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United States of America v. Irving Gellerstein

February 22, 2011


The opinion of the court was delivered by: Matsumoto, United States District Judge:


Plaintiff United States of America (the "government") brought an action seeking a monetary judgment based on the failure of defendants Irving Gellerstein, Norma Gellerstein, and Irene Greenfeder (the "defendants") to pay federal taxes. (ECF No. 1, Compl.) Before the court is the Report and Recommendation ("R&R") issued by Magistrate Judge James Orenstein on June 7, 2010, which sua sponte recommends dismissal of the action for failure to prosecute pursuant to Federal Rule of Civil Procedure 41(b) ("Rule 41"). (ECF No. 10, R&R at 1, 6.) On June 21, 2010, the government timely filed objections to the R&R. (See generally ECF No. 12, Objection to Report and Recommendation ("Obj.").) Upon a de novo review of the record, the R&R, and the government's timely objections, the court respectfully declines to adopt the R&R.


The government filed the complaint in this action on July 7, 2008, seeking to reduce to judgment assessed and unpaid federal tax liabilities of defendants pursuant to 26 U.S.C. Section 6672. (ECF No. 1, Compl.) Summonses to all three defendants were returned executed in July and August 2008. (ECF No. 2, Executed Summons as to Norma Gellerstein; ECF No. 3, Executed Summons as to Irving Gellerstein; ECF No. 4, Executed Summons as to Irene Greenfeder.) For the next five months, between the return of the last summons on August 21, 2008 and a court order entered on January 27, 2009, no action appeared on the docket in this case (the "first dormant period").

Despite the lack of activity on the docket, the government has reported for the first time in its objections that it engaged in unsuccessful settlement negotiations during this first dormant period.*fn1 (See Obj. at 1-2.) Specifically, at some point after service on the defendants, the government reports receiving a call from defendant Norma Gellerstein ("Ms. Gellerstein"). (See id.) During that call, counsel for the government urged Ms. Gellerstein to hire an attorney for herself and her husband, Irving Gellerstein ("Mr. Gellerstein") (together, "the Gellersteins"), and to furnish the government with financial data so that the government could evaluate the possibility of a settlement based on uncollectability. (Id.) In response, Ms. Gellerstein reportedly stated that she would consider settling the matter. (Id.) However, Ms. Gellerstein never followed up with the financial data necessary for the government to make a settlement offer. (Id.)

On January 27, 2009, Judge Orenstein appropriately issued the following order:

A review of the docket entries in this action indicates that there has been no activity in this case since a summons was returned executed on August 21, 2008 (docket entry 4). No later than February 27, 2009, one of the following events must occur: (a) the defendant must file an answer, (b) the parties must file a stipulation extending the defendants' time to answer, or (c) the plaintiff must file a motion for the entry of a notation of default. If none of the preceding events occurs by the deadline set forth above, I will deem the plaintiff to have abandoned the case and will promptly file a Report and Recommendation urging the assigned District Judge to dismiss the case for failure to prosecute. The plaintiff's counsel is directed to provide a copy of this order to his client and to the defendants. (ECF No. 5, January 27, 2009 Order.) On that same day, the government complied with Judge Orenstein's Order and filed a motion for the entry of notation of default against defendants pursuant to Rule 55(a). (ECF No. 6, Mot. for Entry of Default.) On April 29, 2009, the Clerk of the Court noted the default of each defendant. (ECF No. 7, Entry of Default as to Norma Gellerstein; ECF No. 8, Entry of Default as to Irving Gellerstein; ECF No. 9, Entry of Default as to Irene Greenfeder.) Over the course of the next eleven months, the docket reflects no further action by the government (the "second dormant period").

Yet while the docket again reflects inactivity, again for the first time in its objections the government reports that further settlement attempts occurred during this second dormant period. Specifically, the government reports receiving two phone calls in early 2010 regarding the possibility of a settlement with the Gellersteins. (Obj. at 2-3.) First, on February 23, 2010, the government received a call from an individual identifying himself as a prospective attorney for the Gellersteins. (Id. at 2.) Although the government informed the attorney that the government would still entertain settlement offers based on uncollectability, the attorney did not contact the government again. (Id. at 2.) Second, on March 19, 2010, the government received another call from Ms. Gellerstein who informed the government that the Gellersteins were planning to sell their house and relocate to Florida. (Id. at 2-3.) In light of the anticipated sale, the government again urged Ms. Gellerstein to provide the financial data necessary to move forward with a potential settlement. (Id. at 2-3.)

Between the February 23, 2010 and the March 19, 2010 telephone conversations the government also took steps to secure the affidavits of debt from the Internal Revenue Service ("IRS affidavits") which would be necessary to support a motion for default judgment against defendants. (Id. at 2.) However, when the government's counsel received drafts of the IRS affidavits, he "determined that he needed to set aside significant time" to help revise them before the government could move for default judgment. (Id. at 3.) The government's counsel did not immediately have sufficient time for that task due to time conflicts and travel related to other cases. (Id.)

On March 25, 2010, Judge Orenstein's case manager contacted the government's counsel and left a message on his voicemail, which went unreturned. (R&R at 2.) One week later, Judge Orenstein's case manager placed a second telephone call and this time reached the government's counsel. (Id.) During that call, the government's counsel informed Judge Orenstein's case manager that the government expected to file its motion for default judgment against defendants by the end of April 2010. (Id.)

Yet the government did not move for default judgment as expected by the end of April 2010, and the docket reflected no further activity in this case. However, for the first time in the objections to the R&R, the government has detailed certain forces beyond the government's control which prevented the government from moving for default judgment, as promised, by the end of April 2010. (See Obj. at 3-4.) Specifically, counsel for the government stated that he was unable to devote the significant time necessary to revise the IRS affidavits due to scheduling conflicts with other cases and work-related travel which required counsel's absence from the office for a period of more than two weeks during April and May of 2010. (Id. at 3.) Further, counsel for the government described how he was unable to work on the IRS affidavits during the time he had set aside for the task because one of his children became ill and had to be hospitalized for nearly two weeks, during which time counsel was out of the office for several days caring for his other children. (Id. at 3-4.) Further, even after his child was released from the hospital, the government's counsel stated that he was further delayed from devoting the necessary attention to the IRS affidavits because he needed to take additional time off to care for his sick daughter and because of the demands of other cases. (Id.)

Meanwhile, having received no motion for default judgment from the government by the end of April 2010 as promised, and absent any indication from the government as to when such motion would be filed, on June 7, 2010, Judge Orenstein sua sponte issued an R&R addressing whether the complaint should be dismissed for failure to prosecute pursuant to Rule 41. (R&R at 1, 5-6.) In the R&R, Judge Orenstein applied the relevant five factor test used by district courts to determine whether to dismiss a case for failure to prosecute under Rule 41. (Id. at 3-6.) Judge Orenstein found that all five of these factors weighed in favor of dismissal under Rule 41, and he accordingly recommended that the complaint be dismissed for failure to prosecute. (Id.)

On June 10, 2010, three days after the issuance of the R&R, the government filed a motion for default judgment pursuant to Federal Rule of Civil Procedure 55(b)(1). (ECF No. 11, Mot. for Default J.) On June 21, 2010, the government timely objected to the R&R asserting that a careful examination of the "underlying facts and circumstances of this case and an analysis of the five factors" which guide courts' discretion in deciding whether to dismiss a case for failure to prosecute reveals that the drastic sanction of dismissal is unwarranted in this case. (See generally Obj. at 10.) Accordingly, the government requested that this court decline to adopt the R&R and allow the Clerk of the Court to perform the ministerial task of entering a default judgment. (See id.)


In reviewing an R&R, the district court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. ยง 636(b)(1)(C). Where, as here, a party makes specific objections to a magistrate judge's findings, the court must make a de novo ...

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