Guild Administration Corporation v. United States of America

NOTICE OF MOTION AND MOTION for Summary Judgment as to Under Fed. R. Civ. P. 56

C.D. Cal.July 12, 2017

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SANDRA R. BROWN Acting United States Attorney THOMAS D. COKER Assistant United States Attorney Chief, Tax Division ANDREW T. PRIBE (CA SBN 254904) Assistant United States Attorney Federal Building, Suite 7211 300 North Los Angeles Street Los Angeles, California 90012 Telephone: (213) 894-6551 Facsimile: (213) 894-0115 E-mail: andrew.t.pribe@usdoj.gov Attorneys for the United States of America UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA EASTERN DIVISION GUILD ADMINISTRATION CORPORATION, Plaintiff v. UNITED STATES OF AMERICA, ET AL. Case No.: 5:17-cv-00066 VAP(SPx) United States of America’s notice of motion and motion for summary judgment under Fed. R. Civ. P. 56; proposed judgment Hearing date: August 21, 2017 at 2 p.m. Courtroom 8A United States Courthouse 350 West First Street, Los Angeles, California Judge Virginia A. Phillips Case 5:17-cv-00066-VAP-SP Document 24 Filed 07/12/17 Page 1 of 4 Page ID #:234 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 On August 21, 2017, at 2 p.m., the United States will request the Court to grant summary judgment in favor of the United States under Rule 56 of the Federal Rules of Civil Procedure for the reasons set forth in the accompanying memorandum. This motion is made following the conference of counsel for the United States as required by L.R. 7–3 with Edgar Keller, which took place on June 26, 2017, and with Janet Keller, which took place on June 15, 2017. Dated: July 12, 2017 SANDRA R. BROWN Acting United States Attorney THOMAS D. COKER Assistant United States Attorney Chief, Tax Division /s/ Andrew T. Pribe ANDREW T. PRIBE Assistant United States Attorney Case 5:17-cv-00066-VAP-SP Document 24 Filed 07/12/17 Page 2 of 4 Page ID #:235 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE BY MAILING I am over the age of 18 and not a party to the within action. I am employed by the Office of the United States Attorney, Central District of California. My business address is 300 North Los Angeles Street, Suite 7211, Los Angeles, California 90012. On July 12, 2017, I served UNITED STATES OF AMERICA’S NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT UNDER FED. R. CIV. P. 56; PROPOSED JUDGMENT on each person or entity name below by enclosing a copy in an envelope addressed as shown below and placing the envelope for collection and mailing on the date and at the place shown below following our ordinary office practices. I am readily familiar with the practice of this office for collection and processing correspondence for mailing. On the same day that correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service in a sealed envelope with postage fully prepaid. Date of mailing: July 12, 2017 Place of mailing: Los Angeles, California See attached list I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. I declare that I am employed in the office of a member of the bar of this court at whose direction the service was made. Executed on: July 12, 2017, Los Angeles, California. /s/_______ Barbara Le Case 5:17-cv-00066-VAP-SP Document 24 Filed 07/12/17 Page 3 of 4 Page ID #:236 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RE: GUILD ADMINISTRATION CORPORATION V. UNITED STATES OF AMERICA, ET AL CASE NO.: ED CV 17-66 VAP (SPx) Service List EDGAR C. KELLER 341 Puritan Place Redlands, CA 92373 JOZEL BRUNETT TODD M. BAILEY JOHN M. O'DONNELL FRANCHISE TAX BOARD P.O. Box 1720, MS: A-260 Rancho Cordova, CA 95741-1720 JANET M. KELLER P.O. Box 9125 Cedarpines Park, CA 92322 Case 5:17-cv-00066-VAP-SP Document 24 Filed 07/12/17 Page 4 of 4 Page ID #:237 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SANDRA R. BROWN Acting United States Attorney THOMAS D. COKER Assistant United States Attorney Chief, Tax Division ANDREW T. PRIBE (CA SBN 254904) Assistant United States Attorney Federal Building, Suite 7211 300 North Los Angeles Street Los Angeles, California 90012 Telephone: (213) 894-6551 Facsimile: (213) 894-0115 E-mail: andrew.t.pribe@usdoj.gov Attorneys for the United States of America UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA EASTERN DIVISION GUILD ADMINISTRATION CORPORATION, Plaintiff v. UNITED STATES OF AMERICA, ET AL. Case No.: 5:17-cv-00066 VAP(SPx) United States of America’s evidentiary submissions in support of its motion for summary judgment under Fed. R. Civ. P. 56 Hearing date: August 21, 2017 at 2 p.m. Courtroom 8A United States Courthouse 350 West First Street, Los Angeles, California Judge Virginia A. Phillips Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 1 of 39 Page ID #:238 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The United States of America, Claimant, submits the following materials in support of its motion for summary judgment. Personal identifiers have been redacted. Exhibit 1 Certified copy of deed. Exhibit 2 Certificate of assessments, payments, and other specified matters for tax year 2003 for Martin E. Keller. Exhibit 3 Certificate of assessments, payments, and other specified matters for tax year 2004 for Martin E. Keller. Exhibit 4 Certificate of assessments, payments, and other specified matters for tax year 2005 for Martin E. Keller. Exhibit 5 Certificate of assessments, payments, and other specified matters for tax year 2006 for Martin E. Keller. Exhibit 6 Certified statement of balance due. Exhibit 7 Certified copy of notice of federal tax lien. Dated: July 12, 2017 SANDRA R. BROWN Acting United States Attorney THOMAS D. COKER Assistant United States Attorney Chief, Tax Division /s/ Andrew T. Pribe ANDREW T. PRIBE Assistant United States Attorney Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 2 of 39 Page ID #:239 Exhibit 1 00002 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 3 of 39 Page ID #:240 00003 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 4 of 39 Page ID #:241 00004 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 5 of 39 Page ID #:242 Exhibit 2 00005 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 6 of 39 Page ID #:243 00006 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 7 of 39 Page ID #:244 00007 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 8 of 39 Page ID #:245 00008 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 9 of 39 Page ID #:246 00009 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 10 of 39 Page ID #:247 00010 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 11 of 39 Page ID #:248 00011 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 12 of 39 Page ID #:249 00012 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 13 of 39 Page ID #:250 Exhibit 3 00013 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 14 of 39 Page ID #:251 00014 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 15 of 39 Page ID #:252 00015 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 16 of 39 Page ID #:253 00016 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 17 of 39 Page ID #:254 00017 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 18 of 39 Page ID #:255 00018 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 19 of 39 Page ID #:256 Exhibit 4 00019 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 20 of 39 Page ID #:257 00020 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 21 of 39 Page ID #:258 00021 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 22 of 39 Page ID #:259 00022 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 23 of 39 Page ID #:260 00023 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 24 of 39 Page ID #:261 00024 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 25 of 39 Page ID #:262 Exhibit 5 00025 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 26 of 39 Page ID #:263 00026 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 27 of 39 Page ID #:264 00027 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 28 of 39 Page ID #:265 00028 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 29 of 39 Page ID #:266 00029 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 30 of 39 Page ID #:267 00030 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 31 of 39 Page ID #:268 Exhibit 6 00031 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 32 of 39 Page ID #:269 00032 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 33 of 39 Page ID #:270 00033 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 34 of 39 Page ID #:271 Exhibit 7 00034 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 35 of 39 Page ID #:272 00035 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 36 of 39 Page ID #:273 00036 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 37 of 39 Page ID #:274 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE BY MAILING I am over the age of 18 and not a party to the within action. I am employed by the Office of the United States Attorney, Central District of California. My business address is 300 North Los Angeles Street, Suite 7211, Los Angeles, California 90012. On July 12, 2017, I served UNITED STATES OF AMERICA’S EVIDENTIARY SUBMISSIONS IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT UNDER FED. R. CIV. P. 56 on each person or entity name below by enclosing a copy in an envelope addressed as shown below and placing the envelope for collection and mailing on the date and at the place shown below following our ordinary office practices. I am readily familiar with the practice of this office for collection and processing correspondence for mailing. On the same day that correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service in a sealed envelope with postage fully prepaid. Date of mailing: July 12, 2017 Place of mailing: Los Angeles, California See attached list I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. I declare that I am employed in the office of a member of the bar of this court at whose direction the service was made. Executed on: July 12, 2017, Los Angeles, California. /s/_______ Barbara Le Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 38 of 39 Page ID #:275 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RE: GUILD ADMINISTRATION CORPORATION V. UNITED STATES OF AMERICA, ET AL CASE NO.: ED CV 17-66 VAP (SPx) Service List EDGAR C. KELLER 341 Puritan Place Redlands, CA 92373 JOZEL BRUNETT TODD M. BAILEY JOHN M. O'DONNELL FRANCHISE TAX BOARD P.O. Box 1720, MS: A-260 Rancho Cordova, CA 95741-1720 JANET M. KELLER P.O. Box 9125 Cedarpines Park, CA 92322 Case 5:17-cv-00066-VAP-SP Document 24-1 Filed 07/12/17 Page 39 of 39 Page ID #:276 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SANDRA R. BROWN Acting United States Attorney THOMAS D. COKER Assistant United States Attorney Chief, Tax Division ANDREW T. PRIBE (CA SBN 254904) Assistant United States Attorney Federal Building, Suite 7211 300 North Los Angeles Street Los Angeles, California 90012 Telephone: (213) 894-6551 Facsimile: (213) 894-0115 E-mail: andrew.t.pribe@usdoj.gov Attorneys for the United States of America UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA EASTERN DIVISION GUILD ADMINISTRATION CORPORATION, Plaintiff v. UNITED STATES OF AMERICA, ET AL. Case No.: 5:17-cv-00066 VAP(SPx) United States of America’s statement of undisputed facts in support of its motion for summary judgment under Fed. R. Civ. P. 56 Hearing date: August 21, 2017 at 2 p.m. Courtroom 8A United States Courthouse 350 West First Street, Los Angeles, California Judge Virginia A. Phillips Case 5:17-cv-00066-VAP-SP Document 24-2 Filed 07/12/17 Page 1 of 10 Page ID #:277 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The United States of America submits the following statement of undisputed facts in support of its motion for summary judgment. US SUF no. Fact Supporting evidence 1 On September 22, 2000, Martin E. Keller executed a quitclaim deed for real property in San Bernardino County to himself and Janet M. Keller, husband and wife, as community property. Certified copy of deed (exhibit 1 to US evidentiary submissions at 00003). 2 The quitclaim deed specified in paragraph 1 was recorded with the San Bernardino County Recorder on July 7, 2005. Certified copy of deed (exhibit 1 to US evidentiary submissions at 00003). 3 The quitclaim deed concerned real property legally described as “Lot 176 of Tract No. 2901, Del Rosa Estates, in the City of San Bernardino, County of San Bernardino, State of California, as per Map recorded in Book 40, pages 70 through 75, Certified copy of deed (exhibit 1 to US evidentiary submissions at 00003). Case 5:17-cv-00066-VAP-SP Document 24-2 Filed 07/12/17 Page 2 of 10 Page ID #:278 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 inclusive, of maps, in the office of the country recorder of said county.” 4 The subject property was sold at a trustee’s sale on May 19, 2016. Sworn petition and declaration regarding unresolved claims and deposit of undistributed surplus proceeds of trustee’s sale (attached to notice of removal (dkt. 1-1, filed January 13, 2017, at Page ID # 9– 11)). 5 The trustee’s sale yielded a surplus of $156,104.52. Sworn petition and declaration regarding unresolved claims and deposit of undistributed surplus proceeds of trustee’s sale (attached to notice of removal (dkt. 1-1, filed January 13, 2017, at Page ID # 9– 11)). Case 5:17-cv-00066-VAP-SP Document 24-2 Filed 07/12/17 Page 3 of 10 Page ID #:279 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 On September 26, 2016, the trustee filed a petition in state court concerning the surplus funds. Sworn petition and declaration regarding unresolved claims and deposit of undistributed surplus proceeds of trustee’s sale (attached to notice of removal (dkt. 1-1, filed January 13, 2017, at Page ID # 9– 11)). 7 On January 13, 2017, the United States removed the state-court action to federal court. Notice of removal (dkt. 1, filed January 13, 2017). 8 On June 4, 2007, the Internal Revenue Service assessed federal income tax against Martin E. Keller for tax year 2003 of $25,996.04. Certificate of assessment, payments, and other specified matters for tax year 2003 (exhibit 2 to US evidentiary submissions at 00007). 9 On August 25, 2008, the Internal Revenue Service Certificate of assessment, Case 5:17-cv-00066-VAP-SP Document 24-2 Filed 07/12/17 Page 4 of 10 Page ID #:280 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 assessed additional federal income tax against Martin E. Keller for tax year 2003 of $80,225.96. payments, and other specified matters for tax year 2003 (exhibit 2 to US evidentiary submissions at 00008). 10 On January 7, 2008, the Internal Revenue Service assessed federal income tax against Martin E. Keller for tax year 2004 of $9,599.85. Certificate of assessment, payments, and other specified matters for tax year 2004 (exhibit 3 to US evidentiary submissions at 00015). 11 On November 12, 2007, the Internal Revenue Service assessed federal income tax against Martin E. Keller for tax year 2005 of $8,117.02. Certificate of assessment, payments, and other specified matters for tax year 2005 (exhibit 4 to US evidentiary submissions at 00021). 12 On November 19, 2007, the Internal Revenue Service assessed federal income tax Certificate of assessment, payments, and other specified matters for Case 5:17-cv-00066-VAP-SP Document 24-2 Filed 07/12/17 Page 5 of 10 Page ID #:281 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 against Martin E. Keller for tax year 2006 of $4,010.97. tax year 2006 (exhibit 5 to US evidentiary submissions at 00027). 13 As of August 20, 2017, the tax liabilities specified in paragraphs 8 through 12 have the following outstanding balances after taking into account credits, charges, interest, and penalties: 2003: $298,500.51 2004: $24,021.94 2005: $19,454.92 2006: $7,687.42 Total: $349,664.79 Certified statement of balance due (exhibit 6 to US evidentiary submissions 00033) 14 The United States has federal tax liens against all property and rights to property owned by Martin E. Keller as of the assessment dates set forth in paragraphs 8 through 12. 26 U.S.C. §§ 6321, 6322. 15 On January 16, 2009, the IRS recorded a notice of federal tax Certified copy of notice of federal tax Case 5:17-cv-00066-VAP-SP Document 24-2 Filed 07/12/17 Page 6 of 10 Page ID #:282 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 lien for the federal income-tax liabilities set for tax years 2003, 2004, 2005, and 2006 as the Recorder’s Office for San Bernardino County. lien (exhibit 7 to US evidentiary submissions at 00035) 16 In November 2016, the state court ordered that $40,099.89 plus interest be paid from the interpleaded funds to the California Franchise Tax Board. Stipulation regarding priority between the United States and the California Franchise Tax Board (dkt. 16, filed May 8, 2017), ¶ 6. 17 On December 20, 2016, $40,308.53 ($40,099.89 plus $208.64 interest) of the interpleaded funds was paid to the Franchise Tax Board. Stipulation regarding priority between the United States and the California Franchise Tax Board (dkt. 16, filed May 8, 2017), ¶ 7. /// /// /// /// /// /// Case 5:17-cv-00066-VAP-SP Document 24-2 Filed 07/12/17 Page 7 of 10 Page ID #:283 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 The United States and the California Franchise Tax Board have stipulated that the United States has priority over the Franchise Tax Board’s claim. Stipulation regarding priority between the United States and the California Franchise Tax Board (dkt. 16, filed May 8, 2017), ¶ 8. Dated: July 12, 2017 SANDRA R. BROWN Acting United States Attorney THOMAS D. COKER Assistant United States Attorney Chief, Tax Division /s/ Andrew T. Pribe ANDREW T. PRIBE Assistant United States Attorney Case 5:17-cv-00066-VAP-SP Document 24-2 Filed 07/12/17 Page 8 of 10 Page ID #:284 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE BY MAILING I am over the age of 18 and not a party to the within action. I am employed by the Office of the United States Attorney, Central District of California. My business address is 300 North Los Angeles Street, Suite 7211, Los Angeles, California 90012. On July 12, 2017, I served UNITED STATES OF AMERICA’S STATEMENT OF UNDISPUTED FACTS IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT UNDER FED. R. CIV. P. 56 on each person or entity name below by enclosing a copy in an envelope addressed as shown below and placing the envelope for collection and mailing on the date and at the place shown below following our ordinary office practices. I am readily familiar with the practice of this office for collection and processing correspondence for mailing. On the same day that correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service in a sealed envelope with postage fully prepaid. Date of mailing: July 12, 2017 Place of mailing: Los Angeles, California See attached list I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. I declare that I am employed in the office of a member of the bar of this court at whose direction the service was made. Executed on: July 12, 2017, Los Angeles, California. /s/_______ Barbara Le Case 5:17-cv-00066-VAP-SP Document 24-2 Filed 07/12/17 Page 9 of 10 Page ID #:285 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RE: GUILD ADMINISTRATION CORPORATION V. UNITED STATES OF AMERICA, ET AL CASE NO.: ED CV 17-66 VAP (SPx) Service List EDGAR C. KELLER 341 Puritan Place Redlands, CA 92373 JOZEL BRUNETT TODD M. BAILEY JOHN M. O'DONNELL FRANCHISE TAX BOARD P.O. Box 1720, MS: A-260 Rancho Cordova, CA 95741-1720 JANET M. KELLER P.O. Box 9125 Cedarpines Park, CA 92322 Case 5:17-cv-00066-VAP-SP Document 24-2 Filed 07/12/17 Page 10 of 10 Page ID #:286 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SANDRA R. BROWN Acting United States Attorney THOMAS D. COKER Assistant United States Attorney Chief, Tax Division ANDREW T. PRIBE (CA SBN 254904) Assistant United States Attorney Federal Building, Suite 7211 300 North Los Angeles Street Los Angeles, California 90012 Telephone: (213) 894-6551 Facsimile: (213) 894-0115 E-mail: andrew.t.pribe@usdoj.gov Attorneys for the United States of America UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA EASTERN DIVISION GUILD ADMINISTRATION CORPORATION, Plaintiff v. UNITED STATES OF AMERICA, ET AL. Case No.: 5:17-cv-00066 VAP(SPx) United States of America’s memorandum in support of its motion for summary judgment under Fed. R. Civ. P. 56 Hearing date: August 21, 2017 at 2 p.m. Courtroom 8A United States Courthouse 350 West First Street, Los Angeles, California Judge Virginia A. Phillips Case 5:17-cv-00066-VAP-SP Document 24-3 Filed 07/12/17 Page 1 of 8 Page ID #:287 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 This is an interpleader action involving surplus funds from a trustee’s nonjudicial-foreclosure sale. The United States claims the interpleaded funds because it has a lien on the proceeds from the sale arising from its federal tax lien, notice of which was recorded in January 2009. Absent proof that some other claimant has priority over the United States, the United States is entitled to summary judgment. I. Statement of facts. Martin Keller’s real property was sold through a nonjudicial- foreclosure sale in May 2016.1 The trustee’s sale yielded a surplus of $156,104.52.2 The trustee filed an interpleader action in state court, which the United States removed to this Court.3 Martin Keller has unpaid federal income-tax liabilities for tax years 2003 through 2006, as set forth in the following chart:4 Tax year Assessment date Outstanding balance as of Aug. 20, 2017 2003 June 4, 2007 and August 25, 2008 $298,500.51 2004 January 7, 2008 $24,021.94 2005 November 12, 2007 $19,454.92 2006 November 19, 2007 $7,687.42 Total outstanding balance as of August 20, 2017 $349,664.79 1 US SUF, ¶¶ 1, 4. 2 Id., ¶ 5. 3 Id., ¶¶ 6, 7. 4 Id., ¶¶ 8–12. Case 5:17-cv-00066-VAP-SP Document 24-3 Filed 07/12/17 Page 2 of 8 Page ID #:288 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 By automatic operation of §§ 6321 and 6322 of the Internal Revenue Code (26 U.S.C.), the United States has a lien on all of Martin Keller’s property and right to property.5 On January 16, 2009, the Internal Revenue Service recorded a notice of federal tax lien at the Recorder’s Office for San Bernardino County.6 The United States and the California Franchise Tax Board have stipulated that the United States has priority over the California Franchise Tax Board’s claim and, accordingly, that the United States is entitled to the $40,308.53 ($40,099.89 plus $208.64 interest) that was paid to the California Franchise Tax Board from the interpleaded funds.7 II. Because Martin Keller failed to pay his tax liability, the United States has tax liens on all of his property, including any community property. Because Martin Keller has not paid his taxes, the United States has a lien on all of his property. If a taxpayer fails to pay a tax that is due, a federal tax lien automatically arises by operation of IRC § 6321 on “all property and rights to property, whether real or personal” belonging to the taxpayer. The federal tax lien is essentially a security interest in all of the taxpayer’s property. The statutory language “is broad[,]” according to the United States Supreme Court in United States v. National Bank of 5 Id., ¶ 14. 6 Id., ¶ 15. 7 Id., ¶¶ 16, 17. Case 5:17-cv-00066-VAP-SP Document 24-3 Filed 07/12/17 Page 3 of 8 Page ID #:289 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Commerce, “and reveals on its face that Congress meant to reach every interest in property that a taxpayer might have.”8 In Drye v. United States, the Supreme Court noted that “stronger language” could not have been used revealing the legislative aim “to reach every species of right or interest protected by law and having an exchangeable value.”9 By operation of IRC § 6322, the federal tax lien arises automatically on the date of assessment and continues until the tax liability is satisfied or becomes unenforceable due to lapse of time. As noted by the Ninth Circuit in Seaboard Surety Company v. United States, the federal tax lien arises on assessment, continues until the tax liability is extinguished, and “attach[es] to all after-acquired property of the taxpayer.”10 Martin Keller had a community property interest in the foreclosed property. Under California law, community property “is liable for a debt incurred by either spouse before or during marriage, regardless of which spouse has the management and control of the property and regardless of whether one or both spouses are parties to the debt or to a judgment for the debt.”11 In In re McIntyre, the Ninth Circuit confirmed that, under this community-property regime, federal tax liens against one member of the community extend to the entirety of the community property.12 8 472 U.S. 713, 719, 105 S. Ct. 2919, 86 L. Ed. 2d 565 (1985). 9 528 U.S. 49, 56, 120 S. Ct. 474, 145 L. Ed. 2d 466 (1999) (quoting Glass City Bank v. United States, 326 U.S. 265, 267, 66 S. Ct. 108, 90 L. Ed. 56 (1945); Jewett v. Commissioner, 455 U.S. 305, 309, 102 S. Ct. 1082, 71 L. Ed. 2d 170 (1982) (quoting S. Rep. No. 665, 72d Cong., 1st Sess., 39 (1932); H.R. Rep. No. 708, 72d Cong., 1st Sess., 27 (1932)). 10 306 F.2d 855, 859 (9th Cir. 1962) (citing Glass City Bank v. United States, 326 U.S. 265, 66 S. Ct. 108, 90 L. Ed. 56 (1945)). 11 Cal. Fam. Code. § 910(a). 12 222 F.3d 655, 657–59 (9th Cir. 2000). Case 5:17-cv-00066-VAP-SP Document 24-3 Filed 07/12/17 Page 4 of 8 Page ID #:290 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. Absent proof that another claimant has priority over the United States, the United States is entitled to summary judgment. In United States v. McDermott, the Supreme Court said: “Absent provision to the contrary, priority for purposes of federal law is governed by the common-law principal that the first in time is the first in right.”13 Here, the United States and the California Franchise Tax Board have stipulated that the United States has priority over the Franchise Tax Board’s claim. For any other claimant to have priority over the United States, that claimant must offer proof that its claim is senior to that of the United States. IV. Conclusion. Because Martin Keller had not paid his taxes, the Government has a lien on his property. In January 2009, the Government recorded its notice of federal tax lien. The Government’s lien extends to all of the community property in which Martin Keller has an interest. Absent /// /// /// /// /// /// 13 507 U.S. 447, 449, 113 S. Ct. 1526, 123 L. Ed. 2d 128 (1993) (quoting United States v. New Britain, 347 U.S. 81, 85, 74 S. Ct. 367, 98 L. Ed. 520 (1954)) (internal quotations omitted). Case 5:17-cv-00066-VAP-SP Document 24-3 Filed 07/12/17 Page 5 of 8 Page ID #:291 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 proof that some other claimant has priority over the United States, the Government is entitled to summary judgment. Dated: July 12, 2017 SANDRA R. BROWN Acting United States Attorney THOMAS D. COKER Assistant United States Attorney Chief, Tax Division /s/ Andrew T. Pribe ANDREW T. PRIBE Assistant United States Attorney Case 5:17-cv-00066-VAP-SP Document 24-3 Filed 07/12/17 Page 6 of 8 Page ID #:292 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE BY MAILING I am over the age of 18 and not a party to the within action. I am employed by the Office of the United States Attorney, Central District of California. My business address is 300 North Los Angeles Street, Suite 7211, Los Angeles, California 90012. On July 12, 2017, I served UNITED STATES OF AMERICA’S MEMORANDUM IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT UNDER FED. R. CIV. P. 56 on each person or entity name below by enclosing a copy in an envelope addressed as shown below and placing the envelope for collection and mailing on the date and at the place shown below following our ordinary office practices. I am readily familiar with the practice of this office for collection and processing correspondence for mailing. On the same day that correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service in a sealed envelope with postage fully prepaid. Date of mailing: July 12, 2017 Place of mailing: Los Angeles, California See attached list I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. I declare that I am employed in the office of a member of the bar of this court at whose direction the service was made. Executed on: July 12, 2017, Los Angeles, California. /s/_______ Barbara Le Case 5:17-cv-00066-VAP-SP Document 24-3 Filed 07/12/17 Page 7 of 8 Page ID #:293 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RE: GUILD ADMINISTRATION CORPORATION V. UNITED STATES OF AMERICA, ET AL CASE NO.: ED CV 17-66 VAP (SPx) Service List EDGAR C. KELLER 341 Puritan Place Redlands, CA 92373 JOZEL BRUNETT TODD M. BAILEY JOHN M. O'DONNELL FRANCHISE TAX BOARD P.O. Box 1720, MS: A-260 Rancho Cordova, CA 95741-1720 JANET M. KELLER P.O. Box 9125 Cedarpines Park, CA 92322 Case 5:17-cv-00066-VAP-SP Document 24-3 Filed 07/12/17 Page 8 of 8 Page ID #:294 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SANDRA R. BROWN Acting United States Attorney THOMAS D. COKER Assistant United States Attorney Chief, Tax Division ANDREW T. PRIBE (CA SBN 254904) Assistant United States Attorney Federal Building, Suite 7211 300 North Los Angeles Street Los Angeles, California 90012 Telephone: (213) 894-6551 Facsimile: (213) 894-0115 E-mail: andrew.t.pribe@usdoj.gov Attorneys for the United States of America UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA EASTERN DIVISION GUILD ADMINISTRATION CORPORATION, Plaintiff v. UNITED STATES OF AMERICA, ET AL. Case No.: 5:17-cv-00066 VAP(SPx) [proposed] Judgment Case 5:17-cv-00066-VAP-SP Document 24-4 Filed 07/12/17 Page 1 of 5 Page ID #:295 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Based on the United States of America’s motion for summary judgment and for good cause shown: 1. Judgment is entered in favor of the United States as to the interpleaded funds of $156,104.52 deposited with the Clerk of the Superior Court of the State of California for the County of San Bernardino in In re 3660 La Hacienda Drive, San Bernardino, CA 92404 (also bearing the caption Guild Administration Corp., v. All Claimants to Surplus Funds After Trustee’s Sale of Real Property Located at: 3660 La Hacienda Drive, San Bernardino, CA 92404), case no. CIVDS 1617088. 2. The California Franchise Tax Board is ordered to pay to the United States the $40,308.53 ($40,099.89 plus $208.64 interest) it received from the Clerk of the Superior Court of the State of California for the County of San Bernardino. 3. The Clerk of the Superior Court of the State of California for the County of San Bernardino is directed to distribute to the United States of America the $116,004.63 balance of the interpleaded funds in its possession plus any accrued interest the Clerk may have earned on the funds. 4. Payments under this order shall be made payable to the “United States Department of Justice” and mailed to Andrew T. Pribe, /// /// /// /// /// /// Case 5:17-cv-00066-VAP-SP Document 24-4 Filed 07/12/17 Page 2 of 5 Page ID #:296 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Assistant United States Attorney, United States Attorney’s Office, 300 N. Los Angeles Street, Suite 7211, Los Angeles, California 90012. IT IS SO ORDERED. Date: ____________________________________ VIRGINIA A. PHILLIPS CHIEF UNITED STATES DISTRICT JUDGE Case 5:17-cv-00066-VAP-SP Document 24-4 Filed 07/12/17 Page 3 of 5 Page ID #:297 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE BY MAILING I am over the age of 18 and not a party to the within action. I am employed by the Office of the United States Attorney, Central District of California. My business address is 300 North Los Angeles Street, Suite 7211, Los Angeles, California 90012. On July 12, 2017, I served (PROPOSED) JUDGMENT on each person or entity name below by enclosing a copy in an envelope addressed as shown below and placing the envelope for collection and mailing on the date and at the place shown below following our ordinary office practices. I am readily familiar with the practice of this office for collection and processing correspondence for mailing. On the same day that correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service in a sealed envelope with postage fully prepaid. Date of mailing: July 12, 2017 Place of mailing: Los Angeles, California See attached list I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. I declare that I am employed in the office of a member of the bar of this court at whose direction the service was made. Executed on: July 12, 2017, Los Angeles, California. /s/_______ Barbara Le Case 5:17-cv-00066-VAP-SP Document 24-4 Filed 07/12/17 Page 4 of 5 Page ID #:298 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RE: GUILD ADMINISTRATION CORPORATION V. UNITED STATES OF AMERICA, ET AL CASE NO.: ED CV 17-66 VAP (SPx) Service List EDGAR C. KELLER 341 Puritan Place Redlands, CA 92373 JOZEL BRUNETT TODD M. BAILEY JOHN M. O'DONNELL FRANCHISE TAX BOARD P.O. Box 1720, MS: A-260 Rancho Cordova, CA 95741-1720 JANET M. KELLER P.O. Box 9125 Cedarpines Park, CA 92322 Case 5:17-cv-00066-VAP-SP Document 24-4 Filed 07/12/17 Page 5 of 5 Page ID #:299