Opinion
95 Civ. 1424 (CSH)
September 3, 2003
MEMORANDUM OPINION AND ORDER
The most recent correspondence in this case deals with whether the Court should convene another conference in an effort to settle the government's tax claims against defendant Diana Corto.
Familiarity is assumed with all prior opinions and orders. Ogden N. Lewis, Esq., defendant's present counsel, initiated the latest exchange in a status-reporting letter dated July 24, 2003. Mr. Ogden advised that settlement negotiations had broken down over disputes about the extent of discovery that should be accomplished before the government is in a position to evaluate an offer of payment previously made by defendant. Specifically, the government wishes to take defendant's deposition in order to explore her protestation of straitened financial circumstances, and to obtain further discovery of defendant's credit card records. Defendant takes the positions that she has made "reciprocal discovery regarding the nature of the settlements reached by the Government with other defendants and responsible parties in the case." Lewis July 24, 2003 letter at 1 (footnote omitted). Mr. Lewis concluded that letter by saying:
Ms. Corto accordingly respectfully requests a conference with the Court as to whether the information she has provided to date suffices to permit consideration of her settlement offer to continue or, if not, whether she may be permitted discovery with respect to the other settlements reached by the Government.
In a letter dated July 25, 2003, the government speaking through AUS A Sarah Light says that "it does not believe that a conference will materially advance either settlement negotiations or the progress of this litigation," a belief reflecting the government's view that "no further settlement negotiations are appropriate at this time, "principally because of defendant's refusal to make the discovery the government regards as necessary; on that score the government says:
The Government cannot reasonably evaluate defendant's financial condition and ability to pay without independent third-party verification of the statements she has made on her financial disclosure forms. Indeed, when considering whether to compromise a tax liability of any kind in this Office, it is standard practice to require third-party records — such as financial records from banks, credit cards or other institutions — to verify statements made by parties. In addition, when an individual claims financial hardship as a basis for a compromise, this Office ordinarily deposes that individual regarding both the third-party records and the self-disclosed financial forms.
Light June 25, 2003 letter at 1, 2. That is the discovery the government says it must have in this case, and in view of defendant's failure to provide it, in particular withdrawing her previously given consent to examine credit card records and refusing to be deposed, the government asks the Court "to decide the pending motion for reconsideration without requiring further futile efforts at settlement.'" Id. at 2.
Ms Corto has written two letters to the Court, dated July 28 and August 7, 2003, which amplify and expand upon the assertions made on her behalf by counsel. Finally, Mr. Lewis wrote a second letter, dated July 31, 2003, in which he characterizes the Court's role at another conference as "the role of compassion — one that only the Court, as the neutral third-party in our adversarial system, can bring to bear," id. at 2.
While I have convened a number of conferences in this case in an effort to facilitate a settlement, given the circumstances revealed by this correspondence I conclude that another conference would not be appropriate.
Mr. Lewis's July 31 appeal is movingly phrased. Most people like to believe that compassion is one of their virtues; politicians have on occasion proclaimed themselves to be compassionate. However, in order to exercise compassion, an individual must be able to choose between courses of action that are compassionate, indifferent, or even cruel. In "our adversarial system," to which counsel also alludes, the trial judge's neutrality imposes necessary limitations upon his appropriate courses of action.
In this case, the government refuses to consider defendant's settlement offer unless defendant agrees to more discovery, by document production and deposition, than defendant is willing to give voluntarily. The government has seemingly broadened its discovery demands; in an earlier opinion I noted that the government declined to drop its claim against defendant because she had refused "documentary disclosure of her then-existing financial situation," 168 F. Supp.2d 84, 86(S.D.N.Y. 2001), and I learn of the government's insistence upon a deposition for the first time in this recent exchange (although AUSA Light avers that defendant was previously made aware of it). Defendant resists a deposition. She says she has given the government all it reasonably requires, and apparently regards herself as entitled to more discovery with respect to the government's tax recoveries from other sources than the government is prepared to give.
If the case were at the pre-trial discovery stage, the Court could enter orders compelling discovery as legitimate or precluding it as overbroad or harassing. But the parties have been exploring a consensual settlement of the case, a quite different context, and they have an unfettered right, immune to judicial review, to condition their consents in the manners articulated in these letters. There is no proper basis, compassionate or otherwise, upon which the Court could instruct the office of the United States Attorney to forego discovery which that office believes it needs to evaluate defendant's settlement offer; nor would it be appropriate, given AUSA Light's forcefully expressed position, for the Court to pursue an effort of persuasion, friendly or otherwise. And so with the defendant, whose attitude, judging by her letters, is equally adamant. Defendant may choose her course of action. She has able counsel to advise her, but she is free to accept or reject that advice. The conference counsel proposes is a form of judicial mediation, and I have had some success in that genre over the years, but I do not attempt such a resolution unless both parties indicate that they are at least amenable to the process. That cannot be said of either party in this case; quite the contrary is true. I could of course schedule a conference anyway and the parties would have to attend, but judicial pressure is not an acceptable substitute for judicial mediation.
So there will be no further conference, and the Court will now proceed, as the government suggests, "to decide the pending motion." Given the passage of time, it is useful to recall just what that motion entails.
The opinion reported at 168 F. Supp.2d 84 granted the government's motion for summary judgment against defendant in respect of tax liabilities, and directed the government to settle an order and judgment on notice. The government served a proposed judgment in the amount of $594,255.14. Defendant, represented at the time by different counsel, neither agreed to that amount nor served a counter-judgment specifying a different amount; instead she moved under Rule 60(b), Fed.R.Civ.P., for relief from the summary judgment, a motion the government opposes. That is the pending motion that the Court will proceed to adjudicate. I will consider all prior submissions in the case, to the extent that they are relevant to the issues arising out of Rule 60(b). I will hear oral argument, limited to those issues, on a date and at a time to be set in a subsequent order.
If defendant's motion fails, a judgment in favor of the government and against defendant will be entered. The amount of that judgment may prove to be the subject of further litigation. Mr. Lewis acknowledges that "it is not at all clear to me what amount Ms. Corto would actually owe to the Internal Revenue Service were a judgment to be entered against her," letter dated July 31, 2003 at 1, and his uncertainty is understandable; it appears that the government has recovered from several other sources payments in respect of the tax liability in suit, which may operate to reduce the balance owed by Corto. If the case proceeds to the stage of litigating the amount of the judgment against Corto, then she may be entitled to further discovery from the government, within the context of 26 U.S.C. § 1603 or otherwise, but quaere whether the government could compel any further discovery from Corto, since it would not yet have a judgment to enforce. If judgment in a particular amount is entered, the government would have discovery procedures available to it in aid of enforcing the judgment, unless enforcement is stayed by Corto's appeal. It is also worth noting that the entry of judgment against her would create the defendant's first procedural opportunity to challenge in the Court of Appeals this Court's summary judgment ruling against her.
On the present record, defendant's ability to stay enforcement of a judgment may be doubtful, since Rule 62(d) would require her to post a supersedeas bond or other security.
The careful reader will note hat the various possibilities discussed in this paragraph of text are conjectural; the Court intimates no present view with respect to any of them.
Defendant's application for a further conference with the Court is denied. Oral argument on the pending motion will be held on a date and at a time to be subsequently determined.