Clark J. Gebman & Rebecca Gebman v. Commissioner
2017 T.C. Memo. 184
| Tax Ct. | 2017Background
- Clark and Rebecca Gebman filed joint returns for 2007–2010; IRS determined substantial deficiencies and accuracy-related penalties (including disallowance of large NOL carryovers and $210,423 of IRA distributions for 2007).
- At the Tax Court calendar call, volunteer attorney Frank Agostino met the Gebmans; he entered an appearance for Mrs. Gebman and, in the courtroom, announced Mr. Gebman would concede deficiencies and penalties while Mrs. Gebman sought leave to amend to raise an innocent-spouse defense.
- The Court continued the case to allow Mrs. Gebman time to move for leave to amend; Mr. Gebman later filed motions seeking to rescind his concession and to reconsider, asserting he was misinformed and did not consent to conceding.
- Mr. Agostino had previously met with Mr. Gebman (as a volunteer) and provided advice; Mr. Gebman later refused to sign a conflict waiver and terminated Agostino’s services for him, while Agostino continued to represent Mrs. Gebman.
- The Court issued an order to show cause whether Agostino’s representation of Mrs. Gebman, after having represented or consulted with Mr. Gebman, created a conflict under the Model Rules (notably Rules 1.9 and 1.18) and Tax Court Rule 24(g).
- The Court found the matters were substantially related (IRA distributions and joint-return liability), the spouses’ interests were materially adverse (Mrs. Gebman would concede and seek relief; Mr. Gebman sought to contest the deficiencies), and Agostino had not obtained Mr. Gebman’s informed written consent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Agostino’s representation of Mrs. Gebman after advising/representing Mr. Gebman created a disqualifying conflict under Model Rule 1.9/1.18 and Tax Court Rule 24(g) | Gebman: Agostino’s calendar-call involvement led to a client relationship; he seeks to withdraw concession and objects to counsel representing opposing interests | IRS/Respondent: argued the Court should examine whether Mrs. Gebman’s proposed innocent-spouse allegations show merit and did not concede conflict claim | Court: The representation involved the same or substantially related matter, the spouses’ interests are materially adverse, and Agostino lacked Mr. Gebman’s informed written consent — conflict exists |
| Whether the matters are the ‘‘same or substantially related’’ for Model Rule 1.9 purposes | Gebman: The dispute concerns the same IRA distributions and tax consequences | Respondent: Focused on merits of innocent-spouse claim; did not contest substantial relation analysis | Court: The IRA distributions and joint-return issues are the same/substantially related matters |
| Whether the spouses’ interests are materially adverse | Gebman: Initially claimed to support wife but refused to sign waiver and filed motions to contest; contends he never intended counsel to represent adverse interests | Agostino: Argued no material adversity because both sought same statutory relief and Mr. Gebman is likely judgment-proof | Court: Interests materially adverse — wife would concede and seek relief shifting liability to husband; financial and litigation interests conflict |
| Remedy required for conflict under Rule 24(g) | Gebman: Requested relief from conceded position and protection from conflicted representation | Agostino: Did not obtain written waiver; argued consent could be inferred from filings and circumstances | Court: Agostino must either withdraw or take steps to obviate the conflict; ordered withdrawal or curing within 10 days, and granted Mr. Gebman relief from his concession |
Key Cases Cited
- Dorchester Indus. Inc. v. Commissioner, 108 T.C. 320 (1997) (discusses conflict risk when one attorney represents parties with divergent interests)
- Goff v. Commissioner, 135 T.C. 231 (2010) (defines frivolous positions and sanctions context)
- Harbin v. Commissioner, 137 T.C. 93 (2011) (attorney’s concurrent representation created actual conflict that obstructed a spouse’s ability to pursue section 6015 relief)