 31, 2003, hearing, Defendant Gwinn argued that she did not have the answers and documents sought by the Government and she believes that she is being harassed or coerced into creating documents. Before reaching the issue of whether sanctions are appropriate/ the court first examines each of the interrogatories and requests at issue.
Defendant Gwinn's supplemental responses to discovery are attached as Exhibit "A" to the Government's motion for order to show cause. It appears that Gwinn supplemented her answers to interrogatories and attached copies of two bank statements in response to the request to produce. One of the statements is an Amsouth "At Work Primary Ck" account statement from April 12, 2003 through May 12, 2003, listing Gwinn was the account holder and her address as 2001 83rd Ave. N. Lot 1044, St. Petersburg, FL 33702-3902. The second statement is also an Amsouth statement for a "Bus Essentials Cking Plus" account for April 1, 2003 through April 30, 2003, listing Classic Custom Cleaners as the account holder and Gwinn's address. However, it does not appear that Gwinn served a supplemental written response to the Government's request to produce.
After review of the interrogatories, Defendant's original responses and supplemental responses, the court finds that Defendant's responses to interrogatories 8, 10, 11, 12, 15, 18, 21 and 22 are incomplete. Defendant's answers to interrogatories 4, 9 and 20 are sufficiently responsive. The Government argues that Defendant's responses to interrogatories 4, 9, and 20 are evasive because Defendant has responded "none" when the Government asserts that it has information contrary to that response. However, the Government simply asked for better responses and did not seek to strike the answers as false in the prior motion to compel. The veracity of a party's response is challenged through other procedures.
However, the court finds that where Defendant responds "none" but couples that response with a phrase such as "beyond the scope of the petition" or "no legal requirement to maintain records," such a response is evasive.
Moreover, by way of example, Defendant' s supplemental response to interrogatory 8, which asks Defendant to list Petroski's salary, that "these records do not exist" is evasive. As further example, Defendant's response to interrogatory 10 is also evasive. Interrogatory 10 requests Gwinn to identify financial relationships with Petroski, and lists by way of example common financial relationships. In Gwinn's supplemental response, she defines the listed relationships and concludes none based upon her definitions.
The court orders Defendant to supplement her answers to interrogatories 8, 10, 11, 12, 15, 18, 21 and 22 fully and completely without evasion. Since Defendant has not supplemented her written responses to requests to produce, Defendant is also ordered to supplement her responses to Plaintiff's requests 4, 5, 6, 7, 8, 10, 11, 12, 13, 14 and 15 fully and completely in writing without evasion. Defendant shall also serve Plaintiff with any responsive documents not already produced.
Defendant is afforded this final opportunity because the sanction sought by the Government is drastic. Given Defendant's history in failing to respond to written discovery, her failure to file responses to the Government's motions to compel, but continued assertion of objections, such a drastic sanction will be warranted should Defendant's second supplemental responses prove to be evasive or incomplete.
For the reasons subsequently discussed, Defendant's objections to the discovery are not only untimely, but they are also without merit.
B. Validity of Tax Levy
Defendant seeks to quash Plaintiff's interrogatories and contends that the interrogatories served are irrelevant because the notices of levy were not valid. She maintains that a levy is invalid unless a warrant of distraint and the notice of federal tax lien accompanies it and, in the instant case, the notice of tax lien was not served with the levies. Defendant also seeks certified copies of the tax lien assessed against Petroski.
In response, Plaintiff first argues that Defendant's motion is untimely and Defendant is not entitled to the information she seeks. Pursuant to Fed.R.Civ.P. 33(b)(4), the time to object to interrogatories has expired. Additionally, Plaintiff argues that Defendant's arguments as to the validity of the levies have no bearing on whether the interrogatories should be quashed and instead go to the merits of her position in defending the lawsuit. Finally, the Government submits that Gwinn is not entitled to a copy of any lien pertaining to Alexander Petroski because the only two defenses Gwinn may assert are: (1) that she is not in possession of property or rights to property of Petroski; or (2) that the property in question is subject to prior judicial attachment or execution.
This court agrees that Defendant's objection is untimely and that Defendant's argument is more properly addressed in a dispositive motion. Defendant has asserted this argument in a motion to dismiss which was denied by the district court (Dkt. 31). The scope of discovery is any matter, not privileged, that relates to a claim or defense. Fed.R.Civ.P. 26(b)(1). Defendant has not demonstrated that the interrogatories do not relate to the claim asserted by the Government in this action.
The court need go no further in ruling on Defendant's motions to quash. However, the court briefly examines Defendant's contention that the notices of levy are insufficient.
A person served with the notice of a tax levy has only two defenses for failure to comply with the demand: that it is neither "in possession of" nor "obligated with respect to" property or rights to property belonging to the delinquent taxpayer or that taxpayer's property is subject to prior judicial attachment or execution. See United States v. National Bank of Commerce, 472 U.S. 713, 721-22 (1985) (citing 26 U.S.C. § 6332(a). Where these defenses do not apply, the Government's interest in the speedy collection of taxes trumps other claimant's interest in the property and allows the IRS to levy on assets and resolve ownership disputes in post-seizure administrative or judicial proceedings.Id.
Moreover, 26 U.S.C. § 6331 (d) sets forth the requirements of a levy and a certified copy of the tax lien upon which the levy is based is not a requirement of a levy. Levy procedures do not determine ownership rights. Id. Additionally, the contested validity of the underlying tax liability does not alter the obligation of a third party to whom a tax levy is issued. See Schiff v. Simon Schuster, Inc., 780 F.2d 210, 212 (2d Cir. 1985), In Schiff, a taxpayer sued his publisher for allegedly honoring an improperly perfected IRS levy. Id. at 211. The Second Circuit held that the form of the levy (whether by notice of levy or levy form) is immaterial. 26 U.S.C. § 6331 (d) provides that the term levy includes the power of distraint and seizure "by any means. "Id.
See also United States v. Campbell (In re Campbell), 761 F.2d 1181, 1185 (6th Cir. 1985); Al-Kim. Inc. v. United States, 650 F.2d 944, 947 (9th Cir. 1981).
Thus, Defendant's arguments in support of her contention that the interrogatories should be quashed are not a bar to discovery.
In her second motion to quash interrogatories Defendant argues that the interrogatories should be quashed because she believes the attorney for the Government has been harassing her. Defendant Gwinn does not recite any facts in support of this allegation other than counsel's efforts to obtain accurate responses to discovery. A party is entitled to undertake discovery and counsel's efforts to secure accurate responses to discovery does not constitute harassment. Accordingly, no basis exists to quash the Government's interrogatories.
Finally, during the July 31, 2003, hearing, Gwinn argued that the discovery sought from her is improper because the notices of levy are insufficient under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692. However, Defendant could not cite to any particular provision in the FDCPA that was violated or to any authority that provides that the FDCPA applies to IRS collections. The FDCPA, by its terms, does not apply to employees of the Government whose collection activities are part of their jobs. See 15 U.S.C. § 1692a(6). Waiver of Fifth Amendment Privilege
However, within the Internal Revenue Code itself, the IRS is required to observe certain enumerated fair collection practices. See 26 U.S.C. § 6304. Disclosure of a debt instrument is not a listed fair collection practice within § 6304.
During Gwinn's deposition on June 24, 2003, she refused to answer the majority of the questions posed to her and asserted her Fifth Amendment privilege. Petroski also refused to answer some questions during his deposition, instead asserting his Fifth Amendment privilege against self-incrimination. Plaintiff contends that Gwinn and Petroski waived their Fifth Amendment privileges.
With respect to Gwinn, the Government argues that she "opened the door" to certain subject areas by her assertion of certain facts in her original and supplemental answers to interrogatories, production of documents in response to Plaintiff's request for production, identification of documents at her deposition, and pleadings. The Government argues that Petroski waived his Fifth Amendment privilege by partially answering some of the questions posed to him and then by invoking the Fifth Amendment whenever he wanted to stop answering questions.
The Government does not dispute the predicate for the assertion of the privilege by either Gwinn or Petroski but rather asserts that any privilege has been waived.
The privilege not to give self-incriminating evidence, while absolute when claimed, may be waived by anyone entitled to invoke it. The privilege of a witness is waived if not claimed, or if not claimed in a timely manner. See generally Minnesota v. Murphy, 465 U.S. 420, 427-29 (1984). The Fifth Amendment privilege may be asserted by a witness in any proceeding, civil or criminal, where the witness reasonably believes disclosure could be used in a criminal prosecution or could lead to other evidence that might be so used. Kastigar v. United States, 406 U.S. 441, 444-45 (1972).
A witness who testifies to certain facts can be compelled to testify further because the disclosure of a fact waives the privilege as to its details. Scarfia v. Holiday Bank, 129 B.R.
671, 675 (M.D.Fla. 1990). To allow a witness to plead a blanket Fifth Amendment privilege after volunteering information and to refuse to answer any further questions on the subjects covered in his earlier testimony would allow the witness to prematurely close a door which he freely opened. In re Mudd, 95 B.R. 426, 430 (N.D.Tex. 1989) (citations omitted). The law does not permit a witness to open the door just enough to offer the court an impaired view of the facts. Id. Once the witness voluntarily opens the door, the court may open it completely and scrutinize every exposed matter. Id.
The Fifth Amendment privilege is waived for matters to which the witness testifies. Mitchell v. United States, 526 U.S. 314, 321 (1999) (citing Brown v. United States, 356 U.S. 148, 154-155 (1958)). A witness may waive his Fifth Amendment privilege as to any matters addressed by the witness in an affidavit to the court. Nutramax Laboratories. Inc. v. Twin Laboratories. Inc., 32 F. Supp.2d 331, 334. An affidavit operates like any other testimonial statement. Id. at 334.
Additionally, if a the privilege is waived as to testimonial admissions, it is waived as to documentary admissions on the same subject matter. In re Donald Sheldon Co., Inc., 93 F. Supp.2d 503, 505 (S.D.N.Y. 2000). Where a witness provides statements as to his finances in papers submitted to the court, he is deemed to have waived his Fifth Amendment privilege on the same subject matter. Id.
After review of the record before the court, and based upon Defendant's responses to discovery and her submissions to the court, the court finds that Gwinn has waived her Fifth Amendment privilege as to the following subject areas:
(1) past and present employment;
(2) finances, including monthly expenses such as rent and source of income, receipt of trust, disability, and annuity income, if any, circumstances surrounding the purchase of her mobile home, tax returns, financial statements, maintenance of records related to business or finances, and personal checking accounts;
(3) living arrangements;
(4) Classic Custom Cleaners or Classic Cleaners including the following;
(a) its purchase and conveyance/
(b) its gross receipts;
(c) expenses;
(d) employees or independent contractors past and present and their remuneration;
(e) its current ownership;
(f) time sheets, work logs or other records of dates and times that employees of Classic Custom Cleaners worked;
(g) maintenance of records;
(h) employment tax returns;
(i) identification of others with an interest with Classic Custom Cleaners;
(j) customers;
(k) suppliers;
(1) hours of operation;
(m) managers;
(n) placards regarding payment through checks;
(5) relationships with Alexander Petroski including:
(a) any monies paid to Petroski from Gwinn or Classic Custom Cleaners or Classic Cleaners;
(b) Petroski's current duties for Classic Custom Cleaners or Classic Cleaners;
(c) any partnerships with Petroski;
(d) participation in any corporate entities with Petroski;
(e) personal financial relationship with Petroski;
(f) exchange of gifts with Petroski;
(g) possession of property belonging to Petroski;
(h) debts owed to or from Petroski, past and present;
(i) other business ventures with Petroski;
(j) records of payments to or from Petroski;
(l) contracts with Petroski;
(m) cancelled checks or receipts written to Petroski;
(n) documents identifying any financial relationships with Petroski;
(6) Gwinn's current duties for Classic Custom Cleaners or Classic Cleaners;
(7) Classic Custom Cleaner's bank accounts, payroll accounts or operating accounts;
(8) reasons for failure to honor levy;
(9) whether she and Petroski purposefully keep changing the ownership of Classic Custom Cleaners in any way; and
(10) any efforts to confuse the ownership of Classic Custom Cleaners.
Gwinn has not waived her Fifth Amendment privilege as to the following subject areas: past arrests or convictions, education, documents reviewed in preparation for deposition, discussions with others in preparation for deposition, J. B. Hadden Industries, familiarity with caselaw such asUnited States v. Odell, David Bosett, Eddie Kahn, Milton Baxley, Thurston Bell, Irwin Schiff, American Rights Litigators, Mary Bernard, and identity of those who instructed her on legal research.
Based upon Petroski's answers to some questions during his deposition, Petroski has waived his Fifth Amendment privilege as to the following subject areas:
(1) alleged fire that destroyed documents requested by the Government in the subpoena;
(2) possession of the documents requested by the Government in its subpoena;
(3) location of the alleged fire, the property alleged damaged by the fire and its ownership;
(4) residence;
(5) employment, and if self-employed, methods by which he earns or earned income;
(6) employment with or for Donna Gwinn;
(7) White Pine Management;
(8) remuneration from Classic Custom Cleaners;
(9) knowledge and experience with dry cleaning business;
(10) compensation or remuneration received from White Pine Management;
(11) income;
(12) expenses;
(13) finances, ie how Petroski pays or paid expenses such as rent or a mortgage;
(14) employees of Classic Custom Cleaners;
(15) J. B. Hadden Industries;
(16) his operation of a business at 6393 9th Street North; and
(17) bank accounts.
Petroski has not waived his Fifth Amendment privilege as to the following topics: his marriage, children, education, persons with whom he spoke in preparation for the deposition, and credit cards issued by Leadenhall Bank Trust.
During the hearing on July 31, 2003, Petroski argued that he cannot waive his Fifth Amendment privilege without an attorney. However, he could not provide the court with any authority in support of this argument. The court afforded Petroski an opportunity to file supplemental authority. Defendant filed a pleading entitled "Additional Information To Motions Discussed July 31, 2003 At Hearing Before Judge Jenkins" on August 4, 2003 (Dkt. 52). While this pleading contains continued argument that the notices of levy are insufficient, no authority is cited in support of the argument that a witness may not waive his Fifth Amendment privilege without counsel. An individual may lose the benefit of the privilege inadvertently, without a knowing and intelligent waiver. Murphy, 465 U.S. at 428. Therefore, Petroski's argument is without support.
Conclusion
Upon consideration, it is ORDERED and ADJUDGED:
(1) The Government's motions to compel deposition testimony from Defendant and Alexander Petroski (Dkts. 33 and 35) are GRANTED in part and DENIED in part, as more fully set forth above;
(2) Gwinn and Petroski shall submit to a second deposition and answer questions on the subject areas specified above within twenty (20) days from the date of this order as scheduled by the Plaintiff;
(3) Defendant's motions to quash interrogatories (Dkts. 37 and 38) are DENIED;
(4) The Government's motion for sanctions (Dkt. 44) is DEFERRED pending Gwinn's compliance with paragraphs (2) and (5) of this order; and
(5) Defendant Gwinn shall serve supplemental fully responsive written responses to the interrogatories and requests to produce specified above and serve Plaintiff with responsive documents to the extent not already produced within twenty (20) days from the date of this order;
(6) Failure to comply with this order shall subject Gwinn and Petroski to appropriate sanctions.DONE AND ORDERED.