United States of America v. Barringer et al

Filing 19

OPINION entered by Judge Sue E. Myerscough on 08/27/2014. SEE WRITTEN OPINION. The Barringers' Motion to Dismiss 10 is DENIED. (DM, ilcd)

E-FILED

Thursday, 28 August, 2014 11:12:16 AM
Clerk, U.S. District Court, ILCD

IN THE UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
UNITED STATES OF AMERICA,

)
)
Plaintiff,
)
)
v.
)
)
JEROLD W. BARRINGER,
)
Individually and as trustee of the )
KELBAR ASSOCIATES TRUST,
)
LINDA M. BARRINGER, JANET
)
E. CHOTT-BEASLEY, MERLE
)
WERNLE, STATE OF ILLINOIS
)
(DEPARTMENT OF REVENUE), and)
RON JENKINS, MONTGOMERY
)
COUNTY TREASURER,
)
)
Defendants.
)

No. 14-3132

OPINION
SUE E. MYERSCOUGH, U.S. District Judge.
This cause is before the Court on the Motion to Dismiss (d/e
10) filed by Defendants Jerold W. Barringer and Linda M. Barringer.
The Motion is DENIED. The Complaint states a cause of action,
and the Barringers’ other arguments do not warrant dismissal of
the Complaint.

I. BACKGROUND
The Internal Revenue Service has the authority to make
assessments of all unpaid taxes. See 26 U.S.C. § 6201 (“The
Secretary is authorized and required to make the inquiries,
determinations, and assessments of all taxes”); 26 C.F.R.
§ 301.6201-1 (delegating assessment authority to the district
director of the Internal Revenue Service). After the Internal
Revenue Service makes an assessment of tax liability, it must “give
notice to each person liable for the unpaid tax, stating the amount
and demanding payment thereof” within 60 days of the assessment.
26 U.S.C. § 6303. If, after receiving notice and a demand to pay,
the taxpayer does not pay the assessment, a lien attaches to all
property belonging to the taxpayer. 26 U.S.C. § 6321; see also 26
U.S.C. § 6320 (setting forth the notice-of-lien requirements). The
lien also attaches to all property “held by the taxpayer’s nominees—
someone who has legal title when, in substance, the taxpayer
enjoys the benefits of ownership.” United States v. Wesselman, 406
F. App’x 64, 65 (7th Cir. 2010) (unpublished).
On May 2, 2014, the United States of America filed a
Complaint seeking to reduce to judgment the outstanding liability
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for internal revenue taxes of Jerold W. Barringer and Linda M.
Barringer and to enforce the associated tax liens against real estate
known as 200 West Front Street, Nokomis, Illinois (the Nokomis
Property). Compl. (d/e 1). The Complaint also names as interested
parties the following persons having liens or claiming any interest
in the Nokomis Property: Kelbar Associates Trust; Janet E. ChottBeasley; Merle Wernle; State of Illinois (Department of Revenue);
and Ron Jenkins, Montgomery County Treasurer, in his official
capacity. Compl. ¶¶ 3-7.
Count 1 alleges that a delegate of the Secretary of Treasury
made assessments against Jerold W. Barringer for income taxes,
penalties, and interest for tax year 2000. Compl. ¶ 11. Notice of
each tax assessment and a demand for payment was sent to Jerold
W. Barringer on the date of each of the tax or penalty assessments.
Id. ¶ 12. Despite demand and notice, Jerold W. Barringer failed to
pay the assessed liabilities. Id. ¶ 13. The United States seeks
judgment in the amount of $68,194.27, plus such additional
amounts as may continue to accrue from and after May 1, 2014.
Count 2 alleges that a delegate of the Secretary of Treasury
made assessments against Jerold W. Barringer and Linda M.
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Barringer jointly for income taxes, penalties, and interest for tax
years 1999, 2008, 2009, and 2010. Compl. ¶ 15. Notice of each
tax assessment and a demand for payment was sent to Jerold W.
Barringer and Linda M. Barringer on the date of each of the tax or
penalty assessments. Id. ¶ 16. Despite demand and notice, Jerold
W. Barringer and Linda M. Barringer failed to pay the assessed
liabilities. Compl. ¶ 17. The United States seeks judgment in the
amount of $63,828.63, plus such additional amounts as may
continue to accrue from and after May 1, 2014.
Count 3 alleges that, pursuant to 26 U.S.C. § 6321 and § 6322
and as a result of the Barringers’ failure to pay the assessments, a
federal tax lien arose and attached to all property and rights to
property of the Barringers, including the Nokomis Property. Compl.
¶ 19. The Nokomis Property is titled in the name of Kelbar
Associates Trust. Id. ¶ 9.
Specifically, the Complaint alleges that on June 9, 2011,
Horseplayers Edge, LLC conveyed the Nokomis Property to Kelbar
Associates Trust. Compl. ¶ 9. The Deed was signed by Jerold W.
Barringer, Managing Director, Horseplayers Edge, LLC. Id.
According to the allegations in Count 3, Jerold W. Barringer has
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used Kelbar Associates Trust to keep his property out of reach of
creditors by funneling his money through a bank account in the
name of Kelbar Associates Trust and titling real property in the
name of that trust. Id. ¶ 20. The Complaint alleges that Kelbar
Associates is not a valid trust and holds title to the Nokomis
Property as the nominee or alter ego of Jerold W. Barringer, who is
the true, equitable owner of the Nokomis property. Id. ¶ 22.
Notices of Federal Tax Liens were filed in the Montgomery County
Clerk and Recorder’s office. Id. ¶ 23.
The United States seeks a judgment that all property and
property rights belonging to the Barringers are subject to the federal
tax liens. The United States also asks the Court to enforce the
federal tax liens upon the Nokomis Property.
The United States served Jerold W. Barringer, individually and
as Trustee of the Kelbar Associates Trust, and Linda M. Barringer.
See Summons (d/e 2, 6); Return of Service (d/e 13, 14). On July 9,
2014, the Barringers, appearing pro se, filed a Motion to Dismiss
(d/e 9). The Court notes that the Barringers’ Motion does not
comply with this Court’s Local Rules. See CDIL-LR 7.1(B)(1) (“Every
motion raising a question of law . . . must include a memorandum
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of law”). Nonetheless, the United States addresses the Motion on
the merits, and this Court will do the same.
II. JURISDICTION
This is an action filed by the United States to reduce the
taxpayer defendants’ tax liabilities to judgment and to enforce the
federal tax liens against real property. The Court has jurisdiction
pursuant to 26 U.S.C. § 7402 (providing that the district courts
have jurisdiction to render judgments necessary or appropriate for
the enforcement of internal revenue laws); § 7403 (providing that a
civil action may be filed in the district court to enforce a lien where
there has been a refusal or neglect to pay any tax); 28 U.S.C.
§ 1340 (providing that the district courts have original jurisdiction
of civil actions arising under internal revenue laws); and 28 U.S.C.
§ 1345 (providing that the district courts have original jurisdiction
of all civil actions commenced by the United States).
Venue is proper in this Court because the Nokomis Property is
located in Montgomery County. See 28 U.S.C. § 1391 (providing
that a civil action may be brought in the judicial district in which “a
substantial part of the property that is the subject of the suit is

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situated”); CDIL-LR 40.1(B) (cases arising out of Montgomery
County are filed in the Springfield Division).
III. ANALYSIS
In their Motion to Dismiss, the Barringers raise numerous
arguments, which the United States has helpfully divided into three
categories: (1) an argument under Rule 12(b)(2) and (7) that the
United States did not properly serve one of the parties; (2)
numerous arguments asserting that the United States failed to state
a claim upon which relief can be granted; and (3) arguments on
behalf of Defendant Wernle.
A.

The United States Properly Served the Kelbar Associates
Trust
The Barringers first argue that the United States failed to

serve Kelbar Associates Trust at the Trust’s headquarters. See Mot.
to Dismiss ¶ 2.
The capacity of the Kelbar Associates Trust to be sued is
determined by state law. See Fed.R.Civ.P. 17(b)(3)(A) (the capacity
of parties other than an individual not acting in a representative
capacity or a corporation is generally determined by the law of the
state in which the court is located except that an unincorporated
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association without capacity to be sued under state law may be
sued in its common name to enforce a substantive right existing
under the United States Constitution or laws). In Illinois, a written
trust can be sued through its trustee in a representative capacity
on behalf of the trust. See Sullivan v. Kodsi, 359 Ill. App. 3d 1005,
1010 (2005); Trustees of Carpenters’ Health & Welfare Trust Fund
of St. Louis v. Darr, 694 F.3d 803, 811 (7th Cir. 2012) (noting that
“in Illinois, trustees in their representative capacity are the same
entity as the trust”); 760 ILCS 5/4.11 (trustees have the power to
“compromise, contest, prosecute or abandon claims or other
charges in favor of or against the trust estate”). Therefore, the
United States properly sued Kelbar Associates Trust through its
trustee, Jerold W. Barringer, in his representative capacity.
Moreover, a trust is an unincorporated association. See
Soveral v. Franklin Trust, No. 90-2052, 1991 WL 160339 at *2
(D.N.J. 1991). Federal Rule of Civil Procedure 4(h) provides that an
unincorporated association may be served “by delivering a copy of
the summons and of the complaint on to an officer, a managing or
general agent, or any other agent authorized by appointment or by
law to receive service of process.” Fed.R.Civ.P. 4(h)(1)(B). The
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United States properly served Kelbar Associates Trust by serving
Jerold W. Barringer as trustee of the Kelbar Associates Trust. See
Summons (d/e 2); Return of Service (d/e 14).
B.

The Complaint States a Claim Upon Which Relief Can Be
Granted
The Barringers next make a number of arguments, pursuant

to Federal Rule of Civil Procedure 12(b)(6), that the United States’
Complaint fails to state a claim upon which relief can be granted.
A motion under Rule 12(b)(6) challenges the sufficiency of the
complaint. Christensen v. Cnty. of Boone, 483 F.3d 454, 458 (7th
Cir. 2007). To state a claim for relief, a plaintiff need only provide a
short and plain statement of the claim showing she is entitled to
relief and giving the defendants fair notice of the claims. Tamayo v.
Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008).
When considering a motion to dismiss under Rule 12(b)(6), the
Court construes the complaint in the light most favorable to the
plaintiff, accepting all well-pleaded allegations as true and
construing all reasonable inferences in plaintiff’s favor. Id.
However, the complaint must set forth facts that plausibly
demonstrate a claim for relief. Bell Atlantic Corp. v. Twombly, 550
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U.S. 544, 547 (2007). A plausible claim is one that alleges factual
content from which the Court can reasonably infer that the
defendants are liable for the misconduct alleged. Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). Merely reciting the elements of a cause
of action or supporting claims with conclusory statements is
insufficient. Id.
1.

The Barringers’ Challenge to the Sufficiency of the Notices
Does Not Warrant Dismissal of the Complaint
The Barringers argue that they “do not believe” that the

notices of tax assessments and notice of federal tax liens complied
with the law. See Mot. to Dismiss ¶¶ 9, 10. The Barringers assert
that dismissal of the Complaint is therefore warranted.
The Barringers’ argument that the notices might not have
complied with the applicable law is not sufficient to demonstrate
that the Complaint fails to state a claim. A complaint is only
required to provide a “short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2);
Tamayo, 526 F.3d at 1081 (also providing that the complaint need
only give the defendant fair notice of the claim and the basis of the

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claim). The United States is not required to plead evidence. See
Tamayo, 526 F.3d at 1081.
The Government has alleged that an assessment for
deficiencies in taxes was made, notice and demand was sent, the
Barringers failed to pay the deficiencies, and a tax lien attached to
the properties. This is sufficient to state a claim. See United States
v. Zabka, No. 10-1078, 2010 WL 2985356, at *2 (C.D. Ill. July 27,
2010) (Mihm, J.).
2.

The United States is Not Required to Attach Exhibits to its
Complaint
The Barringers next argue that, while the United States alleges

that it has the right to proceed with the litigation, the United States
did not attach the documents that authorized the United States to
bring this action. The Barringers also argue that the United States
did not attach the Notices of Federal Tax Liens referenced in the
Complaint. See Mot. to Dismiss ¶¶ 1, 4.
Federal Rule of Civil Procedure 10(c) provides that a document
attached to the complaint is considered “a part of the pleading for
all purposes.” Fed.R.Civ.P. 10(c). However, a plaintiff does not
have to attach to the complaint the documents upon which the
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action is based. See Venture Assocs. Corp. v. Zenith Data Sys.
Corp., 987 F.2d 429, 431 (7th Cir. 1993); Tamayo, 526 F.3d at
1081 (stating that a complaint need not include evidence).
Therefore, the United States’ failure to attach the referenced
documents to the Complaint does not warrant dismissal.
3.

The United States is Properly Identified as the Plaintiff
The Barringers next argue that listing only the United States

as Plaintiff, and not listing a specific agency, warrants dismissal.
See Mot. to Dismiss ¶ 3. However, the United States is the real
party in interest in an action to enforce a federal tax lien. See
United States v. Kuyper, No. 11-4170, 2012 WL 1932111 at *3 n. 2
(D.S.D. May 29, 2012) (finding that “the United States government
is the real party in interest in an action to enforce a federal tax
lien”); United States v. Dawes, 161 F. App’x 742, 746 (10th Cir.
2005) (rejecting as frivolous the defendants’ argument that the
United States is not the proper plaintiff under 28 U.S.C. § 1345 in a
case brought by the United States to reduce to judgment federal tax
assessments and foreclose federal tax liens); 26 U.S.C. § 7403(a)
(“In any case where there has been a refusal or neglect to pay any
tax, or to discharge any liability in respect thereof . . . the Attorney
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General or his delegate, at the request of the Secretary, may direct a
civil action be filed in a district court of the United State to enforce
the lien of the United States”).
The Barringers also appear to argue that the United States
does not have the authority to sue because the suit must be
brought by an agency in the District of Columbia that has
authorization from Congress to operate outside that jurisdiction.
See Mot. to Dismiss, ¶ 3 citing 4 U.S.C. § 72 (“All offices attached to
the seat of government shall be exercised in the District of
Columbia, and not elsewhere, except as otherwise expressly
provided by law”). Such argument has been rejected as frivolous.
See, e.g., United States v. Springer, 444 F. App’x 256, 260-61 (10th
Cir. 2011) (rejecting as patently frivolous the argument that 4
U.S.C. § 72 limited the Secretary of Treasury to collect taxes only
within the territorial limits of Washington, D.C.). The Court finds
that the United States is the proper Plaintiff.
4.

The Court Will Not Strike the Opening Paragraph of the
Complaint
The Barringers argue that the opening unnumbered paragraph

of the Complaint appears to contain facts, which violates the
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Federal Rule of Civil Procedure 10(b) requirement that all
“allegations be specifically numbered and pled.” Mot. to Dismiss ¶
5; see Fed.R.Civ.P. 10(b) (“A party must state its claims or defenses
in numbered paragraphs”). The Barringers alternatively assert that
if the opening paragraph is not required for the allegations, the
Court should strike that paragraph. Either way, the Barringers
claim that the Complaint fails to succinctly and properly plead all
relevant facts in numbered paragraphs and, therefore, the
Complaint must be dismissed. See Mot. to Dismiss ¶ 5.
The opening paragraph of the Complaint does not contain any
facts that are not included in the numbered paragraphs. The
Barringers have not provided any basis on which the Court would
either strike the opening paragraph or the entire Complaint.
5.

The Court Rejects the Barringers’ “District Director” Argument
The Barringers also argue that the Internal Revenue Service is

required to operate through a series of internal revenue districts.
According to the Barringers, the regulations require certain action
by district directors that has not occurred, warranting dismissal of
this cause of action. See Mot. to Dismiss ¶¶ 8, 11. While the
Barringers’ argument is not well developed, it is strikingly similar to
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the argument Jerold Barringer raised before this Court in United
States v. Barringer, No. 12-3324, 2013 WL 211044 (C.D. Ill. 2013).
In the earlier case, Jerold Barringer argued that the Internal
Revenue Service Restructuring and Reform Act of 1998, Pub. L. No.
105-206, 112 Stat. 685 (1998) eliminated internal revenue districts
and district directors. Jerold Barringer argued that because “no
new delegation individual in a statutory or regulatory structure has
been identified,” the United States did not have authority to enforce
the Internal Revenue Service summons against him. Barringer,
2013 WL 211044 at *2.
Citing numerous other cases, this Court rejected Jerold W.
Barringer’s argument and found the United States had the
authority to enforce the summons. Id. at *2; see also Grunsted v.
Commissioner, 136 T.C. 455, 461 (2011) (noting that the
Restructuring and Reform Act included a savings provision that
kept in effect regulations that refer to officers whose positions no
longer existed and specifically provided that nothing in the
reorganization plan would impair any right or remedy to recover any
penalty claimed to have been collected without authority); United
States v. Sanders, No. 11-912, 2012 WL 4088823, at *7 (S.D. Ill.
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2012) (finding the “district directors” argument meritless); United
States v. Miller, 444 F. App’x 106, 107-08 (8th Cir. 2011) (rejecting
argument that the IRS restructuring “abrogated the duty to pay
taxes by eliminating the district offices where taxpayers previous
filed returns”). For the reasons stated in Barringer, 2013 WL
211044 at *2, and the cases cited therein, the Court rejects the
Barringers’ argument.
6.

The United States Did Not Need Approval from the Local
United States Attorney
The Barringers next argue that the United States failed to

demonstrate that it has the authority or permission to appear in the
Central District of Illinois without the approval of the local United
States Attorney, who is in charge of all actions filed on behalf of the
government in the Central District of Illinois. See Mot. to Dismiss
¶ 12. However, 28 C.F.R. § 0.70(a) assigns the prosecution in all
courts, other than the Tax Court, of civil suits and other matters
arising out of the internal revenue laws to the Assistant Attorney
General, Tax Division, as in this case.

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C.

The Barringers Cannot Raise Arguments on Behalf of
Defendant Wernle
The Barringers last argue that Defendant Wernle is not within

the territorial jurisdiction of this Court and that if Wernle has a
valid lien with priority, his lien will exceed and eliminate any claims
to property by the United States. See Mot. to Dismiss ¶¶ 6, 7.
Although Jerold W. Barringer is a licensed attorney, the Barringers
make no claim that they represent Wernle. Therefore, these
arguments are not properly before the Court.
IV. CONCLUSION
For the reasons stated, the Barringers’ Motion to Dismiss [10]
is DENIED. The Barringers shall file an Answer to the Complaint
on or before September 10, 2014.
ENTER: August 27, 2014
FOR THE COURT:
s/Sue E Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE

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