* This order and judgment is not binding precedent, e xcept

under the doctrines of law of the case, res judicat a, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order andjudgment may be cited under the terms and conditions of Tenth Ci r. R. 36.3. UNITED STATES COURT OF APPEALS Filed 4/3/96 FOR THE TENTH CIRCUIT

______ JESSE LEE HOWELL, ) ) Plaintiff-Appellant, ) ) v. ) No. 95-5093 ) (D.C. No. 92-C-81-K) UNITED STATES OF AMERICA, ) (N. Dist. of Okla.) ) Defendant-Counterclaim Plaintiff- ) Third Party Plaintiff-Appellee. ) ) v. ) ) DANIEL L. NICHOLS and SYDNEY NICHOLS, ) ) Third Party Defendant-Appellant. )

______ ORDER AND JUDGMENT *

______ Before PORFILIO, BARRETT, and LUCERO, Circuit Judges.

______ Jesse Lee Howell (Howell) appeals from an order of the district court denying his motion for summary judgment and granting summary judgment in favor of the United States of America. In 1981, Howell purchased Speedprint No. 1 from M. W. Pickett,- 2 -

the owner of the Speedprint franchise. The busines s was incorporated as J.D.S. Systems, Inc. (JDS). It engaged in commercial printing and typesetting. Howell was th e President and sole shareholder of JDS. Daniel Nichols, husband o f Howell’s sister, Sydney, was a JDS salesman. In 1983, Danie l was elected Vice-President of JDS. On January 1, 1984, Howell and his wife (designated“seller”) entered into an agreement to sell JDS to Daniel andSydney (designated “purchaser”) for $120,000. Daniel was elected President of JDS and Howell Vice-President. Howell remained a member of the board of directors. The agreement pr ovided that: the purchaser would receive 50% of the JDS stock; distr ibution of profits would be made from time to time at the disc retion of seller and purchaser; seller and purchaser would each rece ive an annual salary of $70,000; seller was entitled to examine and inspect the books, records, and accounts of the corporation; an d, seller would receive a monthly recap report from purchaser. The agreement also provided that: no money would be borrowed against J DS unless agreed upon in advance in writing by seller and purchaser; any purchases, except for materials and supplies, must be agreed to by seller and purchaser; and, purchaser could acquire the remain ing 50% of JDS stock after a ten-year period. The agreement was amended on September 7, 1984, to provide, interalia : a reduction in Howell’s salary, a salary for Sydn ey for- 3 -

bookkeeping and typesetting, and a monthly car allo wance of $789.83 for seller and purchaser for 29 months. On that sam e date, a corporate resolution of J’S authorized any one of D aniel Nichol, Sydney Nichol or Jesse Howell to write checks on th e corporate checking acocunt. The agreement, as amended, was modified on January 31, 1986, wherein the parties acknowledged that JDS was havin g financial difficulties, it was in the best interest of both parties that JDS survive, and without financial concessions from the Howells, JDS would be forced to liquidate and file bankruptcy. Under the modification, Howell waived any further salary and he resigned from the board of directors, effective immediately. It also provided that 100% of the JDS stock would be released to the Nichols, free and clear of any liens, upon payment of $165,000. During the third and fourth quarters of 1985 and t he first quarter of 1986, JDS did not remit the federal wit hholding taxes due the United States. On July 28, 1986, the Inter nal Revenue Service (IRS) assessed Howell and the Nichols $31,8 90.15 as responsible persons under 26 U.S.C. § 6672 for JDS’ s employment tax liabilities. Under § 6672, “[a]ny person required to collect . . . and pay over any tax . . . who willfully fails to. . . pay over such tax . . . shall, in addition to other penaltie s provided by law, be liable to a penalty equal to the total amou nt of the tax evaded . . . or not accounted for and paid over.”- 4 -

In 1988, the Nichols submitted amended tax returns on behalf of JDS in which they attempted to eliminate the § 6 672 liability by stating that JDS had erroneously reported as wag es certain payments made to Howell when in fact the payments s hould have been characterized as proceeds from the sale of stock. Howell subsequently filed an action seeking a refun d of the $868.92 payment he had made toward the § 6672 asses sment and to have the balance of the penalty abated. In respons e, the government filed a counterclaim against Howell for the unpaid balance of the penalty, plus interest and statutorycosts. The government filed a similar counterclaim against the Nichols. The parties moved for summary judgment. In its order granting the government’s motion for s ummary judgment, the district court observed, interalia : JDS failed to pay employment taxes for the time period in questio n; for summary judgment to issue in favor of the government it mus t prove that the taxpayers were “responsible persons” for JDS un der § 6672 and that the taxpayers willfully failed to pay JDS’s employment taxes; Howell and the Nichols could prevail on their motio n only “if they establish that the tax returns filed by JDS during the period at issue erroneously classified payments made for the purchase of stock as payments made for salary.” (Corrected Appe ndix to Opening Brief of Appellant, Part A at 6). The court also found/concluded: the Nichols do not dispute1After briefs had been submitted but prior to oral a rgument,

the Nichols settled with the government. - 5 - that they are responsible parties under § 6672; “[t ]he evidence . . . shows that Howell instructed JDS to give paymen t priority to his salary, with other creditors receiving a lower priority. Howell could have instructed JDS to pay the IRS fi rst, and then his salary, but he did not.” Id . at 16; Howell “expressed a preference as to which [creditors] should be paid” and “attempted to influence the Nichols’ decision-making by means of violent
threats.” Id .; Howell “crossed the threshold of § 6672 . . . [and] became a ‘responsible person.’” Id . at 17; although the government agrees that Howell threatened the Nicho ls with harm if his payments were not made, “[t]he court does not f ind that threats negate willfulness as used in § 6672.” Id . at 18; Howell “had access to the company’s books and accounts, and . . . notice of the tax delinquencies. . . . [and] it [is] the combinat ion of factors, including Howell’s role in determining the company’ s payment of creditors, which requires the court to impose respo nsibility on him.” Id . at 21; and, the amended tax returns submitted by JDS did not effectively reclassify the salary payments made to Howell as payments for stock. Howell and the Nichols appeal ed. 1 On appeal, Howell contends that the district court erred in granting summary judgment by failing to recognize t he existence of genuine issues of material fact which precluded summary judgment in- 6 -

favor of the government. The government responds t hat there were sufficient undisputed facts to support summary judgment in its
favor.
I. We review the district court’s grant of summary j udgment de

novo , Ellis v. United Airlines , 73 F.3d 999, 1003 (10th Cir. 1996), applying the same legal standard used by the district court under Fed.R.Civ.P. 56(c). Crow Tribe of Indians v. Repsis , 73 F.3d 982, 986 (10th Cir. 1995). Even though all the par ties moved for summary judgment, this does not change the district court’s consideration or our standard of review. E.E.O.C. v. Steamship Clerks Union, Local 1066 , 48 F.3d 594, 603 n.8 (1st Cir.), cert. denied , ___ U.S. ___ (1995). Although cross motions for summary judgment were filed by the parties, this did not pe rmit the entry of summary judgment if disputes remained as to mate rial facts. Harrison Western Corporation v. Gulf Oil Co. , 662 F.2d 690, 692 (10th Cir. 1991). See alsoCargill Inc. v. Charles Kowsky Resources, Inc ., 949 F.2d 51, 55 (2nd Cir. 1991) (“Even though bo th parties move for summary judgment and even though t hey agree that there are no issues of fact, the court may still fi nd that factual issues exist.”).
II. Howell contends that the district court erred by de ciding the issue of his status as a responsible person under § 6672 on the- 7 -

government’s motion for summary judgment rather tha n allowing the matter to proceed to trial. He argues that there e xisted genuine issues of material fact, including who controlled JDS’s finances, and who had the power to determine which of JDS’s c reditors would be paid, which made summary judgment improper. “Courts have generally given broad interpretation t o the term ‘responsible person’ under § 6672.” Denbo v. Unite d States , 988 F.2d 1029, 1032 (10th Cir. 1993). In Denbo , we held: A person is responsible with the meaning of the sta tute if that person is required to collect, truthfully a ccount for or pay over any taxes withheld from the wages o f a company’s employees. . . . The responsible person generally is, but need not be, a managing officer o r employee, and there may be more than one responsibl e person. . . . Indicia of responsibility include the holding of corporate office, control over financial affairs, the authority to disburse corporate funds, stock ownership, and the ability to hire and fire employe es. . . . Among other things therefore, a corporate offic er or employee is responsible if he or she has significan t, though not necessarily exclusive, authority in the ‘general management and fiscal decision making of t he corporation.’
* * * [W]hile it is clear that [the president] exercised greatercontrol over the corporation than Denbo, ‘[s]ection 6672 does not confine liability for the unpaid taxes only to the single officer with the greatest or the closest control over corporate affairs.’ . . . It suffices that Denbo had ‘significant, as opposed to absolute, control of the corporation’s finances.’
* * * A responsible person’s failure to investigate or to correct mismanagement after being notified that withholding taxes have not been paid satisfies the section 6672 willfulness requirement.- 8 -

988 F.2d at 1032-33 (citations omitted).
See alsoTaylor v. Internal Revenue Service , 69 F.3d 411, 416 (10th Cir. 1995)(person with sufficient indicia of responsibility is a responsible person under § 6672 regardless of whether he has final say as to which creditors should be paid); Mu ck v. United
States , 3 F.3d 1378, 1381 (10th Cir. 1993)(the existence of significant, though not necessarily exclusive autho rity, “irrespective of whether that authority is actuallyexercised, is determinative” of whether a corporate employee or o fficer is a responsible person under § 6672). “‘[S]ummary judgment is appropriate [only] when the re is no genuine issue over a material fact and the moving p arty is entitled to summary judgment as a matter of law’ . . . [and] ‘we must view the record in the light most favorable to the parti es opposing the motion for summary judgment.’” Crow Tribe , 73 F.3d at 986 (citations omitted). In concluding that Howell was a responsible person under § 6672, the district court relied on the undisputed f acts that: Howell was an officer and director of JDS, Howell o wned 50% of JDS stock, and Howell had check writing authority for t he corporation. The court also relied on various provisions within the sales agreement: all profit distributions were at the di scretion of both the seller and purchaser; seller had the right to e xamine and inspect the books, records, and accounts of JDS; se ller was to be- 9 -

supplied a monthly recap report sheet for JDS; all money borrowed by JDS had to be agreed upon in advance by the sell er and purchaser; and any purchases, excluding materials a nd supplies, were to be agreed upon by the seller and purchaser. The district court further considered and relied up on, inter alia : the testimony of the Nichols and M. W. Pickett th at Howell threatened to kill Daniel if he was not paid in acc ordance with the sales agreement in finding that “[m]ortal threats b y a director and vice-president of a company against the president o f that company are indicative of an effort to control the payment of funds to creditors,” (Corrected Appendix to Opening Brief ofAppellant, Part A at 11-12); Daniel’s testimony that Howell control led the books for a period of time after the sale, in finding tha t “[i]n actuality, for much of a year, Howell may have enjo yed greater access to the JDS’s records than its owners,” id . at 14-15; the testimony of the Nichols that Howell consulted wit h them about which creditors to pay in finding that “Howell coul d have instructed JDS to pay the IRS first, and then his s alary, but he did not,” and that “Howell was in a position to pr event the default from occurring. . . .” Id . at 15-16. The court relied on these findings in concluding th at Howell was a responsible person under § 6672. However, no t all of these findings were based on undisputed facts. It is und isputed, however, that in terms of control or the right to e xercise control- 10 -

over JDS during the time period here involved, Howe ll served as vice-president, director and a 50% shareholder of t he corporation at all times in 1985. In addition, the Purchase Ag reement provided Howell with substantial authority over distributionof profits, borrowing, purchases, the right to inspect JDS’s bo oks and records, and to receive a monthly recap report. During the entire period at issue, Howell also exercised check writing authorit y over the corporate checking account. We agree that these undisputed facts justified the district court’s conclusion that Howell was a responsible pa rty with respect to JDS, and thus under a duty to collect and pay ov er the federal income and social security taxes withheld from the wages of JDS’s employees to the government. Responsibility is a matter of status, duty, and authority. We hold that the district court did not err in conc luding that Howell was a responsible person under § 6672.

III. Howell contends that “the district court erred whenit failed to recognize the existence of the unresolved genuin e disputes of material facts regarding [his] alleged wilful [sic] failure to pay JDS Systems, Inc.’s employment taxes under the mean ing of I.R.C. § 6672.” (Corrected Opening Brief of Appellant at 21 ). He argues that because the issue of his willful failure to pa y the- 11 -

withholding taxes was in dispute, and inasmuch as t he district court “appears to have written an order for a trial that has yet to take place,” the order of the district court granti ng summary judgment in favor of the government must be reverse d and the case remanded for trial. Id . We agree. In Thomas v. International Business Machines , 48 F.3d 478, 484 (10th Cir. 1995), we held that the party moving forsummary judgment has the burden of showing that there is anabsence of evidence to support the non-movant’s case, and that the court must examine the factual record and all reasonable infer ences in the light most favorable to the non-movant. Here, the government cannot point to the absence of evidence to support Howell’s contention that he did not act willfully under § 66 72. Furthermore, the district court failed to examine t he factual record in the light most favorable to Howell in gra nting the government’s motion for summary judgment on the iss ue of Howell’s willfulness. In TPLC, Inc. v. United Nat. Ins. Co

. , 44 F.3d 1484, 1489 (10th Cir. 1995), we held that at the summary judgment stage, the court may not weigh the evidence to determine t he truth, but rather must decide only whether there is a genuine issue for trial. If the district court is required to adjudicate fac tual issues, the case is not ripe for summary judgment. IBEW Local Union No. 969 v. Babcock & Wilcox , 826 F.2d 962, 964 (10th Cir. 1987). Here, the district court did adjudicate factual issues.- 12 -

If the moving party shows the absence of a genuine issue of material fact upon a motion for summary judgment as required under Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986), the non-movant “may not rest upon mere allegations or denials” of the pleadings, Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248 (1986), but must produce evidence creating a genuine issue of materi al fact to be resolved at trial. Wilson v. Meeks , 52 F.3d 1547, 1552 (10th Cir. 1995). Here, Howell’s depositional testimony is at complete odds with the government’s contentions on the issue of h is willfulness under § 6672. This creates a credibility issue fortrial determination. See Applied Genetics Intern., Inc. v. First Affiliated Securities, Inc. , 912 F.2d 1238, 1241 (10th Cir. 1990).
Andersonobserved that a fact is “material” only if it “mig ht affect the outcome of the suit under the governing law” and the dispute is “genuine” only “if the evidence is such that a reasonable jury could return a verdict for the non- moving party.” 477 U.S. at 248. Howell’s depositional testimony c reated a credibility issue for trial determination by the fa ct finder. Howell’s depositional testimony disavowed any assoc iation with JDS and any knowledge of JDS’s tax problems during the third and fourth quarters of 1985 and the first quarter of 19 96: Q. The third and fourth quarter of ‘85 and the firs t quarter of ‘86. That’s why we are here, and those are the taxes that weren’t paid, and that’s the issue o f the case. Do you understand that? A. Okay. Yes, I do.- 13 -

Q. Who was running the company in that period at is sue? A. Danny Nichols ran the company from the time I so ld him and he became president, in that period. Q. Okay. What was your role in the company? A. Really I had no role in the company whatsoever. I had told Danny that I would help him with any problems that I could, and I lived on the farm and took care of a nd was trying to build my place up there, is what I was tr ying to do in this period of time. Q. So you basically just told him that you would he lp him if he needed any help? A. That’s right. Q. Did you do anything else with respect to the company? A. No, sir. Q. Did you go onto the company premises? A. Not that I can remember. I might have at one ti me or another or something, but you know, it wouldn’t hav e been on a regular basis.
* * * Q. During that period at issue, though, did you wri te any checks? A. From the time that --- no, I did not. Q. So Danny and Sydney wrote the checks? A. Yes, they did.
* * * Q. So your answer is that, during the period at iss ue, you didn’t receive any financial information? A. No, sir, I did not. Q. Did they tell you that the taxes weren’t being p aid during that period?- 14 -

A. No, sir, they did not. I was not aware of the t ax problem that they had. Q. They didn’t tell you that they were having probl ems with the taxes? A. No, they did not. Q. Did you know that the company was having financi al problems? A. No more than it ever did. I always had, you kno w, I’d have a good month and I’d have a rough month, and I ’d have, you know, its ups and downs, but I always mad e good money. Q. But during the period at issue, did you know tha t the company was having financial problems? A. When I went to Danny’s house, I was pretty well under the understanding that there was something wrong, yes, and at that point Danny and I didn’t communicate on anything. He handled everything himself. They didnot communicate with me, they did not send me financial statements. I had no way of knowing what the busin ess was doing. Q. But you knew it was in trouble? A. Well, I knew that they weren’t paying me, so, yo u know, that’s all I knew.
* * * Q. . . . . Did you ever threaten Danny personally o n paying the notes? A. I’d have to answer that no. . . . I was raised t hat if you have an argument you go outside and settle it, you know, but did not threaten -- (Corrected Appendix to Opening Brief of Appellant, Part A at 13- 14, 21-22, 25). Howell is liable under § 6672 only if he “willfully ” failed to comply with the statute. In Denbo , we defined “willfulness”- 15 -

to be: Willfulness, in the context of section 6672 means a ‘voluntary, conscious and intentional decision to p refer other creditors over the government. . . .’ Althou gh negligence does not give rise to section 6672 liabi lity, “‘the willfulness requirement is ... met if the responsible officer shows a “reckless disregard of a known or obvious risk that trust funds may not be remitted to the government. . . .”’” A responsible person’s failure to investigate or to correct mismanagement after being notified that withholdingtaxes have not been paid satisfies the section 6672 willf ulness requirement. . . . 788 F.2d at 1033 (citations omitted). Applying these standards, and mindful that summary judgment is appropriate only “when there is no genuine dispute over a material fact,” we hold that the district court erred in fin ding/concluding that Howell acted “willfully” for purposes of § 6 672. Howell testified that he did not have any role in JDS what soever during the time in question and that he did not have any knowl edge of JDS’ tax problems. Howell’s testimony created genuine dispu tes of material facts, rendering the district court’s finding/conc lusion of willfulness on the summary judgment motion improper

. IV. Howell contends that the district court erred when it relied heavily on inadmissible hearsay in granting summaryjudgment in favor of the government. We elect not to reach thi s issue in view of our holding that the district court erred in gra nting the government’s motion for summary judgment on the iss ue of Howell’s willfulness.- 16 -

AFFIRMED in part, REVERSEDin part, and REMANDEDfor further proceedings.
Entered for the Court: James E. Barrett, Senior United States Circuit Judge