UNITED STATES OF AMERICA v. COMMANDER et al
OPINION filed. Signed by Judge Anne E. Thompson on 4/3/2017. (km)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
UNITED STATES OF AMERICA,
Civ. No. 13-1092
DARREN COMMANDER and
This matter comes before the Court upon motions for summary judgment brought by
Defendant Darren Commander (“Defendant” or “Commander”) (ECF No. 57) and by Plaintiff
United States of America (“Plaintiff” or “Government”) (ECF No. 58). Each motion is opposed.
(ECF Nos. 59, 60, respectively). The Court has issued the Opinion below based upon the written
submissions and without oral argument pursuant to Federal Rule of Civil Procedure 78(b). For
the reasons stated herein, Defendant’s Motion for Summary Judgment will be denied and
Plaintiff’s Motion for Summary Judgment will be granted.
This case involves Defendants’ failure to pay income and employment taxes they were
required to withhold and pay from employees’ wages. The undisputed facts are as follows:
Defendants Darren Commander and Kenneth Skerianz (“Skerianz”) formed Darken
Architectural Woodwork Installation LLC (“Darken”) in 2003. (Pl.’s Undisputed Facts ¶ 5, ECF
No. 58-1). Commander and Skerianz were each fifty-percent owners of Darken, signatories of
Darken’s Operating Agreement, and the sole officers of Darken. (Id. ¶¶ 8–11). Darken was
member-managed, and all company decisions and actions and many significant financial
transactions had to be by majority vote or with the other member’s consent. (Id. ¶¶ 13–14).
Skerianz was responsible for hiring field employees, assigning employees to each job, ensuring
work was completed in the field, recording hours worked, and distributing employee paychecks.
(Def.’s Undisputed Facts ¶¶ 24, 25, 29, ECF No. 57-3). Commander was aware that employers
are required to withhold employment and income taxes from their employees’ wages. (Pl.’s
Undisputed Facts ¶ 39, ECF No. 58-1). Those withheld taxes are held in trust by the employer to
be paid to the Government; as such, they are sometimes referred to as “trust fund taxes.” Darken
continued to employ and pay workers through 2009. (Id. ¶ 57). Recovery penalties totaling
$1,591,262.24 were assessed against Commander in 2010 for failure to pay income and
employment taxes for Darken’s employees between 2007 and 2009. (Id. ¶¶ 1–3). Plaintiff
alleges that the amount due as of February 20, 2017 is $1,946,023.93, which includes the
statutory interest that accrued since the due date.
During the pendency of this action, Defendant Skerianz passed away; Plaintiff moved to
voluntarily dismiss Skerianz from the action, without prejudice, and that motion was granted on
November 15, 2016. (ECF No. 54). Thus, Commander is the sole remaining defendant in this
Plaintiff and Defendant each moved for summary judgment on February 13, 2016. These
motions are presently before the Court.
Summary judgment shall be granted if “the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A dispute is “genuine” if it could lead
a “reasonable jury [to] return a verdict for the nonmoving party.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). A fact is “material” if it will “affect the outcome of the suit
under the governing law.” Id. When deciding the existence of a genuine dispute of material fact,
a court’s role is not to weigh the evidence; all reasonable “inferences, doubts, and issues of
credibility should be resolved against the moving party.” Meyer v. Riegel Prods. Corp., 720
F.2d 303, 307 n.2 (3d Cir. 1983). In resolving a motion for summary judgment, a district court
considers the facts drawn from “the pleadings, the discovery and disclosure materials, and any
affidavits.” Curley v. Klem, 298 F.3d 271, 276–77 (3d Cir. 2002) (internal quotations omitted).
The court must determine “whether the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.”
Anderson v. Liberty Lobby, 477 U.S. 242, 251–52 (1986). More precisely, summary judgment
should be granted if the evidence available would not support a jury verdict in favor of the
nonmoving party. Id. at 248–49. The Court must grant summary judgment against any party
“who fails to make a showing sufficient to establish the existence of an element essential to that
party’s case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at
A. Plaintiff’s Motion for Summary Judgment
In its Complaint, Plaintiff alleges that Defendant is liable for violations of 26 U.S.C. §
6672. Employers must withhold income, Social Security, and Medicare taxes from their
employees’ wages and hold such taxes in trust for the United States. 26 U.S.C. §§ 3102, 3402,
7501; Greenberg v. United States, 46 F.3d 239, 242 (3d Cir. 1994). Because the United States is
required to credit employees for these withheld “trust fund taxes” regardless of whether they are
actually paid over to the Government by the employer, In re RIBS-R-US, Inc., 828 F.2d 199, 200
(3d Cir. 1987) (citing Slodov v. United States, 436 U.S. 238, 243 (1978)), Congress provided that
an employer’s responsible persons, such as officers and managers, can be held personally liable
under 26 U.S.C. § 6672 for “trust fund recovery penalties” if the trust fund taxes are not paid
over when due. United States v. Pepperman, 976 F.2d 123, 127 (3d Cir. 1992). Liability under
§ 6672 is joint and several among responsible persons, and “each responsible person can be held
[liable] for the total amount of withholding not paid.” Quattrone Accountants, Inc. v. I.R.S., 895
F.2d 921, 926 (3d Cir. 1990).
The two elements for liability under § 6672 are:
(i) the individual was a responsible person within the business, i.e., someone
required to collect, truthfully account for, or pay over the trust fund taxes; and
(ii) the taxpayer willfully failed to do so.
Quattrone, 895 F.2d at 927; Brounstein v. United States, 979 F.2d 952, 954 (3d Cir. 1992).
Plaintiff argues Defendant was a responsible person who willfully failed to pay
employment taxes in violation of § 6672, and, therefore, Plaintiff is entitled to summary
“Responsibility is a matter of status, duty or authority, not knowledge.” Quattrone, 895
F.2d at 927. “A person is responsible if the person has significant, though not necessarily
exclusive, control over the employer’s finances.” Quattrone, 895 F.2d at 927 (citing United
States v. Vespe, 868 F.2d 1328, 1332 (3d Cir. 1983)). “A person has significant control if he has
the final or significant word over which bills or creditors get paid.” Quattrone, 895 F.2d at 927.
In determining whether an individual is a responsible person, courts also consider:
(1) The contents of the corporation’s bylaws;
(2) whether the individual had the ability to sign checks on the company’s bank
(3) whether the individual signed the company’s tax returns;
(4) whether the individual made payments to other creditors instead of the United
(5) the identity of the officers, directors, and principal stockholders of the
(6) the identity of the individuals with authority to hire and/or fire employees;
(7) the identity of the individuals in control of the company financial affairs.
Brounstein, 979 F.2d at 954.
Defendant does not dispute that he was a fifty-percent owner and one of two officers of a
member-managed company, Darken, which failed to pay its trust fund taxes. (Pl.’s Undisputed
Facts ¶¶ 8–11, 13–14, ECF No. 58-1; Def.’s Resp. ¶¶ 8–11, 13–14, ECF No. 60-1).
Furthermore, his approval was required for all company decisions and actions and many
significant financial transactions. (Id. ¶¶ 13–14). Defendant had check signing authority for
Darken’s bank accounts. (Id. ¶ 18). Defendant had and exercised power to pay the company’s
bills, and sign paychecks on occasion. (Def.’s Resp. ¶¶ 21–22). Thus, Defendant was a
responsible party as a matter of status, duty, authority, and control.
Defendant argues that he did not know or have reason to know of the tax delinquencies
and thus he is not liable. Defendant claims, “Skerianz was solely responsible and had the sole
obligation for… making payroll and ensuring that the trust fund taxes were in fact remitted to the
Internal Revenue Service.” (Def.’s Undisputed Facts ¶¶ 45, 44, ECF No. 57-3). Furthermore,
Defendant argues “[he] had no knowledge that the sums were not being paid,” (Id. ¶ 45), and he
only learned of the delinquency at the end of 2009, when he began to receive notices from the
IRS, (Id. ¶ 48).
However, whether payroll and related taxes were the primary responsibility of
Defendant—or those were the purview of Skerianz—is irrelevant, because Defendant was in a
responsible position in the business. There is no remaining genuine issue of material fact on the
The second factor for liability under § 6672 is willfulness. Quattrone, 895 F.2d at 927.
Willfulness under § 6672 is “a voluntary, conscious and intentional decision to prefer other
creditors over the Government.” Brounstein, 979 F.2d at 955–56 (internal citation omitted).
“[W]illfulness” need not involve any evil motive or bad purpose, or actual knowledge of the tax
delinquency. Greenberg, 46 F.3d at 244. The responsible person acts willfully if he (1) clearly
ought to have known that (2) there was a grave risk that the withholding taxes were not being
paid and (3) he was in a position to find out for certain very easily. Vespe, 868 F.2d at 1335.
Alternatively, “[a] responsible person acts willfully when he pays other creditors in preference to
the IRS knowing that taxes are due, or with reckless disregard for whether taxes have been paid.”
Brounstein, 979 F.2d at 956. “Reckless disregard includes the failure to investigate or correct
mismanagement after being notified that withholding taxes have not been paid.” Greenberg, 46
F.3d at 246. Where the responsible person “only later becomes aware that [taxes] were not paid,
he acts willfully by paying other creditors in preference to the United States, even if money
specifically withheld has been dissipated” already. Vespe, 868 F.2d at 1334.
Plaintiff argues that Defendant knew of tax issues when they were occurring, from 2007
to 2009. (Pl.’s Resp. to Def.’s Undisputed Facts ¶¶ 44–45, 47–48, ECF No. 59-1). Defendant
testified, “[T]here came a time I knew the taxes weren’t being paid… Somewhere between 2007
and 2009.” (Commander Dep. Tr. 48:16–25, 113:7–114:25, ECF No. 58-8). He further testified
that during that time period he received regular updates about correspondence with the IRS
regarding the delinquency. (Id. 113:7–114:25).
Defendant submitted a declaration with his opposition to Plaintiff’s motion for summary
judgment, saying that he misspoke and meant to say that he subsequently learned that there were
tax delinquencies between 2007 and 2009, rather than that he learned of the tax delinquencies
between 2007 and 2009. (Def.’s Opp’n Decl. ¶¶ 25–27, ECF No. 60-2). However,
“conclusory, self-serving affidavits are insufficient to withstand a motion for summary
judgment.” Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d 156, 161 (3d Cir. 2009); see
also Fed.R.Civ.P. 56(e)(2). Defendant does not present specific facts that contradict his
deposition testimony or show a genuine issue of material fact for trial. Id. Defendant’s
deposition testimony is clear. These conclusory, self-serving statements only appear in
opposition to Plaintiff’s motion, when Defendant has the greatest motive to issue a self-serving
statement. Therefore, the Court is not persuaded that Defendant’s Declaration in opposition to
Plaintiff’s Motion can defeat Plaintiff’s Motion for Summary Judgment. It appears that
Defendant had actual knowledge that the taxes were not being paid. The Court need not consider
the disputed Dellelo deposition testimony in order to reach this conclusion.
Furthermore, as one of two managing members, Defendant clearly ought to have known
that the withholding taxes were not being paid, and Defendant was certainly in a position to find
out for certain. Vespe, 868 F.2d at 1335. Defendant does not dispute that he knew that Darken
had to pay the trust fund taxes. (Def.’s Resp. to Pl.’s Undisputed Facts ¶ 39, ECF No. 60-1).
Defendant paid employees and other creditors and did not remedy the tax delinquency. (Id. ¶¶
Plaintiff has shown that Defendant is a responsible party with significant control over
Darken’s finances, and that he acted willfully, at least with reckless disregard for whether the
taxes had been paid. Therefore, there remain no genuine disputes as to material facts and
Plaintiff is entitled to judgment as a matter of law.
B. Defendant’s Motion for Summary Judgment
Defendant argues he is not a responsible party and his acts were not willful because he
was not the person primarily responsible for payroll and related taxes and did not have actual
knowledge of the tax delinquency. (Def.’s Undisputed Facts ¶¶ 44, 45, 48, ECF No. 57-3).
As discussed in the preceding section of this Opinion, Defendant was a fifty-percent
owner, one of two officers, and one of two managing members of this member-managed
company. As such, Defendant was a responsible person in the business. Defendant testified that
he was regularly informed that there were tax problems; therefore, he either knew or ought to
have known that there was a grave risk that the withholding taxes were not being paid, and, as a
managing member, he was in a position to find out for certain very easily. See Vespe, 868 F.2d
at 1335. Therefore, when Defendant paid other creditors, he acted willfully, at least with
reckless disregard for whether the taxes were paid.
Defendant has failed to show that he is entitled to summary judgment and Defendant’s
motion for summary judgment will be denied.
For the foregoing reasons, Defendant’s Motion for Summary Judgment (ECF No. 57)
will be denied and Plaintiff’s Motion for Summary Judgment (ECF No. 58) will be granted. A
corresponding order will follow.
/s/ Anne E. Thompson
ANNE E. THOMPSON, U.S.D.J.
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