United States of America v. Graham et al

Filing 48

MEMORANDUM AND ORDER: Accordingly, on the basis of the record and law as set forth above, the Government's motion for summary judgment is GRANTED as it relates to all tax assessments other than the tax assessment for the tax period ending Septem ber 30, 2002. The Government's motion for Summary Judgment is also GRANTED as it relates to Roberto's interest as a tenant by the entirety in the 96th Street Property. The Government's motion for summary judgment is DENIED as it relate s to the tax assessment for the tax period ending September 30, 2002. The Government's motion for Summary Judgment is also DENIED as it relates to Roberto's interest in the Wyona Property. Ordered by Judge William F. Kuntz, II on 3/5/2015. (Brucella, Michelle)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

---------------------------------------------------------------)(
UNITED STATES OF AMERICA,
Plaintiff,

MEMORANDUM AND ORDER

-against13-CV-1288 (WFK) (VMS)
ROBERTOS. GRAHAM, individually and
d/b/a Tico Dental Laboratories,
ANA CECILIA GRAHAM,
ELENA S. GRAHAM,
WELLS FARGO HOME MORTGAGE,
WELLS FARGO, N.A.,
OCWEN LOAN SERVICING, LLC,
Defendants.

---------------------------------------------------------------)(
WILLIAM F. KUNTZ, II United States District Judge

Plaintiff United States of America ("the Government") commenced this action on March
12, 2013, against Defendants Roberto S. Graham, Ana Cecilia Graham ("Ana"), Elena S.
Graham ("Elena"), Wells Fargo Home Mortgage ("Home Mortgage"), Wells Fargo N.A. ("Wells
1
Fargo"), and Ocwen Loan Servicing, LLC ("Ocwen") (collectively, "Defendants"). The
Government seeks (1) to collect unpaid federal tax liabilities from Defendant Roberto S.
Graham, individually ("Roberto") and doing business as Tico Dental Laboratories ("Tico"); (2)
to enforce federal tax liens against real property located at 730 East 96th Street, Brooklyn, NY
11236 ("96th Street Property"); and (3) to enforce federal tax liens against real property located
at 582 Wyona Street, Brooklyn, NY 11207 ("Wyona Property"). Currently before this Court is
the Government's Motion for Summary Judgment pursuant to Rule 56 of the Federal Rules of
Civil Procedure. The Government seeks summary judgment on the issues of the correctness of
1

Defendants Wells Fargo and Ocwen were included in the amended complaint filed on December 23,
2013, as interest holders in the real property located at 1144 Nostrand Avenue, Brooklyn, NY 11226, one
of the properties originally at issue in the action. Dkt. 29 ("Amended Complaint") at 1-2. That property,
however, was sold and so has been dismissed from this action. Dkt. 4 7 ("Voluntary Dismissal of
Nostrand Property"). Therefore, this action as against Defendants Wells Fargo and Ocwen is hereby
dismissed as moot.

the Government's tax assessments, the ability of the Government to attach Roberto's interest in
the 96th Street Property, and the ability of the Government to attach Roberto's interest in the
Wyona Property. Defendants oppose the Government's motion to dismiss on the basis that the
Government's tax assessments are incorrect and on the basis that the extent of Roberto's interest
in the Wyona Property is an issue of fact inappropriate for summary judgment. For the reasons
set forth below, the Government's Motion for Summary Judgment is DENIED IN PART and
GRANTED IN PART.

FACTUAL BACKGROUND
The following facts are either undisputed or described in the light most favorable to
Defendants, the non-moving parties. See Capobianco v. City of New York, 422 F.3d 47, 50 n.1
(2d Cir. 2005).
Between 2000 and 2010, a delegate of the Secretary of the Treasury made assessments
against Defendant Roberto S. Graham, individually and doing business as Tico Dental
Laboratories, for failure to pay federal income taxes, employment taxes, unemployment taxes,
penalties, and interest. Dkt. 39-2 ("Pl's Rule 56.1 Statement") at ii 1; Dkt. 42-1 ("Defs' Rule
56.1 Statement") at ii 1. Based on its assessment, the Government seeks to collect personal
income tax liabilities for the tax periods ending from December 31, 2000 to and including
December 31, 2008; employment tax liabilities for all quarterly periods from March 31, 2002 to
and including December 31, 201 O; and unemployment tax liabilities for periods ending from
December 31, 2000 to and including December 31, 2004 and again from December 31, 2006 to
and including December 31, 2009, as well as penalties and interest (collectively, "the relevant
tax periods"). Dkt 39-1 ("Pl's Memo in Support") at 1-2. Between March 16, 2005, and July 26,
2011, the Internal Revenue Service ("IRS") filed twenty-two Notices of Federal Tax Liens for
the various tax assessments reported on Forms 941 against Roberto in the Register's Office,
Kings County, Brooklyn, New York. See Dkt. 39 ("Motion for Summary Judgment"), Ex. 5678; Defs' Rule 56.1 Statement at ii4-26. In total, Roberto S. Graham has been assessed as owing

2

$484, 718.00 as of December 31, 2013, as well as interest that has accrued since that date.
Motion for Summary Judgment, Ex. 55 at ~6.
In order to satisfy the unpaid tax assessments, the Government is seeking to enforce
federal tax liens against two pieces of real property in which the Government alleges Roberto
holds an interest. The first property, 730 East 96th Street, Brooklyn, New York 11236, ("96th
Street Property") was acquired on June 11, 1981, by Roberto and his wife Ana. Pl's Rule 56.1
Statement at ~27; Defs' Rule 56.1 Statement at ~27. The second property, 582 Wyona Street,
Brooklyn, New York 11207, ("Wyona Property") was acquired on January 8, 1974. Motion for
Summary Judgment, Ex. 81. Roberto and Elena, his younger sister, were both listed on the
property deed for the Wyona Property at the time it was acquired. Motion for Summary
Judgment, Ex. 81; Motion for Summary Judgment, Ex. 83 at ~3; Pl's Rule 56.1 Statement at ~31;
Defs' Rule 56.1 Statement at ~31. Elena stated that she listed Robert as a joint owner of the
Wyona Property so that she "could be certain that in the event of [her] death or disability no
additional steps would have to be taken by [her] family to transfer title [of the real property]."
Motion for Summary Judgment, Ex. 83 at ~3. Elena further stated that she would have wanted
Roberto to own and manage the property in her absence. Id.
On February 17, 2010, Roberto transferred his interest in the Wyona Property to Elena
for ten dollars. Motion for Summary Judgment, Ex. 82. Elena indicated in her affidavit that
Roberto transferred his interest to her to simplify the process of her being able to take out a loan
on the property. Motion for Summary Judgment, Ex. 83 at ~4. Elena also explained that
Roberto had never lived at the Wyona property, had never paid taxes on it, and had never
received rents from it. Motion for Summary Judgment, Ex. 83 at pg. 3-7. Roberto's statements

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in his affidavit support this statement of affairs as well. Motion for Summary Judgment, Ex. 83A.

Presently before this Court is the Government's Motion for Summary Judgment. The
Government seeks summary judgment on three grounds. First, it seeks summary judgment on
the issue of the value of the tax assessments made against Roberto individually and doing
business as Tica. Second, the Government seeks summary judgment on the issue of whether it
can attach Roberto's interest in the 96th Street Property as a tenant by the entirety with his wife,
Ana, in order to satisfy the tax assessments made against Roberto individually and doing
business as Tica. Third, the Government seeks summary judgment on the issue of whether it can
attach Roberto's fifty-percent interest in the Wyona Property that he held at the time of the tax
assessments as a tenant in common with his sister, Elena, in order to satisfy the tax assessments
made against Roberto individually and doing business as Tica. Defendants contest both the
value of the tax assessments made against Roberto individually and doing business as Tica as
well as whether and what interest Roberto held in the Wyona Property at the time of the tax
assessments. The Court will address each issue in tum.

DISCUSSION
I.

Legal Standard
A court appropriately grants summary judgment 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). No genuine issue of material fact exists "[w]here the record taken as a whole
could not lead a rational trier of fact to find for the non-moving party." Lovejoy-Wilson v. NOCO

Motor Fuel, Inc., 263 F.3d 208, 212 (2d Cir. 2001) (quoting Matsushita Electric Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986)). The moving party must meet its burden by
4

pointing to evidence in the record, including depositions, documents, affidavits, or other materials
which it believes demonstrates the absence of a genuine issue of material fact. See Fed. R. Civ. P.
56(c)(l)(A), (2); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "In determining whether
summary judgment is appropriate, [the] Court will construe the facts in the light most favorable to
the non-moving party and must resolve all ambiguities and draw all reasonable inferences against
the movant." Brod v. Omya, Inc., 653 F.3d 156, 164 (2d Cir. 2011) (internal quotation marks and
citations omitted). The role of the district court is not to weigh the evidence and determine the
truth of the matter, but rather to perform "the threshold inquiry of whether there is the need for a
trial[.]" Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
If the moving party fulfills its preliminary burden, the burden shifts to the non-movant to

raise the existence of a genuine issue of material fact. Fed. R. Civ. P. 56(c)(l). Statements that
are devoid of specifics and evidence that is merely colorable are insufficient to defeat a properly
supported motion for summary judgment. See Bickerstaffv. Vassar Coll., 196 F.3d 435, 452 (2d
Cir. 1999); Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998). "A dispute about a 'genuine
issue' exists for summary judgment purposes where the evidence is such that a reasonable jury
could decide in the non-movant's favor." Beyer v. Cnty. of Nassau, 524 F.3d 160, 163 (2d Cir.
2008) (citing Guilbert v. Gardner, 480 F.3d 140, 145 (2d Cir. 2007)).
II.

Analysis
A.

ChaJJenging the Validity of Tax Assessments

The Government may bring an action in district court to obtain a judgment for the
amount assessed against the taxpayer. United States v. Rozbruch, 28 F. Supp. 3d 256, 263
(S.D.N.Y. 2014) (Gorenstein, Mag. J.) (citing United States v. Sweeny, 418 F. Supp. 2d 492, 496

5

(S.D.N.Y. 2006) (Conner, J.)). According to the controlling statute, "[t]he district courts of the
United States ... shall have such jurisdiction ... to render such judgments and decrees as may
be necessary or appropriate for the enforcement of the internal revenue laws." 26 U.S.C. §
7402(a).
"A governing tax assessment is generally presumed to be correct, and a taxpayer who
contests such an assessment bears the burden of proving that it is not." Papandon v. United

States ex rel. Perler, 350 F. App'x 491, 493 (2d Cir. 2009); see also Rozbruch, 28 F. Supp. 3d at
263 ("It is well established that the IRS' s tax calculations (including calculations of interest and
penalties) are presumptively valid and create aprimafacie case of liability, such that the
Government is entitled to have the assessment reduced to judgment unless a taxpayer overcomes
the presumption ... that the assessment is correct.") (internal citations and quotation marks
omitted). To rebut this presumption of correctness at the motion for summary judgment stage, a
taxpayer "must not only show that the assessment is incorrect, but [he] must also prove the
correct amount of tax." Rozbruch, 28 F. Supp. 3d at 263 (internal citation and quotation marks
omitted). "To create a genuine issue as to the amount of his tax liability, [the defendant] must
point to 'specific evidence' that demonstrates the proper amount of his tax liability."
0 'Callaghan v. United States, 943 F. Supp. 320, 327 (S.D.N.Y. 1996) (Baer, J.) (quoting LaBow

v. Comm 'r of Internal Revenue, 763 F.2d 124, 131 (2d Cir. 1985)). "Mere conclusory denials
and bald assertions ... are insufficient to avoid summary judgment." Id (citation omitted).
Here, the Government has provided all of the relevant tax assessments in the form of
certified records (Form 4340s) for each of the relevant tax periods. Motion for Summary
Judgment, Ex. 1-45. The Government calculated the total for all of the tax assessments amounts
to be $484,718.00 as of December 31, 2013, plus any and all interest that has accrued since that

6

date. Motion for Summary Judgment, Ex. 55 at ~6; see also Motion for Summary Judgment, Ex.
46-54 (Form 1040s containing the IRS's interest and penalty calculations). This total assessment
amount, as well as the amount of each individual assessment therein provided by the
Government, is presumed valid. See, e.g., United States v. Martynuk, 13-CV-4110, 2015 WL
328100, at *5 (S.D.N.Y. Jan. 26, 2015) (Polk Failla, J.) (discussing sufficiency of Form 4340s).
Defendants argue that the tax assessments at issue are incorrect, and therefore
inappropriate for summary judgment for several reasons. First, Defendants argue that the
Government has misstated the tax assessment amount for the tax period ending September 30,
2002 based on the Defendants' reading of the Government's 4340 Form. Second, Defendants
argue that the Government has generally misstated the tax assessments against Roberto by failing
to deduct the value of seven checks allegedly issued by Tico to the Government from Roberto's
tax assessments. Third, Defendants argue that the Government has generally misstated the tax
assessments against Roberto by failing to account for nine levy notices issued against the J.P.
Morgan Chase Bank account under the name Tico Dental Laboratory USA, Inc. The Court
considers each argument in tum.
1.

Misstatement of Amount for Period Ending September 30, 2002

Defendants contest the assessment for the tax period ending September 30, 2002. Dkt. 42
("Defs' Memo in Opposition") at 4. According to the Defendant, the tax assessment for the
period ending September 30, 2002 should be $413.61, rather than $2,213.61 as the Government
claims. Pl's Rule 56.1 Statement at ~l. To support their argument, Defendants point out that the
Certificate of Assessments (Form 4340) that the Government attached to its motion for that time
period states the balance of the assessment as $413 .61, the Government seemingly having
credited $1,800.00 to Defendant Roberto on account of two $900.00 payments. Motion for
7

Summary Judgment, Ex. 3, at 4. The amount of tax assessment is a material fact, and
Defendants have made a showing that there is a factual issue contained within the Government's
own evidence. Defendants have also proven the correct amount of the tax- $413.61 - and have
pointed to specific evidence provided by the Government to demonstrate the proper amount.
Therefore, the Government's motion for summary judgment on the tax assessment for the tax
period ending September 30, 2002 is DENIED.
2.

Failure to Credit Defendants for Seven Disputed Checks

Defendants allege that tax assessments for unidentified tax periods are overstated because
the Government has failed to credit Roberto, individually and doing business as Tico, for seven
disputed checks. Defs' Memo in Opposition at 3-4; Defs' Memo in Opposition, Ex. A at ~2-9.
Defendants allege that the checks were deposited, but the Government denies knowledge of
them. Defs' Memo in Opposition at 3. Defendants subpoenaed J.P. Morgan Chase Bank in an
effort to obtain copies of the backs of the disputed checks to prove the checks were deposited.
Defs' Memo in Opposition, Ex. A at ~6 (Affidavit of Matthew Ormsbee, Esq.). J.P. Morgan
Chase Bank was unable to provide copies of the checks as "they are past the retention period of
the firm." Id. at ~7. In the absence of confirmation from J.P. Morgan Chase Bank or from the
Government that Defendants checks were deposited, Defendants have provided the subpoena
with the list of seven checks (numbers, dates, and amounts) issued by TICO Dental Laboratory,
Inc. to the U.S. Treasury to substantiate their claims. Defs' Memo in Opposition, Ex.Bat 3.
The check dates range from September 12, 2002, to October 3, 2003. Id.
This showing is insufficient to defeat the Government's motion for summary judgment
because Defendants have not provided any specific evidence suggesting that money was
deducted from the referenced account, nor have they provided the Court with a copy of the front
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of the disputed checks, which Defendants claim to have sent to the Government. Defs' Memo in
Opposition, Ex. A at ~3 (Affidavit of Matthew Ormsbee, Esq.). Without more than the list of
checks on the subpoena which Defendants themselves wrote, Defendants have not pointed to
specific evidence to dispute the Government's presumptively valid tax assessments. The list of
checks on the subpoena can be considered little more than a "bald assertion" made by the
Defendants in their own interest. See 0 'Callaghan, 943 F. Supp. at 327; see also United States
v. Sage, 412 F. Supp. 2d 406, 415 (S.D.N.Y. 2006) (Keenan, J.) ("Mere speculation is
insufficient to defeat summary judgment on the amount [owed]."). Further, Defendants have
failed to prove the correct amount of the tax by linking any specific check to any specific tax
assessment. Therefore, the Government's motion for summary judgment on the tax assessment
for the tax periods between and including September 12, 2002 and October 3, 2003 is
GRANTED.

3.

Failure to Credit Defendants for Nine Levy Notices

Lastly, Defendants allege that the tax assessments for unidentified tax periods must be
overstated because the Government has failed to credit Roberto, individually and doing business
as Ti co, for nine levy notices issued against the J.P. Morgan Chase Bank account under the name
Tico Dental Laboratory USA, Inc. Dkt. 42 ("Defs' Memo in Opposition") at 3-4; Defs' Memo
in Opposition, Ex. A at ~2-9. Of the nine notices referenced, only two of the notices that
Defendants provided to the Court are issued by the IRS; the others are from the State of New
York and are therefore irrelevant to the question of taxes owed to the federal government. Defs'
Memo in Opposition, Ex. B at 7-31. Evaluating only the levies imposed by the IRS, neither of
the levies was imposed until 2011, long after the relevant tax assessments at issue here were
made. Id. at 20-31. Defendants have not provided any evidence that the tax assessments made
9

between the beginning 2002 and the end of 2010 should be considered incorrect on the basis of
levies imposed months after this period.
In addition, Defendants have failed to prove the correct amount of the assessment. For
example, Defendants have provided no evidence of the amount of money that the Government
received from Roberto's or Tico's account. See Sage, 412 F. Supp. 2d at 415. As a result, they
have failed to overcome the presumption of validity afforded the Government's tax assessments.
Therefore, the Government's motion for summary judgment on the tax assessment for the tax
periods from the beginning of 2004 until the end of2010 is GRANTED.

B.

Federal Tax Liens Attach to Property Interests

The Government has also moved for summary judgment on the issue of Roberto's
interests in the 96th Street Property and the Wyona Property. 26 U.S.C. § 6321 provides that the
amount of unpaid taxes becomes "a lien in favor the United States" against "all property and
rights to property, whether real of personal, belonging to such person." 26 U.S.C. § 6321. The
lien arises "at the time the assessment is made, and shall continue until the liability for the
amount so assessed (or a judgment against the taxpayer arising out of such liability) is satisfied
or becomes unenforceable." 26 U.S.C. § 6322. To enforce the lien, "26 U.S.C. § 7403
authorizes the Government to bring a lien-foreclosure suit to collect unpaid []taxes." Rozbruch,
28 F. Supp. 3d at 269 (citing 26 U.S.C. § 7403(a) and United States v. Rodgers, 461 U.S. 677,
680 (1983)).
Here, Defendants argue that the liens at issue are invalid as against both properties
because Roberto received improper notice and demand from the Government. In addition,
Defendants argue that the lien against the Wyona Property is invalid because Roberto never had
an interest in the property. The Court considers each issue in turn.
10

1.

Notice and Demand

26 U.S.C. § 6303(a) mandates that the Secretary of the Treasury "shall, as soon as
practicable, and within 60 days after the making of an assessment of a tax ... give notice to each
person liable for the unpaid tax, stating the amount and demanding payment thereof." 26 U.S.C.
§ 6303. As with the validity of tax assessments, Form 4340s showing that the IRS issued a
"Statutory Notice of Balance Due" on a particular date are "presumptive evidence that the IRS
complied with its statutory duties." Dourlain v. Internal Revenue Serv., 06-CV-424, 2008 WL
4605958, at *6 (N.D.N.Y. Aug. 27, 2008) (Mordue, J.) (citations omitted), aff'd, 467 F. App'x
229, 230 (2d Cir. 2010) ("[W]e conclude, for substantially the same reasons stated by the district
court in its thorough and well-reasoned ruling, that there was no genuine issue of fact as to
whether the [IRS] had served [taxpayer] with a 'Notice and Demand,' pursuant to 26 U.S.C. §
6303."); accord United States v. Lorson Electric Co., 480 F.2d 554, 555-56 (2d Cir. 1973)
(finding that recitations that notice was sent in the precursor form to Form 4340 might constitute
proof of notice under 26 U.S.C. § 6303). A taxpayer challenging the presumption that notice and
demand were made must show some evidence to raise an issue of fact. Dourlain, 2008 WL
4605958, at *6.
Here, the Government has provided Form 4340s for every one of the relevant tax periods.
Motion for Summary Judgment, Ex. 1-45. Each of the Form 4340s contains a line on its first,
second, third, fourth, or fifth page indicating at least one date on which a "Statutory Notice of
Balance Due" was issued. Id.
Defendants have provided no evidence to raise an issue of fact on this claim. Defendants
merely allege that the Government has "put[] forth no evidence to substantiate that notice and
demand for many of the assessments was properly delivered to Roberto." Defs' Memo in

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Opposition at 10. This is incorrect as a matter of law, as the existence of at least one "Statutory
Notice of Balance Due" line on each of the Form 4340s is "presumptive evidence that the IRS
complied with its statutory duties." Dourlain, 2008 WL 4605958, at *6. The Government has
met its burden, and Defendants have put forth no evidence to rebut the presumption that the IRS
complied in all respects with its statutory notice requirements. Therefore, the Government's
motion for summary judgment on this issue is GRANTED.
2.

Property Interests and Tax Liens

"'State law controls whether a taxpayer has an interest in property to which a lien may
attach."' Rozbruch, 28 F. Supp. 3d at 269 (quoting United States v. Comparato, 22 F.3d 455,
457 (2d Cir. 1997)). Both parties agree that New York law applies. Motion for Summary
Judgment at 7; Defs' Memo in Opposition at 11.
a)

Interest in the 96th Street Property

Under New York law, "a disposition of real property to a husband and wife creates in
them a tenancy by the entirety, unless expressly declared to be a joint tenancy or a tenancy in
common." N.Y. Est. Powers & Trusts Law§ 6-2.2(b). "As tenants by the entirety, both spouses
enjoy an equal right to possession of and profits yielded by the property. Goldman v. Goldman,
733 N.E.2d 200, 202 (N. Y. 2000) (internal citation omitted). Further, each member of a tenancy
by the entirety "may sell, mortgage, or otherwise encumber [his] rights in the property, subject to
the continuing rights of the other." Id. (internal quotation marks and citation omitted).
In support of its motion for summary judgment, the Government includes the property
deed for the 96th Street Property, which indicates that Roberto and Ana, as husband and wife,

12

purchased the property on June 11, 1981. Motion for Summary Judgment, Ex. 79 (Property deed
for 96th Street Property).
Defendants do not contest this fact. Pl's Rule 56.1 Statement at ~27; Defs' Rule 56.1
Statement at ~27. Nor do Defendants address the issue of whether Roberto holds an interest in
the 96th Street Property as a tenant by the entirety with his wife, Ana, in their opposition to the
Government's motion for summary judgment. Accordingly, the Court treats this portion of the
Government's summary judgment motion as unopposed. See Rozbruch, 28 F. Supp. 3d at 268.
When a non-moving party fails to respond to some portion of a motion for summary judgment,
the district court must still determine whether summary judgment is warranted on that issue.
Fed. R. Civ. P. 56(e); Fabrikant v. French, 691F.3d193, 215 n.18 (2d Cir. 2012); Vermont
Teddy Bear Co., Inc. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004).

Since Roberto and Ana purchased the property while they were married, they hold the
property as tenants by the entirety under New York law, unless there is an express declaration to
the contrary. N.Y. Est. Powers & Trusts Law§ 6-2.2(b). Defendants do not provide any
evidence of an express declaration that the 96th Street Property was a joint tenancy or a tenancy
in common, rather than a tenancy by the entirety. See id. Therefore, applying New York law,
the Court finds that the 96th Street Property is held by Roberto and Ana as tenants by the
entirety. See id.
As a tenant by the entirety, Roberto is entitled to encumber his one-half interest in the
property, subject to the continuing rights of his wife, Ana. Goldman, 733 N.E.2d at 202; see also
Sec. & Exch. Comm 'n v. Vuono, 13-MC-405, 2013 WL 6837568, at *7 (E.D.N.Y. Dec. 26, 2013)

(Bianco, J.) (noting that a lien against a tenant by the entirety encumbers that tenant's one-half
interest only). Accordingly, the Government may attach Roberto's interest, as a tenant by the

13

entirety, in the 96th Street Property. 2 The Government's motion for summary judgment on this
issue is GRANTED.
b)

Interest in the Wyona Property

Under New York law, the inclusion of more than one person's name on a deed creates a
presumptive tenancy in common. United States v. Sprint Equities NY, Inc., 92 F. App'x 841, 842
(2d Cir. 2004). "The distinguishing feature of this form of ownership is the right of each
cotenant to use and enjoy the entire property as would a sole owner." Butler ex rel. Butler v.
Rafferty, 792 N.E.2d 1055, 1058 (N.Y. 2003). Tenants-in-common "may each unilaterally

alienate their shares [of the property] through sale or gift or place encumbrances upon these
shares." United States v. Craft, 535 U.S. 274, 280 (2002). Further, under federal law, federal tax
liens placed on a property are not extinguished simply because the individual who owes the tax
transfers his interest in the property to another. See United States v. McCombs, 30 F.3d 310,
321-22 (2d Cir. 1994) (noting that the priority and existence of federal tax liens are matters of
federal, rather than state, law).
Tenants-in-common are "presumed to hold equal shares in the premises they own."
Sprint Equities NY, Inc., 92 F. App'x at 842 (citation omitted). This presumption "may be

rebutted if the facts show that they hold the tenancy in unequal shares." McGuire v. McGuire,
939 N.Y.S.2d 572, 574 (2d Dep't 2012). Facts to be considered to determine ifthe presumption
has been rebutted involve the "various equities," including specifically the "amounts invested in
the property," "the nature of the parties' relationship, and whether any or all of these
2

The Court makes no findings in regards to the relative superiority of Home Mortgage's $154,000.00
mortgage on the 96th Street Property, recorded on November 22, 1989, versus the Government's tax lien
on the 96th Street Property because this issue was not raised in the Government's motion for summary
judgment. See Dkt. 35 ("Home Mortgage Answer") at if2; Motion for Summary Judgment; Dkt. 43
("Government's Reply").

14

contributions were repaid or intended to be a gift." Id. (citations omitted); see also Manganiello

v. Lipman, 905 N.Y.S.2d 153, 155-56 (1st Dep't 2010) (finding that one party's allegations that
she alone contributed to property's maintenance and upkeep after the other party's voluntary
departure rebutted the presumption that the parties held in equal shares). The fact that one
cotenant did not live at the property is not properly considered by the Court because "each
cotenant has an equal right to possess and enjoy all or any portion of the property as if the sole
owner. Consequently, nonpossessory cotenants do not relinquish any of their rights as tenantsin-common when another cotenant assumes exclusive possession of the property." Myers v.

Bartholomew, 697 N.E.2d 160, 161 (N.Y. 1998). Instead, New York law "presumes a cotenant's
possession is possession by and for the benefit of all other cotenants." Id. (citation omitted).
If a party rebuts the presumption of equal shares, then determination of the value of each

cotenant's share is made by the Court acting in equity. McGuire, 939 N.Y.S.2d at 574. This
determination is "not amenable to resolution by summary judgment." Manganiello, 905
N.Y.S.2d at 155-56.
In support of its motion for summary judgment, the Government includes the property
deed for the Wyona Property, which indicates that Roberto and Elena, brother and sister,
purchased the property on January 8, 1974. Motion for Summary Judgment, Ex. 81 (Property
deed for Wyona Property). Defendants do not dispute that Roberto and Elena are presumptively
tenants-in-common of the Wyona Property because both of their names were on the property
deed. Defs' Memo in Opposition at 11; Pl's Rule 56.1 Statement at ~31; Defs' Rule 56.1
Statement at ~31; Motion for Summary Judgment, Ex. 81 at 1. Thus, if Roberto is found to have
held an interest in the Wyona Property as a tenant-in common at the time the tax assessments

15

were made against him, the Government would be able to enforce a lien against Roberto's
interest. See Mccombs, 30 F.3d at 321-22.
The existence of both Roberto's name and his sister Elena's name on the deed for the
Wyona Property creates a rebuttable presumption that the two held the property in equal shares
as tenants-in-common. See Sprint Equities NY, Inc., 92 F. App'x at 842. In an effort to counter
any rebuttal to the presumption, the Government includes in its motion an Indenture, signed by
Elena and Roberto on February 17, 2010, in which Roberto transfers his interest in the Wyona
Property to Elena for $10. Motion for Summary Judgment, Ex. 82. The existence of this
Indenture suggests that the parties believed themselves to have been in a cotenant relationship
prior to Roberto selling his interest to his sister. Defendants, on the other hand, attempt to rebut
the presumption by providing an affidavit from Elena stating, and numerous pieces of evidence
in an effort to show, that Elena paid all of the purchase expenses in 1974, has paid all of the
maintenance and upkeep costs on the property since then, and has paid all of the taxes and
insurance costs on the property. Defs' Memo in Opposition, Ex. D ("Elena's Aff.") at 3-7 & Ex.
B-Z.
Viewing the evidence in the light most favorable to Defendants as the non-moving party,
Defendants have provided enough evidence to create an issue of material fact on the question of
whether and what percentage interest Roberto held in the Wyona Property as a tenant-incommon with his sister, Elena. This question is inappropriate for resolution at the summary
judgment stage. See Manganiello, 905 N.Y.S.2d at 155-56. Thus, the Government's motion for
summary judgment on the issue of Roberto's attachable interest in the Wyona Property is
DENIED.

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CONCLUSION
Accordingly, on the basis of the record and law as set forth above, the Government's
motion for summary judgment is GRANTED as it relates to all tax assessments other than the tax
assessment for the tax period ending September 30, 2002. The Government's motion for
Summary Judgment is also GRANTED as it relates to Roberto's interest as a tenant by the
entirety in the 96th Street Property. The Government's motion for summary judgment is
DENIED as it relates to the tax assessment for the tax period ending September 30, 2002. The
Government's motion for Summary Judgment is also DENIED as it relates to Roberto's interest
in the Wyona Property.

SO ORDERED
Dated: March 5, 2015
Brooklyn, New York

s/WFK

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