Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-09000/USCOURTS-ca10-89-09000-0/pdf.json

Parties Involved:
Commissioner of Internal Revenue
Appellee
Joseph A. Personett
Appellant

Document Text:

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

JOSEPH A. PERSONETT, 

Petitioner-Appellant, 

FI LED 

U.nired Scaces Court of Appeals 

Tenth Circuit 

AUG 9 1989 

ROBERT L. HOECKER 

Clerk 

v. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

No. 89-9000 

(T.C. No. 26486-87) 

COMMISSIONER OF INTERNAL 

REVENUE SERVICE, 

Respondent-Appellee. 

ORDER AND JUDGMENT* 

Before ** LOGAN, SEYMOUR and BALDOCK, Circuit Judges. 

Petitioner-appellant Joseph A. Personett (taxpayer) appeals 

from an order of the tax court dismissing his petition for 

redetermination of tax liability for tax years 1980, 1981 and 

1982. See I.R.C. S6213(a). The tax court dismissed the petition 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

** After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a). 10th Cir. R. 34.19. The cause therefore is ordered 

submitted without oral argument. 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 1 
because it was not filed within 150 days of the date respondentappellee Commissioner of Internal Revenue (Commissioner) mailed 

the statutory notice of deficiency to the taxpayer at an address 

in Guam. 1 The Guam address was listed on taxpayer's 1982 return, 

which was the most recent return on file when the notices of 

deficiency were sent. 

Both notices of deficiency were returned to the IRS. 

Taxpayer claims that the IRS did not mail to his last known 

address in accordance with IRC § 6212 because the Commissioner was 

given repeated notice of address changes for the taxpayer in 

connection with pleadings, correspondence and participation in an 

unrelated and unconsolidated 1979 tax court case handled in 

different IRS districts. Taxpayer also relies on an unsigned 

letter which may or may not have been mailed to a revenue agent in 

the Denver district office. Taxpayer contends that the IRS failed 

to use reasonable diligence in ascertaining his current address, 

particularly when it mailed the second notice of deficiency after 

having received the first as undeliverable. See Mulder v. 

Commissioner, 855 F.2d 208, 211-12, on rehearing, 861 F.2d 1333. 

(5th Cir. 1988) (reasonable diligence in ascertaining last known 

address may include looking beyond most recently filed return when 

prior correspondence sent to same address has been returned to 

IRS). Taxpayer further contends that he should not be held liable 

1 One notice was mailed August 3, 1984 (1980 TY); the other was 

mailed April 12, 1985 (1981, 1982 TY). Both notices originated 

from the Denver district. Taxpayer's petition was filed August 7, 

1987. 

-2-

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 2 
for the post office's failure to forward his mail. Finally, 

taxpayer insists that the tax court erred in denying his discovery 

request and rejecting his contention that his requests for 

admission should be deemed admitted. Our jurisdiction to review 

this case arises under IRC § 7482(a). 

We review the tax court's findings of fact under the clearly 

erroneous standard; conclusions of law are reviewed de novo. Id.; 

Commissioner v. Duberstein, 363 U.S. 278, 290-91 (1960); Casper v. 

Commissioner, 805 F.2d 902, 904 (10th Cir. 1986). We have 

reviewed the tax court's findings of fact and we cannot say they 

are clearly erroneous. Anderson v. City of Bessemer, 470 U.S. 564 

(1985). Nor do we find error in the law as stated by the tax 

court, particularly after considering the plain meaning of IRC 

§ 6212(b)(l). Finally, there was no abuse of discretion by the 

tax court in denying taxpayer's discovery request arid rejecting 

his contention that his requests for admission should be deemed 

admitted. We affirm substantially for the same reasons set forth 

in the tax court's Memorandum Sur Order, a copy of which is 

attached. 

AFFIRMED. 

-3-

Entered for the Court 

Bobby R. Baldock 

Circuit Judge 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 3 
II t I • 

. 

\ I 1 

I I '. 

r-rrr1••ro1nt··,-.. , ill·····. ····'t 

file ,.,.,:.,~, .. r~~~n f-R•J,fi-' 11· · ~ . , ... '"·- ...... 'It, • • , ••• 

. ·~··.•!' .. ... ':J ·, ..• .• .., ' ,, ..•. ; .......... , 

UNITED STATES TAX COURT . 

WASHINGlON, 0.C.- 202~~3 W5 l~l'f/4: 53~: S3 

' • •:• : :· 1 1 • ·-- ~i 

JOSEPH A. PERSONETT, .............................................................................................. Petidoner, 

V. 

COMMISSIONER OF INTERNAL REVENUE. · Respondent. 

. 

• I -~ I 1'.L-1,.;.!. l i· -i: · : . · .. ·.'.:. .. .. . ........ ' .... , .. ''"'· 

Docket No. 26486-87 RECEIVED 

DENVER 

AUG 2 S 1988 

.. ,-... / _V' 

)1 / 

f .. ~ 

-· 

SOUTHWEST nEGIOUAL COUNSU 

INTERNAL REVEtlUE StRVICE 

MEMORANDUM SUR ORDER 

By Order dated December 7, 1987, the Court calendared for 

hearing at the trial session at Houston, Texas, on January 4, 

1988, respondent's motion to dismiss for lack of jurisdiction, 

filed October 2, 1987, and three motions filed by petitioner: a 

motion to dismiss for lack of jurisdiction, filed October lJ, 

1987, a motion to ta~e judicial notice of matters ·in another 

pending Tax Court case of petitioner, filed October 16, 1987, and 

a motion for leave to commence discovery, filed October 20, 

1987. 1 At the hearing, petitioner and respondent appeared, 

through counsel, evidence was adduced, and the matter was take11 

under advisement. 

1 

Unless otherwise indicated, all section references are to 

the Internal Revenue Code of 1954, as amended and in effect 

1uring the years at isaue. All Rule references are to the Tax 

.ourt Rules of Practice and Procedure. 

ronn 50 

Rn. Apr. 1970 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 4 
l .·. ' 

. 

,. 

I 

f 

f 

I 

I 

) . 

• l 

. . 

.. 

- 2 -

Respondent issued notices of deficiency, dated August 3, 

1984, for petitioner's 1980 tax year and April 12, 1985, for 

petitioner's 1981 and l982 ·tax years, determining the followiny 

deficiencies in petitioner's Federal income taxes and additions 

• 

to tax: 

Year 

-

1980 

1981 

1982 

Deficien£.i: 

$ 4,873 .,oo 

$11,567.00 

$13,801.00 

Section 

665l(a) 

$550.30 

$684.00 

Additions tQ Tax 

Section 

665J(a) (lj 

$244.00* 

$578.00 

$700.00 

Section 

6653 (a) (:?J_ 

** 

*** 

* For 1980, this addition to tax is under section 6C~J(~). 

** SO percent of the interest due on $11,567.00. 

*** SO percent of the interest due on $14,006.00. 

The notices were sent by respondent's Denver District Director by 

registered mail to petitioner at 241 Condo Lane #332, Tarnunlng, 

Guam 96911 (the Guam address). The notice of deficiency for 

petitioner's 1980 tax year was returned to respondent in its 

original envelope marked "Return To Sender, No Such Number." ·1·11e 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 5 
. 

I~-:-

I 

I 

. . . 

" . 

- 3 -

notice of deficiency for petitiC?ner's 1981 and 1982 tax yean; w:i:; 

returned to respondent in its original envelope marked "Return To 

sender, Moved, Left No Address." The petition was filed 

August 7, 1987, which date is 1,099 days after the mailing of U1e 

notice of deficiency for 1980, and 847 days after the mailing of 

the notice of deficiency for 1981 and 1982. At the time of 

filing the petition, petitioner resided in Colorado. 2 

The cross ~otions to dismiss pre~ent the classic quc5ti o11 

whether the notices of deficiency were mailed by respondent tu 

petitioner's "last known address." 

Section 6213(a) provides that a petition must be filed 

within 90 days, or 150 days if addressed to a person outside tl 1~ 

United States, after the notice of deficiency is mailed. It i~ 

well settled that, to maintain an action in this Court, ther n 

must be a valid notice of deficiency and a timely filed peti t i o 11. 

· 2 

Prior to the instant case, the Austin, Texas, District 

Director mailed a notice of deficiency dated April 27, 1983, fu ~ 

tax year 1979, to petitioner and his former wife, Rita D. 

Personett at the following addresses: 1644 Lomaland, El Pas o , 

Texas 79935, and 8040 Peco Road, Black Forest, Texas 80908. 'l'h c..: 

notice of deficiency sent to the El Paso, Texas, address was 

returned as ~ndeliverable on May 23, 1983. Petitioner and Itita 

D. Personett filed two petitions with this Court on June 28, 

l9BJ, and July 5, 1983 1 tor their 1979 tax year, Docket Nos. 

17300-83S and 17972-83, respectively. Case Docket No. 17972-83 

was closed on the ground of duplication on October 21, 1983, a,1d 

Docket No. 17300-83$ had its small tax case designation remov ecl 

on February 2, 1984, and was pending at the time of the hearing 

in the instant proceeding. 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 6 
1-: I 

,. 

I 

I 

• l • 

- 4 -

See Pyo v. Commissioner, 83 T.C. 626, 632 (1984); Mollet v. 

coimissioner, 82 T.C. 618, 623 (1984)·, affd. without publishl:d 

opinion 757 F.2d 286 (llth Cir. 1985): J<eeton v. Cornmissionr:1_: , 74 

I T.C. 377, _379 (1980). A notice of deficiency is valid if it i s 

I mailed to the taxpayer's last kno~n address by certified or 

registered mail. Section 6212(a) and (b) (1). Since the petit i o n 

in this case was not filed within the time prescribed by st~tut,] , 

respondent's motion should be granted unless the notices were 1,ut 

mailed to petitioner's last known address. 

As a general rule, respondent is entitled to treat the 

address appearing on the return for the year in question as a 

last known address absent "clear and concise notification'' of a 

new address. Alta Sierra Vista, Inc. v. Commissioner, 62 T.C. 

367, 374 (1974), affd. without published opinion 538 F.2d JJ1 

(9th Cir. 1976). This Court has generally held that the !iJ.incJ 

of a subsequent return with a change of address does not 

constitute clear and convincing _evidence of notice of a chang e of 

address. Weinroth v. Commissioner, 74 T.C. 430, 436-437 (l 9 UO): 

Budlong v. Commissioner, 58 T.C. 850, 852-853 (1972). Howe·-1 e r, 

for purposes of this case, this Court follows the Tenth Circuit 

to the effect that a subsequently filed tax return with a n1~w 

address does give respondent notice of a new address. 3 See 

3 

Colsen v. Commissioner, 54 T.C. 742, 757 (1970), affd. 44 5 

F.2d 985 (10th Cir. 1971). Since any appeal herein lies to tti ,• 

(footnote continueLl) 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 7 
I.; . 

. . 

I - 5 -

Cyclone Drilling, Inc. v. Relley, 769 F.2d 662, 66• (10th Cir. 

19.SS). The burden of proving that the notices were not mailed t:.o 

the last known address is on petitioner. Mollet v. Commissior_~:..£, 

supra; Alta Sierra Vista, Inc. v. Commissioner, supra. 

Petitioner contends he gave respondent clear and concise 

ri~tific~tion of a change of address on several different 

occasions prior to issuance of the notices of deficiency. 

Initi~lly, petitioner asserts it is undisputed that respondenL 

had notice of his change ct address, as evidenced by the -

different ·addresses contained in pleadings and correspondence 

filed in his unrelated and unconsolidated Tax Court case for his 

1979 tax year. Petitioner maintains this position, 

notwithstanding that none of the pleadings or correspondence ~~s 

sent from or received by respondent's Denver District Directo~ 's 

Office or the Denver District Counsel's Office out of which the 

notices of deficiency in this case were issued. 4 In this 

unrelate~ case involving his 1979 tax year, petitioner point~ to 

an amended certificate of service filed by · respondent with tt~is 

Court, which shows that, as of September 2, 1983, respondent h ~1d 

(footnote continued from previous page) 

Tenth Circuit, we follow that Court for purposes of our 

determination of jurisdiction herein. 

4 

The record indicates that all pleadings and correspondence 

in Docket No. 17300-SJS, involving petitioner's 1979 tax year, 

originated from or were aant to the Houston, Dallas, Austin, Lns 

Angeles, and Honolulu district offices of respondent. 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 8 
I .. 

. 

 

, · 

- 6 - . 

notice that petitioner no longer resided at the Guam address. 

The address recited in the amended certificate of service was 

5520 N. Via Entrada, Tuscon, Arizona 85718 . (the Arizona addres ~) . 

Petitioner also points ·to a notice setting the case for trial, 

dated January S, 1984, and a letter dated March l, 1984, from Lo s 

Angeles District Counsel's office, which both show his addre~:s ~s 

1433 Santa Monica Blvd. f340, Santa Monica, California 90404 (th2 

Santa Monica address). In addition, petitioner points to a 

letter dated June 21, 1984, also relating to the 1979 tax ca~ c , 

from the Appeals Office, We~tern Region, Honolulu, Hawaii, wl1ich 

utilized the Arizona address, and a letter, dated July 2, l9B 1 , 

sent by petitioner to the Appeals Office, West~rn Region, 

Hololulu, Hawaii, in which petitioner showed 220 Lakeview Dri v0 , 

Apt. 118, Building a, Ft. Lauderdale, Florida 33326, as his 

return address. In short, petitioner maintains that, because 

respondent had notification of all 'the foregoing addresses, all 

in connection with his 1979 tax case, and all prior to issuiJHJ 

the notices of deficiency for his 1980, 1981, and 1982 tax ye ars , 

the notices for these subsequent years are invalid. 

Although it has been held that clear notification to, or 

knowledge by, an agent of respondent withi.n the same Internal 

Revenue District, of a new address for a taxpayer is sufficient, 

McPartlin v. Commissioner, 653 F.2d 1185, 1190-1191 (7th Cir. 

1981), reversing an unreported order of this C9urt; Weinroth v . 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 9 
·, 

. . 

- 7 -

commissioner, supra, the same does not hold true for notice to, 

- or knowledge by, attorneys of the Chief Counsel's Office, 

representing respondent in another case for other years. Moll e t 

v. Commissioner, supra at 628. Thus, petitioner's allegatio11s of 

his legal residence in pleadings and correspondence in an 

unrelated and unconsolidated docketed ' case in this Court, arP n o t 

imputed to respondent's District Director 'in Denver, the office 

which issued the no.tices of deficiency for 1980, 1981, and 1982 . 

Mollet v. Commissioner, supra at 629. 

The next question is whether the notices were sent to tl,c 

address shown on petitioner's ~ost recent tax return filed prior 

to issuance of the notices of deficiency~ United States v. 

Zolla, 724 F.2d 808, 810 (9th Cir. 1984). The most recent r ctu11 1 

filed prior to issuance of the notices of deficiency was 

petitioner's 1982 return, filed April 29, 1983. 5 This 1982 

return, showing petitioner's address ai the Guam address, was ir1 

respondent's possession prior to issuance of both notices'of 

deficiency. The information contained on the return was posted 

to respondent's computer records during the 21st week of 1983. 

Moreover, no further update of petitioner's address was postc~ to 

respondent's computer records until the 34th week of 1986. 

5 

Petitioner's returns for tax years 1983 and 1984 were fil~d 

April 9, 1987, or April 10, 1987, and April 17, 1987, or · April 20, 1987, respectively, after the notices ot deficiency in 

question had been issued. 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 10 
i I .. 

I 

i 

r - 8 -

Therefore, because the information .shown on the 1982 return wa s 

posted to- respondent's computer records before the notices of 

deficiency in question had been issued, the Court finds that 

respondent was entitled to treat the Guam address as petitioner ' :; 

last known address. See Alta Sierra Visfa, Inc. v. Commission e r, 

supra. 6 

Petitioner argues that a letter dated February 24, 1984, 

prel,)cU. t:d by his tax advisor, Mr. Kersting, and mailed to Revenu e: 

Agent Ballard of the Denver District Director's Office, showin·J 

petitioner's address as 1708 Sawyer Way #180, Colorado Springs, 

Colorado .80915 (the Colorado Springs address), gave respondent 

notice of a change of ad~ress • . Petitioner explained that the 

letter was a reply to an examination report mailed by Revenue 

Agent Ballard to his Guam address on December 14, 1983, with 

respect to his 1960 tax y~ar. There is no language in the letLcr 

indicating that petitioner could be contacted in Colorado 

Springs. The Colorado Springs address merely appeared under 

petitioner's name in the signatory section of the letter. 7 

6 

See also Singer v. Commissioner, T.C. Memo. 1986-193; Seri~ 

v. Commissioner, T.C. Memo. 1986-206. 

7 

The letter was not signed by Mr. Kersting, nor does his n a me 

appear thereon, but was · only prepared by him for petitioner's signature. 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 11 
- 9 -

Based upon an examination of petitioner's letter and the 

testimony adduced at the hearing, the Court is not satisfied tl1al 

petitioner ever mailed such a letter to Revenue Agent Ballard or , 

if he mailed such lett~r, that it was ever received by Revenu 0 

Agent Ballard. Revenue Agent Ballard .testified that, when sh e· 

mailed an examination report to a taxpayer, it was her policy t o 

encluse a return envelope with her return address on the retu1 11 

envelope bearing 3515 South Tamarac, Denver, Colorado. Yet, tt1~ 

aduress appearing above the salutation on petitioner's letter Lu 

Revenue Agent Ballard is 1050 17th Street, Denver, Colorado, and 

not the 3515 South Tamarac address. Revenue Agent Ballard 

f urther testified that, to the best of her recollection, she did 

not receive the letter and, if she had, she would have placed iL 

in petitioner's administrative file, as was her practice. 

Furthermore, even if it is assumed petitioner mailed the l e tt 2 c 

to Revenue Agent Ballard, the letter did not provide clear ar:d 

conci se notice that petitioner wished the Colorado Springs 

address to replace the Guam address in all subsequent 

communications, or that there was an affirmative change of h.i :: 

address . See Tadros v. Commissioner, 763 F.2d 89 (2d Cir. l 9CS), 

affg . an unreported order of dismissal of this Court The 

Colorado Springs address was, as petitioner testified, his wiiL'.'s 

(Susan c. Personett) address and not his address: 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 12 
. .. • 

- 10 -

Q: Okay. And how long did you reside at the Colorado 

Springs address? 

A: Approximately from November of '83 to October of '8 4. 

This again is my wife's residence, Susan c. She was wo rki:1g 

in Colorado Springs while I was working in Florida. I \1ou l d 

visit her and vice versa. 

Thus, it appears that the Colorado Springs address was, at b ~~L, 

r 

only temporary, and the Court is .unable to conclude that 

petitioner wished his mail be sent there. See Looper v. 

Commissioner, 73 T.C. 690, 697 (1980) (college address); and 

Estate of Riger v. Commissioner, T.C. Memo. 1983-669 (vacati o1} 

address), where respondent mailed notices of deficiency to t l10 

taxpayer's temporary address. In both cases, this Court fou nd 

the notices invalid ~snot being the taxpayer's last known 

permanent address. The Court notes that the deficiency notice 

for 1981 and 1982 was not issued until April 12, 1985, and, if 

the Colorado Springs address had been used for that notice, tl10 

address would have been incorrect, since petitioner was at the 

Colorado Springs address only to October 1984. Accordingly, 

petitioner's argument on thi~ point is dismissed. 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 13 
i ... . . A • 

f · - ll -

Petitioner relies ~urther on King v. Commissioner, 88 T.C. 

10~2 (1987). King v. Commissioner, supra, is distinguishable 

from this case. In King, r~spondent argued that a new address 

shown on the taxpayer's 1980 return did not constitute notice 0t 

a new address, bec~use ~ protest letter filed on behalf of tt1~ 

taxpayer subsequent to the filing of the 1980 return showed tnc 

taxpayer's old address. This Court found that, notwi thstand :;_ ,1 r1 \ 

the facts, respondent's agents should have known that the adu n: ~; !~ 

was not correct when the notice of deficiency was returned as 

undeliverable and should have conducted a more comprehensive 

search for the taxpayer's correct address. In the instant c ,!'.;c, , 

the most recent address the Denver District Director's Off ict:i li.:i d 

on f i l~ prior to issuing the ~otices in 1984 and 1985 was 

petitioner's return for 1982, a year which was at issue, 

reflecting the Guam address. Subsequent returns for petiti o1 ;~1·~ 

1983 and 1~84 taxable years were not filed until April 1987, 

after issuance of the notices of deficiency. Therefore , thi ~: 

position is also dismissed. 

The key to the determination of "last known address" is 

whether the address to which the notice was sent is, in light o f 

all the surrounding facts and circums~ances, the address to whi c h 

respondent reasonably believ~d the taxpayer wished the notic~ Lv 

be sent. Delman v. Commissioner, 384 F.2d 929, 932 (3d Cir. 

1967), affg. a Memorandum Opinion ot this Court; Brown v. 

\ l · ,_. . I .v<J-~ 

(" ' 

..• ,J.. _.- -..1.,•.. . ) 

ii. l -~·. ,' . . / 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 14 
~ . 

. . . 

- 12 -

commissioner, 78 T.C. 215, 218-219 (1982): Looper v. 

coramissioner, supra at 696. 8 . It is a question of fact as to \.'h;:.it. 

knowledge the Commissioner obtains concerning the taxpayer's 

address. Maxfield v. Commissioner, 153 F.2d 325, 327 (9th Cir. 

1946). Where respondent knows that a taxpayer has moved, he has 

a duty to exercise reasonable dilig~nce in ascertaining the 

correct adqress. Thus, in determining whether the notices of 

deficiency were mailed to petitioner's last known address, it j ,, 

necessary to determine: (1) Whether respondent had notice th ~1 t 

petitioner had moved; and, if so, (2) whether respondent 

exercised reasonable diligence in ascertaining petitioner's l .,s c 

known address. See Cool Fuel, Inc. v. Connett, 685 F.2d 309, 

- 312-313 (9th Cir. 1982), cited with approval in Cyclone Dril~) ~YJ 

Inc. v. Kelley, supra. 

The Court finds that respondent did not have notice 

petitioner had moved and, therefore, that the cuam address Wc1s no 

longer his correct address. Even though the notices mailed to 

petitioner on August J, 1984, and April 12, 1985, were retur11ed 

to respondent undelivered, petitioner admitted he never directl y 

provided respondent with notice of a change in address with 

respect to his 1980, 1981, and 1982 tax years as indicated by his 

reply to the Court's question: 

a 

See also Pritchett v. Commissioner, T.C. Memo. 1986-559. 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 15 
r 

I 

• 

- 13 -

Q. Okay. Now it really would simplify . this Court's problem 

did you at any time notify the Internal Revenue Service· 

that, with respect to your 1980, 1981, and 1982. tax years 

did you notify them in any form or fashion that, with 

respect to these three specific years, I am no longer liv.inrJ 

in Guam, and this is my address. 

A. No, your Honor, I did not • . I specified in this letter, 

the response to Gwen Ballard, that she could contact me .i 11 

Colorado Springs. 

As such, the Court is satisfied that respondent was nev~r 

p~ovided notice that the Cuam address was not petitioner's 

correct address. 

Even if respondent had notice that the Guam address was not 

petitioner's correct address, it is necessary to determine 

whether respondent made a reasonably diligent effort to determine 

petitioner's address. There is no hard and fast definition uf 

reasonable diligence. 9 Whether respondent exercised reasonable 

9 

Black's Law Dictionary defines diligence as "Vigilant 

activity; attentiveness; or care, of which there are infinite 

shades, trom the slightest momentary thought to the most vigilant 

anxiety." Black's Law Dictionary, at 544 (5th Edition 1979); 

National steel and Ship Building Company v. United States, 419 

F.2d 863, 875 (Ct. Cl. 1969). It defines diligent as "attentive· 

(footnote continu,~d) 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 16 
. ' 

.• . 

-·14 -

diligence is determined by the facts and circumstances of each 

ca&e. See King V. Commissioner' supr_a; O'Brien V. Commission_-=:-_~~- I 

62 T.C. 543, 550 (1974); Lifter v. Commissioner, 59 T.C. 818, e).l 

(1973). 

In Cyclone Drilling, Inc. v. Kelly, supra, the Tenth 

Circuit, in reversing the District Court's summary judgment in 

favor of respondent, held that there were material unresolved 

:;r~£z~ions of fact as to whether respondent had exercised due 

diligence in ascertaining the taxpayer's last known address. 'l'!i e 

Court noted that, in Hall v. Kelly, 564 F.Supp. 371 (D. Wyo. 

1983), respondent's noncompliance with its own procedures war: 

found to be material. In Mall, the District court held tl1at, 

where the notice of deficiency was returned as undeliverable, it 

was not unreasonable to expect respondent to conduct a furtl1Lr 

investigation to determine the taxpayer's last known address . 

(footnote continued from previous page) 

and persistent in doing a thing; steadily applied; active; 

sedulous; laborious; unremitting; untiring." Black's Law 

Di7tionary, at 54 5; National Steel and Ship Building Comp<:_i._!}Y.~ 

United States, supra. Corpus Juris Secundum adds that diligent 

also means "exhibiting careful and persevering effort to 

accomplish what is undertaken, exhibiting the same degree of c ~ 1:e 

and prudence that men prompted by self-interest generally 

exercise in their own affairs." 26A C.J.s., Diligent p. 94J 

(1956). Black's Law Dictionary further adds that "'reasonable 

diligence" is "a fair, proper, and due degree of care and 

activity, measured with reference to particular circumstance!:; 

such diligence, care, · or attention as might be expected from ~ man of ordinary prudence and activity." Black's Law Dictio11 .-1ry, 

at 545. 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 17 
. . . 

- 15 -

In the instant case, Revenue Agent Ballard testified that 

she was assigned ~o the audit of petitioner's 1980 tax return. 

She testified that she made the adjustments, issued the 

examination report, and ultimately sent the case. forward for 

issuance of the notice of deficiency •. She also testified that, 

when submitting a case for issuance of a notice of deficiency, 

she was responsible for preparing the instructions for the 

typist, which included showing petitioner's address, the amou11c 

of the deficiency, and any penalties. She testified that, in 

ascertaining petitioner's address, based upon petitioner's l9 2l 

return, the Guam address was the most recent address on file w .i tli 

tespondent at that time. She also testified that she verified 

petitioner's address by consulting respondent's centralized 

computer system and typing in .the command AMLET o. 10 If, prio r 

to the typing of a notice of deficiency, an AMLET D was "pull t::ol " 

on the computer screen which showed an address for a taxpayer 

different from the address contained in the typing instruction~-;, 

a notice of deficiency was also mailed to the address shown on 

the AMLET D. At the time the notice of deficiency was mailed Lu 

petitioner in 1984, as to his 1980 tax year, the most current 

address for petitioner on respondent's centralized computer 

system was the Guam address reflected on petitioner's 1982 

return. 

10 

In 1984 and 1985, an AMLET D gave the taxpayer's most 

current address on file with the Internal Revenue Service's 

central computer, the IORS system. 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 18 
- 16 -

Revenue Agent Moore.head testified as to issuance of thL! 

n~tice of deficiency for 1981 and 1982: 

For 1981 and '82, it came under the item of a limi t 0~ 

review so it was reviewed by review staff prior to the 

issuance of the 90-day letter. In that case the tax a uJ i t 

reviewer did a check of the administrative. file and 

determined that the last address was the Guam address, ior 

the 'Bl and '82 notice. 

She also testified that an AMLET D review was made to verify 

petitioner's most current address, which again reflected Gu<.1rn ,.1:~ 

his current address. 

With respect to why an additional review was unnecessary 

when the notice of de~iciency was returned as unaelive~able, 

Revenue Agent · Moorehead testified: 

. The follow-up would consist of pulling up the file 

AMLET D for the pa~ticular taxpayer that had been done prior 

to the typing of the letter, so there was no need to do Ll L.l t: 

again. Additional follow-up would be looking through th e 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 19 
. ' 

. .. .. • 

- 17 -

case file to see if there is an additional address. That 

should have been done by the examiner, and if there is a 

change in the address, that should have been noted by th,:, 

examiner. 

From the record, the Court is satisfied that respondent· ~ 

agents who prepared the notices of deficiency for petitioner' s 

1980, 1981, and 1982 tax years relied on the most recent cornp L1t c r 

transcript of petitioner's address, reflecting information p osted 

to respondent's records as of the 21st week of 1983. 

Based on the foregoing, the Court concludes that respond 1~ ,. t.: 

exercised reasonable diligence in ascertaining petitioner's ). , 1~; t 

known address. 

Petitioner's contention that respondent failed to exerc .i ::c \ 

reasonable diligence by not contacting another of his tax 

advisors, Philip s. Scheff, regarding his 1980 tax year docs 11 o t. 

alter this conclusion. Petitioner submitted a letter, dated 

February 14, 1984, from Mr. Scheff addressed to Revenue Agent 

Ballard in response to the examination report sent to petitioner 

at his Guam address on December 14, 1983, in which Mr. Scheff . requested Revenue Agent Ballard to issue a Form 872 to 

petitioner. Revenue Agent Ballard did not have a power of 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 20 
I,. 

... 

•' . - 18 

attorney authorizing Mr. Scheff to represent petitioner, nor w~~ 

suc!h authority indicated in Mr~ Scheff's letter. Furthermore, no 

address was given for petitioner in the letter nor was there c111y 

evidence presented at trial that Mr. Scheff had an address for 

petitioner other than the Cuam address. 

The court finds that the fact that Revenue Agent Ballard 

received the response from Mr. Scheff regarding the examinatio11 

report mailed t~ petitioner'• Guam address, and the fact that tlr . 

Scheff's letter ~id not give a mor~ curre~t address for 

petitioner, led her to reasonably assume that petitioner's Gu ;·1 rn 

address was his current address. 

Accordingly, the Court finds that the notices of def icic!l iCj' 

were mailed to petitioner's last known address. 

In support of his motion to dismiss for lack of 

jurisdiction, petitioner contends that the notices of def icicnc~· 

do not constitute the "determination of a deficiency" under 

sectio~ 6212(a). Citing Scar v. commissioner, 814 F.2d lJ6J ( 9 tl1 

Cir. 1987), revg. · Bl T.C. 855 (1983), petitioner argues that, 

because the notices of deficiency were the result of a flowthrough adjustment from an examination identified as the 

"Kersting Interest Project," respondent was bound to audit 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 21 
' 

--· 

• 

f 

- 19 -

petitioner's books and records before deternining a deficiencj' 

with respect to his 1980, 1981, and 1982 tax years. 

Section 6212(a) authorizes the issuance of a notice of 

deficiency. 11 No particular form is required. Scar v. 

Commissioner, supra at 860; Jarvis v. Commissioner, 78 T.C. 646, 

655-656 (1982). However, the notice must fulfill the purpose of 

providing formal notification that a deficiency in tax has bec.::1 

determined. Foster v. Commissioner, 80 T.C. 34, 229 (1983), 

affd. in part and vacated in part on another issue 756 F.2d l~J0 

(9th Cir. 1985). The notice is "only to advise the person who i s 

to pay the deficiency that the Commissioner means to assess him; 

anything that does this unequivocally is good enough." Olsen v . 

Helvering, 88 F.2d 650, 651 (2d Cir. 1937) [Emphasis added). ·1·11.::: 

notice must (1) advise the taxpayer that the respondent has i1, 

fact determined a deficiency, and (2) specify the year and tlH: 

amount of the deficiency. Foster v. Commissioner, supra at 2 :~ '.i ··· 

230. 

The Court is satisfied from the record that the notices ot 

deficiency for petitioner's 1980, 1981, and 1982 tax years met 

ll 

Section 62l2(a) provides: "If the Secretary determines thc1t 

there is a deficiency in respect ot any tax imposed by subtitle A 

or B or chapter 41, 42, 43, 44, or 45, he is authorized to send 

notice of such deficiency to the taxpayer by certified ~ail or 

registered mail." [Emphaaia added.] 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 22 
 

. ·. ~ 

. . '. 

 

• 

- 20 -

the ~oregoing r~quirements and constituted valid notices of 

deficiency. 

Petitioner's reliance on Scar v. Commissioner, supra, is 

without merit. In Scar, the notice of deficiency disallowed 

deductions from a partnership with which the taxpayers had no 

~onnection and determined a tax deficiency using the then hig li0:_;t:. 

marginal rate. The notice of deficiency contained the follo~,•ir,c_; 

stater.,ant: 

In order to protect the government's interest and since your 

original income tax return is unavailable at this time, the 

income tax is being assessed at the maximum rate of 70%. 

Scar v. Commissioner, supra at 1365. 

The Ninth Circuit interpreted section 6212 (a) to hold th;, L 

the "determination" requirement of that section "has substant i vr! 

content." Scar v. Commissioner, supra at 1369. The court 

concluded "that the Commissioner must consider information th,, t 

relates to a particular taxpayer before it can be said that the 

Com.missioner has 'determined' a 'deficiency' in respect to -that 

taxpayer." Scar v. Commissioner, supra at 1368. The court 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 23 
f .· ..... . . . . , . . • 

~- . 

l· 

- 21 -

reversed this Court's ruling denying petitioner's motions to 

dis;iss for lack of jurisdiction and for summary judgment and 

held that the notice of deficiency was invalid because "the 

Commissioner's purported notice of deficiency revealed on its 

face that no determination of tax deficiency had been made 

* * *·" Scar v. Commissioner, supra at 13 7 o [Emphasis added) _,,- ._, ... :i.rr, 1.,. .· :J-i· c..,y'...... J 

Scar is clearly. distinguishable from this case. The not i 1.:1·!; 

of deficiency clearly indicate that the taxpayer against whom U1 c! 

deficiencies were determined was petitioner. There is no 

indication in the Explanations of Adjustments that respondent 

failed to consider information that related to petitioner and, in 

fact, it is borne out by the evidence that petitioner's tax 

returns for the years at issue were examined befor~ t~e notic o·: 

of deficiency were prepared and mailed. At the hearing herein, 

petitioner did not deny or otherwise establish that he did not 

have an interest in the flow-through adjustment known as the 

Kershing Interest Project. Thus, the Court finds that the 

notices of deficiency do not reveal on their face that respomk i1t. 

failed to make a determination. Accordingly, petitioner's mot .i 01 1 

to dismiss for lack of jurisdiction on these grounds is rejectcJ. 

Petitioner also contends that, notwithstanding the question 

. of the "last known address," his motion to dismiss for lack of 

jurisdiction should be granted because the Postal Service did not 

... 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 24 
I-. · e 

I . . . . 

 

r 

. . 

- 22 -

forward the notices of ~ef iciency to him, even though he left ,l 

forwarding order with the Postal Service in Guam. Petitioner 

argues that it is to b~ presumed that he would have received t Le 

notices if the Postal Service had complied with its duty to 

forward mail addressed to him at Guam. Accordingly, petitione1-

m~intains the notices of deficiency are not valid because they 

were not properly "mail~d" as required by statute. 

As noted earlier, it is well settled that both a valid 

notice of deficiency and a timely filed petition are necessary L o 

maintain an action in this Court. Sections 6212 and 6213; e .9 ., 

Pyo v. Commissioner, supra at 632; Mollet v. Commissioner, surE~1 

at 623; Keeton v. Commissioner, supra at 379. A valid notice c~i 

deficiency has been issued if it is mailed to the taxpayer's l ~s L 

known address by certified or registered mail. Section 6212( ~) 

and (b) (l); section 301.6212-l(a) and (b), Proced. & Admin. Re g s. 

Since the Court finds that respondent mailed the notices of 

deficiency to petitioner's last known address, the question 

appears to be ~hether the notices were properly "mailed,". wh en· 

the Postal Service allegedly _failed to forward the deficiency 

notices to petitioner's current address. 

To constitute a proper mailing, the notice of deficiency 

must have been duly deposited with the Postal Service and sent b y 

certified or registered mail. Section 6212(a); Cataldo v. 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 25 
. ... . . 

- 23 

commissioner, 60 T.C. 522, 524 (1973), affd; per curiam-499 F.2 ~ 

550 (2d Cir. 1974). Although respondent fulfilled all of the!;1:! 

requirements, petitioner, nonetheless, argues that the notice:,: of 

deficiency were not properly "mailed" because he did not receiV l! \ v ... 

them due to Postal Service mishandling, citing Estate of Mc.Ki1 _ _j;_g }~-::··' · · 

. ~-· 

v. Commissioner, 51 T.C. 331 (1968), in support of this posit io11. ,,·- :.,\ 

_) 

In that case, the Court held that, although the deficiency nuLi~, , 

as initially mailed may have been proper, the mailing was not 

-completed because the notice had been diverted by the Postal 

Service and respondent knew or had reason to know of it. In L 11 L ~ 

case, petitioner. had on file with the main post office at Gu.irn a 

forwarding notice; and by letter from the main post office at 

Guam to petitioner, dated October 24, 1983, petitioner was 

advised that his forwarding order was on the Postal Service'!: 

active file and that his mail would be forwarded to his currr:,nt 

address. Respondent argues, therefore, that petitioner's failu~ 0 

to receive the deficiency notices was a result of petitioner' ~ 

own carelessness. 

Congress enacted section 62l2(b) (l) as a safe harbor to 

protect respondent where actual notice is not received by the 

taxpayer. Mulvania v. Commissioner, 81 T.C. 65, 68 (1983); 

Frieling v. Commissioner, 81 T.C. 42, 52 (1983). Thus, if 

respondent follows the procedure set forth in section 6212, 

without more, the notice of deficiency is valid, even if the 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 26 
' 

!·· • 

• .Ii 

.. 

. . • 

- 2 .. -

taxpayer never receives it. E.g., Berger v. Commissioner, 404 

F.2d 668 (3d Cir. 1968), affg. 48 T.C. 848 (1967); DeWeiles v:. 

United States, 378 F.2d 37, 39 (9th Cir. 1967), cert. denied 389 

U.S·. 996 (1967); Brown v. Lethert, 360 F.2d 560, 562 (8th Cir. 

1966); Frieling v. Commissioner, supra at 52; Lifter v. 

Commissioner, supra at 820-821. Moreover, petitioner produced 110 

evidence to establish that respondent knew or should have kncwn 

that the Postal Service had not followed petitioner's forward .i. n ,:1 

instructions, thus distinguishing this case from Estate of M<=:V~,~J~ 

v. Commissioner, supra. Petitioner's argument on this point, 

therefore, is dismissed. 

Petitioner's final argument relates to a request for 

admissions served on respondent to which respondent never 

responded. Since more than 30 days have passed since the req u,:~ L 

was served, petitioner contends the matters requested are clec mc:d 

admitted, and such admissions prove or establish petitioner't; 

motion to dismiss for lac~ of jurisdiction. 

Rule 90(a) provides that requests for admission must be 

commenced and completed within the same time period provided ~ 1, 

Rule 70(a) (2) for commencement and completion of discovery. 

Under Rule 70(a) (2), discovery shall not be commenced, without 

leave of Court, before expiration of 30 days ~tter joinder of 

issue. Joinder ot issue, under Rule 38, arises upon tiling of 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 27 
. . . .

• 

- 25 -

the answer, except where the answer contains affirmative 

all-egations which require a reply, in which event issue is j oi1,c·c.l 

upon filing the reply. 

In this case, an answer has never been filed; consequently, 

issue has never been joined. Petitioner filed the requests for 

admission on .October 16, 1987, without leave of Court. 

Apparently realizing the request was premature, petitioner f :l l1·d 

a motion for leave of Court to commence discovery on October :! u, 

1987. Respondent then filed a notice of -objection. The moti o 11 

was calendared for hearing with the cross motions to dismiss. 

Petitioner's requests for admission, filed without leav,i ld 

Court and prior to joinder of issue, was premature. The moti o 11 

for leave to commence discovery was obviously filed by peti t.i.,:.1,,· tfor purposes of curing this defect, to which respondent obj cc:t1·r.l. 

At the hearing, evidence was adduced by the parties, all of ·,,.,11.ic11 

dealt with the subjects covered in petitioner's requests for 

admission. The Court, having decided that respondent's moti o ,~ 1 0 

dismiss for lack of jurisdiction should be granted, peti tio1w r ' :; 

motion for leave to commence discovery is denied. The Court 

further denies petitioner's contention that the matters requested 

are deemed admitted for the reason that the evidence adduced by 

the parties at the hear~ng, as found by the Court, establish t11 ;_1t. 

the notices of deficiency were properly and validly mailed by 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 28 
,4 I t 

- 26 -

respondent to petitioner's last -known address within the int.,·nt: 

and meaning of section 62l2(b). 

An appropriate order will be issued. 

. AU: 1 '£ 198: 

,. 

(Signed) D. IRVIN COUVILLION 

D. Irvin Couvillion 

Special Trial Judge 

.. 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 29 
RULE J&. . ANSWER 

(a) 1iae to Aaawcr or M...: 1bc Commi11ioncr shall 

have 60 day• from &he dace or acrvice or &he petition wi&hin 

which lO file aa answer, or 45 daya from that date within which 

lO move wi&h respect lO &he petition. Wi&h respect to an 

amended petition or amendmcnu to &he petition, the Commissioner shall h::ave like perioda from the dace of service of those 

papen within which to anawer or move in response thereto, 

acep& a, the Court may o&hcrwiie dicea. 

(b) Form ucl CoaleDC: 1lac anawcr shall be drawn so 

thac it will advise the petitioner and the Coun fwly of the n.1,ure 

of the deferue. It shall contain a specific admisaion or denial of 

each material allegation in the petition; however, if the Commissioner shall be wi&hout knowledge or information sufficient 

to form a belief a, 10 the 1nuh of an allegation, he shall so s&ate, 

and such swcmcru shall have the dTca or a denial. If the Comauuioner intcnda to qualify or lO deny only a pan of an allega• 

tion, he shall specify so aauch of it a, ia U'\le and shall qualify or 

deny only the mnaindcr. In addition, the anawer shall con&ain 

a clear and concise s&atcmcru of every ground~ together with the 

facu in suppon thereof, on which the Commissioner relics and 

has the. burden of proof. Paragraphs of the answer shall be 

dni(n.ltcd to correspond to those of the petition to which they 

relate. 

(c) Effect of Aaawer. Every material allegation set out in 

· the petition and not nprnaJy admitted or derucd in the answer 

shall be dccrncd 10 be adniiucd. 

(d) Dcdan1ory Judpacal uad DiKloa11re Actiom: For ihe 

... ·. rcquircmcnu applicable to the anawer in dcclantory judgment 

aaiona_ and in diadoaw-c action,, sec RuJca 213(a) and 223(a), -

rapcccavdy. . . • .. - ·--/,. I ·. • : :• 

JlULE 37, UPLY 

(a) Time to Bcply or Move: The pcmioncr shall have i5 

days liom the da&c ol icmcc of the answer within which to file a 

Rply, ar 30 days from thac dale wi&bin which to move with Rtpca 

to the answer. Wi&b rapccl to an amended answer or amcndmcn&a to the anawcr; thc petitioner shall have like perioda from the 

dale of scmcc of chOIC papen wilhin which to reply or move in 

raponac thereto, cxa:pt aa the Coun m.&y othcrwix direct. 

\ (b) Form uad Coalcll&: 1n response to each rutcrial al· 

lcp&ion in lhc an,wcr and die faa, in auppon lhcrcof on which 

thc Cornrnieeioncr bu thc burden of proof, die reply atwl contain a 1pccific admi11ion or denial; however, if lhc petitioner 

lhaU be without knowledge or in(omwion sufi"acicnt to form a 

belie{ aa to thc lNUl of aa allegation, he shall so s&ate, aad such 

llalcmco& shall have die cll'ca of a denial. la addition, thc reply 

shall contain a dear and conciac ,wcmcnt of every ground, 

toge&hcr wi&b die faaa in auppon lhcrco(, on whic:h lhc petitioner rdica aJTll1Dll&ivdy ar in avoidance of aay !Ultcr in the 

· answer on which thc Cornrni11U\DCI' ha, the bwdcn o{ proof. In 

. other rapcc:&1 th. Rquircrncnca of pleading appUQble to the '-

~- amwcr provided ill Ruic 36(b) ,ball apply to thc reply. The 

.. parapapb, o{ the reply ,ball be dcaigna&cd co c:om:,pood to 

· &boec ol thc U11Wcr co which chcy rda&c. 

. (c) Ea'ccc ol BcJalY or Pailun Tlacnol: WbcR a reply ii 

filed, tvcry .airmalivc allcp&ion Mt ou& in thc an,wcr and not 

cxpraaly lidmincd or denied in lDC Rply, ,ball be deemed to be 

admiacd. Wbae a reply i, not filed, the alTll1Dll&ive allegation, 

in thc aaawcr will be deemed denied unlcu thc Cornmiuioner, 

within i5 days aller expiration of thc tilDc (or filing thc reply, 

falc, a mocion &hac 1pccifacd allcptiont in thc anawcr be deemed 

adrniucd. Tb.a& mocion will be served OD lhc petitioner and m.ay 

be p-antcd unlcu the required reply i, falcd with&n thc time 

dircc&ed by th. Coult. . 

(d) Nsw Ma&crial, Any new maccrial CIODwncd in &he 

reply abail be dccmcd co be denied. 

(c) Dcclanaory Judpcac uad Ducloaun Actiou, For 

thc requircmcnca applabic ro the reply in dcdaralory judg· 

mcnc act.ion, and in diadoaur. aaiau, NC R.ula 213(b) and 

. 223(b), rupcaivay. · 1 • '· 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 30 
· .. R~ 38. JOINDER OFJSSUE . 

A caae ~ ~ deemed at ialC upon lhc filing o( lhc answer, 

unJaa a reply II required wider Ruic 37, in which cwnt it shall be 

~ at iauc_upon lhe filing oi a~ or chc erury oC an order di.· ~g oi_a mooon ~ Ruic S7(c) or~ cxpirarion of lhc period 

apccified III Ruic S7(c) 111 cue lhe Commiuioncr Dill lO fflOYC. With 

rapcct IO decJarar.ory judgment aaiona, diacJoan aaiona, and 

ncnhip ~ XC Jwla 21 .. and 22 .. and 2-H. rapcCIMJy. pal" 

____ .I . . .. . 

•tJLJ 40. DERNSES AND OBJECTIONS MADI. 

BY PLIADJNG oa MOTION 

E~ dc(cnx, in law '!" fact, to a claim (or Rlic( i.o any • 

pl~r ~ be aucncd III cbc raponaive pladinr chcrcco if 

on~ 11 rcquiRd, excepc dw cbc loUowinr dcfen,a may, at chc 

~paon of cbc pleader, be made by mocion: (a) lack of jwudic:-

oon; and (b) failure co awe a claim upon which relief can be 

granted. U a plcadiag ICll fonb a claim for relief co which the 

advcnc ~ ia DOC required co file a rupon,ivc pleading he 

~Y uacn ai cbc crial aay dcfcnac in law or faca co dw c:wn: for 

rc~f. If, on a mouoa aucrting failure CO 1WC a cJaim on which 

relief can be gran~cd, mancn oucudc the pjcading arc io be 

preaentcd, ~ mooon aJw1 be tRa&cd aa one for 1urnnwy judg· 

mcnc and dupo,cd of aa provided in RuJc 121 and lhc puuc1 ~ be given ~ opponuniry to pracnt ~ ~tcri.J m.dc pcr- uncnc co a mouoa Wider RuJc 121. . . . , 

I , 

B.ULE 70. CENELU. PllOVISJONS · 

(a) Ccacnl: (1) M•t/aod.s anJ Lirnitatio,u of Ducowry: 

In conformicy wi&h r.hac RuJca, a pany may ob,ain discovery 

by wrium inlffl'ogatoria ( RuJc 71 ), by production of documenu 

or uunp (Rules 7% and 75), by depoaiciona upon conKnc of the 

panica (Ruic 74), or by dcpoaiciona wi,houc conacnt of ,he par· 

tin in certain caaa (Rule 75). However, the Coun expects the 

pania co attempt to attain che objcccivca of discov~ry through 

informAI conawtation or communication before ucili1in1 the 

discovery procecbara provided in chac Ruin. Ducovery ia no, 

available under r.hac Rulca &hrough dcpoaidona cxccpc co the 

limited elUent provided in Rulca 74 and 75. Sec Rules 9l(a) and 

100 rcprdinr relationahip of discovery to atipulationa. 

(%) TiJM /or Di#owry. Discovery ahall noc be commenced, 

wichouc leave of Coun, before che expiruion of 30 daya afu:r 

joinder of iuue (ace Rule 38). and ,hall be completed, unlc:1.1 

ochcrwjac auchorucd by chc Coun, no lucr than •5 days prior 

co chc ~cc ace for c~ of the caac from a trial calendar. Discovery 

by a dcpoaition under Rule 75 may noc be commenced before 

a nocice of trial w been iuued or che caac ha, been as.aigned 

co a Judie or Special Trial Judie and ahall be completed within 

the time provided by the prcccdinr acntcnce. Sec Ruic 75(a). 

Discovery of mauen which are relevant only co the iuue of a 

pany'a cntitlancn& to rcaaonablc litigation CCIIU ahall noc be com· 

menced, wichout leave of Coun, before a motion for rcaaonablc 

liti1auon COila w been nociced for a hearing, and shall be com• 

pieced, unlcaa o&hcnriac auchorucd by chc Coun, no later than 

· 45 ~ya prior to the ~cc act for hcarin1. 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 31 
\ llULE 90. llEQUESTS FOR. ADMISSION 

(a) Scope aad Time of llcquac: A party may serve upon 

any oih~r pany a wriucn rcq1&ac for che admiaion, for p1&rpoan 

of chc pcndinf accion only, of che cruch of any macccrs which 

arc noc privilc1cd and arc rclcvanc co me subjccc maucr involved 

ill chc pcndinr action, provided s1&ch maucn arc sec forth in chc 

req11at and rclacc co scaccmcnu or opinions of face or of the ap· 

plicacion of law co face, indudinr chc icnuincncsa of any 

docwncnu dacribcd ill che rcquac. However, UIC Court cxpccu 

chc partia co acccmpc co actain che objccciva of such a rcqucsc 

lhrou1h informal comulcacion or communication before utiliiillr che procedura provided ill chia Rule. Rcqucsu for admisaion m1&11 be commenced and completed wichiD the same period 

· provided ill Rule 70(aX%) for commcnccmcnc and complccion 

of diacovcry. · 

(b) The llequac: The rcquac may, wichouc leave of Coun, 

be lffVc'1 by any parcy co a pcndin( caat. Each maucr of which 

.an admiuion ii requested &ball be acparatcly ace fonh. Copies 

of documcnu sh&ll be served with the rcquac wucsa they have 

been or arc ocherwisc furniahcd or made available for inapcc· 

tion and copyin1. The pany mwnr chc rcquac shall serve a 

copy chcrcof on chc ocher party, and ahalJ file the ori11nal with 

proof of service with the Coun. · 

•(c) llapoDIC &o llcquac: Each matter ia deemed admic• 

tcd unlcsa, within 50 dayi alter service 9f the request or within 

such ahorter or longer time as-the Court may allow, chc pany 

co whom the request ia directed serves upon the requesting par· 

cy (1) a wriuen answer 1pccifically admitting or denying ,he 

maucr involved in whole or in pan, or UM:rting that it cannot 

be truthfully admitted or denied and setting forth in decail 1hc 

rcMOna why dw is 10, or (2) an objection, nacing in dccail 1hc • I . ' - ··· 

ruaona therefor. The response shall be signed by 1he party or 

hia counsel, and the original thereof. wich proof of service on 

&he ocher party, aba1J be falcd with the Coun. A denfal shall fairly 

mccc &he .suba&ancc of the requested admiMion; and, when good 

faicb requira chat a party quali!y hia answer or deny only a pan 

of a maucr, he ahall 1pcci!y ao much of ic aa ia cruc and deny 

or q1&alify che remainder. An anawcring party may not give lack 

of iD!ormation or knowlcdrc aa a rcMOn for failure 10 admi1 or 

deny unJcsa he acates chac he haa made reasonable inquiry and 

chat the informa,ion known or readily obcainablc by him ii in· 

aifflcieru co enable him to admit or deny. A party who considers 

chac a macccr, of which an admiaion haa been rcqucsccd, procncs 

a scnuinc iuue for trial may nol, on chac ,round alone, object 

co chc request; he may, .subject co the provwons of paragraph 

(I) of chia Rule, deny the maucr or set forth reasons why he can· 

DCK admit or deny ic. An objection on the ,round of relevance 

may be noud by any pany but it ia noc co be regarded as jun 

cawe for reflllill to admit or deny. 

(d) I.ffcc:c of Sipaturc: ( l) The signature of counsel or 

a pany colllliuues a ccrtificacion that he haa read the request 

for admluion or response or objection, and chai to the best of 

hia knowledge, iD!ormation. and belief formcc;I after a re;uonablc 

inquiry, it ia (i) conaisccnc with chac Rules and warranted by 

aisc.inr law or a sood faich argwncnc for the cxccnaion, modifica· 

tion, or rncnal of uiatinr law: (ii) noc intcrpoKd for any im· 

proper pW"polC, ~ aa to haraaa or to cal&IC unncccaary delay 1 

or nccdJca increase ill che COIC of litig,uion; and (iii) not 

\&Dffaaonable or l&nduly b&&rdcnaomc or c1pcnaive, (ivcn the nccdi 

of &he case, chc diacovcry already had in the case, the amount 

ill concroveny, and cbc imponancc of chc isa1&es ac scakc in the 1 

litisation. IC a rcquca, raponsc, or objection ia no, signed. i, 

aball be aric.kcn, unJaa ic ia signed promptly after the omiuion 

ia called to the aucncion of the party makin1 the rcqucsc. 1 

raponsc, or objcccion, and a pany shall no& be oblisaccd ,o cake 

any action wi,h rapccl co is uncil is ia aipcd. 

(%) IC a ccrtificacion ia made in violation. of chia Rule, the 

Co.an, upon mouon or upon iu own initiative, may impoae upon 

che pmon who made che ccnwcacion, chc parcy on whole behalf 

the rcqua&, raponac, or objcccion ia made, or both, an ap• 

. propmLC aanc:c.ioa, which may inc11&de an order co pay the 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 32 
••<. ~ 

.. 

amollnt o( the reasonable expenscs incurred bccal&K o( the viola• 

tion, incl1&ding reasonable co1&nscl's fees. 

(e) Motion to Review: The party who b~ requested the 

admmions may move to determine the s1&fficienc:y of the answen 

or objections. Unleu the Co1&rt determines that an objection is 

justified, it shall order that an amwer be served. If the Court 

determines that an answer docs noc comply with the requirement.s 

o( this R1&le, it may order either that the mauer is admitted or 

that an amended answer be served. In lieu of any s1&ch order, 

the Co1&rt may determine that final diapoaition o( the request 

shall be made at some later time which may be more appropriate 

for diapoaing of the q1&estion involved. 

(f) Effect of Ad.million: Any mauer admiued under this 

Ruic ia conchwvely established 1&nlcsa the Co1&n on motion per· 

miu withdrawal or modification o( the admmion. Subjcc:c to any 

other orden made in the case by the · Coun, withdrawal or 

modification may be permitted when the presentation of the 

merits o( the case will be 1ubserved thereby, and the party who 

obtained the admiSlion faila to satisfy the Court that the 

withdrawal or modification will prej1&dice him in pr05CCllting his 

case or defense on the meri.u. Any admisaion made by a party 

1&nder this R1&le is for the pllrpc>K of the pending ac:cion only 

and is not an admillion by him for any other purpc>K, nor may 

it be used against him in any other proceeding. 

(g) Sanctiona: If any party 1&nj1&Stifiably fails to admit the 

genuinencsa of any document or the truth of any matter as re· 

q1&e1i.ed in accordance with this Rule, the party requeuing the 

admillion may apply to the Co1&n for an order imposing such 

unction on the other party or bia co1&nscl ill the Co1&n may find 

appropriate in the circlllftllanca, incl1&din1 b1&t no, limited to 

the unctions provided in Tide X. The fail1&re to admit may be 

fo1&nd 1&nj1&1&ifiablc.1&nJcu the Co1&n finds that (I) ,he request 

Will held objectionable p1&r11&anc co this R1&le, or (2) the admis• 

aion so1&ght Will of no 11&b1tamial importance, or (S) the puty 

failing ,o admit bad reasonable ground to do1&bt che truth of 

the maucr or the genuincncsa of the document in respect of which 

the admisaion Will so1&ght, or (4) there w.u other good re.uon 

for fail1&rc c~ admil, · 

I , 

(la) Otlacr Ap ... 1:-b1c· R J • ,.. R .. - . . ...- ll a. ror ulcs concerned with {re· 

qucncy and unung of rcquau for admilliona in relation co other 

C

pom,ocp~I urea, lllpplenwncation of anawen, effect of cnsivc or in• 

ete anawcn or rapoNa p · de 

d _r , rotecuvc or n and sanctiona an c,uorccmcnu, ace Ticlc x. ' 

Appellate Case: 89-9000 Document: 01019974464 Date Filed: 08/09/1989 Page: 33