Sand Canyon Corporation, FKA Premier Trust Deed Services, Inc. v. Coleman et al

Filing 22

ORDER signed by Judge John A. Mendez on 4/10/13 GRANTING 20 Motion for Summary Judgment. The surplus funds shall be distributed as follows: USA: $33,237.55, plus additional interest thereon from and after 1/18/13, less any applicable credits; FTB: $75,592.40, plus additional interest thereon from and after 1/18/13, less any applicable credits; CSB: $198,023.54, plus additional interest thereon from and after 1/18/13, less any applicable credits. (Meuleman, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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SAND CANYON CORPORATION, FKA
PREMIER TRUST DEED SERVICES,
INC.,

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Plaintiff
(Petitioner),

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2:12-cv-02107 JAM-KJN

ORDER GRANTING UNITED STATES’
UNOPPOSED MOTION FOR SUMMARY
JUDGMENT

v.

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No.

ALAN S. COLEMAN, STACI E.
COLEMAN, CALIFORNIA SERVICE
BUREAU, CALIFORNIA FRANCHISE
TAX BOARD, FRIEDMAN
FINANCIAL, and UNITED STATES
OF AMERICA,
Defendants.

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This matter is before the Court on Defendant United States

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of America’s (“the United States”) Motion for Summary Judgment

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(Doc. #20).

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Petitioner Sand Canyon Corporation (“Petitioner”) from making

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further appearances, Petitioner did not file an opposition or

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statement of non-opposition.1

Pursuant to the state court’s order excusing

For the following reasons, the

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled
for April 3, 2013.
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United States’ motion is granted.

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I.

BACKGROUND

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A.

Procedural and Undisputed Factual Background

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In 2007, Petitioner, trustee to a mortgage on the real

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property of Alan S. and Staci E. Coleman (collectively “the

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Colemans”), foreclosed its mortgage and sold the real property.

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United States’ Statement of Undisputed Facts (Doc. #20), (“SUF”)

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at ¶¶ 2-6.

Following the foreclosure and sale of the real

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property, Petitioner deposited the surplus funds from the sale,

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$306,853.49, with the Solano County Superior Court and filed this

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interpleader action against the Colemans, California Service

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Bureau (“CSB”), California Franchise Tax Board (“FTB”), Friedman

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Financial, and the United States to determine the correct

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priority of the parties’ claims.

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2012, the United States filed a notice of removal (Doc. #1).

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September 24, 2012, this Court issued an order transferring the

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surplus funds from the Solano County Superior Court to the United

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States District Court, Eastern District of California (Doc. #9).

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FTB filed a claim to the surplus funds on September 26, 2012

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(Doc. #10), the United States filed a claim on September 28, 2012

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(Doc. #13), and CSB filed a claim on October 10, 2012 (Doc. #14).

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On December 21, 2012, pursuant to the United States’ request, the

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Clerk of Court entered default as to the Colemans and Friedman

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Financial (Doc. #19).

Id. ¶¶ 7, 11.

On August 13,

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B.

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The United States’ claim arises from federal tax liens

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The United States’ Claim

resulting from unpaid 1999 federal income tax liabilities
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On

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assessed against the Colemans jointly.

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delegate of the Secretary of Treasury made federal income tax

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(Form 1040), penalty, interest, and other statutory addition

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assessments against the Colemans for the tax period ending on

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December 31, 1999.

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the assessments on December 23, 2002, and provided timely notice

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and demand for payment.

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the Secretary of the Treasury refiled a Notice of Federal Tax

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Lien against the Colemans in Solano County Recorder’s Office on

SUF ¶¶ 26.

A duly authorized

The Internal Revenue Service made

Id. ¶¶ 27.

An authorized delegate of

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May 8, 2003, in the amount of $20,090.82.

Notices of Federal Tax

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Lien, Exhibit 2 and 3 to the Declaration of Lee Perla, Doc. #20,

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(“Perla Dec.”), at 1.

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assessed amounts.

Thereafter, the Colemans failed to pay the

Id.

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C.

FTB’s Claims

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FTB’s claims arise from recorded interest in the subject

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real property resulting from perfected tax liens for the 2000,

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2001, 2002, 2003, and 2004 tax years.

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perfected its state tax liens against the real property of Alan

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S. Coleman when it recorded Notices of State Tax Lien in the

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Solano County Recorder’s office for the 2000 tax year in the

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amount of $17,199.48 on May 21, 2003, and $18,456.56 on November

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8, 2004; for the 2001 tax year in the amount of $14,352.69 on

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November 8, 2004; for the 2002 tax year in the amount of

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$16,380.04 on November 8, 2004; for the 2003 tax year in the

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amount of $2,568.12 on May 24, 2006; and for the 2004 tax year in

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the amount of $4,672.08 on February 9, 2007.

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Tax Due and Delinquency, Exhibit 9 to the Perla Dec., Doc. #20,

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at 3.

SUF ¶ 36.

FTB duly

See Certificate of

The Colemans did not pay the assessed amounts.
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Id.

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D.

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CSB’s claims rest on recorded interests in the subject real

CSB’s Claim

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property arising from three judgment liens obtained following

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proceedings in Solano County Superior Court.

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Abstracts of Judgment in favor of CSB and against the Colemans

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were duly recorded with the Solano County Recorder’s Office on

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August 17, 2001, for $3,933.14; on September 2, 2003, for

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$9,692.24; and on June 10, 2005, for $167,087.67.

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judgments remain unsatisfied and have been accruing interest.

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Therefore, the timely filed claims are as follows:

SUF ¶ 31.

These

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Party

Amount

Recorded

Record No.

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CSB

$3,933.14

Aug. 17, 2001

2001-94472

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U.S.

$20,090.82

May 8, 2003

2003-74436

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FTB

$17,199.48

May 21, 2003

2003-82290

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CSB

$9,692.24

Sep. 2, 2003

2003-147957

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FTB

$18,456.56

Nov. 8, 2004

2004-160297

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FTB

$14,352.69

Nov. 8, 2004

2004-160297

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FTB

$16,380.04

Nov. 8, 2004

2004-160297

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CSB

$167,087.67

Jun. 10, 2005

2005-85757

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FTB

$2,568.12

May 24, 2006

2006-65786

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FTB

$4,672.08

Feb. 9, 2007

2007-16772

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II.

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OPINION

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A.

Legal Standard

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Summary judgment is proper “if the pleadings, depositions,

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answers to interrogatories, and admissions on file, together with

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affidavits, if any, show that there is no genuine issue of

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material fact and that the moving party is entitled to judgment
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as a matter of law.”

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summary judgment “is to isolate and dispose of factually

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unsupported claims or defenses.”

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317, 323-324 (1986).

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Fed. R. Civ. P. 56(a).

The purpose of

Celotex v. Catrett, 477 U.S.

The moving party bears the initial burden of demonstrating

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the absence of a genuine issue of material fact for trial.

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986).

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the moving party meets its burden, the burden of production then

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shifts so that “the non-moving party must set forth, by affidavit

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or as otherwise provided in Rule 56, ‘specific facts showing that

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there is a genuine issue for trial.’”

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Inc. v. Pacific Electric Contractors Ass’n, 809 F.2d 626, 630

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(9th Cir. 1987) (quoting Fed. R. Civ. P. 56(e)).

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view the facts and draw inferences in the manner most favorable

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to the non-moving party.

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U.S. 654, 655 (1962).

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that a genuine issue of material fact exists will not preclude

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the grant of summary judgment”.

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728, 731 (9th Cir. 1987).

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If

T.W. Electrical Services,

The Court must

United States v. Diebold, Inc., 369

“[M]ere disagreement or bald assertion

Harper v. Wallingford, 877 F. 2d

The mere existence of a scintilla of evidence in support of

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the non-moving party’s position is insufficient: “There must be

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evidence on which the jury could reasonably find for [the non-

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moving party].”

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applies to either a defendant’s or plaintiff’s motion for summary

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judgment the same standard as for a motion for directed verdict,

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which is “whether the evidence presents a sufficient disagreement

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to require submission to a jury or whether it is so one-sided

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that one party must prevail as a matter of law.”

Anderson, 477 U.S. at 252.

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This Court thus

Id.

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B.

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The parties ask the Court to determine the correct priority

Discussion

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of the parties’ claims to the $306,853.49 surplus funds.

Federal

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Rule of Civil Procedure (“FRCP”) 22 “provides a process by which

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a party may join all other claimants as adverse parties when

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their claims are such that the stakeholder may be exposed to

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multiple liability.”

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F.3d 1030, 1033 (9th Cir. 2000)(internal quotations omitted).

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The purpose of an interpleader action is “to decide the validity

Aetna Life Insurance Co. v. Bayona, 223

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and priority of existing claims to a res.”

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Ponsoldt, 118 F.3d 1367, 1369 (9th Cir. 1997).

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governs the relative priority of federal tax liens and state

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created liens.”

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(1960).

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of federal law is governed by the common-law principle that ‘the

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first in time is the first in right.’”

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McDermott, 507 U.S. 447, 449 (1993) (quoting United States v. New

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Britain, 347 U.S. 81, 85 (1954)).

“[F]ederal law

Aquilino v. United States, 363 U.S. 509, 514 n.5

“Absent provision to the contrary, priority for purposes

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1.

United States v.

Defendants Alan S. Coleman, Staci E. Coleman, and
Friedman Financial

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Texaco, Inc. v.

On December 21, 2012, default was entered against the

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Colemans and Friedman Financial.

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#19, at 1.

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to timely answer, plead, or otherwise defend.

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Colemans and Friedman Financial have forfeited any claim to the

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surplus funds.

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Clerk’s Entry of Default, Doc.

Pursuant to FRCP 55, default was entered for failure

2.

Accordingly, the

The United States

The United States argues that under the “first in time”
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rule, its tax lien falls between CSB’s judgment lied recorded on

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September 17, 2001, and CSB’s judgment lien recorded on September

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2, 2003, and before all of FTB’s claims.

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balance due as of January 18, 2013, including statutory accruals,

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additions, and interest through that date, is $33,237.55.

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26.

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Service Form 4340, Certificate of Assessments and Payments, which

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is “highly probative” and “sufficient, in the absence of contrary

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evidence, to establish that notices and assessments were properly

The total outstanding

SUF ¶

Further, the United States submitted the Internal Revenue

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made.”

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1984).

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United States v. Zolla, 724 F.2d 808, 810 (9th Cir.

3.

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CSB

CSB has three claims with different priorities.

Interest on

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CSB’s judgment liens accrues at the statutory rate of 10% per

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annum.

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the rate of 10 percent per annum on the principal amount of a

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money judgment remaining unsatisfied.”).

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is the principal times the interest rate divided by 365, interest

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accrues daily on CSB’s three claims at the rate of $1.07 for the

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lien recorded on August 1, 2010; $2.65 for the lien recorded on

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September 2, 2003; and $45.77 on the lien recorded on June 10,

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2005.

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$18,892.68, and $296,774.42 respectively.

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Cal. Code Civ. Pro. § 685.010 (a) (“Interest accrues at

Because the daily rate

Therefore, CSB’s claims plus interest equal $8,513.14,

4.

FTB

FTB has six claims with different priorities.

Interest

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accrues on FTB’s claims at a statutory rate.

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Due and Delinquency, Exhibit 9 to the Perla Dec., Doc. #20, at 3.

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The projected total balance due as of January 18, 2013, for FTB’s
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Certificate of Tax

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recorded claims for the 2000, 2001, 2002, 2003, and 2004 tax

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years equals $85,533.84.

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represents the outstanding balance of the tax lien recorded on

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May 21, 2003; $47,223 represents the outstanding balance of the

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tax liens recorded on November 8, 2004; and $6,671.44 represents

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the outstanding balance of the tax lien recorded on May 24, 2006

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and February 9, 2007.2

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Id.

Of this amount, $28,369.40

Id.

Therefore, the timely filed claims projected to January 18,
2013, are as follows:

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Party

Amount

Recorded

Record No.

Balance

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CSB

$3,933.14

Aug. 17, 2001

2001-94472

$8,513.14

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U.S.

$20,090.82

May 8, 2003

2003-74436

$33,237.55

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FTB

$17,199.48

May 21, 2003

2003-82290

$28,369.40

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CSB

$9,692.24

Sep. 2, 2003

2003-147957

$18,892.68

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FTB

$18,456.56

Nov. 8, 2004

2004-160297

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FTB

$14,352.69

Nov. 8, 2004

2004-160297

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FTB

$16,380.04

Nov. 8, 2004

2004-160297

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CSB

$167,087.67

Jun. 10, 2005

2005-85757

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FTB

$2,568.12

May 24, 2006

2006-65786

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FTB

$4,672.08

Feb. 9, 2007

2007-16772

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Total

$47,223

$296,774.42
$6,671.44
$439,681.63

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The total balance owed, $439,681.63, is greater than the

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surplus funds, $306,853.49; therefore, the funds will be depleted

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before all claims are satisfied.

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Based on the Certificate of Tax Due and Delinquency, the
numbers provided by the United States for each lien were
incorrect, but were corrected by the Court to reflect the total
liability for each year.
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Accordingly, based on the “first in time” rule, the United

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States receives $33,237.55 to satisfy its single claim; FTB

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receives $75,592.40 to satisfy its first four recorded claims;

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and CSB receives $198,023.54 to satisfy its first and second

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recorded claims and partially satisfy its third claim.

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III. ORDER
For the reasons set forth above, the United States’ Motion
for Summary Judgment is GRANTED.

The surplus funds shall be

distributed as follows:
a.

The United States—$33,237.55, plus additional interest

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thereon from and after January 18, 2013, less any applicable

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credits;

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b.

FTB—$75,592.40, plus additional interest thereon from

and after January 18, 2013, less any applicable credits;
c.

CSB—$198,023.54, plus additional interest thereon from

and after January 18, 2013, less any applicable credits.
IT IS SO ORDERED.
Dated: April 10, 2013

____________________________
JOHN A. MENDEZ,
UNITED STATES DISTRICT JUDGE

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