UNITED STATES OF AMERICA v. Sanchez-Martinez, et al
Filing
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ORDER granting 11 Motion for Default Judgment - Signed by District Judge Louise Wood Flanagan on 05/16/2012. (Baker, C.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No.5:11-CV-657-FL
UNITED STATES OF AMERICA,
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Plaintiff,
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v.
RICARDO SANCHEZ-MARTINEZ, RSM
FRAMING CONTRACTORS, LLC,
BEATRIZ SANCHEZ, and DULCHE
RODRIGUEZ,
Defendants.
ORDER
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This matter is before the court on plaintiff s motion for entry of default judgment and order
of sale (DE # 11), filed March 15, 2012. By order entered March 20, 2012, the court requested
supplemental briefing, which plaintiff filed April 5, 2012. Accordingly, the issues raised are ripe
for adjudication. For the following reasons, plaintiffs motion is GRANTED.
BACKGROUND
The United States ("plaintiff') filed complaint on November 17, 2011, seeking therein
judgment on federal income tax assessments against defendant Ricardo Sanchez-Martinez
("Sanchez-Martinez") and to foreclose its federal tax liens against real property located in Johnston
County, North Carolina. Additional defendants RSM Framing Contractors, LLC ("RSM Framing"),
Beatriz Sanchez ("Sanchez"), and Dulche Rodriguez ("Rodriguez") were named because they may
claim an interest in the real property at issue.
Summonses were issued as to all defendants, but none entered appearance. On February 10,
2012, plaintiff filed motion for entry of default, and default was entered as to all defendants on
February 13,2012. On March 15,2012, plaintiff filed the instant motion for default judgment.
Plaintiff requests judgment in its favor against defendant Sanchez-Martinez for unpaid 2000
through 2006 federal individual income taxes, penalties, and interest, in the total amount of
$2,813,106.55, plus statutory interest accrued under 26 U.S.C. § 6621 from February 24,2012, until
paid. Plaintiff also seeks judgment that it has valid federal liens against all property and rights to
property owned by defendant Sanchez-Martinez. Next, plaintiff asks the court to adjudge that
defendants RSM Framing and Sanchez are holding the real property at issue as nominees ofSanchez
Martinez. Finally, plaintiff seeks order commanding that this property be sold in accordance with
28 U.S.c. §§ 2001 and 2002.
By order entered March 20, 2012, the court directed plaintiff to provide additional
information as to two issues. First, the court asked plaintiff to explain the distinction in amounts
listed in certificates of assessment attached to plaintiffs motion for default judgment and those
amounts listed on the second page ofplaintiff s memorandum in support. Second, the court directed
plaintiff to provide further argument in support of its contention that defendants RSM Framing and
Sanchez were holding certain real property as nominees of defendant Sanchez-Martinez. With
benefit now ofplaintifrs supplemental materials, filed April 5, 2012, the court rules as follows.
COURT'S DISCUSSION
A.
Defendant's indebtedness to the United States for income tax, penalties, and interest
Plaintiff asserts that defendant Sanchez-Martinez owes the United States an amount of
$2,813,106.55 plus interest from February 24, 2012, for his 2000 through 2006 income tax, penalties,
and interest accrued. Plaintiff attached to its motion for default judgment certificates of assessment
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(Forms 4340) for tax years 2000 through 2006. Each certificate is dated March 25, 2011, and
concludes with a balance. The balances listed are $4,698.38, $902.45, $434,670.08, $689,993.04,
$626,964.81, and $18,375.61 for the tax years 2000 through 2006, respectively.
Plaintiff informs through declarations of Ralph W. Thompson that the amounts due as of
February 24, 2012, taking into consideration accrued penalties and interest, are $5,546.05, $1,061.37,
$699,676.54, $1,106,874.80, $964,374.89, $23,573.08, and $11,999.82, respectively. In further
support, plaintiff attaches to its supplemental filing printouts from the Internal Revenue Service's
("IRS's") computer program, INTST, which printouts confirm the above amounts.
The Commissioner's determination of tax liability is presumptively correct. United States
v. Pomponio, 635 F.2d 293, 296 (4th Cir. 1980). Accordingly, the court is satisfied that the amounts
provided are accurate and ADJUDGES that defendant Sanchez-Martinez is indebted to the United
States for income tax, penalties, and interest in the amount of $2,813,106.55 plus interest from
February 24,2012 with respect to his 2000 through 2006 tax years.
B.
Nominee status ofRSM Framing Contractors, LLC and Beatriz Sanchez
Plaintiff asserts that defendants RSM Framing Contractors, LLC and Beatriz Sanchez hold
title to real property located at 9720 S. U.S. Highway 701, Newton Grove, N.C. as nominees of
Sanchez-Martinez. Plaintiff has filed nominee notices of federal tax liens as to RSM Framing and
Sanchez and now seeks order adjudging that these defendants hold the real property at issue as
nominees of Sanchez-Martinez. Furthermore, plaintiff requests order that this property be sold in
accordance with 28 U.S.C. §§ 2001 and 2002.
Plaintiff has the burden of establishing that defendants RSM Framing and Sanchez are the
nominees of defendant Sanchez-Martinez. United States v. Greer, 383 F. Supp. 2d 861, 866
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(W.D.N.C.2005). Federal district courts in North Carolina have looked to several factors "when
determining nominee status for purposes of attaching federal tax liens on one individual's property
based on the tax liabilities of another." Id. at 868 (citing Hill v. United States, 844 F. Supp. 263, 271
(W.D.N.C. 1993). These factors include: (1) the structure of the transaction placing the property
in the hands of the nominee; (2) the treatment by the taxpayer of the asset as his own; (3) control
over the alleged nominee by the taxpayer or a close relationship between them; (4) use of the alleged
nominee's funds to pay personal expenses ofthe taxpayer; (5) transfer ofthe property to the alleged
nominee for a nominal sum; (6) the fact that the alleged nominee supported the taxpayer; (7) whether
the taxpayer expended personal funds for the property; (8) whether the taxpayer enjoys the benefit
of the property; and (9) whether the record titleholder interfered with the taxpayer's use of the
property. Greer, 383 F. Supp. 2d at 868.
According to statements of Claudine S. Libey, a Revenue Officer for the IRS in Raleigh,
North Carolina, which statements were made in declarations dated March 6, 2012 and April 3, 2012,
Sanchez-Martinez provided the funds to acquire the property located at 9720 US Highway 701,
Newton Grove, N.C. Sanchez-Martinez further represented to Ms. Libey that he owns the property.
In addition, Sanchez-Martinez pays the property taxes on the property. And Ms. Libey's statements
support that Mr. Sanchez-Martinez has a close relationship with the asserted nominees, where he is
Ms. Sanchez's sister and was the sole member ofRSM Contractors, which LLC was administratively
dissolved as of August 13, 2010. Finally, plaintiff asserts that there is no evidence that the record
titleholders ever interfered with Mr. Sanchez-Martinez's use of the property.
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Where at least four ofthe above nine factors are met, the court concludes that RSM Framing
Contractors, LLC and Beatriz Sanchez are holding the real property at issue in this case as nominees
of Mr. Sanchez-Martinez.
CONCLUSION
Upon consideration ofplaintiff s motion for entry of default judgment and order ofsale, and
for good cause shown, it is ORDERED:
1. Plaintiffs motion is GRANTED.
2. JUDGMENT is entered, in favor of plaintiff and against defendant Ricardo Sanchez
Martinez, for unpaid 2000,2001,2002,2003,2004,2005, and 2006 federal individual income taxes,
penalties and interest in the total amount of$2,813,106.55 plus statutory interest under 26 U.S.C.
§ 6621 from February 24, 2012, until paid.
3. Plaintiffhas valid and existing federal tax liens against all property and rights to property
owned by defendant Ricardo Sanchez-Martinez.
4. The nominee federal tax liens against RSM Framing Contractors, LLC, and Beatriz
Sanchez as nominees of Ricardo Sanchez-Martinez are foreclosed against the subject property
described below, and such property is to be sold pursuant to 28 U.S.C. §§ 2001 and 2002 in the
manner set forth below:
A. The real property upon which plaintiff seeks to foreclose its federal tax liens is
listed as owned by RSM Framing Contractors, LLC, and Beatriz Sanchez, nominees of Ricardo
Sanchez-Martinez, and is located in Johnston County, North Carolina at 9720 S. US Highway 701,
Newton Grove, N.C., and is more particularly described as:
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BEING all of Lots 1 & 2 and 16.42 acres, more or less, as depicted upon a plat
entitled "Survey and Map for Fernando Zamora," drawn by Peacock Land Surveying,
dated November 6, 2002 and recorded January 2, 2003, at 1:10 p.m., in Plat Book 61,
Page 352, Johnston County registry, to which reference is made for a more particular
description.
(hereinafter referred to as "the Property").
B. The IRS Property Appraisal and Liquidation Specialists ("PALS") are authorized
to offer for public sale and to sell the Property.
C. The terms and conditions of the sale are as follows:
i. The sale ofthe Property shall be free and clear ofthe interests of all parties
in the suit;
11.
The sale shall be subject to building lines, if established, all laws,
ordinances, and governmental regulations (including building and zoning ordinances) affecting the
Property, and easements and restrictions of record, if any;
iii. The property shall be sold by public auction to take place within Johnston
County, North Carolina, either on the premises itself or at any other place in accordance with the
provisions of28 U.S.C. §§ 2001 and 2002;
IV.
v.
The PALS shall announce the date and time for sale;
Notice of the sale shall be published once a week for at least four
consecutive weeks before the sale in at least one newspaper regularly issued and of general
circulation in Johnston County, N. C., and, at the discretion of the PALS, by any other notice that
the PALS deems appropriate. The notice shall contain a description ofthe property and shall contain
the terms and conditions of sale in this order of sale;
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vi. The PALS shall set the minimum bid. If the minimum bid is not met or
exceeded, the PALS may, without further permission of this court, and under the terms and
conditions in this order of sale, hold a new public sale, if necessary, and reduce the minimum bid;
vii. At the time of the sale, the successful bidder(s) shall deposit with the
PALS, by money order or by certified or cashier's check payable to the Clerk of the United States
District Court for the Eastern District ofNorth Carolina, a deposit in an amount between five (5) and
twenty (20) percent of the minimum bid as specified by the PALS in the published Notice of Sale.
Before being permitted to bid at the sale, potential bidders shall display to the PALS proofthat they
are able to comply with this requirement. No bids will be accepted from any person(s) who have not
presented proofthat, ifthey are the successful bidders(s), they can make the deposit required by this
order of sale;
viii. The successful bidder(s) shall pay the balance of the purchase price for
the Property within sixty (60) days following the date of the sale. The certified or cashier's check
payable to the United States District Court for the Eastern District ofNorth Carolina shall be given
to PALS who will deposit the funds with the Clerk of this Court. If the bidder fails to fulfill this
requirement, the deposit shall be forfeited and shall be applied to cover the expenses ofthe sale, with
any amount remaining to be applied to the liabilities of Ricardo Sanchez-Martinez at issue herein.
The Clerk shall distribute the deposit as directed by the PALS by check made to the "United States
Treasury." The Property shall be again offered for sale under the terms and conditions of this order
of sale or, in the alternative, sold to the second highest bidder;
ix. The Clerk of the District Court is directed to accept the proceeds of the
sale and deposit it into the Court's registry for distribution pursuant to further Order of this Court;
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x. The sale ofthe Property shall be subject to confinnation by this Court. On
confirmation of the sale, the IRS shall execute and deliver its deed conveying the Property to the
purchaser. On confirmation of the sale, all interests in, liens against, or claims to, the Property that
are held or asserted by all parties to this action are discharged and extinguished;
xi. When this Court confirms the sale, the Recording Official of Johnston
County, North Carolina shall cause transfer 0 f the Property to be reflected upon that county's register
of title. The successful bidder at the sale shall pay, in addition to the amount of the bid, any
documentary stamps and Clerk's registry fees as provided by law;
xii. The sale ofthe Property is ordered pursuant to 28 U.S.c. § 2001 and is
made without right of redemption.
D. Until the Property is sold, Ricardo Sanchez-Martinez shall take all reasonable
steps necessary to preserve the Property. He shall neither commit waste against the Property nor
cause or pennit anyone else to do so. He shall neither do anything that tends to reduce the value or
marketability of the Property nor cause or permit anyone else to do so. He shall not record any
instruments, publish any notice, or take any other action (such as running newspaper advertisements,
posting signs, or making internet postings) that may directly or indirectly tend to adversely affect the
value of the Property or that may tend to deter or discourage potential bidders from participating in
the public auction, nor shall he cause or pennit anyone else to do so.
E. Pending the sale of the Property, and until the deed to the Property is delivered
to the successful bidder, the PALS is authorized to have free access to the premises in order to take
any and all actions necessary to preserve the Property.
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F. After the Court confirms the sale, the sale proceeds deposited with the Clerk of
this Court should be applied to the following items, in the order specified:
i. First, to the United States Treasury for the expenses of the sale, including
any expenses incurred to secure or maintain the property pending sale and confirmation by the Court;
ii. Second, to Johnston County, N.C. or other local taxing authority, for real
property taxes and other local assessments due and owing; and
iii. Third, the remaining proceeds shall be distributed to plaintiff United
States of America for application to the unpaid federal income tax liabilities for the years 2000
through 2006 against the defendant Ricardo Sanchez-Martinez, including all accrued statutory
penalties, additions, and interest, until fully paid.
SO ORDERED, this the
& day of May, 2012.
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