Succullo v. United States of America

MOTION for summary judgment

M.D. Fla.January 6, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION MARK A. SUCCULLO, AS SUCCESSOR ) TRUSTEE OF THE ANTHONY L. ) SACCULLO IRREVOCABLE TRUST ) FOR THE BENEFIT OF MARK A. ) SACCULLO, ) ) Plaintiff/Counter Defendant, ) ) v. ) ) UNITED STATES OF AMERICA, ) ) Defendant/Counter Plaintiff ) ) v. ) ) MARK A. SACCULLO, AS PERSONAL ) REPRESENTATIVE OF THE ESTATE OF ) ANTHONY L. SACCULLO, MARK A. ) SACCULLO, DOROTHY SACCULLO, and ) TAX COLLECTOR OF CHARLOTTE ) COUNTY, FLORIDA, ) ) Counterclaim Defendants. ) _______________________________________) Case No. 8:16-cv-410-CEH-TBM DISPOSITIVE MOTION UNITED STATES OF AMERICA'S MOTION SUMMARY JUDGMENT1 The United States of America, by and through undersigned counsel, pursuant to Federal Rule of Civil Procedure 56, respectfully moves the Court for a summary judgment in 1The parties have stipulated as to the extent and priority of certain liens of Charlotte County in the real properties that are the subject of this action. (ECF No. 24.) This motion seeks to resolve the only remaining disputed issues which involve only the United States, Dorothy Saccullo, and Mark Saccullo in his various capacities. Case 8:16-cv-00410-CEH-TBM Document 33 Filed 01/06/17 Page 1 of 10 PageID 178 2 its favor. Plaintiff filed his complaint to quiet title to certain real property on February 22, 2016. (ECF No. 1.) On May 25, 2016, the United States answered the Complaint and asserted a counterclaim seeking to foreclose federal tax liens on the real property which was the subject of Plaintiff’s complaint and another property, thereby bringing additional defendants into the action. (ECF No. 13.) The undisputed facts establish that the lien for the federal estate tax liability of Anthony L. Saccullo’s estate attaches to both of those properties; therefore, the Court should order the foreclosure of that lien and the sale of those properties free and clear of the interests of the parties to this case with the proceeds to be paid to the United States and Charlotte County in accordance with the parties’ prior stipulation. INCORPORATED MEMORANDUM OF LAW Undisputed Facts2 Anthony L. Saccullo (the “decedent”) died on December 21, 2005. (Stip Facts ¶ 1.) On March 29, 2007, Mark Saccullo, filed a federal estate tax return for decedent’s Estate (“Estate”). (Stip Facts Ex. 1.) That estate tax return reported a federal estate tax due of $1,380,097 and included the two real properties (“Property One” and “Property Two”) that are at issue in this case in Anthony Saccullo’s gross estate. (Stip Facts ¶ 3.) The IRS 2The parties have stipulated to the facts material to their respective claims. References to the parties’ stipulation the priority of Charlotte County (ECF No. 24) will be in the form (Stip Priority ¶ #). References to the stipulation of undisputed facts between the United States and Mark and Dorothy Saccullo (ECF No. 32) will be in the form (Stip Facts ¶# or Stip Facts Ex. #). In each instance, # represents the number of the paragraph or exhibit cited. The United States and the Saccullos intend for the stipulation of facts to satisfy the Court’s requirement in ¶H.1 of the Case Management and Scheduling Order (ECF No. 20) requiring the parties provide a stipulation or agreed material facts. Case 8:16-cv-00410-CEH-TBM Document 33 Filed 01/06/17 Page 2 of 10 PageID 179 3 assessed the reported estate tax on May 7, 2007, gave notice of the assessment, and demanded it be paid. (Stip Facts ¶¶ 5-7.) Despite nominal payments with the return, the Estate’s estate tax liability remains unpaid in an amount that exceeds $1.6 million. (Stip Facts ¶¶ 4-9.) Property One is located at 327 Tamiami Trail, Port Charlotte, Florida. The legal description of Property One is: Lot 59, Block 2419, PORT CHARLOTTE SUBDIVISION, SECTION 32 according to the plat recorded at Plat Book 5, Page 29A thru 29H of the Public Records of Charlotte County, Florida. Parcel Id No.: 402103402002 (Stip Priority ¶1.a.) Decedent’s estate tax return included Property One in his gross estate with a date of death value of $220,000. (Stip Facts ¶ 10.) At some time prior to December 30, 1998, decedent became the sole owner of Property One in fee simple absolute. (Stip Facts ¶ 11.) On December 30, 1998, decedent executed a warranty deed purporting to transfer ownership of Property One from himself to the “Anthony L. Saccullo, Trustee under the Anthony L Saccullo Irrevocable Trust f b o Mark A Saccullo, dated 12-17-98.” (Stip Facts ¶ 12, Ex. 2.) That deed was notarized on December 12, 1998, and only bears the signature of one person identified as a “witness”. (Stip Facts ¶ 14, Ex. 2.) On January 31, 2008, Mark Saccullo, joined by his wife, Dorothy, executed a quit claim deed purporting to transfer Property One to themselves as Husband and Wife. (Stip Facts ¶¶ 19-20, Ex. 6.) On October 19, 1998, decedent executed an Irrevocable Trust for the Benefit of Mark A. Saccullo. (Stip Facts ¶ 15, Ex. 3.) He also executed an Irrevocable Trust for the Benefit Case 8:16-cv-00410-CEH-TBM Document 33 Filed 01/06/17 Page 3 of 10 PageID 180 4 of Katherine Steunkel on December 17, 1998. (Stip Facts ¶ 16, Ex. 4.) There is no irrevocable trust for the benefit of Mark Saccullo dated December 17, 1998. (Stip Facts ¶¶ 15-16.) Property Two is comprised of two parcels located at 311 and/or 315 Tamiami Trail, Port Charlotte, Florida. The legal description of Property Two is: Lots 60 and 61, Block 2419, PORT CHARLOTTE SUBDIVISION, SECTION 32 according to the plat recorded at Plat Book 5, Page 29A thru 29H of the Public Records of Charlotte County, Florida. Parcel Id No.: 402103402001 (Stip Priority ¶ 1.b.) At the time of his death, decedent owned Property Two. (Stip Facts ¶ 21.) Decedent’s estate tax return included Property Two in his gross estate with a date of death value of $320,000. (Stip Facts ¶ 22.) Property Two has not been sold or transferred and remains property of the probate Estate. (Stip Facts ¶ 23.) Mark Saccullo’s interest in Property Two is limited to the interest he acquired as personal representative of decedent’s estate. (Stip Facts ¶ 24.) Dorothy Saccullo has no interest in Property Two. (Stip Facts ¶ 25.) On September 10, 2012, a delegate of the Secretary of the Treasury filed a notice of federal tax lien in the public records of Charlotte County, Florida against the Estate for the estate tax assessed against it in 2007. (Stip Facts ¶ 26, Ex. 7.) On April 7, 2015, a delegate of the Secretary of the Treasury recorded a notice of federal tax lien as to Property One in the public records of Charlotte County, Florida against Mark Saccullo and Dorothy Saccullo, as transferees of decedent’s Estate. (Stip Facts ¶ 27, Ex. 8.) On April 7, 2015, a delegate of the Secretary of the Treasury also recorded a notice of federal tax lien as to Property Two (and Case 8:16-cv-00410-CEH-TBM Document 33 Filed 01/06/17 Page 4 of 10 PageID 181 5 other properties not at issue) in the public records of Charlotte County, Florida against Mark Saccullo as a transferee of the Estate. (Stip Facts ¶ 28, Ex. 9.) Argument Federal Rule of Civil Procedure 56(a) permits a party to move for summary judgment on “each claim or defense—or the part of each claim or defense—on which summary judgment is sought.” The Court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Here, the United States is entitled to summary judgment on its counterclaim because the undisputed facts establish that the two real properties at issue belonged to decedent’s probate Estate at the time its estate tax liability was assessed. Decedent’s attempt to place Property One into an irrevocable trust prior to his death was ineffectual. Consequently, it still belonged to him at his death, and remained part of his estate when the federal estate tax lien at issue arose and attached to all of its property. Property Two is also indisputably a part of the Estate, and is therefore also subject to the lien. It is now appropriate for the Court to order the foreclosure and sale of those properties pursuant to 26 U.S.C. § 7403. I. The Estate Tax Lien Attaches to Property One and Property Two. The undisputed facts establish that Property One and Property Two are subject to the United States’ lien for the Estate’s estate tax liability. A tax lien arises by operation of law Case 8:16-cv-00410-CEH-TBM Document 33 Filed 01/06/17 Page 5 of 10 PageID 182 6 upon the assessment of tax.3 See 26 U.S.C. §§ 6321, 6322. A tax lien attaches to all property and rights to property belonging to the taxpayer. 26 U.S.C. § 6321. The Court has jurisdiction to enforce a lien and subject property to payment of tax under 26 U.S.C. § 7403(a) where, as here, the United States brings suit at the request of the Secretary of the Treasury to enforce a tax liability. With respect to the two subject properties, they formed part of decedent’s gross estate at his time of death and were reported on his estate tax return as such. In general, federal tax liens arise under federal law and attach to rights to property determined by state law. Randall v. H. Nakashima & Co., 542 F.2d 270, 272 (5th Cir. 1976). Therefore, the ownership of Property One and Property Two is controlled by Florida law. There is no dispute that Property Two was owned by decedent at the time of his death, that the tax liens that arose upon assessment of the estate tax liability we seek to collect attached to it, and can be foreclosed. The controversy in this case only concerns Property One. Mark Saccullo filed his quiet title action alleging that Property One was transferred to an irrevocable trust in 1998, and that decedent had no interest in it at the time of his death. The undisputed facts establish, however, that the 1998 deed did not effectively transfer Property One to the irrevocable trust. Consequently, Property One remained part of decedent’s Estate and is subject to our tax lien. 3Pursuant to 26 U.S.C. § 6324 a separate lien for unpaid estate tax also arises at date of death and attaches to all property in the decedent’s gross estate for a period of ten years. That lien expired on December 21, 2015. Case 8:16-cv-00410-CEH-TBM Document 33 Filed 01/06/17 Page 6 of 10 PageID 183 7 A. Property One remains in the Estate because the 1998 deed identifies a non- existent trust as grantee. The 1998 deed was ineffective as a transfer of title because it identifies a non-existent trust as the grantee. It purports to transfer the property to decedent as trustee of an irrevocable trust for the benefit of Mark Saccullo dated “December 17, 1998,” but there is no evidence that such a trust ever existed. A deed from an owner of real property to a non- existent entity is a nullity. Daniels v. Berry, 513 So.2d 250, 251 (Fla. 5th Dist. Ct. App. 1987); see also McLemore v. McLemore, 675 So. 2d 202, 204 n.7 (Fla. 1st Dist. Ct. App. 1996). Therefore, because there is no irrevocable trust for Mark Saccullo dated December 17, 1998, the deed is a nullity and title remained with decedent.4 Similarly, if a conveyance of property is made to someone as trustee of a trust that does not exist, it creates a fee simple estate in the named trustee. See In re Miller, 418 B.R. 406, 409-10 (Bankr. N.D. Fla. 2009); Fla. Stat. Ann. § 689.07. Therefore, the deed could only give decedent—as the named trustee of the nonexistent trust—a fee simple estate in Property One (which he already had). B. Property One remains in the Estate because the 1998 deed was not properly witnessed. The deed is also ineffective to transfer title to a trust because it has only one witness. Under Florida law, a deed must be signed by two witnesses to transfer an estate in land. See Fla. Stat. Ann. 689.01. On the face of the deed, there is only one “witness,” a Thomas Alix. 4Decedent also executed a trust for Katherine Stuenkel dated December 17, 1998, but the deed does not correctly identify that trust either. Case 8:16-cv-00410-CEH-TBM Document 33 Filed 01/06/17 Page 7 of 10 PageID 184 8 Nor does the presence of a notary’s acknowledgement constitute that of a second witness, notwithstanding that the notary’s acknowledgement is itself suspect as predating the execution of the deed by eighteen days. See Walker v. City of Jacksonville, 360 So. 2d 52, 53 (Fla. 1st Dist. Ct. App. 1978).5 Consequently, the prior notarization and signature of only one putative witness renders the deed ineffective to transfer Property One to anyone or any irrevocable trust, even if the Court overlooks the identification of a nonexistent trust. This result is not altered by Florida’s five-year statute of limitations for a party to protest an ineffective deed on the basis of insufficient witnesses. See Fla. Stat. Ann. 95.231. State statutes of limitation do not generally apply to the United States. See United States v. Weiss, 791 F. Supp. 2d 1183, 1202 (M.D. Fla. 2011) (“Absent any statutory waiver, state statutes of limitations do not apply to actions filed by the federal government.”); See also, United States v. Summerlin, 310 U.S. 414, 416 (1940) (“It is well settled that the United States is not bound by state statutes of limitation . . . .”); United States v. Moore, 968 F.2d 1099, 1100 (11th Cir. 1992). Consequently, the deed is ineffective, leaving Property One in the Estate and attached with the estate tax lien. II. The Estate Tax Lien Should Be Foreclosed. A federal tax lien is not self-executing. To enforce a tax lien, the United States may bring an action under Section 7403 of the Internal Revenue Code. Section 7403 permits the Court to decree the foreclosure and sale of property subject to that lien. See 26 U.S.C. § 5The fact that the notarization predates the execution of the deed renders it meaningless. See Fla. Stat. Ann. 695.09. Case 8:16-cv-00410-CEH-TBM Document 33 Filed 01/06/17 Page 8 of 10 PageID 185 9 7403(a), (c); see also United States v. Rodgers, 461 U.S. 677 (1982) (District Courts to order foreclosure under section 7403 unless certain factors are present that weigh against foreclosure). Such an order is appropriate in this case. The Estate owes more than $1.6 million in assessed but unpaid estate tax liability. It has failed to pay that tax after notice and demand. (Stip Facts ¶ 7.) Therefore, the Court should order that the liens that arose upon assessment of the Estate’s liability attaches to Property One and Property Two and that they be sold. CONCLUSION For the foregoing reasons, the United States requests the Court grant summary judgment and order the foreclosure and sale of Property One and Property Two with the proceeds to be distributed in accordance with the parties’ stipulation. Dated: January 6, 2017 Respectfully Submitted, Caroline D. Ciraolo Principal Deputy Assistant Attorney General By: s/ Michael W. May MICHAEL W. MAY TX Bar no. 24054882 Trial Attorney, Tax Division U.S. Department of Justice Post Office Box 14198 Washington, D.C. 20044 Telephone: (202) 616-1857 Fax: (202) 514-9868 michael.w.may@usdoj.gov Of counsel: A. Lee Bentley, III Acting United States Attorney Counsel for Plaintiff United States of America Case 8:16-cv-00410-CEH-TBM Document 33 Filed 01/06/17 Page 9 of 10 PageID 186 10 CERTIFICATE OF SERVICE I hereby certify that on January 6, 2017, I electronically filed the foregoing UNITED STATES OF AMERICA'S MOTION FOR SUMMARY JUDGMENT with the Clerk of the Court by using the CM/ECF system which will cause service of it by electronic notification on the following: David W. Smith Law Office of David W. Smith 5020 Clark Road Ste. 42 Sarasota, FL 34223 Chris E. Frohlich, Esquire James D. Gordon, Esquire FROHLICH, GORDON & BEASON, P.A. 18501 Murdock Circule, Ste. 103 Port Charlotte, Florida 33948 s/ Michael W. May MICHAEL W. MAY Trial Attorney, Tax Division U.S. Department of Justice Case 8:16-cv-00410-CEH-TBM Document 33 Filed 01/06/17 Page 10 of 10 PageID 187