Findling v. United States of America Department of Treasury, Internal Revenue Service et al

Filing 37

OPINION AND ORDER granting 30 defendant Linda Thursfield's Motion for Summary Judgment and for Immediate Relief. Signed by District Judge George Caram Steeh. (MBea)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
DAVID FINDLING, in his
Capacity as State-Court
Appointed Receiver,
Plaintiff,

Case No. 17-CV-13560
HON. GEORGE CARAM STEEH

vs.
UNITED STATES OF AMERICA,
DAVID W. THURSFIELD, and
LINDA J. THURSFIELD,
Defendants.
_____________________________/
OPINION AND ORDER GRANTING
DEFENDANT LINDA THURSFIELD’S MOTION FOR
SUMMARY JUDGMENT AND FOR IMMEDIATE RELIEF [ECF DOC. 30]
After 25 years of marriage, Linda Thursfield obtained a divorce from
David Thursfield in 2005. Mrs. Thursfield is now in the unenviable position
of being caught up in the Internal Revenue Service’s attempt to collect on
her ex-husband’s failure to pay his 2009 taxes. The matter comes before
the court in this Interpleader action on Mrs. Thursfield’s motion for
summary judgment and for immediate relief. The court held oral argument
on the motion on June 20, 2018. For the reasons stated in this opinion and
order, defendant Mrs. Thursfield’s motion for summary judgment and
immediate relief is GRANTED.
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On April 16, 2005, a Judgment of Divorce was entered by the
Oakland County Circuit Court between David and Linda Thursfield. A
property Settlement Agreement divided the parties’ marital property. Mr.
Thursfield has more than one retirement benefit plan through his former
employment with Ford Motor Company. One plan 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. With regard to the NonQualified Plan, which could not be transferred by a Qualified Domestic
Relations Order, the Settlement Agreement provided:
With respect to those portions of Husband’s retirement which
are not qualified plans and which cannot be transferred by a
Qualified Domestic Relations Order, as of the date of entry of
the Judgment of Divorce, or as soon thereafter as possible,
Husband will attempt to establish a direct payment to Wife of
fifty percent (50%) of the amount he receives, net of the
taxes he incurs. If it is not possible to establish direct payments,
then a trust will be established for the benefit of Wife to ensure
that Wife receives her fifty percent (50%) of the retirement
plans, which fifty percent (50%) is net of taxes incurred by
Husband.
From 2005 through 2009, Mr. Thursfield voluntarily remitted one half of the
net amount after withheld taxes to Mrs. Thursfield. Then, in 2010 when he
turned 65 years of age, Mr. Thursfield withdrew a lump sum from the Non-2-

Qualified Plan. As a result, Mrs. Thursfield’s 50% monthly payment from
the Non-Qualified Plan was reduced from $58,583 to approximately
$27,000. Mrs. Thursfield initiated an enforcement action in state court due
to Mr. Thursfield’s improper withdraw from the Non-Qualified Plan.
Discovery revealed that Mr. Thursfield failed to disclose millions of dollars
he received in compensation from his job subsequent to leaving Ford Motor
Company, and additionally that he hid other significant assets from Mrs.
Thursfield.
On January 15, 2015, David was found to be in default of the
Judgment of Divorce and the Circuit Court appointed David Findling as
Receiver. Mr. and Mrs. Thursfield entered into a Settlement Agreement on
August 4, 2015 which was incorporated and merged into their Judgment of
Divorce. The Settlement Agreement provides that Mrs. Thursfield receive
Mr. Thursfield’s 50% interest in both the Qualified and Non-Qualified Plans
effective May 1, 2015. This means that Mrs. Thursfield now receives 100%
of the Non-Qualified Plan with a reversionary interest in Mr. Thursfield if he
outlives her:
6. David will assign all of his right, title, and interest to his Ford
pension to Linda effective May 1, 2015 (approximately $25,000$30,000 per month). In the event Linda predeceases David, his
obligation to pay her additional funds under this paragraph is
terminated. Also, if Linda predeceases David, he agrees to pay
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the first six months of the Ford U.S. pension payments to their
daughter, Charlotte, forthwith.
In addition, the 2015 Settlement Agreement provides that “[b]oth parties
shall cooperate in perfecting Linda’s claim and interest in the Ford U.S.
Pension,” and that “[a] money judgment quantifying Linda’s claim shall be
entered forthwith.”
On October 8, 2015, a consent money judgment was entered in favor
of Mrs. Thursfield and against Mr. Thursfield in the amount of
$4,118,911.89 relating to Mr. Thursfield’s breach of the 2005 settlement
agreement. On the advice of Mrs. Thursfield’s tax counsel, the consent
money judgment was in a set amount and granted Mrs. Thursfield a lien
against the Non-Qualified Plan: “Linda shall be entitled to a lien in
accordance with the parties’ settlement agreement, including but not limited
to the benefits David is entitled to receive under” the Ford Non-Qualified
Plan.
Out of an abundance of caution, to make certain that her lien was
perfected, Mrs. Thursfield filed two UCC financing statements referencing
her claim to Mr. Thursfield’s interest in the Non-Qualified Plan. On October
16, 2015, Mrs. Thursfield filed a UCC financing statement with the Michigan
Department of State, identifying as collateral “[b]enefits in the name of
David Thursfield under the Ford Motor Company Non-Qualified Pension
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Plan pursuant to a Consent Money Judgment dated October 8, 2015.” The
UCC financing statement was filed in Michigan because that is where Mrs.
Thursfield believed the property to be perfected was located under state
law. See MCL 440.9301. On June 1, 2017, Linda filed a UCC financing
statement with the Office of Recorder of Deeds for Washington, D.C., again
identifying as collateral “[b]enefits in the name of David Thursfield under the
Ford Motor Company Non-Qualified Pension Plan pursuant to a Consent
Money Judgment dated October 8, 2015.” The second UCC financing
statement was filed in case Washington D.C. is the correct place to file a
UCC financing statement against a debtor with an overseas address.
On April 4, 2017, the United States served a Notice of Levy (“2017
Levy”) on the Receiver for tax liability owed by David. The Receiver feared
he faced risk of double liability regardless of how he distributed the monthly
payment. He therefore brought this interpleader action on November 1,
2017.
If a person liable to pay any tax neglects to pay after demand, a lien
is imposed “in favor of the United States upon all property and rights to
property, whether real or personal, belonging to such person.” 26 U.S.C. §
6321. The lien attaches to all property owned by the delinquent taxpayer.
“The federal tax lien statute itself ‘creates no property rights, but merely
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attaches consequences, federally defined, to rights created under state
law.’” United States v. Craft, 535 U.S. 274, 278 (2002) (quotation omitted).
As the debtor, Mr. Thursfield’s interest in the Ford U.S. Non-Qualified Plan,
if any, constitutes property or rights to property to which the government’s
lien attaches. See, Lawrence v. United States, 229 F.3d 1152 (6th Cir.
2000).
The 2015 Settlement Agreement, which was incorporated and
merged into the parties’ judgment of divorce by order of the Oakland
County Circuit Court on August 4, 2015, gave all interest and title in the
Non-Qualified Plan to Mrs. Thursfield. As the government acknowledged
on the record, there has been no allegation or suspicion of any wrongdoing
or foul play on the part of Mrs. Thursfield in this case. Mrs. Thursfield
therefore has a full interest in the Non-Qualified Plan, while Mr. Thursfield
has a reversionary right six months after Mrs. Thursfield’s death.
The parties appeared before this court on March 26, 2018 for a
hearing on the Receiver’s motion to interplead funds and the government’s
motion to dismiss. The court held an in-chambers conference with the
parties on that date, during which time all parties informed the court they
would waive oral argument on the motions and rely on the arguments in
their briefs. During this in-chambers conference, the court urged the
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parties to expedite the process to resolve the matter, admonishing them to
communicate in order to get this done. This court’s Practice Guidelines
provide that discovery should start right away and not wait for the Rule
26(f) conference: “The Court does not enforce the stay of discovery
contemplated by Fed. R. Civ. P. 26(d) pending the conference
contemplated by Fed. R. Civ. P. 26(f).”
For the past three months the government has done nothing to obtain
the discovery it claims it needs to adequately respond to Mrs. Thursfield’s
arguments. In a clear effort at cooperation, Mrs. Thursfield attached to her
reply brief every document in her possession that the government put on its
discovery wish list. The spirit of the state court order adopting the
Settlement Agreement in 2015 is obvious that the Non-Qualified Plan
belongs to Mrs. Thursfield. The government has done nothing to dispel this
conclusion.
The state court proceedings are clear that Mr. Thursfield’s interest
was assigned to Mrs. Thursfield, except for a reversionary interest should
Mrs. Thursfield predecease her ex-husband. To find otherwise, or indeed
to delay this matter any further, would put form over substance and result in
a grave injustice. Now, therefore,
IT IS HEREBY ORDERED that defendant Linda Thursfield’s motion
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for summary judgment is GRANTED.
IT IS HEREBY FURTHER ORDERED that Judgment enter in favor of
Linda Thursfield with regard to 100% of the Ford U.S. Non-Qualified
Pension payments, both prior to and after the issuance of the Notice of
Federal Tax Lien and subsequent levy, as well as payments to be made in
the future.
IT IS HEREBY FURTHER ORDERED that all funds that were
deposited with the registry of the court in this interpleader action will be
paid to Mrs. Thursfield.
IT IS HEREBY FURTHER ORDERED that the Receiver shall submit
a proposed order that complies with Eastern District of Michigan Local Rule
67.1(b), for disbursement of the interpleaded funds by the court.
So ordered.
Dated: June 28, 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
June 28, 2018, by electronic and/or ordinary mail.
s/Marcia Beauchemin
Deputy Clerk

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