Dinwiddie v. United States of America

Filing 35

MEMORANDUM DECISION AND ORDER re: 27 Interim MOTION for Discovery filed by Julie Dinwiddie. IT IS HEREBY ORDERED THAT: Julie's Motion for Additional Time Within Which to Disclose Advancing Expert Witnesses and Rebuttal Witnesses (Dkt. 27 ) is GRANTED. The deadline for completion of fact and expert discovery, as set forth in the Court's Scheduling Order, as Amended, shall be reset to March 26, 2020. The dispositive motion deadline shall be reset to April 25, 2020. Signed by Judge David C. Nye. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (ckh)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
JULIE DINWIDDIE,

Case No. 1:18-cv-00197-DCN
MEMORANDUM DECISION AND
ORDER

Plaintiff,
v.
UNITED STATES OF AMERICA,
Defendant.

I. INTRODUCTION
Pending before the Court is Plaintiff Julie Dinwiddie’s (“Julie”)1 Motion for
Additional Time Within Which to Disclose Advancing Expert Witnesses and Rebuttal
Witnesses (“Motion”). Dkt. 27. Having reviewed the record and briefs, the Court finds that
the facts and legal arguments are adequately presented. Accordingly, the Court finds that
the decisional process would not be significantly aided by oral argument, the Court will
decide the motions without oral argument. Dist. Idaho Loc. Civ. R. 7.1(d)(1)(B). Based on
the following, the Court finds good cause to GRANT Julie’s Motion.
II. BACKGROUND
A. General
This case revolves around the transfer of 100% of the shares of stock in Evergreen
Nursery, Inc. (“ENI”) from Jeff Dinwiddie (“Jeff”) to his wife, Julie, on January 5, 2012.

1

While the Court prefers to refer to parties by their last names, because both Mr. and Mrs. Dinwiddie will
be discussed in this order, the Court will utilize their first names.

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In January 2012, ENI was no longer an operating entity and its only asset was real estate
located at 12580 Old Seward Highway in Anchorage, Alaska (the “Property”). At the time
Jeff transferred the stock, his federal tax liabilities exceeded five-million dollars.
In December 2012, ENI sold the Property to Condor LLC (“Condor”) and provided
seller financing to Condor. Under the seller financing agreement, Condor makes monthly
payments to ENI, which accumulates in a bank account in ENI’s name.
In March 2018, Julie, as the sole owner of ENI, directed the bank to transfer more
than $94,000 from the ENI bank account to her personal account. The IRS levied these
funds in partial satisfaction of Jeff’s federal tax liability. Julie then filed this case on May
7, 2018, alleging that the IRS wrongfully levied on her property to satisfy the federal tax
liabilities of her husband. Dkt. 1.
B. Affirmative Defenses
As is relevant to the Motion, on June 27, 2018, the United States filed an answer to
Julie’s Complaint, asserting as its only affirmative defense that Julie was a nominee of her
husband with respect to ENI.2 Then, on February 5, 2019, in a response to an interrogatory,
the United States stated that Jeff’s transfer to Julie “was fraudulent under the laws of the
State of Alaska.” Dkt. 31-1, at 8. Roughly six months later, on August 1, 2019, the United
States filed an Amended Answer, adding fraudulent transfer as an affirmative defense. Dkt.
26. August 1, 2019, was also the expert rebuttal disclosures cutoff, but due to a series of
2

“A nominee is one who holds bare legal title to property for the benefit of another.” Fourth Inv. LP. v.
United States, 720 F.3d 1058, 1066 (9th Cir. 2013) (quotations omitted). “In the context of a wrongful levy
case, a nominee is essentially a proxy, or even a decoy, for someone else.” Turk v. I.R.S., 127 F. Supp. 2d
1165, 1167 (D. Mont. 2000).

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stipulated delays and extensions, Julie had until August 20, 2019, to submit rebuttal reports.
Julie filed this Motion on August 27, 2019, asking the Court to extend the expert
discovery cutoff date. She argues that the affirmative defense of fraudulent conveyance is
different than the affirmative defense that she was a nominee of her husband. With this
new affirmative defense, Julie contends she will need to submit an additional expert report
that will provide a proper valuation of the ENI stock that was transferred, rather than the
valuation of the Property. The United States counters that Julie was aware of its intent to
provide evidence of fraudulent transfer because it stated such in a response to
interrogatories. According to the United States, since Julie did not diligently seek this
discovery between February 5, 2019, and the close of expert discovery, there is no good
cause to modify the scheduling order to allow her additional expert report.
III. LEGAL STANDARD
Once entered, a scheduling order “controls the course of the action unless the court
modifies it.” Fed. R. Civ. P. 16(e). This scheduling order “may be modified only for good
cause and with the judge’s consent.” Id. at 16(b)(4). A district court may modify the pretrial
schedule “if it cannot reasonably be met despite the diligence of the party seeking the
extension.” Fed. R. Civ. P. 16 advisory committee’s notes (1983 amendment). The focus
of the inquiry, therefore, is upon the moving party’s reasons for seeking modification. C.F.
v. Capistrano Unified Sch. Dist. 654 F.3d 975, 984 (9th Cir. 2011) (quoting Johnson v.
Mammoth Recreations, Inc., 975 F.2d 604, 610 (9th Cir. 1992); T. Dorfman, Inc. v.
Melaleuca, Inc., 2013 WL 5676808 (D. Idaho October 18, 2013) at *2.

MEMORANDUM DECISION AND ORDER - 3

IV. DISCUSSION
Here, the Court finds good cause to grant Julie additional time to disclose expert
witnesses. Throughout discovery, Julie was undoubtedly preparing to both argue a case for
wrongful levy and address the United States’ only (at the time) affirmative defense that she
was a nominee of her husband. She had no reason to do otherwise; she had her burden to
meet, and the United States had announced its sole defense. When the United States
amended its Answer to include an affirmative defense of fraudulent conveyance, this
altered the expectations of discovery for both parties because arguing that Jeff fraudulently
transferred the stock is different than arguing solely that Julie was a nominee for Jeff. See
Turk v. I.R.S., 127 F. Supp. 2d 1165, 1168 (D. Mont. 2000) (analyzing nominee and
fraudulent conveyance as separate legal defenses). As such, Julie should have adequate
time to address the new facets of the case that this new defense brought.3
The Court rejects the United States’ argument that Julie failed to diligently pursue
this discovery because she had adequate notice of this defense via the February 5, 2019,
response to interrogatories. The language in the response that purportedly puts Julie on
notice simply states, “the transfer was fraudulent under the laws of the State of Alaska.”
Dkt. 31-1, at 8. Even if it can be said that this language is legally sufficient to alert Julia of

3

Julie did not object to the United States filing its Amended Answer. Dkt. 31-1, at 2. However, the
Amended Case Management / Scheduling Order required the parties to file any amended pleadings on or
before Feb. 11, 2019. Dkts. 13, 15. The Ninth Circuit has held that motions to amend filed after the
Scheduling Order deadline are governed not by the liberal provisions of Fed. R. Civ. P. 15(a), but instead
by the more restrictive provisions of Fed. R. Civ. P. 16(b) requiring a showing of “good cause.” Johnson
v. Mammoth Recreations, Inc., 975 F.2d 604 (9th Cir. 1992). Were this Court to deny Julie’s Motion, it
would also strike the Amended Answer as the United States has not shown good cause to excuse its
untimeliness.

MEMORANDUM DECISION AND ORDER - 4

the United States’ intent to utilize the fraudulent transfer affirmative defense, that language
was contained in a response to an interrogatory, not in an answer to a complaint. As such,
it cannot qualify as an affirmative defense. See Fed. R. Civ. Pro. 8(c) (“In responding to
a pleading, a party must affirmatively state any avoidance or affirmative defense.”). A
response to an interrogatory does not carry the same significance that an affirmative
defense does. The United States must have known this, which is why on August 1, 2019,
it filed an Amended Answer and included the new affirmative defense.
With that being said, if the United States feels that this expert testimony is flawed
or is inadmissible, it may certainly argue such at a different time. The Court’s decision that
Julie may disclose an additional expert does not mean that it is automatically going to
accept what that expert says. At this time, it is prudent and appropriate to allow Julie some
extra time to properly address the United States’ recently added affirmative defense.
V. ORDER
IT IS HEREBY ORDERED THAT:
1. Julie’s Motion for Additional Time Within Which to Disclose Advancing
Expert Witnesses and Rebuttal Witnesses (Dkt. 27) is GRANTED.
a. The advancing party shall have until February 5, 2020, to both identify
any additional Expert Witnesses and provide to the opposing party each
Expert’s Report prepared in compliance with this Court’s prior
Scheduling Order, as Amended;
b. The party presenting Rebuttal Expert(s) shall then have until February
25, 2020, to identify additional Rebuttal Witness(es)and provide to the
MEMORANDUM DECISION AND ORDER - 5

opposing party each Expert’s Report prepared in compliance with this
Court’s prior Scheduling Order, as Amended; and
c. The deadline for completion of fact and expert discovery, as set forth in
the Court’s Scheduling Order, as Amended, shall be reset to March 26,
2020.
d. The dispositive motion deadline shall be reset to April 25, 2020.

DATED: January 7, 2020
_________________________
David C. Nye
Chief U.S. District Court Judge

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