United States District Court, M.D. North Carolina
CHARLES B. ERWIN, Plaintiff,
UNITED STATES OF AMERICA, Defendant and Third Party Plaintiff,
STEPHEN C. COGGIN, WILLIAM G. PINTNER, JAMES BARRY LIGHT, and HARTSELL B. LIGHT, JR., Third Party. Defendants.
MEMORANDUM OPINION AND ORDER
JAMES A. BEATY, District Judge.
This matter is before the Court on a Motion for Summary Judgment [Doc. #154] filed by Defendant and Third Party Plaintiff United States ("United States") against Third Party Defendant William G. Pintner ("Pintner"). In its Third Party Complaint [Doc. #9], the United States alleged that on or about September 8, 2004, the United States assessed a penalty in the amount of $252, 678.36 against Pintner for unpaid federal employer withholding taxes of G.C. Affordable Dining ("GCAD") for the tax quarters ending December 31, 1998, March 31, 1999, June 30, 1999, and September 30, 1999. Pursuant to the Internal Revenue Code, 26 U.S.C. § 6672, the United States claimed that Pintner is personally liable for these tax deficiencies associated with GCAD. The United States asserted that Pintner was a responsible person under § 6672 who willfully failed to pay the employer withholding taxes for periods of the years 1998 and 1999. Pintner denied that he was a responsible party and that he willfully failed to pay the taxes at issue. For the reasons discussed below, the Court will grant the United States' Motion for Summary Judgment.
I. FACTUAL AND PROCEDURAL BACKGROUND
The undisputed facts are as follows. In June 1994, Charles Erwin, Stephen Coggin, and two other businessmen created GCAD to serve as a franchisee of Golden Corral Franchising System, Inc. ("Golden Corral"). GCAD operated five Golden Corral restaurants. Although the company realized limited early profits, GCAD began struggling financially soon after its formation. In the beginning of 1997, the owners decided to fire one of the company's two day-to-day managers. After consolidating the day-to-day operations under the remaining manager, the business continued to experience difficulties. In 1998, the owners of GCAD decided to fire the day-to-day manager and hired Pintner as a replacement.
Pintner had an extensive background in managing Golden Corral restaurants. He had worked for Golden Corral beginning in 1984, where he eventually attained the position of Regional Vice President. In that role he oversaw the operations of 125 Golden Corral restaurants. In 1993, he left Golden Corral and created a Golden Corral franchisee that owned and operated approximately 62 restaurants. Pintner served as the President and Chief Executive Officer with that franchisee.
Pintner joined GCAD as the business's Vice President of Operations. In that position, Pintner managed the business and was tasked with improving GCAD's restaurants' performance. As Pintner stated in his deposition, some people may have perceived Pintner as actually being a partner, CEO, or president "because [he] was running the thing [GCAD]." (Pintner Dep. [Doc. #161-1], at 45:14.) Pintner coordinated closely with Erwin regarding all aspects of the business: "I spoke to Charlie [Erwin] every day about sales and... called him at least once or twice a day to let him know how business was, how things were going, how our new managers were doing, how our stores were operating, things of that nature." (Id. at 33:23-34:2.)
In overseeing GCAD's operations, Pintner negotiated advertising contracts for GCAD and worked closely with Erwin and Coggin in creating a payment plan for overdue invoices with Lopresti, GCAD's main grocery supplier. Pintner had authority to hire and fire employees, as well as authority to write checks for GCAD. One of Pintner's initial recommendations to help turn around the business was hiring James Barry Light and Hartsell B. Light, Jr. ("the Light Brothers") to manage the business's accounting and payroll needs. Pintner worked closely with the Light Brothers in his role overseeing GCAD's operations. Pintner received and reviewed bills and invoices before forwarding them on to the Light Brothers. At some point, a signature stamp of Pintner's signature was made and given to the Light Brothers. The Light Brothers had the authority to use the stamp on company checks and on tax returns. Pintner testified that "[t]hey could use my stamp on anything they wanted to.... I didn't tell them not to, but I didn't tell them to do it, either. I knew they were using that facsimile for checks and for whatever needed my signature." (Id. at 65:16-25.)
Pintner was aware of GCAD's financial difficulties from the beginning of his employment with GCAD. According to Pintner, the business's cash flow "started out behind, and it just stayed there." (Id. at 57:6-7.) Pintner was aware of GCAD falling behind on rent payments as well as payments to other vendors. Indeed, vendors would often contact him directly to demand payment. Although Pintner stated he never looked at GCAD's tax returns, he did review individual stores' profits and losses statements which indicated that the restaurants were losing money. Pintner was aware throughout his tenure with GCAD that the company generally did not have enough money to cover outstanding obligations and that Erwin and Coggin frequently had to make capital contributions to GCAD. Shortly after Pintner joined GCAD, the company began failing to pay its federal employee withholding taxes. GCAD did not pay its employee withholding taxes for the fourth quarter of 1998 through the third quarter of 1999.
The United States assessed a tax penalty against Pintner in September, 2004, for past due withholding taxes of GCAD in the amount of $252, 678.36. On January 20, 2006, Erwin filed a Complaint [Doc. #1] against the United States in response to the United States' assessment of a tax penalty against him for GCAD's unpaid employer withholding taxes. In its Answer [Doc. #4], the United States counterclaimed pursuant to 26 U.S.C. § 6672, seeking to hold Erwin personally liable for GCAD's unpaid tax liabilities. On April 21, 2006, the United States filed a Third Party Complaint [Doc. #9] against Coggin, the Light Brothers, and Pintner, asserting that each party was liable for unpaid taxes of GCAD. On June 13, 2014, the United States filed a Motion for Summary Judgment [Doc. #154] against Pintner. The Motion is fully briefed and ripe for adjudication.
II. LEGAL STANDARD
Pursuant to Rule 56 of the Federal Rules of Civil Procedure, a court shall grant summary judgment when there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Zahodnick v. Int'l Bus. Machs. Corp., 135 F.3d 911, 913 (4th Cir. 1997). The party seeking summary judgment bears the burden of initially coming forward and demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Once the moving party has met its burden, the non-moving party must then affirmatively demonstrate the presence of a genuine issue of material fact which requires trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1349, 89 L.Ed.2d 538 (1986).
When making a summary judgment determination, the court must view the evidence and all justifiable inferences from the evidence in the light most favorable to the non-moving party. Zahodnick, 135 F.3d at 913. However, the party opposing summary judgment may not rest on mere allegations or denials, and the court need not consider "unsupported assertions" or "self-serving opinions without objective corroboration." Evans v. Techs. Applications & Serv. Co., 80 F.3d 954, 962 (4th Cir. 1996); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The court may not make credibility determinations, and "must disregard all evidence favorable to the moving party... that a jury would not be required to believe." Edell & Assocs., P.C. v. Law Offices of Peter G. Angelos, 264 F.3d 424, 436 (4th Cir. 2001).
Federal law requires employers to withhold social security and federal income taxes from their employees' wages. 26 U.S.C. §§ 3102(a), 3402(a); Erwin v. United States, 591 F.3d 313, 319 (4th Cir. 2010). Because the employer effectively holds these amounts in trust for the federal government, such taxes are often called "trust fund taxes." 26 U.S.C. § 7501(a); Erwin, 591 F.3d at 319. When an employer fails to remit these employer withholding taxes, the Internal Revenue Code holds certain ...