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United States v. Ligas

May 10, 2006

UNITED STATES OF AMERICA, PLAINTIFF,
v.
LAWRENCE J. LIGAS AND LABE BANK, DEFENDANTS.



The opinion of the court was delivered by: James F. Holderman, District Judge

MEMORANDUM OPINION AND ORDER

On February 6, 2004, the United States of America ("government"), filed a complaint alleging that defendant Lawrence J. Ligas ("Mr. Ligas"), owed $243,324.59 in back taxes, interest and penalties as of February 8, 2004 and sought a judgment for the unpaid balance. (Dkt. No. 1). The government filed a first amended complaint on August 27, 2004 adding Labe Bank as a defendant and seeking the additional relief of foreclosure of the tax lien levied on Mr. Ligas' residence located in Chicago, Illinois. (Dkt. No. 5). Labe filed an answer, counterclaim and third-party complaint on November 3, 2004 seeking foreclosure of the mortgage, personal judgment for the deficiency, an order granting possession and attorneys' fees and costs. (Dkt. No. 14). Labe Bank named Lisa M. Ligas ("Ms. Ligas"), as a third-party defendant in its November 3, 2004 third-party complaint in addition to the government and Mr. Ligas. (Id.) Now pending before this court are: (1) the government's motion of February 1, 2006 for summary judgment, (Dkt. No. 111), (2) Mr. Ligas' motion of February 24, 2006 for this court to reconsider Judge Keys' January 27, 2006 decision, (Dkt. No. 132), (3) Labe Bank's motion of February 2, 2006 to withdraw as counsel, (Dkt. No. 113), (4) Mr. Ligas' motion of March 6, 2006 to disqualify Labe Bank's counsel, (Dkt. No. 136) and (5) Labe Bank's motion of March 28, 2006 for leave to file an appearance. (Dkt. No. 150). For the reasons set forth below, this court denies, without prejudice, the government's motion for summary judgment, denies Mr. Ligas' motion to reconsider Judge Keys' decision, grants Labe Bank's motion to withdraw, denies Mr. Ligas' motion to disqualify and grants Labe Bank's motion to file an appearance.

BACKGROUND

The parties spent considerable time in 2004 and 2005 arguing over whether proper service of process had been effected on Mr. Ligas, (Dkt Nos. 42, 43, 63, 64), but ultimately this court established that it did have personal jurisdiction as to Mr. Ligas after he consented to this court's jurisdiction. (Dkt. Nos. 70, 71). Mr. Ligas filed an answer to the amended complaint and responded to the counterclaim on July 25, 2005 (Dkt. Nos. 72, 73), and this court entered a scheduling order in this case on September 15, 2005. (Dkt. No 94). The court's scheduling order set discovery to be closed by January 13, 2006, the filing for dispositive motions for February 10, 2006, the filing of the final pretrial order for May 13, 2006 and set the case for trial on June 5, 2006. (Dkt. No. 94). This court referred supervision of discovery disputes and settlement conferences to Magistrate Judge Keys. (Dkt. No. 83).

The government moved for summary judgment on November 16, 2005 (Dkt. No. 87), and Mr. Ligas filed a motion to stay discovery on November 28, 2005. (Dkt. No. 95). Applying Rule 56(f) of the Federal Rules of Civil Procedure ("Rules"), this court denied the government's motion for summary judgment without prejudice, and in turn Mr. Ligas' motion to stay discovery, ruling that the parties should complete discovery before proceeding with summary judgment. (Dkt. No. 97). On January 17, 2006, four days after the scheduled close of discovery, the parties reported that discovery was complete except for the items they listed in open court and the items sought in two motions to compel filed with Judge Keys. (Dkt. No 104). Mr. Ligas had two motions to compel discovery, one that he had previously filed on January 10, 2006 (Dkt. No. 101), and one he would later file on January 24, 2006. (Dkt. No. 105). Judge Keys heard oral argument on the motions to compel discovery on January 27, 2006 and ruled on the points raised by counsel. (Dkt. No. 110). On January 21, 2006 Mr. Ligas was granted until March 31, 2006 to complete discovery as to the government. (Dkt. No. 125). This court is setting a new discovery schedule and closing date for claims between Labe Bank and Mr. Ligas at the conclusion of this opinion.

ANALYSIS

A. Motions Involving the Government and Mr. Ligas

1. The Government's Motion of February 1, 2006 for Summary Judgment (Dkt. No. 111)

Mr. Ligas argues that the government's motion for summary judgment should be denied pursuant to Rule 56(f) because he has been unable to complete discovery. The government counters that Mr. Ligas seeks information in discovery that is not relevant, his Rule 56(f) argument should be rejected and this court should enter judgment in the government's favor.

In light of Mr. Ligas' objections to Judge Keys' discovery ruling, which this court addresses later in this opinion, the court believes the fairest way to proceed at this juncture is to deny, without prejudice, the government's February 1, 2006 motion for summary judgment pursuant to Rule 56(f). Mr. Ligas' pending motion objecting to Judge Keys' January 27, 2006 is the last remaining discovery issue and the court is addressing that motion next in this opinion. Upon this court's ruling, discovery between the government and Mr. Ligas will be complete and the court will set a final summary judgment schedule for motions between the government and Mr. Ligas at the conclusion of this opinion.

2. Mr. Ligas' Motion of February 24, 2006 to Reconsider Judge Keys' January 27, 2006 Decision (Dkt. No. 132)

On January 10, 2006, Mr. Ligas filed a motion to compel discovery he sought from the government. (Dkt. No. 101). Mr. Ligas sought information from the government relating to his October 26, 2005 interrogatories and request for production of documents, and his December 5, 2005 second set of interrogatories and request for production of documents. Mr. Ligas sought the name, current address, function, responsibility, education, employment history, nature of the activities, supervisors of the IRS employees who worked on his case, whether documents created by these employees had ever been revoked, whether IRS employees signed off on documents for each other, whether the government served documents to him without formal process, every assessment form produced by the IRS, documentation to support every government response to his interrogatories and he seeks to depose 10 IRS employees.

The government responded on January 20, 2006 that the information sought by Mr. Ligas was irrelevant, could not lead to the discovery of admissible evidence and, therefore, the motion to compel should be denied. The government's position was that it is seeking recovery of unpaid income and FICA taxes owed by the L.J. Ligas corporation and from Ligas pursuant to the Trust Fund Recovery provision of the IRS Code. 26 U.S.C. § 6672. The government, citing three Seventh Circuit's decisions, argued that the only issues to be determined in this case are whether

(1) Mr. Ligas was "the "responsible person," ie, one who by virtue of his authority over the financial affairs of the business is required to collect, account for, and pay over the tax; and (2) [Mr. Ligas] willfully failed to see to it that the taxes were collected, accounted for and paid to the government." (Dkt. No. 103-1 at pg. 4) (citing United States v. Kim, 111 F.3d 1351, 1357 (7th Cir. 1997); Thomas v. United States, 41 F.3d 1109, 1113 (7th Cir. 1994); Bowlen v. United States, 956 F.2d ...


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