USA v. Gonzalez, et al
Filing
37
MEMORANDUM OPINION. Signed by Honorable Susan O. Hickey on July 3, 2012. (rw)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
TEXARKANA DIVISION
UNITED STATES OF AMERICA
V.
PLAINTIFF
No. 4:01-cv-4070
VICTOR P. GONZALEZ and
LINDA J. GONZALEZ, husband and wife;
MONTGOMERY WARD CREDIT CORPORATION
and SHURTLEFF TILE CO.
DEFENDANTS
MEMORANDUM OPINION
Before the Court is a Motion for Summary Judgment filed by the United States of America
(“Government”). (ECF No. 34). The Government moves the Court for the entry of a judgment that
establishes Victor P. and Linda J. Gonzalez’s liability to pay certain indebtedness arising under a
promissory note, mortgage, attendant loan subsidy repayment agreement, late and other loan charges,
and interest. The Government also moves for a declaration that it has a first and prior valid lien in
and to the real estate at issue and that the interest of Montgomery Ward Credit Corporation and
Shurtleff Tile Co. is subordinate and inferior to the lien of the Government. No parties have filed
a response in opposition to the Government’s summary judgment motion, and the time for response
has passed.1 The Court finds this matter ripe for consideration.
BACKGROUND
The Government commenced this action against Victor and Linda Gonzalez to recover
money owed to the Government pursuant to a Rural Development Service loan agreement that was
entered into on February 25, 1985. The Gonzalezes executed and delivered a promissory note, a
copy of which is attached as Exhibit #1 to Plaintiff’s First Amended Complaint, in order to secure
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Default has been entered as against the Separate Defendant Gonzalezes. (ECF No. 33)
a home mortgage. The Government is the owner and holder of this note. (ECF No. 18). A copy of
the Government’s mortgage is attached to Plaintiff’s First Amended Complaint as Exhibit #2. (ECF
No. 18).
The Gonzalezes also executed a Subsidy Repayment Agreement in order to receive an
interest-credit subsidy from the Government. The repayment agreement provides that any subsidy
received is due and payable upon the sale or non-occupancy of the property by the Gonzalezes. A
copy of this repayment agreement is attached to Plaintiff’s First Amended Complaint as Exhibit #3.
The Government is the owner and holder of this agreement. (ECF No. 18).
Payments were not made on these loan agreements and the Government filed suit in May
2001 to recover against the Gonzalezes and to have priority as against other creditors, the Separate
Defendants Montgomery Ward Credit Corporation and Shurtleff Tile Co. Separate Defendant
Montgomery Ward Credit Corporation answered the original complaint and admitted that the
Government’s lien was superior to its lien. (ECF No. 2). The Government then obtained a decree
of foreclosure as an in rem judgment on August 14, 2001. However, the action was twice stayed
when the Gonzalezes filed for Chapter 13 bankruptcy in May 2003 and again in May 2011.
On May 1, 2003, the Gonzalezes commenced a Chapter 13 Bankruptcy proceeding before
the property was sold in a foreclosure sale. The Gonzalezes paid into the Chapter 13 plan for some
time, but their case was dismissed in October 2008 for failing to make certain payments. The
Government was then unable to collect. In February 2010, the Government moved to reopen the
case and set aside the prior in rem judgment (ECF No. 14). In February 2010, the case was reopened and the Government filed an amended complaint in April 2011. (ECF No. 18). Separate
Defendant Shurtleff Tile Co., like Separate Defendant Montgomery Ward Credit Corporation,
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answered and admitted that the Government’s lien was superior to its lien. (ECF No. 22). When
the case was re-opened, Montgomery Ward Credit Corporation was properly served on April 29,
2011, but did not file a response. Default was entered against them on June 1, 2011. (ECF No. 24).
The Gonzalezes then filed a separate Chapter 13 proceeding on May 18, 2011, again staying
this case. However, the second Bankruptcy case was dismissed October 19, 2011. The Government
was again unable to collect and moved to reopen this case in November 2011. The case was
reopened and the Government filed affidavits in support of the Gonzalezes’ default. Default was
entered on January 4, 2012. (ECF No. 33). The Government then filed the motion for summary
judgment which is presently before the Court. (ECF No. 34)
This motion asks for the entry of a judgment that establishes the Gonzalezes’ liability for
certain indebtedness arising under a promissory note, mortgage, attendant loan subsidy repayment
agreement, late and other loan charges, and interest. The Government also moves for a declaration
that it has a first and prior valid lien in and to the real estate at issue and that the interests of
Montgomery Ward Credit Corporation and Shurtleff Tile Co. are subordinate and inferior to the lien
of the Government. Defendant Montgomery Ward Credit Corporation may claim a lien or some
interest in the property that is the subject of this action by virtue of a Default Judgment they obtained
against the Gonzalezes on February 9, 1995 in the Circuit Court of Little River County. Defendant
Shurtleff Tile Co. may claim a lien or some interest in the property that is the subject of this action
by virtue of a Judgment they obtained against the Gonzalezes on October 2, 2002 in the District
Court of Little River County.
The Government asserts that there are no issues of fact regarding the Defendants’ default and
the Government’s lien priority. The Government asserts that it is therefore entitled to judgment as
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a matter of law regarding this issue.
STANDARD OF REVIEW
The standard of review for summary judgment is well established. The Federal Rules of
Civil Procedure provide that when a party moves for summary judgment:
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); Krenik v. County of LeSueur, 47 F.3d 953 (8th Cir.1995). The Supreme Court
has issued the following guidelines for trial courts to determine whether this standard has been
satisfied:
The inquiry performed is the threshold inquiry of determining whether there is
a need for trial-whether, in other words, there are genuine factual issues that
properly can be resolved only by a finder of fact because they may reasonably
be resolved in favor of either party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). See also Agristor Leasing v. Farrow, 826
F.2d 732 (8th Cir.1987); Niagara of Wisconsin Paper Corp. v. Paper Indus. Union-Management
Pension Fund, 800 F.2d 742, 746 (8th Cir.1986). A fact is material only when its resolution affects
the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. at 248. A dispute is genuine if
the evidence is such that it could cause a reasonable jury to return a verdict for either party. Id. at
252.
The Court must consider all the evidence and all reasonable inferences that arise from the
evidence in a light most favorable to the nonmoving party. See Nitsche v. CEO of Osage Valley
Elec. Co-Op., 446 F.3d 841 (8th Cir. 2006). The moving party bears the burden of showing that
there is no genuine issue of material fact and that it is entitled to judgment as a matter of law.
Enterprise Bank v. Magna Bank, 92 F.3d 743, 747 (8th Cir.1996) The nonmoving party must then
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demonstrate the existence of specific facts in the record that create a genuine issue for trial. Krenik
v. County of LeSueur, 47 F.3d at 957. A party opposing a properly supported motion for summary
judgment may not rest upon mere allegations or denials, but must set forth specific facts showing
that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. at 256.
DISCUSSION
The Gonzalezes have not answered and denied the execution of the loan, their failure to
comply with the terms of the Note or agreement, or their default. The Government claims that its
lien in the real estate tied to the note is superior to the interests of Montgomery Ward Credit
Corporation and Shurtleff Tile Co. in this same real estate.
More specifically, the Government has submitted an affidavit and statement-of-account
demonstrating the Government is the owner and holder of the promissory notes and mortgages of
real property described as follows: “Lot 2 of Block 3 of Wallace Subdivision, as per plat recorded
in “N” Misc. At Page 170.” The account has been declared in default, and the Government has
declared the entire balance due and payable and has made demand upon the Gonzalezes for payment.
(ECF No. 18). The affidavit and statement of account, which is attached as Exhibit #1 to the motion
for summary judgment, demonstrates that there is due and owing to the Government, a debt on the
promissory note in the principal sum of $10,035.97, plus loan subsidy of $40,755.39, late and other
loan charges of $4,860.48, and accrued interest of $3,950.80 through February 15, 2012, for a total
of $59,602.64, with interest accruing thereafter at the rate of 3.2651 percent per annum until either
expiration or cancellation of the interest credit agreement between the Government and the
Gonzalezes. The promissory notes were properly executed by the Gonzalezes and have not been
satisfied. (ECF Nos. 34, 35, 36).
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Separate Defendant Shurtleff Tile Co. and Separate Defendant Montgomery Ward Credit
Corporation admit that the Government’s lien is superior to their liens. (ECF Nos. 2 & 22). As
such, none of the parties have disputed the Government’s claims as to its priority interest in the real
estate or its claim for judgment.
In fact, none of the parties have responded at all to the
Government’s motion for summary judgment, and the Gonzalezes are in default. (ECF No. 33) The
Court finds that there is no genuine issue of fact to be litigated and is satisfied that the Government
has sufficiently alleged and proved the Gonzalez’s default and the existence and superiority of the
Government’s lien interest in the real estate according to the terms of the note and agreements
themselves. Thus, the Government is entitled to summary judgment as a matter of law.
Based on the Gonzalez’s default and the Government’s priority in the real estate, an in rem
judgment finding the following is appropriate:
The defendants, Victor P. Gonzalez and Linda J. Gonzalez, are adjudged to owe the
Government on the promissory note the principal sum of $10,035.97, plus loan subsidy of
$40,755.39, late and other loan charges of $4,860.48, and accrued interest of $3,950.80 through
February 15, 2012, for a total of $59,602.64, with interest accruing thereafter at the rate of
3.2651 percent per annum until either expiration or cancellation of the interest-credit
agreement between the Gonzalezes and the Government; that Government has a first and
prior valid lien in and to the real estate described in its Complaint and First Amended
Complaint; and that the interests of Montgomery Ward Credit Corporation and Shurtleff Tile
Co. are subordinate and inferior to the lien of the Government.
If this judgment is not paid within a reasonable time, the real estate may be foreclosed upon
in keeping with the provisions of the applicable foreclosure decree process. The lands can then be
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ordered sold to satisfy the judgment, and the proceeds of any foreclosure sale should be applied first
to the costs of the sale and then paid to the Government. Any surplus should then be paid to the
other Separate Defendants as their interests appear and are validated. The Gonzalezes will remain
liable for any deficiency that may exist once the real estate is sold.
CONCLUSION
For the reasons discussed herein, the Court finds that the Government’s motion for summary
judgment (ECF. 34) should be and hereby is GRANTED. An order of even date, consistent with
this opinion, shall issue.
IT IS SO ORDERED, this 3rd day of July, 2012.
/s/ Susan O. Hickey
Hon. Susan O. Hickey
United States District Judge
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