T.C. Memo. 2000-247
UNITED STATES TAX COURT
QUANTUM INVESTMENTS, L.L.C., TROY ENTERPRISES TRUST,
JOHN P. WILDE, TRUSTEE, TAX MATTERS PARTNER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 17894-99. Filed August 8, 2000.
John P. Wilde, for petitioner.
John W. Duncan, for respondent.
MEMORANDUM OPINION
VASQUEZ, Judge: This case is before the Court on
respondent’s motion to dismiss for lack of jurisdiction.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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Background
On September 2, 1999, respondent mailed a notice of final
partnership administrative adjustment (notice) to the tax matters
partner of Quantum Investments, L.L.C. (Quantum). At all
relevant times, Quantum was a limited liability company that is
classified as a partnership because it did not make an election
to be taxed as a corporation. On November 29, 1999, Troy
Enterprises Trust (petitioner) filed a petition with this Court
as the tax matters partner. Petitioner is a trust organized
under the laws of Arizona. John P. Wilde (Mr. Wilde) signed the
petition, wherein he identified himself as “trustee”. Below the
signature line, however, he identified himself as trustee of
“Educational Enterprises Trust”.1
During the examination of Quantum’s 1995 taxable year (to
which the notice relates), respondent was not able to obtain the
trust document of or information relating to petitioner.
On January 27, 2000, respondent filed a motion to dismiss
for lack of jurisdiction (respondent’s motion) on the ground that
pursuant to Rule 60, Mr. Wilde is not the proper party to bring
this action because there is no evidence in the record supporting
petitioner’s claim that Mr. Wilde is its trustee. On February 2,
2000, the Court ordered petitioner to file a response to
1
There is no further reference to “Educational Enterprises
Trust” in the pleadings or in the record.
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respondent’s motion and to attach a copy of the trust instrument
showing Mr. Wilde’s capacity to act on behalf of petitioner or to
otherwise advise the Court of Mr. Wilde’s capacity to represent
petitioner in these proceedings.
On February 22, 2000, petitioner filed a response to
respondent’s motion (petitioner’s response). In petitioner’s
response, petitioner argues that Mr. Wilde is its trustee and
thus the proper party to bring this action. In support of its
contention, petitioner attached a document entitled “Minute–-
Morgan Kramer & Strauss L.L.C.” (the minutes). The minutes
provide, in relevant part:
A special meeting of the members has been called
for the purpose of amending the purpose and operation
of the L.L.C.
* * * * * * *
It is hereby resolved that it is in the best
interest of all parties concerned to replace the
trustee on all trusts where the LLC is named. To this
end and in fulfilling the requirements for succession
John P. Wilde and Jimmy Chisum have been selected as
successors.
By agreement the appointment of Wilde and Chisum
and the withdrawal of Stern and Stein are simultaneous
and signatures hereto signify a full and total change
in trusteeship, responsibility, custody and ownership
of corpus, papers, and all legal affairs. [Emphasis
added.]
Cliff Jennewin and Richard Scarborough signed the minutes on
behalf of Morgan, Kramer & Strauss L.L.C. (Morgan, Kramer). Mr.
Wilde and Jimmy Chisum (Mr. Chisum) also signed the minutes to
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signify that they accepted the appointment as trustees.
In petitioner’s response, it further argues:
the issue concerning Mr. Wilde’s capacity as Trustee
falls within the exclusive jurisdiction of the superior
court here in the State of Arizona. * * * At this
point, this court is without jurisdiction to examine
the matter beyond the minute[s] appointing Mr. Wilde as
Trustee and determine whether he is the duly authorized
Trustee. In absence of evidence to the contrary the
appointment of John P. Wilde as a Trustee, in the
minute[s] * * * is presumptively valid unless some
provision of Arizona Law or a court of competent
jurisdiction under the laws of the State of Arizona
have found that the appointment to be invalid. The
Petitioner need not remind the Court of the
consequences of taking any action over which subject
matter is completely lacking.
On March 15, 2000, respondent replied to petitioner’s
response. On June 5, 2000, we held a hearing on respondent’s
motion wherein Mr. Wilde appeared on behalf of petitioner.2 At
the hearing, Mr. Wilde submitted a document entitled “Trustee
Declaration and Certification” (certification) which was prepared
by Mr. Chisum, an alleged current trustee of petitioner. The
certification purports to describe petitioner’s chain of trustees
beginning with Morgan, Kramer and ending with Mr. Wilde and Mr.
Chisum. The certification also included an incomplete document
purporting to be the trust document of petitioner (purported
trust document).
2
At the hearing, the Court informed Mr. Wilde that its
allowing him to appear at the hearing as the alleged trustee of
petitioner did not mean that the Court agreed that he in fact was
a duly appointed and authorized trustee of petitioner.
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The purported trust document has an unnumbered cover page
entitled “Contract”, which states that petitioner is “An
Irrevocable Pure Trust” and that Morgan, Kramer is the trustee.
The cover page further states that the “Contract” was executed
“under the laws of the Constitution for the United States of
America and the Constitution for the State of Delaware”. Behind
the cover page, two pages (labeled pages 5 and 6) describe the
management of the trust, the replacement of the trustee, meetings
of a board, the alteration or amendment of the trust document,
and the termination of the trust.3 The purported trust document
provides in pertinent part:
REPLACEMENT OF TRUSTEE
33. The Trustee may be replaced in any of the
following manners:
A. Resignation. The Trustee may resign with
or without cause at any time by sending a notice of his
intention to do so to the Trust principle office by
Certified Mail. However, such resignation shall not be
effective unless and until such time as a Successor
Trustee has accepted the appointment to assume the
duties and responsibilities of Trustee on the
expiration date of the outgoing Trustee, or thirty days
after receipt of the resignation, whichever occurs
first.
3
The purported trust document also includes three pages
(numbered 10, 11, and 12) dealing with the creation of the trust
and the appointment and acceptance of Morgan, Kramer as trustee.
We note that pages 1 through 4 and 7 through 9 are missing. We
also note that the purported trust document appears to have
inconsistent imprinting on each of its pages. The cover page and
pages 5, 6, 10, and 11 have the imprint “Troy Enterprises”, while
page 12, which deals with Morgan, Kramer’s acceptance as trustee,
has the imprint “Troy Investments”.
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B. Removal. Upon complaint for proper cause
by any agent or person appointed by the Trust, the
Protector shall appoint a Committee of Arbitrators
(hereinafter referred to as the Committee), to
investigate the complaint.
1. The Committee shall consist of three
(3) persons independent of the Trust.
2. The Committee shall have the power,
upon meeting, investigation, and a two-thirds (2/3)
majority vote, to remove the Trustee for the following
specific reasons constituting proper cause: a)
insolvency, b) negligence, c) incompetence, or d)
failure to perform fiduciary duties under the terms of
the Contract.
At trial, we admitted the certification and purported trust
document into evidence, but we stated that we would give them
“whatever weight [they were] entitled to.”
Discussion
This Court is a court of limited jurisdiction. See Freytag
v. Commissioner, 501 U.S. 868, 870 (1991). With respect to a
notice of a final partnership administrative adjustment,
jurisdiction may be predicated upon the timely filing of a
petition by the tax matters partner. See sec. 6226(a); Rule
240(c)(1). The petition may be filed by a fiduciary entitled to
institute a case on behalf of the tax matters partner. The
capacity of a fiduciary to litigate in this Court shall be
determined in accordance with the law of the jurisdiction from
which such person’s authority is derived. See Rule 60(c).
The parties treat petitioner as a trust organized under the
laws of Arizona. Pursuant to Rule 60(c), Arizona law therefore
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applies in determining the capacity of a fiduciary to petition
this Court. Under Arizona law, a trustee has the capacity to
institute court proceedings on behalf of a trust and is thus the
proper party to file a petition on behalf of a trust in this
Court. See Ariz. Rev. Stat. Ann. sec. 14-7233.C.25 (West 1995).
Petitioner bears the burden of proving that this Court has
jurisdiction by establishing affirmatively all facts giving rise
to our jurisdiction. See Patz v. Commissioner, 69 T.C. 497, 503
(1977); Fehrs v. Commissioner, 65 T.C. 346, 348 (1975); Wheeler’s
Peachtree Pharmacy, Inc. v. Commissioner, 35 T.C. 177, 180
(1960); National Comm. to Secure Justice v. Commissioner, 27 T.C.
837, 839 (1957); Consolidated Cos. v. Commissioner, 15 B.T.A.
645, 651 (1929). In order to meet that burden, petitioner must
provide evidence establishing that Mr. Wilde has authority to act
on its behalf. See National Comm. to Secure Justice v.
Commissioner, supra at 839-840; Coca-Cola Bottling Co. v.
Commissioner, 22 B.T.A. 686, 700 (1931).
Petitioner submitted the minutes as evidence. The minutes
purport to be the minutes of Morgan, Kramer. Within the minutes,
however, there is a reference to “Stern & Stein” which implies
that the minutes are documenting the withdrawal of Stern & Stein
as trustee and not the withdrawal of Morgan, Kramer as trustee.
We note that Mr. Wilde was recently involved in another matter
before this Court, Renaissance Enters. Trust v. Commissioner,
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T.C. Memo. 2000-226, wherein Mr. Wilde claimed that he was
appointed trustee by the resigning trustee, Stern & Stein. In
Renaissance Enters. Trust, Mr. Wilde submitted minutes from Stern
& Stein as proof of his appointment which mirror the minutes
submitted in this case except for the title on the top of the
document. It appears that Mr. Wilde simply copied the minutes
submitted in Renaissance Enters. Trust and submitted them as
Morgan, Kramer’s minutes in the present case. We therefore
question the authenticity of the minutes.
At the hearing, Mr. Wilde submitted on behalf of petitioner
the certification and the purported trust document.4 Petitioner
alleges that the certification and the purported trust document
attest to the chain of petitioner’s trustees and show that Mr.
Wilde is a current trustee of petitioner. The purported trust
document is incomplete, and when both it and the certification
are viewed in light of the questionable minutes submitted by Mr.
Wilde, we are not persuaded by these documents that Mr. Wilde is
the duly appointed and authorized trustee of petitioner.
4
In Troy Enters. Trust v. Commissioner, T.C. Memo. 2000-
227, which we recently decided, the Commissioner filed a motion
to dismiss for lack of jurisdiction based on the Commissioner’s
assertion that Mr. Wilde was not a trustee of Troy Enterprises
Trust or Yale Enterprises Trust. In Troy Enters. Trust, we held
that Mr. Wilde did not have the requisite capacity to file a
petition on behalf of Troy Enterprises Trust and Yale Enterprises
Trust. In that case, however, the certification and purported
trust document were not part of the record. Because those
documents are part of the record in the instant case, we review
them in making our determination in this case.
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In view of the evidentiary shortcomings in the record, we
find that Mr. Wilde has failed to establish the requisite
capacity to file a petition on behalf of petitioner in this
Court.5 We therefore shall grant respondent’s motion.
To the extent not herein discussed, we have considered
petitioner’s other arguments and find them to be without merit.
To reflect the foregoing,
An appropriate order of
dismissal will be entered.
5
We note that Mr. Wilde is no stranger to this Court.
Recently, in addition to the petition in Renaissance Enters.
Trust v. Commissioner, T.C. Memo. 2000-226, mentioned earlier,
Mr. Wilde filed petitions in Scenic Wonders Gallery, LLC v.
Commissioner, T.C. Memo. 2000-64, and Photo Art Mktg. Trust v.
Commissioner, T.C. Memo. 2000-65. In those cases, we granted the
Commissioner’s motions to dismiss for lack of jurisdiction on the
ground that Mr. Wilde lacked the requisite capacity to file
petitions on behalf of those taxpayers.
Additionally, Mr. Chisum, who is listed as cotrustee in the
minutes and certification submitted by petitioner in the instant
case, has filed petitions in at least three similar cases where
motions to dismiss for lack of jurisdiction were granted on
similar grounds. See Banana Moon Trust v. Commissioner, T.C.
Memo. 2000-73 (holding Mr. Chisum did not have the requisite
capacity to file a petition on behalf of the taxpayers); Jeff
Burger Prods., LLC v. Commissioner, T.C. Memo. 2000-72 (similar
holding); Bantam Domestic Trust v. Commissioner, T.C. Memo. 2000-
63 (similar holding).