United States of America v. Calaman et al

Filing 61

MEMORANDUM & ORDER granting 59 Motion for Disbursement of Funds. The proceeds from the sale of the Marlborough Property shall be distributed in accordance with this Order. So Ordered by Judge Nicholas G. Garaufis on 3/2/2017. (Lee, Tiffeny)

^IF

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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UNITED STATES OF AMERICA,

Plaintiff,

MEMORANDUM & ORDER

15-CV-180(NGG)
(PK)

-againstDONALD CALAMAN;TOBY CALAMAN;
CITIBANK,N.A.; RUTH CALAMAN,
TRUSTEE,on behalfof 121 MARLBOROUGH
ROAD TRUST;RUTH CALAMAN,TRUSTEE,
on behalf of THE NEW HAVEN TRUST;
CAPITAL ONE BANK,NA;and NEW YORK
STATE DEPARTMENT OF TAXATION AND

FINANCE,
Defendants.
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NICHOLAS G. GARAUFIS,United States District Judge.

On January 13, 2015,the United States of America(the "Government") brought this

action pursuant to, inter alia. 26 U.S.C. § 7403,^ to enforce federal tax liens encumbering
Defendant Donald Calaman's interest in certain real property at 121 Marlborough Road,

Brooklyn,New York (the "Marlborough Property"). fSee Compl.(Dkt. 1).) The Complaint
named the following additional defendants, alleging that they "may have an interest" in the
Marlborough Property: Donald Calaman's wife, Toby Calaman; Ruth Calaman, as trustee on

behalf ofthe 121 Marlborough Trust and the New Haven Trust; Citibank, NA ("Citibank");
Capital One; Capital One Bank,NA;and the New York State Department of Taxation and

^ 26 U.S.C. § 7403(c) provides that in an action to enforce a lien,
[t]he court shall, after the parties[having liens upon or claiming any interest in the property involved
in the action] have been duly notified ofthe action, proceed to adjudicate ail matters involved therein
and finally determine the merits of all claims to and liens upon Ae property, and, in all cases where
a claim or interest ofthe United States therein is established, may decree a sale ofsuch property, by
the proper officer of the court, and a distribution of the proceeds of such sale according to the
findings ofthe court in respect to the interests ofthe parties and ofthe United States.
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Finance (the "NYSDTF"). (See id UK 4-10, 22.) Before the court is the Government's

Unopposed Motion to Distribute Sales Proceeds from the Marlborough Property (the "Motion").
(Mot. for Disbursement ofFunds("Mot.")(Dkt. 59).) For the following reasons, the Motion is
GRANTED.
1.

BACKGROUND

a. Disposition of Claims

The Government entered into a stipulated agreement(the "Calaman Defendants

Stipulation") with Defendants Donald Calaman, Toby Calaman, and Ruth Calaman, as trustee on
behalf ofthe 121 Marlborough Trust and the New Haven Trust(the "Calaman Defendants"),
which was so-ordered by the court on February 25, 2016. (Stip.("Calaman Defs. Stip.")

(Dkt. 33).) The Calaman Defendants Stipulation provides, inter alia, that(1)the Marlborough
Property will be sold through a court-appointed receiver;(2)the Government shall receive a total

of$850,000 from the net proceeds^ from the sale ofthe Marlborough Property; and(3)ifthe net
proceeds exceed $850,000,"any remaining balance shall be paid to the 121 Marlborough Road
Trust." (Id KK 3, 5.) Donald Calaman entered into a stipulation with Citibank, which was
so-ordered by this court on October 7, 2016,in which Citibank agreed to release any claims
asserted against Donald Calaman or any assets in this action. (Stip. & Order(Dkt. 41).)
On November 23,2016,the court granted the Government's motion to dismiss Capital

One as a defendant.^ (Order(Dkt. 49).) The court entered defaultjudgment against the

^"Net proceeds shall be the total sale price ofthe Marlborough Property less payment of all costs associated with
the Marlborough Sale, including receiver's fees. New York State and New York City real estate transfer taxes,
including the 'mansion tax', real estate taxes, and the mortgage owed on the Marlborough Property." (Calaman
Defs. Stip. ^5.)

^ The Government explained that "Capital One should not have been listed as a party and it has no interest in any of
the properties at issue in this suit. The listing of Capital One in the case caption was an error. The proper party to
the suit is Capital One Bank, NA." (Mot. to Dismiss(Dkt. 46).)

remaining defendants, Capital One Bank,NA and the NYSDFT. (Corrected Default J.
(Dkt. 58).) Pursuant to those defaultjudgments. Capital One Bank,NA and the NYSDTF have
no right, title, claim, or lien interest in the Marlborough Property. (Id; see also Order re Report

and Recommendation (Dkt. 53); Order re Report and Recommendation (Dkt. 54); Order re Mot.
to Correct Case Caption(Dkt. 56).)
b. Sale Transaction

On May 2,2016,the court approved the Government's motion to appoint Jonathan

Mellon("Mellon") as receiver ofthe Marlborough Property. (Order("Receiver Order")
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(Dkt. 38).) On December 1,2016,the court entered an order confirming the sale ofthe

Marlborough Property to Michael Gantcher and Christina Gantcher (the "Buyers")for a purchase
price of$2,150,000(the "Sale Order"). (Order(Dkt. 50).) The Sale Order provided that upon
full payment ofthe purchase price, the Marlborough Property would be transferred to the Buyers
"free and clear of any rights, titles, claims, or interests of any ofthe parties to this action," and
that "[t]he proceeds ofthe sale shall be distributed in accordance with a future order ofthis
[c]ourt." (Id at 2.)
The Government has made the following representations with respect to the sale ofthe

Marlborough Property:(1)the "fmal closing ofthe Marlborough Property was completed and the
sales proceeds, less taxes and adjustments at closing, are being held in escrow in the [Interest on
Lawyers Trust Account("lOLTA")] ofFrankfurt Kumit Klein & Selz PC";(2)"upon receipt of

the funds, a receiver's deed was issued from Receiver Jonathan Mellon transferring the
Marlborough Property to [the Buyers]";(3)the proceeds from the sale ofthe Marlborough
Property "were distributed at closing for NYC Transfer taxes, NYS transfer taxes and fees to

prevent flirther accruals";(4)"[ajfter proration of property taxes in the amoimt of$618.93, credit

for fuel oil of$182.88 and payment to local taxing authorities plus fees, there are excess sales
proceeds of $2,111,232.50 to distribute." (Mot.^ 2-3.)
II.

MOTION TO DISTRIBUTE SALES PROCEEDS

The Government requests that the court order that the excess sales proceeds of
$2,111,232.50 be distributed as follows:(1)$107,500 to Mellon "for Receiver's commission";
(2)$850,000 to the Government"for application to Donald Calaman's unpaid federal tax

liabilities"; and (3)the remaining $1,153,732.50 to "Ruth Calaman Trustee, on behalfofthe 121
Marlborough Road Trust." (Mot.f 4.)

Pursuant to the court's May 2,2016, Order, appointing Mellon as receiver ofthe
)

Marlborough Property, Mellon is entitled to receive 5% ofthe "gross sales proceeds" from the
sale ofthe Marlborough Property, unless the buyer is not represented in the sale transaction, in
which case he is entitled to 4% ofthe gross sales proceeds. (Receiver Order K 8.) The Buyers

were represented by Stuart Serota, Esq. ofKaufrnan and Serota, P.O. in connection with the
purchase ofthe Marlborough Property. rSee Aff. of Jonathan Mellon(Dkt. 60-1)Hlf 5,6, 9.)
Accordingly,the court finds that Mellon is entitled to 5% ofthe gross sales proceeds, i.e.,
$2,150,000, which is equivalent to $107,500.

Pursuant to the Calaman Defendants Stipulation, the Government is entitled to $850,000

from the net proceeds ofthe sale ofthe Marlborough Property, and the 121 Marlborough Road
Trust is entitled to "any remaining balance" ifthe net proceeds exceed $850,000. (Calaman
Defs. Stip. H 5.) Under the Calaman Defendants Stipulation, the "net proceeds" consist ofthe
total sale price ofthe Marlborough Property—i.e., the $2,150,000 purchase price and seller's

credit in the amount of$801.81 (for property taxes and fiiel oil) fsee Ex. 1 to Mot.(Dkt. 59-1) at
ECF p.l)—^less payment of all costs associated with the Marlborough Sale, including: $107,500
in receiver's fees, as explained above; and $39,569.31 in New York State and New York City
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real estate transfer taxes(see id. at ECF p.2). (Calaman Defs. Stip. ^ 5.) Net proceeds therefore
amount to $2,003,732.50. The court finds that the Government is entitled to $850,000 jfrom

these net proceeds. The 121 Marlborough Road Trust is entitled to the remaining $1,153,732.50.
III.

CONCLUSION

The proceeds from the sale ofthe Marlborough Property shall be distributed in
accordance with this Order.

SO ORDERED.

s/Nicholas G. Garaufis

Dated: Brooklyn, New York
March

2017

NICHOLAS G. GARAUl^S
United States District Judge