USA v. Nugent

Filing 22

MEMORANDUM OPINION & ORDER: (1) DENYING Nugent's 16 FIRST MOTION to Strike the IRS Account Transcripts; (2) DENYING Nugent's 15 FIRST MOTION to Strike the Declaration of Revenue Officer Glenda Granville; (3) disc for purpose of d ft taking depo of Revenue Officer Granville will close in 30 days; after depo is taken, dft shall have 21 days to file a supplemental response to pla's mot for S/J; pla shall have 14 days to file a supplemental reply to dft's response. Signed by Judge Joseph M. Hood on 9/25/17.(KJR)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
UNITED STATES OF AMERICA,
Plaintiff,
v.

THOMAS NUGENT,
Defendant.

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Action No. 5:16-cv-380-JMH

MEMORANDUM OPINION
AND ORDER

****
I. INTRODUCTION
This matter is before the Court upon Defendant Thomas Nugent’s
Motions to Strike [DE 15; 16]. Nugent wishes to strike two pieces
of evidence from the record that Plaintiff United States attached
to its Motion for Summary Judgment: (1) the declaration of Internal
Revenue Service (“IRS”) Officer Glenda Granville and (2) IRS
account transcripts. [Id.]. Plaintiff has responded to Defendant’s
motion. [DE 21]. It is now fully briefed and ripe for the Court’s
review. For the reasons stated herein, IT IS ORDERED that Nugent’s
Motions to Strike are DENIED. However, this Court ORDERS that
discovery for the sole purpose of Defendant taking the deposition
of Revenue Officer Glenda Granville be open for 30 days.
II.

FACTUAL AND PROCEDURAL BACKGROUND

1 

Between 2006 and 2008, delegates of the Secretary of the
Treasury made assessments of more than $230,000 against Thomas
Nugent for unpaid federal income taxes for tax years 2003 through
2007. [DE 1, p. 2, ¶5]. When combined with interest and penalties,
the total amount the Government seeks to recover is $496,499. [DE
1, p. 2, ¶8]. The United States filed this action on October 5,
2016 to reduce Nugent’s federal tax assessments to judgment. [DE
1]. In his answer, Nugent denied he owes the amount sought by the
Government, although he admits he has some tax liability. [DE 5,
p. 1, ¶6].
After Nugent filed his answer, this Court held a hearing and
set a truncated discovery period. [DE 7; 8]. In April, the parties
filed a Joint Motion for Extension of Time to Complete Discovery
for the purpose of taking the depositions of Nugent and accountant
Williams P. Farmer, Jr. [DE 9]. The Court granted the motion. [DE
10].

The parties did not exchange initial disclosures. [DE 21, p.

5, n. 3]. The Government supplied Nugent with copies of the account
transcripts

during

discovery.

[Id.,

p.

5].

Nugent

used

the

transcripts in his Motion for Judgment on the Pleadings. [DE 124; 12-5]. The Government also informed Nugent that a witness would
testify to explain the account transcripts. [DE 21, p. 5]. Nothing
in the Record indicates Nugent ever asked for the witness’s name
or information.

2 

Months later, and after the United States moved for summary
judgment, Nugent filed his Motion to Strike the declaration of
that witness testifying about the transcripts—Revenue Officer
Glenda Granville. [DE 15]. Nugent has also filed a motion to strike
the transcripts themselves. [DE 16]. Specifically, Nugent asks
this

court

to

strike

the

transcripts

because

they

are

not

authenticated under Fed. R. Evid. 902(1). [Id.]. He asks this Court
to strike the Granville declaration on two theories: (1) under
56(d) because he did not have an opportunity to depose Granville
since the Government failed to turn over her information during
discovery; and (2) under 56(c)(4) because Granville’s statements
are not based on personal knowledge. [DE 15]. The Court now
considers both motions, and each argument raised therein, in turn.
III. ANALYSIS
A. Standard of Review

(i)

Motion to Strike Account Transcripts

“A party may object that the material cited to support or
dispute a fact cannot be presented in a form that would be
admissible in evidence.” Fed. R. Civ. P. 56(c)(2). Evidence that
is not authenticated is not admissible. Fed. R. Evid. 901. “To
satisfy the requirement of authenticating or identifying an item
of evidence, the proponent must produce sufficient evidence to

3 

support a finding that the item is what the proponent claims it
is.” Fed.

R.

Evid. 901(a).

The standard under Rule 56(c)(2) “is not that the material
‘has not’ been submitted in admissible form, but that it ‘cannot’
be.” Farnhurst, LLC v. City of Macedonia, No. 5:13-cv-668, 2016 WL
524361, at *2 (N.D. Ohio Feb. 10, 2016) (citing Foreward Magazine,
Inc. v. OverDrive Inc., No. 1:10-cv-1144, 2011 WL 5169384 at *2
(W.D. Mich. Oct. 31, 2011)). “The objection functions much as an
objection at trial, adjusted for the pretrial setting. The burden
is on the proponent to show that the material is admissible as
presented or to explain the admissible form that is anticipated.
There is no need to make a separate motion to strike.” Id. (quoting
Fed. R. Civ. P. 56 (2010 Advisory Committee comments)).
(ii)

Motion to Strike Granville Declaration

“An affidavit or declaration used to support or oppose a
motion must be made on personal knowledge, set out facts that would
be admissible evidence, and show that the affiant or declarant is
competent to testify on the matters stated.” Fed. R. Civ. P.
56(c)(4).

Evidence

not

based

on

personal

knowledge

“may

be

disregarded on Summary Judgment.” Lloyd v. Midland Funding, LLC,
639 Fed App’x 301, 304 (6th. Cir. 2016). This rule “limits the
matter to be properly included in an affidavit to facts, and the
facts introduced must be alleged on personal knowledge.” Ondo v.
4 

City of Cleveland, 795 F.3d 597, 605 (6th Cir. 2015) (quoting 10B
Wright, Miller & Kane, Federal Practice and Procedure § 2738, at
345-46 (3d ed.1998)).
After a party files a motion for summary judgment, the
opposing party may make a motion under Rule 56(d). To receive
relief under Rule 56(d), the nonmovant must “show by affidavit or
declaration that, for specified reasons, it cannot present facts
essential to justify its opposition.” Fed. R. Civ. P. 56(d). If
the nonmovant makes such a showing, the Court may:

(1) defer

considering the motion or deny it; (2) allow time to obtain
affidavits or declarations or take discovery; or (3) issue any
other appropriate order.” Id. “Mere speculation that there is some
relevant

evidence

not

yet

discovered

will

never

suffice.”

Saulsberry v. Fed. Exp. Corp, 552 Fed. App’x 424, 427-28 (6th Cir.
2014) (quoting 11 Moore, et all,

Moore’s Federal Practice

§

56.102[2](2012)).
B. Account Transcripts
Nugent argues that the Government has not authenticated the
account transcripts because the transcripts do not satisfy Federal
Rule of Evidence 902(1). [DE 16, p. 1]. Rule 902 lists items of
evidence considered self-authenticating; that is, they require no
extrinsic evidence to establish authenticity. Fed. R. Evid. 902.
Under 902(1), documents signed and under seal of the United States
5 

are considered self-authenticated. Because the Government has
failed to submit the transcripts under seal, Nugent argues they
are not authenticated and thus not admissible. [DE 16, p. 1].
Nugent is correct that the Government has not met 902(1). But
Nugent is incorrect that the Government must satisfy 902(1). While
that rule offers one route to authenticate documents, it is by no
means exclusive. Indeed, the Government never argues that the
transcripts

are

authenticated

under

902(1).

Instead,

the

Government attempts to authenticate the transcripts as business
records. [DE 21, p. 6].
Evidence may be admissible as a business record even if it
would otherwise be hearsay. Fed. R. Evid. 803(6). Under Rule
803(6), a proponent may admit documents as business records if:
“(A) the record was made at or near the time by – or from
information transmitted by – someone with knowledge; (B) the record
was kept in the course of a regularly conduct activity of a
business, organization, occupation, or calling, whether or not for
profit; (C) making the record was a regular practice of that
activity.” Fed. R. Evid. 803(6)(A)-(C). The proponent must show
all of these conditions through a “custodian or another qualified
witness.” Fed. R. Evid. 803(6)(D). This Circuit has explained that
the

party

offering

evidence

under

803(6)

must

satisfy

four

requirements: “(1) it was made in the course of regularly conducted

6 

business activities; (2) it was kept in the regular course of
business; (3) the regular practice of that business must have been
to have made the [document]; and (4) the document was made by a
person with knowledge of the transaction or from information
transmitted by a person with knowledge.” United States v. Nixon,
694 F.3d 623, 634 (6th Cir. 2012) (quoting Cobbins v. Tenn. Dep’t
of Transp., 566 F.3d 582, 588 (6th Cir. 2009)).
Thus, for the transcripts to be admissible under 803(6),
Granville must (1) be a qualified witness under 803(6)(D); and (2)
establish the factors outlined in 803(6)(A)-(C). We first consider
whether Granville meets the requirements of a “qualified witness.”
“[T]he meaning of another qualified witness should be given
the broadest interpretation.” United States v. Collins, 799 F.3d
554, 582 (6th Cir. 2015); United States v. Baker, 458 F.3d 513,
518 (6th Cir. 2006) (“The phrase other qualified witness is given
a very broad interpretation.”). “The only requirement is that the
witness be familiar with the record keeping system.” Collins, 799
F.3d at 582; Dyno Constr. Co. v. McWane, Inc., 198 F.3d 567, 57576 (6th Cir. 1999). “The qualifying witness does not need to have
any personal knowledge of the records’ preparation.” Collins, 799
F.3d at 582; United States v. Salgado, 250 F.3d 438, 452 (6th Cir.
2001). Witnesses who testify that they are familiar with records
through training and experience and that they commonly deal with

7 

the records at issue will qualify under 803(6)(D). See United
States v. Jenkins, 345 F.3d 928, 936 (6th Cir. 2003).
Granville is a qualified witness.

She has worked for the IRS

for more than three decades. [DE 13-2, p. 3, ¶8]. As a revenue
officer,

she

is

familiar

with

and

has

access

to

account

transcripts. [Id., p. 1, ¶3]. Granville explains the information
listed

in

the

transcripts

and

how

the

IRS

maintains

the

transcripts. [Id., p. 1-2, ¶¶ 3-4]. Granville plainly is “familiar
with the record keeping system” for account transcripts at the
IRS. See Collins, 799 F.3d at 582. This meets 803(6)(D)’s standard.
As a qualified witness, Granville must also satisfy the other
requirements in Rule 803(6). Her declaration makes clear that
account transcripts are “maintained in the regular course of
business . . . as part of the performance of our official duties
at the Service.” [DE 13-2, p. 1, ¶3]. These statements establish
that the transcripts meet 803(6)(B) and (C).
As for 803(6)(A), the Government must establish that the
transcripts were “made at or near the time by – or from information
transmitted by – someone with knowledge.” The qualified witness
herself need not have personal knowledge of the records’ creation.
See Salgado, 250 F.3d at 453; Dyno, 198 F.3d at 576. So long as
the qualified witness understands the recordkeeping system and can
testify that the 803(6) factors are met, the records are not
8 

excludable. See Dyno, 198 F.3d at 576. This is true even when the
witness

does

not

“have

personal

knowledge

of

or

personally

participate in their creation, or even know who actually recorded
the information.” Caudill v. Cavalry SPV I, LLC, No. 14-32-ART,
2014 WL 4230811, at *4 (Aug. 25, 2014). In other words, to
authenticate business records, the qualified witness need only be
familiar with the recordkeeping practices and attest that the
records at issue meet the 803(6) factors. See United States v.
Weinstock, 153 F.3d 272, 276 (6th Cir. 1998); In re Custodian of
Records of Variety Distributing Inc., 927 F.2d 244, 248 (6th Cir.
1991).
Granville describes the account transcripts as “true and
correct.” [DE 13-2, p. 2, ¶5]. She explains how the IRS collects
and maintains the transcripts. [Id., p. 1-2, ¶¶3-4]. She describes
how keeping account transcripts falls within the official duties
of revenue officers. [Id., p. 1, ¶ 3]. In short, her declaration
establishes that the transcripts would have been made by a person
with knowledge in the regular course of business. This satisfies
803(6)(A).
As

business

records,

the

account

transcripts

are

authenticated under 901 through Granville. Nugent’s motion to
strike the account transcripts is thus DENIED.
C. Granville Declaration
9 

Nugent objects to Granville’s declaration and moves to strike
based on two theories. First, he claims Granville does not have
sufficient personal knowledge to meet Fed. R. Civ. P. 56(c)(4).
[DE 15, p. 4-5]. Second, Nugent argues that because the United
States did not reveal Granville’s name, address, and telephone
number during discovery, the Court must strike her declaration
from the record. [Id., p. 1].
Personal knowledge can derive from a review of business
records. See Dykhouse v. Hoffman, 9 F.3d 107 (table), 1993 WL
424845,

at

satisfied

*6

(6th

because

Cir.

Oct.

statements

19,
were

1993)

(personal

“based

upon

her

knowledge
personal

familiarity with the case and her review of the files”); Farnhurst,
LLC v. City of Macedonia, NO. 5:13-cv-668, 2016 WL 524361, at *2
(N.D. Ohio Feb. 10, 2016) (“[F]acts based upon the affiant’s review
of relevant business records . . . does not offend the ‘personal
knowledge’ requirement of Rule 56(c)(4).”); Daniel v. West Asset
Mgmt., Inc., No. 11-10034, 2011 WL 5142980, at *9 (E.D. Mich. Oct.
28, 2011) (holding that an affiant’s review of business records
satisfied Rule 56’s personal knowledge requirement);

Orrand v.

Keim Concrete Pumping, Inc., NO 2:08-CV-1046, 2010 WL 3447647, at
*8 (S.D. Ohio Aug. 30, 2010) (“an affiant may testify to acts that
she did not personally observe but which are described in business
records.”); Supplier’s City SA De, CV v. EFTEC N. Am., LLC, No.
07-12694,

2010

WL

538427,

at

*7
10 

(E.D.

Mich.

Feb

10,

2010)

(“Personal knowledge can come from review of the contents of
business records”);

Kelecseny v. Chevron USA, Inc., NO. 08-61294-

CIV-ALTONAGA, 2009 WL 10667062, at *6 (S.D. Fla. June 4, 2009)
(“personal knowledge, as innumerable decisions from the federal
courts

make

clear,

may

be

gleaned

from

a

review

of

records

pertinent to a given case.”); AT & T Corp. v. Overdrive, Inc., No:
1:05-CV-1904, 2006 WL 3392746, at *2 (N.D. Ohio Nov. 21, 2006)
(“Personal knowledge can come from review of the contents of
business records”); Washington Cent. R.R. Co., Inc. v. Nat’l
Mediation Bd., 830 F. Supp. 1343, 1352-53 (“[b]ased on personal
knowledge of the files and records, a declarant may testify to
acts that she or he did not personally observe but which are
described in the record.”). Review of business records can supply
personal knowledge “even if it were shown that [the affiant] did
not have independent personal knowledge.” Stevenson v. Brennan,
No. 06-CV-15182, 2017 WL 714357, at *5 (E.D. Mich. Feb. 23, 2017).
Many

courts

have

applied

this

general

rule

to

an

IRS

employee’s review of business records. See Hunter v. United States,
No. 3:12-CV-144-CRS, 2013 WL 5934149, at *3 (W.D. Ky. Nov. 5, 2013)
(“the personal knowledge required for a Fed. R. Civ. P. 56(c)(4)
supporting affidavit may come from a review of files and records,
such as those maintained in an IRS database.”); United States v.
Rogers,

558

F.

Supp.

2d

774,

777-78

(N.D.

Ohio

2008)

(“IRS

representatives are allowed to rely on official IRS records to
11 

show the occurrence of events recorded therein” and those records
can satisfy the personal knowledge requirement of Rule 56(c)(4));
Tweedy v. United States, No. CV90-346-N-MHW, 1992 WL 438014, at *7
(D. Idaho Oct. 15, 1992) (IRS employee’s declaration was “based on
his review of the official files of the Internal Revenue Service
relating the [taxpayer’s] federal tax liabilities . . . and thus
meets the personal knowledge requirement” of Rule 56); Vote v.
United States, 753 F. Supp. 866, 868 (D. Nev. 1990), aff’d , 930
F.2d 31 (9th Cir. 1991) (holding that an IRS officer’s review of
a taxpayer’s records provided the officer with personal knowledge
in his affidavit).
Granville has personal knowledge to satisfy Rule 56(c)(4). In
the first place, she has worked on this case for two years and
states in her declaration that she has personal knowledge of the
facts in her statement. [DE 13-2, p. 1, ¶2]. Nugent argues that
Granville’s knowledge comes only from the account transcripts. But
as the case law makes clear, Granville may use business records
and still possess personal knowledge under Rule 56. See, e.g.,
Rogers, 558 F. Supp. 2d at 777-78. Thus, any additional knowledge
gleaned from her review of the relevant business records fits
within the parameters of Rule 56(c)(4).
Nugent

also

invokes

Rule

56(d)

in

arguing

Granville’s

declaration should be stricken. [DE 16, p. 1]. Nugent does not

12 

meet the Rule 56(d) standard for relief. The Rule requires that a
nonmovant show by affidavit or declaration that it “cannot present
facts essential to justify its opposition.” Fed. R. Civ. P. 56(d).
The affidavit attached to Nugent’s motion comes from a former IRS
and PricewaterhouseCoopers employee, Kathy Gale. [DE 16-1]. The
affidavit merely states that the IRS sometimes gets calculations
wrong; it does not show why Nugent cannot present facts essential
to oppose the Government’s motion. [Id.] Thus, Nugent has not
satisfied Rule 56(d).
Finally,

Nugent

argues

that

the

Court

should

strike

Granville’s declaration because the Government did not turn over
Granville’s name, address, and telephone number during discovery.
[DE 15].

Under Rule 26(a)(1) a party must provide “the name and,

if known, the address and telephone number of each individual
likely to have discoverable information . . . that the disclosing
party may use to support its claims or defenses.” Fed. R. Civ. P.
26(a)(1)(a)(i). Rule 37 allows district courts to exclude evidence
when parties do not comply with this rule. Fed. R. Civ. P.
37(c)(1). A Court need not impose sanctions where the failure was
substantially justified or harmless. Id.
Nugent argues that had the Government “disclosed that RO
Granville was going to provide testimony to the Court in this
matter, Mr. Nugent would have deposed her.” [DE 15, p. 4]. Nugent

13 

states that his deposition of Granville would have focused on her
lack of personal knowledge in the case. [Id.]. As analyzed above,
however, Granville does possess sufficient personal knowledge.
Thus, the Court fails to see the harm Nugent suffered in not
deposing Granville.
Moreover, after Nugent filed his answer in this case, the
parties met for a hearing where the Court set a shortened discovery
period of 90 days. [DE 8]. The parties decided not to exchange
initial disclosures. [DE 21, p. 5, n. 3]. More than a month before
discovery closed, the United States told Nugent that a witness
would testify to explain the account transcripts. [Id., p. 5].
That witness turned out to be Granville. Later, the parties filed
a Joint Motion to Extend Discovery to complete depositions of two
additional witnesses. [DE 9]. Nugent still did not seek to depose
Granville at that time. Nothing suggests, and Nugent does not
argue, that he served interrogatories or asked to depose Granville
at any time. In other words, the Defendant failed time and again
to secure testimony that he now argues is essential to his defense.
Nevertheless, the Court will allow the Defendant to depose
Officer Granville within 30 days of this Order. After that time,
Defendant will have 21 days to file a supplemental response to
Plaintiff’s Motion for Summary Judgment. [DE 13]. Plaintiff will
then have 14 days to file a supplemental reply to Defendant’s

14 

response. All pending dispositive motions filed in this case will
be held in abeyance pending the supplemental period.
IV.

CONCLUSION

Accordingly, for the reasons stated herein,
IT IS ORDERED as follows:
(1)

Defendant

Thomas

Nugent’s

Motion

to

Strike

the

IRS

Account Transcripts [DE 16] is DENIED;
(2)

Defendant

Thomas

Nugent’s

Motion

to

Strike

the

Declaration of Revenue Officer Glenda Granville [DE 15]
is DENIED;
(3)

Discovery for the sole purpose of Defendant taking the
deposition of Revenue Officer Glenda Granville will
close in 30 days. After Granville’s deposition is taken,
the Defendant shall have 21 days to file a supplemental
response to Plaintiff’s Motion for Summary Judgment. [DE
13].

Plaintiff

shall

then

have

14

days

supplemental reply to Defendant’s response.
This the 25 day of September, 2017.

15 

to

file

a