Free Response to Motion - District Court of Federal Claims - federal

Case 1:06-cv-00407-ECH

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS No. 06-407 T (into which have been consolidated Nos. 06-408 T, 06-409 T, 06-410 T, 06-411 T, 06-810 T, 06-811 T) Judge Emily C. Hewitt (E-Filed: August 26, 2008) ____________________________________________ ) ALPHA I, L.P., BY AND THROUGH ROBERT ) SANDS, A NOTICE PARTNER ) ) Plaintiff, ) ) v. ) 06-407 T ) THE UNITED STATES, ) ) Defendant. ) ____________________________________________) ) BETA PARTNERS, L.L.C., BY AND THROUGH ) ROBERT SANDS, A NOTICE PARTNER ) ) Plaintiff, ) ) v. ) 06-408 T ) THE UNITED STATES, ) ) Defendant. ) ____________________________________________) ) R, R, M & C PARTNERS, L.L.C., BY AND ) THROUGH R, R, M & C GROUP, L.P., A ) NOTICE PARTNER, ) ) Plaintiff, ) ) v. ) 06-409 T ) THE UNITED STATES, ) ) Defendant. ) ____________________________________________)

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____________________________________________ ) ) ) ) Plaintiff, ) ) v. ) ) THE UNITED STATES, ) ) Defendant. ) ____________________________________________) ) CWC PARTNERSHIP I, BY AND THROUGH ) TRUST FBO ZACHARY STERN U/A FIFTH G. ) ANDREW STERN AND MARILYN SANDS, ) TRUSTEES, A NOTICE PARTNER, ) ) Plaintiff, ) ) v. ) ) THE UNITED STATES, ) ) Defendant. ) ____________________________________________) ) MICKEY MANAGEMENT, L.P., BY AND ) THROUGH MARILYN SANDS, A NOTICE ) PARTNER, ) ) Plaintiff, ) ) v. ) ) THE UNITED STATES, ) ) Defendant. ) ____________________________________________) R, R, M & C GROUP, L.P., BY AND THROUGH ROBERT SANDS, A NOTICE PARTNER

06-410 T

06-411 T

06-810 T

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____________________________________________ ) ) ) ) Plaintiff, ) ) v. ) ) THE UNITED STATES, ) ) Defendant. ) ____________________________________________) M, L, R & R, BY AND THROUGH RICHARD E. SANDS, TAX MATTERS PARTNER,

06-811 T

PLAINTIFFS' RESPONSE IN OPPOSITION TO UNITED STATES' MOTION FOR LEAVE TO EXCEED PAGE LIMITATIONS

Plaintiffs object to defendant's August 21, 2008 request for leave to file a reply brief in excess of 20 pages.1 Defendant did not comply with the Court's rules in its initial brief filed on July 2, 2008, in which defendant incorporated a prior brief by reference (Def. Mot. Summ. J., Docket # 106, at 9-10) and thereby exceeded the page limitations by eight pages without first requesting the Court's permission to do so. Ct. Fed. Cl. R. 5.3(b)(3). Plaintiffs requested an extension of page limitations for their response brief solely so that they could incorporate by reference a portion of their previous brief (which responded to the brief incorporated by defendant) in accordance with the Court's rules. Plaintiffs kept the remainder of their response brief within the 30-page limit specifically permitted by the Court's rules. Defendant's motion for additional pages should be denied because defendant is using the reply brief to raise new issues in its reply that should have been raised in its initial motion. Enlarging the page limits by 50 percent gives defendant an unfair advantage and prejudices
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Plaintiffs object to defendant's characterization of their objection as "meritless and petty" for the reasons set forth herein. (Def. Mot. 2.)

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plaintiffs because the "new issues" to which defendant responded were issues of which defendant was aware and which should have been raised in defendant's initial brief. Defendant argues that plaintiffs raised new issues by asserting that Treas. Reg. § 1.701-2 was invalid and that plaintiffs had reasonable cause and good faith such that they are not subject to penalties under Section 6662. (Def. Mot. 1.) Contrary to defendant's allegation, plaintiffs raised both of these issues in their original complaints. (Alpha Compl. ¶¶ 61-62, 75; Beta Compl. ¶¶ 51-52, 64; Partners Compl. ¶¶ 50-51, 65; Group Compl. ¶¶ 57-58, 71; CWC Compl. ¶¶ 47-48, 58; Mickey Mgmt. Compl. ¶ 59; M,L,R&R Compl. ¶ 58.) Plaintiffs did not include their assertion that Treas. Reg. § 1.701-2 was invalid in their amended complaints because it was not asserted as a ground for supporting defendant's adjustment to the identity of the partners of Group until defendant included it in Defendant's Motion for Summary Judgment (Docket # 106) filed on July 2, 2008. Nonetheless, based on plaintiffs' original complaints, defendant was well aware that plaintiffs considered Treas. Reg. §1.701-2 invalid prior to filing its brief. Additionally, it is difficult to understand how plaintiffs' assertion of reasonable cause comes as a surprise to defendant since it was raised in each complaint, amended complaint, and the prior round of summary judgment briefing. (Alpha Compl. ¶ 75; Beta Compl. ¶ 64; Partners Compl. ¶ 65; Group Compl. ¶ 71; CWC Compl. ¶ 58; Mickey Mgmt. Compl. ¶ 59; M,L,R&R Compl. ¶ 58; Alpha Am. Compl. ¶ 50; Beta Am. Compl. ¶ 47; Partners Am. Compl. ¶ 45; Group Am. Compl. ¶ 48; CWC Am. Compl. ¶ 38; Mickey Mgmt. Am. Compl. ¶ 47; M,L,R&R Am. Compl. ¶ 47; Pls.' Cross-Mot. Summ. J., Docket # 35, at 43-48.) Moreover, defendant has used the additional pages to make unfounded personal attacks against the partners of plaintiffs and to impugn the character of three professionals, two CPAs and an attorney, who are not parties to this case, with no evidentiary support and by ignoring

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contrary evidence in the record. (Def.'s Reply, Docket # 122, at 6-8, 12; Pls.' Resp. to Def.'s Mot. Summ. J., Docket # 117, Ex. 19, 20 and 28.) Plaintiffs note that based on the new information and arguments included in defendant's 30-page reply brief, they will have to seek leave to file a sur-reply to respond to the issues that should have been raised by defendant in its initial brief, but were first brought up in defendant's reply. For the reasons set forth above, plaintiffs respectfully request the Court to deny defendant's motion to extend the page limitations.

Respectfully submitted this 26th day of August, 2008.

s/ Lewis S. Wiener LEWIS S. WIENER Sutherland Asbill & Brennan LLP 1275 Pennsylvania Avenue, NW Washington, D.C. 20004 202.383.0140 telephone 202.637.3593 facsimile Email: [email protected]

Of Counsel: N. Jerold Cohen Thomas A. Cullinan Joseph M. DePew Julie P. Bowling Sutherland Asbill & Brennan LLP 999 Peachtree Street, NE Atlanta, Georgia 30309 404.853.8000 telephone 404.853.8806 facsimile

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Kent L. Jones Sutherland Asbill & Brennan LLP 1275 Pennsylvania Ave., NW Washington, DC 20004 202.383.0732 telephone 202.637.3593 facsimile Attorneys for Plaintiffs

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