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United States v. Cusaac

October 30, 2008


The opinion of the court was delivered by: Simandle, District Judge


Plaintiff filed this action to reduce to judgment certain trust fund liabilities and federal income tax liabilities assessed against Ocie Cusaac. The matter now comes before this Court on Plaintiff's motion for summary judgment, in which it asserts that Defendants have, in effect, admitted to the bulk of the allegations in the complaint, and have failed to present evidence to rebut the tax assessments made against Ocie Cusaac.

For the reasons discussed below, the Court will grant Plaintiff's motion for summary judgment [Docket Item 23].


In its complaint, Plaintiff, the United States of America, alleges that Ocie Cusaac ("Mr. Cusaac") owes the United States trust fund taxes for Mark Masonry, Inc. as well as federal income taxes, along with interest, penalties and statutory additions. The complaint asserts that on March 19, 1996, the Internal Revenue Service ("IRS") made a $80,747 assessment against Mr. Cusaac for unpaid trust fund taxes*fn1 for various tax period beginning on April 1, 1992 and ending on December 31, 1994. (Compl. ¶ 7.) According to the Plaintiff, despite notice and demand for payment, Mr. Cusaac failed to pay the full amounts due. (Compl. ¶ 10.) The complaint further alleges that in 2002 and 2003, the IRS made assessments against Mr. Cusaac for unpaid federal income taxes, interest, and penalties in the amounts of $8,046 and $4,632, respectively. (Compl. ¶ 12.) Mr. Cusaac is similarly accused of disregarding the notice and demand for payment and failing to pay the full amounts of income tax due. (Compl. ¶ 15.) As of May 5, 2008, Plaintiff asserts that Mr. Cusaac owed $181,892.26 in unpaid trust fund taxes and $14,447.57 for unpaid income taxes, including interest and penalties. (Pl. Br. at 3.)

In answer, Mr. Cusaac admitted to his home address, admitted that he received notice of the various tax assessments, but denied that he failed to pay the amounts owed or that there remained any amount due. (Answer ¶¶ 5, 10, 15.) To all other allegations in the complaint Mr. Cusaac answered: "Defendant neither admits nor denies and plaintiff is left to its proofs." (Compl. ¶¶ 1-4, 7-9, 12-14.) Mr. Cusaac has since deceased, and in May, 2007, the Court granted Plaintiff's motion to substitute Robert Cusaac and Lynette White, personal representatives of the estate of Mr. Cusaac, as the proper party defendants (collectively, "Defendants").

In the instant motion, Plaintiff argues first that Defendants' answer that Mr. Cusaac "neither admits nor denies and plaintiff is left to its proofs" amounts to an admission of those allegations. Plaintiff also maintains that it is entitled to summary judgment because the IRS tax assessments, submitted with the motion, are presumed correct and Defendants have failed to submit evidence that raises a question as to their validity. In opposition, Defendants offer "a recap of the tax liabilities and payments for the years 1983 through 2000" prepared by Defendants' bookkeeper, as well as IRS Form 941 (Employer's Quarterly Federal Tax Return) for the last three quarters of 1992 and all four quarters of 1993, and forty-nine checks from Mark Masonry, Inc. dating from May 20, 1992 through December 30, 1993.


A. Admitting and Denying Complaint Allegations

Under Federal Rules of Procedure 8(b)(6), "[a]n allegation . . . is admitted if a responsive pleading is required and the allegation is not denied." A party who lacks knowledge or information to respond "must so state" in order to deny. Fed. R. Civ. P. 8(b)(5). Defendants' answer to certain allegations in the complaint that Mr. Cusaac "neither admits nor denies and plaintiff is left to its proofs" is not sufficient for a denial and thus constitutes an admission. See Mahanor v. U.S., 192 F.3d 873, 876 (1st Cir. 1951) (defendant's answer that she "neither admits nor denies that truths of the allegations . . . and demands that the plaintiff prove said allegations" was taken to have admitted the allegation); Reed v. Hickey, 2 F.R.D. 92 (E.D. Pa. 1941) (answer that allegations were "'neither admitted nor denied, but proof thereof is demanded if material'" was "an insufficient denial"); 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1264 (3d ed. 2004); see also Publicker v. Shallcross, 106 F.2d 949 (3d Cir 1939) (answer that styled complaint's averments as immaterial and not requiring an answer was an admission). As a consequence, it is not disputed as to the amount of the IRS assessments or the tax periods at issue, nor is it disputed that Mr. Cusaac received notice and a demand for payment of these assessments. The only matter in dispute is whether Mr. Cusaac (or more specifically his Estate) owes these trust fund and personal income taxes. (Compl. ¶¶ 10, 15; Answer ¶¶ 10, 15.)

B. Amounts Owed

Plaintiff asserts that it is entitled to summary judgment against Defendants, because Defendants have presented no evidence to rebut the presumption that the tax assessments against Mr. Cusaac are valid. (Pl. Br. at 4-5.) Summary judgment is appropriate when the materials of record "show 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). A dispute is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the non-moving party." See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is "material" only if it might affect the outcome of the suit under the applicable rule of law. Id. In deciding whether there is a disputed issue of material fact, the court must view the evidence in favor of the non-moving party by extending any reasonable favorable inference to that party; in other words, "the nonmoving party's evidence 'is to be believed, and all justifiable inferences are to be drawn in [that party's] favor.'" Hunt v. Cromartie, 526 U.S. 541, 552 (1999) (quoting Liberty Lobby, 477 U.S. at 255).

Though Plaintiff, of course, bears the initial burden of proof in this matter, by submitting current tax assessments against Mr. Cusaac, along with an affidavit asserting their authenticity, Plaintiff has established a prima facie case of liability against Defendants. See U.S. v. Green, 201 F.3d 251, 253 (3d Cir. 2000); Freck v. I.R.S., 37 F.3d 986, 992 n.8 (3d Cir. 1994). "An assessment by the government is presumptively correct and where, as here, it is introduced into evidence, the burden shifts to the defendant [to disprove liability]." U.S. v. Vespe, 868 F.2d 1328, 1331 (3d Cir. 1989); Psaty v. U.S., 442 F.2d 1154, 1160 (3d Cir. 1971) ("[T]he presumption of correctness operates to place upon the taxpayer both the burden of going forward and the burden of persuasion."). Therefore, to survive this motion for ...

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