CORY v. WHISMAN, GRYGIEL & GIORDANO, P.A.Civil Action WMN-06-2694.
JOHN R. CORY, SR.
WHISMAN, GRYGIEL & GIORDANO, P.A. et al.
WHISMAN, GRYGIEL & GIORDANO, P.A. et al.
United States District Court, D. Maryland.
May 8, 2012.
John R. Cory, Sr., Plaintiff, represented by Robert Clagett Sanders, Law Office of Robert C Sanders. Whisman, Grygiel & Giordano, P.A., Defendant, represented by Alvin I Frederick, Eccleston and Wolf PC, Larry Lee Puckett, Jr, Eccleston and Wolf PC & James Edward Dickerman, Eccleston and Wolf PC. Whisman, Girodano & Daney, LLC, Defendant, represented by Alvin I Frederick, Eccleston and Wolf PC, Larry Lee Puckett, Jr, Eccleston and Wolf PC & James Edward Dickerman, Eccleston and Wolf PC. Whisman Giordano and Associates, LLC, Defendant, represented by Alvin I Frederick, Eccleston and Wolf PC, Larry Lee Puckett, Jr, Eccleston and Wolf PC & James Edward Dickerman, Eccleston and Wolf PC. B. Christopher Daney, Defendant, represented by Alvin I Frederick, Eccleston and Wolf PC, Larry Lee Puckett, Jr, Eccleston and Wolf PC & James Edward Dickerman, Eccleston and Wolf PC. James R Whisman, Jr., Defendant, represented by Alvin I Frederick, Eccleston and Wolf PC, Larry Lee Puckett, Jr, Eccleston and Wolf PC & James Edward Dickerman, Eccleston and Wolf PC.
Joseph A. Giordano, Defendant, represented by Alvin I Frederick, Eccleston and Wolf PC, Larry Lee Puckett, Jr, Eccleston and Wolf PC & James Edward Dickerman, Eccleston and Wolf PC.
WILLIAM M. NICKERSON, Senior District Judge.
Pending before this Court is Defendants' Motion for Leave to File Motion for Summary Judgment as to Counts IX, X, XI, XIII, XIV and XV,
I. FACTUAL BACKGROUND & PROCEDURAL HISTORY
This case has been pending for more than five years. The only claims remaining involve allegations that Defendants Whisman Grygiel & Giordano (Whisman Grygiel), and Whisman Giordano & Daney (Whisman Giordano), two iterations of a Delaware-based accounting firm, and Christopher Daney, an accountant and principle in the firms, committed professional malpractice when they failed to inform Plaintiff Cory that they had not completed and filed Cory's individual tax return for 2002.
As the Court explained in its Memorandum dated January 20, 2008:
ECF No. 39 at 2-3. With respect to the 2002 individual return, the Court explained the undisputed facts:
ECF No. 39 at, 10.
Cory filed the pending suit on October 13, 2006. In 2007, Defendants filed a motion for summary judgment, which this Court denied as part of the above-quoted Memorandum. Defendants then filed a Motion for Reconsideration, ECF No. 41, which the Court also denied. ECF No. 48. The case was scheduled to go to trial in 2008, but trial was cancelled after the parties negotiated a settlement agreement with the assistance of Magistrate Judge Bredar. On October 22, 2008, the Court granted an indefinite continuation of the trial so that the parties could pursue relief from the Internal Revenue Service (IRS) as part of the settlement agreement. ECF No. 72. Unfortunately, even with assistance from Magistrate Judge Gesner, the parties and the IRS were unable to reach an acceptable resolution, and, on January 4, 2012, Judge Gesner advised the undersigned that settlement discussions had concluded and the case should proceed to trial. ECF No. 113. The case is currently scheduled to begin a three-day non-jury trial on June 4, 2012.
Defendants have requested leave to file a motion that they have captioned as a "Motion for Summary Judgment . . ., or in the Alternative, a Motion for Judgment on the Pleadings, or in the Alternative, a Motion for the Court to Make Findings of Fact and Conclusions of Law with Respect to Plaintiff's Inability to Establish Proximate Causation" (the Motion). Cory argues that the Court should not grant Defendants leave to file this Motion because Defendants already filed a Motion for Summary Judgment and a Motion for Reconsideration in this case, both of which were denied, and the currently pending Motion is similarly without merit. As the pending Motion presents issues distinct from those already decided by the Court in its previous Memoranda,
II. LEGAL STANDARD
Summary judgment is proper if the evidence before the court, consisting of the pleadings, depositions, answers to interrogatories, and admissions of record, establishes that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c);
If the movant demonstrates that there is no genuine issue of material fact and that the movant is entitled to summary judgment as a matter of law, the non-moving party must, in order to withstand the motion for summary judgment, produce sufficient evidence in the form of depositions, affidavits or other documentation which demonstrates that a triable issue of fact exists for trial.
Cory has alleged claims for breach of contract and negligence. Both of these claims arise out of the same facts regarding Defendants' failure to file the 2002 tax return. Though facially they appear to be distinct claims, both require Cory to prove that Defendants negligently breached a professional duty.
Under Maryland law, a cause of action in negligence requires that the plaintiff show: (1) that the defendant owed a duty to the plaintiff; (2) that the defendant breached that duty; (3) that the plaintiff suffered actual injury or loss; and (4) that the loss or injury proximately resulted from the defendant's breach of the duty.
To support this argument, Defendants make two assertions: (1) Cory will be unable to show that at the time he discovered that Defendants had failed to file the 2002 tax return it was too late for him to challenge his tax liability related to the 1099-Misc, and (2) even if it was too late for Cory to challenge his liability, Cory will not be able to show that it is more likely than not that he would have succeeded in challenging the 1099-Misc if such challenge was timely submitted by Defendants when filing the 2002 return.
The Court agrees that, in order to hold Defendants liable, Cory will need to establish a causal link between Defendants' negligence and his damages by a preponderance of the evidence. Notwithstanding, the Court does not agree that Defendants are entitled to summary judgment.
In support of their first assertion, Defendants argue that Cory has been unable to provide sufficient evidence to prove that he received a Notice of Deficiency from the IRS. Defendants argue that this is significant because, pursuant to 26 U.S.C. § 6213(a), the IRS is required by law to send a Notice of Deficiency prior to assessing any tax liability on a taxpayer. This statute also provides that the taxpayer may file a petition with the Tax Court challenging the deficiency within 90 days from the date the IRS mailed the Notice. Therefore, Defendants contend, if Cory discovered that his 2002 tax return had not been filed prior to receiving the Notice of Deficiency, he still would have been able to challenge the tax liability and 1099-Misc. As such, they argue, Defendants' failure to file the tax return and explanation of the 1099-Misc did not cause harm to Cory because Cory was not yet foreclosed from raising the same challenge to his tax liability with the Tax Court or other adjudicative entity with jurisdiction to hear his dispute.
Cory refutes this assertion by arguing that the Court can infer that the Notice of Deficiency was sent "because the I.R.S. proceeded to assess the tax, issued a notice of intent to levy, executed the levy, and imposed a tax lien, none of which the I.R.S. can do without first issuing the statutory notice of deficiency." Opp'n at 6. This inference, therefore, would allow the Court to conclude that at the time he discovered the 2002 return had not been filed, it was too late for Cory to challenge the taxes assessed against him
Though the parties dedicate the majority of their briefing to whether or not Cory could have challenged his tax liability, the answer to this question is not dispositive of Defendants' liability. Cory has alleged that:
Am. Compl. at ¶ 46. Even if Cory had the opportunity to challenge his tax liability at the time he discovered the 2002 return had not been filed, this allegation suggests that he believed doing so would have been futile because of the length of time that has passed since the return was originally due to be filed. Whether or not it is true that a challenge would have been futile, at this point in the proceedings, when all inferences are to be made in favor of the non-moving party, it is reasonable to infer that Cory was in a weaker position with respect to challenging the tax liability in August 2006 than he would have been had Defendants filed his taxes and submitted an explanatory letter challenging the 1099-Misc in March 2004,
Furthermore, the Court may not, at this time, determine whether the IRS would have agreed that the 1099-Misc was erroneously issued and that Cory did not owe any tax on the amount stated therein had Defendants timely submitted such an explanation. As this Court previously noted, "[w]hether it is more likely than not that the IRS would have agreed with Cory that he did not realize discharge of indebtedness income from the transactions with Pepco is a mixed question of fact and law." ECF No. 39 at 15 (citing
Defendants argue that Cory has no real obligation to repay the loan and so the Court can determine that the debt was effectively discharged. Defendants support this assertion by stating that the Note, as written, does not provide any means by which Cory would repay the Assignee, Ms. Kydd, and noting that Cory has not made any payments on the loan since the assignment. Notwithstanding, Cory still contends that he intends to repay the debt and remains obligated under the Note. These conflicting assertions create an issue of fact that the Court can only resolve after hearing the evidence and weighing its credibility. As such, the Court will deny the Motion with respect to this issue as well.
V. MOTION TO COMPEL
Defendants have filed a Motion for Order Compelling Plaintiff to Supplement Discovery Responses, ECF No. 117. In this motion, Defendants request that the Court order Cory to supplement his discovery responses by "producing (1) all communications with the IRS related to tax year 2002, (2) the complete, unredacted FOIA response
This Rule clearly requires that parties supplement their discovery responses as necessary to ensure that their responses are complete and accurate. This obligation does not end at the close of discovery, and Cory does not dispute that such an obligation exists under Rule 26(e). In their motion, Defendants reference a number of specific documents that fall within their discovery requests that they believe exist
It is clear that pursuant to Rule 26(e) Cory is required to supplement his discovery responses to include all communications related to his 2002 tax return and to provide copies of all returns filed for tax years 2003 through 2007.
Defendants also request an unredacted copy of a FOIA response that Cory received from the IRS. The Court notes that the redaction of the response was completed by Cory himself and not by or with the advice of his counsel. This raises a red flag for the Court because in by-passing his counsel when responding to discovery, Cory also by-passed the Rule 11 requirement that all papers "must be signed by at least one attorney of record in the attorney's name." Fed. R. Civ. Proc. 11(a). This removes the layer of protection that Rule 11 provides to deter parties from making inaccurate or disingenuous submissions. In light of this concern, the Court will order that Cory produce the FOIA response to Defendants through his counsel. If counsel believes that it is appropriate to redact the document due to the presence of undiscoverable content, then counsel may make such redactions but must provide a privilege log detailing such redactions as discussed supra. The Court cautions counsel, however, that the scope of discovery is broad and that because the lawsuit squarely places his client's taxes at issue, it will be difficult to claim that information related to those taxes is irrelevant or undiscoverable.
Because trial is scheduled to begin in one month, the Court recognizes that the supplementation of discovery must be completed quickly. Therefore, the Court will order that Cory provide the documentation described above to Defendants within five days of the date of the Order.
For the foregoing reasons, the Court concludes that Defendants' Motion for Leave to File will be granted, Plaintiff's Motion for Leave to File will be denied, Defendants' Motion for Summary Judgment will be denied and Defendants' Motion to Compel will be granted. The Court will issue a separate Order.
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