UNITED STATES OF AMERICA v. PLUMMER et al
Filing
28
MEMORANDUM OPINION AND ORDER signed by MAG/JUDGE L. PATRICK AULD on 08/17/2015; that Defendant Plummer is indebted to Plaintiff for assessed and unpaid Federal income tax liabilities for the taxable years 1999 to 2011, inclusive, in the total amo unt of $1,888,831.98, as of May 16, 2014, plus further interest and statutory additions thereon as provided by law. Interest shall accrue daily at the rate provided by 26 U.S.C. §§ 6601, 6621, and 6622, until paid in full. FURTHER ORDERED that, pursuant to 26 U.S.C. § 6321, Plaintiff has valid Federal tax liens on all of Defendant Plummer's real and personal property, including the Ragsdale Property. FURTHER ORDERED that Plaintiff may foreclose on the Ragsdale Property and sell it to offset Defendant Plummer's tax liabilities, with such subject to Defendant MFB's deed of trust. (Garland, Leah)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
UNITED STATES OF AMERICA,
)
)
)
)
)
)
)
)
)
Plaintiff,
v.
CHARLES W. PLUMMER, et al.,
Defendants.
1:14CV420
MEMORANDUM OPINION AND ORDER1
This case comes before the Court on Plaintiff’s Motion for
Summary Judgment. (Docket Entry 24.) Plaintiff briefed the motion
(see id.) and only Defendant Mechanics and Farmers Bank responded
(see
Docket
Entries
25,
26).
For
the
reasons
that
follow,
Plaintiff’s instant Motion is granted on Plaintiff’s claim for
unpaid federal income tax liabilities and to enforce the tax liens
associated with Defendant Plummer’s tax liabilities through the
sale of Defendant Plummer’s real property.
BACKGROUND
This case stems from Plaintiff’s unpaid federal income taxes
from 1999 to 2011.
(Docket Entry 1, ¶¶ 6-8.)
In May of 1986,
Defendant Plummer purchased 101 Ragsdale Court, Jamestown, North
Carolina (the “Ragsdale Property”).
(Docket Entry 24-4.)
In June
of 1986, Defendant Mechanics and Farmers Bank (“Defendant MFB”)
1
The parties consented to the disposition of this case by a
United States Magistrate Judge under 28 U.S.C. § 636(c).
(See
Docket Entry 20.)
executed a deed of trust on the Ragsdale Property as security for
a debt.
(Docket Entry 16-1, ¶ 3; Docket Entry 16-2, ¶ 3; Docket
Entry 18, ¶ 13.)2
From 1999 to 2011, Defendant Plummer failed to
pay all or portions of his assessed income taxes and accrued a debt
totaling $1,888,831.98 through a combination of back taxes, late
fees, penalties, and interest owed to the Internal Revenue Services
(“IRS”).
(Docket Entry 1, ¶ 8; Docket Entry 24-1; see also Docket
Entry 24-2 (certified copies of Defendant Plummer’s Certificates of
Assessments, Payments, and Other Specified Matters).)
As a result
of Defendant Plummer’s non-payment, Plaintiff, through the IRS,
filed notices of federal-tax liens on the Ragsdale Property.
Docket Entry 24-5.)
(See
Defendant State of North Carolina Department
of Revenue also filed a lien on the Ragsdale Property in October of
2009 for unpaid state income taxes.
(Docket Entry 8, ¶ 3; see also
id. at 5, 6 (copies of the Certificate of Tax Liability for
Defendant Plummer).)
Plaintiff filed its Complaint in May of 2014, seeking a
judgment against Defendant Plummer for his tax liabilities and an
order for the sale of the Ragsdale Property.
2
(Docket Entry 1 at 8-
Some confusion appears in the record regarding when
Defendant MFB first recorded its interest in the Ragsdale Property.
(Compare Docket Entry 16-1, ¶ 3 (listing June 1986 as the time
Defendant MFB recorded its deed of trust), Docket Entry 16-2, ¶ 3
(same), and Docket Entry 25-2, ¶ 2 (same), with Docket Entry 26 at
3 (listing 2004 as the time Defendant MFB recorded its deed of
trust).) Regardless of whether Defendant MFB filed the deed of
trust in 1986 or 2004, Defendant MFB filed its interest before any
other party.
2
9.)
After the course of discovery, Plaintiff sought leave to file
a motion for summary judgment (Docket Entry 23), which the Court
granted (Text Order dated May 11, 2015).
instant Motion.
(Docket Entry 24.)
to the instant Motion.
present.)
Plaintiff then filed the
Only Defendant MFB responded
(See Docket Entries dated May 13, 2015, to
As part of that response, Defendant MFB submitted a
stipulation between Plaintiff and Defendant MFB confirming that any
forced sale of the Ragsdale Property would not terminate Defendant
MFB’s deed of trust.
(Docket Entry 25.)
otherwise oppose the Motion.
Defendant MFB did not
(See Docket Entry 26 at 3-4.)
ANALYSIS
The Court should grant a motion for summary judgment when
“there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
56(a).
Fed. R. Civ. P.
A genuine dispute exists “if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
This
standard requires more than a mere scintilla of evidence. American
Arms Int’l v. Herbert, 563 F.3d 78, 82 (4th Cir. 2009).
In
considering a motion for summary judgment, the Court must view the
facts
and
draw
all
reasonable
favorable to the nonmoving party.
inferences
in
the
light
most
Miller v. Leathers, 913 F.2d
1085, 1087 (4th Cir. 1990) (en banc).
The party seeking summary
judgment has the initial burden to show an absence of evidence to
3
support the nonmoving party’s case.
U.S. 317, 325 (1986).
Celotex Corp. v. Catrett, 477
The opposing party then must demonstrate
that a triable issue of fact exists; he may not rest upon mere
allegations or denials.
Anderson, 477 U.S. at 248.
The Court will first address whether Defendant Plummer owes
the assessed tax liabilities.
whether
it
should
order
If so, then the Court can determine
the
sale
of
the
Ragsdale
Property.
Finally, the Court will assess how such a sale would affect the
interest of Defendant MFB.
As
of
May
16,
2014,
Defendant
Plummer
owed
Plaintiff
$1,888,831.98 plus continuing interest and fees as required by 26
U.S.C. §§ 6601, 6621, and 6622.
The United States Constitution
authorizes Congress to set and collect taxes on income.
U.S.
Const. art. I, § 8 cl. 1; see also U.S. Const. amend. XVI (removing
the apportionment requirement for taxes).
this power at 26 U.S.C. § 1, et seq.
Congress has codified
For establishing a tax
liability, “[i]t is well established in the tax law that an
assessment is entitled to a legal presumption of correctness-a
presumption that can help the Government prove its case against a
taxpayer in court.” United States v. Fior D’Italia, Inc., 536 U.S.
238, 242 (2002).
Moreover, Plaintiff may rely on Certificates of
Assessments, Payments, and Other Specified Matters to establish a
prima facie case of tax liability.
F.2d 293, 296 (4th Cir. 1980).
4
United States v. Pomponio, 635
In this case, Plaintiff has provided certified copies of
Defendant Plummer’s Certificates of Assessments, Payments, and
Other Specified Matters containing the tax assessments.
(See
Docket Entry 24-2.) Such Certificates establish a prima facie case
for Defendant Plummer’s tax liability.
296.
See Pomponio, 635 F.2d at
In addition, Defendant Plummer admitted to owing the tax
liabilities at issue.
(Docket Entry 24-3 at 2.)
Thus, no genuine
dispute of material fact exists as to Defendant Plummer’s liability
or to the amount of his tax obligation.
As a result of Defendant Plummer’s tax liabilities, the Court
will order the sale of the Ragsdale Property.
See 26 U.S.C.
§§ 6321 (declaring that, if a party fails to pay any tax, or any
amount attributable thereto, then the United States shall have a
lien on all of said parties property - either real or personal);
7403 (authorizing the United States to enforce any tax lien through
sale of
an
encumbered
property).
In other
words,
Defendant
Plummer’s tax liabilities provide Plaintiff with a lien on his
property - including the Ragsdale Property - that Plaintiff may now
enforce through a sale.
for a contrary ruling.
present.)
Defendant Plummer has provided no basis
(See Docket Entries dated May 13, 2015, to
Accordingly, the Court will order the sale of the
Ragsdale Property.
Finally, because different parties claim an interest in the
Ragsdale
Property,
the
Court
must
5
determine
their
relative
priority.
“[P]riority for purposes of federal law is governed by
the common-law principle that ‘the first in time is the first in
right.’”
United States v. McDermott, 507 U.S. 447, 449 (1993)
(quoting United States v. New Britain, 347 U.S. 81, 85 (1954)).
Under federal law, any judicially ordered sale of encumbered
property “shall have the same effect respecting the discharge of
the property from the mortgage or other lien held by the United
States as may be provided with respect to such matters by the local
law
of
the
§ 2410(c).
place
where
the
court
is
situated.”
28
U.S.C.
In that regard, under North Carolina law, the forced
sale by a junior lienholder does not destroy a senior lien; rather,
the
buyer
takes
the
property
subject
to
any
superior
lien.
Staunton Military Academ. v. Dockery, 244 N.C. 427, 430, 94 S.E.2d
354, 356-57 (1956).
Here,
interests.
the
The
interest first.
parties
record
do
not
reveals
dispute
that
the
priority
Defendant
MFB
of
the
filed
its
(See Docket Entry 16-1, ¶ 3; Docket Entry 16-2,
¶ 3; Docket Entry 25-2, ¶ 2.)
Plaintiff’s tax liens for the years
1995 to 2008 take second priority. Plaintiff filed liens from 1995
thru 2005 on November 10, 2005 (see Docket Entry 24-5 at 1), for
2006 thru 2007 on January 26, 2009 (see id. at 2); Plaintiff then
refiled its liens from 1995 thru 2007 on February 2, 2009 (see id.
at 3), and then Plaintiff filed its tax lien for 2008 on July 17,
2009 (see id. at 4).
Defendant State of North Carolina Department
6
of Revenue filed its lien on October 14, 2009 - making it third for
priority.
(See Docket Entry 8 at 5-6.)
Finally, Plaintiff filed
its liens for 2009 on September 2, 2011 (see Docket Entry 24-5 at
6) and for 2011 on December 17, 2012 (see id. at 7).
Because
Defendant MFB’s deed of trust has seniority over Plaintiff’s
federal tax liens, any purchaser shall take the Ragsdale Property
subject to Defendant MFB’s deed of trust.
Additionally, the
judicially ordered sale will terminate Defendant State of North
Carolina Department of Revenue’s junior lien.
See Ellis v. United
States, No. 1:04CV00453, 2005 WL 1719102, at *3 (M.D.N.C. July 22,
2005) (unpublished) (Beaty, J.) (quoting Merchants Bank & Trust Co.
v. Watson, 187 N.C. 107, 112, 121 S.E. 181, 183 (1924)).
CONCLUSION
Plaintiff has established Defendant Plummer’s liability for
his unpaid taxes, which gives rise to a lien on Defendant Plummer’s
property, including the Ragsdale Property.
Plaintiff may enforce
its tax lien by selling the Ragsdale Property in order to offset
Plaintiff’s tax liability.
Finally, any such sale will be subject
to Defendant MFB’s preexisting deed of trust.
IT IS THEREFORE ORDERED that Defendant Plummer is indebted to
Plaintiff for assessed and unpaid Federal income tax liabilities
for the taxable years 1999 to 2011, inclusive, in the total amount
of $1,888,831.98, as of May 16, 2014, plus further interest and
statutory additions thereon as provided by law.
7
Interest shall
accrue daily at the rate provided by 26 U.S.C. §§ 6601, 6621, and
6622, until paid in full.
IT IS FURTHER ORDERED that, pursuant to 26 U.S.C. § 6321,
Plaintiff has valid Federal tax liens on all of Defendant Plummer’s
real and personal property, including the Ragsdale Property.
IT IS FURTHER ORDERED that Plaintiff may foreclose on the
Ragsdale Property and sell it to offset Defendant Plummer’s tax
liabilities, with such subject to Defendant MFB’s deed of trust.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
August 17, 2015
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