Opinion ID: 538936
Heading Depth: 2
Heading Rank: 1

Heading: conversion of the motion to one of partial summary judgment

Text: 11 The first issue is whether the Tax Court's conversion of the Commissioner's motion to dismiss to one of partial summary judgment was appropriate. Tax Court Rule 40 provides that a motion asserting failure to state a claim upon which relief can be granted shall be treated as one for summary judgment and disposed of as provided in Rule 121, if matters outside the pleadings are to be presented. Summary Judgment pursuant to Tax Court Rule 121 is derived from Rule 56 of the Federal Rules of Civil Procedure and is interpreted consistently with interpretations of Rule 56. Long v. Commissioner of Internal Revenue, 757 F.2d 957 (8th Cir.1985) (citing Abramo v. Commissioner, 78 T.C. 154, 162 n. 8 (1982)). 12 Deciding a case on summary judgment grounds represents a final adjudication on the merits foreclosing subsequent litigation. The Federal Courts realize this harsh outcome, and have incorporated a strict ten-day notice requirement in Rule 56 of the Federal Rules of Civil Procedure. 3 The concern is that the parties have an adequate opportunity to present all evidence in support of their positions. The Tax Courts do not have such a stringent notice requirement, although Rule 40 states that when the motion to dismiss is disposed of as one for summary judgment the parties shall be given an opportunity to present all material made pertinent to a motion under Rule 121 [summary judgment]. 13 The motion to dismiss was filed pursuant to Tax Court Rule 40. The Tax Court scheduled the motion for a hearing on December 1, 1988. On November 30, 1988 before the scheduled hearing, the appellant submitted a memorandum of law attaching two letters in support of his position opposing the motion. In filing these matters outside the pleadings with his memorandum opposing the motion, the appellant was clearly on notice that the Tax Court may decide the case on summary judgment grounds. 14 At the hearing, the appellant's argument that a binding settlement existed was based solely on the two letters he submitted with his memorandum of law in opposition to the motion. The Tax Court correctly noted that federal tax law governed the dispute and that the proper manner to dispose of an income tax matter is clearly set out in the tax code statutes. As will be set forth in more detail in subsection C below, a binding settlement on a tax liability must follow the requirements of the tax code which include the execution of a closing agreement and the signing of other Tax Forms. The appellant clearly did not have any such proof. We find that the appellant had adequate notice that the Tax Court may recharacterize the motion and further find that the Tax Court was presented with all the evidence necessary to decide the issues on summary judgment grounds.