Smink v. Commissioner ( 1996 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
CARL R. SMINK; WINIFRED A. SMINK,
Petitioners-Appellants,
v.
No. 95-2158
COMMISSIONER OF THE INTERNAL
REVENUE SERVICE,
Respondent-Appellee.
Appeal from the United States Tax Court.
(Tax Ct. No. 94-6444)
Submitted: April 23, 1996
Decided: May 9, 1996
Before ERVIN and MICHAEL, Circuit Judges, and CHAPMAN,
Senior Circuit Judge.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
Stephen G. Cochran, Daniel M. Rathbun, COCHRAN & RATHBUN,
P.C., McLean, Virginia, for Appellants. Loretta C. Argrett, Assistant
Attorney General, Gary R. Allen, Ann B. Durney, Sara Ann Ketchum,
Tax Division, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C., for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Carl R. Smink and Winifred A. Smink appeal from the tax court's
order dismissing, for failure to prosecute, their joint petition for rede-
termination of the asserted deficiencies in their taxes for the 1989 tax
year. Finding no abuse of discretion, we affirm.
The Sminks, acting pro se, filed their petition on April 20, 1994.
The tax court set the case for trial at the trial session beginning March
6, 1995, notifying the parties that they are "expected to be present at
that time and be prepared to try the case." The parties were also noti-
fied that failure to appear or failure to cooperate in the preparation of
a stipulation of facts and evidence may result in dismissal of the case.
In the standing pre-trial order, the parties were notified to be prepared
to try the case any time during the term of the trial session and that
continuances are granted "only in exceptional circumstances."
On December 21, 1994, counsel for the Commissioner sent the
Sminks a request for admissions, seeking an agreement as to the
authenticity and admissibility of eleven named and attached exhibits.
The Commissioner's counsel also served the Sminks with a request
for production of documents. Although Mr. Smink agreed to provide
the documents, he did not.
Lawrence E. Lewy entered his appearance as counsel for the
Sminks on January 5, 1995. On January 30, counsel for the Commis-
sioner filed a motion to compel answers to the interrogatories, which
were propounded to the Sminks on December 6, 1994. The tax court
granted this motion, ordering the Sminks to serve answers to all of the
interrogatories by February 16, 1995. The court also ordered that the
Commissioner's motion for sanctions be heard at the trial session
scheduled to begin on March 6, 1995. The Commissioner thereafter
moved to compel production of documents. The tax court also granted
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this motion, ordering production of the requested documents by Feb-
ruary 21, 1995, and deferred ruling on the motion for sanctions until
the trial date.
Three days prior to the beginning of the trial session at which their
petition was scheduled to be heard, the Sminks, pro se, filed a motion
for a continuance. In that motion, they asserted that their attorney
failed to respond to requests for production of documents and inter-
rogatories, even after ordered to do so by the court, failed to prepare
for trial, failed to file stipulations for trial, and failed to prepare a trial
memorandum. The Sminks requested a continuance because they
were not prepared for trial and they wished to retain new counsel.
On March 6, 1995, the tax court called the Sminks' case and, upon
being informed that the Sminks' counsel was not prepared to try the
case, denied the motion for a continuance, denied the Sminks' motion
to relieve counsel, and granted the Commissioner's motion for judg-
ment by default. The tax court entered its order of dismissal and deci-
sion on March 7, 1995, granting the Commissioner's motion to
dismiss for failure to prosecute and upholding the deficiency determi-
nation of the Commissioner. The court also denied as moot the Com-
missioner's motions for sanctions.
The Sminks' counsel moved for reconsideration of the tax court's
dismissal order, asserting that when he entered his appearance in the
case on January 5, 1995, he was not aware that the case had been set
for trial on March 6, 1995; he thought the case was merely set for a
calendar call on that date. From the time of his entry of his appear-
ance, counsel asserted that he had several settlement discussions with
the Commissioner's counsel, and he sincerely believed that the case
would be settled, rather than go to trial. Counsel requested that the tax
court reopen the proceedings. By marginal order, the tax court denied
counsel's motion for reconsideration. The Sminks noted a timely
appeal on June 2, 1995.
Dismissal of an action for failure to prosecute or failure to comply
with the court's rules is within the discretion of the trial court. Doyle
v. Murray, 938 F.2d 33, 34 (4th Cir. 1991); Hillig v. Commissioner,
916 F.2d 171, 173 (4th Cir. 1990) (dismissal under Tax Court Rule
123). However, because dismissal is a harsh sanction, the court must
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employ some restraint. Hillig, 916 F.2d at 173; Reizakis v. Loy, 490
F.2d 1132, 1135 (4th Cir. 1974).
The tax court may dismiss a case or enter a default under Tax
Court Rule 123 for the taxpayer's failure to comply with the Tax
Court Rules or any order of the court or for failure to prosecute. Fur-
ther, the tax court may dismiss a case for failure to obey discovery
orders. Tax Court Rule 104(c); see Aruba Bonaire Curacao Trust Co.
Ltd. v. Commissioner, 777 F.2d 38, 43-45 (D.C. Cir. 1985), cert.
denied, 475 U.S. 1086 (1986).
Four factors must be considered prior to dismissal for failure to
prosecute: (1) the petitioner's personal responsibility; (2) the amount
of prejudice to the respondent; (3) the presence of a history of pro-
ceeding in a dilatory manner; and (4) the effectiveness of less drastic
sanctions. Hillig, 916 F.2d at 174. Applying these factors to the tax
court's dismissal of the Sminks' case, we find no abuse of discretion
in the tax court's dismissal order.
The Sminks contend that they should not be held responsible for
their attorney's failure to respond to discovery requests, failure to
comply with the tax court's orders compelling discovery, and failure
to prepare for the trial of this case. However, prior to retaining coun-
sel, the Sminks failed to comply with the tax court's pretrial order by
failing to respond to the Commissioner's proposed stipulation of facts
and by failing to comply with the Commissioner's discovery requests.
See Larsen v. Commissioner, 765 F.2d 939, 941 (9th Cir. 1985) (fail-
ure to stipulate to documents prior to trial is sufficient grounds for
dismissal of tax court petition). Further, the Sminks canceled or
ignored appointments and ignored deadlines, document requests, and
interrogatories. Although Mr. Smink agreed to provide documents
and responses to the interrogatories by certain dates, he failed to do
so and he failed to contact the Commissioner to obtain an extension
of time. All of this occurred before the Sminks retained counsel. We
find that the Sminks' actions before retaining counsel evidence a his-
tory of dilatory tactics and the Sminks' personal responsibility for
failing to prosecute their tax court case.
Further, after retaining counsel, the Sminks--although aware of
discovery deadlines and the trial date--failed to follow up with coun-
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sel to ensure that the deadlines were met and the case prepared for
trial. Contrary to their contention, the Sminks were not blameless for
their attorney's inaction. See Doyle, 938 F.2d at 35 (client has some
responsibility in selecting and supervising counsel); cf. Hillig, 916
F.2d at 174 (dismissal not appropriate if client blameless). Although
the Sminks assert that they inquired about their case and were
informed that counsel expected to have the case continued and
expected to settle the case, anticipated settlement of the case does not
excuse failure to prepare for trial.
Concerning the second Hillig factor--prejudice to the respondent
--the Sminks contend that "the prejudice, if any, was neither substan-
tial nor irreparable." They contend that a lesser sanction, such as mon-
etary sanctions against their counsel, would have remedied any
prejudice to the Commissioner caused by the need for a continuance
to prepare for trial. While lack of prejudice does not prevent the dis-
missal of the case, Reizakis, 490 F.2d at 1135, the Sminks' failure to
comply with the Tax Court Rules and orders of the court hindered the
Commissioner's trial preparation and caused the Commissioner to
expend additional resources in an attempt to force the Sminks' to
cooperate with discovery and stipulations for trial.
As for the last factor, any lesser sanction would not be effective.
The Sminks' suggestion of imposing monetary sanctions against their
counsel would not serve to sanction the Sminks for their failure to
comply with the tax court's rules and orders governing cooperation
with discovery requests and stipulations. An alternative sanction, such
as excluding from evidence any documents not provided to opposing
counsel or entering a decision against the taxpayers on any issue on
which they have the burden of proof, see Tax Court Rules 104(c),
123(b); Pfluger v. Commissioner, 840 F.2d 1379, 1382-83 (7th Cir.),
cert. denied, 487 U.S. 1237 (1988), would have the same result as the
tax court's dismissal for failure to prosecute. The Sminks had the bur-
den of proof on all of the issues and they failed to stipulate to any
documents. See Tax Court Rule 142(a); Helvering v. Taylor, 293 U.S.
507, 515 (1935). Barring them from presenting evidence would also
result in a default. See Tax Court Rule 149.
In conclusion, consideration of all the factors governing dismissals
for failure to prosecute reveals no abuse of discretion by the tax court
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in dismissing the Sminks' case. We therefore affirm the tax court's
order dismissing the Sminks' petition for redetermination. We dis-
pense with oral argument because the facts and legal contentions are
adequately presented in the materials before the court and argument
would not aid the decisional process.
AFFIRMED
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