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United States v. Ethridge

United States District Court, Fifth Circuit

June 5, 2013




BEFORE THE COURT is a Motion for Summary Judgment [14] filed by the United States of America on January 8, 2013, pursuant to Federal Rule of Civil Procedure 56. Jomey Ethridge filed a Response [17] on January 29, 2013, and the United States has filed a Rebuttal [18]. After due consideration of the Motion, Response, Rebuttal, the record and pleadings on file, and relevant legal authorities, the Court finds that Plaintiff's Motion for Summary Judgment [14] should be granted.


Jomey Ethridge ["Defendant"] served as owner, president, director, and resident agent of Struthers Industries, Inc., located in Gulfport, Mississippi. Struthers Industries was in the business of designing and building heat transfer and pressure vessels. Due to economic setbacks and other factors, on July 17, 2003, Defendant filed on behalf of Struthers Industries a petition for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of Mississippi. In Re Struthers Industries, Bankr. No. 03-53514-ERG. The Internal Revenue Service ["IRS"] filed a pre-petition claim in the bankruptcy proceedings for $2, 576, 994.38, and a post-petition Request for Payment of Internal Revenue Taxes in the amount of $946, 065.65. Proof of Claim [14-14]. The IRS filed a Fourth Amended Proof of Claim on November 1, 2004. Amended Proof of Claims [14-14]. As a result of the bankruptcy proceedings, Struthers Industries was liquidated in 2005. On November 8, 2006, the Bankruptcy Court entered an Order [14-15] approving various claims against the Struthers estate, including one on behalf of the United States ["Plaintiff"] for the sum of $900, 000.00 "in full and final satisfaction of its administrative claim in this case set forth in its Request for Payment of Internal Revenue Taxes dated June 17, 2005." Bankruptcy Court Order [14-15], at p. 16, att. as Ex. "15" to Mot. for Summ. J.

The November 8, 2006, Order did not restrict Plaintiff's right to pursue relief on its pre-petition claims submitted in its November 1, 2004, Fourth Amended Proof of Claim. As such, on June 11, 2012, Plaintiff filed a Complaint [1] in this Court against Jomey Ethridge and Cynthia McDaniel[1], seeking recovery of $742, 894.51 plus interest for unpaid trust fund recovery penalty assessments resulting from Defendant's willful refusal to pay these sums. According to the Complaint, this action is brought pursuant to:

§§ 7402 and 7403 of the Internal Revenue Code, the Federal Debt Collection Procedure Act ["FDCPA"], 28 U.S.C. § 3301, et. seq., Florida's Uniform Fraudulent Transfer Act ["FUFTA"], Fla. Stat. § 7.26.101, et. seq., and Mississippi's Uniform Fraudulent Transfer Act ["MUFTA"], Miss. Code Ann. § 15-3-101, et seq.; to: (i) reduce to judgment unpaid trust fund recovery penalties owed by Jomey B. Ethridge; (ii) determine and reduce to judgment Cynthia McDaniel's liability for those trust fund recovery penalties as a fraudulent transferee of real property located in Panama City Beach, Florida (the "Panama City Beach property") and a 2010 Mercedes ESSOW (the "Mercedes"); (iii) foreclose federal tax liens on the Mercedes; and (iv) obtain an accounting, an order imposing a constructive trust on the proceeds McDaniel received from the sale of the Panama City Beach property, and an order requiring McDaniel and Ethridge to pay over the sales proceeds to the United States and permitting the United States to levy execution on those funds.

Compl. [1] ¶ 1, at pp. 1.

Plaintiff contends that during the period between March 31, 2002, and December 31, 2004, Defendant was the party responsible for collecting, accounting for, and remitting federal employment taxes for Struthers Industries employees. Plaintiff alleges that during the relevant time period, Defendant deposited millions of dollars into the Struthers operating accounts at Hancock Bank, and withdrew these same funds. As the person responsible to "collect, truthfully account for, and pay over the income and employment taxes withheld from Struthers' employees, [Defendant] willfully failed to satisfy those responsibilities and was duly assessed trust fund recovery penalties as a result pursuant to 26 U.S.C. § 6672." Compl. [1] at p. 7. Plaintiff now moves for summary judgment on its claims pursuant to Federal Rule of Civil Procedure 56.


A. Legal Standard

Federal Rule of Civil Procedure 56(a) provides that summary judgment is appropriate "[i]f 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). The purpose of summary judgment is to isolate and dispose of factually unsupported claims or defenses. Melton v. Teachers Ins. & Annuity Ass'n of America, 114 F.3d 557, 560 (5th Cir. 1997)(citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)).

To rebut a properly supported motion for summary judgment, the opposing party must show, with "significant probative evidence, " that there exists a genuine issue of material fact. Hamilton v. Segue Software, Inc., 232 F.3d 473, 477 (5th Cir. 2000). In deciding whether summary judgment is appropriate, the Court views facts and inferences in the light most favorable to the nonmoving party. RSR Corp. v. Int'l Ins. Co., 612 F.3d 851, 858 (5th Cir. 2010). However, if the evidence is merely colorable, or is not significantly probative, summary judgment is appropriate. Cutting Underwater Techs. USA, Inc. v. ENI U.S. Operating Co, 671 F.3d 512, 516 (5th Cir. 2012)(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). "[M]ere conclusory allegations are not competent summary judgment evidence, and such allegations are insufficient, therefore, to defeat a motion for summary judgment." Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996).

"There is no material fact issue unless the evidence is such that a reasonable jury could return a verdict for the nonmoving party." RSR Corp., 612 F.3d at 858. "A fact is material' if its resolution in favor of one party might affect the outcome of the lawsuit under governing law. An issue is genuine' if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party." Hamilton, 232 F.3d at 477 (citing Anderson, 477 U.S. at 248). "The court has no duty to search the record for material fact issues." RSR Corp., 612 F.3d at 858. "Rather, the party ...

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