United States of America v. Gerard et al

Filing 37

OPINION AND ORDER: Court DENIES 27 Motion for Summary Judgment. Signed by Judge Joseph S Van Bokkelen on 9/8/2016. (tc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.

Case No.: 1:14-CV-67-JVB-SLC

CYNTHIA J. GERARD,
ROBERT E. GERARD, and
TREASURER, ALLEN COUNTY,
INDIANA,
Defendants.
OPINION AND ORDER
The United States claims Cynthia Gerard owes taxes in connection with her business.
(Compl., DE 1, Count I.) The United States further claims federal liens securing most of these
liabilities attach to the real property at which Cynthia resides. (Id., Count II.) The United States
asks the Court to enter judgment for the tax liabilities and to force the sale of the real property to
satisfy the liens.
The United States moved for summary judgment. For the following reasons, the Court
denies this motion.

A.

Background facts
Plaintiff and the Gerard Defendants essentially agree to the following facts, except as

indicated.
Robert and Cynthia Gerard, husband and wife, bought residential real property
(“Property”) in 1990. They owned the Property as tenants by the entireties.

Cynthia owned and operated a limited liability company as its sole member from 2003
through 2008. Cynthia did not ask the IRS to treat the company as a corporation rather than a
sole proprietorship, so the company was a “disregarded entity” under the applicable regulations,
and was treated in the same manner as a sole proprietorship for federal tax purposes. (Compl.,
DE 1, ¶ 6; Answer, DE 4, ¶ 6.)
Cynthia and her company incurred employment and unemployment tax liabilities, some
of which remain unpaid. (Compl., DE 1, ¶ 11.) Plaintiff and the Gerard Defendants disagree
regarding the amount of unpaid taxes. (Defs.’ Mem. Opp’n Mot. Summ. J., DE 33 at 5–7.) The
parties agree Robert is not personally liable for these unpaid taxes.
Plaintiff claims the vast majority of the tax liabilities gave rise to liens, which attached to
the Property. (Compl., DE 1, Count II.)
In July 2012, Robert and Cynthia conveyed the Property to Robert, individually. The
Gerards claim they transferred the Property in this manner on the advice of former counsel, given
Cynthia’s debilitating brain aneurism and the need for Robert to manage her affairs and assets.
(Defs.’ Mem. Opp’n Mot. Summ. J., DE 33 at 4.)
Plaintiff claimed in its Motion for Summary Judgment that this transfer was fraudulent,
but withdrew this claim due to the lack of its inclusion in the complaint. (Pl.’s Reply, DE 36 at
2.)
The parties dispute other factual issues related to the nature of the ownership interests in
the property over time, related to the nature of any consideration exchanged for the transfer of
the Property to Robert individually, related to the value of the Property, and related to the proper
values of disbursements from any sale of the Property.

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B.

Legal Standard
A motion for summary judgment must be granted “if the pleadings, depositions, answers

to interrogatories, and admissions on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” Fed. R. Civ. P. 56(c). Rule 56(c) further requires the entry of summary judgment,
after adequate time for discovery, against a party “who fails to make a showing sufficient to
establish the existence of an element essential to that party’s case, and on which that party will
bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
A party seeking summary judgment bears the initial responsibility of informing a court of
the basis for its motion and identifying those portions of the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, which it believes
demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. If the
moving party supports its motion for summary judgment with affidavits or other materials, it
thereby shifts to the non-moving party the burden of showing that an issue of material fact exists.
Keri v. Bd. of Trust. of Purdue Univ., 458 F.3d 620, 628 (7th Cir. 2006).
Rule 56(e) specifies that once a properly supported motion for summary judgment is
made, “the adverse party’s response, by affidavits or as otherwise provided in this rule, must set
forth specific facts to establish that there is a genuine issue for trial.” Fed. R. Civ. P. 56(e).
In viewing the facts presented on a motion for summary judgment, a court must construe
all facts in a light most favorable to the non-moving party and draw all legitimate inferences and
resolve all doubts in favor of that party. Keri, 458 F.3d at 628. A court’s role is not to evaluate

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the weight of the evidence, to judge the credibility of witnesses, or to determine the truth of the
matter, but instead to determine whether there is a genuine issue of triable fact. Anderson v.
Liberty Lobby, 477 U.S. 242, 249–50 (1986). When examining the evidence, a court must
resolve ambiguities in favor of the non-moving party. See Aviles v. Cornell Forge Co., 183 F.3d
598, 603 (7th Cir. 1999).

C.

Discussion
Multiple genuine issues of material fact preclude summary judgment in this case.
There are genuine issues of material fact regarding the amount owed by Defendant

Cynthia Gerard to Plaintiff, regarding the characters and values of the various interests in the
Property, regarding the level of prejudice Plaintiff would suffer without a forced sale of the
entire Property, regarding the level of prejudice and hardship Defendant Robert Gerard would
suffer in the event of a forced sale of the entire Property, and regarding other issues.
Construing the facts in the light most favorable to the non-moving Defendants, and
resolving ambiguities in their favor, the Court cannot say Plaintiff is entitled to judgment as a
matter of law.

D.

Conclusion
Accordingly, the Court DENIES Plaintiff’s motion for summary judgment (DE 27).
SO ORDERED on September 8, 2016.
s/ Joseph S. Van Bokkelen
JOSEPH S. VAN BOKKELEN
UNITED STATES DISTRICT JUDGE

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