Wade V. Shang - Page 4




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               Petitioner’s objections to the motion fall into three                  
          categories.  Petitioner argues:  (1) Respondent is in violation             
          of the Court’s Rules, (2) respondent failed to exercise due                 
          diligence, and (3) if the motion is granted, petitioner will be             
          unduly prejudiced in presenting his case.                                   
          Whether Respondent Has Complied With the Court’s Rules                      
               Petitioner argues that respondent is in violation of Rule              
          39, which requires that a party set forth in his pleading special           
          matters, including fraud and collateral estoppel.  Petitioner               
          argues that respondent pleaded collateral estoppel, but not                 
          fraud, in his original answer.  However, the answer specifically            
          states:  “petitioner is liable for the civil fraud penalty                  
          pursuant to I.R.C. section 6663 for taxable years 1996, 1998, and           
          1999”.  In his answer, respondent relies on collateral estoppel.            
          In his motion for leave to file amendment to answer, respondent             
          merely seeks to include the facts necessary for a finding of                
          fraud without reliance on collateral estoppel.  As respondent               
          alleged fraud in his answer, he has complied with Rule 39.                  
               Petitioner alleges that respondent did not set forth the               
          reasons for the amendment as required by Rule 41(a).  However,              
          the motion states that respondent seeks to set forth allegations            
          of facts surrounding the imposition of the civil fraud penalty              
          under section 6663.  This is sufficient to comply with Rule                 
          41(a).                                                                      







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