USA v. Baker et al
ORDER denying without prejudice 19 Motion for Summary Judgment; granting 22 Motion for Summary Judgment. So Ordered by Judge Paul J. Barbadoro.(jna)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
United States of America
Case No. 13-cv-213-PB
Opinion No. 2014 DNH 176
Scott G. Baker and Robyn Baker
MEMORANDUM AND ORDER
The United States sued Scott and Robyn Baker to force the
sale of two parcels of land in West Campton, New Hampshire
pursuant to federal tax liens that had been imposed upon Mr.
Baker for nonpayment of federal income tax.
The Bakers claim
that the tax liens do not encumber these properties because Mr.
Baker transferred his ownership interest in them to Ms. Baker
pursuant to a divorce judgment prior to the date that the tax
The United States and Ms. Baker have each moved
for summary judgment.
Robyn and Scott Baker were married on December 12, 1998.
Doc. No. 26-2.
On February 23, 2000, they purchased two parcels
of land in West Campton, New Hampshire as joint tenants with
rights of survivorship.
Doc. No. 19-3.
The Bakers recorded a
quitclaim deed to the properties in the Grafton County Registry
of Deeds the following day.
Eight years later, the Bakers filed for divorce.
On February 28, 2008, a Massachusetts state court issued
a divorce judgment which became final on May 29, 2008.
judgment approved and incorporated the Bakers’ separation
agreement, which the court found to be “fair and reasonable and
not the product of any fraud, duress or coercion.”
agreement states in relevant part:
The Wife shall own solely the piece of land located at
Miclon Rd., Campton, New Hampshire (“Land”).
thirty (30) days following the date of this Agreement,
the Husband shall execute a deed transferring and
conveying to the Wife all of his right, title and
interest in and to the Land, free and clear of all
The Husband hereby waives and
releases any and all spousal rights in the Vacation
Home, which he may have or acquire under the present
and future laws of any jurisdiction.
On May 14, 2009, the United States assessed unpaid income
taxes against Mr. Baker.
Doc. No. 19-3.
Officer Patrick Dillon1 reviewed the divorce judgment and
separation agreement on October 20, 2009.
A federally registered pseudonym.
Doc. No. 26-1.
Doc. No. 19-2.
United States sent a levy notice to Mr. Baker the following day,
see Doc. No. 19-4, and Dillon then recorded a notice of federal
tax lien for $2,458,609.02 - representing the tax assessment
plus accrued interest and penalties - with the Grafton County
Registry of Deeds on November 2, 2009.
Doc. No. 19-3.
20, 2010, the United States assessed additional unpaid income
taxes against Mr. Baker.
him on July 29, 2010.
It sent a second levy notice to
Doc. No. 19-4.
On August 9, 2010, Dillon
recorded a second notice of federal tax lien for $1,133,687.17
with the Grafton County Registry of Deeds.
Doc. No. 19-3.
On May 1, 2013, the United States sued the Bakers2 seeking a
judicial sale of the West Campton properties in partial
satisfaction of Mr. Baker’s outstanding tax liability, allegedly
totaling $4,437,450.43 on the date of the complaint.
On May 27, 2014, Dillon verified that Mr. Baker remained
liable for at least this amount and that no documents pertaining
to the West Campton properties had been filed with the Grafton
County Registry of Deeds since the Bakers’ February 24, 2000
Doc. No. 19-2.
Although the tax liens are in Mr. Baker’s name, the United
States sued Ms. Baker pursuant to 26 U.S.C. § 7403(b) because
she claims an interest in the West Campton properties.
The United States and Ms. Baker filed cross motions for
summary judgment on May 27 and June 25, 2014.
Doc. Nos. 19, 22.
Ms. Baker claims that she owns the West Campton properties free
of the tax liens because “both properties were transferred for
adequate consideration to [her] pursuant to the” divorce
Doc. No. 3; see Doc. No. 23.
The United States
claims that its tax liens are entitled to priority over the
divorce judgment because neither the judgment nor any related
deed was ever recorded.3
Doc. No. 19-1.
STANDARD OF REVIEW
Summary judgment is appropriate when the record reveals “no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.”
Fed. R. Civ. P.
An issue is considered genuine if the evidence allows a
reasonable jury to resolve the point in favor of the nonmoving
party, and a fact is considered material if it “is one ‘that
might affect the outcome of the suit under the governing law.’”
United States v. One Parcel of Real Prop. with Bldgs., 960 F.2d
Because Mr. Baker has disclaimed any interest in the West
Campton properties, he has not opposed the United States’ motion
insofar as it seeks the sale of these properties. Doc. No. 25.
200, 204 (1st Cir. 1992) (quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986)).
In ruling on a motion for
summary judgment, I examine the evidence in the light most
favorable to the nonmoving party.
Navarro v. Pfizer Corp., 261
F.3d 90, 94 (1st Cir. 2001).
The party moving for summary judgment bears the initial
burden of identifying the portions of the record it believes
demonstrate an absence of disputed material facts.
Corp. v. Catrett, 477 U.S. 317, 323 (1986).
In determining what
constitutes a material fact, “we safely can ignore ‘conclusory
allegations, improbable inferences, and unsupported
Carroll v. Xerox Corp., 294 F.3d 231, 237 (1st
Cir. 2002) (quoting Medina–Munoz v. R.J. Reynolds Tobacco Co.,
896 F.2d 5, 8 (1st Cir. 1990)).
As a general matter, federal tax liens “arise at the time
the assessment is made.”
Drye v. United States, 528 U.S. 49, 55
n.2 (1999) (quoting 26 U.S.C. § 6322).
The United States may
take “[a]ffirmative action . . . to enforce collection of [a
delinquent taxpayer’s] unpaid taxes” by seeking to judicially
foreclose upon its lien if the taxpayer “neglects or refuses to
pay the same after demand.”
EC Term of Years Trust v. United
States, 550 U.S. 429, 430-31 (2007) (first alteration in
original) (quoting 26 U.S.C. § 6321; United States v. Nat’l Bank
of Commerce, 472 U.S. 713, 720 (1985)).
In the absence of
contrary evidence, the Certificates of Assessments and Payments
submitted by the United States here “are sufficient to establish
that the IRS made valid assessments against” Mr. Baker.
United States v. Tempelman, 111 F. Supp. 2d 85, 90-91 (D.N.H.
2000) (citing Geiselman v. United States, 961 F.2d 1, 6 (1st
Cir. 1992) (per curiam)), aff’d, 12 F. App’x 18 (1st Cir. 2001).
Consequently, federal tax liens encumbered “all property and
rights to property, whether real or personal, belonging to” Mr.
Baker on March 14, 2009 and May 20, 2010.
See EC Term of Years
Trust, 550 U.S. at 430 (quoting 26 U.S.C. § 6321).
“When the government asserts a tax lien against a
taxpayer’s property, the threshold inquiry is directed to the
nature of the legal interest the taxpayer has in the property in
United States v. V & E Eng’g & Constr. Co., 819 F.2d
331, 333 (1st Cir. 1987) (citing Aquilino v. United States, 363
U.S. 509, 512 (1960)).
“To determine whether the taxpayer has a
sufficient legal interest in the property to satisfy this
threshold inquiry, the Court must look to state law.”
Burnham, No. 91-100-S, 1994 WL 240394, at *2 (D.N.H. Jan. 22,
1994) (citing Nat’l Bank of Commerce, 472 U.S. at 722); accord
V & E Eng’g, 819 F.2d at 333 (citing Aquilino, 363 U.S. at 51213).
The United States relies on a number of extrajurisdictional authorities for the proposition that “a divorce
decree disposing of real property is ineffective against third
persons until the decree or an abstract is filed in the registry
See In re Robinson, 38 B.R. 255, 256 (Bankr. D. Me.
1984) (applying Maine law); accord United States v. Hole, No.
75-1770-MA, 1980 WL 1555, at *1 (D. Mass. Mar. 31, 1980)
(applying Massachusetts law); In re Golemo, 494 B.R. 588, 592
(Bankr. D. Mass. 2013) (same).
But in New Hampshire,4 “the
The parties’ briefs cite both Massachusetts and New Hampshire
authority without specifying which state’s law applies here. I
find that New Hampshire law governs the instant motions. See
Restatement (Second) of Conflict of Laws § 223 (1971) (“Whether
a conveyance transfers an interest in land and the nature of the
interest transferred are determined by the law that would be
applied by the courts of the situs. . . . These courts would
usually apply their own local law in determining such
questions.”); cf. Proctor v. Frost, 89 N.H. 304, 305-06 (1938)
(“‘[T]he validity of a mortgage is determined by the law of the
situs of the land.’ We think that this rule is well established
undivided interest in the real estate [apportioned by a divorce
judgment] vest[s] in the [grantee spouse], ‘by the mere force of
the decree,’ ‘as effectually as the same could be done by any
conveyance of the [grantor spouse] himself.’”
Swett v. Swett,
49 N.H. 264, 264 (1870) (quoting Whittier v. Whittier, 31 N.H.
452, 458-59 (1855)).
When a “stipulation between the parties .
. . incorporated and merged into the divorce decree” “clearly
and affirmatively expresse[s] their intention” to convey a real
property interest, that interest vests in the grantee “on the
effective date of the divorce decree.”
See Mamalis v. Bornovas,
112 N.H. 423, 424, 428 (1972) (citing Swett, 49 N.H. at 264).
The husband and wife’s subsequent failure to comply with a
provision of the divorce judgment – in this case, the execution
and recording of a deed to the West Campton properties – will
not invalidate or delay the conveyance unless the parties
clearly intended for the provision to serve as a condition
See id. at 425, 428 (holding that a husband’s
failure to pay his ex-wife’s share of the equity in their real
estate as required by their divorce decree and incorporated
and that the effect of the [foreign] deed in question must be
determined in accordance with New Hampshire law.” (quoting
Restatement (First) of Conflict of Laws § 225 (1934))).
separation agreement did not affect the severance of their joint
tenancy on the date of the divorce).
No such intention is
apparent on the face of the Bakers’ separation agreement, which
clearly indicates that the transfer of the West Campton
properties was intended to occur upon the execution of the
See Doc. No. 26-2.
The United States nevertheless argues that the Bakers’
failure to record the divorce judgment invalidates the
conveyance because they failed to comply with New Hampshire
Revised Statute section 477:7, which states that “[n]o . . .
conveyance of real estate . . . shall be valid . . . against any
person but the grantor and his heirs only, unless . . . recorded
. . . .”
As the First Circuit observed while considering an
analogous recording statute in V & E Engineering,5 any effect
The United States argues that V & E Engineering is
distinguishable because the statute at issue there “d[id] not
require that a transfer be recorded in order to be valid.” Doc.
No. 28. The problem with this argument is that it simply
ignores the fact that section 477:7, like the statute at issue
in V & E Engineering, makes recording a prerequisite to
enforcement against third parties but does not require a
transfer to be recorded to be enforceable against the grantor.
See N.H. Rev. Stat. Ann. § 477:7 (“No . . . conveyance of real
estate . . . shall be valid . . . against any person but the
grantor and his heirs only, unless . . . recorded . . . .”
that an unrecorded property transfer has on a subsequent bona
fide purchaser or creditor has no bearing on whether a grantor
retains any “rights to property” previously conveyed for
purposes of 26 U.S.C. § 6321:
The government bases its argument on the Puerto
Rico recording statute . . . . [which] provides that
if the same piece of real property is [conveyed] to
two [grantees], the property belongs to the party who
The government argues that this
provision means that the [grantor] of such a property
retains the “right” to transfer it after he has once
[conveyed] it, provided the original [grantee] has not
yet recorded. . . .
We cannot accept the government’s reasoning. The
Puerto Rico recording statute, like other so-called
“race-notice” statutes, is designed to protect good
faith purchasers who deal with sellers of property in
reliance on public records of property ownership. . .
[T]hey should not be presumed to give any “right”
to a [grantor] to convey the same piece of property to
two [grantees]. The government . . . ask[s] that we
construe the term “right to property” in section 6321
as referring to the possibility that the [grantor]
(emphasis added)); French v. Bank of N.Y. Mellon, 2011 DNH 187,
8 (citing section 477:7) (“[An] unrecorded document . . . can
still be enforced against [its grantor].”), aff’d, 729 F.3d 17
(1st Cir. 2013). Thus, the reasoning in V & E Engineering
applies here, and this case is distinguishable from other cases
cited by the government in which the statute then at issue
provided that a transfer would not be effective against anyone,
including the grantor, until it was recorded. See, e.g., United
States v. Hole, No. 75-1770-MA, 1980 WL 1555, at *1 (D. Mass.
Mar. 31, 1980) (citing Mass. Gen. Laws ch. 209, § 3 (1980)
(“[N]o . . . conveyance of real estate [between husband and
wife] shall have any effect, either in passing title or
otherwise, until the deed . . . [is] recorded . . . .”),
amended by Mass. Gen. Laws ch. 209, § 3 (1992).
might fraudulently convey the . . . property to an
innocent third party.
We cannot accept that Congress
intended the term “right” to include the possibility
that a party might engage in fraud. . . .
taxpayer, once having [conveyed] his property, no
longer has a “right” to that property within the
meaning of section 6321.
819 F.2d at 333.
In the present case, Mr. Baker lost his right to own,
transfer, or encumber the properties when the divorce judgment
Section 477:7 did not give him any enforceable
right to the properties as that term is used in § 6321.
the properties are beyond the reach of the federal tax liens
because Mr. Baker had no ownership interest in them when the
See Nat’l Bank of Commerce, 472 U.S. at 727
(section 6321 “relates to the taxpayer’s rights to property and
not to his creditors’ rights”); United States v. Gibbons, 71
F.3d 1496, 1501 (10th Cir. 1995) (“The IRS must stand in the
shoes of [Mr. Baker], who has no ‘rights to property’ to which
the tax lien could attach in the property interest conveyed to
[Ms. Baker].” (quoting § 6321)); Thomson v. United States, 66
F.3d 160, 162-63 (8th Cir. 1995) (citing V & E Eng’g, 819 F.2d
at 333) (same).
For the reasons discussed above, I grant Ms. Baker’s motion
for summary judgment, Doc. No. 22, and deny the United States’
motion for summary judgment, Doc. No. 19, without prejudice to
it filing a new complaint to enforce its tax liens against the
West Campton properties at a later date.6
The United States has alleged in an action filed in the
District of Massachusetts that the Bakers engaged in a sham
divorce intended to shield Mr. Baker’s assets, including the
West Campton properties, from the federal tax liens. Doc. No.
28; see Kennedy v United States, 49 A.F.T.R. 2d (RIA) 82-742
(D.N.H. 1982) (citing 26 U.S.C. § 6321; N.H. Rev. Stat. Ann.
§ 545-A:4; Rice v. Snow, 116 N.H. 69 (1976)). The United States
has moved for summary judgment with respect to that issue in
concurrent litigation in the U.S. District Court for the
District of Massachusetts, which has heard oral argument on the
matter. See generally United States’ Motion for Partial Summary
Judgment, United States v. Baker, No. 1:13-cv-11078-RGS (D. Mass
June 10, 2014). Here, the parties’ respective motions note that
I need not consider the validity of the Bakers’ divorce or the
related property division. See Doc. Nos. 19-1 (“[T]he Court
need not determine the validity of the Baker’s purported divorce
at this time.”), 23 (“[T]he United States has not alleged sham
divorce or any scheme to evade payment of tax” in this
proceeding). In its objection to Ms. Baker’s motion, however,
the United States “requests that if the Court denies [its]
motion . . . the Court defer any ruling on Robyn Baker’s motion
until the District of Massachusetts rules on the United States’
summary-judgment motion . . . .” Doc. No. 28. Rather than
delaying this case indefinitely, I grant Robyn Baker’s motion
without prejudice to the government’s right to file a new action
if it succeeds on its fraudulent conveyance claim in the
United States District Judge
August 22, 2014
Michael R. Pahl, Esq.
Jeffrey J. Cymrot, Esq.
Anthony M. Ambriano, Esq.
D. Sean McMahon, Esq.
Terri L. Pastori, Esq.
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