Opinion
No. 01-CV-548
September 4, 2002
DECISION AND ORDER
Pursuant to a stipulation dated March 15, 2002, the discovery deadline in the above-captioned quiet title action is September 20, 2002, and the dispositive motion deadline is September 27, 2002. However, on April 4, 2002, the plaintiff, Orville Macklin, filed a motion for partial summary judgment. A veritable barrage of motions ensued, including the defendant's Rule 56(f) Motion for an Extension of Time to Oppose Plaintiff's Motion for Partial Summary Judgment. For the reasons stated below, the defendant's motion for an extension is granted. The Court will discuss the remaining motions when appropriate.
Background
Orville Macklin owns three contiguous parcels of property in Franklin, Wisconsin, Milwaukee County: 9824 W. St. Martins Road, 9745 W. Loomis Road and 9821 W. Loomis Road. On December 15, 2000, the defendant, through the Internal Revenue Service (IRS), filed and recorded three nominee liens against each parcel. According to the liens, Macklin was holding each parcel for the benefit of Gerald Macklin, Randy Greil, and Jan-9821, Inc. T/A "Illusions" (the "Taxpayers.") The complaint seeks relief under 28 U.S.C. § 2410, 26 U.S.C. § 7432, 28 U.S.C. § 2412(b), and Wis. Stats. §§ 814.025 and 706.13. Specifically, Orville Macklin seeks to quiet title and have the nominee liens removed pursuant to § 2410(a)(1), which provides: ". . . the United States may be named a party in any civil action or suit in any district court, or in any State court having jurisdiction of the subject matter . . . to quiet title to . . . real or personal property on which the United States has or claims a mortgage or other lien." While § 2410 merely waives the defendant's sovereign immunity and does not provide an independent basis for jurisdiction, see Harrell v. United States, 13 F.3d 232, 234 (7th Cir. 1993), the Court has jurisdiction pursuant to 28 U.S.C. § 1340.
§ 1340 provides: "The district courts shall have original jurisdiction of any civil action arising under any Act of Congress providing for internal revenue . . . ." As the Seventh Circuit recently observed in a related case, § 1340 is "a statute conferring original jurisdiction on the district courts in any action arising under the internal revenue laws of the United States," and "Federal law, specifically provisions of the federal Internal Revenue Code and its accompanying regulations, dictates the form and content of a federal tax lien." Macklin v. United States, No. 01-3489, 2002 WL 1837813, at *2 (7th Cir. August 13, 2002).
Nominee Liens
It is well-established that the government may collect a taxpayer's tax debts from the assets of the taxpayer's nominee, instrumentality or alter ego. G.M. Leasing Corp. v. United States, 429 U.S. 338, 350-51 (1977). By filing a "nominee lien" against Orville Macklin's property, the IRS seeks to recover tax debts from the Taxpayers under the theory that they have "engaged in a sort of legal fiction, for tax purposes, by placing legal title to property in the hands of another [Orville Macklin] while, in actuality, retaining all or some of the benefits of being the true owners." Richards v. United States, 231 B.R. 571, 578 (E.D. Pa. 1999). With regard to such liens, courts generally conduct a multi-factor analysis, which includes but is not limited to the following: (1) whether the taxpayer expended personal funds for the property; (2) whether the taxpayer enjoys the benefits of the property; (3) the close family relationship between the taxpayer and the titleholder; (4) whether the taxpayer exercises dominion and control over the property; and (5) whether the record titleholder interferes with the taxpayer's use of the property. Simpson v. United States, Nos. 87-526-CIV-J-12 and 87-837-CIV-J-12, 1989 WL 73212, at *6 (M.D. Fla. April 6, 1989).Rule 56(1)
Now, to the merits of the government's motion. Fed.R.Civ.P. 56(f) provides:
Should it appear from the affidavits of a party opposing the motion [for summary judgment] that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.
Emphasis added. The government attempts to meet its burden through the Declaration of Mary Bielefeld, senior trial attorney in the Tax Division of the United States Department of Justice and attorney for the United States in this matter. Bielefeld's Declaration outlines discovery which the government needs to take in order to respond to the plaintiff's motion. See Declaration, ¶ 7, A-I. Macklin argues that the government has not demonstrated an inability to oppose the motion because it does not justify why it was unable to complete this discovery in the months leading up to Macklin's April, 2002 motion. Cases do not exist in a vacuum. Other deadlines and obligations come into play, and government attorneys are no exception. Furthermore, the discovery deadline in this matter initially was set for June, 2002, but the parties stipulated to a three month extension. This stipulation was filed just weeks before Macklin's April, 2002 motion for partial summary judgment. The Court will not allow more time for discovery and then arbitrarily cut it off.
Macklin argues that the government's Rule 56(f) motion is in improper form, as it was not supported by "affidavits of a party opposing the motion" for summary judgment. However, Bielefeld's Declaration, signed under penalty of perjury pursuant to 28 U.S.C. § 1746, is a sufficient substitute. § 1746 provides: "[w]herever, under any law of the United States under any rule, regulation, order or requirement made pursuant to law, any matter is required . . . to be . . . proved by the sworn . . . affidavit, in writing of the person making the same . . . such matter may, with like force and effect, be . . . proved by the unsworn declaration . . . in writing of such person which is subscribed by him, as true under penalty of perjury, and dated." Macklin also objects to the narrative form of Bielefeld's Declaration under Rule 56(e). Whatever the requirements of Rule 56(e), they are not applicable to the government's Rule 56(f) motion.
Macklin also argues that the government should not need discovery. According to Macklin, the "Defendant may not file Nominee Liens and, if an when the Plaintiff challenges those liens, then set about doing discovery to try to establish a good faith basis for filing those liens. That is the thrust and purpose of the Plaintiffs MOTION FOR SUMMARY JUDGMENT" (emphasis in original). Mackin continues: "Defendant's Rule 56(f) MOTION is an admission that it does not now and did not at the time it filed the Nominee Liens on December 15, 2000 have facts essential to justify the Defendant's opposition to Plaintiff's argument that the liens were filed without any basis in fact." Plaintiffs May 21, 2002 Brief in Opposition, p. 1. Macklin cites no legal authority for this novel proposition. Indeed, as noted above, it is certainly within the IRS's realm of power to file nominee liens. Whether they were properly filed is a matter for the courts to decide. The discovery phase is but one part of that process.
Macklin can recover damages incurred as the result of an improperly filed tax lien under 26 U.S.C. § 7432.
Finally, Macklin argues that the government's motion should be stricken because it was filed four days late. However, the Court agrees with the government's interpretation of Local Rule 7.1(c), which provides: "On motions for summary judgment, the opposing party must serve a response answering brief and affidavits or other documents within 30 days of service of the motion" (emphasis added). In contrast, Local Rule 56.2(b) provides that "Any materials in opposition to a motion filed under this rule must be filed within 30 days of the motion . . ." (emphasis added). A Rule 56(f) motion is not a motion in opposition to a motion for summary judgment, as contemplated by Civil L.R. 56.2(b). Rather, it merely requests an extension of time to file a motion in opposition. Such a motion can be construed as a "response answering brief," as contemplated by Civil L.R. 7.1(c). Accordingly, because the government was served on April 3, 2002, it was only required to serve its Rule 56(f) motion on or before May 6, 2002, under Civil L.R. 7.1(c), not file the motion, as Macklin argues. The government served Macklin with its motion by mail on May 6, 2002, and accordingly, the motion is not untimely.
Three days are added for service by mail under Fed.R.Civ. p. 6(e).
Rule 7.4 Motion to Modify Scheduling Order
The initial Scheduling Order in this matter, established by Judge Reynolds on December 13, 2001, provided that on or before April 26, 2002, the defendant shall disclose information concerning defendant's expert witnesses in accordance with Civil L.R. 26.1(a) and (b). On April 23, 2002, the parties stipulated that the deadline for disclosure by the United States of any experts be extended thirty days until May 26, 2002. Subsequently, on May 28, 2002, the government moved to modify the Scheduling Order again, such that the expert report deadline be scheduled for October 21, 2002. and the discovery deadline for expert witness depositions be scheduled for November 21, 2002. In response, Macklin expresses "substantial concern that the Defendant has seen that it can simply outlast the Plaintiff here because of his age (86)." June 6, 2002 Response to Motion to Modify Expert Report Deadline, ¶ 7. This argument is unavailing, as the government has not moved to postpone the trial date, set for February 25-27, 2003.
NOW, THEREFORE, BASED ON THE FOREGOING, IT IS HEREBY ORDERED THAT:
1. Defendant's Rule 56(f) motion to extend time to respond to the plaintiffs Motion for Partial Summary Judgment [33-1] is GRANTED. The defendant shall file a response to Macklin's April 4, 2002 Motion for Partial Summary Judgment [23-1] on or before October 10, 2002;
2. Mackin's motion to strike the Declaration of Mary Bielefeld [36-1] is DENIED;
3. Macklin's motion to strike the Declaration of Mary Bielefeld, the Second Declaration of Mary Bielefeld, and for partial summary judgment [49-1] is DENIED;
4. Mackin's motion for partial summary judgment [36-2] is DENIED;
5. Defendant's Rule 7.4 Motion to Modify Scheduling Order [40-1] is GRANTED, such that the expert report deadline is October 21 2002, and the discovery deadline for expert witness depositions is November 21, 2002;
6. In all other respects, the discovery deadline in this matter remains September 20, 2002, and the dispositive motion deadline remains September 27, 2002 and
7. The Court's March 20, 2002 Scheduling Order remains unmodified. Dated at Milwaukee, Wisconsin, this 4th day of September, 2002.