November 5, 2013 4th Circuit published opinions

Johnson v United States

Johnson sought a refund of payroll tax penalty she paid and the government sought a judgment for all payroll taxes not collected from 2001 to 2004. The district court granted summary judgment to the government against Johnson and her husband. The panel affirmed. It held the husband waived his statute of limitations argument by failing to challenge the district court’s reasoning. As to Johnson, the panel held that Johnson was a responsible person under 26 USC 6672 as she was sole shareholder of the corporation, its vice president and chair of it board and had effective control over its finances as demonstrated by her firing of the finance manager and active efforts to pay payroll taxes once she learned they had not been paid. Mere delegation of authority, as Johnson did to her husband, does not shield a responsible person form liability. As to willfulness, the panel held that Johnson’s acts were willful as she allowed herself and other creditors to be paid after she learned of the arrearage in payroll taxes. The panel finally held that there was no reasonable possibility of double recovery as the judgments against Johnson and her husband will be reduced if the corporation reaches a settlement with the IRS.

Projects Management Company v DynCorp International, LLC

Company sued DynCorp alleging failure to pay under a contract for services in Iraq. The district court dismissed the case with prejudice based on Company’s failure to comply with discovery orders and alleging damages not allowed under law. The panel affirmed. It held that the district court did not abuse its discretion in dismissing the case as company had engaged in egregious conduct by withholding discovery on damages, Company, not its attorney committed the conduct, the conduct interfered with DynCorp’s ability to conduct depositions, lesser sanctions had not remedied the misconduct and the integrity of the district court was best served by dismissal. The panel rejected Company’s counterarguments noting Company provided false testimony in an interrogatory and at deposition and the district court’s order was proper in the context of the case as a whole.

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