Findling v. United States of America Department of Treasury, Internal Revenue Service et al
OPINION AND ORDER denying 12 defendant United States' Motion to Dismiss; granting 21 plaintiff's Motion for Authority to deposit funds. Signed by District Judge George Caram Steeh. (MBea)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
DAVID FINDLING, in his
Capacity as State-Court
Case No. 17-CV-13560
HON. GEORGE CARAM STEEH
UNITED STATES OF AMERICA,
DAVID W. THURSFIELD, and
LINDA J. THURSFIELD,
OPINION AND ORDER DENYING DEFENDANT UNITED STATES=
MOTION TO DISMISS [DOC. 12] AND GRANTING PLAINTIFF’S
MOTION FOR AUTHORITY TO DEPOSIT FUNDS [DOC. 21]
This matter comes before the court on defendant United States’
motion to dismiss and plaintiff Receiver David Findling’s motion for
approval of bond or to deposit funds with the court. The court held an inchambers conference with the parties on March 26, 2018, during which
time all parties informed the court they would waive oral argument on the
motions and rely on the arguments in their briefs.
On April 16, 2005, a Judgment of Divorce was entered by the
Oakland County Circuit Court between David Thursfield (“David”) and his
former wife, Linda Thursfield (“Linda”). A property Settlement Agreement
divided the parties’ marital property. David has more than one retirement
benefit plan through his former employment with Ford Motor Company.
One is qualified under the Employment Retirement Income Security Act
(“ERISA”) (the “Qualified Plan”) and another one is not qualified under
ERISA (the “Non-Qualified Plan”). The Settlement Agreement provided
that both retirement plans were to be divided between the parties equally.
On January 15, 2015, David was in default of the Judgment of
Divorce and the Circuit Court appointed David Findling as Receiver. David
and Linda entered into a Settlement Agreement on August 4, 2015 which
was incorporated and merged into their Judgment of Divorce. The
Settlement Agreement provided that Linda receive David’s 50% interest in
the Qualified and Non-Qualified Plans effective May 1, 2015. This meant
that Linda now received 100% of David’s Ford U.S. Pension. David
retained his Ford U.K. Pension. In addition, Linda was awarded a Money
Judgment for $4,118,911.89 and was entitled to a lien.
David’s interest in the Non-Qualified Plan could not be divided by a
qualified domestic relations order. Therefore, 100% of the monthly
payments from the Non-Qualified Plan (“Pension Payment”) are remitted to
the Receiver. From February 2016 to April 2017, each Pension Payment
was collected by the Receiver and in turn remitted to Linda.
On April 4, 2017, the United States served a Notice of Levy (“2017
Levy”) on the Receiver for tax liability owed by David. IRS Officer Teresita
Lopez told the Receiver a Notice of Federal Tax Lien (“NFTL”) had been
perfected against David in the amount of $146,075.99 for his 2009 taxes.
Because David resided in Spain, the NFTL was recorded in the District of
Columbia on May 25, 2016.
After the Money Judgment was entered in 2015, Linda recorded a
UCC-1 in Oakland County, Michigan to perfect her lien (“Linda’s Lien”).
When Linda’s lawyers learned of the NFTL, Linda re-recorded her UCC-1
in the District of Columbia on June 1, 2017. Thereafter, the United States
recorded a second NFTL on August 18, 2017.
On September 26, 2017, the Receiver wrote a letter to Officer Lopez
outlining numerous issues:
- The Receiver’s personal liability under 31 USC §3713(b);
- Whether the Receiver was required to marshal David’s Ford U.K.
Pension under the marshaling doctrine;
- The necessity of releasing the Receiver from liability due to both
the obligations under the 2017 Levy and the NFTL should he remit
payment to Linda;
- Whether the Pension payments from the Non-Qualified Plan are
property of David or Linda; and
- Does the United States have lien priority over Linda and if so is it
for $146,075.99 or $2,124,693.00?
Officer Lopez responded with a letter on October 4, 2017 stating that
the 2017 Levy attached to 50% of David’s interest in his Ford Non-Qualified
Retirement Plan and does not attach to the portion of that plan the Circuit
Court ordered to be paid to Linda as part of the April 16, 2005 divorce
settlement. The letter did not address the fact that the merged Settlement
Agreement allocated 100% of David’s Ford U.S. Pension to Linda. Nor did
the letter address the other issues raised by the Receiver.
Because of the various issues and possible exposure facing the
Receiver, he filed this action to interplead the Receivership Funds and
seeks declaratory relief in this federal court.
Motion to Dismiss
There are two approaches to interpleader in the federal courts.
Statutory interpleader is brought pursuant to the Federal Interpleader Act,
28 U.S.C. §1335, 1397, 2361, which grants district courts original
jurisdiction. Statutory interpleader relief is available if the plaintiff
"stakeholder" has in its custody property valued at $500 or more, there are
two or more adverse claimants of diverse citizenship, and the plaintiff has
deposited the property or its value with the court. The United States may
be named as an adverse party where it "has or claims a mortgage or other
lien." 28 U.S.C. ' 2410(a)(5).
The first element, the amount in controversy, is satisfied in this case.
The second element for statutory interpleader requires that minimal
diversity exist among at least two of the claimants to the fund. State Farm
Fire & Cas. Co. v. Tashire, 386 U.S. 523, 530 (1967). Complete diversity
is satisfied if the action is between citizens of a State and citizens of a
foreign state, “except that the district courts shall not have original
jurisdiction under this subsection of an action between citizens of a State
and citizens or subjects of a foreign state who are lawfully admitted for
permanent residence in the United States and are domiciled in the same
State.” 28 U.S.C.A. § 1332(a)(2).
The claimants in this case include Linda, who claims a right to the
entire Receivership Funds pursuant to a Circuit Court judgment as well as
her recorded lien, and the Internal Revenue Service which claims a right to
the Receivership Funds pursuant to its recorded liens and its Notice of
Levy served on the Receiver. Potential other claimants to the
Receivership Funds include the Receiver who asserts a claim to the funds
for his receiver’s and attorney’s fees, and David Thursfield who is a named
defendant but has not yet been served.
Both Linda and David are citizens of the United Kingdom, with Linda
domiciled in Michigan and David allegedly domiciled in Spain. The
Receiver has been appointed under the authority of the State of Michigan,
so his citizenship is presumably Michigan, assuming he is properly
considered a claimant to the funds. The IRS is an agency of the United
States and as such its claim is treated as if it is made by the United States.
The United States is not a party that can be sued in diversity as it is not a
citizen of any state. See Koppers Co., Inc. v. Garling & Langlois, 594 F.2d
1094, 1097 n.1 (6th Cir. 1979). Based on the evidence before the court it
is not clear that minimal diversity is met in this case.
The third requirement for statutory interpleader is that the funds be
deposited with the court, or that a sufficient bond be posted. This issue is
addressed in the section of this order dealing with plaintiff’s motion for
approval of bond or authority to deposit funds subject to interpleader.
Even where statutory interpleader does not confer jurisdiction on this
court, interpleader may still be employed under the Federal Rules of Civil
Procedure. Rule 22 interpleader is a procedural device which does not
itself grant the court subject matter jurisdiction. Fed. R. Civ. P. 22.
Therefore, in an action brought pursuant to rule interpleader, federal
question jurisdiction or diversity jurisdiction must first be established.
The Sixth Circuit has recognized that a district court can exercise
federal subject matter jurisdiction in a Rule 22 interpleader action involving
the IRS as an adverse claimant if federal question jurisdiction would have
existed in a coercive action filed by the IRS against the stakeholder. The
court reasoned that such coercive action would be decided as a matter of
federal law as opposed to state law. Bell & Beckwith v. United States, 766
F.2d 910, 914 (6th Cir. 1985). The Bell & Beckwith court held that federal
jurisdiction did not exist in the case before it because a coercive action by
the IRS in that case was one to be decided exclusively by state law. The
issue presented was whether the taxpayer owned the liened funds or
whether the funds were owned by another claimant. The issue of
ownership was exclusively one of state law.
In a coercive action between the United States and Linda over the
right to the Receivership Funds, the issues go beyond state law in
determining ownership. In addition to determining Linda’s ownership of
the Pension Payments pursuant to the Circuit Court Judgment of Divorce
and Settlement Agreements, in this case there are competing perfected
liens which involve application of the Federal Tax Lien Act, 26 U.S.C.
§6321, et seq. Unlike in Bell & Beckwith, resolution of the question of
ownership of the Receivership Funds will not “obviate the need to decide
the federal question . . . .” Id. at 916. It is too broad an interpretation of
Bell & Beckwith to hold that all disputes regarding the priority of a federal
tax levy require reliance upon state law to determine competing property
rights. The court finds that in this case federal question jurisdiction exists
and Rule 22 interpleader may be utilized by the Receiver.
II. Motion for Approval of Bond or Authority to Deposit Funds
Plaintiff moves for approval of bond or for authority to deposit the
Receivership Funds with the court. The Receiver receives over $27,000
per month from David’s Ford U.S. Pension. There is currently
$270,991.18 in the receivership trust account. The court orders that the
Receiver shall deposit the Receivership Funds already held into the court’s
registry and that each future monthly Pension Plan payment shall be
deposited into the court’s registry as it is received.
IT IS HEREBY ORDERED that the United States’ motion to dismiss
IT IS HEREBY FURTHER ORDERED that the Receiver’s motion for
authority to deposit funds subject to interpleader is GRANTED. Plaintiff
shall deposit the existing Receivership Funds into the registry of the court,
as well as any additional Receivership Funds received on an on-going
monthly basis, until further order of the court.
Dated: March 29, 2018
s/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE
CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
March 29, 2018, by electronic and/or ordinary mail.
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