Bauer v. Commissioner ( 1996 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
HERBERT H. BAUER,
Petitioner-Appellant,
v.
No. 95-1735
COMMISSIONER OF THE INTERNAL
REVENUE SERVICE,
Respondent-Appellee.
On Appeal from the United States Tax Court.
(Tax Ct. No. 92-6721)
Argued: July 9, 1996
Decided: July 30, 1996
Before RUSSELL, WIDENER, and HALL, Circuit Judges.
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Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Thomas Allen Worth, Greensboro, North Carolina, for
Appellant. Andrea R. Tebbets, Tax Division, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON
BRIEF: Loretta C. Argrett, Assistant Attorney General, Gary R.
Allen, Ann B. Durney, Tax Division, UNITED STATES DEPART-
MENT OF JUSTICE, Washington, D.C., for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
Herbert H. Bauer appeals the United States Tax Court's decision
and order dismissing his case for lack of prosecution and sustaining
the Commissioner of Internal Revenue's determination that Bauer
owed $176,655 in United States federal income taxes and additions.1
We affirm.
I.
In November 1991 Bauer, a citizen and resident of Hamburg, Ger-
many, received a Notice of Deficiency from the Commissioner of
Internal Revenue (the "Commissioner") informing him that he was
deficient in his United States federal income taxes for the tax years
1984 through 1987, as well as for penalties accrued from his failure
to pay federal income taxes. Bauer's tax deficiencies resulted from his
failure to report as income monies he received from Carolina Para-
chute Corporation ("CPC"), a North Carolina corporation owned by
two German companies of which Bauer was the sole owner.
On March 30, 1992, Bauer filed a pro se petition in the Tax Court
for redetermination of the deficiencies and additions to tax, contend-
ing that the monies he had received from CPC were interest payments
on advancements in excess of one million dollars that his German
corporations had loaned CPC. He further informed the Tax Court of
his present inability to come to the United States to resolve his defi-
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1 This sum includes a $133,315 tax deficiency for tax years 1984
through 1987, plus additions to tax for failure to file timely returns or pay
tax in violation of 26 U.S.C. § 6651(a)(1); for negligence in violation of
26 U.S.C. §§ 6653(a)(1) and (2); for failure by individual to pay esti-
mated income tax in violation of 26 U.S.C. § 6654; and for substantial
understatement of liability in violation of 26 U.S.C. § 6661.
2
ciencies because he was detained in Tripoli, Libya without permission
to leave. Attached to Bauer's petition was a statement from the Ger-
man Embassy in Tripoli indicating Bauer's residence permit had
expired and that efforts to obtain an exit visa for him were underway.
On July 23, 1992, Bauer's secretary in Hamburg, Germany, filed
a motion for leave to file an amendment to the petition. Although the
motion was delivered through his Hamburg office, Bauer apparently
signed it in Tripoli, Libya. The Tax Court granted the motion and
filed the amended petition on September 9, 1992.
On September 16, 1992, the Tax Court notified the parties (1) that
the case was set for trial on February 22, 1993, in Winston-Salem,
North Carolina; (2) that both parties were expected to be present on
that date and be prepared to try the case; (3) that a party's failure to
appear may result in dismissal of the case and entry of decision
against it; and (4) that although the Tax Court will try to accommo-
date the parties in fixing a trial date, the final determination rests in
the court's discretion. A standing pre-trial order accompanied the
notice.
On January 21, 1993, the Commissioner filed a motion for continu-
ance of trial asking the Tax Court to strike the case from its calendar
and to restore it to the general docket because she had been unable
to reach either Bauer or his secretary, and that she had not received
any communications from them since July 16, 1992. In her motion the
Commissioner also requested that the Tax Court order the parties to
file status reports by July 14, 1993. The Tax Court granted the Com-
missioner's motion.
The Commissioner's status report of July 8, 1993, indicated, inter
alia, that Bauer's secretary wrote the Commissioner on June 15 and
July 7, 1993. The June 15 letter requested that Bauer have until Sep-
tember 30, 1993, to file his status report. The Commissioner
responded that under the Tax Court rules Bauer's secretary could not
be recognized as petitioner's legal representative. The July 7 corre-
spondence indicated that Bauer was unable to timely file his report
because he was still in Libya and that he would be returning to the
United States as soon as possible for trial preparation. Because of the
correspondence the Commissioner's status report stressed:
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[T]here can be no meaningful trial preparation without the
personal participation of [Bauer]. This case is not currently
on a calendar, and so [Bauer's] inability to begin trial prepa-
ration is not a critical matter. At such time as this case does
appear on a calendar, it will be a critical matter, and if peti-
tioner's inability continues at that time, [the Commissioner]
will be obliged to move to dismiss this case for lack of pros-
ecution.
Bauer was served with the Commissioner's status report at his identi-
fied Hamburg address.
On July 16, 1993, the Tax Court ordered the case restored to the
general docket. Eleven months later, on June 15, 1994, the Tax Court
notified the parties that the case was set for trial on November 28,
1994, in Winston-Salem, North Carolina. The trial notice was identi-
cal to the one issued by the Tax Court in September 1992, and it con-
tained the same standing pre-trial order.
At the November 28, 1994, calendar call, neither Bauer nor his
counsel were present. Counsel for the Commissioner, therefore,
moved to have the case dismissed for lack of prosecution. The follow-
ing exchange occurred:
THE COURT: I have not received anything in this case
either from [the Commissioner] or from [Bauer]. So what is
the status of the Bauer case?
THE COMMISSIONER: Your Honor, [the Commis-
sioner] intends to file a motion to dismiss this case for lack
of prosecution. The reasons are stated in the motion, which
I have prepared in writing to serve this morning. In particu-
lar, I had to file a status report about a year ago in this case,
and in that status report I indicated that this case would be
dismissed for lack of prosecution -- or at any rate I would
move for dismissal -- if [Bauer] did not contact [the Com-
missioner] to get ready for trial preparation.
THE COURT: Now what efforts have you made since the
case was noticed for trial back in June -- June 15, 1994 --
what efforts have you made to contact [Bauer]?
4
THE COMMISSIONER: Your Honor, I have made no
efforts. The last communication I received -- it is very diffi-
cult to contact [Bauer]. I received communications from his
secretary [ ] in Germany. Bauer was allegedly in Libya and
was not at liberty to leave.
After the notice of trial was issued, [Bauer's secretary]
sent me a facsimile indicating that she had received the
notice of trial and that Bauer would be shortly leaving and
intended to contact me and would contact me and meet with
me in Greensboro for trial preparation. That is the last com-
munication I have received from [Bauer] as is set forth in
my motion.
THE COURT: Okay. Do you have a copy of that commu-
nication attached to your motion?
THE COMMISSIONER: No, but I can make a copy of it
and attach it. I only have one copy, so --
THE COURT: If you would make a copy -- make copies
and attach them to your motion later during the session --
THE COMMISSIONER: All right, Your Honor.
THE COURT: The motion to dismiss for lack of prosecu-
tion will be granted based upon the circumstances recited by
[the Commissioner].
THE COMMISSIONER: Thank you, Your Honor. And if
it is all right, at the time that I have the copies I will also
file the written motion.
THE COURT: Fine.
THE COMMISSIONER: Thank you.
(Whereupon, the calendar call was concluded.)
5
On December 22, 1994, the Tax Court entered an order and deci-
sion dismissing Bauer's case for failure to prosecute and sustaining
the Commissioner's deficiency determinations. On March 20, 1995,
Bauer retained an attorney, who on March 22, 1995, ninety days after
the entry of decision, entered his appearance as Bauer's counsel and
contemporaneously filed a motion to vacate under Tax Court Rule
162, and a motion for leave to file motion to vacate under Tax Court
Rule 123(c) and 26 U.S.C. § 7481. Bauer's counsel also filed a notice
of appeal of the Tax Court's December 22, 1994, dismissal order,
requesting that it be held in abeyance until the Tax Court ruled on the
motion for leave to file motion to vacate. In each motion, Bauer's
counsel asserted that Bauer had been prevented from returning to the
United States by "significant health problems" as well as "certain
immigration and business problems in Africa." The Tax Court denied
the motion for leave to file the motion to vacate, explaining that its
ruling was made after careful consideration of the entire case history
from the filing of Bauer's petition through the motion currently before
the court. The Tax Court also noted that Bauer had neither met with
the Commissioner's counsel as of the trial date nor had made any
attempt to contact the Tax Court between September 1992 and March
1995.
Bauer appeals the Tax Court's December 22, 1994, decision and
order.
II.
Bauer contends that the Tax Court's decision and order granting
the Commissioner's motion to dismiss for lack of prosecution vio-
lated his due process rights because the Commissioner failed to serve
him notice of its intent to move on that motion in violation of Tax
Court Rules 50(a) and (f) and Rule 21.2 The Tax Court's decision to
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2 Tax Court Rule 50(a) provides:"An application to the Court for an
Order shall be by motion in writing. . . . The motion shall show that prior
notice thereof has been given to each other party or counsel for each
other party and shall state whether there is any objection to the motion."
Rule 50(f) provides: "The Rules applicable to service of pleadings
apply to service of motions. See Rule 21."
Rule 21 provides: "Except as otherwise required by these Rules or
directed by the Court, all pleadings, motions . . . shall be served on each
of the parties . . . ."
6
dismiss a case for lack of prosecution is not to be overturned, absent
an abuse of discretion. Hillig v. Commissioner , 916 F.2d 171, 174
(4th Cir. 1990).
Although the Tax Court Rules that Bauer cites required the Com-
missioner to serve Bauer with her motion to dismiss, he ignores the
fact that the Tax Court has discretional authority to dismiss any case
sua sponte pursuant to Tax Court Rule 123(b), regardless of whether
the Commissioner files a motion to dismiss.
Thus, Tax Court Rule 123(b) provides:
For failure of a petitioner properly to prosecute or to comply
with these Rules or any order of the Court or for other cause
which the Court deems sufficient, the Court may dismiss a
case at any time and enter a decision against the petitioner.
The Court may, for similar reasons, decide against any party
any issue as to which he has the burden of proof; and such
decision shall be treated as a dismissal for purposes of para-
graphs (c) and (d) of this Rule.
Dismissal for failure to prosecute typically occurs where a party fails
to appear at trial. Noli v. Commissioner, 860 F.2d 1521, 1527 (9th Cir.
1988).
In determining whether to dismiss a case for failure to prosecute,
a court considers the following four factors: (1) the plaintiff's degree
of personal responsibility; (2) the presence of a drawn out history of
deliberately proceeding in a dilatory fashion; (3) the amount of preju-
dice caused the defendant; and (4) the effectiveness of sanctions less
drastic than dismissal. Hillig, 916 F.2d at 174.
In the instant case, Bauer was solely responsible for his attendance
at the calendar call. His secretary wrote the Commissioner on August
9, 1994, acknowledging the November 28, 1994, trial date and report-
ing Bauer's intention to be present. The secretary wrote:
Mr. Bauer is now in the process of returning from Africa
and will therefore come to the United States in a very short
7
period of time to prepare for trial. He intends to meet with
you as necessary for trial preparations in Greensboro. If the
time available until the trial is not sufficient he will advise
the Court after his meeting with you how much time he may
need.
Other than the German Embassy's statement that Bauer was in Libya
in 1992, there is no substantiated evidence before the Tax Court indi-
cating that Bauer was unable to attend the November 28, 1994 pro-
ceedings. Bauer was obligated either to appear at the calendar call or
to inform the Tax Court of his inability to be present.
Bauer's petition for redetermination languished for close to three
years because he intentionally stalled the proceedings by filing for
continuances and failing to submit status reports. Not once did he ever
meet with the Commissioner to prepare for litigation, nor did he pro-
vide either the Tax Court or the Commissioner with any means of
contacting him other than by his Hamburg address. Furthermore,
Bauer never contacted the Tax Court regarding his inability to appear
on November 28, 1994. In fact, Bauer had failed to contact the Tax
Court after September 1992.
Bauer's delay of the proceedings prejudiced the Commissioner
because it prevented her from preparing for trial and from obtaining
a judicial resolution of the tax monies in dispute it sought to collect.
Bauer's stonewalling left the Tax Court with no alternative other
than dismissal for failure to prosecute. No lesser sanctions exist that
would have remedied Bauer's failure to appear to prosecute his case.
Accordingly, the Tax Court did not abuse its discretion in dismissing
Bauer's case for failure to prosecute.
III.
Bauer also contends that the Tax Court erred in not affording him
special protection as a pro se petitioner. We disagree.
Evidence of record shows that, despite the fact that Bauer repre-
sented himself, he was savvy enough to forestall litigating his case for
8
close to three years since he received notice of his deficiencies in
November 1991. In spite of his alleged detention in Libya, Bauer filed
both a pro se petition and a motion for leave to file an amendment
to the petition during 1992. And, in 1993, he successfully moved for
an extension of time to file his status report. Bauer's failure to appear
for trial, of which he had notice, is not excusable merely because he
is a pro se litigant.
Furthermore, Bauer had the ability to obtain a lawyer to represent
him in his absence. He was an international businessman with an
established corporation in North Carolina. He had the ability to com-
municate with persons in the United States either directly or through
his secretary in Germany. In fact, within ninety days after receiving
the judgment against him, Bauer secured representation even though
he was still outside of the United States. We see no reason why he
could not have obtained counsel earlier.
Bauer's access to the Tax Court was barred by his own actions, not
by the Tax Court's disposition of his case. Although trial courts are
encouraged to liberally treat procedural errors made by pro se liti-
gants, especially when a technical or arcane procedural rule is
involved, such tolerance does not extend to a litigant's failure to
appear in court without explanation or without contacting the court
beforehand. Bauer was twice put on notice that his failure to appear
may result in dismissal of his case and entry of decision against him.
Accordingly, Bauer was not entitled to any preferential treatment.
IV.
Having reviewed Bauer's other arguments and finding them to be
without merit, we affirm the Tax Court's decision and order dismiss-
ing Bauer's case for lack of prosecution.
AFFIRMED
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