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United States v. McFarland

United States District Court, S.D. Mississippi, Northern Division

July 23, 2015

UNITED STATES OF AMERICA, Plaintiff,
v.
BURNS H. McFARLAND, et al., Defendants.

ORDER

DANIEL P. JORDAN, III, District Judge.

This tax-lien-enforcement action is before the Court on Plaintiff United States of America's Motion for Summary Judgment [49]. Having fully considered the premises, the Court finds that the United States is entitled to summary judgment on its claims as well as R. McFarland's counterclaim. The United States' motion is therefore granted.

I. Facts and Procedural History

The United States filed this lawsuit to reduce to judgment various federal tax liens and penalties assessed against Defendant Burns H. McFarland ("B. McFarland"). Principally at issue in the present motion is the United States' claimed interest in real property ("the Property") B. McFarland purchased in 1997 but then transferred to his son, Robert McFarland ("R. McFarland"), in 2003 after a federal tax lien was recorded. The tax liens now disputed occurred after this transfer.

The United States has moved for summary judgment as to (1) its claims against B. McFarland, (2) its claim against both McFarlands for foreclosure of the liens on the Property, and (3) R. McFarland's counterclaim to quiet title to the Property. B. McFarland waived response; R. McFarland has responded in opposition with a memorandum [51] that also purports to include a cross motion for summary judgment. He did not, however, separately docket his motion as required by Uniform Local Rule 7(b)(3)(C), and he filed no reply in support thereof. The Court has personal and subject-matter jurisdiction and is prepared to rule.

II. Standard

Summary judgment is warranted under Rule 56(a) of the Federal Rules of Civil Procedure when evidence reveals "no genuine dispute as to material fact and the movant is entitled to judgment as a matter of law." The rule "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

The party moving for summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Id. at 323. The nonmoving party must then "go beyond the pleadings" and "designate specific facts showing that there is a genuine issue for trial.'" Id. at 324. In reviewing the evidence, factual controversies are to be resolved in favor of the nonmovant, "but only when... both parties have submitted evidence of contradictory facts." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam). When such contradictory facts exist, the court may "not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000).

III. Analysis

A. Counts I and II of the Complaint

The United States has offered proof that, as of April 1, 2015, B. McFarland is liable for outstanding federal income taxes and trust-fund-recovery penalty assessments in the amounts of $110, 244.25, and $1, 021, 591.85. B. McFarland offers nothing in opposition, and R. McFarland points to no record evidence suggesting the invalidity of the assessments.[1] The United States is entitled to summary judgment on its claims for the unpaid taxes and penalties. See Perez v. United States, 312 F.3d 191, 195-96 (5th Cir. 2002) (per curiam).

B. Count III of the Complaint and the Quiet-Title Counterclaim

The heart of this litigation concerns the ownership of the Property. The United States contends that R. McFarland holds title only as the nominee of B. McFarland, who maintains true beneficial ownership of the Property. Under 26 U.S.C. § 6321, if a taxpayer "neglects or refuses" to pay any tax "after demand, " the amount owed becomes "a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person." A lien under § 6321 "shall arise at the time the assessment is made." 26 U.S.C. § 6322. The language in § 6321 "is broad and reveals on its face that Congress meant to reach every interest in property that a taxpayer might have." United States v. Nat'l Bank of Commerce, 472 U.S. 713, 719-20 (1985).

Significantly, liability under § 6321 can attach when property is held by the taxpayer's nominee. See Oxford Capital Corp. v. United States, 211 F.3d 280, 283-84 (5th Cir. 2000) (per curiam). "A nominee theory involves the determination of the true beneficial ownership of the property.'" Oxford Capital Corp., 211 F.3d at 284. "Specific property in which a third person has legal title may be levied upon as a nominee of the taxpayer if the taxpayer in fact has beneficial ownership of the property." Id. To that end, "[p]roperty, ' as defined by the statute, includes not only the property and rights to property owned by the delinquent taxpayer, but also property held by a third party if it is determined that the third party is holding the property as a nominee... of the delinquent ...


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