United States District Court, D. North Dakota
ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY
L. HOVLAND, CHIEF JUDGE UNITED STATES DISTRICT COURT
the Court is Plaintiff Lawrence Danduran's motion for
summary judgment filed on November 1, 2018. See Doc.
No. 30. The Defendant, United States of America, filed a
response in opposition to the motion on November 21, 2018.
See Doc. No. 42. The Plaintiff filed a reply brief
on November 28, 2018. See Doc. No. 45. For the
reasons set forth below, the motion for is denied.
an action for refund of tax penalties assessed for failure to
remit to the IRS employment taxes withheld from
employees' wages. Danduran and Third-Party Defendant
Cheryl Huntzinger (“Huntzinger”) each owned a 50
percent interest in Mill Pump & Cheers, LLC (“Mill
Pump”), a former North Dakota limited liability
company. Mill Pump operated a convenience store located in
New Rockford, North Dakota, from July 2010 until April 2014.
was never an officer of Mill Pump but rather was a co-owner.
The business was run as a partnership. Mill Pump did not have
a board of directors, did not issue stock to its owners, and
did not give titles to its owners. Danduran's initial
contributions to Mill Pump consisted of a $45, 000 loan and
labor to complete renovations of the building in which the
convenience store operated.
Mill Pump began operating the convenience store, Danduran
primarily handled fuel management, maintenance, and
inventory. Danduran and Huntzinger jointly managed the
day-to-day operations of Mill Pump after the store initially
opened. Danduran and Huntzinger both had signature authority
on Mill Pump's checking account. Danduran signed for and
acquired Mill Pump's liquor license and tobacco license.
Huntzinger wrote the vast majority of the checks to Mill
Pump's creditors. Danduran signed checks to vendors when
necessary. Danduran relied on Huntzinger to file employment
tax returns, pay employment taxes, prepare payroll, and to
collect and remit trust fund taxes. Mill Pump employed
several persons to operate the convenience store. Huntzinger
was primarily responsible for calculating or preparing Mill
Pump's payroll checks and tax withholdings. Huntzinger
signed and filed the payroll tax returns for Mill Pump.
established the relationship with Mill Pump's fuel vendor
and ensured that all payments from Mill Pump were made to the
fuel vendor. Mill Pump's relationship with its fuel
vendor was dependent on a personal guarantee, provided by
Danduran, that the fuel vendor's bills would be paid.
Danduran calculated amounts due to the fuel vendor, and
directed Huntzinger to make payments in the correct amount.
in 2011 or 2012, Danduran and Huntzinger had a
“falling-out” and Danduran found another job in
sales at a car dealership. After he took the car dealership
job, Danduran continued to come to Mill Pump most days to
handle fuel management and maintenance. Danduran received
both a salary from Mill Pump and monthly repayments on the
personal loan he made to renovate the store and purchase
Pump, like all employers, was required by law to withhold
federal income and Federal Insurance Contributions Act (FICA)
taxes, which include Social Security and Medicare taxes, from
its employees' wages and pay the withheld wages over to
the IRS. The amounts withheld from employee wages are
commonly referred to as “trust fund taxes”
because the employee's income and FICA taxes are said to
be held in trust by the employer for the United States.
See 26 U.S.C. § 7501. The trust fund taxes,
along with the employer's own FICA obligations
(collectively, “employment taxes”), are reported
quarterly on a Form 941 (i.e., Employer's Quarterly
Federal Tax Return). Mill Pump was required by law to make
periodic deposits of employment taxes in an appropriate
federal depository in accordance with federal deposit
regulations. See 26 U.S.C. § 6302; 26 C.F.R.
Pump failed to pay its federal income and FICA taxes, which
include Social Security and Medicare taxes, withheld from its
employees' wages for: (1) the third and fourth quarters
of 2010; (2) the first, second, third, and fourth quarters of
2011; (3) the first, second, third, and fourth quarters of
2012; and (4) the first quarter of 2013 (collectively, the
“tax periods at issue”). The persons responsible
for collecting, accounting for, and paying over trust fund
taxes withheld from employees' wages, who willfully fail
to do so, are liable for a penalty in the amount of tax
withheld but not paid over. See 26 U.S.C. §
March 24, 2014, the IRS assessed against Danduran a trust
fund recovery penalty under 26 U.S.C. § 6672 for the tax
periods at issue. On August 7, 2014, Danduran paid the full
amount assessed plus interest in the amount of $56, 280.44.
On June 19, 2015, Danduran filed a Form 843 Claim for Refund
and Request for Abatement for the tax periods at issue. On
October 20, 2015, the IRS sent Danduran notice that his claim
for refund and abatement was disallowed. On November 18,
2015, Danduran filed an appeal with the IRS Appeals Office.
Danduran's appeal was denied in September 2016.
28, 2017, Danduran filed suit against the United States
demanding a refund of the penalties under 26 U.S.C. §
6672 assessed to Danduran for the tax periods at issue. The
Government filed an answer on October 18, 2017. On October
19, 2017, the Government filed a third-party complaint
against Cheryl Huntzinger seeking a judgment against her for
any amounts it is required to refund to Danduran. The
Clerk's entry of default was made against Huntzinger on
February 5, 2018. Danduran moved for summary judgment on
November 1, 2018. The motion has been fully briefed. Trial is
scheduled for May 14, 2019.
STANDARD OF REVIEW
judgment is appropriate when the evidence, viewed in a light
most favorable to the non-moving party, indicates that no
genuine issues of material fact exist and that the moving
party is entitled to judgment as a matter of law. Davison
v. City of Minneapolis, Minn., 490 F.3d 648, 654 (8th
Cir. 2007); see Fed.R.Civ.P. 56(a). Summary judgment
is not appropriate if there are factual disputes that may
affect the outcome of the case under the applicable
substantive law. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). An issue of material fact is
genuine if the evidence would allow a reasonable jury to
return a verdict for the non-moving party. Id. The