Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-02055/USCOURTS-azd-2_06-cv-02055-2/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 26:7402 IRS: Petition to Enforce IRS Summons

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

United States of America, )

 )

Petitioner, ) No. CIV 06-2055 PHX RCB

 )

vs. ) O R D E R

 )

Lance C. Standifird, )

 )

 )

Respondent. ) )

This matter arises out of an IRS summons enforcement action

against Respondent Lance C. Standifird. Mot. (doc. # 1). On

October 23, 2006, the Court held a hearing on the Government's

motion (doc. # 16) for order to show cause why Respondent should

not be held in contempt for failure to comply with the Court's

January 23, 2006 order (doc. # 13) granting the Government's

petition to enforce the IRS summons. Minute Entry (doc. # 23). At

the hearing, the Court denied Respondent's written motion to stay

the proceedings (doc. # 27), and found Respondent in civil contempt

for failure to produce the documents and testimony sought by the

IRS summons issued on February 15, 2005. Id. Currently before the

Court are Respondent's notice of appeal (doc. # 30) and motion for

Case 2:06-cv-02055-RCB Document 37 Filed 11/03/06 Page 1 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 2 -

reconsideration of the Court's order denying his motion to stay

(doc. # 33). Having carefully considered the arguments raised, the

Court now rules.

I. BACKGROUND

On November 4, 2005, the Government filed a petition to

enforce an IRS summons issued to Respondent on February 15, 2005. 

Mot. (doc. # 1). After granting Respondent an extension of time

within which to respond to the Government's petition, see Order

(doc. # 9), the Court held a hearing on January 23, 2006 at which

it denied Respondent's motion to dismiss for lack of subject matter

jurisdiction (doc. # 10) and granted the Government's petition to

enforce the IRS summons (doc. # 1). Minute Entry (doc. # 13); see

also Order (doc. # 15). No appeal was taken from that final order.

On March 9, 2006, Respondent appeared before the IRS, but

refused to produce the documents or testimony sought by the

summons, asserting claims of Fifth Amendment privilege. See Mot.

(doc. # 16), Ex. 1 at 8-90.

Thereafter, on August 28, 2006, the Court held a hearing on

the Government's motion (doc. # 16) for order to show cause why

Respondent should not be held in contempt for failure to comply

with the Court's January 23, 2006 order (doc. # 13) granting the

Government's petition to enforce the IRS summons. Minute Entry

(doc. # 23). At that hearing, Respondent orally moved for courtappointed counsel. Id. The Court denied that request at that time

on the basis that Respondent had not made any showing of his

financial eligibility for court-appointed counsel. Tr. of Aug. 28,

Case 2:06-cv-02055-RCB Document 37 Filed 11/03/06 Page 2 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

 The Court also expressed its reservation as to whether he was

entitled to appointed counsel in the context of civil contempt

proceedings related to the enforcement of an IRS summons. Tr. of

Aug. 28, 2006 Hearing (doc. # 23) at 2:14:32 - 2:17:33 p.m.. In the

instant case, the Government's motion seeking adjudication of

Respondent in contempt for his refusal to comply with an IRS tax

inquiry is in the nature of civil contempt. The Supreme Court has

held that "[w]hile particular acts do not always readily lend

themselves to classification as civil or criminal contempts, a

contempt is considered civil when the punishment is wholly remedial,

serves only the purposes of the complainant, and is not intended as

a deterrent to offenses against the public." McCrone v. United

States, 307, U.S. 61, 64 (1939). Thus, a motion invoking judicial

assistance to obtain testimony in a tax inquiry is in the nature of

civil contempt, because the "[a]uthority of the court [is] sought to

buttress the procedure for collection of taxes and not in

'vindication of the public justice,' as in criminal cases." Id. at

64-65.

- 3 -

2006 Hearing (doc. # 23) at 2:14:32 - 2:17:33 p.m..1 Nevertheless,

in light of Respondent's claim that he had not received a copy of

the Government's motion (doc. # 16), the Court directed that an

additional copy be served upon him and reset the hearing on the

Government's motion for October 23, 2006. Minute Entry (doc. #

23). The Court also allowed Respondent to file a supplemental

response under seal to articulate his Fifth Amendment objections by

showing how his production of the summoned records or testimony

"would 'support a conviction under a federal criminal statute' or

'furnish a link in the chain of evidence needed to prosecute [him]

for a federal crime,'" see Rendahl, 746 F.2d at 555 (quoting

Hoffman v. United States, 341 U.S. 479, 486 (1951)).

Respondent did not file any supplemental response or appear at

the hearing on October 23, 2006. Instead, he appealed the Court's

order denying his request for court-appointed counsel, Notice (doc.

# 24), and filed a motion to stay the proceedings pending appeal,

Mot. (doc. # 27). The Court denied the motion to stay, and, in

Case 2:06-cv-02055-RCB Document 37 Filed 11/03/06 Page 3 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

view of Respondent's failure to produce the documents and testimony

sought by the IRS summons or explain to the Court the basis for his

asserted Fifth Amendment privilege, found him in civil contempt for

the remedial purpose of obtaining his compliance. Order (doc. #

29). The Court provided Respondent until November 2, 2006 to purge

himself of the contempt. Id.

On October 27, 2006, Respondent filed a notice of appeal (doc.

# 30) with respect to the Court's finding of contempt, and, on

October 30, 2006, filed a motion for reconsideration of the Court's

order denying his motion to stay the proceedings (doc. # 33). 

II. DISCUSSION

The decision to grant or deny a motion for reconsideration is

left to the sound discretion of the trial court. See Sch. Dist.

No. 1J, Multnomah County v. ACandS, Inc., 5 F.3d 1255, 1263 (9th

Cir. 1993). Such motions are disfavored and, absent exceptional

circumstances, are generally only appropriate "if the district

court (1) is presented with newly discovered evidence; (2)

committed clear error or the initial decision was manifestly

unjust; or (3) if there is an intervening change in controlling

law." Id.

Respondent's motion is not premised on newly discovered

evidence or an intervening change in controlling law. See Mot.

(doc. # 33). Rather, as the sole basis for reconsideration,

Respondent contends that the Court committed clear error in denying

his motion to stay (doc. # 27). Id. In order to prove that the

Court committed clear error, Respondent must demonstrate that the

Court’s action fell clearly outside the bounds of its authority. 

See McDowell v. Calerdon, 197 F.3d 1253, 1256 (9th Cir. 1999). If

Case 2:06-cv-02055-RCB Document 37 Filed 11/03/06 Page 4 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 -

the propriety of the Court’s judgment is a debatable question,

there is no clear error and the motion to reconsider is properly

denied. Id.

Respondent argues (1) that a finding of civil contempt in an

IRS summons enforcement action constitutes a final appealable

order, and (2) that he had a right to court-appointed counsel and

that the Court should not have entered its order of incarceration

in the absence of Respondent's express waiver of that right. Mot.

(doc. # 33) at 1-2. The Court addresses both arguments in turn.

A. Appealability of Civil Contempt Order

In his first argument, Respondent states that he was "baffled

by the Court's citation to a non-summons case when [his] prior

paperwork cited several more recent cases which have clearly

recognized the finality and ability to appeal a contempt order in

these exact circumstances." Mot. (doc. # 33) at 1. Respondent is

presumably referring to that portion of the Court's October 24,

2006 order citing Taylor v. Bowles, 152 F.2d 311, 312 (9th Cir.

1945), in which the Ninth Circuit held that "[a] remedial or civil

contempt order directed against a party litigant is deemed

interlocutory and not a final order, and is reviewable only on

appeal from the final decree in the main action." See Order (doc.

# 29) at 2. Notwithstanding Respondent's professed bewilderment at

the Court's reference to Taylor in dictum, his argument does not

warrant reconsideration of the Court's order (doc. # 29) denying

his motion to stay (doc. # 27), because that motion did not rely on

the appealability of a hypothetical contempt order that had not yet

been entered. See Mot. (doc. # 27). Rather, Respondent's request

for a stay was based on the pendency of his appeal from the Court's

Case 2:06-cv-02055-RCB Document 37 Filed 11/03/06 Page 5 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

 As the Court explained in its September 21, 2006 order, the

denial of Respondent's request for court-appointed counsel was not

immediately appealable, as the denial did not constitute a final

decision on that issue. Order (doc. # 26) at 2-3.

- 6 -

August 28, 2006 order (doc. # 23) denying his request for courtappointed counsel, which was the only appeal he had taken at that

time. See id. In denying Respondent's motion to stay (doc. # 27),

the Court noted the interlocutory character of the August 28, 2006

order.2 Order (doc. # 29) at 2. Respondent has not challenged the

Court's conclusion in that regard, and, therefore, reconsideration

on the basis of clear error is not warranted.

B. Right to Counsel

Respondent's second argument asserts that "th[e] Court's

decision to order [him] incarcerated when he had no counsel and

never waived counsel raises a serious question." Mot. (doc. # 33)

at 2 (citing Lassiter v. Dep't of Soc. Servs., 452 U.S. 18, 25

(1981)). Given that Respondent's first and only request for courtappointed counsel was denied on the basis that he did not make any

showing of his financial eligibility, see Tr. of Aug. 28, 2006

Hearing (doc. # 23) at 2:14:32 - 2:17:33 p.m., Respondent's present

motion (doc. # 33) apparently takes the position that he has an

unqualified right to court-appointed counsel-- a right which he

claims he did not waive. The Court has previously expressed its

reservation as to whether a civil contemnor in an IRS summons

enforcement action has a right to court-appointed counsel. Tr. of

Aug. 28, 2006 Hearing (doc. # 23) at 2:14:32 - 2:17:33 p.m.. Given

the occasion to do so now, the Court will expand on the reasons for

its reservation.

Respondent maintains that "the right to counsel extends to

Case 2:06-cv-02055-RCB Document 37 Filed 11/03/06 Page 6 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 7 -

every case in which the litigant may be deprived of his liberty if

he loses, regardless of the civil or criminal label." Resp. (doc.

# 21) at 3:15-17 (citation and internal quotations omitted); accord

Mot. (doc. # 33) at 2. In Lassiter, the principal case on which

Respondent relies for this proposition, the Supreme Court

ultimately held that a state trial court did not commit reversible

error by failing to appoint counsel in a proceeding determining the

parental rights of an indigent and incarcerated mother. Lassiter,

452 U.S. at 33. However, more recent and relevant Supreme Court

authority declares that civil contempt sanctions require fewer

procedural protections, as they are avoidable and not punitive. 

See Int'l Union, United Mine Workers of Am. v. Bagwell, 512 U.S.

821, 831 (1994). Because the contemnor is able to purge the

contempt by compliance in such cases, and thereby obtain his

release, it is said that he "carries the keys of his prison in his

own pocket." Id., 512 U.S. at 828 (citation and internal

quotations omitted). Thus, "civil sanctions may be imposed so long

as the court provides adequate notice and an opportunity to be

heard." Lasar v. Ford Motor Co., 399 F.3d 1101, 1110 (9th Cir.

2005) (citing Bagwell, 512 U.S. at 827).

To that end, the Supreme Court has indicated that the

indefinite incarceration of a contemnor for the remedial purpose of

obtaining compliance with an affirmative command is "[t]he

paradigmatic coercive, civil contempt sanction." Id. at 828. 

Specifically, a motion invoking judicial assistance to obtain

testimony in a tax inquiry has been held to be in the nature of

civil contempt, because the "[a]uthority of the court [is] sought

to buttress the procedure for collection of taxes and not in

Case 2:06-cv-02055-RCB Document 37 Filed 11/03/06 Page 7 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

 Lest Respondent take issue again with the Court's citation to

a "60+ year old appeals court decision," see Mot. (doc. # 33) at 1,

the Court will point out that, as recently as 1994, the Supreme Court

has cited its McCrone decision as an example of a "paradigmatic

coercive, civil contempt sanction" requiring fewer procedural

protections for the contemnor. Bagwell, 512 U.S. at 828.

4

 Rejecting the taxpayer's appeal as "totally frivolous" under

Fed. R. App. P. 38, the Fifth Circuit went on to impose sanctions on

the taxpayer, explaining that "[the taxpayer] seeks only to delay the

inevitable, and in so doing, . . . has occasioned the waste of

limited governmental and judicial resources, unduly impeding the

court's ability to resolve the meritorious claims of other litigants.

This abuse of the system and citizenry cannot be tolerated."

McDougal, 818 F.2d at 455.

- 8 -

'vindication of the public justice,' as in criminal cases." 

McCrone v. United States, 307 U.S. 61, 64-65 (1939).3 Thus, in an

IRS deficiency action, where a taxpayer appearing pro se was found

in contempt and incarcerated, the Fifth Circuit summarily rejected

the taxpayer's argument that he was denied his right to counsel.4

McDougal v. Commissioner, 818 F.2d 453, 454-55 (5th Cir. 1987).

Respondent cites another Fifth Circuit case, Ridgeway v.

Baker, 720 F.2d 1409, 1413 (5th Cir. 1983), essentially for the

notion that the civil-criminal distinction is irrelevant in

determining whether a civil contemnor has a right to courtappointed counsel. Mot. (doc. # 33) at 2. To the Court's

knowledge, Ridgeway has not been followed by either the Supreme

Court or the Ninth Circuit. Indeed, the most recent authority from

the Supreme Court and the Ninth Circuit confirms that the civilcriminal distinction is alive and well. See Bagwell, 512 U.S. at

831-34; see also Lasar, 399 F.3d at 1110 (endorsing the distinction

between civil and criminal contempts resulting in incarceration)

(citing Bagwell, 512 U.S. at 829). Given the choice between

following their binding authority or taking the contrary view

Case 2:06-cv-02055-RCB Document 37 Filed 11/03/06 Page 8 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

 Ridgeway is also factually distinguishable from the present

case. In Ridgeway, an allegedly indigent contemnor was jailed for

failure to pay child support, raising the question of whether he

could ever find sufficient funds to purge the contempt. See

Ridgeway, 720 F.2d at 1413-14. That is why the court doubted the

applicability of the adage that the contemnor "carrie[d] the keys of

his prison in his own pocket." Id. In the present case, however,

there is no indication of an impossibility of performance that would

bar Respondent from testifying and producing the documents sought by

the IRS summons-- particularly now as he has declined the opportunity

to present the Court with a sealed filing setting forth the factual

basis for a meritorious claim of Fifth Amendment privilege.

6

 Of course, the Court has not had to decide that question, nor

does it do so now, because Respondent's first and only request for

court-appointed counsel was denied on the basis that he did not make

any showing of his financial eligibility. Tr. of Aug. 28, 2006

Hearing (doc. # 23) at 2:14:32-2:17:33 p.m..

- 9 -

expressed in a much older Fifth Circuit opinion, the Court chooses

the former.5

For the foregoing reasons, it is questionable whether a civil

contemnor in an IRS summons enforcement action has a right to

court-appointed counsel.6 The few authorities finding that there

may be such a right are manifestly clear that court-appointed

counsel is reserved for those litigants who will at least make some

showing of their financial eligibility. See 18 U.S.C. § 3006A;

Henkel v. Bradshaw, 483 F.2d 1386, 1387-88, 1390 (9th Cir. 1973)

(discussing possibility of right to counsel for indigent

contemnor); 17 Am. Jur. 2d Contempt § 177 (2006) (same); United

States v. Bobart Travel Agency, Inc., 699 F.2d 618, 621 (2d Cir.

1983) (civil contemnor in IRS summons enforcement action entitled

to court-appointed counsel only if found indigent). This,

Respondent has not done. Although his request for court-appointed

was denied without prejudice, see Tr. of Aug. 28, 2006 Hearing

(doc. # 23) at 2:14:32-2:17:33 p.m., Respondent has never since

Case 2:06-cv-02055-RCB Document 37 Filed 11/03/06 Page 9 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 10 -

made another request supported with the necessary proof of

financial eligibility, and the Court cannot simply appoint

Respondent an attorney based on his unproven assertion that he

"cannot afford" one. See Tr. of Aug. 28, 2006 (doc. # 23) at

2:14:51-2:14:56 p.m..

Moreover, the Court has always proceeded on the basis that

Respondent has had a right to have counsel present, see id. at

2:14:31-2:14:51 p.m., and, during the nearly one year of this

case's pendency, has granted Respondent extensions of time to

respond to the Government's motions, see Orders (doc. ## 9, 23). 

During this expanse of time, Respondent has consistently decided to

appear without counsel. He has never (1) brought a motion for

court-appointed counsel, properly documented with proof of his

financial eligibility, (2) claimed that he has been unable to

locate counsel to represent him, or (3) requested additional time

for the purpose of retaining an attorney. Under these

circumstances of this case, it is painfully obvious that

Respondent's failure to obtain counsel is the product of either his

own neglect or his deliberate design to "manipulate his right to

counsel to undermine the orderly procedure of the courts [and]

subvert the administration of justice." See United States v.

Thibodeaux, 758 F.2d 199, 201 (7th Cir. 1985).

In sum, Respondent has not demonstrated any basis for

reconsideration of its order (doc. # 29) denying his motion to stay

(doc. # 27).

Therefore,

Case 2:06-cv-02055-RCB Document 37 Filed 11/03/06 Page 10 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 11 -

IT IS ORDERED that Respondent's motion for reconsideration

(doc. # 33) is DENIED.

DATED this 3rd day of November, 2006.

Copies to counsel of record and Respondent pro se

Case 2:06-cv-02055-RCB Document 37 Filed 11/03/06 Page 11 of 11