Court Opinion

ID: 72950
Source: CourtListenerOpinion
Date Created: 2010-04-26 07:50:26+00
Date Added: 2024-06-11T09:39:29.808760
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PUBLISH

                 IN THE UNITED STATES COURT OF APPEALS

                         FOR THE ELEVENTH CIRCUIT

                                No. 96-3603

               Tax Court Docket Nos. 32434-88, 32435-88

J.J. ZAND and EVA ZAND,

                                                Petitioners-Appellants,

                                  versus

COMMISSIONER OF INTERNAL REVENUE SERVICE,

                                                    Respondent-Appellee.

                     Appeals from a Decision of the
                         United States Tax Court

                              (June 15, 1998)

Before BLACK, Circuit Judge, and HILL and HENDERSON, Senior
Circuit Judges.

HILL, Senior Circuit Judge:
       J. J. Zand and his wife, Eva C. Zand,1 appeal from a 272-page Tax Court

decision2 issued by Judge Howard Dawson in 1996, regarding a ten-day trial

presided over by Judge Meade Whitaker five years earlier. The tax years involved

in their two consolidated cases date back to 1972-1981. The sole issue for our

review is whether the Tax Court violated the taxpayers’ rights to due process and

to a fair trial, and committed clear error, by reassigning their cases to successor

Judge Dawson to write the opinion after presiding Judge Whitaker retired on

permanent disability.3

       Upon a careful review of the record, we conclude that the taxpayers waived

their right to a new trial, both by failing to request one, and by indicating that a

new trial would cause them hardship. As the taxpayers’ constitutional rights were

not violated, we affirm the judgment of the Tax Court.

       1
         Collectively, Mr. and Mrs. Zand will be referred to as “taxpayers.” They received
statutory notices of deficiency in income taxes from the Commissioner of Internal Revenue
(Commissioner) for the years 1978 through 1981. Singularly, Mr. Zand will be referred to as
“Zand.” He received statutory notices of deficiency for the years 1972 through 1977.
       2
        The Tax Court decision determined income tax deficiencies against Zand of
$9,030,576.98, together with fraud ($4,250,615.33) and negligence ($63,821.68) penalties for
1972-1977. It determined income tax deficiencies against taxpayers for the years 1978-1981 of
$987,579.00, together with a negligence penalty of $49,378.95.
       3
         We affirm without opinion the two remaining issues presented, which are: (1) whether
the Tax Court correctly found that Zand, individually, earned certain unreported income, and not
various other entities; and (2) correctly imposed the addition to tax for fraud penalty under
Internal Revenue Code § 6653(b) for the years 1972-1976. See 11th Cir. R. 36-1.

                                               2
               I. FACTUAL AND PROCEDURAL BACKGROUND4

       Zand was born in Iran in 1923. In 1953, he became a United States citizen. By

the mid-1950's, Zand had already begun a long and seemingly successful career as an

international entrepreneur. In 1958, Zand, together with his father and a classmate,

formed the Diesel Power Trading Company (Diesel Power) in Iran. By 1972, Zand

had acquired 100% of Diesel Power.5 Over the years, many business relationships

were formed and transactions made among Zand, Diesel Power, and the Caspian

Trading Company (CTC), Zand’s sole proprietorship6 and various American

manufacturers (such as Lockheed Aircraft Corporation, Ashland Bermuda Limited,

General Motors, and Ingersoll-Rand Company). Business transactions typically

involved the provision of services by Zand and/or his companies to the American

manufacturer, generating commission income to Zand and stimulating the sales of

American manufactured goods abroad, principally to Iran.

       4
        We present only a cryptic factual background pertinent to the due process issue
addressed in this opinion. For further factual background, we direct the reader to Judge
Dawson’s lengthy memorandum opinion, unofficially reported at Zand v. Commissioner, 71
T.C.M (CCH) 1758 (1996).
       5
        In October 1974, he sold fifty-one percent to his sister and brother-in-law. He sold the
remainder in 1977.
       6
         In the early years, the CTC acted as a liaison between the Caspian Trading Company of
Iran (Caspian Iran), in which Zand had no interest, and certain American manufacturers with
which Zand had a business relationship. Caspian Iran imported American equipment into Iran
and was the Iranian distributor of American products in Iran. Zand severed his ties with Caspian
Iran in 1957.

                                                3
       The Commissioner of Internal Revenue (Commissioner) audited Zand’s tax

returns for the years at issue, asserted fraud and negligence penalties, questioning who

earned certain commissions from various manufacturers and the deductibility of

numerous business expenses. The result of the Commissioner’s audit was that Zand

failed to report millions of dollars of commission income and that his alleged failure

to do so was fraudulent. She originally issued statutory notices of deficiency of

$11,634,023.28, together with fraud ($4,660,681.33) and negligence ($89,987.40)

penalties.7 The taxpayers filed petitions in the Tax Court, seeking a redetermination

of their income tax liabilities.

       The cases were assigned to Judge Whitaker in October 1989 for trial or other

disposition. After extensive discovery by both parties, the cases were tried in August

1991. The trial lasted ten days. Zand and twenty-one other witnesses testified during

his case in chief. The Commissioner called ten witnesses. At the conclusion of the

trial, Judge Whitaker made the following statements from the bench:

       What I particularly want both sides to do – and I think this is of more
       concern to you Mr. Curtin [taxpayers’ counsel], than Ms. Herbert
       [Commissioner’s counsel] – maybe I should preface this by saying that
       it is my recollection of the testimony, and this is not a decision on my
       part, but my present recollection of the way the testimony came before
       me, Mr. Curtin, you made a very strong case for your client.

       7
         The Commissioner, in her amended answer, increased the deficiencies and fraud
penalties by $470,149.90, and $235,074.95, respectively.

                                              4
         I don’t mean any criticism of Ms. Herbert, but I think your witnesses
      all supported your client’s position, and frankly I don’t think Ms.
      Herbert’s witnesses did any appreciable damage. And again, this is
      purely from recollection.
          ....
         Ms. Herbert, as I indicated, I think [taxpayers’] case is a very strong
      case. . . .
          ....
      And if I were you [Ms. Herbert], I wouldn’t waste a whole lot of time on
      that argument [of fraud]. I don’t think this is a fraud case, frankly.
      Understand again, this is just my reaction today after listening to two
      weeks and one day of testimony, but I don’t believe you’ve proved fraud
      ....
          ....
          You’re perfectly – obviously, you can argue it [fraud]. You should
      argue it. But point out those parts of the record which you think support
      fraud, because I have some trouble with it. I don’t think this ought to
      have been a fraud case to start with.

      Final briefs were filed in June 1993. Judge Whitaker had not disposed of the

cases when he retired on permanent disability in January 1995.

      In February 1995, Chief Judge Hamblen issued the following order:

            Judge Meade Whitaker, to whom these cases are submitted
            is fully retired as of January 31, 1995. The Court proposes
            to reassign these cases to another Judge of this Court for
            purposes of preparing the opinion in these consolidated
            cases. Upon due consideration, it is

            ORDERED that the parties on or before March 3, 1995, file
            with the Court a response, if any, to such reassignment.
            The Court will thereupon take such action as it deems
            appropriate.

                                          5
      The Commissioner agreed to the reassignment.7 Taxpayers filed their response,

requesting a status conference with the Chief Judge, yet stating that they were not in

a position to make an informed decision on the Court’s proposal to reassign.8

      7
          The Commissioner stated that:

      [T]he [Commissioner] agrees with the Court’s proposal to assign these cases to
      another Judge of the Court for opinion . . . . [I]n the event that the Court, or the
      Judge to whom the cases are assigned, wishes to consider that judicial action after
      reassignment would encompass further actions other than preparation of the
      opinion, the [Commissioner] requests an opportunity to provide her views on any
      expanded scope of consideration.
      8
          The taxpayers stated that they were:

      [C]urrently engaged in the process of evaluating the legal implications,
      consequences, possible alternatives and potential prejudicial impact of the court’s
      proposal to reassign these cases to a judge who did not preside over the
      comparatively long and heavily factual trial of this case. The retirement of Judge
      Whitaker and the potential reassignment to a new judge at this point in these cases
      are unexpected and unusual events that must be carefully and fully evaluated to
      ensure that the taxpayers are given every opportunity to understand what has
      happened and what their rights are. The [taxpayers] need additional time and
      information before they can make final and informed decisions on the matters
      raised in the February Order [proposing reassignment].
          In order to assist [taxpayers] in deciding whether to object or not to the
      reassignment proposed in the aforementioned Order and to assist them in
      evaluating possible alternative solutions to the unwelcome dilemma that now
      surrounds them, [taxpayers] believe that the interests of justice require that a
      status conference be scheduled with the Chief Judge before any action is taken on
      these cases. . . . In [taxpayers’] view, such a conference serves the interests of
      justice and is consistent with appropriate case management principles. At this
      conference counsel would be prepared to discuss and seek guidance on the
      proposed reassignment, including its scope and legal implications, as well as
      alternative approaches, if any, that may assist in protecting the taxpayers from the
      substantial prejudicial impact of the loss of the judge who tried the case as the
      decision maker in this very factual case . . . .

                                                 6
   In Part III of the taxpayers’ response, entitled “The Taxpayers’ Dilemma”9 they

stated:

          As will be explained in more detail during the status conference, if the
       Court grants our request, the expense of the trial of this case four years
       ago, the passage of time since the trial, and the occurrence of a number
       of events since the trial, have combined to put Mr. Zand in a position
       where he cannot financially afford to retry this case. The first trial was
       a financial blow to the taxpayers. Following the expense and effort of
       trying this case, Mr. Zand’s finances quickly worsened. First, he lost his
       business to a lender. Then, he and his family lost their home to a
       foreclosing bank. Unsurprisingly, Mr. Zand’s finances have been sapped
       by this matter since the audit that ultimately led to this litigation started
       in the late 1970s.
           The effort and expense of putting on the same case presented four
       years ago would be very difficult to duplicate. Mr. Zand called 20
       witnesses in his case-in-chief, some of them from other countries and
       others from distant locations within the United States. Moreover, Mr.
       Zand is now 72 years old [in 1995] and certainly not in the same health
       he was in 1991 when he was able to attend every minute of the trial and
       testified for hours on direct and cross-examination. Under the unique
       circumstances presented here, no taxpayer should be asked or required
       to retry a case of this magnitude. Additionally, no taxpayer should be
       deprived of the right to have a case of this size and factual character
       decided by the judge who heard it. The [taxpayers] did not bring this
       dilemma on themselves and they should not be penalized or prejudiced
       by it.

(Emphasis added.)

       In March 1995, Chief Judge Hamblen issued an order directing counsel for the

parties to appear for a status conference on April 5, 1995. In hindsight, and,

       9
        From a trial strategy standpoint, the depth of taxpayers’ dilemma goes even further.
Judge Whitaker’s comments from the bench apparently gave the taxpayers every cause to believe
they would be victorious, at least on the fraud issue.

                                             7
unfortunately for all concerned, the April 5, 1995, status conference was not

stenographically reported or otherwise recorded.10 It was attended by Chief Judge

Hamblen, Judge Dawson, and counsel for the respective parties. The Commissioner’s

recollection of events is that the Chief Judge explained the three options available: (1)

retrial before another judge if requested by either party; (2) reassignment of the cases

to another judge for disposition on the existing record; or (3) settlement.

Commissioner claims that neither party requested a new trial at the status conference.

She suggested that the taxpayers submit an offer-in-compromise.11 This recollection

appears to align with that of Judge Dawson who writes: “At an informal conference

with counsel for the parties on Apr. 5, 1995, the parties were offered a new trial,

which was not accepted, and it was suggested that efforts be made to settle the cases.”

Zand v. Commissioner, 71 T.C.M. (CCH) 1758, 1764 n.1(1996).

    Taxpayers, on the other hand, claim that the focus of the status conference was

settlement, not retrial or reassignment. They claim in their brief that:

       10
          Informal status conferences, however, are not required to be stenographically reported
or otherwise recorded. See Tax Ct. R. 150. In the record on appeal, the closest memorialization
of the events which transpired at the April 5, 1995, status conference appears to be the
Commissioner’s [undated] memorandum to the file, which appears as the fifth document
attached to the taxpayers’ “Motion For Production of the Record of Proceedings of the April 5,
1995 Conference with the Court.”
       11
         The record reflects that the taxpayers, citing financial difficulties, and a net worth of
approximately $1.5 million, offered the Commissioner $250,000 to settle their cases. Their offer
was rejected. By this time [1995], proposed taxes and penalties approached $20 million.

                                                8
       [A]t the status conference, the Tax Court briefly outlined possible
       solutions available to the parties and the Tax Court, including
       particularly settlement. The Tax Court stated that it preferred that the
       parties settle the case so that the Tax Court would not have to expend
       further time and judicial resources on the case. The discussion then
       focused on the best way of exploring the possibility of settlement.

(Emphasis added.)

       In October 1995, following the parties’ failure to settle, see note 11 supra, Chief

Judge Hamblen assigned the cases to Judge Dawson.12 In November 1995, taxpayers

filed an objection to the reassignment of the cases but again did not request a new

trial. In January 1996, Judge Dawson issued his opinion. He ultimately found that

Zand: (1) had substantially understated his taxable income for the years 1972 through

1977; (2) had substantially overstated his business expenses and deductions for the

years 1973 through 1981; and (3) had made such omissions and overstatements with

fraudulent and negligent intent. Roughly, the opinion reflects an approximate finding

of 80% for the Commissioner and 20% for the taxpayers.

   In March 1996, taxpayers filed a motion for reconsideration. In its order denying

taxpayers’ motion, the court stated:

          A very disturbing statement is made in the motion by [taxpayers’]
       counsel that the “parties were not offered a new trial” at the chambers
       conference, requested by them, on April 5, 1995. That statement is

       12
         Although Judge Dawson had read the briefs (at the Chief Judge’s request), there was
no implication at the April 5, 1995, status conference that the cases would go to Judge Dawson if
reassigned.

                                               9
      conspicuously incorrect and contrary to fact. At the April 5, 1995,
      conference Chief Judge Hamblen informed counsel that Judge Whitaker
      had retired on permanent disability and that he could not be recalled to
      prepare an opinion deciding the issues in these cases. Chief Judge
      Hamblen clearly explained that three options existed [retrial,
      reassignment, settlement]. Because the parties were offered, and
      declined, a new or further trial, that option was eliminated. The right to
      a new or further trial was waived by both parties. . . . [Taxpayers] now
      seek either an opinion and decision by Judge Whitaker, which of course
      is not possible, or a decision totally in their favor, based predominantly
      on the testimonial evidence to the exclusion of the voluminous
      documentary evidence, which we are unwilling to give them . . . .

(Emphasis added.)

      In May 1996, taxpayers filed a motion to dismiss their cases upon the ground

that they had been denied procedural due process. In its order of denial, the Tax Court

stated:

      We emphasize again that both parties were told by then Chief Judge
      Hamblen at the April 5, 1995, informal status conference, requested by
      [taxpayers’] counsel, that the Court would grant a new or further trial of
      these cases if requested by either party. Both Judge Hamblen and Judge
      Dawson are certain that Mr. Curtin stated that [taxpayers] were unwilling
      to retry the cases, primarily because of the age, health, and financial
      condition of [Zand]. . . . It is the Court’s view that the parties were
      offered a new trial and they did not accept it. Therefore, we think the
      right to a new trial was waived. To this day [June 12, 1996] the Court
      has not received any request, formal or informal, or any motion for a
      new trial from either party. . . .
         ....
         Because of Judge Whitaker’s physical ailments it was not possible for
      him to decide these cases before it became necessary to retire on
      permanent disability. . . . It strikes the Court as incongruous that
      [taxpayers], who apparently were aware of Judge Whitaker’s health
      problems, have leveled their criticism of him for delay in the opinion

                                          10
       process, while contending, at the same time, that only Judge Whitaker
       can fairly decide these cases.

(Emphasis added.)

       Thereafter, in June 1996, the taxpayers moved that the Tax Court provide them

with any record that might exist of the April 5, 1995, status conference. In its denial,

the court stated:

          The conference was informal. . . . There was no official stenographic
       reporting of the . . . informal status conference. It was not a hearing or
       a trial.     Any unofficial, internal Court documents, including
       memorandums or notes by Judges or employees, that may exist are, of
       course, confidential and not subject to production. . . . In short,
       [taxpayers] have never requested or moved for a new trial of these
       cases. Apparently they are now attempting to put themselves in a
       position where they can disavow their previous declination. The plain
       fact of the matter is that they declined to retry these cases.

(Emphasis added.)13

    In September 1996, taxpayers filed a motion to vacate the decisions and for a new

trial. It was denied. The taxpayers now appeal Judge Dawson’s January 1996

opinion.

       13
          The Court, in an opinion co-signed by the Chief Judge, went on to sternly admonish
counsel for the taxpayers for making allegations regarding “the Court’s candor and credibility
which are inconsistent with what occurred. . . . Mr. Curtin [taxpayers’ counsel] related at the
conference that a new trial was not a viable option and was not sought. . . . Correlatively, we
note that Mr. Curtin is not a signatory to any of the post-opinion motions which attack the
Court’s credibility and denigrate its integrity. We do not take these aspersions lightly. Thus,
any further action in this respect will be treated as frivolous, invidious, and for purposes of
vexatious delay that could result in the imposition of appropriate sanctions.”

                                               11
                               II. ISSUE ON APPEAL

      Whether, after determining that taxpayers had declined its offer of a new trial,

the Tax Court violated the taxpayers’ rights to due process and to a fair trial, and in

so doing, committed clear error when it reassigned their cases to a successor judge to

write the opinion after the presiding trial judge retired on permanent disability.

                           III. STANDARD OF REVIEW

      The Tax Court’s findings of fact are subject to reversal only if clearly

erroneous. Commissioner v. Duberstein, 363 U. S. 278, 291 (1960); Florida Hosp.

Trust Fund v. Commissioner, 71 F.3d 808, 810 (11th Cir. 1996). Whether taxpayers

waived their right to a new trial is a question of fact. See Johnson v. Zerbst, 304 U.S.

458, 464 (1938).

                                  IV. DISCUSSION

      A. The Contentions of the Parties

             1. The Taxpayers

  The thrust of the taxpayers’ argument is that Judge Whitaker, from the bench at the

close of trial, made oral findings of fact, especially relating to witness credibility and

fraud, and those findings constitute the law of the case. Tax Ct. R. 152(a). They

claim that, as Judge Whitaker heard the testimony of Zand and his witnesses, and

observed first hand their demeanor on the witness stand, Judge Dawson committed

                                           12
reversible error when he gave no due deference to Judge Whitaker’s findings.

Taxpayers claim that, in rejecting these findings, Judge Dawson found them to be

inappropriate statements, approaching injudicious or prejudicial. In this implicit

rejection of the trial’s testimonial evidence, taxpayers assert that Judge Dawson also

committed reversible error by deeming their witnesses not to be credible, not only as

to the issue of fraud, but also as to issues concerning the deductibility of expenses, the

earning of commission income, and the asserted negligence penalty. See Exxon Corp.

v. United States, 931 F.2d 874, 878 (Fed. Cir. 1991)(a successor judge has no

authority to amend his predecessor’s findings if they are dependent upon weighing

conflicting testimony and evaluating witness credibility); Henry A. Knott Co. v.

Chesapeake & Potomac Tel. Co., 772 F.2d 78, 85 (4th Cir. 1985)(deference should

be given to the trier of fact as the person who sees the witness and hears the

testimony); Toussaint v. Commissioner, 743 F.2d 309, 312 (5th Cir. 1984)(“[d]ue

regard shall be given to the opportunity of the trial court to judge the credibility of the

witnesses. . . .”). Taxpayers claim that Judge Dawson compounded this error when

he drew negative inferences from various documents against Zand and his witnesses,

all without regard to their trial testimony or Judge Whitaker’s view that their

testimony was credible.

                                            13
      The taxpayers contend that they did not consent to the reassignment. Emerson

Elec. Co. v. General Elec. Co., 846 F.2d 1324, 1326 (11th Cir. 1988). They claim that

a close scrutiny of the record shows that Zand never declined an offer of a new trial.

Once settlement discussions came to an end, the taxpayers argue that the Tax Court

gave them no opportunity to request a new trial. They claim to be blind-sided by the

court’s opinion finding that Zand waived his right to a retrial after the April 5, 1996,

status conference and continue to dispute what transpired at the unrecorded status

conference.

              2. The Commissioner

      The Commissioner contends (contrary to taxpayers’ claim that the Tax Court

never offered the parties a new trial and that the taxpayers never declined a new trial),

that Chief Judge Hamblen, at the April 5, 1995, status conference, explained that a

new trial was one of the three options [in addition to reassignment or settlement]

available to the parties after Judge Whitaker retired. She agrees with Judge Dawson’s

statement that taxpayers’ claim that the parties were not offered a new trial is

“conspicuously incorrect and contrary to fact.”

      In addition, the Commissioner claims that the taxpayers waived their right to

a new trial even before the status conference was held, by stating (in their pleading

requesting a conference), that the cost of the earlier trial and subsequent financial

                                           14
reverses had left taxpayer “in a position where he cannot financially afford to retry

this case” and that he was four years older and not in the same health as he had been

at the time of the trial.

       Further, the Commissioner claims that Judge Whitaker’s oral statements from

the bench were not his findings of fact. She contends that oral findings would have

been inappropriate as the relevant facts and law of the case were not clear at the close

of evidence and briefs had not been filed. See Tax Ct. R. 152. She argues further that

Judge Whitaker’s comments were not binding, even as to fraud, because they were

substantially qualified (“this is not a decision on my part” . . . “this is just my reaction

today”). The Commissioner claims that Judge Dawson was “well aware” of these

comments which he described as a “tentative and qualified reaction by the trial judge

made before a review of all the testimony and massive documentary evidence and

before any briefs were filed.” Hence, Judge Whitaker’s comments, the Commissioner

avers, were of a preliminary or tentative nature, not embodied in a ruling, and not

binding.

       The Commissioner cites Milbrew, Inc. v. Commissioner, 710 F.2d 1302 (7th Cir.

1983) in support of her position. In Milbrew, the taxpayer’s case was decided by a

successor judge after reassignment by the Tax Court. In its affirming opinion, the

Seventh Circuit rejected the taxpayer’s attack upon the reassignment by stating:

                                            15
      The Tax Court judge before whom the case was tried retired after the
      trial but before rendering his opinion. The taxpayers agreed that the case
      could be reassigned to another judge for decision on the record compiled
      before the first judge, and this was done. Having been willing to take
      their chances before the second judge they cannot complain because he
      decided the case against them. The first judge had made comments
      during the course of the trial that were very favorable to the taxpayers.
      The taxpayers were confident that his successor would be influenced by
      those comments and would decide for them. They were disappointed.
      Of course if he had decided for them they would be defending vigorously
      the procedure that was adopted. By consenting to the procedure they
      waived any objection.

(Emphasis added.)

Milbrew, 710 F.2d at 1308; see also W.R.B. Corp. v. Geer, 313 F.2d 750 (5th Cir.

1963). The Milbrew taxpayers consented to the reassignment procedure. The Seventh

Circuit concluded that they had waived any objection to that procedure and affirmed

the judgment of the Tax Court.

      B. In General

   Fed. R. Civ. P. 6314 provides:

      14
           Before it was amended, Rule 63 read as follows:

      Disability of a Judge

      If by reason of death, sickness, or other disability, a judge before whom an action
      has been tried is unable to perform the duties to be performed by the court under
      these rules after . . . findings of fact and conclusion of law are filed, then any
      other judge regularly sitting in or assigned to the court in which the action was
      tried may perform those duties; but if such other judge is satisfied that he cannot
      perform those duties because he did not preside at the trial or for any other reason,
      he may in his discretion grant a new trial.

                                               16
       Inability of a Judge to Proceed

       If a trial or hearing has been commenced and the judge is unable to
       proceed, any other judge may proceed with it upon certifying familiarity
       with the record and determining that the proceedings in the case may be
       completed without prejudice to the parties. In a hearing or trial without
       a jury, the successor judge shall at the request of a party recall any
       witness whose testimony is material and disputed and who is available
       to testify again without undue burden. The successor judge may also call
       any other witness.

The original text contained restrictions that contemplated withdrawal of a judge only after
completion of the trial, and only by reason of death, sickness, or disability. 11 Charles A.
Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2921. The 1991
amendments to Rule 63 broadened its scope considerably. Id. Before it was amended in 1991,
Rule 63 applied only “after . . . findings of fact and conclusions [were] filed” in a non-jury case.
Id. After amendment, a provision was added allowing judges to withdraw for reasons other than
death, sickness, or disability. Id. In addition, the rule now provides that a judge may withdraw
at any time after a trial or hearing is commenced; the trial need not be completed for a substitute
judge to be assigned. Id. The Advisory Committee Notes indicate that this change was made in
view of the “increasing length of federal trials,” “to prevent unnecessary expenses and delay.”
Id.; see also Canseco v. United States, 97 F.3d 1224, 1226 (9th Cir. 1996)(citing Advisory
Committee Notes to 1991 Amendment to Fed. R. Civ. P. 63).
    Insofar as the factual circumstances of this case are concerned, all parties agree that the
amendment works no change.

                                                 17
Although the Tax Court rules contain no parallel rule, the practice is substantially the

same in the Tax Court.15 See Tax Ct. R. 1; Townsend v. Gray Line Bus Co., 767 F.2d

11, 17-18 (1st Cir. 1985).

          And, although Rule 63 was amended in 1991 and considerably broadened, the

present rule encompasses the former rule and more. See note14 supra. We therefore

look to pre-1991 decisions for guidance given the facts of this case.

          Under pre-1991 Rule 63, if the judge became disabled after filing his findings

of fact and conclusions of law in a civil bench trial, the successor judge could

substitute for the original judge and complete any duties remaining in the case without

holding a new trial. Home Placement Service, Inc. v. Providence Journal Co., 819

F.2d 1199, 1202 (1st Cir. 1987). The rule empowered the successor judge to grant a

new trial if the remaining duties would not otherwise be satisfactorily performed. Id.

The decision as to whether to hold a new trial was left to the discretion of the

successor judge. Id. We conclude, after carefully reviewing the trial transcript, that

          15
               Here, in its order denying the taxpayers’ post-opinion motion to dismiss, the Tax Court
stated:

          Although the Tax Court Rules of Practice and Procedure do not contain a rule
          similar to Fed. R. Civ. P. 63, this Court has followed the spirit of Rule 63 and
          used it to provide us with guidance. It has been our practice to grant a new or
          further trial, if requested by either party, when a judge who heard the case dies,
          becomes disabled, or resigns before preparing the findings of fact and opinion.
          However, if no such request is made, or if a new trial is offered and not accepted,
          the Court will reassign the case, even over the objection of a party, to another
          judge for disposition on the record made before the trial judge.

                                                    18
Judge Whitaker’s comments were not findings of fact binding on Judge Dawson.

Therefore historically, Rule 63 did not explicitly apply to the circumstance present

here, that is, where the presiding judge in a bench trial became disabled before he filed

his findings of fact and conclusions of law. The application of the rule, however, is

made implicitly, by negative inference. See Townsend, 767 F.2d at 17-18. Courts

found that if the presiding judge in a civil case became disabled (or died) before

issuing his findings of fact and conclusions of law, the successor judge was required

to retry the case. Id.; see Whalen v. Ford Motor Credit Co., 684 F.2d 272 (4th Cir.)(en

banc), cert. denied, 103 S.Ct. 216 (1982); Thompson v. Sawyer, 678 F.2d 257 (D.C.

Cir. 1982); In re Schoenfield, 608 F.2d 930, 934 (2d Cir. 1979); Arrow-Hart, Inc. v.

Philip Carey Co., 552 F.2d 711, 712-13 (6th Cir. 1977). An exception to the rule

mandating a retrial was made only if all parties agreed to allow the successor judge,

in a non-jury action, make findings of fact and conclusions of law based upon a prior,

or stipulated record. Townsend, 767 F.2d at 17-18 (citing Milbrew, 710 F.2d at 1308);

Whalen, 684 F.2d at 278; Thompson, 678 F.2d at 268-69; Arrow-Hart, Inc., 552 F.2d

at 712-13. This circuit followed suit. Emerson Elec., 846 F.2d at 1326 (“When a

judge has yet to make findings of fact and conclusions of law, a successor judge must

retry the case unless (1) all parties consent to resolution based on the trial transcript

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or (2) summary judgment would be appropriate . . . .”); see also Mesa Petroleum Co.

v. Coniglio, 787 F.2d 1484, 1488 (11th Cir. 1986), cert. denied, 107 S.Ct. 876 (1987).

      Taxpayers claim the consent exception is not applicable here. They seek to

distinguish their case from the Townsend line of cases on the ground that they did not

consent to the reassignment of these cases to Judge Dawson. Townsend, however, is

very much on point. 767 F.2d at 17-18.

      In Townsend, the First Circuit was sympathetic with Gray Line Bus Company,

the appellant, as constitutional considerations, as well as the implication of Rule 63,

would ordinarily accord litigants such as Gray Line a new trial where the previous

judge had died or become disabled before filing his findings and rulings. However,

Gray Line’s own conduct caused the court’s sympathy to rapidly dissipate:

      Thus, but for the conduct of Gray Line, the case should have been
      retried. Here, however, we are satisfied that Gray Line waived its right
      to a new trial by failing to appear at the status conference, by failing to
      respond when Townsend’s counsel later notified it that the court would
      likely proceed on the basis of the old record, and by neglecting to
      respond or communicate with the court in any way during the relevant
      period.

Townsend, 767 F.2d at 18.

      Although taxpayers’ actions here are not negligent actions as those in

Townsend, the same principle applies. Taxpayers’ mere objection to the reassignment,

a reaction, was not accompanied by the necessary concomitant action, that is, a

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request for a new trial. Here, not only did taxpayers not request a new trial, they

indicated to the court all the reasons they did not want a new trial, and that a new trial

would cause them undue hardship. By cleverly tiptoeing across this procedural

tightrope, taxpayers tried carefully to avoid consenting to a reassignment, while at the

same time, carefully to avoid asking for a new trial, thus paralyzing the court’s ability

to proceed at all. As we have outlined, Rule 63 anticipates and circumvents this

paralysis.

                                  V. CONCLUSION

      The Tax Court’s finding that taxpayers waived their right to a new trial or a

further trial is, from this record, clearly correct, not clearly erroneous. As in Milbrew,

the taxpayers cannot now complain simply because Judge Dawson decided the case

against them. The judgment of the Tax Court is

   AFFIRMED.

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