Disdaining TPs In South Dakota

[The Observer]

UNITED STATES OF AMERICA,
Plaintiff,
v.
DUANE L. KUYPER INDIVIDUALLY AND
AS TRUSTEE OF KUYPER FAMILY LIVING TRUST;
MARY L. KUYPER INDIVIDUALLY AND
AS TRUSTEE OF KUYPER FAMILY LIVING TRUST;
KUYPER FAMILY LIVING TRUST; VISION UNLIMITED;
AND RAYMOND EHRMAN, AS TRUSTEE OF VISION UNLIMITED,
Defendants.

Release Date: OCTOBER 23, 2013

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH DAKOTA

MEMORANDUM AND ORDER

In this action the United States seeks to reduce to judgment tax assessments against Duane Kuyper and Kuyper Family Living Trust, and to foreclose related federal tax liens on certain real properties that were transferred by Duane and Mary Kuyper to Kuyper Family Living Trust and then to Vision Unlimited, another trust controlled by the Kuypers. The United States alleges that the trusts are alter egos, nominees, or transferees of Duane Kuyper, and that the true and beneficial owners of the real properties are Duane and Mary Kuyper.

Duane and Mary Kuyper, who are named as defendants in their individual capacities, 1 failed to appear for their noticed depositions on August 27, 2013. As a result, the United States has filed a motion for sanctions pursuant to Federal Rule of Civil Procedure 37(d), which provides in part:

(d) Party's Failure to Attend Its Own Deposition,
Serve Answers to Interrogatories, or Respond to a
Request for Inspection.

(1) In General.

(A) Motion; Grounds for Sanctions. The court where
the action is pending may, on motion, order sanctions
if:

(i) a party or a party's officer, director, or managing
agent mdash; or a person designated under Rule 30(b)(6)
or 31(a)(4) -- fails, after being served with proper
notice, to appear for that person's deposition; or

(ii) a party, after being properly served with interrogatories
under Rule 33 or a request for inspection under Rule
34, fails to serve its answers, objections, or written
response.

(B) Certification. A motion for sanctions for failing
to answer or respond must include a certification
that the movant has in good faith conferred or attempted
to confer with the party failing to act in an effort
to obtain the answer or response without court action.

(2) Unacceptable Excuse for Failing to Act. A failure
described in Rule 37(d)(1)(A) is not excused on the
ground that the discovery sought was objectionable,
unless the party failing to act has a pending motion
for a protective order under Rule 26(c).

(3) Types of Sanctions. Sanctions may include any
of the orders listed in Rule 37(b)(2)(A)(i)-(vi). Instead
of or in addition to these sanctions, the court must
require the party failing to act, the attorney advising
that party, or both to pay the reasonable expenses,
including attorney's fees, caused by the failure, unless
the failure was substantially justified or other circumstances
make an award of expenses unjust.

Fed. R. Civ. P. 37(d).

Under Rule 37(b)(2)(A)(vi), the court is authorized to "render[] a default judgment against the disobedient party," which is the sanction requested by the United States. 2 For the reasons discussed below, I find that the United States' request, which the defendants have not actively opposed, should be granted.

There is no question that the Kuypers, who appear pro se in this action, 3 were served with proper notice of their depositions. On August 5, 2013, the United States sent notices to Duane Kuyper and Mary Kuyper, at their mailing address in Stickney, South Dakota, stating that their depositions were scheduled for August 27, 2013, at the United States Attorney's Office in Sioux Falls, South Dakota, at 9:30 a.m. and 11:30 a.m., respectively (docket no. 83-10). On August 22, 2013, the Kuypers filed a motion to quash the depositions (docket no. 70). 4 The motion was denied that same day, and the court's order was immediately mailed to the Kuypers (docket no. 73).

Plaintiff's counsel waited at the U.S. Attorney's Office with a court reporter from 9:00 a.m. until noon on August 27, 2013, and had the court reporter note that the Kuypers had not appeared as of 11:50 a.m. Declaration of Daniel Applegate (docket no. 83-2), paragraph 9. The Kuypers did not contact Mr. Applegate at any time on August 27, 2013, concerning their absence. Id.

On September 5, 2013, the Kuypers filed a notice of appeal from the order denying their motion to quash (docket no. 77). The United States Court of Appeals for the Eighth Circuit granted a motion to dismiss filed the United States and summarily disposed of the appeal on September 30, 2013 (docket no. 84).

"Default judgment is appropriate where the party against whom the judgment is sought has engaged in 'willful violations of court rules, contumacious conduct, or intentional delays.'" Forsythe v. Hales, 255 F.3d 487, 490 (8th Cir. 2001) (quoting Ackra Direct Mktg. Corp. v. Fingerhut Corp., 86 F.3d 852, 856 (8th Cir. 1996)). "[T]he district court must consider all of the evidence and circumstances that tend to provide a 'complete understanding of the parties' motivations'. . . ." Int'l Bhd. of Elec. Workers, Local Union No. 545 v. Hope Elec. Corp., 380 F.3d 1084, 1106 (8th Cir. 2004) (quoting Smith v. Smith, 145 F.3d 335, 344 (5th Cir.1998)).

The Kuypers' intentional failure to appear for their depositions, and subsequent filing an unauthorized appeal, are just the latest in a series of acts designed to delay and obstruct this judicial proceeding, which has been pending since December 1, 2011. Some of those acts are recounted below:

º On December 29, 2011, the Kuypers (together with
a non-party, Raymond Ehrman) answered and filed a
third-party complaint against James Daugherty, Brendan
Johnson, Daniel Applegate, the United States District
Court for the District of South Dakota, the Treasury
Department, the Internal Revenue Service, the Office
of the Inspector General, and Congress (docket no.
9). 5 In this rambling, 80-page pleading (including
attachments), the Kuypers alleged, among other things,
that the third-party defendants were guilty of fraud
and extortion because they were attempting to collect
a federal income tax that is enforceable only in
the District of Columbia. The Kuypers also moved
for a change of venue to Washington, D. C. After
all judges from the District of South Dakota recused
themselves, the undersigned Senior United States
District Judge for the District of Nebraska was designated
and assigned to preside over this matter (docket
no. 21), to which the Kuypers took exception (docket
no. 22). In a memorandum and order entered on February
29, 2012, I struck the third-party complaint pursuant
to Fed. R. Civ. P. 14(a)(4) and, except to the extent
that the Kuypers had entered a general denial, struck
the answer pursuant to Fed. R. Civ. P. 12(f) for
pleading insufficient defenses and redundant, immaterial,
impertinent, and scandalous matter; in addition,
I denied the Kuypers' motion for change of venue
and their objections to the case reassignment (docket
no. 24).

º On March 6, 2012, the Kuypers, despite having already
answered, filed a motion to dismiss the complaint
and reiterated their frivolous contention that the
federal income tax is not collectible outside of
the District of Columbia (docket no. 25). The motion
to dismiss was denied on April 2, 2012 (docket no.
29).

º On April 25, 2012, the Kuypers "concurred with" a
motion to dismiss filed by Raymond Ehrman as Trustee
of Vision Unlimited (docket no. 35). It was once
again claimed, among other things, that the federal
income tax extends only to the District of Columbia. This motion to dismiss was denied on May 29, 2012,
in a detailed memorandum opinion (docket no. 40). 6
in a detailed memorandum opinion (docket no. 40). 6

º On June 13, 2012, the Kuypers answered an amended
complaint 7 and also counterclaimed for damages (docket
no. 41). This pleading repeated and expanded upon
many of the allegations that were contained in the
Kuypers' answer to the original complaint and that
had been ordered stricken; "counterclaims" were also
alleged against Mr. Daugherty and myself. After the
United States filed a motion to strike and to dismiss
this pleading (docket no. 42), the Kuypers filed
an amended answer and counterclaim that included
additional allegations but did not correct any of
the pleading defects of the previous filing (docket
no. 43). The United States then filed another motion
to strike and to dismiss (docket no. 44).

º On August 24, 2012, the Kuypers filed a motion to
require the United States to respond to the counterclaim (docket no. 45). On October 3, 2012, I dismissed
the counterclaim and struck large portions of the
answer (docket no. 47).

º On November 2, 2012, the Kuypers filed an appeal
from the court's October 3rd order (docket no. 48).
The appeal was dismissed for lack of jurisdiction
on December 17, 2012 (docket no. 54).

By refusing to participate in discovery, the Kuypers have again demonstrated their disdain for the United States and their contempt for this judicial proceeding. They have provided no excuse for their behavior and have given no indication that they have a meritorious defense. Considering all of the circumstances, and finding no good reason to prolong the action further by imposing a lesser sanction, I conclude that the Kuypers should be declared in default. Also, because all other defendants are in default for failure to plead or otherwise defend the action, I conclude that a final judgment can and should be entered.

"A default judgment entered by the court binds the party facing the default as having admitted all of the well pleaded allegations in the plaintiff's complaint." Angelo Iafrate Const., LLC v. Potashnick Const., Inc., 370 F.3d 715, 721-22 (8th Cir. 2004). Because the amended complaint only sets forth the accrued tax liabilities of Duane Kuyper and Kuyper Family Living Trust through December 1, 2011, the United States should file an affidavit computing the amounts currently due. The United States will also be directed to provide the court with a proposed final judgment, which may be emailed to my chambers at kopf@ned.uscourts.gov.

I caution the defendants that this memorandum and order does not constitute a judgment and cannot be appealed. Any appeal will need to wait until after a final judgment has been entered by the court.

Accordingly,

IT IS ORDERED:

1. Plaintiff's motion for sanctions (docket no. 83)
is granted and, pursuant to Federal Rule of Civil
Procedure 37(d), default is entered against Defendants
Duane L. Kuyper and Mary L. Kuyper in their individual
capacities.

2. Plaintiff is directed to file an affidavit showing
computations of accrued tax liabilities and to provide
the court with a proposed final judgment which, upon
approval and filing by the court, will conclude this
action.

October 23, 2013

By the Court:

Richard G. Kopf
Senior United States District
Judge

FOOTNOTES:

/1/ Default has been entered against all other defendants for failure to plead or otherwise defend the action. On April 6, 2012, the clerk of the court entered default against Kuyper Family Living Trust (docket no. 33). On March 30, 2013, the clerk of the court entered default against Vision Unlimited, Raymond Ehrman as Trustee of Vision Unlimited, and Duane Kuyper and Mary Kuyper as Trustees of Kuyper Family Living Trust (docket no. 56).

/2/ Alternatively, the United States requests that the defendants be ordered to appear for depositions, to produce documents that have been requested by the United States, and to provide satisfactory answers to previously served interrogatories.

/3/ "A pro se litigant is bound by the litigation rules as is a lawyer, particularly here with the fulfilling of simple requirements of discovery." Lindstedt v. City of Granby, 238 F.3d 933, 937 (8th Cir. 2000).

/4/ The Kuypers also requested the court to prohibit any further discovery by the United States and to dismiss the complaint.

/5/ Mr. Daugherty is an IRS agent. Mr. Johnson is United States Attorney for the District of South Dakota. Mr. Applegate is an Assistant United States Attorney who appears as counsel of record for the United States in this matter.

/6/ Subsequently, the trustee's motion to dismiss was ordered stricken as an improper pro se filing (docket no. 47).

/7/ The United States was granted leave to amend to substitute Mr. Ehrman as trustee for a previously named defendant (docket no. 29).

[The Observer]

UNITED STATES OF AMERICA,
Plaintiff,
v.
DUANE L. KUYPER INDIVIDUALLY AND
AS TRUSTEE OF KUYPER FAMILY LIVING TRUST;
MARY L. KUYPER INDIVIDUALLY AND
AS TRUSTEE OF KUYPER FAMILY LIVING TRUST;
KUYPER FAMILY LIVING TRUST;
VISION UNLIMITED; AND
RAYMOND EHRMAN,
AS TRUSTEE OF VISION UNLIMITED,
Defendants.

Release Date: NOVEMBER 04, 2013


IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH DAKOTA

JUDGMENT

The Court entered defaults against Duane Kuyper and Mary Kuyper, in their individual capacities, on October 23, 2013 (Docket No. 85). Previously, the Clerk of the Court entered defaults against Kuyper Family Living Trust on April 6, 2012 (Docket No. 33), and Vision Unlimited, Raymond Ehrman as Trustee of Vision Unlimited, and Duane Kuyper and Mary Kuyper, as Trustees of Kuyper Family Living Trust, on March 30, 2013 (Docket No. 56). Because defaults have been entered against all of the defendants, each "is deemed to have admitted all well pleaded factual allegations in the complaint." Acuity Ins. Co. v. Jones, No. 4:11-CV-2041-AGF, 2013 WL 1192764 at *1 (E.D. Mo. Mar. 22, 2013)(citing Marshall v. Baggett, 616 F.3d 849, 852 (8th Cir. 2010)).

In accordance with the Memorandum and Order issued on October 23, 2013 (Docket No. 85), and the defaults entered by the Clerk of the Court, and based on the Affidavit of IRS Revenue Officer Advisor Deborah A. Olson (Docket No. 87), judgment shall be entered in favor of the United States and against Duane L. Kuyper, individually and as Trustee of Kuyper Family Living Trust, Mary Kuyper, individually and as Trustee of Kuyper Family Living Trust, Kuyper Family Living Trust, Vision Unlimited, and Raymond Ehrman, as Trustee of Vision Unlimited, as set forth below. Accordingly,

IT IS HEREBY ORDERED that judgment on Count I of the United States' complaint is entered in favor of the United States and against Duane L. Kuyper (individually) in the amount of $ 240,170.42 (representing his federal income tax liabilities for the tax years ending December 31, 2000 and December 31, 2001), plus statutory additions that have and will accrue thereon from October 28, 2013, according to law;

IT IS FURTHER ORDERED that judgment on Count II of the United States' complaint is entered in favor of the United States and against the Kuyper Family Living Trust in the amount of $ 704,804.83 (representing its federal income tax liabilities for the tax years ending December 31, 1997, December 31, 1998, December 31, 1999, December 31, 2000, and December 31, 2001), plus statutory additions that have and will accrue thereon from October 28, 2013, according to law;

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that judgment on Counts III and IV of the United States' complaint shall be entered in favor of the United States and against all defendants as follows:

A. The federal tax liens that arose from the federal income tax assessments against Duane L. Kuyper for 2000 and 2001, and the federal tax liens that arose from the federal income tax assessments against Kuyper Family Living Trust for 1997, 1998, 1999, 2000, and 2001, are valid and subsisting liens that attached at the time of the assessments to all property and rights to property held by Duane L. Kuyper and Kuyper Family Living Trust, and to property held by Kuyper Family Living Trust and Vision Unlimited as the nominees and/or alter egos of Duane L. Kuyper and Kuyper Family Living Trust, respectively, including the real properties located in Aurora County, South Dakota, described as follows (the "Properties"):

Parcel One

Lot "B" of Block Thirteen (13) of Milwaukee Land
Company's Second Addition to Stickney, Aurora County,
South Dakota.

Parcel Two

Lot One "A" (1A), of Block Thirteen (13), in the
Milwaukee Land Company's Second Addition to Stickney,
Aurora County, South Dakota.

Parcel Three

The West Seventy-five feet (W. 75') of Lot One (1),
in Block Thirteen (13) of the Second Addition to
the Town of Stickney, Aurora County, South Dakota.

B. The federal tax liens referred to above and that attached to the Properties are hereby foreclosed against the Properties. The Properties shall be sold subject to further order of the Court. A separate order of sale enforcing this Judgment against the Properties will issue.

IT IS FURTHER ORDERED that the Clerk of the Court shall enter this judgment forthwith.

ORDERED this 4th day of November, 2013.

By the Court:

Richard G. Kopf
Senior United States
District Judge