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Tell City Boatworks, Inc. v. Indiana Department of State Revenue

Tax Court of Indiana

May 10, 2019

TELL CITY BOATWORKS, INC., Petitioner,
v.
INDIANA DEPARTMENT OF STATE REVENUE, Respondent.

          ATTORNEYS FOR PETITIONER: RANDAL J. KALTENMARK, ZIAADDIN MOLLABASHY, BARNES & THORNBURG LLP, Indianapolis, IN.

          ATTORNEYS FOR RESPONDENT: CURTIS T. HILL, JR., ATTORNEY GENERAL OF INDIANA, REBECCA L. MCCLAIN, DEPUTY ATTORNEY GENERAL Indianapolis, IN.

          JOHN H. DIES JEREMY M. FINGERET, ROSALIND J. LEWIS, JEFFERSON H. READ, ZERBE MILLER FINGERET, FRANK & JADAV, P.C. Houston, TX.

          SEAN P. BURKE, HAMISH S. COHEN, ELINAM B. KPOTUFE, MATTINGLY BURKE COHEN & BIEDERMAN LLP Indianapolis, IN.

          ORDER ON RESPONDENT'S MOTION TO EXCLUDE THE ALLIANTGROUP REPORT AND EXCLUDE OR LIMIT THE PROPOSED TESTIMONY OF STACY LITTLE

          Martha Blood Wentworth, Judge.

         This matter concerns the Indiana Department of State Revenue's "Motion to Exclude the AlliantGroup Report and Exclude or Limit the Proposed Testimony of Stacy Little." Upon review, the Court denies the Department's Motion in part and grants it in part.

         BACKGROUND

         On January 16, 2018, Tell City Boatworks, Inc. filed an original tax appeal challenging the Department's final determination that Tell City was not entitled to a qualified research expense credit (the "ORE credit") or an income tax refund for the 2010 tax year. Pursuant to the Court's Case Management Plan, the parties were ordered to disclose the names, addresses, and reports of any experts no later than October 4, 2018. That deadline was later extended to October 12, 2018.

         At some point during the discovery process, Tell City produced its "Research and Development Tax Credit Study" ("Report"). (See Resp't Br. Supp. Mot. Exclude Alliant Group Report & Exclude or Limit Proposed Test. Stacy Little ("Resp't Br.") at 3, Ex. B.) The Report provided that Tell City had retained the alliantgroup LP "to assist in analyzing, substantiating, and documenting [Tell City's] various research and experimental activities in accordance with the guidelines provided" in Indiana Code § 6-3.1 -4 et seq. and IRC §§ 41 and 174 for the 2010 tax year. (Resp't Br., Ex. B at 1.) In addition, Tell City indicated that although it did not intend to call an expert witness to testify, it may call Stacy Little, an Associate Director with the alliantgroup, as a fact witness. (See Resp't Br., Ex. A at Interrogs. 11, 12.) Tell City explained that Ms. Little's testimony might "address anything from project qualification to quantification of the research credit to substantiation or other items related to the claimed credit." (Resp't Br., Ex. A at Interrog. 11.)

         In October of 2018, the Department sent a 30(B)(6) Notice of Deposition and a subpoena duces tecum for the production of certain documents to the alliantgroup. (Resp't Br., Ex. C.) The parties subsequently agreed to postpone that discovery "until... Tell City decided whether it would call a representative of the alliantgroup as a witness at trial." (Resp't Br. at 4.) At some point thereafter, the Department discovered that Ms. Little was both an alliantgroup employee and an attorney and that all of Tell City's nonlocal counsel held managerial, executive, or senior positions at the alliantgroup. (See, e.g., Resp't Br. at 1-2, 7-8.) On January 29, 2019, the Court held a Status Conference during which Tell City confirmed for the first time that Ms. Little would be called as a fact witness. (Resp't Br. at 4.)

         On February 13, 2019, the Department filed its Motion, claiming the Report and testimony of Ms. Little should be excluded or limited pursuant to Indiana Rules of Evidence 403, 602, 701, 704, 801, and 802. (See generally Resp't Br. at 9-22.) On March 5, 2019, after the matter was fully briefed, the Court took the Department's Motion under advisement. Additional facts will be supplied when necessary.

         LAW AND ANALYSIS

         The Department has presented several arguments claiming, for one reason or another, that Indiana's rules of evidence bar the admission of Ms. Little's testimony and the Report. (See, e.g., Resp't Br. at 9-22.) It appears, however, that the Department's primary claim is that Ms. Little should not be permitted to testify as a fact witness because the substance of both her testimony and the Report are more akin to the opinions of experts than those of fact witnesses. (See, e.g., Resp't Br. at 14-16.)

         Tell City, on the other hand, claims that the Department's characterization of Ms. Little as "'an expert in lay witness' clothing'" is unfounded because she possesses none of the attributes of a retained expert. (See Pet'r Resp. Opp'n Resp't Mot. Exclude AlliantGroup Report & Exclude or Limit Proposed Test. Stacy Little ("Pet'r Br.") at 2, 4-5, 13-14 (indicating that Ms. Little was directly involved in conducting the alliantgroup's study of Tell City).) Tell City further claims that the Department's concerns regarding the Report are misplaced because it is nothing more than a "summary of the actions taken ...


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