UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

United States of America,

Plaintiff

v. Case No. 08-cv-499-SM

Opinion No. 2011 DNH 201

David M. Hulick and

Caroline P. Hulick,

Defendants/

Counterclaim Plaintiffs

and

State of New Hampshire

Department of Employment Security,

Defendant

O R D E R

In 1997, the Secretary of the Treasury determined that

Precision Valley Aviation, Inc. (“Precision”), Northeast Express

Regional Airlines (“NERA”), and six other related airline service

companies had failed to pay over to the Internal Revenue Service

more than $500,000 in federal income taxes and F.I.C.A.

contributions they had withheld from employee paychecks in 1994. 

Ten years later (as of October 31, 2007), the IRS calculated

that, with accrued interest, it was still owed more than $2

million in withholdings. It now seeks to collect that amount

from the defendant, David Hulick. 

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At issue is not Hulick’s payment or non-payment of personal

income taxes. Rather, this case involves his alleged individual

liability for taxes withheld by his employers from employee

wages. The IRS determined that, because of the positions Hulick

held at Precision and NERA (and/or one or more of the related

companies), Hulick was personally responsible for paying over to

the IRS taxes and F.I.C.A. contributions withheld by the

companies. Accordingly, the government looked to him,

personally, for payment of those outstanding corporate

obligations, plus continually accruing interest. 

Approximately eleven years after making the assessments

against Hulick, and following nearly two years of periodic

payments by him, and after rejecting at least three settlement

proposals by Hulick, the government brought suit against both

Hulick and his wife seeking to: (a) reduce to judgment all unpaid

tax liabilities for which the IRS claims he is personally

responsible (known as trust fund recovery penalties); (b)

establish the validity of federal tax liens levied against all

property owned by Hulick; (c) foreclose the liens upon Hulick’s

family home in New Boston, New Hampshire (in which his wife has

an interest); and (d) permit a judicial sale of that property. 

Hulick answered the government’s complaint, denied liability, and

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advanced several counterclaims (all but one of which were

previously resolved against him). 

The government now moves for summary judgment on all counts,

saying there are no factual issues requiring a trial, and that it

is entitled to judgment as a matter of law. The IRS also says it

is entitled to dismissal of Hulick’s sole remaining counterclaim. 

Hulick objects, and he also moves for summary judgment. For the

reasons discussed below, the court concludes that genuinely

disputed material facts preclude the entry of summary judgment in

favor of either party. The government’s motion to dismiss

Hulick’s counterclaim is also denied.

Standard of Review

When ruling on a motion for summary judgment, the court must

“view the entire record in the light most hospitable to the party

opposing summary judgment, indulging all reasonable inferences in

that party’s favor.” Griggs-Ryan v. Smith, 904 F.2d 112, 115

(1st Cir. 1990). Summary judgment is appropriate when the record

reveals “no genuine issue as to any material fact and . . . the

moving party is entitled to a judgment as a matter of law.” Fed.

R. Civ. P. 56(c). In this context, “a fact is ‘material’ if it

potentially affects the outcome of the suit and a dispute over it

is ‘genuine’ if the parties’ positions on the issue are supported

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by conflicting evidence.” Int’l Ass’n of Machinists and

Aerospace Workers v. Winship Green Nursing Ctr., 103 F.3d 196,

199-200 (1st Cir. 1996) (citations omitted). 

Background

Hulick began working for Precision in 1990, as its Vice

President and Chief Financial Officer. He was an employee, but

not a director or shareholder. Precision struggled financially

and on at least two occasions between 1992 and 1994 it failed to

make timely payroll tax payments to the IRS on behalf of its

employees. Precision managed to later pay arrearages and

penalties in 1993, but failed to do so in 1994 before going out

of business. 

Hulick notes that, because both Precision and NERA were

commercial airlines, when cash flow was restricted (due to

contingencies like higher fuel prices, reduced travel demand, and

weather-related flight cancellations), the companies focused

their attention and limited financial resources on maintaining a

safe fleet of aircraft. See, e.g., Hulick Deposition (documents

no. 48-4 thru 48-6) at 50 (“The companies were paying only those

creditors that were essential to the safe operation of the

airline.”). When cash flow improved (typically in the summer

months), the companies generally had sufficient assets to resolve

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their outstanding obligations to creditors and the IRS (including

late fees, fines, and penalties). That is, until they went

bankrupt before completely fulfilling those obligations. 

Although Hulick says he did not actively participate in

decisions to withhold tax payments due the IRS, he was aware of

the companies’ practice of doing so and “ensured that the owners

were at all times aware of the amount and nature of the nonpayment of taxes.” Amended Answer and Counterclaims (document

no. 33) at para. 28. Because of his position in Precision and

NERA - Vice President of Finance - the IRS deemed Hulick to be a

“responsible person” and assessed him for the unpaid payroll

taxes. 

The first assessment against Hulick was made on February 3,

1997, for the tax period ending on June 30, 1994. And, six weeks

later, on March 17, 1997, the second assessment was made, for the

tax period ending on Sept. 30, 1994. Each assessment was subject

to a collection limitations period of ten years, the last day of

which is commonly known as the “Collection Statute Expiration

Date” or “CSED.” See 26 U.S.C. § 6502(a). But, that ten-year

limitations period is tolled while any offer-in-compromise is

pending, plus 30 days after the IRS rejects that offer. See 26

U.S.C. § 6331(k)(1) (when an offer in compromise is pending, and

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for 30 days after any rejection, the IRS may not levy against

those unpaid taxes); 26 U.S.C. § 6503(a)(1) (the CSED is tolled

for any period during which the IRS may not levy). 

In an effort to satisfy his alleged obligations, as asserted

by the IRS, Hulick made three separate offers-in-compromise. The

IRS rejected each offer. But, as noted above, each offer

effectively tolled the applicable limitations period while it was

pending. The IRS’s most recent calculation of the tolling

periods and the CSEDs is set forth in the government’s reply

memorandum and involves the interplay of three federal statutes. 

See Government’s reply (document no. 35) at 4-8. 

In December of 2006, Hulick again met with the IRS to

discuss settling the claims. The IRS’s representatives

acknowledged that the claims against him had been pending for

many years, and expressed their commitment to try to finally

resolve the matter. By letter dated December 19, 2006 (the

“December Letter”), the IRS provided Hulick with a written

calculation of the Collection Statute Expiration Date for each of

the assessments for which he was allegedly liable. According to

that letter, “[t]he earliest collection statute will expire

August 8, 2008 and the last statute will expire October 1, 2008.” 

Exhibit A, Amended Answer (document no. 33-1) (emphasis

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supplied). The December Letter went on to state that, based upon

financial information Hulick had recently provided, the IRS

determined that “he could afford to pay $3,147.00 per month

toward his tax obligation,” and “if he takes no action to resolve

the account, [the IRS] will take action to collect the balance

due.” Id. The IRS also said it wanted him to “remit his equity”

in his family’s home. Id. Hulick administratively appealed the

finding that he could afford to pay the IRS approximately $3,200

per month. He lost that appeal when the IRS concluded (without

any explanation) that he could actually afford to pay more:

$4,058 per month.

Like Falstaff, Hulick perhaps recognized at that point that

“the better part of valour is discretion.”1

 He acquiesced and

began making monthly payments of approximately $4,100. He

dutifully submitted each monthly payment through what the IRS had

assured him was the expiration of the last limitations period. 

At that point, he says he believed his obligations to personally

repay the companies’ debts had been met to the IRS’s

satisfaction, and all relevant collection statutes had expired,

putting an end to the matter, as agreed. 

1 William Shakespeare, Henry IV, Part 1, Act 5, Scene 4

(circa 1597). 

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What was [of] particular [significance] to me was that

the letter was explicit in its monthly payment

requirement, 3,000 some odd dollars every month. The

CSED runs out October 2008. So for me, it was very

clear. They want these payments, and that’s my primary

responsibility. 

I appealed the payment because it was too high, in my

opinion. That did not go well for me. Two things

happened: One, the IRS levied my wages in January, and

two, the appeal was overturned and inexplicably, the

monthly number was raised to over $4,000 a month. 

So, at this point, I said, David, just pay. Don’t ask

questions. They know where you are. If they want the

house, they will come and tell you what they want. I

took that [reference by IRS agents to the existence of

equity in Hulick’s house] to be the threat of what

would happen if I did not conform [and make the monthly

payments]. I don’t know. Was the thousand dollars on

top of that [i.e., the increase from roughly $3,100 to

$4,100], was that to reflect the home equity? It was

not explained to me. And I was, frankly, not

comfortable going back and asking because the last time

I did so, it didn’t go so well for me. But please also

keep in mind that the IRS knew I was out there because

every month, Mary Byars received an envelope from me

addressed to her personally with a $4,000 check in it. 

So I knew, guys, you know I’m here, you know I’m doing

what the [December Letter] says. I’m sure when you

want something, you’ll let me know. 

I can tell you when October came, it was a wonderful

day. It’s over. I’ve discharged my responsibility. I

did what they told me to do. 

Hulick Deposition at 106-07. Not surprisingly (given this

litigation), the IRS did not share Hulick’s view.

By form letter dated November 5, 2008, the IRS notified

Hulick that, according to its calculations, he still owed more

than $2 million. The IRS also informed Hulick that the

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Collection Statute Expiration Dates it had previously determined

and represented to be accurate, at least implicitly, in the

December Letter, were inaccurate. After reviewing the file and

re-calculating the relevant tolling periods, the IRS now informed

Hulick that the CSEDs actually ran until at least July of 2009. 

In other words, the IRS told Hulick that in its view he still

owed a substantial sum of money and, because the relevant

limitations periods had not yet expired after all (contrary to

its prior representations), it was still free to collect those

sums from him.

Hulick was, of course, surprised to learn that the

government had, from his perspective, dramatically changed its

position. Hulick thought the IRS had agreed that his personal

obligations would be considered fully discharged if he made the

required monthly payments of $4,100 through the end of October,

2008. 

The lawsuit was an absolute mind blower. I just - I

have no expectation, no understandings. I had - they

told me what they wanted from me explicitly, pay this

amount. This is the [drop] dead date. And I did it. 

Hulick Deposition at 107-08. When asked whether he believed the

December Letter (in which the IRS first established - and

subsequently raised - its monthly payment demand, and explained

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that the statute of limitations (CSED) expired in October of

2008) was a contract between him and the IRS, Hulick testified:

Yes. And please understand, it was not a contract in

the sense that there’s an exchange. We were not

equals. They had shown me in January, if you don’t do

what we like, we will levy your wages. So it was - I

was under the threat of a levy and I also knew they had

threatened me with a lawsuit. So I was going to make

sure that those checks were always paid, always on

time. 

* * * 

When I went to them in December [of 2006], I said, I

would like to have a deal, I would like to have

something concrete so I can put this behind me. And

the [December] letter, if you look through the whole

history of the correspondence, that’s the only personal

letter I’ve gotten from the IRS. So it was pretty

important to me. They put some effort into that. 

. . . It wasn’t a form letter. That was the only

nonform letter I got, so it was important to me. 

So I get to that day, I make the last payment, and I

get a form letter, we’re going to levy your wages. You

need to remit $2 million to the IRS. I talked to my

attorney in May, who lived in North Carolina, I said,

there’s a mistake. I did [everything they asked]. 

So he writes them a letter and the next thing I know, I

get an envelope from the Department of Justice. My

wife and I are being sued. There was no call, there

was no follow-up. I was astonished. I went in [in

2006], and they say, we’ll take care of this. They

give me the [December] letter. I did what they said,

and then I get a form letter and a lawsuit. That’s not

right. 

Hulick Deposition at 108-110. 

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Hulick’s sense that he has not been treated fairly by the

IRS is understandable. It was reasonable for Hulick to think

that the IRS had: (1) properly calculated the relevant CSEDs; and

(2) led him to believe that if he complied with the demand that

he pay $4,100 each month to the IRS through October of 2008 (the

last CSED), his personal obligations would be considered

fulfilled.2

 

Also understandable is Hulick’s frustration at his

government’s too casual characterization of the record, and its

failure to distinguish between Hulick’s historical authority at

Precision and his actual authority during the tax quarters in

question. Compare Government’s Motion for Summary Judgment

(document no. 50-1) at 6-7 with Hulick Deposition. See generally

Defendant’s Objection (document no. 57-1) at 3-5 (pointing out,

2 The December Letter requests Hulick to “begin to make

voluntary payments toward the tax obligation [i.e., the $4,100

monthly payments] and says that if he “takes no action to resolve

the account, [the IRS] will take action to collect the balance

due. This may include issuing levys and recommending that a suit

be filed.” December Letter (document no. 30-2) at 2. Hulick

plausibly asserts that the implication of that letter is clear:

if he failed to take action, he would risk being sued; if, on the

other hand, he complied with the IRS’s demand for voluntary

payments through the end of the fixed limitations period, his

obligations would be considered fulfilled and the IRS would forgo

filing suit against him for any (claimed) unpaid balance. The

IRS certainly did not candidly inform him that the periodic

monthly payments were expected to be made, and, before the

relevant CSEDs, the IRS would then file suit for the claimed

balance.

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with record citations, the several misstatements or, at worst,

mischaracterizations in the government’s memorandum). 

For its part, the government acknowledges that IRS agents

gave Hulick incorrect CSEDs, and it does not seriously dispute

that he relied on those dates. Nevertheless, the government says

it is not bound by those miscalculations and negligent

misrepresentations, even though Hulick plainly relied on them in

making the “voluntary” monthly payments demanded by the IRS. 

And, more critically for Hulick, the government says his

uninterrupted and timely monthly payments of $4,100 through the

misrepresented CSEDs did not resolve his alleged personal

obligation to the IRS, which the IRS claims still exceeds $2

million. 

Discussion

I. “Responsible Person” Under the Internal Revenue Code.

The Internal Revenue Code “requires employers to withhold

from their employees’ paychecks money representing employees’

personal income taxes, unemployment insurance and social security

taxes that those employees owe or will owe the government.” In

re Energy Resources Co., 871 F.2d 223, 225 (1st Cir. 1989). The

employer holds the withheld monies in trust for the United

States, and is responsible for remitting them to the Internal

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Revenue Service. Once those funds are withheld from an

employee’s wages, the IRS has no recourse against the employee -

even if the employer fails to turn them over to the IRS. 

The Code also “imposes personal liability not only upon

employers but upon their officers and agents who are responsible

for collecting, accounting for, and paying over to the government

the taxes withheld.” Thomsen v. United States, 887 F.2d 12, 14

(1st Cir. 1989). See generally 26 U.S.C. § 6672.3 The statute

imposes upon “responsible persons” what is commonly known as the

Trust Fund Recovery Penalty. And, because tax assessments are

presumed to be correct, the person against whom such a penalty is

imposed bears the burden of proving, by a preponderance of the

evidence, that he or she is not a “responsible person” under

section 6672. See, e.g., Jean v. United States, 396 F.3d 449,

3 Section 6672 of Title 26 of the United States Code

provides that: 

Any person required to collect, truthfully account for,

and pay over any tax imposed by this title who

willfully fails to collect such tax, or truthfully

account for and pay over such tax, or willfully

attempts in any manner to evade or defeat any such tax

or the payment thereof, shall, in addition to other

penalties provided by law, be liable to a penalty equal

to the total amount of the tax evaded, or not

collected, or not accounted for and paid over. 

26 U.S.C. § 6672(a) (emphasis supplied). 

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454 (1st Cir. 2005); Brinskele v. United States, 88 Fed. Cl. 334,

339 (Fed. Cl. 2009).

Precision, NERA, and at least some of the related companies

identified in the government’s complaint failed to remit

withholdings that each made from employees’ wages. The critical

question in this litigation is, then, whether Hulick was a

“responsible person” with regard to any of those companies during

the tax quarters in question. If he was, he is personally liable

to the IRS for the Trust Fund Recovery Penalties imposed by 26

U.S.C. § 6672. 

In determining whether someone is a “responsible person”

under section 6672, courts consider several factors. 

In determining who falls within the category of

responsible person, the courts have identified seven

typically used, but nonexclusive, indicia. The inquiry

focuses on whether the individual “(1) is an officer or

member of the board of directors, (2) owns shares or

possesses an entrepreneurial stake in the company, (3)

is active in the management of day-to-day affairs of

the company, (4) has the ability to hire and fire

employees, (5) makes decisions regarding which, when

and in what order outstanding debts or taxes will be

paid, (6) exercises control over daily bank accounts

and disbursement records, and (7) has check-signing

authority.”

Vinick v. United States, 205 F.3d 1, 7 (1st Cir. 2000) (quoting

Fiataruolo v. United States, 8 F.3d 930, 939 (2d Cir. 1993)). 

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Importantly, however, “[t]o trigger § 6672 liability, a

person must have significant decision-making authority over the

corporation’s tax matters. A person’s technical authority to

sign checks and duty to prepare tax returns are not enough to

make the person responsible under the statute.” Barton v. United

States, 988 F.2d 58, 59 (8th Cir. 1993) (emphasis supplied). The

purpose of Section 6672 is “to hold liable for the nonpayment of

withholding taxes the party responsible for such payment.” 

Vinick, 205 F.3d at 8. Accordingly, the “crucial inquiry is

whether the person had the ‘effective power’ to pay the taxes -

that is, whether he had the actual authority or ability, in view

of his status within the corporation, to pay the taxes owed.” 

Id. (quoting Barnett v. IRS, 988 F.2d 1449, 1454 (5th Cir. 1993))

(emphasis supplied). See also Moulton v. United States 429 F.3d

352, 357 (1st Cir. 2005) (“[T]he central question in determining

whether a taxpayer is a responsible person is whether he had the

power to pay the taxes during the quarters in question.”)

(quoting Vinick, 205 F.3d at 10); Hochstein v. United States,

900 F.2d 543, 546-47 (2d Cir. 1990) (“whether an individual is

responsible for the payment of a corporation’s withholding taxes

depends primarily on the factual question of the degree of

control he exercises over the corporation’s finances.”). 

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Here, whether Hulick had the authority to pay the taxes at

issue — whether he possessed the requisite degree of control over

the companies’ resources during the relevant period — is plainly

a genuinely disputed issue of material fact. Careful

consideration of the seven factors identified above fails to

conclusively settle, as a matter of law, whether he is properly

viewed as a “responsible person” during the tax quarters at

issue. For example, Hulick’s job title suggests he was an

officer of Precision and NERA. But he was not on the board of

directors; he had no equity or legal ownership interest in either

corporation; he did not invest in either corporation, and he held

no stock. He was involved in the routine day-to-day management

of some of the affairs of the companies, but he says critical

management decisions during the quarters at issue were made by

the companies’ equitable and legal owners, and Hulick’s corporate

superiors, Allyn Caruso and John Gallichon. He had some limited

ability to hire employees within the accounting department, but

Gallichon was “the main person” with authority to hire and fire

employees. Prior to what Hulick referred to as the “crisis

situation of 1993 and 1994,” he had some authority to determine

(or at least suggest to Gallichon) which creditors should be

paid; but, he testified that such authority lapsed during the

“crisis situation” when the companies were struggling to survive. 

And, finally, prior to the “crisis situation,” Hulick exercised

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some management control over bank accounts and disbursement

records and he had check signing authority, but the companies’

payroll was actually administered by a third party (even though

each check went out under a facsimile of Hulick’s signature). 

The critical - and unresolved - factual question is this:

Did Hulick have the ability/authority to prevent the companies’

tax defaults from occurring during the tax quarters at issue? 

Noting that the past is often prologue, the IRS points out that

Hulick had, historically, been vested with such authority. And,

as the IRS correctly asserts, historic evidence of that sort is

certainly relevant evidence. See Vinick, 205 F.3d at 11, n.8

(“We do not mean to suggest that in all § 6672 cases a district

court is precluded from considering evidence from outside the

quarters in question. For example, behavior in one quarter,

depending on the circumstances, could cast light on one’s status

as a responsible person in other quarters.”). See also Moulton,

429 F.3d at 357 (“[The taxpayers’] argument suggests that

evidence outside a particular quarter may not be used to

establish liability for that quarter. Such a rule would not be

sensible and is not the law of this circuit.”). 

But, simply because Hulick may have once had the authority

to ensure that employee withholdings were remitted to the IRS in

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a timely manner hardly compels the conclusion that he had the

same authority to allocate corporate-controlled money during the

period of time at issue in this case. See Vinick, 205 F.3d at

11, n.8 (“Because one’s function and status can change between

quarters, however, it would be erroneous based solely on evidence

from one quarter automatically to conclude that a person is

responsible in another quarter.”). Moreover, Hulick specifically

testified that during the “crisis situation” of 1993-1994, he

lacked authority to determine which creditors (including the IRS)

would be paid with scarce money under his corporate employers’

control (probably for very pragmatic reasons, since it wasn’t his

company that was failing). See, e.g., Hulick Deposition at 42-

43; 77. In fact, Hulick testified that if he had tried to remit

the withholdings in question to the IRS without Gallichon’s

express authorization, he likely would have been fired. 

Question: During the crisis time, what would have

happened if you had tried to pay creditors

[including the IRS] without Mr. Gallichon’s

authority? 

Answer: Well, I would answer that in two parts. One,

he made his expectation clear that he wanted

to be consulted on all major payments, and I

assumed he would have dismissed me if I had

taken the initiative to start running things. 

Id. at 79. See also Id. at 43 (“[T]here was no point in time

where I could have gone in and said, okay, I’m going to clean

this up today and do it whether Gallichon or Caruso want to or

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not.”); Id. at 80 (“There was no systematic process [to determine

who got paid when there wasn’t enough money to pay every

creditor]. It was discussed in the VP meetings, which meant that

all the key operational people had a chance to comment on what

they needed to continue the operation and safety element, and in

the end, Mr. Gallichon would then make the decision as to what

was done.”). 

As currently developed, the record reveals that in the fall

of 1993 the two owners of Precision and NERA - Allyn Caruso and

John Gallichon - decided that, as a matter of corporate policy,

the companies would prioritize payments to creditors, giving

preference to those responsible for aircraft safety and

maintenance over the Internal Revenue Service. Then, when cash

flow had sufficiently improved, the companies intended to bring

their obligations to the IRS current (including the payment of

fines, penalties, and interest). That was, to be sure, an unwise

policy decision. But, it was also one the IRS was seemingly

willing to tolerate as long as the taxes and penalties were

eventually paid. Needless to say, the IRS was predictably less

satisfied with that approach when the companies were not able to

remit the full amount that had been withheld from employees’

payroll checks during 1993 and 1994. 

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Parenthetically, the court notes that the IRS is no longer

seeking to obtain trust fund recovery penalties from Caruso and

Gallichon. The IRS pursued Gallichon for the same penalties it

seeks to recover from Hulick and eventually settled those claims

for an undisclosed amount. As for Mr. Caruso, however, it

appears the IRS allowed the statutory collections period to

expire before obtaining any recovery at all from him. See United

States’ Responses to First Set of Interrogatories (document no.

48-35) at 8. 

The IRS seeks to hold Hulick personally liable for the

companies’ outstanding tax obligations because, it asserts, he

could have exercised unilateral authority to appropriate funds

over which the companies had control in an amount sufficient to

pay all the companies’ outstanding payroll withholdings

obligations. But, as noted above, whether Hulick is properly

viewed as a “responsible person” during the tax quarters in

question requires resolution of complicated material factual

issues regarding his authority and ability to control the

expenditure of funds under corporate control during a financially

stressful period — issues that are disputed. Consequently,

neither party is entitled to judgment as a matter of law. 

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II. The Government’s Motion to Dismiss Hulick’s Counterclaim.

The government moves to dismiss Hulick’s sole remaining

counterclaim, asserting that it fails to state a viable claim

and, in any event, the court lacks subject matter jurisdiction. 

Hulick objects, asserting: (1) this court previously ruled that

his counterclaim for breach of contract adequately sets forth a

viable cause of action; and (2) even if it is barred as a matter

of law as a counterclaim (or the court lacks subject matter

jurisdiction over it), it survives as an affirmative defense. 

Hulick’s first assertion misconstrues the court’s prior

order. See generally Order dated June 30, 2011 (document no. 42)

(“Hulick I”). In that order, the court noted that neither party

had addressed the court’s charitable construction of Hulick’s

counterclaim: i.e., that Hulick said the government had, in

essence, entered into a settlement agreement with him, that he

had performed his obligations under that agreement, and that he

now sought to enforce the government’s alleged promise not to sue

him. Accordingly, the court held that “the parties should have

the opportunity to engage on those specific issues and brief

their respective positions.” Id. at 15, n.2. Contrary to

Hulick’s suggestion, the court did not hold that his

counterclaim, even charitably construed, stated a viable cause of

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action. It merely noted the obvious — that the parties had not

yet adequately briefed the issue. 

But, the government, too, seems to be somewhat off the mark

in its arguments. If, in his counterclaim, Hulick were seeking

an award of money damages against the government in excess of

$10,000, the government would be correct in pointing out that

this court lacks jurisdiction over such a claim. See 28 U.S.C. §

1491(a)(1) and 29 U.S.C. § 1346(a)(2). See generally McGuire v.

United States, 550 F.3d 903, 910-11 (9th Cir. 2008) (“Read

together, these statutes provide for jurisdiction solely in the

Court of Federal Claims for Tucker Act claims seeking more than

$10,000 in damages, and concurrent district court jurisdiction

over claims seeking $10,000 or less.”). 

But, Hulick is no longer seeking money damages. Instead, he

asserts that he and the government entered into a contract or

settlement agreement, pursuant to which the government agreed not

to sue him if he made regular and timely monthly payments of

roughly $4,100, through the expiration of the limitations periods

as represented by the IRS. Hulick seeks the equitable remedy of

specific performance or, alternatively, relief in the nature of

an injunction or estoppel preventing the government from

asserting that he owes any additional funds on behalf of

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Precision or NERA as a “responsible person.” And, as before, the

government has inexplicably failed to address that claim. See

Hulick I, slip op. at 15 (“The government has not, however,

asserted that Hulick cannot bring an action to specifically

enforce the (alleged) settlement agreement with the IRS nor has

it briefed that issue. Consequently, the court concludes that

dismissal (or transfer to the Court of Claims) of Hulick’s breach

of contract claim is, at least at this juncture, premature.”). 

To the extent the government suggests that this court lacks

jurisdiction to award the non-monetary relief Hulick seeks, that

argument would seem to lack merit. But, at the risk of

repetition: it has not been adequately briefed.4 

4 In its brief, the government casually asserts that

“[b]oth the Tucker Act and the Little Tucker Act forbid equitable

relief in contract actions against the United States.” 

Government’s memorandum (document no. 67-1) at 2. The government

provides very little legal support for that thesis but, even

assuming it is a correct statement of federal law, it does not

answer the broader question of whether any other federal statute

vests this court with jurisdiction over Hulick’s request for

equitable relief. See, e.g., 5 U.S.C. § 702 (“A person suffering

legal wrong because of agency action, or adversely affected or

aggrieved by agency action within the meaning of a relevant

statute, is entitled to judicial review thereof. An action in a

court of the United States seeking relief other than money

damages and stating a claim that an agency or an officer or

employee thereof acted or failed to act in an official capacity

or under color of legal authority shall not be dismissed nor

relief therein be denied on the ground that it is against the

United States or that the United States is an indispensable

party.”). 

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Moreover, even if he cannot prove that he had a contract

with the government (or, as he claims, that the government

entered into a “covenant not to sue” him), Hulick has one final

arrow in his quiver: an affirmative defense, in which he asserts

that the government is, based on the misrepresentations made by

its agents, at least estopped from collecting any additional

alleged tax deficiency for which Hulick might be liable. See

Amended Answer and Counterclaims (document no. 33) at 3. Whether

claims of estoppel ever properly lie against the government is a

question subject to substantial debate. See, e.g., Office of

Personnel Management v. Richmond, 496 U.S. 414, 421-24 (1990). 

The Supreme Court left that issue unresolved. See Id. at 423

(“[W]e need not embrace a rule that no estoppel will lie against

the Government in any case in order to decide this case. We

leave for another day whether an estoppel claim could ever

succeed against the Government.”).

The government has not demonstrated that Hulick’s

affirmative defense of estoppel is subject to dismissal (or that

it would be appropriate to strike that affirmative defense). 

See, e.g., InvestmentSignals v. Irrisoft, Case no. 10-cv-600-SM,

slip op. at 2 (D.N.H. Aug. 1, 2011) (discussing the distinction

between “dismissing” a counterclaim, and “striking” an

affirmative defense). Whether Hulick will be able to sustain his

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substantial burden of proof as to that defense, however, remains

to be seen. See generally United States Pub. Interest Research

Group v. Atl. Salmon of Maine, LLC., 215 F. Supp. 2d 239, 259-60

(D.Me. 2002) (“A defendant raising equitable estoppel against the

government must show that the government engaged in ‘affirmative

misconduct.’ At a minimum, the government official must have

intentionally or recklessly misled [the defendant]. Mere

negligence does not rise to the level of affirmative

misconduct.”). Here, the IRS agents may well have been merely

incompetent or negligent. But, given this record, a finding of

“recklessness” would not be without evidentiary support.

Conclusion

Whether Hulick is personally liable for trust fund recovery

penalties turns on whether he had actual authority, during the

tax quarters in question, to decide which of the companies’

creditors would be paid, and which would not. The government has

yet to identify any direct evidence of such authority, choosing

instead to rely on inferences arising from evidence suggesting

that Hulick possessed sufficient authority in earlier tax

quarters. The government says that it is reasonable to infer

from Hulick’s prior authority that he retained that authority

during the “crisis period” of 1993-1994. As noted above,

however, while such evidence is relevant, it is not dispositive -

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a person’s role in a company, as well as his or her authority,

can certainly change over time. 

For his part, Hulick is not entirely clear on that point

either. At times, his deposition testimony was unequivocal and

he clearly stated that he lacked the authority to determine

whether (or when) the employee withholdings would be remitted to

the IRS. See, e.g., Hulick Deposition at 43 (“[T]here was no

point in time where I could have gone in and said, okay, I’m

going to clean this up today and do it whether Gallichon or

Caruso want to or not.”). At other times, however, his testimony

was more ambivalent. See, e.g., Id. at 77 (In response to the

question, “Who was in charge of paying bills for the seven

airline companies?” Hulick testified that, “In the normal course

of business, the - I’d work with the accounting department to

handle the cash flow. In a crisis situation, Mr. Gallichon was

very much involved in determining who got what.”). Of course,

that Mr. Gallichon was “very much involved” in those decisions

does not mean that Hulick lacked the authority to make them

himself. Presumably, however, Hulick’s testimony at trial on

that point will be clarified during the examination process.

For the foregoing reasons, the Government’s Motion for

Summary Judgment (document no. 48), the Defendant’s Motion for

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Summary Judgment (document no. 50), and the Government’s Motion

to Dismiss (document no. 67) are all denied. 

SO ORDERED.

____________________________

Steven J. McAuliffe

District Judge

December 7, 2011

cc: Andrea A. Kafka, Esq.

Patrick B. Gushue, Esq.

Daniel E. Will, Esq.

Joshua M. Wyatt, Esq.

Charles H. Bradley, III, Esq.

Richard J. Lavers, Jr., Esq.

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