United States of America v. Chicorel et al

Filing 27

OPINION AND ORDER granting in part 22 Plaintiff's Motion for Summary Judgment and Directing Further briefing. Signed by District Judge Robert H. Cleland. (LWag)

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

UNITED STATES OF AMERICA,
Plaintiff,
v.

Case No. 16-10894

ESTATE OF ALBERT CHICOREL, et al.,
Defendants.
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OPINION AND ORDER GRANTING IN PART PLAINTIFF’S MOTION FOR SUMMARY
JUDGMENT AND DIRECTING FURTHER BRIEFING
In this action Plaintiff United States of America seeks to recover back taxes
allegedly owed by Defendant Estate of Albert Chicorel. Before the court is the
government’s motion for summary judgment. (Dkt. # 22.) The matter is fully briefed and
a hearing is unnecessary. See E.D. Mich. LR 7.1(f)(2). For the reasons that follow, the
court will grant the motion in part and direct further briefing.
I. BACKGROUND
The following facts are undisputed unless otherwise noted. Decedent Albert
Chicorel died on October 26, 2006. (Dkt. # 25, Pg. ID 274.) In the year prior to his
death, Decedent was placed into a conservatorship under the supervision of the
Oakland County Probate Court. (Id. at Pg. ID 275.) The court-appointed conservator
prepared Decedent’s 2002, 2003, and 2004 federal income tax returns. (Id.) Defendants
aver that “virtually of Decedent’s income reported in these tax returns was stolen from
the Decedent by his business associates.” (Id.)

A delegate of the Secretary of the Treasury made timely assessments against
Decedent for unpaid federal income taxes, penalties, and interest for each year’s unpaid
taxes. (Dkt. # 22, Pg. ID 216.) The assessments are reflected in the following table,
taken from Defendants’ opposition brief:
Tax Period

Tax
Assessment
Date

Initial Assessment
[(Dkt. # 25-4)]

2002

09/12/2005

$140,903.52

Balance due as
of 03/09/2016
according to
Plaintiff
$234,250.05

2003

02/06/2006

$175,825.98

$292,760.79

2004

03/13/2006

$108,294.20

$184,709.71

Total

$425,023.70

$711,720.55

(Dkt. # 25, Pg. ID 276.) Plaintiff avers that as of March 1, 2017, the total amount due is
$738,344.26. (Dkt. # 22-3.)
Shirley Behar, successor conservator for Decedent, sent a request for collection
due process hearing concerning the 2003 and 2004 taxes to the IRS dated June 27,
2006. The IRS responded on February 7, 2007, with a letter titled “Notice of
Determination Concerning Collection Action(s) under Section 6329 and/or 6330.” (Dkt. #
22-4, Pg. ID 255; Dkt. # 22-5, Pg. ID 264-65.) The IRS letter advised Ms. Behar that the
IRS would file a proof of claim in the probate proceeding once it was opened and no
other collection action would be taken at that time. (Dkt. # 22-4, Pg. ID 261.)
Unsupervised probate proceedings commenced in the Oakland County, Michigan
Probate Court on March 6, 2007. Decedent’s nephew, Richard Behar, was appointed
personal representative on April 27, 2007. Michigan statute requires the personal
representative to publish a “notice to creditors” stating that creditors have four months

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after the date of publication to present their claims. Mich. Comp. Laws § 700.3803.
Pursuant to the statute, Mr. Behar published a notice to creditors on May 4, 2007, in the
Oakland County Legal News. (Dkt. # 25, Pg. ID 288.)
The IRS mailed a proof of claim for the assessed income taxes to the Oakland
County Probate Court and Steven Cohen, attorney for Mr. Behar, on January 28, 2009.
(Dkt. # 22-6.) The proof of claim was recorded with the Oakland County Probate Court
the following day. (Dkt. # 22-7.) The probate proceeding is ongoing, and no other
collection action took place until the government filed the instant litigation on March 11,
2016. (Dkt. # 1.)
II. STANDARD
Summary judgment is proper “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). “In deciding a motion for summary judgment, the court must
view the evidence in the light most favorable to the non-moving party, drawing all
reasonable inferences in that party’s favor.” Sagan v. United States, 342 F.3d 493, 497
(6th Cir. 2003). The movant has the initial burden of showing the absence of a genuine
dispute as to a material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “[T]hat
burden may be discharged by showing . . . that there is an absence of evidence to
support the nonmoving party’s case.” Bennett v. City of Eastpointe, 410 F.3d 810, 817
(6th Cir. 2005) (internal quotation marks omitted). The burden then shifts to the
nonmovant, who must put forth enough evidence to show that there exists “a genuine
issue for trial.” Horton v. Potter, 369 F.3d 906, 909 (6th Cir. 2004) (citation omitted).
Summary judgment is not appropriate when “the evidence presents a sufficient

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disagreement to require submission to a jury.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 243 (1986). In evaluating a summary judgment motion, “the judge’s function is not
himself to weigh the evidence and determine the truth of the matter but to determine
whether there is a genuine issue for trial . . . credibility judgments and weighing of the
evidence are prohibited.” Moran v. Al Basit LLC, 788 F.3d 201, 204 (6th Cir. 2015)
(internal quotation marks and citations omitted).
III. DISCUSSION
Defendants raise two arguments in opposition to summary judgment. First,
Defendants contend that the court should decline to exercise its jurisdiction over this
matter under principles of comity. Second, Defendants argue that the government is
barred by the statute of limitations from enforcing the 2002 assessment.1 The court will
reject Defendants’ first argument, but will require further briefing before it addresses the
second one.
A. Comity
The comity doctrine “counsels lower federal courts to resist engagement in
certain cases falling within their jurisdiction.” Levin v. Commerce Energy, Inc. 560 U.S.
413, 421 (2010). The Supreme Court has explained that the doctrine reflects:
a proper respect for state functions, a recognition of the fact that the entire
country is made up of a Union of separate state governments, and a
continuance of the belief that the National Government will fare best if the
States and their institutions are left free to perform their separate functions
in separate ways.

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Defendants state that if the court rejects their comity argument, they stipulate to
judgment on the 2003 and 2004 assessments. (See Dkt. # 25, Pg. ID 272-73.)
Accordingly, the court will grant Plaintiff’s motion with respect to the 2003 and 2004
assessments.

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Fair Assessment in Real Estate Ass’n, Inc. v. McNary, 454 U.S. 100, 112 (1971)
(quoting Younger v. Harris, 401 U.S. 37, 44 (1971)).
Federal courts generally recognize probate proceedings as particularly state-law
centric, and the courts have “long recognized a probate exception, kin to the domestic
relations exception, to otherwise proper federal jurisdiction.” Marshall v. Marshall, 547
U.S. 293, 296 (2006). This does not imply that federal courts refrain from adjudicating
matters simply because a probate proceeding is ongoing, however. “[W]hile a federal
court may not exercise its jurisdiction to disturb or affect the possession of property in
the custody of a state court, . . . it may exercise its jurisdiction to adjudicate rights in
such property where the final judgment does not undertake to interfere with the state
court’s possession save to the extent that the state court is bound by the judgment to
recognize the right adjudicated by the federal court.” Id. (quoting Markham v. Allen, 326
U.S. 490, 494 (1946)).
Defendants contend that the Oakland County Probate Court is “uniquely qualified
to sort out” the questions of state law presented by the statute of limitations question.
(Dkt. # 25, Pg. ID 282.) Defendants also aver that the government has already stated
that it intends to pursue collection against Chicorel Lyons, LLC and the Decedent’s trust
in state court, as this court barred them from doing in this proceeding when it denied
their motion to file a second amended complaint. (See Dkt. # 17.) Thus, exercising
comity may consolidate these issues for a single proceeding in front of the court that
Defendants claim is best suited to address them—though the government says it has
“no intent” to pursue collections against third parties in the probate court. (Dkt. # 26, Pg.
ID 333.)

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Defendants bring their comity argument for the first time in their response brief to
the government’s motion for summary judgment, filed March 22, 2017. (Dkt. # 25.)
Defendants waited until three weeks after the March 1, 2017 dispositive motion deadline
to raise the issue. As a result, Defendants’ comity argument is untimely.
In any event, the court finds that comity is not called for here. While the probate
proceeding is ongoing, adjudicating this issue would only settle the rights of the claimant
and would not interfere with the probate court’s possession of the property; Marshall
explains that this is the type of dispute where federal jurisdiction is appropriate. 547
U.S. at 296. Further, the principal legal question is the proper interpretation of a federal
statute—whether filing a proof of claim in probate constitutes a “proceeding in court”
under 26 U.S.C. § 6502(a). Michigan law is certainly relevant, but the court is ultimately
called upon to answer a federal question, which this court is at least as qualified to do
as the Oakland County Probate Court. Cf. United States v. Craft, 535 U.S. 274 (2002)
(finding that although state law governs property rights, whether state-law rights qualify
as “rights to property” within the meaning of the federal tax lien statute is a question of
federal law).
This case is properly before the court. In light of the “virtually unflagging
obligation of the federal courts to exercise the jurisdiction given to them” Romine v.
Compuserve Inc., 160 F.3d 337, 339 (6th Cir. 1998) (quoting Colorado River Water
Conservation Dist. v. U.S., 424 U.S. 800 (1976)), the court declines to dismiss this
action under the comity doctrine.

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B. Statute of Limitations
Defendants contend that the government’s claim for the 2002 assessment is
time-barred. The relevant statute provides,
Where the assessment of any tax imposed . . . has been made within the
period of limitation properly applicable thereto, such tax may be collected
by levy or by a proceeding in court, but only if the levy is made of the
proceeding begun . . . within 10 years after the assessment of the tax . . . .
If a timely proceeding in court for the collection of a tax is commenced, the
period during which such tax may be collected by levy shall be extended
and shall not expire until the liability for the tax (or a judgment against the
taxpayer arising from such liability) is satisfied or becomes unenforceable.
26 U.S.C. § 6502(a). The taxes for 2002 were assessed on September 12, 2005. (Dkt. #
25, Pg. ID 276.) The government filed this action on March 11, 2016, more than ten
years after the assessment.
The government argues that its proof of claim constituted a ““proceeding in court”
within the meaning of § 6502(a) that tolled the running of the limitations period. (Dkt. #
22, Pg. ID 227-35.) The parties agree that the question turns on the “nature, function
and effect” of submitting a probate claim under local law, as stated in United States v.
Saxe, 261 F.2d 316, 319 (1st Cir. 1958). (Dkt. # 22, Pg. ID 229; Dkt. # 25, Pg. ID 283.)
However, neither party addresses why an earlier, timely proceeding in court
would toll the statute with respect to a later, separate proceeding in court. The language
of the statute appears to toll only “the period during which such tax may be collected by
levy[.]” 26 U.S.C. § 6502(a). With the exception of In re Estate of Young, 2010 WL
1427584 (S.D. Miss. April 8, 2010), all of the parties’ cited cases predate this language,

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which was adopted in 1988.2 See P.L. 100-647, Sec. 1015(u)(1) (1988). The In re
Estate of Young court does not address this question.
Section 6331(b) provides that “the term ‘levy’ as used in this title includes the
power of distraint and seizure by any means.” 26 U.S.C. § 6331(b). The Northern
District of Ohio has discussed this definition of “levy” in detail:
Under the Internal Revenue Code, the word “levy” merely “includes,” or
encompasses, the power-to-seize definition. The word “includes,” the
Code explains, “shall not be deemed to exclude other things otherwise
within the meaning of” levy. 26 U.S.C. § 7701(c). “Levy,” therefore, is not
simply a synonym for “seizure” and nothing more. Rather, the term “levy”
in the Code denotes everything else that it otherwise denotes in American
law.
In American legal usage, levy “is an ambiguous word, with its meaning
dependent on the context in which it is used.” Hill v. Whitlock Oil Services,
Inc., 450 F.2d 170, 174 (10th Cir.1971). It is also a broad term: it “may
refer to all the steps, collectively, by which public revenue is raised.” In re
Zoller's Estate, 53 Del. 448, 171 A.2d 375, 379 (1961); State ex rel. Board
of Education v. Hamrock, 11 Ohio Misc. 36, 225 N.E.2d 795, 798 (Ohio
Com.Pleas 1967).
In federal tax law, “levy is ordinarily used to describe the process of
reaching amounts owing to the taxpayer by third persons (e.g. bank
deposits).” 4 Boris Bittker & Lawrence Lokken, Federal Taxation of
Income, Estates, and Gifts (2d ed. 1992) ¶ 111.6.5 at 111–72 (emphasis
added). This “process” is understood broadly: whether a levy was made
does not depend on whether the Internal Revenue Code's formal levy
procedures were followed. Interfirst Bank Dallas, N.A. v. United States,
769 F.2d 299, 304 (5th Cir.1985). Instead, “any forced taking of property”
is a levy. Id. at 305 n. 9.
Miller v. United States, 921 F. Supp. 494, 497–98 (N.D. Ohio 1996). The court
understands this action to be seeking to reduce the alleged outstanding liability for the
2002 tax assessment to judgment, not to be seeking a “forced taking of property.”
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The 1988 amendment substituted the current language for the following: "The period
provided by this subsection during which a tax may be collected by levy shall not be
extended or curtailed by reason of a judgment against the taxpayer." P.L. 100-647, Sec.
1015(u)(1) (1988).

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Further briefing addressing this issue would be helpful. Accordingly, the court will
direct both parties to provide supplemental briefs, no longer than five pages, addressing
(1) whether the court’s preliminary reading of the statute is correct and (2) whether
some doctrine outside the text of § 6502(a) tolls the limitations period with respect to an
otherwise untimely proceeding in court based on an earlier, timely proceeding.
IV. CONCLUSION
IT IS ORDERED that Plaintiff’s motion for summary judgment (Dkt. # 22) is
GRANTED IN PART. The motion is GRANTED with respect to the 2003 and 2004 tax
assessments. Judgment on the balance of the motion is RESERVED.
IT IS FURTHER ORDERED that the parties are DIRECTED to provide
supplemental briefing as set forth above by May 5th, 2017.

s/Robert H. Cleland
ROBERT H. CLELAND
UNITED STATES DISTRICT JUDGE

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Dated: April 24, 2017
I hereby certify that a copy of the foregoing document was mailed to counsel of record
on this date, April 24, 2017, by electronic and/or ordinary mail.

s/Lisa Wagner
Case Manager and Deputy Clerk
[phone]

S:\Cleland\JUDGE'S DESK\C1 ORDERS\16-10894.CHICOREL.grant.summary.judgment.tlh.docx

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