JOHNSON v. UNITED STATES OF AMERICA
Filing
61
MEMORANDUM OPINION, RECOMMENDATION, AND ORDER OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE L. PATRICK AULD on 01/17/2012. IT IS THEREFORE ORDERED that the Motion to Withdraw (Docket Entry 60 ) is GRANTED. IT IS RECOMMENDED that the United States' Motion for Summary Judgment (Docket Entry 47 ) be GRANTED. IT IS FURTHER RECOMMENDED that the Motion of Victoria Johnson for Summary Judgment (Docket Entry 49 ) be DENIED.(Taylor, Abby)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
VICTORIA JOHNSON,
Plaintiff and
Counterclaim Defendant,
v.
UNITED STATES OF AMERICA,
Defendant, Counterclaim
Plaintiff, and ThirdParty Plaintiff,
v.
SAMMY E. JOHNSON, J. HUNTER
SCHOFIELD, and MATTHEW SCHOFIELD,
Third-Party Defendants.
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1:09CV957
MEMORANDUM OPINION, RECOMMENDATION, AND ORDER
OF UNITED STATES MAGISTRATE JUDGE
The instant matter comes before the undersigned United States
Magistrate Judge for a recommended ruling on the United States’
Motion for Summary Judgment (Docket Entry 47) and the Motion of
Victoria Johnson for Summary Judgment (Docket Entry 49), as well as
for disposition of Plaintiff’s counsel’s Motion to Withdraw (Docket
Entry 60).
For the reasons that follow, the United States’ Motion
for Summary Judgment should be granted, the Motion of Victoria
Johnson for Summary Judgment should be denied, and Plaintiff’s
counsel’s Motion to Withdraw will be granted.
Background
In 1997, Plaintiff Victoria Johnson’s (“Victoria’s”) husband,
Sammy Johnson (“Sammy”), was fired from his job at Colonial Life &
Accident Insurance Co. (“Colonial Life”).
2.)
(See Docket Entry 48 at
Sammy sued Colonial Life for breach of contract and wrongful
discharge.
(See Docket Entry 50 at 2.)
After a lengthy legal
proceeding, a jury awarded Sammy a judgment of $1,613,661.00 plus
interest and costs in March 2006.
also
Docket
Entry
48-6.)
(See Docket Entry 48 at 2; see
Sammy
received
a
net
award
of
$1,049,444.45 after legal fees and expenses, which he directed to
be placed into his wife’s checking account because (according to
Sammy) “he wanted nothing to do with the money.”
(Docket Entry 50
at 3; see also Docket Entry 48 at 2-3.)
Roughly six months after Sammy’s receipt of the funds (and the
transfer to Victoria), Sammy and Victoria began to investigate
whether the judgment award was taxable. (See Docket Entry 48 at 3;
see also Docket Entry 48-4 at 66-67.)
Sammy and Victoria first
contacted an accountant who advised them that, in his opinion, the
funds were taxable, but also suggested that they seek a second
opinion.
(See Docket Entry 48 at 4; see also Docket Entry 48-1 at
65-67; Docket Entry 48-4 at 66-67.)
Sammy subsequently contacted
a second accountant, Keith Pleasant (“Pleasant”), who advised Sammy
that based on the recent opinion of the United States Court of
Appeals for the District of Columbia Circuit (“D.C. Circuit”) in
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Murphy v. United States, 460 F.3d 79 (D.C. Cir.), vacated, 2006 WL
4005276 (D.C. Cir. Dec. 22, 2006), a portion of the award may not
be taxable.
(See Docket Entry 48 at 3-4.)
Pleasant advised Sammy
to delay filing his tax return until the appeals process was
complete with respect to the Murphy decision.
(See id. at 4.)
Accordingly, Pleasant prepared an extension request for Sammy’s
2006 income tax return filing.
(See id.)
After vacating its original decision in Murphy, the D.C.
Circuit held that the funds at issue in that case were taxable.
Murphy v. Internal Revenue Service, 493 F.3d 170 (D.C. Cir. 2007).
Sammy then filed his 2006 income tax return reporting $1,021,024 of
taxable income and an income tax owed of $358,223.
Entry 48 at 5.)
$1,000.
(See Docket
Sammy, however, submitted a payment of only
(See Docket Entry 48 at 5.)
The unpaid balance continues
to accrue interest and penalties, which, as of May 15, 2011,
resulted in Sammy owing $503,980.47 to the United States for the
2006 income tax year (see id.).
Upon the original transfer from Sammy to Victoria in March
2006, Victoria had deposited the funds into a money market account.
(See id. at 6.)
She subsequently used the funds in various ways,
including to build the home where she and Sammy now live, to
establish an investment account, and to make gifts to three of her
children.
(Id.; see also Docket Entry 48-4 at 56, 71-74.)
In
early 2008, Victoria, along with two of her children, J. Hunter
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Schofield (“Hunter”) and Matthew Schofield (“Matthew”), formed
Schofield-Johnson, LLC (“Schofield-Johnson”). (See Docket Entry 48
at 6.)
Victoria contributed nearly all of the entity’s assets,
including the home she built and the investment accounts she had
established with the funds from Sammy’s lawsuit.
no ownership interest in Schofield-Johnson.
(Id.)
Sammy has
(See Docket Entry 50
at 3.)
In July 2009, the United States Internal Revenue Service
(“IRS”) filed a nominee lien against Victoria and a separate lien
against Schofield-Johnson for the debt owed by Sammy.
(See id. at
5.) The IRS subsequently levied on Victoria’s personal accounts at
the State Employee Credit Union, from which the IRS eventually
obtained over $20,000.
(See id.)
Victoria filed a Complaint in
this Court alleging wrongful levy on the basis that she is not a
nominee of Sammy.
(Docket Entry 1.)
The United States answered
Victoria’s Complaint (Docket Entry 14) and asserted a counter-claim
against
Victoria
and
a
third-party
fraudulent transfer (see id. at 14).
claim
against
Sammy
for
After discovering that
Victoria had transferred $25,000 to both Hunter and Matthew, the
United
States
filed
an
Amended
Counterclaim
and
Third-Party
Complaint to include Hunter and Matthew in the fraudulent transfer
claim.
(See Docket Entry 24.)
In a separate action, Schofield-Johnson filed for bankruptcy
protection, effectively staying the levies against it. (See Docket
-4-
Entry 50 at 5.)
That case remains pending in the United States
Bankruptcy Court for the Middle District of North Carolina.
In re
Schofield-Johnson, LLC, Case No. 09-81347 (Bankr. M.D.N.C.).
Of
particular relevance to the instant proceeding, Schofield-Johnson
initiated an adversary proceeding in the bankruptcy action seeking
“a judgment declaring that the levy by the IRS was wrongful and
that its account may not be used to satisfy Sammy’s individual tax
liability.”
(See Docket Entry 59-1 at 1; see also Schofiel-
Johnson, LLC v. United States of America, Commissioner of Internal
Revenue
Service,
Adv.
No.
09-09067
(Bankr.
M.D.N.C.).)
In
response, the IRS sought “a ruling that Schofield-Johnson is merely
the nominee of Sammy Johnson or that Sammy’s transfer of certain
funds to Victoria was fraudulent, and that therefore, the IRS may
properly levy upon Schofield-Johnson’s account to satisfy Sammy’s
tax liability.”
(See Docket Entry 59-1 at 1-2; see also Docket
Entry 48 at 6.)
Trial was held in the adversary proceeding in August 2011.
(See Docket Entry 59-1 at 1.)
Thereafter, the bankruptcy court
issued a Memorandum Opinion in which it determined that, in order
to decide whether Schofield-Johnson was the nominee of Sammy, the
bankruptcy court first had to analyze whether the transfer between
Sammy and Victoria was fraudulent (see id. at 5). After concluding
that state law provided the appropriate decisional authority for
-5-
that determination (see id.), the bankruptcy court looked to N.C.
Gen. Stat. § 39-23.4(a), which states that:
A transfer made or obligation incurred by a debtor is
fraudulent as to a creditor, whether the creditor’s claim
arose before or after the transfer was made or the
obligations was incurred, if the debtor made the transfer
or incurred the obligation . . . [w]ith intent to hinder,
delay or defraud any creditor of the debtor.
After addressing each of the relevant factors provided in N.C. Gen.
Stat. § 39-23.4(b) to determine intent, the bankruptcy court held
that, “[s]ince the overwhelming majority of the factors favors the
position of the IRS, . . . the transfer from Sammy to Victoria was
fraudulent under North Carolina law.”
(Docket Entry 59-1 at 11.)
Although that decision was subsequently appealed, see SchofieldJohnson, LLC v. Internal Revenue Service, 1:11-cv-00960 (M.D.N.C.),
said appeal was ultimately withdrawn, see id., Docket Entries 14,
15, leaving the bankruptcy court’s Memorandum Opinion as the final
judgment in that matter.
In the instant action between Victoria and the United States,
the Court is now asked to address Victoria’s and the United States’
cross-motions for summary judgment (see Docket Entries 47, 49),
which, as discussed below, require findings nearly identical to
those already determined by the bankruptcy court in the adversary
proceeding between Schofield-Johnson and the United States.
Under
these circumstances, this Memorandum Opinion will evaluate whether
either party is entitled to judgment as a matter of law on the
following two issues: (1) is Victoria a nominee of Sammy; and
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(2) was the transfer from Sammy to Victoria fraudulent under 28
U.S.C. § 3304(b).
Motions for Summary Judgment
Under Fed. R. Civ. P. 56(a), “[t]he [C]ourt shall grant
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.”
Court
“may
evidence.”
133,
150
not
make
In considering that question, the
credibility
determinations
or
weigh
the
Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S.
(2000).
However,
“unsupported
speculation
is
not
sufficient to defeat a summary judgment motion if the undisputed
evidence indicates that the other party should win as a matter of
law.”
Francis v. Booz, Allen & Hamilton, Inc., 452 F.3d 299, 308
(4th Cir. 2006).
Victoria as a Nominee of Sammy
The United States may enforce federal tax liens against
property owned by a third-party that is a nominee or alter ego of
a delinquent tax payer.
G.M. Leasing Corp v. United States, 429
U.S. 338, 350-51 (1977).
To decide if an individual qualifies as
a nominee, the Court must first determine whether the delinquent
taxpayer has any rights in the property under state law.
Drye v.
United States, 528 U.S. 49, 58 (1999); see also OMOA Wireless, S.
De R.L. v. United States, No. 1:06CV148, 2010 WL 3199959, at *4
(M.D.N.C. Aug. 12, 2010) (Osteen, Jr., J.) (unpublished) (“The
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initial inquiry in any case involving a federal tax lien is to
determine what rights the taxpayer has to the property in question
under state law.”).
The Court, by way of opinion of Judge Osteen, Jr., previously
has
held
that
the
state
law
of
fraudulent
transfers
is
the
appropriate law by which to determine ownership status of property
where the United States specifically pleads elements of that claim.
OMOA Wireless, 2010 WL 3199959, at *5-6.
Given that the United
States has specifically pled such elements in the instant action
(albeit in the context of the federal fraudulent transfer statute
codified
at
28
U.S.C.
§
3304,
rather
than
its
state
law
counterpart), analysis of whether the transfer from Sammy to
Victoria was fraudulent under N.C. Gen. Stat. § 39-23.4 represents
the appropriate method for determining whether Sammy retains an
ownership interest in the transferred funds.
A finding that the
transfer was fraudulent under state law (and that Sammy therefore
retains ownership rights in the property) leads to the conclusions
that Victoria qualifies as a nominee of Sammy and that the United
States had authority to levy on her accounts.
See OMOA Wireless,
2010 WL 3199959, at *9.
The specific issue of whether the transfer from Sammy to
Victoria was fraudulent under state law was litigated and decided
in the adversary proceeding related to the bankruptcy action of
Schofield-Johnson.
Because “‘[t]he normal rules of res judicata
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and collateral estoppel apply to the decisions of bankruptcy
courts,’” Neighbors Law Firm, P.C. v. Highland Capital Mgmt., L.P.,
No. 5:09-CV-352-F, 2010 WL 5477260, at *3 (E.D.N.C. Dec. 28, 2010)
(unpublished) (quoting Turshen v. Chapman, 823 F.3d 836, 839 (4th
Cir. 1987)), the Court must consider the applicability of the
collateral estoppel doctrine to the instant proceeding.1
Collateral estoppel “operates to bar subsequent litigation of
those legal and factual issues common to both actions that were
‘actually and necessarily determined by a court of competent
jurisdiction in the first litigation.’” In re Varat Enters., Inc.,
81 F.3d 1310, 1315 (4th Cir. 1996) (quoting Montana v. United
1
Collateral estoppel was not (and, at the relevant time, could not have
been) raised as an affirmative defense by the United States. (See Docket Entries
14, 24.) The United States Court of Appeals for the Fourth Circuit, however, has
held:
To be sure, certain affirmative defenses implicate important
institutional interests of the court, and may sometimes be properly
raised and considered sua sponte. For example, the affirmative
defense of res judicata-which serves not only ‘the defendant’s
interest in avoiding the burden of twice defending a suit,’ but also
the important judicial interest in avoiding resolution of an issue
that the court has already decided-may, in ‘special circumstances,’
be raised sua sponte. Arizona [v. California], 530 U.S. 392, 412-13,
120 S. Ct. 2304, 147 L. Ed.2d 374; see also Doe v. Pfrommer, 148
F.3d 73, 80 (2d Cir.1998) (concluding that policy of “avoiding
relitigation” justified sua sponte consideration of defense of
collateral estoppel).
Given the
Eriline Co. S.A. v. Johnson, 440 F.3d 648, 655 (4th Cir. 2006).
identity of issues between the instant case and the adversary proceeding, the
privity of interest of the parties, and the inability of the United States to
raise this issue as an affirmative defense at the pleading stage due to the
procedural posture of the bankruptcy proceeding at that time, addressing this
issue sua sponte is appropriate in the instant action. See, e.g., Saudi v. V.
Shp Switzerland, S.A., 93 Fed. Appx. 516, 520-21 (4th Cir. 2004) (“[G]iven the
indisputable privity of the parties and the identity of the issues between the
instant case and the case upon which the res judicata holding rested, we believe
that sua sponte invocation of the bar was permissible.”)
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States, 440 U.S. 147, 153 (1979)).
Its application is appropriate
where:
(1) the issue sought to be precluded is identical to the
one previously litigated; (2) the issue must have been
actually
determined
in
the
prior
proceeding;
(3) determination of the issue must have been a critical
and necessary part of the decision in the prior
proceeding; (4) the prior judgment must be final and
valid; and (5) the party against whom estoppel is
asserted must have had a full and fair opportunity to
litigate the issue in the previous forum.
Sedlack v. Braswell Servs. Grp., Inc., 134 F.3d 219, 224 (4th Cir.
1998).
The record before the Court satisfies all of the above
criteria.
First, the bankruptcy court examined the discrete issue
of whether the transfer from Sammy to Victoria was fraudulent as to
the United States under N.C. Gen. Stat. § 39-23.4.
(See Docket
Entry 59-1 at 5-11 (“The [bankruptcy court] should first consider
whether the transfers at issue were fraudulent . . . .”).)
Second, said issue was actually determined in that action.
After addressing the relevant factors to determine intent under
N.C. Gen. Stat. § 39-23.4(b), the bankruptcy court found explicitly
“that the transfer from Sammy to Victoria was fraudulent under
North Carolina law.” (Docket Entry 59-1 at 11.)
Third,
determination
of
that
issue
was
critical
to
the
bankruptcy court’s ultimate conclusion that Schofield-Johnson is a
nominee of Sammy.
The bankruptcy court noted that the IRS’s
“nominee claim should be considered together with its fraudulent
-10-
conveyance claim.”
(Id. at 5.)
Accordingly, the bankruptcy court
decided it “should first consider whether the transfers at issue
were fraudulent in order to determine whether Sammy retains any
property rights in the [j]udgment [p]roceeds that are now in
possession of Schofield-Johnson. If the transfers are fraudulent and therefore Sammy still retains property rights in the proceeds Schofield-Johnson may be the nominee of Sammy and the IRS may
enforce its lien and levy [against Schofield-Johnson].”
(Id.)
Fourth, given the withdrawal of the appeal of the bankruptcy
court’s Memorandum Opinion as described above, see discussion supra
p. 6, that decision stands as the final judgment in the matter.
Fifth, as to the requirement that “the party against whom
estoppel is asserted must have had a full and fair opportunity to
litigate the issue in the previous forum,” Sedlack, 134 F.3d 219,
224, “[i]t is important to note in this regard that collateral
estoppel binds not only the parties to the underlying case, but
also those in privity with them,” Universal Furniture Intern., Inc.
v. Frankel, No. 1:08CV395, 2011 WL 6843001, at *4 (M.D.N.C. Dec.
29, 2011) (Osteen, Jr., J.) (unpublished) (citing Weinberger v.
Tucker, 510 F.3d 486, 491 (4th Cir. 2007)).
“The test for privity
is ‘whether the interests of one party are so identified with the
interests
of
representation
another
of
the
that
representation
other’s
legal
by
one
right.’”
party
Id.
is
a
(quoting
Weinberger, 510 F.3d at 491); see also Weinberger, 510 F.3d at 492
-11-
(“The concept of privity requires an alignment of interests and not
an exact identity of parties.”).
In the instant case, Victoria, Sammy, Hunter and Matthew are
in privity of interest with Schofield-Johnson - the relevant party
in the bankruptcy action.
As an initial matter, Schofield-Johnson
is owned solely by Victoria, Hunter and Matthew, who, accordingly,
had the ability to control its litigation of the adversarial
proceeding. (See Docket Entry 48-4 at 47-48.) Sammy, although not
an owner of Schofield-Johnson, shared an identical interest with
that party with respect to the fraudulent transfer.
SEC,
115
F.3d
1173,
1178
(4th
Cir.
1997)
See Jones v.
(“[T]he
privity
requirement assumes that the person in privity is so identified
with a party to former litigation that he represents precisely the
same legal right in respect to the subject matter involved.”
(internal quotation marks and citation omitted)).
Furthermore,
given that nearly all of the funds from Sammy’s judgment are now
held by Schofield-Johnson and that Sammy was essentially judgment
proof
given
his
lack
of
assets,
Schofield-Johnson
was
an
appropriate party to adequately represent those interests, and did
so with the same legal counsel that Sammy and Victoria retained in
the instant action.
Accordingly, on these facts, the fifth factor
for a finding of collateral estoppel is satisfied, and the Court
should conclude that the transfer from Sammy to Victoria was
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fraudulent under N.C. Gen. Stat. § 39-23.4 based on the findings of
the bankruptcy court.2
As a remedy for a fraudulent transfer, state law allows a
creditor to avoid the transfer “to the extent necessary to satisfy
[its] claim.”
N.C. Gen. Stat. § 39-23.7.
Therefore, Sammy is
considered to have ownership rights to the transferred funds for
the purpose of the United States collecting its debt, see OMOA
Wireless, 2010 WL 3199959, at *7, such that Victoria qualifies as
Sammy’s nominee.
Accordingly, the levy on Victoria’s account was
not wrongful. See id. (“[S]ince Mr. Boggs retains ownership rights
to the properties under North Carolina law in regard to his debts,
the nominee or alter ego liens against the properties are proper
under 26 U.S.C. § 6321 (2006) . . . .”).
Fraudulent Transfer Under 28 U.S.C. § 3304(b)
Although the foregoing discussion resolves Victoria’s wrongful
levy claim by examining whether the transfer from Sammy to Victoria
was fraudulent under N.C. Gen. Stat. § 39-23.4 (making her a
nominee), resolution of the United States’ counter-claim against
Victoria, Sammy, Matthew and Hunter for fraudulent transfer under
28 U.S.C. § 3304(b) requires further consideration.
2
The doctrine
North Carolina law provides that “[a] transfer or obligation is not
voidable under G.S. 39-23.4(a)(1) against a person who took in good faith and for
a reasonably equivalent value or against any subsequent transferee or obligee.”
N.C. Gen. Stat. § 39-23.8(a). Victoria has not asserted that she took “in good
faith and for a reasonably equivalent value,” id. (See Docket Entries 48, 52,
58.)
Moreover, the record establishes that Victoria received the funds
gratuitously from Sammy. (See Docket Entry 50 at 3 (“Sammy held no monies back
for himself and gave the [p]roceeds to his wife unequivocally and absolutely.”).)
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of collateral estoppel, however, remains relevant on this issue as
well. Indeed, the prior analysis, see discussion supra, pp. 10-13,
applies verbatim, with the exception that further attention is
warranted to whether application of the state law of fraudulent
transfers adequately addresses the issues relevant to a claim
brought under the federal counterpart.
The relevant state and federal statutory provisions regarding
fraudulent transfer are nearly identical.
Compare N.C. Gen. Stat.
§ 39-23.4 with 28 U.S.C. § 3304(b). North Carolina law provides in
relevant part:
A transfer made or obligation incurred by a debtor is
fraudulent as to a creditor, whether the creditor’s claim
arose before or after the transfer was made or the
obligation was incurred, if the debtor made the transfer
or incurred the obligation . . . [w]ith intent to hinder,
delay, or defraud any creditor of the debtor.
N.C. Gen. Stat. § 39-23.4(a).
Similarly, the federal statute states:
[A] transfer made or obligation incurred by a debtor is
fraudulent as to a debt to the United States, whether
such debt arises before or after the transfer is made or
the obligation is incurred, if the debtor makes the
transfer or incurs the obligation . . . with actual
intent to hinder, delay, or defraud a creditor.
28 U.S.C. § 3304(b).
Furthermore, both provisions contain an exception to the
ability to avoid such a transfer in the case of a person “who took
in good faith and for a reasonably equivalent value or against any
transferee or obligee.”
N.C. Gen. Stat. § 39-23.8(a); 28 U.S.C.
-14-
§ 3307(a).
In addition, both statutes provide a list of factors
pertinent to a determination of intent.
23.4(b); 28 U.S.C. § 3304(b)(2).
See N.C. Gen. Stat. § 39-
The North Carolina statute
encompasses all of the factors listed in the United States Code,
but also includes two additional items.
23.4(b)(12), (13).
See N.C. Gen. Stat. § 39-
As neither list is exclusive, see N.C. Gen.
Stat. § 39-23.4(b); 28 U.S.C. 3304(b)(2), this distinction is
immaterial.
Based on the similarity of the two statutes, no basis exists
for
this
Court
to
find
differently
when
applying
28
U.S.C.
§ 3304(b) than the bankruptcy court did when it applied N.C. Gen.
Stat. § 39-23.4. In other words, the bankruptcy court analyzed the
discrete issue of whether the transfer between Sammy and Victoria
was fraudulent (for the purposes of deciding if a fraudulent
transfer occurred under N.C. Gen. Stat. § 39-23.4) in a fashion
that directly addresses the issue presented in the instant action
(as to whether a fraudulent transfer occurred within the meaning of
28 U.S.C. § 3304(b)).
Given a finding that the transfer between Sammy and Victoria
was fraudulent, the United States is entitled to a judgment against
Victoria, Sammy, Matthew and Hunter on its fraudulent transfer
counter-claim. Specifically, in the case of a fraudulent transfer,
the United States:
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may recover a judgment for the value of the asset
transferred, but not to exceed the judgment on a debt.
The judgment may be entered against-(1) the first transferee of the asset or the person for
whose benefit the transfer was made; or
(2) any subsequent transferee, other than a good faith
transferee who took for value or any subsequent
transferee of such good-faith transferee.
28 U.S.C. § 3307(b).
As the entirety of Sammy’s judgment was
transferred to Victoria as the first transferee, the United States
may seek from Victoria the entirety of Sammy’s debt under 28 U.S.C.
§ 3307(b)(1). Furthermore, because the evidence shows that Matthew
and
Hunter
each
received
$25,000
without
giving
reasonably
equivalent value, to the extent Victoria cannot satisfy the debt,
the United States may seek payment from Matthew and Hunter up to
that amount.
28 U.S.C. 3307(b)(2).
Motion to Withdraw
As a final matter, Plaintiff’s counsel has filed a Motion to
Withdraw as counsel for Victoria and Sammy. (Docket Entry 60.) In
support of said motion, Plaintiff’s counsel has asserted that
Victoria and Sammy “have advised [Plaintiff’s counsel] that they no
longer wish for [Plaintiff’s counsel] to represent them” in this
action.
(Id., ¶ 2.)
The motion further notes that Plaintiff’s
counsel and Victoria/Sammy “have had significant and apparently
irreconcilable differences in handling the next phase” of this
action.
(Id., ¶ 3.)
Under these circumstances, Plaintiff’s
counsel’s motion will be granted.
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Conclusion
Because the discrete issue of whether the transfer of funds
from Sammy to Victoria was fraudulent under N.C. Gen. Stat. § 3923.4 has been previously litigated before and decided by the United
States Bankruptcy Court for the Middle District of North Carolina,
this Court should not re-decide that issue.
Sammy
is
considered
to
have
an
Given that finding,
ownership
interest
in
the
transferred funds such that Victoria qualifies as his nominee and
the United States’ levy on Victoria’s accounts thus was proper.
See OMOA Wireless, 2010 WL 3199959, at *7.
Furthermore, in light
of the nearly identical language of N.C. Gen. Stat. § 39-23.4 and
28 U.S.C. § 3304(b), the bankruptcy court’s prior decision under
state law addresses the same issue raised under the federal
fraudulent transfer statute.
As a result, collateral estoppel
warrants judgment for the United States on its counter-claim
against Victoria, Sammy, Matthew and Hunter, under the provisions
of 28 U.S.C. § 3307(b).
IT IS THEREFORE ORDERED that the Motion to Withdraw (Docket
Entry 60) is GRANTED.
IT IS RECOMMENDED that the United States’ Motion for Summary
Judgment (Docket Entry 47) be GRANTED.
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IT IS FURTHER RECOMMENDED that the Motion of Victoria Johnson
for Summary Judgment (Docket Entry 49) be DENIED.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
January 17, 2012
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