United States of America v. 60.00 Acres of Land et al

Filing 39

FINDINGS OF FACT AND CONCLUSIONS OF LAW signed by Judge George H. Wu. (gk)

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STEPHANIE YONEKURA
Acting United States Attorney
LEON W. WEIDMAN
Assistant United States Attorney
Chief, Civil Division
JONATHAN B. KLINCK (CBN 119926)
Assistant United States Attorney
Federal Building, Suite 7516
300 North Los Angeles Street
Los Angeles, California 90012
Telephone: [phone]
Facsimile: [phone]
E-mail: [e-mail]

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Attorneys for Plaintiff United States of America

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UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA

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WESTERN DIVISION
UNITED STATES OF AMERICA,

No. EDCV 13-1468-GW(OPx)

Plaintiff,
v.

FINDINGS OF FACT AND
CONCLUSIONS OF LAW

60.00 ACRES OF LAND, MORE OR
LESS, SITUATE IN SAN
BERNARDION COUNTY, STATE OF
CALIFORNIA; WESTWARD
ENTERPRISES, A CALIFORNIA
CORPORTATION; DAVID
RUPPERT; WEST COAST
DEVELOPMENT CO, INC; CLARA
STAPLES; SAFECO TITLE
INSURANCE; AND SAN
BERNARDINO COUNTY TAX
COLLECTOR, et al.,

Trial: May 5, 2015
Time: 9:00 a.m.

Defendants.

The Honorable George H. Wu

Trial by narrative statement pursuant to Local Rule 43-1 commenced on May 5,
2015, at 9:00 a.m. Plaintiff United States submitted its Trial Brief and the Declarations
of Robert W. Colangelo and Warren H. Neville, and appeared by Assistant United States
Attorney Jonathan B. Klinck. Third Party Creditor State of California Franchise Tax
Board (“FTB”) filed its Notice of State Tax Lien on March 4, 2015 (Dkt. #27.) No
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appearance was made by any named defendant. Having reviewed the pleadings and

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papers filed herein, and argument of counsel having been heard, the Court makes these

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Findings of Fact and Conclusions of Law pursuant to F.R.Civ. P. 52.

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I.

FINDINGS OF FACT

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A.

THE SUBJECT PROPERTY

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1.

This is an action by the United States to condemn real property in fee

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simple. The property is described as follows (“Subject Property”):

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The Northwest ¼ of the Northwest ½ and the North ½ of the Southwest ¼

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of the Northwest ¼ of Section 16, Township 13 North, Range 1 East, San

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Bernardino Meridian, in the County of San Bernardino, State of California,

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according to the official plat thereof. This Tract 839 is also known as

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Assessor’s Parcel Number 051-031-18-0000, containing 60.00 acres, more

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or less.

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Declaration of Robert W. Colangelo (“Colangelo Decl.”) ¶ 2.
B.

PROCEDURAL HISTORY
2.

The Taking of the Subject Property by the United States

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Plaintiff’s agency the Army Corps of Engineers (“COE”) and defendant Westward

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Enterprises entered into an Accepted Offer whereby Westward Enterprises agreed to sell

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the Subject Property to the COE for the sum of $78,000. Declaration of Robert W.

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Colangelo (“Colangelo Decl.”) ¶ 4, Exhibit A. The COE and defendant Westward

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Enterprises were unable to complete the transaction because the COE is obliged to obtain

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an ALTA policy of title insurance when it obtains real property by purchase, and the title

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insurer would not issue such as policy because Westward Enterprises was a suspended

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corporation. Colangelo Decl. ¶ 6. This action was filed on August 16, 2014 (Dkt. #1).

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Notice of Condemnation, including the Declaration of Taking, and the Notice of Deposit

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of Just Compensation were filed on September 9, 2013 (Dkt. ## 4-6), at which time title

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in fee simple vested in the United States. 40 U.S.C. § 3114(b). Plaintiff filed its ex

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parte application for Order of Delivery of Possession on September 10, 2013 (Dkt. # 7)
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and the November 27, 2013 Order for Possession (Dkt. #9) was issued. Defendant San

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Bernardino County Tax Collector filed its Disclaimer on October 2, 2013 (Dkt. # 10).

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Plaintiff filed its Notice of Filing Waivers of Service of Judicial Process on January 15,

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2014 (Dkt.# 12). As of the date of trial, no named defendant has made an appearance.

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C.

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Title to the Subject Property Was Held by Westward Enterprises
Prior to Taking by the United States

3.

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Before title in fee simple vested in the United States on September 9, 2015,

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title was held by defendant Westward Enterprises, a California corporation (“Westward

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Enterprises”). Colangelo Decl. ¶ ¶ 2 and 5.

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D.

Westward Enterprises Owed the FTB Taxes Since 1983, and Was a

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Suspended Corporation at the Time Title Vested in the United States

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and at the Time of the Accepted Offer
4.

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As shown by the records of the California Secretary of State filed in this

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action, Westward Enterprises failed to pay taxes due to the Franchise Tax Board

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(“FTB”) since 1983, which amounted to the sum of $76,492.56, and daily interest in the

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sum of $6.29 from February 19, 2015, as of the date the FTB filed its Notice of Lien.

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Notice of State Tax Lien (Dkt. #27). As of May 5, 2015 trial date, the amount of the tax

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lien is [75 days x $6.29 = $471.75 + $76,429.56 = $76,964.31] Seventy-Six Thousand,

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Nine Hundred Sixty-Four Dollars and Thirty-One Cents ($76,964.31).

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II.

CONCLUSIONS OF LAW

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A.

JURISDICTION

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5.

The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1358.

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B.

SINCE JURY TRIAL HAS NOT BEEN DEMANDED THE TRIAL

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MAY PROCEED BEFORE THE BENCH WITHOUT A JURY
6.

The United States has not demanded jury trial. The FTB, the only other

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entity to have appeared, has not demanded jury trial. Accordingly, this action may

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proceed to trial before the bench without a jury. Zahn v. Geren, 697 Fed. Appx. 696,

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697 (9th Cir. 2007).
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C.

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WESTWARD ENTERPRISES IS A SUSPENDED CALIFORNIA
CORPORATION

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F.R.Civ.P. 17(b)(2) establishes that the capacity of a corporate litigant to

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sue or be sued in a federal case is determined by the state law under which the

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corporation is organized. Westward Enterprises is a California corporation. Colangelo

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Decl. ¶ 4. California Revenue and Taxation Code § 23301 suspends the rights and

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privileges of California corporations which fail to pay FTB taxes and suspended

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corporations cannot prosecute or defend actions, including federal appeals. Matter of

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Christian & Porter Aluminum Co., 584 F.2d 326, 331 (9th Cir. 1978). Pursuant to

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California Revenue Code § 23304.1, any contract entered into by a suspended

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corporation is voidable.

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D.

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The FTB Notice of Lien is Prima Facie Evidence of the FTB Lien, and
Has Not Been Contested by Any Defendant

8.

Pursuant to California Revenue & Taxation Code § 19374, the Certificate of

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Tax Due and Delinquency, which was attached as Exhibit A to the Notice of State Tax

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Lien (Dkt. #27), is prima facie evidence of the levy of the tax, penalties, and interest, and

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of FTB’s compliance with the statutes relating to the computation and levy of the tax.

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The United States does not contest the validity or amount of FTB’s tax lien, nor has any

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named defendant contested its validity.

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E.

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The Court Has the Authority to Determine the Amount of Just
Compensation and to Whom That Compensation Is To Be Paid

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Pursuant to F.R.Civ.P. 71.1 and the Declaration of Taking Act, 40 U.S.C.

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§ 3114, the two issues before the Court are: (1) the amount of just compensation as of

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the September 9, 2013 date of taking by the United States; and (2) the distribution of the

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just compensation. The Court has the authority to determine to whom and how much an

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award in condemnation should be paid and it has authority to “make just and equitable

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orders in respect of encumbrances, liens, rents, taxes, assessments, insurance and other

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charges. 40 U.S.C. § 3224(d). See also F.R.Civ.P. 71.1(h); United States v. 14.02 Acres

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of Land More or Less in Fresno County, 547 F.3d 943, 954 (9th Cir. 2008).

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1.
10.

Just Compensation

Plaintiff has obtained an appraisal report by Warren H. Neville, MAI, which

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opines that the value of the Subject Property as of the September 9, 2013 date of taking

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was $21,600. Declaration of Warren H. Neville ¶ 2, Exhibit A. However, Plaintiff

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entered into an August 15, 2006 Accepted Offer with Westward Enterprises in the far

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higher sum of $78,000. Colangelo Decl. ¶ 4, Exhibit A. The United States is bound by

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the Accepted Offer, and therefore the just compensation for the Subject Property is

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$78,000.

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2.
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FTB Lien

As shown by the records of the California Secretary of State filed in this

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action, Westward Enterprises failed to pay taxes, penalties and interest due to the

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Franchise Tax Board (“FTB”) from 1983, which now amounts to the sum of $76,492.56,

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and daily interest in the sum of $6.29 from February 19, 2015, the date the FTB filed its

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Notice of Lien. Notice of State Tax Lien (Dkt. #27.) Thus, as of May 5, 2015 trial date,

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the amount of the tax lien will be Seventy-Six Thousand, Nine Hundred Sixty-Four

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Dollars and Thirty-One Cents ($76,964.31). Neither the United States nor any defendant

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has disputed the validity of the lien.

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3.
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Distribution of Just Compensation

Prior to the September 9, 2013 taking by the United States, the Subject

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Property was owned by Westward Enterprises, a suspended California corporation.

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Colangelo Decl. ¶ 5.

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13.

After deduction of the $76,492.56 FTB lien from the deposited estimated

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compensation of $78,000, a balance of $1,507.44 will remain, less $6.29 daily interest

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incurred after the May 5, 2015 trial date.

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14.

Westward Enterprises is entitled to recover the balance of any portion of the

$78,000 not paid to FTB, if it can submit proof to the Court that it has been revived as a
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corporation in good standing by the California Secretary of State.

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Title to the Subject Property is vested in the United States in fee simple.

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The FTB is entitled to the sum of $76,964.31, together with daily interest in

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the sum of $6.29 after the May 5, 2015 trial date.
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The Clerk shall return to the United States Treasury any part of the $78,000

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deposited by the United States which remain uncollected five years after the entry of

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judgment herein.

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DATED: May 5, 2015

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_________________________________
GEORGE H. WU, U.S. District Judge

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Respectfully submitted,

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STEPHANIE YONEKURA
Acting United States Attorney
LEON W. WEIDMAN
Assistant United States Attorney
Chief, Civil Division
Federal Building, Suite 7516
300 North Los Angeles Street
Los Angeles, California 90012
Telephone: [phone]
Facsimile: [phone]
E-mail: [e-mail]

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/s/ Jonathan B. Klinck
JONATHAN B. KLINCK
Attorneys for Plaintiff United States of America

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