United States of America v. Stillman

Filing 25

OPINION AND ORDER GRANTING 19 MOTION for Default Judgment as to Diamond Residential Mortgage Corporation by Plaintiff United States of America. It is ADJUDGED that the federal tax liens that arose against Edwin L Stillman's property on March 1 5, 2006, October 19, 2015, and November 9, 2015 are superior in priority to any right, title, claim, lien, or interest held by Defendant Diamond Residential Mortgage Corporation in the real property located at 239 East Bridgewater Lane, Valparaiso, I ndiana. Clerk DIRECTED to enter default judgment in favor of the Plaintiff United States of America and against Defendant Diamond Residential Mortgage Corporation. Clerk DIRECTED to forward a copy of this Order to Defendant Diamond Residential Mortgage Corporation c/o Incorp Services, Registered Agent, 120 East Market Street, Suite 808, Indianapolis, Indiana 46204. Signed by Chief Judge Philip P Simon on 12/29/16. (cc: Diamond Residential Mortgage Corporation). (cer)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.
DIAMOND RESIDENTIAL
MORTGAGE CORPORATION,
Defendant.

)
)
)
)
)
)
)
)
)
)

Cause No. 2:16-cv-91

OPINION & ORDER
The United States seeks to enforce federal tax liens against Edwin Stillman’s
home in Valparaiso. (DE 1.) Diamond Residential Mortgage Corporation was named a
codefendant because it “may claim . . . an interest in the real property on which the
United States seeks to enforce its tax liens.” (DE 3 at 2.) The United States now seeks a
default judgment against Diamond because the company hasn’t responded to the
complaint or otherwise defended this lawsuit. (DE 19.) For the reasons below, the
United States’ motion is granted.
Background
According to the complaint, Edward Stillman withheld more than $175,000 in
Federal Insurance Contributions Act (“FICA”) taxes from the wages of Provar Industrial
Corporation employees between 2003 and 2005 but never paid it to the IRS. (DE 3 at 3.)
Stillman also allegedly failed to pay federal income taxes totaling more than $15,000 for
2012, 2013, and 2014. (Id. at 3-4.) The government recorded the FICA tax liability and

demanded payment from Stillman on March 15, 2016, and it assessed the unpaid
income taxes and demanded payment from Stillman for 2012 and 2013 on October 19,
2015 and for 2014 on November 9, 2015. (Id. at 4.) Together with accrued penalties and
interest and taking account of all payments, credits, and the like, Stillman allegedly
owes $288,181.79. (Id. at 4.)
Stillman and his wife, Monica, purchased real property at 230 East Bridgewater
Lane in Valparaiso, Indiana on June 25, 2010. (Id. at 2.) The United States filed notices of
federal tax liens on that property with the Porter County Recorder’s office in Stillman’s
name for tax periods in 2003, 2004, and 2005 starting in August 2015, and it filed notices
of those same liens in Diamond’s name on December 9, 2015. (Id. at 5-6.)
The government filed this case three months later. (DE 1.) Although Diamond
received service of the summons and amended complaint through its registered agent
on May 2, 2016, the company failed to plead or otherwise defend this action by the May
23, 2016 deadline. (DE 12.) As a result, the Clerk of the Court entered a default on
August 16, 2016 (DE 16), and the government has now moved for default judgment (DE
19). Diamond still has not appeared or responded.
Discussion
“[I]n civil cases, where a party fails to respond, after notice the court is ordinarily
justified in entering a judgment against the defaulting party, and the court has
considerable latitude in deciding whether to require plaintiff to produce evidence in
support of the claims before entering such a judgment. Bermudez v. Reid, 733 F.2d 18, 21
2

(2d Cir. 1984) (citing Fed. R. Civ. P. 55(b)(2); 10 C. Wright, A. Miller, M. Kane, Federal
Practice & Procedure §§ 2685, 2688 (1983)). However, even though Diamond has failed
to challenge the facts alleged in the complaint, I still must determine whether those facts
constitute a legitimate cause of action.
Count II of the complaint, the only count relevant to this defendant, alleges that
the United States has federal tax liens against the Valparaiso property, arising from the
FICA tax liabilities assessed against Stillman on March 15, 2006, and income tax
liabilities assessed against him on October 19, 2015, and November 9, 2015. The count
further alleges Diamond has no right, title, lien, or other interest in the Valparaiso
property. Therefore, the complaint alleges a legitimate cause of action to determine the
priority of the federal tax liens relative to any interest Diamond may have in the
Valparaiso property.
Conclusion
Accordingly, the United States’ Motion for Default Judgment (DE 19) is
GRANTED, and it is hereby ADJUDGED that the federal tax liens that arose against
Edwin L. Stillman’s property on March 15, 2006, October 19, 2015, and November 9,
2015 are superior in priority to any right, title, claim, lien, or interest held by Diamond
Residential Mortgage Company in the real property located at 239 East Bridgewater
Lane, Valparaiso, Indiana. The Clerk of Court is DIRECTED to enter default judgment
in favor of the plaintiff and against defendant Diamond Residential Mortgage
Corporation and ORDERED to send a copy of this order to Diamond Residential
3

Mortgage Corporation, c/o Incorp Services, Registered Agent, 120 E. Market St., Ste.
808, Indianapolis, IN 46204.
SO ORDERED.
ENTERED: December 29, 2016.
s/ Philip P. Simon
CHIEF JUDGE
UNITED STATES DISTRICT COURT

4