Court Opinion

ID: 4337130
Source: CourtListenerOpinion
Date Created: 2018-11-14 03:11:25.740447+00
Date Added: 2024-06-11T14:20:35.229219
License: Public Domain

ESTATE OF MARY V. ALLISON, DONOR, DECEASED, DANIEL B. ALLISON, II, PERSONAL REPRESENTATIVE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ESTATE OF MARY V. ALLISON, DECEASED, DANIEL B. ALLISON, II, PERSONAL REPRESENTATIVE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent.Estate of Allison v. Comm'rNos. 247-00, 714-00United States Tax CourtT.C. Memo 2008-149; 2008 Tax Ct. Memo LEXIS 150; 95 T.C.M. (CCH) 1592; June 10, 2008, Filed*150 Daniel B. Allison, II, for petitionersMichael T. Sargent, for respondent.Holmes, Mark V.MARK V. HOLMESMEMORANDUM OPINIONHOLMES, Judge: Mary Allison died in 1995. Her son, Daniel Allison, is an attorney and the personal representative of her estate. He opened a probate case shortly after her death in Seattle's King County Superior Court. It is still not closed. Mr. Allison also filed two Tax Court cases for the estate in early 2000. Neither of them has been closed. It appears that Mr. Allison has been telling our Court that resolution of the probate case is all that's needed to wrap up the Tax Court cases, and telling the King County Superior Court that resolution of the Tax Court cases is all that's needed to wrap up the probate case. We issued an order to Mr. Allison to show cause why we shouldn't sanction him for his misrepresentations. This opinion explains the reasons for our decision to make that order absolute.BACKGROUNDThe combined records of the probate and tax cases support the following timeline:YearTax CourtSuperior Court1995September 7Mr. Allison opened theprobate case in the KingCounty Superior Court.1997MayMr. Allison and his sisterbegan litigating a disputeover the administrativeexpenses paid from theirmother's and father's estates.1999December 3Nothing in the docket havinghappened in two years, theSuperior Court ordered Mr.Allison to close his mother'sestate or file a statusreport.2000January 4Mr. Allison filed apetition in Tax Court,docket number 247-00,contesting the IRS'sdetermination of adeficiency in gift taxowed by his late mother.January 11Mr. Allison requested aone-year continuance in theprobate case while he resolved the dispute with theCommissioner.January 13The Superior Court granted acontinuance until January 4,2001. The order listed thereason for continuance as"Dispute with IRS."January 18Mr. Allison filed asecond petition in Tax Court, docket number 714-00,challenging the IRS'sdetermination of a deficiencyin estate tax. This caseis closely related to the gift tax case.April 26Both Tax Court cases wereput on the October 2000Baltimore trial calendar.September 18Mr. Allison and theCommissioner jointly movedto continue the Tax Courtcases. Filed with the motionwas a stipulation of agreedissues settling "all theoutstanding issues in thetwo cases with the exceptionof the issues of fees andcommissions on the FederalEstate Tax Return." Theseissues, they explained, "arecurrently the subject oflitigation between [Mr. Allison] and a beneficiary."This litigation appearsto be the probate case stillpending in the Superior Court.December 29Mr. Allison, a graduate ofStanford Law School, wasadmitted to the Tax Court bar.2001January 4The Superior Court againordered Mr. Allison to closethe estate or report on itsstatus.May 17The Tax Court cases wereput on the October 2001Baltimore trial calendar.July 5Mr. Allison requested anothercontinuance of the probatecase, until JUly 5, 2002,because the "[e]state[could not] be closed at[that] time because of adispute with the [IRS]." Mr.Allison then promised to close the estate afterhe resolved the IRS dispute,not telling Superior Court ofthe stipulation of agreed issues filed in Tax Court.The Superior Courtcontinued the case untilDecember 20, 2001.August 21Mr. Allison and the Commissioner jointly move asecond time for a continuanceciting the unresolvedprobate case.December 27The Superior Court continuedthe probate case untilJuly 11, 2002, for goodcause shown.2002April 3The Tax Court cases were puton the September 2002 Baltimore trial calendar.July 19Mr. Allison and the Commissioner jointly move athird time to continue theTax Court cases, Mr. Allisonhaving advised the Commissioner "that the litigation between the personal representative and  a beneficiary concerning the fees and commissions issues[was] still pending."September 11The Superior Court issued aform order to show cause andcitation for contempt of court, but noted that "[Mr.Allison] appeared and gavegood reason why there has notbeen compliance with priorcourt orders," and continuedthe contempt proceeding untilNovember 13, 2002. The courtalso noted that this "[c]asehas been on [the] delinquencycalendar since 12/03/1999 andeach year [Mr. Allison]requests case be continuedanother year due todispute with the IRS. Localagent never notified ofdelinquencies, and neither was creditor who hasrequested special notice."November 15Mr. Allison wrote theSuperior Court explaining that the dispute with the IRSwas still not resolved. He also requested the order to show cause be dischargedbecause, he claimed, allcreditors had been paid andthe dispute with the IRSwas set on the Tax Court'strial calendar and he expected the tax case to be called in September orOctober of 2003. (Notethat the motion to remove the Tax Court cases fromthe trial calendar had already been granted and nonew trial date had yetbeen set.) Mr. Allisonalso asked for a continuanceof the probate case untilDecember 1, 2003, saying thathe couldn't close the estateuntil he obtained arelease from the IRS.December 18The Tax Court cases wereput on the May 2003Baltimore trial calendar.2003March 20Mr. Allison and the Commissioner jointly moved  a fourth time to continuethe Tax Court cases,Mr. Allison having advisedthe Commissioner "that thelitigation between thepersonal representative anda beneficiary concerning thefees and commissionsissues is still pending."June 7Mr. Allison wrote a letter to the Superior Court(labeled an "Interim StatusReport") explaining that hecouldn't close the estatebecause of the ongoing IRSdispute. He also said thatthe IRS cases were expectedto be called on the 2004trial calendar. He askedthe Superior Court tocontinue the probate case foranother year without issuinganother order to show cause.June 16The Superior Court, statingthat "[Mr. Allison] appearedand gave good reason whythere has not been compliancewith prior court orders," continued the probate case until July 23, 2003. It alsonoted that "[Mr. Allison]is directed to appoint a non-corporate entity asresident agent and to filedocumentation from IRS casein support of request forcontinuance."July 21Mr. Allison sent another"Interim Status Report" tothe Superior Court similarto his June 7, 2003 letter.November 24The Tax Court cases wereput on the April 2004Baltimore trial calendar.2004January 20Mr. Allison and theCommissioner jointly move afifth time to continue theTax Court cases, Mr. Allisonhaving advised theCommissioner "that thelitigation between thepersonal representative anda beneficiary concerning thefees and commissions issues[was] still pending."July 29Mr. Allison sent another"Interim Status Report" tothe Superior Court, similarto the previous reports, andstated that the Tax Courtcases were "set on the trialcalendar and * * * expectedto be called on the 2005 trial calendar." He alsowrote that "[a]ll of the assets of the Estate have been distributed. All of thecreditors have been paid."August 10The Tax Court cases were puton the January 2005 Baltimoretrial calendar.December 2Mr. Allison and the Commissioner jointly moved asixth time to continue the Tax Court cases, Mr. Allisonhaving advised the Commissioner "that the litigation between the personal representative anda beneficiary concerning thefees and commissions issues[was] still pending." Wegranted the motion, but putthe cases on a status-reporttrack and ordered them notreturned to the general docket. Mr. Allison did notinform the Commissioner orthe Court that he had distributed all the estate'sassets and paid all its creditors.2005February 17Mr. Allison filed a statusreport with the Tax Courtand gave the same reasonsfor continuing the cases ascontained in the previouslyfiled joint motions, addingthat the probate case was "not set for trial this yearand that the probability of settlement before trial is very low."February 22The Tax Court ordered theparties to submit a statusreport with informationallowing Tax Court to trackthe progress of the probatecase over the internet.May 17Mr. Allison wrote to the TaxCourt that the SuperiorCourt had not yet scheduleda trial date for the probatecase. He failed to mentionthat this was a result ofhis own repeated motions andreports to the SuperiorCourt.August 12The Superior Court ordered Mr. Allison to appear onNovember 9, 2005, and toshow cause why he shouldn'tbe held in contempt. Theorderalso stated that Mr.Allison "shall producedocumenting evidence of IRSdispute prior to hearing, inorder to receive continuance.Failure to do so shallresult in closure of estate."November 14The Superior Court issued aform order to show cause anda citation for contempt ofcourt, stating that "[Mr.Allison] appeared and gavegood reason why there hasnot been compliance withprior court orders." Thecourt then continued thecontempt proceeding untilNovember 8, 2006. The courtalso noted that the "Estatehas two actions against IRSproceeding in US Tax Court."It is unclear whatdocumentation, if any, Mr.Allison provided to theSuperior Court or how heexplained the lack ofprogress in the Tax Courtcases.December 7The Tax Court issued to Mr.Allison an order to showcause, requiring him to seta trial date in the probatecase or face dismissal ofthe Tax Court cases.2006June 14Mr. Allison told theSuperior Court that theissue regarding administrative expenses hadto be resolved and asked fora trial date.July 17Mr. Allison filed asupplemental response to theTax Court stating that theSuperior Court had set atrial date for October 8,2007.December 19Mr. Allison failed to file astatus report with the TaxCourt, and we ordered him tosubmit certified copies ofall papers filed after July1, 2006, in the SuperiorCourt.2007January 9Mr. Allison failed toprovide the copies,promising to do so whenthe Superior Court respondedto his request.March 1We ordered Mr. Allison tosubmit the certified copiespreviously requested and notyet produced.March 9Instead of submitting thecopies, Mr. Allison filed astatus report statingthat his adversary in theprobate case changed lawyers,and the new lawyer neededtime to review the casedocuments. Also, Mr. Allisonsaid that the burden ofproducing all the requesteddocumentation was too heavybecause the file was large.Mr. Allison attached a fewcertified copies from theprobate case.April 6We ordered the Commissionerto produce the requesteddocuments.April 23The Commissioner did so.July 2Mr. Allison successfullymoved for continuance of theSuperior Court trial datefrom October 2007 toFebruary 4, 2008.2008January 10Mr. Allison successfullymoved for continuance of theSuperior Court trial datefrom February 4, 2008, toMay 12, 2008.March 7We issued an order to showcause why we should notsanction Mr. Allison for hisconduct and ordering Mr.Allison to appear beforethis Court on April 2.April 2We held a hearing regardingthe order but Mr. Allisondidn't show up.May 1Mr. Allison successfullymoved for continuance of theSuperior Court trial datefrom May 12, 2008 to September 15, 2008.We *151 must now decide whether to sanction Mr. Allison.DISUSSIONFrom the comparison of the documents filed with this Court and with the King County Superior Court, we believe that Mr. Allison is taking advantage of the calendar system of both courts to indefinitely postpone the resolution of the probate case and the Tax Court cases. We find that he deliberately and repeatedly told each court that the other matter had to be resolved first, and in doing so, he has misled and misinformed this Court.Section 66731 says in part:SEC. 6673(a). Tax Court Proceedings. --(1) Procedures instituted primarily for delay, etc. --Whenever it appears to the Tax Court that --(A) proceedings before it have been instituted or maintained by the taxpayer primarily for delay, the Tax Court, in its decision, may require the taxpayer to pay to the United States a penalty not in excess of $ 25,000. *   *   *   *   *   *   *(2) Counsel's liability for excessive costs. -- Whenever it appears to the Tax Court that any attorney or other person admitted to practice before the Tax Court has multiplied the proceedings in any case unreasonably and vexatiously, the Tax Court may require --(A) that such attorney or other person *152 pay personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct * * *This penalty is used to "sanction and deter the use of false documents and testimony and to protect the integrity of our proceedings from intentional misconduct." Bagby v. Commissioner, 102 T.C. 596">102 T.C. 596, 615 (1994).Section 6673(a)(1) permits us to impose sanctions against the taxpayer -- the estate in this case. In Williams v. Comm'r, 119 T.C. 276">119 T.C. 276 (2002), an individual income tax case brought by a pro se petitioner, we imposed a $ 25,000 sanction under section 6673 after we found that the taxpayer had intentionally delayed the case by serially filing bad faith bankruptcy cases (and even forging what looked like bankruptcy court documents). We later discovered that he was allowing the bankruptcy cases to linger just long enough to invoke the automatic stay to delay trial in this Court. This outrageous behavior also prompted us to punish his dishonesty with an additional $ 5,000 penalty for criminal contempt under section 7456. Id. at 282-83.In this case, though, we think it more appropriate *153 to sanction Mr. Allison personally in his role as the estate's attorney, so that any other beneficiaries of the estate don't suffer for his actions. Section 6673(a)(2)(A) gives us the power to make Mr. Allison himself pay any fees or excessive costs that the Commissioner has incurred as a result of his bad behavior -- actions which have "multiplied the proceedings * * * unreasonably and vexatiously."Mr. Allison repeatedly requested continuances from this Court, telling us that he was pursuing the probate case diligently while repeatedly telling the probate court that he was moving forward in the Tax Court cases. He also has failed on many occasions to timely satisfy this Court's requests and orders. His failure to submit information regarding the status of the probate case that we requested in 2005 is especially notable, since it would likely have helped us catch his serial misrepresentations sooner.Mr. Allison's education and legal experience, not to mention his admission to the Tax Court bar, underscore the egregiousness of his conduct. The issues in both cases before us are fairly simple and should have been resolved long ago. Instead, the cases before us have dragged on for over *154 eight years, and the probate case has lingered for more than a decade. We therefore find that he used procedures of our Court primarily for delay, and in doing so was repeatedly dishonest. Mr. Allison's persistence in the face of warnings from both courts thus warrants a penalty under section 6673(a)(2). That section requires a determination of the costs imposed on the Commissioner, and we will order the Commissioner to file evidence of what those costs were.Because Mr. Allison is an attorney currently admitted to practice before the Tax Court, other sanctions may be appropriate. We will also send this opinion (and the order to show cause dated March 7, 2008) to the King County Superior Court for their consideration in In re Estate of Allison, No. 95-403740-0.An appropriate order will be issued.Footnotes1. Unless otherwise indicated, all section references are to the Internal Revenue Code.↩