UNITED STATES OF AMERICA v. ZIMMERMAN et al

Filing 43

MEMORANDUM. ( SIGNED BY HONORABLE HARVEY BARTLE, III ON 4/19/11. ) 4/19/11 ENTERED AND COPIES MAILED AND TO PRO SE, E-MAILED.(gn, ) Modified on 4/19/2011 (gn, ).

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
UNITED STATES OF AMERICA
v.
MERVIN NOLT ZIMMERMAN, et al.

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CIVIL ACTION

NO. 09-5158

MEMORANDUM
Bartle, C.J.

April 19, 2011

The United States filed suit against defendants Mervin
Nolt Zimmerman and Mildred Zimmerman, husband and wife, and the
M&M Family Trust to reduce to judgment assessments of federal
income taxes and to foreclose federal tax liens.

Before the

court is the motion of the United States for default judgment
under Rule 37 of the Federal Rules of Civil Procedure.
I.
The United States filed suit against the defendants in
November 2009.

The complaint seeks to reduce to judgment

assessments of federal income taxes that the Secretary of the
Treasury made against Mervin Nolt Zimmerman for the years 1996
through 1999 and 2003 through 2005.

The total amount assessed

against Mervin Zimmerman for all seven years, including taxes,
statutory additions, interest, and penalties, is $481,117.19 as
of October 31, 2009.

The complaint also seeks to reduce to

judgment assessments of federal income taxes the Secretary of the
Treasury made against the M&M Family Trust for the years 1998 and

1999.

The M&M Family Trust owed $60,287.15 on these assessments

as of October 31, 2009.
Finally, the complaint asks the court to foreclose
federal tax liens that arose on property and rights to property
belonging to Mervin Zimmerman and the M&M Family Trust as a
result of the assessments.

The complaint alleges that these

liens attached to a farm at 492 East Farmersville Road, New
Holland, Lancaster County, Pennsylvania where the Zimmermans
live.

According to the complaint, the Zimmermans sold the farm

to Linda Glick on August 12, 1991 for $1.00.

Mrs. Glick

allegedly sold the farm to the M&M Family Trust on the same day
for "200 Units of Beneficial Interest in the M&M Family Trust," a
trust in which Mervin Zimmerman is a trustee.

The United States

alleges that the M&M Family Trust holds title to the Farmersville
Road property as an alter ego or nominee of the Mervin and
Mildred Zimmerman.1
On behalf of the United States, the Clerk entered
defaults against all defendants in January 2010 after each
defendant failed to file a timely answer.

The defendants

retained counsel, the parties agreed to set aside the entry of
default, and the defendants answered.
On August 19, 2010, the United States filed a motion to
compel a response to interrogatories and requests for the
production of documents that defendants failed to answer.

The

1. Mildred Zimmerman is named as a defendant because she may
hold an interest in the real property at issue.
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court granted the motion to compel and ordered defendants to
respond to the government's discovery requests by August 30.
Defendants responded to the discovery requests by the
court-ordered deadline.

In their interrogatory responses, the

defendants identified several entities and individuals as having
information that may support the affirmative defenses set forth
in their answers.

Specifically, the defendants identified

Farmersville Crane, LLC ("Farmersville Crane") as an entity for
which Mervin Zimmerman works and identified Edwin Zimmerman as an
individual with relevant knowledge.

Defendants' interrogatory

responses stated that Edwin Zimmerman lives at the same address
as Mervin and Mildred Zimmerman.
Based on this information, the United States caused
subpoenas for the production of documents and for deposition
testimony to issue to Farmersville Crane and to two Edwin
Zimmermans that live at the defendants' address.2

The United

States also caused a subpoena to issue to the WEMER Family Trust,
an entity on whose accounts defendant Mervin Zimmerman had checkwriting authority.

Finally, due to the paucity of useful

information in the defendants' interrogatory responses, the
United States issued a second set of interrogatories and requests
for production of documents to the defendants and noticed
depositions for each of the three defendants.

2. Unsure of which of the two Edwin Zimmermans was the one with
the relevant information, the United States caused subpoenas to
issue to both.
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None of the third parties produced documents in
response to the government's subpoenas, and it elected to take
these parties' depositions without their documents.

On

December 8, 2010, an unidentified man appeared at an IRS facility
in Lancaster, Pennsylvania for the deposition of the WEMER Family
Trust.

The man refused to identify himself but said that counsel

for the United States could call him "friend."

The man left

without testifying but did leave a handwritten "NOTICE" that
reads:
For the record I am here in the matter of the
name EDWIN ZIMMERMAN there is a mistake I
have never been properly noticed Where is the
meeting of the minds I want to settle this
matter honorably I trust you can settle the
matter
The United States made a record of the events at this deposition
by placing the building security guard under oath and having the
guard describe the exchange he had witnessed between the
unidentified man and counsel for the United States.
The next day, December 9, 2010, the same anonymous
individual appeared for the deposition of Edwin H. Zimmerman.

He

once again refused to testify, but he did read a statement on the
record that substantially mirrors the content of the "NOTICE" he
had provided at the previous day's deposition.

Later in the

afternoon of December 9, defendant Mervin Zimmerman appeared
without his attorney for the deposition of Farmersville Crane.
Mervin Zimmerman stated repeatedly that he was only present for
"the matter of the name," and when asked if he was present to

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testify on behalf of Farmersville Crane, he answered, "Apparently
not."

The only "testimony" Mervin Zimmerman would give was this:
For the record, I'm here for the matter of
the name Mervin Zimmerman. There is a
mistake. I have never been properly noticed.
Where is the meeting of the minds? I want to
settle this matter honorably. I trust you
can settle the matter.
The defendants failed timely to answer the United

States' second set of discovery requests, and on December 13,
2010, the United States moved to compel responses to these
requests.

It explained that it needed the requested documents

and interrogatory responses by December 16 because depositions of
the defendants were scheduled to begin on that date.

Since

defendants had failed to make any response to the discovery
requests, the court summarily granted the motion on December 14,
2010.

It ordered defendants to answer the interrogatories and

produce the requested documents to the United States by 12:00
p.m. on December 16.
On December 16, defendants Mervin and Mildred Zimmerman
appeared for Mildred Zimmerman's deposition without their
attorney.

As they entered the IRS facility, they were required

to present photo identification to the building security guard.
The United States began by asking Mildred Zimmerman for her name.
She responded, "You can call me friend."

When asked the next

question, she responded, "For the record, in the matter of
Mildred Zimmerman, there appears to be a mistake.
been properly noticed.

I have never

Where is the meeting of the minds so I

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can deal with the matter honorably?"

Mildred Zimmerman then

stated that she had nothing else to say.
Mervin Zimmerman then offered to read the statement he
would otherwise have read at his deposition and the deposition of
M&M Family Trust, both scheduled for the following day,
December 17.

He then proceeded to read the same statement

Mildred Zimmerman had just read, replacing the name "Mildred
Zimmerman" with "Mervin Zimmerman."

The Zimmermans both

confirmed that they did not bring any documents to the deposition
and that they would not respond to the government's discovery
requests.

Having confirmed they would say no more, the

Zimmermans left and the United States once again placed the
building security guard under oath.

The security guard testified

that the two people who spoke to counsel for the United States
moments before had been Mervin and Mildred Zimmerman and that
they brought only one thin envelope apiece to the deposition.
On December 22, 2010, the defendants' attorney,
Jonathan Altman, Esquire moved to withdraw his appearance.

Mr.

Altman stated that the defendants had unexpectedly terminated his
services on December 15, the day before Mildred Zimmerman's
deposition.

Shortly thereafter, the court received two pieces of

correspondence from the Zimmermans.

Each is a note that has been

written by hand onto the court's order of December 14, 2010.
first reads:
For the record,
In the matter of the name MERVIN ZIMMERMAN
There appears to be a mistake
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The

I have never been properly noticed,
Where is the meeting of the minds,
So that I can deal with The matter honorably.
The second letter is substantially identical but includes the
name Mildred Zimmerman in capital letters in place of Mervin
Zimmerman.
Between December 22 and December 29, 2010, the United
States filed three motions.

First, the United States asked the

court to enter sanctions, including judgment, against the
defendants under Rule 37 of the Federal Rules of Civil Procedure
due to their continuing failure to participate in discovery.

The

United States filed a second motion requesting in the alternative
an order to compel the defendants to appear and participate in a
deposition.

Finally, the United States sought to have the court

hold in contempt Farmersville Crane, WEMER Family Trust, and the
two Edwin Zimmermans for failing to testify or produce documents
in response to the government's subpoenas.
On January 13, 2011, the court once again ordered the
defendants to respond to the government's discovery requests,
which had also been the subject of the December 14 order.

The

court further ordered Mervin and Mildred Zimmerman and a
representative of the M&M Family Trust to appear and "participate
cooperatively" in the taking of their depositions on February 17,
2011.

The court entered a separate order requiring Farmersville

Crane, WEMER Family Trust, and both Edwin Zimmermans to appear
before the court and show cause why they should not be held in

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contempt for failing to comply with the subpoenas issued at the
request of the United States.
At the show cause hearing on February 15, 2011, one of
the Edwin Zimmermans appeared and admitted receiving the United
States' subpoena.

When asked by the court to explain his failure

to comply, Edwin Zimmerman repeatedly stated only that the court
could call him "friend," that there was a mistake in this matter,
that he had not received proper notice, and he wanted "to deal
with this matter honorably."

Despite Edwin Zimmerman's

obstinance and refusal to purge his contempt, the United States
stated it was not necessary to incarcerate him because the
documents at issue were of unknown value and were requested
primarily to ensure that the defenses asserted in the answer to
the complaint lacked merit.

Defendant Mervin Zimmerman was

present in the gallery for the show cause hearing.3

As the

hearing concluded, the court admonished those present that
serious consequences would attach to the defendants' continued
refusal to participate in discovery.
Two days after the show cause hearing, the Zimmermans
appeared at the IRS office in Lancaster, Pennsylvania to be
deposed as required by the court's January 13 order.

The

Zimmermans would not be seated and refused to testify.

Mervin

3. The court was not made aware of Mervin Zimmerman's presence
during the hearing. The documents submitted with the motion for
entry of default judgment explain that counsel for the United
States observed defendant Mervin Zimmerman present in the
courtroom.
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Zimmerman insisted repeatedly that he was "just here for the
matter of the name."

When asked by the United States to be

seated and be deposed, Mervin Zimmerman stated, "Well, just going
to make the statement, as I'm here for the matter for the name
Mervin Nolt Zimmerman.

You can call me friend, and where is the

proper notice so I can deal with this matter honorably."

Mervin

and Mildred Zimmerman confirmed that they had nothing further to
say and brought no documents with them.

Mervin Zimmerman

acknowledged that he was appearing on behalf of M&M Family Trust.
Counsel for the United States explained to the Zimmermans that
they were required by a court order to appear and participate in
the depositions, but the Zimmermans said nothing further.
Counsel for the United States suspended the depositions.
The motion of the United States under Rule 37 of the
Federal Rules of Civil Procedure for default judgment against
Mervin and Mildred Zimmerman and M&M Family Trust followed.

No

defendant filed an opposition to this motion, but the court did
receive by mail a "Notice" from one of the defendants.

The

"Notice" was enclosed with the copy of the motion for default
judgment that counsel for the United States served on Mervin
Zimmerman.

The "Notice" reads:
Date: Mar. 11, 2011
To: Judge: Harvey Bartle III
Notice
In the matter of UNITED STATES V. MERVIN
ZIMMERMAN, There is a mistake. You can call
me friend I have important first-hand
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Testimony to help you settle the matter
honourably.
When can we meet so I can provide you with
this evidence?
Thank you,
Friend
492 East Farmersville Rd
New Holland, PA 17557
717-314-1058
II.
The court is empowered to sanction parties that refuse
to participate in discovery.

Fed. R. Civ. P. 37(b)(2)(A).

The

court is specifically authorized to enter default judgment
against a party based on that party's failure to participate or
cooperate in the discovery process.

Id. at 37(b)(2)(A)(vi).

Entry of default judgment is "the most severe" sanction a court
can impose for discovery misconduct and is appropriate only where
a party demonstrates "flagrant bad faith."

Nat'l Hockey League

v. Met. Hockey Club, Inc., 427 U.S. 639, 643 (1976).

In deciding

whether entry of default judgment is an appropriate sanction we
consider the six factors enumerated by our Court of Appeals in
Poulis v. State Farm Fire & Casualty Co.
(3d Cir. 1984).

747 F.2d 863, 868-70

These factors are:

(1) the extent of the party's personal
responsibility; (2) the prejudice to the
adversary caused by the failure to meet
scheduling orders and respond to discovery;
(3) a history of dilatoriness; (4) whether
the conduct of the party or the attorney was
willful or in bad faith; (5) the
effectiveness of sanctions other than
dismissal, which entails an analysis of
alternative sanctions; and (6) the
meritoriousness of the claim or defense.
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Id. at 868 (emphases in original); see Hoxworth v. Blinder,
Robinson & Co., Inc., 980 F.2d 912, 921 (3d Cir. 1992).

No

single factor is dispositive, every factor need not be present,
and "there is no 'magic formula'" for balancing these six
factors.

Briscoe v. Klaus, 538 F.3d 252, 263 (3d Cir. 2008).
Each of the Poulis factors supports entry of default

judgment against the defendants.

Mervin and Mildred Zimmerman

are personally responsible for frustrating the discovery efforts
of the United States.

They appeared without counsel on their own

behalf and on the behalf of M&M Family Trust at two separately
scheduled depositions without counsel and refused to testify.
One of those depositions was held pursuant to this court's order.
Further, the Zimmermans personally responded to the court's
December 14, 2010 order and the motion of the United States for
entry of default judgment by writing meaningless missives to the
court.

The Zimmermans disregarded two court orders requiring

them to produce responses to the United States' interrogatories
and requests for the production of documents.
Moreover, the court does not consider it a coincidence
that Farmersville Crane, WEMER Family Trust, and one of the Edwin
Zimmermans engaged in the same contumacious behavior as the
defendants.

Edwin Zimmerman, on behalf of himself and the WEMER

Family Trust, refused to testify or produce documents in response
to the government's subpoena.

Defendant Mervin Zimmerman engaged

in nearly identical conduct when subpoenaed to testify and
produce documents in his individual capacity and on behalf of M&M
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Family Trust and Farmersville Crane.

The record reflects that

Edwin Zimmerman lives at the same address as Mervin Zimmerman,
engaged in the same behavior as defendants, and attempted to
justify his contumacious conduct with the same language that
defendants Mervin and Mildred Zimmerman recited at their
depositions.

The court finds that defendants coordinated with a

third party, Edwin Zimmerman, to frustrate the discovery process.
Thus, the defendants Mervin and Mildred Zimmerman are personally
responsible not only for their own failure to respond to
discovery requests but for engineering non-compliance by another
with subpoenas issued on behalf of the United States.

See

Hoxworth, 980 F.2d at 920.
The defendants' conduct has caused significant
prejudice to the United States in litigating this matter.
Counsel for the United States been required to travel from
Washington D.C. to Lancaster, Pennsylvania on multiple occasions
in a futile effort to depose the defendants and their related
third parties.

Since December 2010, the United States has been

required to file two motions to compel discovery responses from
the defendants.

When the United States attempted to pursue

discovery through third-party subpoenas, the defendants conspired
with others to stymie those efforts.

The United States had no

alternative but to bring a motion for contempt.
The defendants have demonstrated a distinct pattern of
dilatory and contemptuous conduct.

Even while defendants were

represented, the United States obtained answers to its first set
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of discovery requests only by bringing a motion to compel.
Thereafter, while proceeding pro se, the defendants have failed
to respond to the United States' discovery requests despite two
separate court orders requiring compliance and a verbal
admonition by the court at the show cause hearing.

Moreover, the

defendants refused to participate in their depositions despite a
court order requiring them to do so.

Defendants' conduct

represents a concerted effort to obstruct these proceedings.

See

Coastal Mart, Inc. v. Johnson Auto Repair, Inc., 196 F.R.D. 30,
34-35 (E.D. Pa. 2000).

In sum, the behavior of the defendants in

this case was clearly willful, motivated by obvious bad faith,
and with the clear intent to frustrate the judicial process.

See

United States v. Hempfling, Case No. 05-594, 2008 WL 703809, at
*8-*9 (E.D. Cal. Mar. 13, 2008).
The United States' claims in this case appear
meritorious.

A claim is meritorious in this context when the

allegations in the complaint would support recovery if proven at
trial.

Poulis, 747 F.2d at 869-70.

We are not required to

consider the merit of the defendants' affirmative defenses or to
balance the merit of defenses against the merit of the
plaintiff's claims.

Hoxworth, 980 F.2d at 922.

In Counts I and II of the complaint, the United States
alleges that the Secretary of the Treasury assessed federal
income taxes against Mervin Zimmerman and the M&M Family Trust.
These assessments are presumptively valid and the taxpayer bears
the burden of proving that the assessment is invalid or
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incorrect.

Francisco v. United States, 267 F.3d 303, 319 (3d

Cir. 2001).

Count III of the complaint asks the court to

foreclose federal tax liens.

An assessment of federal income

taxes automatically causes a lien to arise on the property and
rights to property of the assessed taxpayer.

26 U.S.C. §§ 6321-

22; see United States v. Green, 201 F.3d 251, 253 (3d Cir. 2000).
The United States alleges that the M&M Family Trust is a nominee
or alter ego of Mervin and Mildred Zimmerman.

If proven, the

United States could obtain court approval to sell property held
in the name of M&M Family Trust to satisfy Mervin Zimmerman's
unpaid federal tax liability.

See 12 Pa. Cons. Stat. 5104; Drye

v. United States, 528 U.S. 49, 58-59 (1999); Green, 201 F.3d at
251.
Finally, entry of default judgment is the only
appropriate sanction for defendants' contumacious conduct given
the disregard all three defendants have shown for this court's
orders and the discovery process.

A lesser consequence would not

appropriately redress defendants' flagrant misbehavior.
Hempfling, 2008 WL 703809 at *9.

See

A lighter repercussion would

reward defendants for their contempt and would encourage others
to flout this court's orders.

See Nat'l Hockey League, 427 U.S.

at 643.
Accordingly, we will grant the United States' motion
and enter default judgment against the defendants.

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