USA v. TJ Enterprises & Acoustical et alMOTION for Summary Judgment and Memorandum in Support Motionfor Summary JudgmentD. UtahMay 1, 2017Jeffery R. Price (USB 06315) MOULTON & PRICE, P.C. 74 East 500 South, Suite 245 Bountiful, Utah 84010 Telephone: (801) 683-8337 Facsimile: (903) 705-6860 jeff@moultonprice.com Attorneys for Defendants T.J. Enterprises & Acoustical, Inc., Gurule Properties Incorporated d/b/a/ Gurule Properties, Inc., and Linda Gurule a/k/a Linda Lee Roach ______________________________________________________________________________ IN THE UNITED STATED DISTRICT COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION ______________________________________________________________________________ ) UNITED STATES OF AMERICA, ) MOTION FOR SUMMARY ) JUDGMENT OF DEFENDANTS Plaintiff, ) GURULE PROPERTIES, INC. ) AND LINDA GURULE -vs.- ) ) T.J. ENTERPRISES & ACOUSTICAL, INC.; ) GURULE PROPERTIES INCORPORATED, ) d/b/a GURULE PROPERTIES, INC.; LINDA ) GURULE, a/k/a LINDA LEE ROACH; RDLC ) MANAGEMENT; STATE OF UTAH, TAX ) COMMISSION; STATE OF UTAH DEPART- ) MENT OF WORKFORCE SERVICES; SALT ) Civil No. 2:15-cv-00065-DN LAKE COUNTY, UTAH; WORKERS ) COMPENSATION FUND OF UTAH; ) Judge David Nuffer CERTIFIED REPROGRAPHICS, INC.; ) CHEKLINE, INC.; d/b/a/ CHECK MAX; ) Magistrate Judge Evelyn J. Furse Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 1 of 38 NEW HAMPSHIRE INSURANCE COMPANY, ) a member company of AMERICAN ) INTERNATIONAL GROUP, INC.; and ) SAVAGE SCAFFOLD & EQUIPMENT, INC., ) ) Defendants. ) _________________________________________ ) COMES NOW defendants Gurule Properties, Inc. (“GPI”) and Linda Gurule, acting by and through their counsel of record, and under Rule 56(c) of the Federal Rules of Civil Procedure, and local rules DUCivR 7-1, and DUCivR 56-1, hereby move the Court to grant a summary judgment in their favor and against plaintiff to dismiss Counts II, III, IV and V of the Complaint. Introduction and Statement of Relief Requested This is an action by the United States of America (“the Government”) to collect payment of federal taxes from T.J. Enterprises & Acoustical, Inc. (“T.J. Enterprises”) T.J. Enterprises was a Utah corporation. T.J. Enterprises was incorporated in 1997 as a construction company. T.J. Enterprises operated from 1997 until 2010. Throughout the entire time it operated, T.J. Enterprises was solely, and wholly owned by Teddy (“Ted”) J. Gurule. Defendant Linda Gurule is Ted Gurule’s mother. Terry Gurule is Ted Gurule’s brother. Jennifer Gurule is Ted Gurule’s wife. In July 2005, Linda Gurule announced her idea to purchase a commercial property for sale located at 480 W. Century Dr., Murray, Utah. (“the Property”) Linda Gurule, Ted Gurule and Jennifer Gurule formed a new Utah corporation -2- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 2 of 38 known as Gurule Properties, Inc. (“GPI”) for the purpose of purchasing the Property as an investment for the benefit of Linda Gurule and her family. The sole shareholder of GPI is Linda Gurule. The Directors for GPI are Linda Gurule, Ted Gurule, and Jennifer Gurule. The officers of GPI are Linda Gurule (President), and Ted Gurule (Secretary). On August 5, 2005, GPI entered into a written contract with RDLC Management to purchase the Property on terms, with the seller retaining a security interest (Trust Deed) in the Property until agreement was paid in full. The seller of the Property is unrelated to, and unaffiliated with any of the Gurule family members. The purchase price for the Property was $310,000.00. Linda Gurule and her husband provided GPI with money for down payment of $30,000.00. On August 5, 2005, the seller transferred the Property to GPI by Warranty Deed, and retained a security interest by Trust Deed. The balance of $280,000.00 was then paid according to terms of the loan agreement with the seller (“Note”). .J. Enterprises (i.e. the Taxpayer) never held title to the Property. T.J. Enterprises did not transfer the Property to GPI. T.J. Enterprises did not transfer money to GPI and direct it be used to purchase the Property for the benefit of T.J. Enterprises. T.J. Enterprises did not pay any money to purchase the Property at the time of the transaction, when title passed to Gurule Properties, Inc. T.J. Enterprises ceased to exist in 2010 prior to the time the balance was paid off on the Property. T.J. Enterprises did not, cannot, and does not retain any beneficial ownership in the Property as a matter of law. -3- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 3 of 38 Terry Gurule loaned a substantial amount of money to T.J. Enterprises and provided substantial other value to T.J. Enterprises and Ted Gurule. In 2007, in order to secure Terry Gurule’s position, GPI, through Linda Gurule, agreed that GPI would provide a Trust Deed against the Property in the face amount of $350,000.00. Terry Gurule (a non-lawyer) obtained a Trust Deed form from the internet, prepared it for signing by Ted, Linda, Jennifer, and GPI, and, once signed, recorded it on the records of the Salt Lake County Recorder. (“the Trust Deed”) Later, being in need of money, at a time when the Property was encumbered beyond its value by federal tax liens, Terry Gurule assigned the Trust Deed to Linda Gurule in exchange for payment of $3,000.00. The Deed of Trust and the Assignment are in full effect and valid as a matter of law. The Government has no basis in fact or law to be asserting otherwise as alleged in Count IV of the Complaint. In this case, the Government, in Counts II through V seeks to: (1) reduce the tax assessments against T.J. Enterprises to judgment; (2) have the court determine that GPI is the nominee, alter-ego or transferee of T.J. Enterprises; (3) to declare the Property held in a resulting trust for the benefit of the Government; (4) have the court declare the Trust Deed invalid; and (5) foreclose the federal tax liens against GPI’s property in order to satisfy T.J. Enterprises’ tax debt. Statement of Relief Requested Gurule Properties, Inc. seeks in this motion an order of the Court to grant it a summary judgment to: (1) dismiss Counts II, III and V of the Complaint, in their entirety, with prejudice; -4- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 4 of 38 and (2) to order the federal tax liens cancelled and removed as encumbrances on the title record of GPI’s Property. Linda Gurule seeks in this motion an order of the Court to grant her a summary judgment to dismiss Count IV of the Complaint, in its entirety, with prejudice Statement of Elements and Undisputed Material Facts I. USA Claim Against Gurule Properties, Inc. - Complaint, Counts II, III and V as Nominee of T.J. Enterprises: (A) Elements Required to Prevail: As against Gurule Properties, Inc., the Government has the burden to prove by clear and convincing evidence: Count II: That T.J. Enterprises owns a direct and/or equitable interest in GPI’s property because GPI is the nominee, alter ego or transferee of T.J. Enterprises under some theory of state (Utah) law.1 Count III: That the purchase of the Property gave rise to a purchase money resulting trust under Utah law. Count V: That T.J. Enterprises’ equitable interest in the Property is subject to foreclosure by the Government by means of the federal tax liens. Gurule Properties, Inc.’s defense succeeds to completely to defeat the Government’s claims because: 1 The Government has nowhere revealed in Count II, under what theory or theories of Utah law it seeks to establish the nominee, atler-ego or transferee status of GPI. It appears from the face of the Complaint the sole theory advanced by the Government is a purchase money resulting trust. See, e.g. Count III of the Complaint. -5- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 5 of 38 Count II a. GPI is not the Transferee of T.J. Enterprises 1. T.J. Enterprises never held title to the Property in its own name. 2. T.J. Enterprises never transferred the Property to GPI. b. That where GPI is not a “Transferee” of T.J. Enterprises, No equitable interest in the Property arises from a fraudulent transfer: 1. T.J. Enterprises never held title to the Property in its own name. 2. T.J. Enterprises never transferred the Property to GPI. 3. Because there is no transfer of the Property, none of the “badges of fraud” apply as set forth in the Utah Uniform Fraudulent Transfer Act, Utah. Code Ann. §25-6-5(2)(a-k) to give rise to an equitable interest reachable by the Government. c. GPI is not the alter-ego of T.J. Enterprises: 1. The Government had no dealings with GPI. 2. The Government has no standing to seek to pierce the corporate veil of GPI. 3. The Government has not alleged, and has no legally cognizable claim against GPI for which GPI is liable to the Government other than the equitable claim of a resulting trust in favor of T.J. Enterprises under Count III. The Government’s claim of a resulting trust is not directed at GPI’s shareholder individually. Counts II and III d. There is no Basis in Fact or Law for a Purchase Money Resulting Trust. 1. T.J. Enterprises never held title to the Property in its own name. 2. T.J. Enterprises never transferred the Property to GPI. -6- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 6 of 38 3. T.J. Enterprises did not pay the purchase price for the Property at the time of the purchase transaction, and conveyance of the Property from RDLC Management to GPI. 4. T.J. Enterprises never had any legal obligation, in writing or otherwise, to pay the purchase price for the Property. 5. T.J. Enterprises never had any agreement with GPI, in writing or otherwise, regarding the Property under which T.J. Enterprises obtained any beneficial ownership interest in the Property. 7. The Government cannot meet its burden of proving a resulting trust by clear and convincing evidence. Count V: e. T.J. Enterprises has no equitable interest in the Property, such that the Government is not entitled to foreclose its tax liens against GPI’s property. (B) Citation to Legal Authority: a. As the standard for summary judgment under Rule 56 of the Federal Rules of Civil Procedure: Cases Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986) Barber v. General Elec. Co., 648 F.2d 1272, 1276 n. 1 (10th Cir. 1981) Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986) Maughan v. S.W. Servicing, Inc., 758 F.2d 1381, 1387 (10th Cir. 1985) Tersiner v. Union Pacific R.R., 740 F.Supp. 1519, 1522-23 (D.Kan.1990) Rules Rule 56, Federal Rules of Civil Procedure -7- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 7 of 38 b. As to the Plaintiff’s Burden of Proof and Application of State Law: Cases: Drye v. United States, 528 U.S. 49, 58, 120 S.Ct. 474, 145 L.Ed.2d 466 (1999) Holman v. USA, 505 F.3d 1060 (10th Cir. 2007) In re. Krouse, 637 F.3d 1160 (10th Cir. 2011) McGavin v. McGavin et al., 189 F.3d 1215, 1217 (10th Cir. 1999) Taylor v. Rupp (In re. Taylor), 133 F.2d 1336 (10th Cir. 1998) USA v. Tingey, 716 F.3d1295 (10th Cir. 2013) c. As to application of Utah law regarding alter-ego: Cases: Colman v. Colman, 743 P.2d 782 (Utah Ct.App. 1987) Lodges at Bear Hollow Condo. Homeowners Ass'n v. Bear Hollow Restoration, LLC, 2015 UT App. 6, ¶ 13, 344 P.3d 145 (Utah App. 2015) Jones & Trevor Mktg., Inc. v. Lowry, 2012 UT 39, ¶ 13, 284 P.3d 630 (Utah App. 2012) Norman v. Murray First Thrift & Loan Co., 596 P.2d 1028, 1030 (Utah 1979) Simons v. Park City RV Resort, LLC, et al., 354 P.3d 215, 218-219 (Utah App. 2015) d. As to the application of Utah law regarding fraudulent transfers: Cases: Selvage v. J.J. Johnson & Assocs., 910 P.2d 1252, 1261 (Utah App.1996) -8- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 8 of 38 Territorial Sav. & Loan Ass'n v. Baird, 781 P.2d 452, 462 (Utah App.1989) Wastach Oil & Gas, LLC v. Reott, 163 P.3d 713, 722 (Utah App. 2007) Statutes: Utah Uniform Fraudulent Transfers Act, Utah Code Ann. §25-6-5(1)(a) and §25-6- 5(2)(a)-(k) e. As to the application of Utah law regarding purchase money resulting trusts: Christian v. College Boulevard National Bank, 820 F. Supp. 1293, (D. Kansas 1993) Davis v. Roberts, 295 S.W.2d 152, 156 (Mo. 1956)(en banc) Drye v. United States, 528 U.S. 49, 58, 120 S.Ct. 474, 145 L.Ed.2d 466 (1999) Holman v. USA, 505 F.3d 1060 (10th Cir. 2007) In re. Krouse, 637 F.3d 1160 (10th Cir. 2011) McGavin v. McGavin et al., 189 F.3d 1215, 1217 (10th Cir. 1999) Nielson v. Rasmussen, 558 P.2d 511, 513 (Utah 1976) Parks v. Zions First National Bank (In re. Est. of Parks), 673 P.2d 590 (Utah 1983) Taylor v. Rupp (In re. Taylor), 133 F.2d 1336 (10th Cir. 1998) USA v. Tingey, 716 F.3d1295 (10th Cir. 2013) Zions First National Bank v. Fennemore (In re. Est. of Hock), 655 P.2d 1111, 1115 (Utah 1982) Other Authorities: -9- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 9 of 38 Restatement (Second) of Trusts, §§§440, 441 and 443, cmt. a 5 Scott, The Law of Trusts §§440 and 457 (3d Ed. 1967) G.G. and G.T. Bogert, Trusts and Trustees §456 at 548-549 (2d ed. 1964) (C) Statement of Undisputed Material Facts 1. T. J. Enterprises & Acoustical, Inc. was incorporated in Utah in 1997.2 2. T.J. Enterprises was engaged in the business of construction of metal stud framing, drywall and acoustical ceiling for commercial buildings.3 3. The sole shareholder, director and officer of T.J. Enterprises was Teddy J. Gurule.4 4. Neither Linda Gurule nor Jennifer Gurule was ever a shareholder, director, or officer of T.J. Enterprises.5 5. T.J. Enterprises ceased all business operations sometime in 2010.6 2 Ex. D-1, pp.13-23 3 Ex. D-1, p.14 4 Ex. D-1, pp. 13-23 5 Ex. D-3, No. 5 6 Ex. D-1, pp. 13-23; Ex. D-3, p.7; Ex. D-4, p.13 -10- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 10 of 38 6. In or about July 2005, Linda Gurule was attending a church which is located immediately adjacent to the Property located at 480 W. Century Dr., Murray, Utah 84123.7 7. In going to and from the church, Linda Gurule observed a sign placard with words to the effect that the building was for sale by the owner.8 8. Linda Gurule had the idea of purchasing the building as an investment property for herself and her family members, and discussed doing so with Ted Gurule and Jennifer Gurule.9 9. From those discussions, Linda Gurule asked Ted Gurule to make contact with the owner and see if they (Linda and Ted) could negotiate agreeable terms for the purchase with the owner.10 10. Both Linda and Ted Gurule met with the owner to discuss and negotiate the sale and purchase of the Property.11 7 Ex. D-4, p. 25 8 Id. 9 Id. 10 Ex. D-4, pp. 25-31 11 Ex. D-4, pp. 47-48, 63 -11- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 11 of 38 11. Gurule Properties, Inc. (“GPI”) was originally incorporated in Utah on August 5, 2005.12 12. Linda Gurule is the sole shareholder of Gurule Properties, Inc.13 13. Linda Gurule, Ted Gurule and Jennifer Gurule are the Directors of Gurule GPI.14 14. Linda Gurule and Ted Gurule are the officers of GPI.15 15. The purpose of GPI was to purchase and own the Property as an investment and legacy for Linda Gurule and her family.16 16. On August 5, 2005, GPI entered into a contract with RDLC Management to purchase the Property.17 17. Under the contract, the purchase price for the Property was $310,000.00.18 18. On August 5, 2005, GPI paid an initial down-payment to RDLC in the amount of $30,000.00.19 12 Ex. D-4, p. 15; Ex. D-5 13 Ex. D-4, pp.15-16; Ex. D-6, Interrogatory No. 5 14 Ex. D-6, Interrogatory No. 5 15 Ex. D-4, pp. 16-17;p Ex. D-6, Interrogatory No. 5 16 Ex. D-4, p.18 17 Comp./GPI Answr, ¶44; Ex. D-7; Ex. D-8; Ex. D-9; Ex. D-10; Ex. D-11 18 Ex. D-7; Ex. D-8; Ex. D-9; Ex. D-10; Ex. D-11 19 Ex. D-4, pp. 26-27; Ex. D-11 -12- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 12 of 38 19. The money used for the down payment was provided by Linda Gurule’s husband Barry Wickel.20 20. On August 5, 2005, at the direction of Linda Gurule, by the Through Ted Gurule in his capacity as the Secretary of GPI, GPI executed a Promissory Note for payment of the balance of the purchase price of $280,000.00, under which GPI obligated itself to pay the balance of the purchase price according to terms stated in the Note.21 21. On August 5, 2005, RDLC Management executed and delivered a Warranty Deed in favor and for the benefit of Gurule Properties, Inc., which was recorded with in the office of the Salt Lake Count Recorder on August 5, 2005, at 3:56 p.m.22 22. On August 5, 2005, Gurule Properties, Inc. executed and delivered a Deed of Trust And Assignment of Rents in favor of RDLC Management to secure payment due under the Note, which was recorded in the office of the Salt Lake County Recorder on August 5, 2005 at the same time as the Warranty Deed.23 20 Ex. D-4, pp. 26-27 21 Ex. D-4, pp. 50-51; Ex. D-8 22 Comp/GPI Answr., ¶28; Ex. D-10 23 Comp/GPI Answr., ¶28; Ex. D-9 -13- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 13 of 38 23. T.J. Enterprises paid no money to RDLC Management for any purpose on August 5, 2005.24 24. T.J. Enterprises neither paid nor provided any of the money used by GPI for the down payment paid to RDLC Management on August 5, 2005.25 25. T.J. Enterprises paid no money to anybody on August 5, 2005, in connection with the purchase of the Property.26 26. T.J. Enterprises had no agreement, written or otherwise, with RDLC Management in connection with the purchase of the Property.27 27. T.J. Enterprises had no agreement, written or otherwise, with Gurule Properties, Inc. in connection with the purchase of the Property.28 28. The purchase and ownership of the property is and was always intended by Ted Gurule, T.J. Enterprises and Linda Gurule to be for the exclusive benefit of Gurule Properties, Inc. as an investment or legacy property for Linda Gurule and her family.29 24 Ex. D-12 25 Id. 26 Id. 27 Id. 28 Id. 29 Id. -14- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 14 of 38 33. T.J. Enterprises never held title to the Property in its own name.30 34. T.J. Enterprises never transferred the Property to Gurule Properties, Inc.31 II. USA Claim Against Linda Gurule Count IV - To Invalidate Deed of Trust and Assignment of Deed of Trust (A) Elements Required to Prevail: The Government bears the burden to prove: 1. That the Deed of Trust made in favor of Terry Gurule constitutes a fraudulent transfer under the Utah Uniform Fraudulent Transfers Act so as to create an equitable interest in the Property in favor of T.J. Enterprises. 2. That the Assignment of the Deed of Trust to Linda Gurule by Terry Gurule Constitutes a Fraudulent Transfer under the Utah Uniform Fraudulent Transfers Act 3. That the debt to Terry Gurule has been satisfied 4. That the Deed of Trust is otherwise junior to any enforceable federal tax liens Linda Gurule’s defense succeeds to completely defeats the Government’s claims in Count IV because: 1. The Government is not a creditor of GPI. 2. The Government is not a party to the Deed of Trust or the Assignment of Deed of Trust. 3. The Government has no standing to challenge the validity of the Deed of Trust or Assignment of Deed of Trust. 30 Ex. D-2, No. 6 31 Ex. D-2, No. 7 -15- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 15 of 38 4. T.J. Enterprises never held title to the Property in its own name. 5. T.J. Enterprises never transferred the Property to Gurule Properties, Inc. 6. T.J. Enterprises did not transfer or convey any interest in the Property to Terry Gurule. 7. GPI conveyed the Deed of Trust in favor of Terry Gurule. 8. Gurule Properties, Inc. intends that Terry Gurule have a security interest in the Property under the Deed of Trust. 9. The Assignment of the Deed of Trust to Linda Gurule was given for value. 10. The Government has no interest in the Property. 11. The debt owed to Terry Gurule has never been satisfied. 12. The Government’s claim in Count IV is barred by the applicable statute of limitations. (B) Citations to Authority Statutes Utah Uniform Fraudulent Transfers Act, Utah Code Ann. §25-6-5(1)(a) and Utah Code Ann. §§26-6-10 (C) Statement of Undisputed Material Facts 1. In 2003 T.J. Enterprises began having significant tax related difficulties and other serious financial problems, which continued until T.J. Enterprises went out of business in 2010.32 32 Complaint, ¶¶17-26 - not disputed by Linda Gurule -16- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 16 of 38 2. Terry Gurule, the brother of Ted Gurule was working as an employee at T.J. Enterprises.33 3. Terry Gurule was severely injured in a motorcycle accident.34 4. Terry Gurule received a cash settlement from a claim arising from injuries he sustained in the motorcycle accident.35 (Ex. “7") 5. From the proceeds of the settlement, Terry Gurule made a series of loans to T.J. Enterprises totaling approximately $120,000.00.36 6. Terry Gurule, while working at T.J. Enterprises was owed waged and un- reimbursed business expenses from T.J. Enterprises.37 7. Terry Gurule purchased a residential property by taking out a mortgage in his own name and on his own credit.38 8. The purpose of the purchase of the residential property was provide a place for Ted Gurule and his wife Jennifer to live, with the agreement that Ted and Jennifer would make 33 Ex. D-13, pp. 18-21 34 Ex. D-13, pp. 36-37 35 Id. 36 Ex. D-13, pp. 25-37 37 Ex. D-13, pp. 20-21, 41-45 38 Ex. D-13, pp. 25-37 -17- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 17 of 38 all of the mortgage payments, and pay all other expenses associated with the residential property to hold Terry Gurule harmless from the risk of foreclosure or loss of the property.39 9. The residential property is at risk of foreclosure due to the failure of T.J. Enterprises and Ted’s ability to generate income.40 10. In 2008 Terry Gurule perceived that T.J. Enterprises office, that T.J. Enterprises was having serious financial problems, including tax problems.41 11. Concerned about being repaid for the loans, Terry Gurule obtained a Deed of Trust form from the internet, modified it insert the names of T.J. Enterprises, Gurule Properties, Inc., an amount relating to his loan to T.J. Enterprises, etc.42 12. Terry Gurule is not a lawyer. Terry Gurule did not seek or receive any legal assistance or advice in preparing the Deed of Trust.43 14. Terry Gurule has and had not personal knowledge of the business dealings or relationships, if any, between T.J. Enterprises and GPI, and/or Linda Gurule and Ted Gurule.44 39 Ex. D-13, pp. 41-45 40 Id. 41 Ex. D-13, pp. 40-49 42 Id. 43 Id. 44 Ex. D-13, pp. 25-27 -18- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 18 of 38 15. Terry Gurule demanded that Ted Gurule, Linda Gurule, and Jennifer Gurule sign the Deed of Trust so he could record it and secure repayment of his money and the value of the residential property in the event it was lost.45 16. On March 17, 2008, Ted Gurule as an agent for T.J. Enterprises signed the Deed of Trust. Jennifer Gurule and Linda Gurule, each as individuals signed the Deed of Trust as prepared by Terry Gurule.46 17. The Deed of Trust was recorded on the records of the Salt Lake County Recorder on March 18, 2008.47 18. The Deed of Trust as prepared by Terry Gurule the “Borrower” and Trustor as “T.J. Enterprises and Acoustical (A.K.A. Gurule Properties, Inc.)”48 19. On August 25, 2011, Terry Gurule prepared and executed an Assignment of Deed of Trust to assign the Deed of Trust signed by Ted, Linda and Jennifer to Linda Gurule.49 20. At that time Terry Gurule was in need of money to fund his bankruptcy case, and believed the Deed of Trust to be essentially worthless because of federal tax liens or other debts, 45 Id. 46 Ex. D-14 47 Id.; Comp./Linda Gurle Answr.; ¶56 48 Id. 49 Ex. D-15; Ex. D-16, pp. 19-24 -19- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 19 of 38 and made the assignment to Linda Gurule in exchange for payment of $3,000.00.50 21. The Assignment of Deed of Trust was recorded on the records of the Salt Lake County Recorder on August 25, 2011.51 22. The $3,000.00 consideration for the Assignment was paid in full by Linda Gurule.52 23. On December 14, 2014, T.J. Enterprises, Ted Gurule, Gurule Properties, Inc. and Linda Gurule executed and recorded an Affidavit of Correction to Deed of Trust.53 24. The Affidavit of Correction of Deed of Trust was to correct the name of the borrower in the Deed of Trust in favor of Terry Gurule, and to affirm that Gurule Properties, Inc., as the conveyor of the Deed of Trust ratified a security interest in the Property in favor of Terry Gurule, as intended by the Deed of Trust.54 25. The debt to Terry Gurule has never been satisfied.55 50 Id. 51 Comp./Linda Gurule Answr., ¶56; Ex. D-15 52 Ex. D-17, pp. 19-24 53 Ex. D-16 54 Id. 55 Ex. 13, pp. 25-71 -20- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 20 of 38 Argument A. Standard for Summary Judgment Under Rule 56 of the Federal Rules of Civil Procedure the court must examine all the evidence in the light most favorable to the nonmoving party. Barber v. General Elec. Co., 648 F.2d 1272, 1276 n. 1 (10th Cir. 1981). A moving party who bears the burden of proof at trial is entitled to summary judgment only when the evidence indicates that no genuine issue of material fact exists. Fed.R.Civ.P. 56(c); Maughan v. S.W. Servicing, Inc., 758 F.2d 1381, 1387 (10th Cir. 1985). If the moving party does not bear the burden of proof at trial, it must show "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). Once the movant meets these requirements, the burden shifts to the party resisting the motion to "set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986). The nonmovant may not merely rest on the pleadings to meet this burden. Id. Genuine factual issues must exist that "can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Id. at 250, 106 S.Ct. at 2511; Tersiner v. Union Pacific R.R., 740 F.Supp. 1519, 1522-23 (D.Kan.1990). More than a "disfavored procedural shortcut," summary judgment is an important procedure "designed 'to secure the just, speedy and inexpensive determination of every action.' Fed.R.Civ.P. 1." Celotex, 477 U.S. at 327, 106 S.Ct. at 2555. -21- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 21 of 38 B. As to Counts II, III and V of the Complaint - T.J. Enterprises Has No Equitable or Other Interest in the Property Which the Government Has a Right to Foreclose to Satisfy T.J. Enterprises’ Tax Debt 1. Plaintiff has failed to plead facts, and Cannot Meet its Burden to Prove that GPI is the alter ego, nominee, or transferee of T.J. Enterprises under the applicable law. In cases, like this one, where the Government seeks to satisfy a taxpayer’s obligation from the property an alleged nominee or alter-ego, the Court is required to look initially to state law to determine what rights the taxpayer has in the property the Government seeks to reach." Drye v. United States, 528 U.S. 49, 58, 120 S.Ct. 474, 145 L.Ed.2d 466 (1999); USA v. Tingey, 716 F.3d1295 (10th Cir. 2013); In re. Krouse, 637 F.3d 1160 (10th Cir. 2011); Holman v. USA, 505 F.3d 1060 (10th Cir. 2007) In Count II of the Complaint, the Government does not reveal upon which theory(ies) of Utah law the Government relies to establish that the taxpayer, T.J. Enterprises has, if any, in the Property. There are likely only four (4) possible legal theories to which the Government might look to prove that the taxpayer (T.J. Enterprises) has some cognizable legal or equitable ownership interest in the Property. Those four theories are: (1) direct ownership of the real property under Utah real property law; (2) the Utah law of alter-ego of a corporation; (3) the Utah fraudulent conveyance statute; and (4) the Utah law of purchase money resulting trusts. No legal or ownership interest in the Property in favor of T.J. Enterprises arises from any of these theories, such that Gurule Properties, Inc. is entitled to judgment as a matter of law. -22- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 22 of 38 a. T.J. Enterprises Had No Direct Ownership of the Property T.J. Enterprises have never owned the Property in its own name. There is no allegation stated anywhere in the Complaint that T.J. Enterprises ever directly acquired title or legal ownership of the subject property by a conveyance from anyone. T.J. Enterprises did not transfer the Property to Gurule Properties, Inc. On the contrary, the Government properly admits that Gurule Properties, Inc. acquired the subject property in its own name from the previous owner (by warranty deed) on August 5, 2005. The Government is left to prove some legally cognizable equitable interest GPI’s property in favor of T.J. Enterprises. No such interest has ever existed arisen in this case under any applicable law. b. Gurule Properties, Inc. Is Not the Alter-ego of T.J. Enterprises As a Matter of Law. The Utah Court of Appeals has recently reiterated the well settled law in Utah concerning the elements required to plead and prove a case for alter-ego liability. In Simons v. Park City RV Resort, LLC, et al., 354 P.3d 215, 218-219 (Utah App. 2015), the court explained as follows: " 'Ordinarily a corporation [or limited liability company] is regarded as a legal entity, separate and apart from its stockholders.'" Lodges at Bear Hollow Condo. Homeowners Ass'n v. Bear Hollow Restoration, LLC, 2015 UT App. 6, ¶ 13, 344 P.3d 145 (quoting Jones & Trevor Mktg., Inc. v. Lowry, 2012 UT 39, ¶ 13, 284 P.3d 630).[3] " The purpose of such separation is to insulate the stockholders from the liabilities of the [corporate entity], thus limiting their liability to only the amount that the stockholders voluntarily put at risk." Id. (citation and internal quotation marks omitted). A party " may pierce the corporate veil and obtain a judgment against the individual shareholders . . . [for] a cause of action [that] arose from a dispute with the corporate entity" if the plaintiff proves that the corporation is acting as an alter ego of its shareholders. Id. (citation and internal quotation marks omitted). Courts grant such relief, however, " only reluctantly and -23- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 23 of 38 cautiously." Id. (citation and internal quotation marks omitted). To make a case for piercing the corporate veil, the plaintiff must demonstrate both parts of what has become known as the Norman test. Id. ¶ 14. " The first part of the test, often called the 'formalities requirement,' requires the [claimant] to show 'such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist.'" Id. (quoting Norman v. Murray First Thrift & Loan Co., 596 P.2d 1028, 1030 (Utah 1979)). In Colman v. Colman, 743 P.2d 782 (Utah Ct.App. 1987), we identified " [c]ertain factors which are deemed significant, although not conclusive, in determining whether [the formalities requirement] has been met." Id. at 786. These factors include (1) undercapitalization of a one-man corporation; (2) failure to observe corporate formalities; (3) nonpayment of dividends; (4) siphoning of corporate funds by the dominant stockholder; (5) nonfunctioning of other officers or directors; (6) absence of corporate records; [and] (7) the use of the corporation as a facade for operations of the dominant stockholder or stockholders . . . . Id. (footnotes omitted). " The second part of the [ Norman] test, often called the 'fairness requirement,' requires the [claimant] to show that observance of the corporate form would sanction a fraud, promote injustice, or condone an inequitable result." Lodges at Bear Hollow, 2015 UT App. 6, ¶ 14, 344 P.3d 145. In this case, the Government has not alleged, and has no evidence of facts necessary or sufficient to prove that GPI is the alter-ego of T. J. Enterprises. The idea of the alter-ego law is to permit a creditor, in an appropriate situation to pierce (i.e. disregard) the corporate entity, and recover directly from the shareholder or shareholders personally. In this case, the Government would ostensibly be claiming to pierce the corporate entity of GPI, to hold its shareholder liable for payment of the tax debt owed by T.J. Enterprises. The only shareholder of GPI is Linda Gurule. According to the Complaint, Linda Gurule is a named defendant in this case because she may claim an interest in the Property. (Complaint, ¶7) That interest arises from a Deed of Trust and related Assignment of Deed of Trust referenced in Count IV of the Complaint. The -24- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 24 of 38 Government is not claiming that Linda Gurule is personally liable for the tax debt of T.J. Enterprises because she’s a shareholder of GPI. The law of alter-ego, in connection with conjuring up some equitable interest of T.J. Enterprises in GPI’s property, has no application in this case. Moreover, the Government has failed to plead, and cannot prove any of the Colman factors for purposes of imposing liability as the alter-ego under Utah law. As to the second part of the Norman test, the Government only asserts that for Gurule Properties, Inc. to retain its ownership in the subject property would frustrate the Government’s attempt to collect a tax debt from T.J. Enterprises. That is a far cry away from alleging facts sufficient to show that recognizing the corporate separateness of Gurule Properties, Inc. would condone an inequitable result, or somehow sanction a fraud just because the Government doesn’t get to look to GPI’s property to satisfy the unpaid tax assessments against T.J. Enterprises. It is this very type of unsupported claim that makes the courts in Utah cautious and reluctant to pierce the corporate veil in the best of cases. This one is not the best of cases. The Government has not plead, and cannot prove a case for T.J. Enterprises obtaining rights in the Property under Utah alter-ego law. Accordingly, GPI is entitled to judgment as a matter of law. c. T.J. Enterprises Has No Equitable Ownership Interest in the Property Arising Under Utah’s Uniform Fraudulent Transfers Act. Under the Utah Fraudulent Transfer Act (UFTA), the transfer of an asset "is fraudulent ... if the debtor made the transfer ... with actual intent to hinder, delay, or defraud any creditor of the -25- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 25 of 38 debtor." Utah Code Ann. §25-6-5(1)(a). In deciding whether fraudulent intent exists, it is appropriate to infer its existence from "certain indicia of fraud," among other factors, set forth in the UFTA, see id. §25-6-5(2)(a)-(k). Wastach Oil & Gas, LLC v. Reott, 163 P.3d 713, 722 (Utah App. 2007)(citing,Territorial Sav. & Loan Ass'n v. Baird, 781 P.2d 452, 462 (Utah App.1989). These indicia have been described as so called "badges of fraud." Id. (citing, Selvage v. J.J. Johnson & Assocs., 910 P.2d 1252, 1261 (Utah App.1996)) In order for Utah’s fraudulent transfer law to apply, there has to have been a transfer of property of an asset from a transferor (i.e. T.J. Enterprises) to a transferee (i.e. Gurule Properties, Inc. Each of the so called “badges of fraud” rely on the existence of a transfer of an asset from the debtor to another for the purposes of evading the debt. Without a transfer, there are no badges of fraud, and hence no case arising under the Utah fraudulent transfer law. Utah Code Ann. §25-6-5(2)(a)-(k) .J. Enterprises never held title in it own name. T.J. Enterprises did not transfer the Property to GPI. The UFTA has no application in this case to create an equitable interest in GPI’s property in favor of T.J. Enterprises which is subject to the federal tax liens. GPI is entitle to judgment as a matter of law. d. No Purchase Money Resulting Trust Arises in this Case As a Matter of Law The Government’s only real theory to show GPI as the nominee of T.J. Enterprises, is that a purchase money resulting trust was created to give equitable title of the Property to T.J. -26- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 26 of 38 Enterprises, because T.J. Enterprises paid rent to GPI, which was used to pay off GPI’s original note for the Property. For purposes of Counts II, III and V of the Complaint, the Government bears the burden of proving, by clear and convincing evidence, that T.J. Enterprises retains an equitable right to the Property by way of a purchase money resulting trust. Holman v. United States, 505 F.3d 1060 (10th Cir. 2007)(citing, Parks v. Zions First National Bank, 673 P.2d 590 (Utah 1983)) Under Utah law, the Government in this case bears the burden to prove, that the acquisition of the Property by GPI gives rise to the imposition of a resulting trust in which the transferor (i.e. taxpayer) retained a beneficial interest. Holman v. United States, 505 F.3d 1060 (10th Cir. 2007)(citing, Parks v. Zions First National Bank, 673 P.2d 590 (Utah 1983)) Such a trust is an equitable remedy. The circumstances requiring imposition of such a trust must be found to exist by "clear and convincing evidence. Id.; Taylor v. Rupp, (In re Taylor), 133 F.3d 1336 (10th Cir.), cert. denied, 119 S.Ct. 172 (1998)(citing, Parks v. Zions First National Bank, 673 P.2d 590 (Utah 1983); Nielson v. Rasmussen, 558 P.2d 511, 513 (Utah 1976)) That burden includes clear and convincing evidence of the transferor’s intent to retain a beneficial interest in the property. McGavin v. Segal, 189 F.3d 1215 (10th Cir. 1999)(citing, Parks v. Zions First National Bank, 673 P.2d 590 (Utah 1983)(emphasis added) The Government’s is to present evidence that leaves a reasonable fact finder an “abiding conviction that the truth of its factual contentions are ‘highly probable.’ This occurs when the -27- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 27 of 38 material it offered instantly tilted the evidentiary scales in the affirmative when weighed against the evidence [the opposing party] offered in opposition See e.g. Colorado v. New Mexico, 467 U.S. 310, 104 S.Ct. 2433, 2438, 81 L.Ed.2d 247 (1984)(citing C. McCormick, Law of Evidence § 320, p. 679 (1954), and McBaine, Burden of Proof: Degrees of Belief, 32 Calif.L.Rev. 242, 251-254 (1944)) The Government’s entire theory hinges on the allegation that T.J. Enterprises made all of the payments due under a Note and Trust Deed agreement between Gurule Properties, Inc. and the seller, RDLC Management. (Complaint, ¶¶28 and 45) Specifically, in paragraph 28 of the Complaint the Government acknowledges that “GPI purchased the property from RDLC by warranty deed and a Deed of Trust.” There is no dispute that the warranty deed was recorded, and that title to the Property passed to GPI on August 5, 2005. In paragraph 45 of the Complaint the Government specifically alleges, with emphasis, that “[a]fter the purchase, T.J. Enterprises conducted its business activities at the subject property, and it made all payments on a promissory note between Gurule Properties and RDLC Management, which was used for the purchase of the property and secured by the Deed of Trust and Assignment of rents described in paragraph 28, above (emphasis added) Whether a purchase money resulting trust arises in this case in favor of T.J. Enterprises (and derivatively the Government) is a matter of Utah law regarding resulting trusts. -28- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 28 of 38 Under Utah law “a purchase money resulting trust is an equitable remedy designed to implement what the law assumes to be the intentions of the putative trustee.” USA v. Tingey, 716 F.3d 1295, 1301-1302 (10th Cir. 2013)(citing, Zions First National Bank v. Fennemore (In re. Est. of Hock), 655 P.2d 1111, 1115 (Utah 1982)(emphasis added) Utah has adopted the general rule for the creation of a purchase money resulting trust by operation of law as set out in the Restatement (Second) of Trust §440 (1959) which provides in pertinent part: Where a transfer of property is made to one person and the purchase price is paid by another, a resulting trust arises in favor of the person by whom the purchase price is paid, except as stated in §§441, 442 and 444. Zions First National Bank v. Fennemore (In re. Est. of Hock), 655 P.2d 1111, 1115 (Utah 1982)(citations omitted) As noted by the court in Hock, expressed more succinctly, the general rule is: If there’s no evidence as to the intention of the parties, other than the fact that A paid the purchase price for conveyance to B, a resulting trust arises in favor of A. It is unnecessary for A to introduce further evidence that the trust was intended, since the character of the transaction itself raises the inference that B was not to take the property beneficially. Id. (citing 5 Scott, The Law of Trusts §440 (3d Ed. 1967) Notably, however, “It is the intention at the time of the transfer and not some subsequent time which determines whether a resulting trust arises.” USA v. Tingey, 716 F.3d 1295, 1302 -29- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 29 of 38 (10th Cir. 2013)(citing, Taylor v. Rupp (In re. Taylor), 133 F.2d 1336 (10th Cir. 1998)(quoting, Restatement (Second) of Trusts §443, cmt. a)(emphasis added);56 McGavin v. McGavin et al., 189 F.3d 1215, 1217 (10th Cir. 1999)(concerning a resulting trust, there must be clear and convincing evidence of the transferor’s intent at the time or the transfer to retain a beneficial interest in the property)(emphasis added) Under this law a party claiming a resulting trust in favor of A, must prove that A paid, or at least obligated himself to pay the purchase price for the subject property, in writing, at the time the property was transferred to B. See, e.g. Davis v. Roberts, 295 S.W.2d 152, 156 (Mo. 1956)(en banc)(cited with approval in Christian v. College Boulevard National Bank, 820 F. Supp. 1293, 1297 (D. Kansas 1993)(“A resulting trust is one implied by law from the acts and conduct of the parties and the facts and circumstances which at the time exist and surround the transaction)(emphasis added) Moreover, it has long been recognized that if property is conveyed to A, who pays a down-payment and executes a promissory note, payment by B of the note indebtedness pursuant to subsequent oral agreement by which B is to get an interest in the land will not create a presumption of a resulting trust because B was not obligated to do so before the passage of legal title to A. See, G.G. and G.T. Bogert, Trusts and Trustees §456 at 548-549 (2d ed. 1964) To 56 Compare, Davis v. Roberts, 295 S.W.2d 152, 156 (Mo. 1956)(en banc)(‘A resulting trust, as distinguished from an express trust, is one implied by law from the acts and conduct of the parties and the facts and circumstances which at the time exist and attend the transaction out of which it arises.’(citations omitted)(emphasis added) -30- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 30 of 38 Give effect to the subsequent oral agreement would run afoul of the statute of frauds. 5 A. Scott, The Law of Trusts §457 at 3397 (3d ed. 1967) The Government does not dispute that T.J. Enterprises made no payment to RDLC Management for the purchase of the Property at the time of the transaction. Rather, the Government emphasizes that T.J. Enterprises made no payments at all until “after the purchase.” The undisputed evidence is that T.J. Enterprises made no payment to anybody at the time of the transaction. Further, there is no allegation (not even a suggestion) in the Complaint that T.J. Enterprises ever legally obligated itself make payments of the purchase price at the time of the transaction. The undisputed evidence is that there was no such agreement. On the face of the Complaint, based on both the facts which were alleged, those that were not alleged, and on the undisputed evidence no presumption of the intent for T.J. Enterprises to retain an equitable interest in the Property arises, and hence, and no resulting trust arises in this case as a matter of law. Where there is no resulting trust, T.J. Enterprises has no interest in the Property which may be reached by the federal tax liens. Accordingly, defendant Gurule Properties, Inc. is entitled to a summary judgment as a matter of law on Counts II, III and V of the Complaint. e. As to Count IV of the Complaint 1. There is No Basis in Law or Fact to Invalidate the Deed of Trust or Assignment to Linda Gurule So That Linda Gurule is Entitled to Judgment As a Matter of Law -31- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 31 of 38 T.J. Enterprises never had title to the Property in its own name. T.J. Enterprises did not transfer the Property to GPI. T.J. Enterprises does not now have, and never has had an equitable or beneficial ownership interest in the Property subject to any claim by the Government. It is undisputed that GPI took title to the Property by Warranty Deed on August 5, 2005. It is undisputed that GPI has remained the record title owner to the Property ever since. It is undisputed that the Note associated with the purchase of the Property was paid in full, and the purchase Deed of Trust reconveyed in July 2012. It is undisputed that the Government in this case is not a creditor of GPI. It is beyond any dispute that Terry Gurule loaned tens of thousands of dollars from his own money to T.J. Enterprises and Ted Gurule with the expectation of being repaid. It is not disputable that Terry Gurule gave substantial other value Ted Gurule with the expectation of being secured, and repaid. The government was not a party to those private agreements between Terry Gurule, T.J. Enterprises and Ted Gurule. The Government has no claim arising from, or in connection with them. As the title owner of the Property, GPI had the right to convey a Deed of Trust, or any other partial or complete interest in the Property, to anyone, at any time, and for any reason, on any terms or conditions it wanted, with or without consideration. The Government has no right to intervene or interfere with that right at all for any reason. -32- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 32 of 38 The Government was not a party to either the Deed of Trust to Terry Gurule, or the Assignment of Deed of Trust to Linda Gurule. The Government is not a creditor of GPI. The Government has no interest in either of those instruments. The Government has no standing to challenge the validity of either of those two instruments. Paragraph 54 of the Government’s Complaint states that on March 18, 2008, Teddy’s brother, Terry Gurule, recorded a Deed of Trust with the Salt Lake County Recorder, claiming that the deed secured a $350,000 Note between Terry Gurule and “TJ Enterprises and Acoustical (A.K.A. Gurule Properties, Inc.) The Government omits mention that the Deed of Trust was later corrected, as to the mention of “TJ Enterprises and Acoustical” in the Deed of Trust was a scrivener’s error, and the corrected the conveyor of the Deed of Trust to be the owner of the Property, Gurule Properties, Inc. The Affidavit of Correction further explicitly states the intention of Gurule Properties, Inc. to give a security interest in favor of Terry Gurule by means of the Deed of Trust. That Affidavit of Correction is undisputed by the Government. Accordingly, TJ Enterprises has never held any legal or equitable interest in the Property, and therefore never transferred any security interest or any other interest in the Property to anyone. These facts are not disputed in the record evidence. Paragraph 55 of the Government’s Complaint further contends that neither Terry Gurule nor T.J. Enterprises has provided any documentation of the $350,000.00 loan. That statement is meaningless as well. GPI has no obligation or burden to prove anything concerning the private -33- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 33 of 38 dealings between Terry Gurule and T.J. Enterprises. GPI bears no burden in this case to justify its giving a Deed of Trust to Terry Gurule, or the amount or value of the Deed of Trust, or the reason why GPI gave a Deed of Trust in favor of Terry Gurule. Even if GPI gave the Deed of Trust in favor of Terry Gurule for the express purpose of defeating the Government’s ineffective tax liens, it had every lawful right to so do. The Government is not a creditor of GPI. Terry Gurule eventually assigned the Deed of Trust to Linda Gurule on August 25, 2011. Rather bizarrely, the Government contends that the recording of both the Deed of Trust and Assignment of Deed of Trust were made with the intent to hinder, delay, and defraud T.J. Enterprises’ creditors, and the Deed of Trust was recorded without T.J. Enterprises receiving reasonably equivalent value in exchange for the purported obligation. Since T.J. Enterprises never held an interest in the property, there is no possible way that Gurule Properties, Inc.’s granting of a security interest to Terry Gurule could somehow “hinder, delay, and defraud T.J. Enterprises’ creditors.” T.J. Enterprises never had any interest in the subject property, and consequently, T.J. Enterprises’ creditors never could have obtained any interest in the subject property. Moreover, the Government has no standing to assert some abstract claim against GPI on behalf of unidentified creditors of T.J. Enterprises. Although the Complaint does not specify under what theory of law the Deed of Trust or Assignment should be set aside, in responses to Interrogatories, the Government states that it seeks to set aside the Deed of Trust as a fraudulent conveyance, or in the alternative, an interest -34- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 34 of 38 in the subject property that has either been satisfied or is junior to the United States’ interest in the property. Under Utah law, a fraudulent conveyance is defined as follows: 25-6-5. Fraudulent transfer -- Claim arising before or after transfer. (1) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation: (a) with actual intent to hinder, delay, or defraud any creditor of the debtor; or (b) without receiving a reasonably equivalent value in exchange for the transfer or obligation; and the debtor: (i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or (ii) intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due. Utah Code Ann. §25-6-5(1)(a). T.J. Enterprises never held an interest in the subject property, therefore there was never a “transfer” by T.J. Enterprises. Equally important, however, is the fact that neither Terry Gurule, nor Gurule Properties, Inc., nor Linda Gurule, were debtors of the Government at the time that the Deed of Trust was recorded or assigned. Accordingly, there could have been no “intent to hinder, delay, or defraud any creditor of the debtor.” Finally, with regards to the Governments’ claims that the Deed of Trust is an interest in the subject property that has either been satisfied or is junior to the United States’ interest in the property. The Government has provided no evidence that the debt has been paid. The -35- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 35 of 38 Governments’ assertion that the Deed of Trust is junior to the federal tax liens relies wholly upon the Government’s failed claim of a resulting trust. In short, the Government’s contentions are nothing more than unsupported allegations, which fail as a matter of law. Linda Gurule is entitled to judgment as a matter of law on Count IV of the Complaint. 2. The Government’s Claim in Count IV Is Barred Under The Applicable Statute of Limitations, Utah Code Ann. §§26-6-10 Paragraph 53 of the Government’s Complaint states that the IRS met with Teddy Gurule in February of 2008, and suggested that T.J. Enterprises liquidate its interest in the subject property and apply the proceeds to its tax obligations. Facts about that meeting will be disputed. But the dispute on the details of the meeting doesn’t matter. What does matter is: (1) T.J. Enterprises undisputedly never had an interest in the Property it could liquidate; and (2) the Government new and had reason to know about the Property, the Deed of Trust and the Assignment, more than four (4) years prior to filing the present lawsuit. There were public records available to the Government from the time the Deed of Trust was recorded on March 18, 2008. The Government nowhere articulates whether it is asserting its claim under Section 5 (prior to the transfer) or Section 6 (after the transfer) of the UFTA. It makes not difference, in either case, the claim is barred by the applicable statute of limitations under Utah Code Annotated §25-6-10. In either case, the most generous reading of the UFTA required the -36- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 36 of 38 Government to file its claim within four (4) years of the recording of the Deed of Trust. The Government’s claim was filed in March, 2015, long after the applicable statute of limitations had run. Linda Gurule is entitled to a judgment as a matter of law both under Rule 12(b) and 56 of the Federal Rules of Civil Procedure. Conclusion In view of the undisputed material facts and arguments set forth above, defendants Gurule Properties, Inc. and Linda Gurule hereby request the Court to issue an order granting them, respectively, a Summary Judgment in their favor and against plaintiff on Counts II, III, IV and V of the Complaint, to dismiss those counts in their entirety, with prejudice, to order the federal tax liens against the subject property be cancelled and removed in their entirety, with prejudice, and together with such further relief the Court deems just and appropriate under the circumstances. DATED this 1st day of May, 2017 MOULTON & PRICE, P.C. By: /s/ Jeffery R. Price Jeffery R. Price Attorneys for Defendants T.J. Enterprises & Acoustical, Inc., Gurule Properties Incorporated d/b/a/ Gurule Properties, Inc., and Linda Gurule a/k/a Linda Lee Roach -37- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 37 of 38 Certificate of Service I hereby certify that on the 1st day of May, 2017, I caused to be served a true and correct copy of the foregoing through the court’s CM/ECF electronic filing and electronic mail system. DATED this 1st day of May, 2017 MOULTON & PRICE, P.C. By: /s/ Jeffery R. Price Jeffery R. Price Attorneys for Defendants T.J. Enterprises & Acoustical, Inc., Gurule Properties Incorporated d/b/a/ Gurule Properties, Inc., and Linda Gurule a/k/a Linda Lee Roach -38- Case 2:15-cv-00065-DN Document 64 Filed 05/01/17 Page 38 of 38
