United States District Court, D. Colorado
KELLY D. DAVIS, Plaintiff,
UNITED STATES OF AMERICA, Defendant.
OPINION AND ORDER GRANTING GOVERNMENT'S MOTION
FOR SUMMARY JUDGMENT
S. KRIEGER, CHIEF UNITED STATES DISTRICT JUDGE.
MATTER comes before the Court pursuant to Mr.
Davis' Motion for Summary Judgment (#
49), the Government's response (#
50), and Mr. Davis' reply (#
52); and the Government's Motion for Summary
Judgment (# 48), Mr. Davis' response
(# 51), the Government's reply
(# 53), and Mr. Davis' sur-reply
pertinent facts of this case are undisputed. Between 2005 and
2009, Mr. Davis and Allyce Card were co-owners of WVC, a
construction contractor. Mr. Davis was the President of WVC
and managed the company's field operations. Ms. Card was
WVC's bookkeeper and managed its finances and office
staff. WVC withheld money from employee paychecks to satisfy
federal payroll tax obligations, but it did not pay those
funds over to the Government. Instead, it diverted those
funds to pay operating expenses, creditors, and, apparently,
personal obligations of Mr. Davis and Ms. Card.
parties agree that Mr. Davis became aware of WVC's
failure to remit withheld payroll taxes to the Government by
early 2009, and further agree that, although WVC continued to
operate throughout the remainder of 2009, Mr. Davis never
caused WVC to rectify the tax delinquencies with the federal
government. The Government assessed nearly $1 million in tax
penalties against Mr. Davis, personally, pursuant to 26
U.S.C. § 6672 for non-payment of the employment taxes.
Mr. Davis commenced this action to challenge those
assessments. He seeks a declaration that he owes nothing to
the Government; the Government has counterclaimed for a
determination under § 6672 that Mr. Davis owes the
sides have moved (# 48, 49) for summary
judgment in their favor.
Standard of review
of the Federal Rules of Civil Procedure facilitates the entry
of a judgment only if no trial is necessary. See White v.
York Intern. Corp., 45 F.3d 357, 360 (10th Cir. 1995).
Summary adjudication is authorized when there is no genuine
dispute as to any material fact and a party is entitled to
judgment as a matter of law. Fed.R.Civ.P. 56(a). Substantive
law governs what facts are material and what issues must be
determined. It also specifies the elements that must be
proved for a given claim or defense, sets the standard of
proof and identifies the party with the burden of proof.
See Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986); Kaiser-Francis Oil Co. v.
Producer's Gas Co., 870 F.2d 563, 565 (10th Cir.
1989). A factual dispute is “genuine” and summary
judgment is precluded if the evidence presented in support of
and opposition to the motion is so contradictory that, if
presented at trial, a judgment could enter for either party.
See Anderson, 477 U.S. at 248. When considering a
summary judgment motion, a court views all evidence in the
light most favorable to the non-moving party, thereby
favoring the right to a trial. See Garrett v. Hewlett
Packard Co., 305 F.3d 1210, 1213 (10th Cir. 2002).
movant has the burden of proof on a claim or defense, the
movant must establish every element of its claim or defense
by sufficient, competent evidence. See Fed. R. Civ.
P. 56(c)(1)(A). Once the moving party has met its burden, to
avoid summary judgment the responding party must present
sufficient, competent, contradictory evidence to establish a
genuine factual dispute. See Bacchus Indus., Inc. v.
Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir. 1991);
Perry v. Woodward, 199 F.3d 1126, 1131 (10th Cir.
1999). If there is a genuine dispute as to a material fact, a
trial is required. If there is no genuine dispute as to any
material fact, no trial is required. The court then applies
the law to the undisputed facts and enters judgment.
moving party does not have the burden of proof at trial, it
must point to an absence of sufficient evidence to establish
the claim or defense that the non-movant is obligated to
prove. If the respondent comes forward with sufficient
competent evidence to establish a prima facie claim
or defense, a trial is required. If the respondent fails to
produce sufficient competent evidence to establish its claim
or defense, then the movant is entitled to judgment as a
matter of law. See Celotex Corp. v. Catrett, 477
U.S. 317, 322-23 (1986).
case involves cross-motions for summary judgment.
"Because the determination of whether there is a genuine
dispute as to a material factual issue turns upon who has the
burden of proof, the standard of proof and whether adequate
evidence has been submitted to support a prima facie
case or to establish a genuine dispute as to material fact,
cross motions must be evaluated independently." In
re Ribozyme Pharmaceuticals, Inc., Securities Litig.,
209 F.Supp.2d 1106, 1112 (D. Colo. 2002); see also
Atlantic Richfield Co. v. Farm Credit Bank of Wichita,
226 F.3d 1138, 1148 (10th Cir. 2000); Buell Cabinet Co.
v. Sudduth, 608 F.2d 431, 433 (10th Cir. 1979)
("Cross-motions for summary judgment are to be treated
separately; the denial of one does not require the grant of
another."). However, because, as set forth herein, all
material facts are undisputed, the Court need simply recite
those facts and then apply the law to them.
Government's claim is brought pursuant to 26 U.S.C.
§ 6672, which provides that “any person required
to collect, truthfully account for, and pay over any
[payroll] tax . . . who willfully fails to . . . pay over
such tax [shall] . . . be liable to a penalty equal to the
total amount of the tax [not paid over].” The claim has
two elements: (i) that the defendant is a “responsible
person” - that is, responsible within the business for
ensuring the proper payment of the taxes, and (ii) that he or
she willfully failed to pay over the tax money to the
government. The taxpayer bears the burden of proving
by a preponderance of the evidence that he is either: (i) not
a “responsible person, ” or (ii) that his failure
to pay taxes was not willful. U.S. v. Hodges, 684
Fed.Appx. 722, 728 (10th Cir. 2017); Byrne v.
U.S., 857 F.3d 319, 327 (6th Cir. 2017). 1.
Responsibility Mr. Davis' first argument is that it was
Ms. Card - and only Ms. Card - that was responsible
for WVC's (non-)payment of payroll taxes, and therefore
he is not a “responsible” person under Section
6672. A person is “responsible” for payment of
taxes if that person is required to collect, account for, or
pay over taxes withheld from employees' wages.
Bradshaw v. U.S., 83 F.3d 1175, 1178
(10th Cir. 1995). A responsible person will
generally be a managing officer or employee, and there may be
more than one responsible person in an entity. Denbo
v. U.S., 988 F.2d 1029, 1032 (10th Cir.
1993). The question is not who had the most control
over company finances, but simply whether the person in
question had significant control over the payment of
taxes - more specifically, whether the person had “the
actual authority or ability, in view of his status within the
corporation, to pay the taxes owed.” Smith v.
U.S., 555 F.3d 1158, 1165 (10th Cir. 2009).
Responsibility turns on whether the person in question had