Court Opinion

ID: 8917403
Source: CourtListenerOpinion
Date Created: 2022-11-27 05:38:38.324233+00
Date Added: 2024-06-11T17:09:06.997656
License: Public Domain

IRVING, District Judge,
concurring in part and dissenting in part:
Although I concur with portion 11(A) of the majority opinion, I respectfully dissent from part 11(B) and would hold Judge Schnacke did not commit an abuse of discretion or error in denying Appellants’ request for a limited evidentiary hearing.
The Ninth Circuit in United States v. Stuckey, 646 F.2d 1369, (9th Cir.1981), cert. denied, 455 U.S. 942, 102 S.Ct. 1436, 71 L.Ed.2d 653 (1982), set forth the standard of appellate review of district court decisions in cases such as these. The Stuckey Court held that the trial court’s decision that the summonses were issued in good faith would not be disturbed unless that finding was clearly erroneous or the district court had applied an incorrect legal standard in reaching its decision. Id. at 1373.
In our case, Appellants submitted four affidavits in support of their request for an evidentiary hearing in which they attempted to demonstrate sufficient evidence of bad faith on the part of the government in seeking enforcement of the summonses to entitle them to the limited evidentiary hearing (provided for upon such a showing). The taxpayer carries a heavy burden in this respect. Id. at 1372.
The four affidavits merely recount conversations during which IRS agents told customers that appellants were involved in “shams” and “paper transaction,” and that the IRS was going after First Western in an attempt to “close them down.” (Middle-brook Declaration, C.R. 53 at 2).
Having considered the evidence proffered, Judge Schnacke wrote, in his order dated September 15, 1982:
Respondents have moved for an evidentiary hearing to determine whether further discovery should be allowed. No hearing is required for the issuance of these summonses. The order of Judge Henderson as to the John Doe summonses is final, and the prerequisites of their issuance cannot be questioned. Perhaps if the circumstances demonstrated some egregious conduct or overreaching by the United States, it could be taken into account in considering the requirements of the enforcement order. However, no such improper conduct by the government has been shown. Petitioner has more than ample reason to believe that there has been a failure to comply with the revenue laws, and the circumstances indicate that it is imperative that investigation of the matter be delayed no further.
Nothing has been submitted by way of declaration to raise any material factual *1349dispute, and an evidentiary hearing would serve no purpose but delay. Therefore, respondents’ motion for an evidentiary hearing is denied.
(C.R. 61 at 4)
Considering Judge Schnacke’s express determination that the evidentiary hearing would serve no purpose but delay, and the very slight showing Appellants made in their declarations, I do not believe Judge Schnacke committed reversible error in his decision to deny Appellants an evidentiary hearing.
Stuckey advises that the “district court has discretionary authority to limit the scope of an evidentiary hearing and to deny discovery in a summons enforcement proceeding.” Id. at 1378. Such discretionary authority must extend to the initial determination of whether Appellants have made any showing of bad faith to even entitle them to such a hearing. Judge Schnacke examined the evidence and made a determination that Appellants had not met that burden.
Accordingly, I would affirm Judge Schnacke’s denial of the Motion for a limited evidentiary hearing, and affirm enforcement of the summons.