United States of America v. Shaw et al

Filing 48

OPINION AND ORDER granting 46 Motion for Default Judgment against Richard Shaw, Rose Shaw, and Saint Andrews Ivy, B.T. as to Counts I through III. Count IV regarding foreclosure is taken under advisement. The Clerk shall enter a default judg ment as set forth in the Opinion and Order. The case remains stayed as to enforcement of the judgment, and plaintiff shall inform the Court when the stay is due to be lifted or submit a motion and proposed order of sale. Plaintiff shall also notif y whether Ocwen Loan Servicing, LLC and Lee County, Florida, are due to be terminated. The Clerk shall forward a copy of this Opinion and Order to the last known addressed for defendants and add a stay flag to the case. Signed by Judge John E. Steele on 6/28/2017. (RKR)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.

Case No: 2:16-cv-109-FtM-99CM

RICHARD C. SHAW, ROSE O.
SHAW, SAINT ANDREWS IVY,
B.T., OCWEN LOAN SERVICING,
LLC,
and
LEE
COUNTY,
FLORIDA,
Defendants.
OPINION AND ORDER
This matter comes before the Court on the United States’
Motion for Default Judgment Against Richard Shaw, Rose Shaw, and
Saint Andrews Ivy, B.T. (Doc. #46) and Declaration of Dylan Cerling
in Support of Motion for Entry of Default Judgment Against Richard
Shaw, Rose Shaw, and Saint Andrews Ivy, B.T. (Doc. #47), filed on
April 20, 2017.

No response has been filed, and the time to do

so has expired.

The Court finds that an evidentiary hearing is

not required in this case and will render a decision based on the
documents submitted.
I.
On February 5, 2016, the United States (plaintiff or United
States) filed a four-count Complaint to Foreclose Federal Tax Liens
and Sell Real Property against defendants Richard Shaw; Rose Shaw;

Saint Andrews Ivy, B.T.; Lee County, Florida; and Ocwen Loan
Servicing, LLC (Ocwen) regarding a parcel of real property at 2301
Ivy Ave., Fort Myers, Florida, 33907 1 (Florida Parcel) (Doc. #1).
Plaintiff

is

currently

proceeding

on

a

four-count

Amended

Complaint to Foreclose Federal Tax Liens and Sell Real Property
against the same.
On

January

(Doc. #7.)
31,

2017,

Lee

County

filed

a

Disclaimer

of

Interests, disclaiming its interest in the Florida Parcel and
requesting to be excused from pretrial matters and trial, which
was granted on February 1, 2017.

(Docs. ##37, 40.)

Additionally,

the United States has agreed by Stipulation that Ocwen, as the
holder of a mortgage security interest on the Florida Parcel (Doc.
#21-1), has a priority interest.

(Doc. #45.)

Because the issue

of Ocwen and Lee County’s respective interests has been resolved,
plaintiff’s motion is limited to defendants Richard Shaw, Rose
Shaw, and Saint Andrews Ivy, B.T., who may claim an interest in
the

Florida

1

Parcel

(collectively

“defendants”).

Because

The Florida Parcel is legally described as:

Lot 1, Block 77, of the certain subdivision known as
FORT MYERS VILLAS, UNIT NO. 3B PART 2 AND UNIT NO. 4
PART 3, AND UNIT NO. 5 PART 2, AND UNIT NO. 6, PART 1,
according to the map or plat thereof on file and recorded
in the Office of the Clerk of the Circuit Court of Lee
County, Florida, in Plat Book 17, Pages 61 and 62, Public
Records of Lee County, Florida.
(Doc. #7 p. 3 ¶ 10.)

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defendants failed to respond to the Amended Complaint, a Clerk’s
Entry of Default was entered on February 2, 2017.

(Doc. #41.)

Plaintiff now moves for the entry of judgment against defendants.
II.
When a defendant defaults, they are “deemed to admit the
plaintiff’s

well-pleaded

allegations

of

conclusions of law or facts not well-pleaded.

facts,”

but

not

Surtain v. Hamlin

Terrace Foundation, 789 F.3d 1239, 1245 (11th Cir. 2015).

To

warrant a default judgment, the facts alleged in the pleadings
must provide

a

sufficient

basis

for

judgment.

Id.

(quoting

Nishimatsu Const. Co., Ltd. V. Houston Nat’l Bank, 515 F.2d 1200,
1206

(5th

Cir.

1975)).

The

sufficiency

standard

is

that

“necessary to survive a motion to dismiss for failure to state a
claim.”

Id.

In

its

four-count

Amended

Complaint,

the

United

requests the following:
(Count I) find that the United States’ tax
liens
have
priority
over
subsequentlyrecorded interests,
(Count II) set aside the transfer of property
of the Florida Parcel to Saint Andrews Ivy,
B.T. as fraudulent,
(Count III) find that the Florida Parcel is
held by Saint Andrews Ivy, B.T. as the nominee
or alter ego of Richard C. Shaw and that the
Federal tax liens attach to that interest, and
(Count IV) foreclose Federal tax liens against
the Florida Parcel, currently titled in the
name of a nominee and/or alter ego of Richard

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States

C. Shaw and sell the property to satisfy, in
part or in full, the tax liens issue.
(Doc. #7.)

A bankruptcy stay as to Richard Shaw was partially

lifted on November 14, 2016 as to liability only, but this case
remains stayed as to the enforcement of any judgment through a
foreclosure sale.

(Doc. #29.)

Therefore, the United States only

seeks judgment at this time as to Counts I-III.
A. The Florida Parcel’s History
According to the Amended Complaint, the Florida Parcel was
transferred to Richard Shaw from Thomas Nunn and Shirley Nunn by
a warranty deed recorded in Lee County, Florida (Doc. No. 4641532),
on May 25, 1999. 2

(Doc. #7, ¶ 11.)

On September 22, 2003, a

quitclaim deed was recorded in Lee County, Florida (Doc. No.
5978038), in which Richard Shaw, “joined by his spouse Rose Shaw,”
for ten dollars consideration, purported to transfer the Florida
Parcel to Richard C. Shaw and Rose Shaw, husband and wife. 3
¶ 12.)

(Id.

Also on September 22, 2003, the Shaws recorded a mortgage

on the Florida Parcel as security for a $135,000 loan (Doc. No.

2

The United States does not include copies of the deeds.

3

A conveyance to spouses “as husband and wife” is presumed
to form an estate by the entirety, Schuler v. Claughton, 248 F.2d
528, 529 n.1 (5th Cir. 1957) (interpreting Fla. Stat. § 689.11);
see also Losey v. Losey, 221 So. 2d 417, 418 (Fla. 1969). As set
forth below, the Court directs plaintiff to clarify Rose Shaw’s
interest upon moving for an order of sale.

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5978039).
mortgage.

(Id. ¶ 14.)

Ocwen is the current servicer of that

(Id. ¶ 15.)

On October 19, 2004, a warranty deed was recorded in Lee
County, Florida (Doc. No. 6490971), in which Richard Shaw purported
to transfer the Florida Parcel to Saint Andrews Ivy, B.T. 4 for ten
dollars consideration.

A corrected version of that warranty deed

was filed on October 19, 2004 in Lee County, Florida at Doc. No.
6492360.

(Doc. #7, ¶ 13.)

At the time of transfer to Saint

Andrews Ivy, B.T., Richard Shaw was aware that he was indebted to
the United States for outstanding tax liabilities, as detailed
below, and became insolvent as a result of the transfer to Saint
Andrews Ivy, B.T.

(Id. ¶¶ 55-57.)

Richard Shaw continues to pay

the carrying cost of the Florida Parcel (Id. ¶ 28), and continues
to “occupy, possess, exercise dominion and control, and have use
and

enjoyment

residency.

of

the

Florida

Parcel,”

including

periodic

(Id. ¶¶ 28, 50.)

B. Richard Shaw’s Tax Liabilities
Beginning on November 17, 2003 – approximately two months
after the quitclaim deed and mortgage were recorded – the IRS
performed the first of several tax assessments of Richard Shaw’s

4

Saint Andrews Ivy, B.T. is a trust incorporated in Nevada.
(Doc. #7, ¶ 7.) Richard Shaw is managing director and Rose Shaw
is the trust secretary.
(Id. ¶ 24.)
Richard and Rose’s son
(Travis Shaw) and daughter (Vanessa Shaw) are listed as trustees.
(Id.) The trust has no beneficiaries. (Id.)

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unpaid taxes for tax years 1999, 2000, 2003, and 2004. 5
pp. 5-6, see chart.)

(Doc. #7,

Richard Shaw failed to pay in full these tax

liabilities despite notice and demand for payment.

(Id. ¶ 19.)

Pursuant to 26 U.S.C. § 6321, statutory liens arose against all
property and rights to property owned by Richard Shaw, including
the Florida Parcel, at the time of the tax assessments.

(Id.)

Despite timely notice and demand for payment of the assessments,
Richard Shaw neglected or refused to make full payment to the
United States, and the assessments remain due and owing, together
with accrued but unassessed statutory interest of $387,396.48, as
of

August

17,

2015,

minus

pre-petition

penalties,

fees,

and

interest accruing on pre-petition fees and penalties, but plus
statutory interest and accruals after August 17, 2015.

(Id. ¶

20.)
The IRS duly recorded notice of federal tax liens in Lee
County, Florida, at Doc. No. 20141120-0002981 (Nov. 20, 2014);
Doc. No. 2015-0218-0000956 (Feb. 18, 2015); and Doc. No. 201505040002075 (May 4, 2015), naming Saint Andrews Ivy, B.T. as nominee
of Richard Shaw.

(Doc. #7, ¶ 21.)

5

Those documents include

Income tax assessments, post-petition fee assessments, and
corresponding accrued interest for the 1999, 2000, 2003, and 2004
tax years have not been discharged in Richard Shaw’s bankruptcy.
While pre-petition fees and penalty assessments, and corresponding
interest have been discharged, pre-petition federal tax liens that
reflect those assessments may still be foreclosed. (Doc. #7, p.
7.)

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Richard Shaw’s 1999, 2000, 2003, 2004 federal income tax periods,
and the 2002 and 2003 civil penalty periods.
C. Richard Shaw’s Purchase and Control of the Florida Parcel,
and the Relevant Nominee Entity
The United States alleges upon information and belief that
Richard Shaw currently lives on a parcel of property also owned by
Saint Andrews Ivy, B.T., in Nevada.

(Doc. #7, ¶ 26.)

The United

States believes that Richard Shaw has lived on the Florida Parcel
periodically since that parcel was purchased by Richard Shaw.
(Id. ¶ 27.)

The carrying costs for the Florida Parcel are being

paid out of Richard Shaw’s bank accounts.

(Id. ¶ 28.)

D. Richard Shaw’s Bankruptcy Did Not
Income Tax Liabilities Listed Above

Discharge

the

On July 11, 2014, Richard Shaw filed for Chapter 7, no-asset
bankruptcy.

(Doc. #7, ¶ 30.)

In his bankruptcy petition, Richard

Shaw did not list either the Nevada Parcel, or the Florida Parcel,
as an asset.

(Id. ¶ 31.)

Nor did Richard Shaw list an interest

of any kind in Saint Andrews Ivy, B.T., and listed only $4,100 in
tax debts to the IRS.

(Id.)

Richard Shaw was aware that he had a duty to pay federal taxes
on all income for tax years 1999, 2000, 2003, and 2004, but
intentionally chose not to do so, evading his taxes.
33.)

(Doc. #7, ¶

Richard Shaw eventually filed returns for tax years 2000,

2003, and 2004, years late, and filed frivolous documents listing
only zeros in portions that required income reporting.

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(Id. ¶¶

36-38.)

The IRS has issued statutory notices of deficiency per

26 U.S.C. § 6212 for the 1999, 2000, 2003, and 2004 tax years,
which went unchallenged by Richard Shaw.

(Id. ¶¶ 39-40.)

By transferring the Nevada and Florida Parcels to Saint
Andrews Ivy, B.T., subsequently filing a Chapter 7 bankruptcy
petition without listing the Nevada or Florida Parcels, and filing
“zero” returns that are not honest and genuine, Richard Shaw was
attempting to evade or defeat the income tax assessments, and so
the income tax debts were not discharged.

(Doc. #7, ¶ 43.)

III.
Under section 6321 of the Internal Revenue Code, “[i]f any
person liable to pay any tax neglects or refuses to pay the same
after demand,” the United States will have a lien “upon all
property and rights to property . . . belonging to such person.”
26 U.S.C. § 6321.

Federal tax liens “shall arise at the time the

assessment is made.”

26 U.S.C. § 6322; see also United States v.

De Cespedes, 603 F. App’x 769, 771 (11th Cir. 2015) (finding that
a lien for unpaid taxes from 2001, 2002, and 2003 was created once
the assessment was made in 2009).

Levy of the unpaid tax must

begin “within 10 years after the assessment of the tax.”

26 U.S.C.

§ 6502.
When enforcing internal revenue laws, district courts are
empowered “to render such judgments and decrees as may be necessary
and appropriate.”

United States v. Christiansen, 414 F. App’x

- 8 -

218, 220 (11th Cir. 2011) (quoting 26 U.S.C. § 7402(a)).

The

Court is also authorized, under section 726.108, Florida Statutes,
“to grant a creditor broad relief against the transferee of a
fraudulent transfer.

Friedman v. Heart Institute of Port St.

Lucie, Inc., 806 So. 2d 625, 626-27 (Fla. 4th DCA 2002), aff’d 863
So. 2d 189 (Fla. 2003).
A. Count I: Priority of Federal Tax Liens over SubsequentlyRecorded Interests
Plaintiff asks the Court to make a finding on the priority of
the federal tax liens as they relate to subsequent interests.
Priority for the purposes of federal law is “governed by the common
law principle that first in time is first in right.”

United States

v. Spoor, 838 F.3d 1197, 1201 (11th Cir. 2016) (quoting United
States v. McDermott, 507 U.S. 447, 449 (1993)).

Tax liens are

valid against purchasers once recorded with the proper office
designated

by

state

law.

26

U.S.C.

§

6323(a),(f)(1)(A)(i).

However, until the lien is recorded, it does not have priority
against any purchaser or holder of a security interest.

Spoor,

838 F.3d at 1202.
The first tax lien came into existence on November 11, 2003,
and was recorded in Lee County on April 28, 2005.
5, 7; ¶ 22.)

(Doc. #7, pp.

Therefore, the United States has alleged sufficient

facts to show that the federal tax liens have priority over any
interest held by the defendants recorded after April 28, 2005.

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Additionally, for the reasons explained below, Saint Andrews Ivy,
B.T. is not a bona fide purchaser under 26 U.S.C. § 6323(a), and
therefore its interest is not protected against federal tax liens.
B. Count II: Setting Aside Transfer of Florida Parcel to Saint
Andrews Ivy, B.T. as Fraudulent
The United States asks that the Court set aside the transfer
of the Florida Parcel to Saint Andrews Ivy, B.T. based on the
theory that the transfer was actually fraudulent under the Florida
Uniform

Fraudulent

Transfer

Act

(FUFTA),

Fla

Stat.

§

726.105(1)(a)), and is therefore voidable pursuant to Fla. Stat.
§ 726.108(1)(a)-(b).
A fraudulent transfer may be voided under the FUFTA, and a
creditor may have their claim attached against the transferred
property.

Fla. Stat. § 726.108(1)(a)-(b).

According to the

FUFTA, a transfer is actually fraudulent – “whether the creditor’s
claim arose before or after the transfer” – when made by a debtor
“with actual intent to hinder, delay, or defraud any creditor.”
Wiand v. Lee, 753 F.3d 1194, 1199 (11th Cir. 2014) (quoting Fla.
Stat. § 726.105(1)(a)).

Accordingly, for a plaintiff to succeed

on an FUFTA claim, they must show “[1] a creditor to be defrauded,
[2] a debtor intending fraud, and [3] a conveyance of property.”
Id. at 1199-1200 (quoting Johnson v. Dowell, 592 So. 2d 1194, 1196
(Fla. 2d DCA 1992)); see also Newman v. William L. Gunlicks
Irrevocable Tr., 897 F. Supp. 2d 1270, 1276 (M.D. Fla. 2012)

- 10 -

(dismissing a FUFTA claim for failure to adequately identify a
“creditor” and “debtor.”)).
To qualify as a “creditor,” a plaintiff must show they have
a

“claim”

as

defined

in

section

726.102,

Florida

Statutes.

Friedman v. Heart Institute of Port St. Lucie, Inc., 863 So. 2d
189, 192 (Fla. 2003).

Such claims are broadly defined as “a right

to payment, whether or not the right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured.”
Fla. Stat. § 726.102(4); Wiand, 753 F.3d at 1200; Friedman, 863
So. 2d at 192.
To

determine

whether

the

United

States

has

sufficiently

alleged actual intent, the Court will look to the statutory “badges
of fraud,” specifically whether:
(a) The transfer
insider.

or

obligation

was

to

an

(b) The debtor retained possession or control
of
the
property
transferred
after
the
transfer.
. . . .
(h) The value of the consideration received by
the debtor was reasonably equivalent to the
value of the asset transferred or the amount
of the obligation incurred.
(i) The debtor was insolvent or became
insolvent shortly after the transfer was made
or the obligation was incurred.
(j) The transfer occurred shortly before or
shortly after a substantial debt was incurred.

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Fla. Stat. § 726.105(2)(a)-(k).
As noted above, United States plausibly alleges that it holds
federal tax liens against Richard Shaw and the Florida Parcel.
(Doc. #7, pp. 4-12.)

The tax debt owed, and the resulting lien,

fall squarely within the broad definition of a claim under the
FUFTA.

Accordingly, the Court is satisfied that plaintiff has

sufficiently identified the United States as a defrauded creditor,
and that the transfer of the Florida Parcel is the type of
conveyance

meant

to

fall

within

the

scope

of

the

FUFTA.

Specifically, Saint Andrews Ivy, B.T.’s managing director is an
“insider” as defined by section 726.102, Florida Statutes 6 (Id. ¶¶
24, 53), and Richard Shaw became insolvent when he transferred his
real assets – including the Florida Parcel – to Saint Andrews Ivy,
B.T.

(Id. ¶ 57.)

Additionally, plaintiff alleges sufficient

facts that the consideration paid ($10) was unreasonable and
inadequate (Id. ¶ 54) and that Richard Shaw continued to “occupy,
possess, exercise dominion and control over, and have use and
enjoyment of” the Florida Parcel after the conveyance.
27, 50.)

(Id. ¶¶

Furthermore, the transfer was made shortly after Richard

Shaw was informed of his tax obligations.

(Id. ¶ 55)

Therefore, because the statutory “badges of fraud” have been
adequately alleged, the Court finds that the transfer of the

6

“Insider includes . . . a corporation of which the debtor is a
director, officer, or person in control.” Fla. Stat. § 726.102.

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Florida Parcel from Richard Shaw to Saint Andrews Ivy, B.T. was
fraudulent against the United States.

Accordingly, the Court will

sets aside the transfer as fraudulent and void.
C. Count III: Finding Saint Andrews Ivy, B.T. As Nominee of
Richard Shaw, and that the Federal Tax Liens Attach to that
Interest
The United States further requests that the Court find that
the federal tax liens attach to the Florida Parcel because Saint
Andrews Ivy, B.T. holds title to the property as Richard Shaw’s
nominee or alter ego.
A lien can be attached to property held by a third party
“holding the property as a nominee . . . of the delinquent
taxpayer.”

United States v. Lupi, No. 8:09–cv–552–T–30TGW, 2010

WL 2330303, at *5 (M.D. Fla. June 9, 2010) (quoting May v. United
States, No. 07-10531, 2007 WL 3287513, at *1 (11th Cir. Nov. 8,
2007)).

To identify a nominee, the Court considers the following:
(1) whether the taxpayer continues to exercise
dominion and control over the property; (2)
whether the property was transferred in
anticipation of collection activity; (3) the
amount of consideration, if any, paid for the
transfer; (4) the relationship between the
taxpayer and the new title holder; and (5)
whether the taxpayer continues to pay for the
property’s expenses.

United

States

v.

Enright,

No.

8:14-cv-2189-T-30JSS,

2015

WL

5883166, at *4 (M.D. Fla. Oct. 6, 2015) (citing United States v.
Dornbrock, No. 06-61669-CIV, 2008 WL 769065, at *4 (S.D. Fla. Jan.
17, 2008)).

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As the Court found in its above FUFTA analysis, plaintiff
plausibly alleges elements 1 through 4 of the Enright test, which
is also included among the “badges of fraud” already considered
under Count II.

Furthermore, satisfying the fifth element of the

Enright test, plaintiff sufficiently alleges that Richard Shaw has
continued to pay the carrying costs – including a mortgage in his
name – out of his own bank accounts.

(Doc. #7, ¶¶ 25, 28.)

Therefore, Saint Andrews Ivy, B.T. is the nominee or alter
ego of Richard Shaw, and accordingly, the federal tax liens are
properly attached to Richard Shaw’s interest in the Florida Parcel.
IV.
With regard to the proper entry of judgment, the bankruptcy
stay as to liability was lifted on November 14, 2016 (Doc. #29);
therefore, entry of judgment is appropriate as to liability.

The

stay has not been lifted as to the foreclosure of tax liens on the
Florida Parcel, and the United States is not requesting that the
property be sold at this time.

(Doc. #46, p. 6.)

Thus, the Court

will defer the issue of foreclosure pending the submission of a
motion and proposed order of sale, which should more specifically
address issues of homestead, Rose Shaw’s interest in the property,
and whether the sale should be limited in any fashion.
Accordingly, it is hereby
ORDERED AND ADJUGED:

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1. The United States’ Motion for Default Judgment against
Richard Shaw, Rose Shaw, and Saint Andrews Ivy, B.T. (Doc. #46) is
GRANTED to the extent that judgment will be entered as to Counts
I through III.

The issue of foreclosure (Count IV) is otherwise

taken under advisement pending a motion and proposed order for
sale or further order of the Court.
2. The Clerk shall enter a default judgment in favor of
plaintiff and against defendants Richard Shaw, Rose Shaw, and Saint
Andrews Ivy, B.T., as to Counts I through III as follows:
a. The United States has valid tax liens resulting from
Richard Shaw’s unpaid federal income taxes for the tax years
ending 1999, 2000, 2003, and 2004, and the tax liens shall
attach to Richard Shaw’s interest in real property located at
2301 Ivy Ave., Fort Myers, Florida, 33907, including any
interest fraudulently conveyed to or held as nominee and alter
ego by Saint Andrews Ivy, B.T., whose interest is deemed void;
b. The United States has priority over any subsequent
claimant to real property located at 2301 Ivy Ave., Fort
Myers, Florida, 33907, subject to the priority interest held
by Ocwen Loan Servicing, LLC.
2. This case remains stayed as to the enforcement of this
judgment

through

proceedings.

foreclosure

(Doc. #29.)

due

to

the

ongoing

bankruptcy

Plaintiff shall inform the Court when

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the stay is due to be lifted or otherwise submit a motion and
proposed order of sale.
3. Plaintiff shall also inform the Court whether defendants
Ocwen Loan Servicing, LLC and Lee County, Florida, are due to be
terminated from this matter as party-defendants.
4. The Clerk shall forward a copy of this Order to the last
known addresses for defendants and add a stay flag to the case.
DONE and ORDERED at Fort Myers, Florida, this
of June, 2017.

Copies:
Counsel of Record
Richard C. Shaw
Rose O. Shaw
Saint Andrews Ivy, B.T.

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28th

day