US v. Melick 10-CV-308-JD 10/06/11
UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEW HAMPSHIRE
United States
v. Civil No. lO-cv-308-JD
Opinion No. 2011 DNH 163
C. Gregory Melick
ORDER ON PETITION FOR CIVIL CONTEMPT
The government has filed a petition for civil contempt (Doc
no. 20) alleging that C. Gregory Melick, a/k/a Charles Gregory
Melick, has failed to comply with the court's August 6, 2010,
order, (Doc. no. 16), requiring him to comply with the Internal
Revenue Service ("IRS") summons that was the subject of the
government's petition to enforce filed on May 11, 2010. (Doc. no
1). Melick was ordered to appear at the Internal Revenue Office
at 80 Daniel Street, Portsmouth, New Hampshire, on August 20,
2010, at 9:30 a.m., before Revenue Officer David Kalinowski or
any other authorized Revenue Officer of the IRS, to give
testimony and produce all books and records in his possession or
control required and called for by the terms of the summons.1
See Attachment A.
1The court has jurisdiction to compel a taxpayer to comply
with an IRS summons under 26 U.S.C. § 7402(b) and
26 U.S.C.
§ 7604(a), and enforcement authority under
26 U.S.C. § 7604(b).
Background
IRS Revenue Agent Sonia J. Cryan conducted an investigation
of Melick's tax liability for 2003. The IRS seeks Melick's
testimony and documents within his control in connection with the
investigation. On February 26, 2010, Cryan issued an IRS summons
ordering C. Gregory Melick to appear at the IRS's office in
Laconia, New Hampshire, on March 16, 2010, to testify and produce
all documents or records in his possession or control regarding
"assets, liabilities, or accounts held in the taxpayer's name or
for the taxpayer's benefit which the taxpayer wholly or partially
owns, or in which the taxpayer has a security interest" for the
period from September 1, 2009, to February 25, 2010. (Doc. no. 1,
Ex. 2). Cryan served the summons on Melick on March 2, by taping
it to his apartment door in a secured, confidential envelope.
Melick failed to appear pursuant to the summons.
On May 11, 2010, the government filed a petition in this
court to enforce the IRS summons. On May 17, this court issued
an order for Melick to show cause why the petition should not be
granted and scheduled a hearing for July 7, 2010, before the
magistrate judge. The order gave Melick ten days to file a
written response supported by affidavit and to file any motions.
The order provided that the court would consider "[o]nly those
issues raised by motion or brought into controversy by the
2
responsive pleadings and supported by affidavit . . . " and that
"any uncontested allegations in the petition [would] be
considered as admitted." On May 24, a deputy sheriff with the
Carroll County Sheriff's Office served Melick with the May 17
show cause order by handing it to him, along with the IRS
petition and exhibits, at his Tamworth, New Hampshire, home.
In response to the order, on June 2 Melick filed a motion to
dismiss under Rule 1 2 (b), alleging, inter alia, lack of personal
and subject matter jurisdiction. He also claimed that process
and service of process were inadequate because the summons bore
neither the signature of the Clerk of Court nor the court seal.
The government objected.
On July 6, 2010, Melick returned the show cause order,
petition, and exhibits to the court. On the first page of the
order, he scrawled that the order was refused for insufficient
process, lack of subject matter jurisdiction, lack of personal
jurisdiction, and failure to state a claim.
Melick did not appear at the July 7, 2010, show cause
hearing. On July 6, he filed a second motion to dismiss, again
challenging the court's jurisdiction and asserting the same
arguments he had made in his first motion to dismiss. The
government again objected.
3
On July 8, 2010, the magistrate judge issued a report and
recommendation addressing the IRS summons and Melick's June 2
motion to dismiss.2 The magistrate judge found that the
government had satisfied the factors set forth in United States
v. Powell, 379 U.S. 48, 57-58 (1964), and that Melick had not met
his burden of showing that the summons was invalid or that
enforcement would be an abuse of the court's process. See
Powell,
379 U.S. at 58. The magistrate judge recommended that
Melick be ordered to obey the summons and that his June 2 motion
to dismiss be denied for the reasons set forth in the
government's objection. The magistrate judge also recommended
that the government be awarded its costs. The court mailed the
report and recommendation to Melick at his home address.
On July 12, 2010, Melick filed a notice of a change of
address, informing the court that his mailing address was P.O.
Box 422, Chocorua, New Hampshire. Melick stated that he might
return mail addressed to the wrong party or sent to a different
address. The court resent the magistrate judge's report and
recommendation to the post office box address.
2Melick's July 6 motion to dismiss was not docketed until
July 9, 2010, one day after the magistrate judge's report and
recommendation issued.
4
On July 22, 2010, Melick filed a second notice of change of
address, stating that his correct mailing address was "Charles
Gregory Melick, Sui Juris, c/o P.O. Box 422, Chocorua [03817-
0422], New Hampshire, U.S.A." (Doc. no. 12). Melick again said
that mail addressed to another name or to an address other than
the one given would not be "received or accepted" by him. Id.3
On July 30, the court sent Melick the report and recommendation
for the third time. The court noted that Melick had returned
mail sent to both his post office box and his street address and
that the court had called the U.S. Post Office to confirm his
address.4
On August 5, 2010, Melick filed a third notice of change of
address, in which he provided a new mailing address, a post
office box in North Conway, New Hampshire. (Doc. no. 15). The
3A 1 s o on that date, the defendant sent a letter purporting
to notify the court that the government had defaulted on its
claims and thus that the court had "substantial grounds to
dismiss the motion and vacate the order. . . ." (Doc. no. 13).
In his response on July 30, the Chief Deputy Clerk informed
Melick that the court would not act upon his letter request
because it was not in the form of a formal pleading, as required
by the Federal Rules of Civil Procedure and local rules.
4Three days after the magistrate judge's report and
recommendation was approved, the July 30 copy of the report and
recommendation was returned to the court with the "Refused"
notation checked.
5
court sent the report and recommendation to the North Conway
address.
On August 6, 2010, the court granted the government's
petition to enforce its summons and denied both of Melick's
motions to dismiss. The court observed that neither party had
filed a timely objection to the magistrate judge's report and
recommendation, concerning Melick's June 2 motion to dismiss and
the government's petition and, therefore, approved the
recommended decision without further analysis. See PowerShare,
Inc. v. Svntel, Inc., 597 F.3d 10, 14 (1st Cir. 2010). The court
denied Melick's July 6, 2010, motion to dismiss, holding that the
court had jurisdiction to enforce the IRS summons, awarded costs
to the government, and ordered Melick to appear before an
authorized Revenue Officer of the IRS at the IRS's Portsmouth,
New Hampshire, office on August 20, 2010, at 9:30 a.m., to give
testimony and produce the books and records called for by the
February 26, 2010, summons. The order directed the United States
Marshal or his deputy to deliver service to Melick in hand and to
file a return of service with the court. Melick was personally
served on August 19, in accordance with the court's order.
Melick failed to appear at the IRS office on August 20,
2010, in response to the court's order. Three hours after his
ordered appointment, Melick left a telephone message with the
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Taxpayer Walk-in Service that he would need to reschedule his
appointment. On September 6, 2010, Melick wrote a letter to the
IRS indicating that he had hired an "IRS Enrolled Agent Tax
Preparer" to "compose a completed report of pertinent financial
records for submission to the Internal Revenue Service" for the
2003 tax year. He estimated that he would be able to provide the
2003 information within 30 days. Revenue Officer David
Kalinowski called Melick on September 13 to discuss his planned
compliance with the summons. Melick told him that he had hired
an accountant to prepare a substitute tax return for 2003. The
IRS did not receive any responsive paperwork with regard to
Melick's 2003 tax liability.
On November 17 and 23, 2010, Kalinowski attempted to contact
Melick by telephone. On both occasions, he received no answer
and left messages on Melick's answering machine asking him to
return the call. In his November 23 message, Kalinowski
indicated specifically that he was following up on Melick's
promise to provide the information required by the summons,
relative to his 2003 federal tax liability, and asked Melick to
return his call by the close of business the next day. Melick
did not return Kalinowski's calls.
On December 16, 2010, the government filed a motion to hold
Melick in civil contempt of the August 6, 2010, order and served
7
a copy of the motion and accompanying affidavit on Melick via
first-class, postage-prepaid mail at his North Conway address.
Melick did not object to the government's motion. On January 14,
2011, the court ordered Melick to appear for a show cause hearing
on February 14, 2011. In its order, the court warned Melick that
if he did not appear for the hearing, a warrant would issue for
his arrest. Again, the order directed the United States Marshal
to serve on Melick in hand a copy of the order and the
government's petition and the accompanying exhibit and to file a
return of service with the court.
Deputy United States Marshal Paul Schmieder personally
served Melick on February 3, 2011, in the presence of Carroll
County Sheriff Christopher Conley. Melick refused to take
process when it was handed to him, so Schmieder dropped the
process at Melick's feet. On the return of service filed with
the court, Schmieder noted that Melick had "stated it was not a
lawful service because there was no court stamp on it and [it]
did not address him by his legal name." (Doc. no. 23).
On February 11, 2011, Melick mailed a 14-page "warning
notice" to the district court in which he claimed that the court
and judge were "imposing provisions of a contract counter to
public morals." He attached a copy of the court's January 14,
2011, show cause order, which is a clear indication that he was
aware of the order. On February 14, Sheriff Conley wrote a
letter to the court in which he stated that he had witnessed the
"attempted service" of the January 14, 2011, show cause order.
(Doc. no. 27). Sheriff Conley attached the show cause order and
a number of affidavits to his letter, including an affidavit from
Melick.
In the affidavit, Melick acknowledged that he had agreed to
meet Schmieder at the Carroll County Sheriff's Office on February
3. Melick stated that when Schmieder arrived, Melick had
directed him to hand the summons to Sheriff Conley for
inspection. Melick stated that the sheriff had pointed out
several "deficiencies" with the process.5 Melick then told
Schmieder that he declined to be served. Melick stated that he
had watched Schmieder throw the process at his feet but "made no
move towards [it]."
Melick failed to appear for the February 14, 2011, show
cause hearing, as ordered. The court found and ruled that the
February 3 service of process constituted valid personal service
of the show cause order on Melick and that he had been duly
notified to appear for the February 14 hearing. The court issued
5These purported deficiencies were that the document
addressed Melick by the wrong name, did not bear a court seal or
clerk's signature, and had a return date of fewer than fourteen
days.
9
a bench warrant for Melick's arrest and detention and ordered
that Melick be brought before a judge in this court for a show
cause hearing on the government's petition for civil contempt.
Melick was arrested on October 6, 2011.
Discussion
A. Service of Process
Melick claimed that the service of process of the January 14
order to show cause was insufficient because the document
addressed Melick by the wrong name, did not bear a court seal or
the clerk's signature, and had a return date of fewer than
fourteen days. These arguments are unavailing.
1. Wrong Party
In his affidavit filed with Sheriff Conley's letter, Melick
did not elaborate upon his claim that the process addressed him
by the wrong name. The documents referred to Melick as "C.
Gregory Melick." Although Melick's full name is Charles Gregory
Melick, he was aware that "C. Gregory Melick" referred to him, as
evidenced by the fact that he used the same name in his first
motion to dismiss. (Doc. no. 4). To the extent that Melick would
renew his argument, made in his first motion to dismiss, that the
10
summons showed his name typed in all capital letters and thus
referred to an unknown "C. GREGORY MELICK," such an argument is
frivolous. See, e.g.. Ford v. Prvor, 552 F.3d 1174, 1179 (10th
Cir. 2008) .
2. Lack of Court Seal or Clerk's Signature
Melick argues that he did not receive adequate service of
process because the show cause order lacked a court seal and the
signature of the clerk of court. Although a court-issued summons
would have the court seal and signature of the clerk of court,
see Federal Rule of Civil Procedure 4(a)(1)(F)&(G), that was
neither necessary nor required for purposes of the show cause
order that was issued in this case.
The Federal Rules of Civil Procedure apply to IRS summons
proceedings, but the court retains the flexibility to "'limit the
application of the rules in a summons proceeding . . . so long as
the rights of the party summoned are protected and an adversary
hearing, if requested is made available.'" United States v.
Elmes, 532 F.3d 1138, 1142 (11th Cir. 2008) (quoting Donaldson v.
United States,
400 U.S. 517, 528-29 (1971)); see also Fed. R.
Civ. P. 81(a)(3). Service of an IRS summons notifies the
taxpayer "of the possibility that an action would later be
initiated to enforce that summons." Elmes,
532 F.3d at 1144.
11
"Under these circumstances, personal service of the district
court's order to show cause and the petition to enforce [is]
adequate to notify the [taxpayer] of the proceedings against him,
and his rights [are] protected by the availability of an
adversary hearing." Id. at 1144-45.
The same circumstances that existed in the Elmes case exist
in this case. Melick was served with an IRS summons and then was
served with the show cause order and the petition to enforce the
IRS summons. A hearing was scheduled to give him an opportunity
to contest the proceeding against him. Therefore, the "court was
free to modify the required procedure under Rule 81(a)(3) by
directing service upon [Melick] of only the show cause order and
the petition." Id. at 1145. Melick was properly served, and he
chose to ignore the order of the court and to forego the
opportunity for a hearing.
3. Return date
There is no requirement under the Federal Rules of Civil
Procedure that a summons or show cause order be delivered at
least fourteen days before the party is scheduled to appear at a
show cause hearing.6
6Melick may be referring to the state law requirement that
writs be served fourteen days before the return day to which they
12
4. Method of Service
Melick appears to believe that he was not served with the
show cause order because the Deputy United States Marshal
Schmieder dropped it at his feet and Melick made no move to
retrieve it. As the court previously stated in its February 15,
2011, procedural order, the delivery procedure constituted valid
personal service of the show cause order. See, e.g., Novak v.
World Bank, 703 F.2d 1305, 1314 n.14 (D.C. Cir. 1982)("When a
person refuses to accept service, service may be effected by
leaving the papers at a location, such as a table or on the
floor, near that person.").
B. Civil Contempt
The government requests that Melick be held in civil
contempt of court and incarcerated until such time as he complies
with the court's August 6, 2010, enforcement order.
Civil contempt may be imposed to compel compliance with a
court order. United States v. Saccoccia, 433 F.3d 19, 27 (1st
Cir. 2005). The moving party must prove civil contempt by clear
and convincing evidence. AccuSoft Corp. v. Palo,
237 F.3d 31, 47
(1st Cir. 2001) (citations and internal quotation marks
are returnable. See N.H.R.S.A. 510:1. This procedural
requirement does not apply in federal court.
13
omitted).7 "In addition, contempt may only be established if the
order allegedly violated is clear and unambiguous." Id.
(citations and internal quotation marks omitted). " [A]ny
ambiguities or uncertainties in such a court order must be read
in a light favorable to the person charged with contempt."
Islamic Inv. Co. of the Gulf (Bah.) Ltd. v. Harper (In re Grand
Jury Investigation),
545 F.3d 21, 25 (1st Cir. 2008). The
validity of the underlying order is assumed, however; the legal
or factual basis of the order is not open for reconsideration in
a contempt proceeding. United States v. Lawn Builders of New
Eng., Inc.,
856 F.2d 388, 395 (1st Cir. 1988). Where, as here,
"the court's purpose is to coerce compliance, the available
remedies include imprisonment of the contemnor until he purges
himself of contempt by complying with the order. . . ." G .& C .
Merriam Co. v. Webster Dictionary Co.,
639 F.2d 29, 41 n. 13
(citations omitted).
Both the IRS and the court have provided Melick with full
7In many cases, civil contempt can be established without
the need for an evidentiary hearing. In civil contempt
proceedings, a party has a right to an evidentiary hearing only
if, and to the extent that, genuine issues of material fact
exist. Goya Foods, Inc. v. Wallack Mqmt. Co., 290 F.3d 63, 77
(1st Cir. 2002); see also United States v. Winter,
70 F.3d 655,
661 (1st Cir. 1995)("Generally, a court may impose civil contempt
sanctions pursuant to the minimal procedures of notice and an
opportunity to be heard; the reason for this is that the civil
contemnor may avoid the sanction by obeying the court's order.").
14
due process and an opportunity to be heard.
C. Finding of Civil Contempt
The court, after a hearing held today, finds by clear and
convincing evidence that Charles Gregory Melick has willfully
refused, without just cause, to comply with the order of this
court issued on August 6, 2010, requiring him to obey the IRS
summons referred to hereinabove and attached hereto as
"Attachment A."
Therefore, Charles Gregory Melick is found to be in civil
contempt of the court's order issued on August 6, 2010.
At today's hearing Charles Gregory Melick agreed to comply
with the August 6, 2010, order and produce the documents required
by the February 26, 2010, IRS summons, without prejudice to
raising specific issues of privilege with respect to specific
documents individually.
He shall report to this courthouse (Rudman Courthouse, 55
Pleasant Street, Concord, New Hampshire, Courtroom 1, Attorney
Conference Room) on October 20, 2011, at 10:00 a.m., with the
documents required by the IRS summons and to produce said
documents to the IRS officer.
Failure to comply with this order will result in issuance of
a bench warrant for the arrest of Charles Gregory Melick to be
15
brought before this court to show cause why he did not appear in
conformity with this order.
Failure to appear will also result in a charge of criminal
contempt and issuance of an arrest warrant for Charles Gregory
Melick for failure to comply with this order.
A copy of this order shall be served in hand on Melick by
the United States Marshal and a return of service shall be filed
with the court.
SO ORDERED.
d ClWto.(
I
t
\ Jjoseph A. DiClerico, Jrt
United States District Judge
October 6, 2011
Attachment
cc: Gretchen Leah Witt, Esq.
C. Gregory Melick, pro se
Michael lacopino, Esq.
16
Case 1:10-cv-00308-JD Document 1-2 Filed 05/11/10 Page 1 of 2
Summons ATTACHMENT A
Collection Information Statement
In the matter of C GREGORY MELICK. PO BOX 422. CHOCORUA. NH 03817-0422________________________________
Internal Revenue Service (Identify Division) SMALL BUSINESS/SELF EMPLOYED____________________________________
Industry/Area (Identify by num ber or name) SB/SE AREA 1 (21)_____________________________________________________
Periods: Form 1040 for the calendar period ending December 31.2003________________________________________________
The Commissioner of Internal Revenue
To: C GREGORY MEI IC K_____________________________________________________________________________________________
At: 11 RUNNELLS HALL ROAD. CHOCORUA. NH 03817__________________________________________________________
You are hereby summoned and required to appear before SONIA J. CRYAN. an Internal Revenue Sen/ice (IRS) officer, and/or his or her designee, to give
testimony and to bring for examination the following Information related to the collection of the tax liability of the person Identified above for the periods shown:
All documents and records you possess or control regarding assets, liabilities, or accounts held In the taxpayer’s name or for the taxpayer's benefit which the
taxpayer wholly or partially owns, or in which the taxpayer has a security interest. These records and documents include but are not limited to: all bank
statements, checkbooks, canceled checks, saving account passbooks, records or certificates of deposit for the period:
From 09/01/2009 To 02/25/2010
Also include all current vehicle registration certificates, deeds or contracts regarding real property, stocks and bonds, accounts, notes and judgments receivable,
and all life or health Insurance policies.
IRS will use this information to prepare a Collection Information Statement. W e have attached a blank statement to guide you In producing the necessary
documents and records.
Do not write in this space
Business address and telephone number of IRS officer before whom you are to appear:
719 N. MAIN ST.. LACONIA. NH 03246 (6031527-2007_____________________
Place and tim e for appearance: At 719 N. MAIN ST.. LACONIA. NH 03246
on the 16th dav of March . 2010 at 9:00 o'clock
o'' a m.
Issued under authority of the Internal Revenue Code this 26th day of February ■ 2010
Department of the Treasury
Internal Revenue Service SOM IA J. CRYAN 75(iWA REVENUE OFFICER
Signature of Issuing officer Title
www.irs.gov
Form 6637 (Rev.10-2006)
Catalog Number 25000Q
Signature of approving officer (if applicable) Title
Exhibit B Original -- to be kept by IRS
