Michael Zubasic, et al v. Commissioner of Internal Reven

Filing

NOT PRECEDENTIAL PER CURIAM OPINION Coram: CHAGARES, KRAUSE and ROTH, Circuit Judges. Total Pages: 4.

Case: 16-1251

Document: 003112493052

Page: 1

Date Filed: 12/20/2016

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 16-1251
___________
MICHAEL W. ZUBASIC;
DAWN M. ZUBASIC,
Appellants
v.
COMMISSIONER OF INTERNAL REVENUE
____________________________________
On Appeal from the United States Tax Court
(Tax Ct. No. 14-018640)
Tax Court Judge: Honorable Robert P. Ruwe
____________________________________
Submitted Pursuant to Third Circuit LAR 34.1(a)
August 1, 2016
Before: CHAGARES, KRAUSE and ROTH, Circuit Judges
(Opinion filed: December 20, 2016)
___________
OPINION *
___________
PER CURIAM

*

This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.

Case: 16-1251

Document: 003112493052

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Date Filed: 12/20/2016

Michael and Dawn Zubasic appeal from the Tax Court’s order granting the
Commissioner’s motion to dismiss their petition for failure to prosecute. For the reasons
that follow, we will affirm the Tax Court’s order.
The Zubasics, who own a company called Basic Building Interiors, LLC, took a
deduction of $138,276 for depreciable business assets, and filed an income tax return
showing no tax liability for 2011. Thereafter, the Internal Revenue Service issued a
notice of deficiency, disallowing the business asset deduction and determining that the
Zubasics owed additional income tax and an accuracy-related penalty. The Zubasics
challenged the notice of deficiency by filing a petition in the Tax Court.
On April 9, 2015, the IRS informed the Zubasics that the Tax Court had scheduled
a trial session for November 2, 2015, asked the Zubasics for certain information and
documents, and urged the Zubasics to participate in the preparation of a Stipulation of
Facts. Several months later, the Tax Court officially informed the parties that the case
was set for trial on November 2, 2015. The Tax Court notice also set dates by which the
parties were to exchange any documents expected to be offered at trial, to file pretrial
memoranda, and to submit a joint stipulation of facts. Notably, the notice emphasized
that failure to comply with those requirements might result in dismissal of the case. The
Tax Court sent an additional notice to the parties on September 18, 2015, reminding them
to be present for trial and that failure to appear may result in dismissal of the petition.
The IRS wrote to the Zubasics on October 13, 2015, advising that the requested

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Case: 16-1251

Document: 003112493052

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Date Filed: 12/20/2016

documents had not been provided, suggesting a conference to discuss a possible
settlement, and noting the scheduled trial date.
The Tax Court called the case for trial as scheduled, but the Zubasics failed to
appear. The IRS filed a motion to dismiss based on the Zubasics’ failure to prosecute the
case. The Tax Court granted that motion on November 12, 2015, holding that the
Zubasics were liable for a tax deficiency and an accuracy-related penalty. The Zubasics
appealed.
We have jurisdiction pursuant to 26 U.S.C. § 7482(a)(1), and review the Tax
Court’s decision to dismiss the Zubasics’ petition for failure to prosecute under an abuse
of discretion standard. Sauers v. Comm’r, 771 F.2d 64, 66 (3d Cir. 1985) (citing Link v.
Wabash R.R. Co., 370 U.S. 626, 633 (1962)).
As noted by the Commissioner, the Zubasics offer no justification for their failure
to appear for the trial, and they do not specifically challenge the Tax Court’s decision to
dismiss the petition for failure to prosecute. Accordingly, any argument with respect to
the Tax Court’s dismissal has been waived. See United States v. Pelullo, 399 F.3d 197,
222 (3d Cir. 2005) (“It is well settled that an appellant’s failure to identify or argue an
issue in his opening brief constitutes waiver of that issue on appeal.”). Nevertheless, we
conclude that the Tax Court acted within its discretion in dismissing the Zubasics’
petition for failure to prosecute.
The Tax Court may “dismiss a case at any time and enter a decision against the
petitioner” if the petitioner fails to prosecute his or her case, to comply with the rules of
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Case: 16-1251

Document: 003112493052

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Date Filed: 12/20/2016

practice and procedure, or for any other cause the Tax Court deems sufficient. See 26
U.S.C. § 7453; Tax Court Rule 123(b). In particular, a case “may be dismissed for
failure properly to prosecute” if there is an “unexcused absence of a party . . . when a
case is called for trial.” Tax Court Rule 149(a). Here, the Zubasics were notified several
times about their pretrial obligations and the trial date. But they failed to cooperate with
the Commissioner, failed to submit a pretrial memorandum, and failed to appear for trial.
On appeal, the Zubasics appear to argue that they were not required to substantiate
the depreciation deduction because their tax return included Form 5213, titled “Election
to Postpone Determination as To Whether the Presumption Applies Than an Activity Is
Engaged in for Profit.” Even if the Zubasics are correct, their argument does not excuse
their obligation to prosecute their petition. Indeed, we have stated that “[a] party
disappointed with a court’s ruling may not refuse to proceed and then expect to obtain
relief on appeal from an order of dismissal or default.” Spain v. Gallegos, 26 F.3d 439,
454 (3d Cir. 1994) (explaining that when a plaintiff willfully refuses to proceed, a court
need not weigh the six factors set forth in Poulis v. State Farm Fire & Cas. Co., 747 F.2d
863, 868 (3d Cir. 1984), before dismissing the case for lack of prosecution).
Under these circumstances, dismissal of the Zubasics’ petition for failure to
prosecute was proper. See, e.g., Sauers, 771 F.2d at 66 (affirming Tax Court’s dismissal
for failure to prosecute where taxpayer refused in engage in a stipulation of facts and
indicated that he had no evidence to present at trial). Therefore, we will affirm the Tax
Court’s order.
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