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explaining that the court may raise issue preclusion sua sponte
Summary of this case from Dixon v. Stern & Eisenberg, PCOpinion
Civil Action No. 99-2451
March 26, 2002
OPINION ORDER
This mailer is before the Court on motion of the Defendant United States of America ("Defendant") for summary judgment. The Plaintiff Inductotherm Industries, Inc. ("Plaintiff') has opposed the motion. For the following reasons, the motion will be denied without prejudice.
I. BACKGROUND
This case stems from the sale of three electron beam furnaces (furnaces "A," "B," and "C") to Iraq in May of 1989. The Plaintiff is the parent corporation of Consarc Corporation ("Consarc"), which was the manufacturer and seller of the subject furnaces. The Defendant is the United States of America. Following its initial sale contract with Iraq, Consarc became embroiled in protracted litigation with the government regarding the `freezing' of the furnaces and related assets under the Iraq Sanctions Regulations, 31 C.F.R. §§ 575.101, et seq. See Consarc Corp. v. United States Treasury Dept., Office of Foreign Assets Control, 71 F.3d 909 (D.C. Cir. 1995). At issue in this mailer are the tax consequences to the Plaintiff of Consarc's manufacture, initial sale, and subsequent resale of the furnaces. Specifically in question is whether the proceeds from the resale of furnace A is taxable income to the Plaintiff in fiscal year 1991 and whether the Plaintiff may deduct the costs incurred in the manufacture of furnaces B and C in 1991 and 1992 when they were built, or whether the Plaintiff must wait until their year of resale, 1997, to deduct these costs.
The Defendant has moved for summary judgment arguing that there are no genuine issues of material fact to be decided. It believes that under the claim of right doctrine, the Plaintiff should be taxed for income it received from the resale of furnace A in 1991. The government also believes that the Plaintiff may not deduct the manufacturing costs of furnaces B and C until 1997 when they were resold. The Plaintiff vehemently disagrees.
In support of its motion, the Defendant initially submitted a memorandum of law, accompanied by four exhibits. Three of the exhibits are uncertified copies of various decisions from the United States District Court for the District of Columbia, and the United States Court of Appeals for the District of Columbia Circuit in the above referenced Consarc litigation. The fourth exhibit is an unsigned declaration of Defendant's counsel, James Wilkinson, along with six different documents claimed to be received from the Plaintiff and a third-party during discovery, in response to various requests for production of documents, interrogatories and subpoenas ("Wilkinson Decl.").
II. SUMMARY JUDGMENT STANDARD
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a mailer of law." Fed.R.Civ.P. 56(c). A fact is "material" if a dispute over that fact "might affect the outcome of the suit under the governing law. . . ." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An is sue is "genuine" only if there is sufficient evidence for "a reasonable jury [to] return a verdict for the nonmoving party." Anderson, 477 U.S. at 248.
The party moving for summary judgment bears the initial burden of demonstrating to the court that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The moving party may satisfy this burden by showing that the nonmoving party has failed to "make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp., 477 U.S. at 322. Once the moving party has demonstrated the "absence of evidence to support the nonmoving party's case," the burden shifts to the nonmoving party to show that a genuine issue for trial exists.
III. DISCUSSION
As an initial mailer, this Court must determine what evidence has been properly placed before it. Local Civ. R. 56.1 provides, in pertinent part, that "[o]n motion for summary judgment, each side shall furnish a statement which sets forth material facts as to which there exists or does not exist a genuine issue." L. Civ. R. 56.1. The Defendant failed to provide a separate Rule 56.1 Statement, instead outlining the factual landscape in its moving brief, primarily through reference to the above referenced Consarc litigation. As noted above, the Defendant attached uncertified copies of the decisions from that litigation, ostensibly as a means of establishing certain "undisputed facts" for the purposes of its summary judgment motion.
The Plaintiff argues that the Defendant's failure in this regard warrants an outright denial of its motion. While it is certainly true that "failure to comply with the Local Civil Rule would by itself suffice to deny [a party's] motion for summary judgment," Bowers v. NCAA, 9 F. Supp.2d 460, 476 (D.N.J. 1998), this result is not foregone. In the absence of bad faith, the Court has the discretion to excuse a procedural failing of this type. Fowler v. Borough of Westville, 97 F. Supp.2d 602, 606-07 (D.N.J. 2000). Given the standing preference for deciding motions on their merits, Foman v. Davis, 371 U.S. 178, 182 (1962), in the circumstances presently before the Court, it is desirable to look to the Defendant's brief and other submissions for the factual underpinnings of its motion. In re Thomas, 285 B.R. 648, 652 (Bankr. D.N.J. 2000) (quoting SEC v. Chester Holdings, Ltd., 41 F. Supp.2d 505, 516 n. 7 (D.N.J. 1999)). Standing alone, the Defendant's failure to provide a Rule 56.1 Statement does not, in this instance, justify a denial of its motion. This is especially true where, as here, the Plaintiff, despite its protestations, has committed the same procedural error that it faults the Defendant for. By not supplying this Court with a separate statement of facts, the Plaintiff, too, has failed to comply with L. Civ. R. 56.1. The Rule is mandatory and requires both parties to submit statements of fact. Both parties are advised to consult the Local Rules when coming before this Court in the future.
The Defendant's reliance on the Consarc litigation for the bulk of its factual assertions implies its belief that the Consarc factfinding should be accepted for the truth of the mailers found therein. In that regard, the Defendant invites this Court to either take judicial notice of those facts, or should determine that the Plaintiff is collaterally estopped from challenging their veracity. To some degree, consideration of these two alternatives is overlapping.
Under Fed.R.Evid. 201(b), judicial notice may be taken of facts "generally known within the territorial jurisdiction of the trial court," or those "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Werner v. Werner, 267 F.3d 288, 295 (3d Cir. 2001). With regard to the actual record of the Consarc litigation, or to any judicial statement of fact not expressly relied upon for these rulings, the truth of facts enunciated in this manner may not be judicially noticed by this Court. "A court may take judicial notice of a document filed in another court "not for the truth of the mailers asserted in the other litigation, but rather to establish the fact of such litigation and related filings." International Star Class Yacht Racing v. Tommy Hilfiger, 146 F.3d 66, 70 (3d Cir. 1998) (quoting Liberty Mutual Ins. Co. v. Rotches Pork Packers, Inc., 969 F.2d 1384, 1388 (2d Cir. 1992)). This Court may accept the fact that the Consarc litigation occurred through judicial notice and may even note the factual outcome of the mailer, but it may not accept as truth the factual assertions in the Consarc record
This analysis does not end the mailer, however, because Consarc was not an unrelated case with ambiguous factual findings. If the Defendant can show that the Consarc orders contain defined factual findings necessary to those decisions, and that the Plaintiff or its privy fully represented its interests therein, this Court would be required to adopt the factual findings actually litigated in that mailer. Henglein v. Colt Industries Operating Corp., 260 F.3d 201, 209 (3d Cir. 2001). Issue preclusion, also known as collateral estoppel, prohibits the relitigation of an issue or fact that has previously been placed in dispute, actually litigated and specifically decided adversely to the party against whom the preclusion is sought. Melikian v. Corradeili, 791 F.2d 274, 277 (3d Cir. 1986). There is thus a key difference between a court taking judicial notice of generalized facts in the record of previous litigation and a court adopting the explicit factual findings of a previous court that adjudicated the same issues in earlier litigation between the same parties or their privies. Holloway v. Lockhart, 813 F.2d 874, 879 (8th Cir. 1987) ("The fact that the judge made that finding in [previous litigation] is a judicially noticeable fact; but that fact is irrelevant in this case, unless used as a predicate for the application of collateral estoppel. . . .") (emphasis in original).
The Plaintiff cites United States v. Jones, 29 F.3d 1549 (11th Cir. 1994) for the notion that this Court may not take judicial notice of the Consarc litigation. At issue in Jones was a district court's judicial notice of a previously litigated issue in a case that included the party against whom the fact was asserted. United States v. Jones, 29 F.3d 1549, 1550-51 (11th Cir. 1994). Jones, however, does not conflict with this Court's analysis because the initial litigation in Jones was a jury trial, wherein no special interrogatories given to the jury, as factfinder, to determine what facts it had actually relied upon to reach its verdict. Jones, 29 F.3d at 1551 n. 3. The fact that was the subject of the subsequent court's judicial notice was contained in the original court's order denying a judgment notwithstanding the verdict. Id. at 1553. of course, in the original trial, the jury acted as the factfinder and anything stated by the court in a subsequent decision regarding the verdict does not represent the court's factfinding. Parkway Garage, Inc. v. City of Philadelphia, 5 F.3d 685, 691 (3d Cir. 1993) (describing the trial court's function on a motion for JNOV). Therefore, that Jones disallowed the subsequent court's judicial notice of the original court's hearsay "finding" is unsurprising.
The Defendant, however, has not argued that the Plaintiff should be bound to the factual findings of the Consarc litigation through collateral estoppel, resting instead on mere citations to the published cases and the attachment of uncertified printouts of selected decisions. While this Court may raise the issue sua sponte Doe v. Pfrommer, 148 F.3d 73, 80 (2d Cir. 1998), it nevertheless is left without a sufficient evidence to apply issue preclusion. It is true that the parties in the Consarc litigation were closely related to the parties in this mailer. Without any evidence whatsoever on this subject, however, it cannot be said that Consarc Corporation, as a subsidiary corporation, is in privity with the Plaintiff or that the Plaintiff's interests were fully represented in the previous litigation. As they have not been properly presented, then, this Court will not consider the factual findings of the Consarc decisions in its summary judgment analysis.
As a result, the only evidence placed before this Court by the Defendant is the unsigned Wilkinson Declaration. This Court is not able to consider whether the accompanying documents have been authenticated by Plaintiff's production during discovery because the declaration is unsigned and therefore will be disregarded.
Consequently, the Defendant has failed to place any facts whatsoever before the Court. It follows that the Defendant cannot bear its burden of "demonstrating to the court that there is no genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
IV. CONCLUSION
For the foregoing reasons and because the Court has not reached the underlying substance of this motion, it will be denied without prejudice to the Defendant's refiling.
ACCORDINGLY;
IT IS on this 26th day of March, 2002 ORDERED that the Defendant's motion for summary judgment [24] is hereby DENIED without prejudice.