United States District Court, N.D. Mississippi, Oxford Division
OPINION AND ORDER
M. BROWN UNITED STATES DISTRICT JUDGE
interpleader action is before the Court on the United States
of America's motion for summary judgment, Doc. #32; and
State Auto Property and Casualty Insurance Company's
motion for summary judgment and motion to strike. Doc. #34;
April 8, 2016, State Auto Property and Casualty Insurance
Company filed a "Complaint for Interpleader and
Declaratory Judgment" in this Court, naming as
defendants "Eugene Burnett, Individually and d/b/a
JB's Auto and Diesel, " and The Internal Revenue
Service. Doc. #1. On May 9, 2016, State Auto filed an
"Amended Complaint for Interpleader and Declaratory
Judgment" against Burnett, "Individually and d/b/a
JB's Auto and Diesel, " and the United States of
America. Doc. #3. The amended complaint asserts an
interpleader action based on Burnett's and the United
States' competing claims to building coverage insurance
proceeds, and seeks a declaratory judgment that State Auto
has satisfied its obligations under the building coverage
6, 2016, Burnett, acting pro se, filed an "Answer and
Counter-Claim." Doc. #5. State Auto filed an answer to the
counterclaim on June 27, 2016. Doc. #11. On July 5, 2016,
Burnett filed an "Amended Answer and
Counter-Claim." Doc. #12. Burnett's amended
counterclaim alleges, among other things, bad faith by State
Auto "for failing to timely make payment" on the
policy to Burnett, which permitted the IRS time to make a
claim for the policy proceeds when the IRS originally made no
such claim. On July 18, 2016, State Auto answered
Burnett's amended counterclaim. Doc. #14. The United
States filed an answer to the amended complaint on August 3,
2016. Doc. #16.
August 11, 2016, State Auto filed a motion to deposit the
insurance proceeds into the registry of the Court pursuant to
Rules 22 and 67 of the Federal Rules of Civil Procedure. Doc.
#17. United States Magistrate Judge Jane M. Virden granted
the motion on August 16, 2016. Doc. #19.
October 21, 2016, the United States filed a motion seeking
summary judgment that the interpleaded insurance funds are
subject to federal liens recorded against Burnett for unpaid
federal income taxes and, as a result, should be distributed
to the United States. Doc. #32. On December 14, 2016, State
Auto filed a separate motion for summary judgment. Doc. #34.
19, 2017, Burnett filed "Defendants Response to the
United States' Motion for Summary Judgment, " to
which the defendants filed separate replies on, respectively,
May 25 and May, 26, 2017. Doc. #38; Doc. #40; Doc. #41.
Though Burnett's response is directed to the United
States' summary judgment motion, State Auto moved to
strike Burnett's response. Doc. #42.
Auto has moved to strike Burnett's response to the United
States' motion for summary judgment. Doc. #42. State
Auto argues that Burnett's response was (1) grossly
untimely under the local rules, (2) lacks competent summary
judgment evidence, and (3) fails to properly respond to State
Auto's motion for summary judgment and, thus, State
Auto's summary judgment motion should be granted.
Uniform Local Rule 7(b)(4) provides:
Counsel for respondent must, within fourteen days of service
of movant's motion and memorandum brief, file a response
and memorandum brief in support of the response. ... A party
must make a request for an extension of time in writing to
the judge who will decide the motion. Failure to timely
submit the required motion documents may result in denial of
Burnett failed to respond to the United States' summary
judgment motion within fourteen days and did not seek an
extension of the response period, his response is untimely.
motions, however, cannot be granted because they are
unopposed. See Uniform Local Rule 7(b)(3)(E).
Summary judgment can only be granted "if the motion and
supporting materials-including the facts considered
undisputed-show that the movant is entitled to it ...."
Fed.R.Civ.P. 56(e)(3). "The Supreme Court has recognized
that, even in the absence of a factual dispute, a district
court has the power to 'deny summary judgment in a case
where there is reason to believe that the better course would
be to proceed to a full trial.'" Black v. J.I.
Case Co., Inc., 22 F.3d 568, 572 (5th Cir. 1994) (citing
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986)). "Credibility determinations, the weighing of
evidence, and the drawing of legitimate inferences from the
facts are jury functions, not those of a judge ...."
Liberty Lobby, Inc., 477 U.S. at 255.
Burnett's response was untimely, in the interest of
justice, the Court will consider Burnett's response, to
which both parties replied without objecting to its
untimeliness. Williams v. Taco Bell Corp., No.
01-21132, 2002 WL 1973807, at *2 n.l (5th Cir. Aug. 2, 2002)
("Although Williams's response was untimely pursuant
to a local rule, the district court considered the response
in the interest of justice. For purposes of this appeal, we
follow the district court's lead and consider
Williams's response to Taco Bell's motion for summary
judgment.") (internal quotation marks and alterations
omitted). Accordingly, State Auto's motion to strike is
for Summary Judgment
Rule 56 of the Federal Rules of Civil Procedure,
"[s]ummary judgment is proper only when the record
demonstrates that no genuine issue of material fact exists
and the movant is entitled to judgment as a matter of
law." Luv N' Care Ltd. v. Groupo Rimar, 844
F.3d 442, 447 (5th Cir. 2016). "A factual issue is
genuine if the evidence is sufficient for a reasonable jury
to return a verdict for the non-moving party, and material if
its resolution could affect the outcome of the action."
Burton v. Freescale Semiconductor, Inc., 798 F.3d
222, 226 (5th Cir. 2015) (internal quotation marks omitted).
On a motion for summary judgment, a court must "consider
the evidence in the light most favorable to the nonmoving
party and draw all reasonable inferences in its favor."
Edwards v. Cont'l Cas. Co., 841 F.3d 360, 363
(5th Cir. 2016).
seeking summary judgment, "[t]he moving party 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." Nola Spice Designs, L.L.C.
v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir.
2015) (internal quotation marks and alterations omitted). If
the moving party satisfies this burden, "the non-moving
party must go beyond the pleadings and by her own affidavits,
or by the depositions, answers to interrogatories, and
admissions on file, designate specific facts showing that
there is a genuine issue for trial." Id.
(internal quotation marks omitted). "Where the nonmoving
party bears the burden of proof at trial, the moving party
satisfies this initial burden by demonstrating an absence of
evidence to support the nonmoving party's case."
Celtic Marine Corp. v. James C. Justice Cos., Inc.,
760 F.3d 477, 481 (5th Cir. 2014).
Insurance policy and payments
purchased a commercial insurance policy from State Auto to
cover his commercial building and business property. Doc.
#34-4. As the named insured, the policy lists "Eugene
Burnett dba JB's Auto and Diesel." Id. at
2. The policy term was for one year, from January 25, 2015,
to January 25, 2016. Id. at 12. The policy provided
$246, 637 of commercial building coverage, and $29, 026 of
business personal property coverage. Doc. #34-5 at
November 14, 2015, Burnett suffered a fire loss to his
commercial building. Burnett filed a claim for the loss with
State Auto. At the time of the loss, Covenant Bank held a
mortgage and multiple deeds of trust securing multiple loans
on the insured building, and was named the mortgagee under
the policy. Doc. #34-5 at 2.
November 20, 2015, Burnett was tendered $10, 000 as an
advance for business personal property and, on January 27,
2016, an additional $11, 911.80. Id. at 2-3 &
Exs. 1, 2. After Burnett submitted receipts verifying
replacement of business personal property lost in the fire,
he was tendered an additional $3, 465.84. Doc. #34-5 at 3
& Ex. 3. This left $3, 648.36 remaining as recoverable
depreciation under the policy for business personal property.
Doc. #34-5 at 3.
before January 5, 2016, State Auto conducted a title search
of the insured property and discovered the property was
subject to a federal tax lien filed in the land records of
Panola County, Mississippi, in the sum of $216, 925.65 plus
interest. Id. at 3; Doc. #1-2. On January 5, 2016,
State Auto spoke with Burnett and obtained contact
information from his IRS representative, Pamela Brown, to
discuss the tax lien. Doc. #34-5 at 3. After State Auto left
a voicemail for Brown, on January 14, 2016, IRS
representative Jureen Metzler called State Auto. Id.
Metzler left a voicemail advising that the IRS should be
included on the check for the remaining building proceeds and
that the IRS's standard protocol was to sign the check
and return it to the policyholder. Id.
January 26, 2016, State Auto received the amount of Covenant
Bank's mortgage and interest totaling $158, 144.26. Doc.
#34-5 at 3-1 & Ex. 4. The next day, State Auto issued a
check jointly to Eugene Burnett d/b/a JB's Auto and
Diesel and Covenant Bank for $158, 144.26. Doc. #34-5 at 3-1
& Ex. 1. These payments left a balance of building
coverage under the policy in the amount of $88, 492.74. Doc.
#34-5 at 4.
January 27, 2016, State Auto requested a check in the amount
of $81, 736.74 payable to "Eugene Burnett and Ernestine
Burnett and Department of Treasury-IRS" and a check for
$6, 756 payable to "Eugene Burnett and Ernestine Burnett
and State of Mississippi Department of Revenue."
Id. These checks were issued on January 28, 2016.
Id. & Ex. 5. State Auto notified Burnett of
these payments in a letter dated January 27, 2016. Doc. #34-5
at 4 & Ex. 6. After learning that the Mississippi
Department of Revenue lien had been cancelled, State Auto
voided the $6, 756 check. Doc. #34-5 at 4-5. On February 1,
2016, State Auto, through counsel, sent a letter to the
Advisory Group Manager with the Department of Treasury,
memorializing State Auto's understanding of the
voicemail-that the IRS would endorse the check and return it
to Burnett-enclosing the $81, 736.74 check. Doc. #34-5 at 5
& Ex. 7.
response to the February 1, 2016 letter, Metzler called State
Auto and left a voicemail requesting additional documents
concerning the policy and stating that if the IRS has an
interest in the remaining building coverage under the policy,
the IRS will collect that amount. Doc. #34-5 at 5-6. On
February 3, 2016, State Auto sent a letter to Metzler
enclosing a copy of the policy declarations, photos of the
fire damage, and a copy of the title opinion. Id.
& Ex. 8. On March 7, 2016, State Auto's counsel sent
a letter to Burnett and State Auto informing them that the
IRS was making a claim for the remaining $88, 492.74, stating
that the amount "is encumbered by the Federal Tax Lien
(IRC §6321) and should be submitted to the Internal
Revenue Service as payment toward [Burnett's] current tax
liability." Doc. #34-5 at 6 & Ex. 9.
December 12, 2016, Burnett had not provided State Auto with
any written report of debris removal expenses, or any
receipts, invoices or estimates for debris removal expenses.
Doc. #34-5 at 6.
produced four documents, each entitled, "Certificate of
Assessments, Payments and Other Specified Matters, "
which the IRS states "are certified official transcripts
of computer entries identifying assessments, payments, and
credits on the Burnetts' accounts for given taxable
periods." Doc. #32-1 at¶ 4; Doc. #32-2.
2007 "Certificate of Assessments, Payments and Other
Specified Matters" shows the following events recorded
05-06-2013 INTENT TO LEVY COLLECTION DUE PROCESS NOTICE
05-13-2013 INTENT TO LEVY COLLECTION DUE PROCESS NOTICE
RETURN RECEIPT SIGNED
05-13-2013 INTENT TO LEVY COLLECTION DUE PROCESS NOTICE
RETURN RECEIPT SIGNED
05-20-2013 PENDING INSTALLMENT AGREEMENT
05-24-2013 FEDERAL TAX LIEN
06-10-2013 MODULE REVERSED OUT OF FEDERAL PAYMENT LEVY
07-24-2013 INSTALLMENT AGREEMENT
08-26-2013 SUBSEQUENT PAYMENT $395.00
09-24-2013 SUBSEQUENT PAYMENT ...