USA v. Hulick et al

Filing 79

ORDER denying 53 Motion to Compel; granting in part and denying in part 69 Motion to Compel. So Ordered by Magistrate Judge Landya B. McCafferty.(gla)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
United States of America
v.

Case No. 08-cv-499-SM

David M. Hulick; Caroline P.
Hulick; and State of New Hampshire
Department of Employment Security

O R D E R
The United States of America has sued to: (1) reduce an
unpaid tax liability owed by David Hulick (“Hulick”) to
judgment; (2) establish the validity of federal tax liens on
Hulick’s property; (3) foreclose on a parcel of real estate in
which Hulick has an interest; and (4) get permission to conduct
a judicial sale of that property.
for breach of contract.

Hulick asserts a counterclaim

Before the court are the Hulicks’

renewed first motion to compel plus their second motion to
compel.

For the reasons that follow, defendants’ renewed first

motion to compel, document no. 69, is granted in part and denied
in part, and their second motion to compel, document no. 53, is
denied.
Legal Principles
“Unless otherwise limited by court order, the scope of
discovery . . . [extends to] any nonprivileged matter that is

relevant to any party’s claim or defense – including the
existence, description, nature, custody, condition, and location
of any documents . . . .

Relevant information need not be

admissible at the trial if the discovery appears reasonably
calculated to lead to the discovery of admissible evidence.”
Fed. R. Civ. P. 26(b)(1).

A party seeking broader discovery,

that is, discovery of “any matter relevant to the subject matter
involved in the action,” is required, under the Rule, to show
“good cause.”

Id.; see also In re Subpoena to Witzel, 531 F.3d

112, 118 (1st Cir. 2008).

“[T]he purpose of pretrial discovery

is to ‘make trial less a game of blindman’s bluff and more a
fair contest with the basic issues and facts disclosed to the
fullest practicable extent.’”

Wamala v. City of Nashua, No. 09-

cv-304-JD, 2010 WL 3746008, at *1 (D.N.H. Sept. 20, 2010)
(quoting Macaulay v. Anas, 321 F.3d 45, 53 (1st Cir. 2003)).
The court, however, “must limit the frequency or extent of
discovery otherwise allowed” if and when it determines that:
(i) the discovery sought is unreasonably cumulative
or duplicative, or can be obtained from some
other source that is more convenient, less
burdensome, or less expensive;
(ii) the party seeking discovery has had ample
opportunity to obtain the information by
discovery in the action; or
(iii) the burden or expense of the proposed discovery
outweighs its likely benefit . . . .
Fed. R. Civ. P. 26(b)(2)(C).
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When a party does not produce the discovery requested from
it, the Federal Rules permit that party to “move for an order
compelling disclosure or discovery.”

Fed. R. Civ. P. 37(a)(1).

In this court, the party moving to compel discovery over an
adversary’s objection bears the burden of showing that the
information he seeks is relevant and not privileged.

Id. at *2;

see also Saalfrank v. Town of Alton, No. 08-cv-46-JL, 2009
3578459, at *3 (D.N.H. Oct. 27, 2009).
Discussion
With the foregoing principles as a backdrop, the court
turns to the specific discovery requests at issue.
A. Renewed First Motion to Compel
In their renewed first motion to compel, the Hulicks seek
responses to four interrogatories and also seek the production
of certain documents.
1. Interrogatory #3
In Interrogatory #3, the Hulicks asked the United States to
explain how one or more IRS employees calculated certain
collection statute expiration dates (or “CSEDs”) communicated by
the IRS to David Hulick in 2006.

The United States answered:

“The United States, in its reply in support of its motion to
dismiss . . . sets forth the proper calculation of the CSED, and

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shows that this case was timely filed, and attaches its reply
hereto as Exhibit C.”
In their motion to compel, the Hulicks call the United
States’ answer evasive.

In response, the United States argues

that the thought processes of the IRS agents involved in
Hulick’s case are irrelevant and that it has produced the IRS’s
entire case file, including multiple documents that contain the
information requested in Interrogatory #3.
Plainly, much in this case turns on determining the correct
CSED(s).

As the United States correctly notes, that

determination is a question of law.

Mary Beyers’ letter to

Peter Sang, dated December 19, 2006, explains how the IRS
initially determined that the last relevant limitation period
was due to expire on October 1, 2008.

That letter is attached

to the Hulicks’ objection to the United States’ first motion to
dismiss.

The United States’ reply in support of that motion

explains the calculation of the July 26, 2009, CSED the IRS now
says is correct.

Each one of those calculations is either

correct or incorrect, as a matter of law.

Comparison of the two

calculation shows the sole difference between them; the first
calculation was based on a determination that the limitation
period was not tolled during the IRS’s consideration of Hulick’s
first offer in compromise, while the second calculation is based
on 355 days of tolling during that same period.
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The point is,

it appears that everything that the Hulicks seek in
Interrogatory #3 is already a part of the record of this case.
The United States has satisfied its obligations with respect to
this interrogatory.
2. Interrogatory #5
In Interrogatory #5, the Hulicks asked the United States to
explain why there was a discrepancy between the two different
CSEDs the IRS calculated, and they requested specific details
concerning the IRS’s discovery of that discrepancy and any
actions they took upon discovering it.

The United States

objected on grounds that the information the Hulicks sought was
not relevant and not likely to lead to the discovery of
admissible evidence, and without waiving these objections,
answered by referring the Hulicks to “the proper calculation of
the CSED” as shown in Exhibit C to the United States’ reply.
The IRS’s discovery of the discrepancy between the CSEDs, and
the actions it took upon discovering the discrepancy are
relevant to the Hulick’s estoppel (or affirmative misconduct)
defense and may lead to the discovery of admissible evidence.
The United States’ objection is not sufficiently specific and
its reference to the “proper” CSED calculation is not responsive
to the interrogatory.

The United States must respond to

Interrogatory #5 and each subpart therein.

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3. Interrogatory #10
In Interrogatory #10, the Hulicks asked the United States
to identify, with considerable specificity, any IRS personnel
who were involved in investigating Hulick’s case and pursuing
the collection action against him.

The United States objected

on grounds of over-breadth and relevance but, without waiving
its objections, provided the names of three IRS employees who
were involved in investing Hulick’s case.

In their motion to

compel, the Hulicks argue:
Interrogatories 10 and 11 inquire about the
investigation of Mr. Hulick and others at the
Precision companies. This information is relevant –
or at least discoverable – to the Hulicks’ defenses
and their counterclaims. As discussed, Mr. Hulick
challenges the propriety of the underlying assessment
against him. Similarly, the IRS is bound to follow
all applicable law in its collections activity. The
Hulicks, therefore, simply seek information to discern
whether and to what extent the IRS improperly assessed
the [trust fund recovery penalty] against Mr. Hulick
and/or improperly engaged in certain collections
activity.
Defs.’ Mem. of Law (doc. no. 38-1), at 13.

While this argument

is conclusory and lacking in specifics, the court finds that the
Hulicks’ request for the names of those IRS employees most
intimately involved in the investigation of Mr. Hulick is
relevant to the Hulicks’ defenses in this case.

The United

States has supplied the names of three different employees who
investigated Mr. Hulick’s case.

The court presumes that these

three individuals are the key employees responsible for the
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investigation.

The United States has not answered the five

subparts in Interrogatory #10 with respect to these three
employees.

Once the United States provides answers to

Interrogatory #10(a)-(e) with respect to the three employees
(whose names the United States has already provided to the
Hulicks), the United States will have satisfied its obligations
with respect to this discovery request.
4. Interrogatory #11
In Interrogatory #11, the Hulicks asked the United States
to identify, with considerable specificity, the steps the IRS
took to pursue collection from other responsible persons.

The

United States objected but also provided the following response:
John Gallichon was assessed for all of the same trust
fund recovery penalty (“TFRP”) periods that Mr. Hulick
was assessed. Mr. Gallichon submitted an offer in
compromise that was accepted and has been completed.
Also subject to the United States’ objection, Allyn
Caruso was assessed for two of the same TFRPs for the
period ending June 30, 1994, and the statutory period
for collections on his account ran in 2007.
Defs.’s Mot. to Compel (doc. no. 38-1), at 12.

The court does

not find the Hulicks’ conclusory arguments with respect to this
interrogatory sufficient to carry its burden on relevance.

It

is not clear how the steps the IRS took toward other responsible
persons is relevant to the Hulicks’ defense or contract claim,
or likely to lead to admissible evidence.

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The limited

information the IRS provided in response to this interrogatory
more than satisfies the obligations with respect thereto.
5. Request for Production #7
In Request for Production #7, the Hulicks asked the United
States to produce “a complete copy of the current IRS review
manual section(s) governing the ‘Collection Process’ and all
prior versions of the same in effect since June 20, 1993.”
Defs.’ Mem. of Law (doc. no. 38-1), at 12.

The United States

objected on grounds that the request was overly broad and unduly
burdensome, and also objected on grounds of relevance.

Without

waiving its objection, however, the United States provided the
Hulicks with an internet link to the complete IRS manual
containing its policies and procedures.
According to the Hulicks:
The relevance of the sought-after documents is or
should be obvious. The IRS manuals directly relate to
determining whether and to what extent the IRS
followed [its] own procedure in investigating Mr.
Hulick (and others), assessing the TFRP against him,
and/or then undertaking dubious collection activities,
including misrepresenting to him the CSED, allowing
him to make voluntary payments after that
misrepresentation, and then filing [t]his action to
foreclose on his home after “recalculating” the
“proper” CSED.
Id. at 14.
Internal IRS policies and procedures governing the
collection process, if violated, may be relevant to the Hulicks’

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estoppel defense.

To the extent internal policies and

procedures may have been violated in this case, such procedures
would be those in effect as of 2006, when the IRS provided Mr.
Hulick with the 2008 CSED calculations.

It is not clear to the

court how policies in existence before or after 2006 are
relevant.

Through an estoppel defense, the Hulicks presumably

seek to estop the United States from relying on any CSED
calculation other than that calculated and communicated to Mr.
Hulick in 2006.

Assuming for purposes of this discovery motion

that equitable estoppel applies here, to prove entitlement to
the defense the Hulicks must prove: (1) the IRS made a “definite
misrepresentation of fact” to Mr. Hulick and had reason to
believe that he would rely upon it; (2) Mr. Hulick relied on the
misrepresentations to his detriment; and (3) such reliance was
reasonable.

See Dickow v. United States, 654 F.3d 144, 152 (1st

Cir. 2011).

For the moment, the court will put aside the

illogic of attempting to prove that the IRS committed misconduct
by providing a 2006 calculation that turned out to be more
favorable to Mr. Hulick than that the IRS made at a subsequent
date.

That aside, any alleged misconduct would have occurred in

or around 2006, when the IRS made and communicated the
calculation subject to putative estoppel.
Accordingly, the Hulicks’ motion to compel a response to
Request for Production #7 is granted only with respect to any
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portions of an IRS manual governing the “Collecting Process” in
effect in 2006.

To the extent, therefore, that the current

manual is identical in this respect to any manual(s) in effect
in 2006, the United States has satisfied its obligations with
respect to this discovery request.
B. Second Motion to Compel
In their second motion to compel, the Hulicks ask the court
to compel the United States to answer certain interrogatories
and produce various documents.

In their second set of

interrogatories, the Hulicks asked the United States about: (1)
the documents and persons it consulted when responding to the
Hulicks’ first set of interrogatories (Interrogatory #18); (2)
the IRS’s document-storage procedures (Interrogatory #19); (3)
documents that were responsive to their first sets of discovery
requests but are no longer available to the IRS (Interrogatory
#20); (4) the IRS’s policies for document retention and/or
destruction from 1993 to the present (Interrogatory # 21).
addition, in Interrogatory #22, the Hulicks asked the United
States to
identify each and every reason why, exclusive of
claimed privilege or work-product protection, only 659
pages of documents were produced by you in response
to:
(a) David M. Hulick’s and Caroline P. Hulick’s
First Set of Interrogatories Propounded Upon

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In

Plaintiff United States of America (Nos. 1 to
17); or
(b) David M. Hulick’s and Caroline P. Hulick’s
First Set of Document Requests Propounded Upon
Plaintiff United States of America (Nos. 1 to
15).
Defs.’ Second Mot. to Compel, Ex. 1 (doc. no. 53-2), at 11.

In

their second set of document requests, the Hulicks asked the
United States to produce all documents referred to in response
to Interrogatories 18 through 22, including any policies
pertaining to document retention and/or destruction.
In response, the United States objected to the number of
interrogatories propounded by the Hulicks and to the burdensome
nature of the second sets of discovery requests.

In addition,

the United States objected on grounds of relevance, and also
asserted that Interrogatory #19 requested electronically stored
information which, in its view, is not discoverable under the
agreed-upon discovery plan.
Rather than sorting through each of the United States’
objections, the court turns directly to the dispositive issue:
relevance.

This is a case about whether Hulick is liable to the

IRS and, if so, whether the IRS may satisfy that liability by
placing a lien on the Hulicks’ house, foreclosing, and then
selling the house.

Aside from the estoppel defense, which

arguably allows limited inquiry into the IRS’s CSED calculation
in 2006, this is not a case about the internal operations of the
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IRS.

Additionally, the Hulicks’ belief that the IRS must have

more documents than it produced does not make the IRS’s
document-retention policies and procedures relevant.
As for Interrogatory #22, which asks why the IRS only
produced 659 pages of documents, the Hulicks already have the
answer: the IRS produced 659 pages of documents because the IRS
believed it had only 659 pages of responsive documents to
produce.

The IRS has stated that it produced the entire IRS

administrative file pertaining to this case.

The United States

has satisfied its obligations with respect to this interrogatory
and the remainder of discovery requested in the Hulicks’ second
motion to compel.
Conclusion
For the foregoing reasons, the Hulicks’ renewed first
motion to compel, document no. 69, is granted in part and denied
in part and their second motion to compel, document no. 53, is
denied.

While the renewed first motion to compel is granted in

part, the court declines to award any attorneys’ fees.
SO ORDERED.
__________________________
Landya McCafferty
United States Magistrate Judge
November 3, 2011
cc:

Patrick B. Gushue, Esq.
Andrea A. Kafka, Esq.
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Richard J. Lavers, Jr., Esq.
Daniel E. Will, Esq.
Joshua M. Wyatt, Esq.

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