Noble Colt, LLC v. Kearse et al

Filing 37

ORDER & JUDGMENT granting gov't's MSJ 29 ; JUDGMENT ENTERED in favor of government United States of America & against deft Noble Colt - the federal tax liens id'd @ Doc 31 -3 shall cotinue to encumber the property located @ 27 Pine St, York, PA; & Clrk of Ct directed to CLOSE case. (See order & jdgmt for complete details.) Signed by Chief Judge Christopher C. Conner on 6/26/17. (ki)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
NOBLE COLT, LLC,
Plaintiffs
v.
BILLIE J. KEARSE; J. MICHAEL
FELICIANO; WILMINGTON
FINANCE, INC. FOR MERS;
BENEFICIAL CONSUMER
DISCOUNT COMPANY DBA
BENEFICIAL MORTGAGE CO.
OF PA.; METRO BANK;
COMMONWEALTH OF
PENNSYLVANIA; and UNITED
STATES OF AMERICA,
Defendants

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CIVIL ACTION NO. 1:15-CV-1649
(Chief Judge Conner)

ORDER & JUDGMENT
AND NOW, this 26th day of June, 2017, upon consideration of the
motion (Doc. 29) for summary judgment filed by defendant United States of
America, and the parties’ respective briefs in support of and opposition to said
motion, (Docs. 30, 32, 34), wherein the parties dispute whether a Pennsylvania tax
sale at which plaintiff Noble Colt, LLC (“Noble Colt”) purchased title to property
located at 27 Pine Street in York, Pennsylvania—the subject of the instant quiet
title action—qualifies as a judicial or nonjudicial sale under the Internal Revenue
Code, specifically, 26 U.S.C. § 7425, and, depending on the type of sale, whether
the government received proper notice of the sale sufficient to discharge its tax
lien on the disputed property, and the court observing that, through summary
adjudication, we may dispose of those claims that do not present a “genuine

dispute as to any material fact,”1 FED. R. CIV. P. 56(a), and the court taking the
parties’ disputes seriatim: first, with regard to the type of sale herein, it appearing
that the definition of “judicial sale” under 26 U.S.C. § 7425(a) is not well settled, but
that a court order, decree, or judgment directing a sale is an indicator of a judicial
sale, A. H. & R. S. Coal Corp. v. United States, 461 F. Supp. 752, 755 (W.D. Pa. 1978)
(quoting City of New Castle v. Whaley’s Heirs, 157 A. 503, 504 (Pa. Super. Ct. 1931);
In re Sale of Certain Unmined Coal of Pittsburgh or River Vein Owned by Fayette
Cty. Inst. Dist., 76 A.2d 194, 196 (Pa. 1950)), and the court noting that in determining
whether a sale is a § 7425(a) judicial sale, a court must evaluate the particular sale’s
circumstances, United States v. Capobianco, 836 F.2d 808, 817 (3d Cir. 1988), and
1

Local Rule 56.1 requires that a motion for summary judgment pursuant to
Federal Rule of Civil Procedure 56 be supported “by a separate, short, and concise
statement of the material facts, in numbered paragraphs, as to which the moving
party contends there is no genuine issue to be tried.” LOCAL RULE OF COURT 56.1. A
party opposing a motion for summary judgment must file a separate statement of
material facts, responding to the numbered paragraphs set forth in the moving
party’s statement and identifying genuine issues to be tried. Id. Noble Colt
challenges multiple facts in its responsive Rule 56.1 statement. (See Doc. 33). To
the extent Noble Colt clarifies statements made by the government based on
uncontroverted record evidence, the court finds that there are no issues of material
dispute. (See id. ¶¶ 1-5, 10). Noble Colt also denies several pertinent paragraphs
concerning service on federal government entities, claiming that it “has no
knowledge, information or belief” as to service on said entities. (Id. ¶¶ 6-9). The
government supports these disputed paragraphs with official court documents and
affidavits from government officials. (See Doc. 31 ¶¶ 6-9, Doc. 31-4, Doc. 31-5, Doc.
31-6). Both government affiants state that they have personal knowledge of
whether the concerned federal entities received notice of the Pennsylvania tax sale
disputed herein. (Doc. 31-5 ¶¶ 1-2; see Doc. 31-6). Noble Colt does not contend that
these affiants lack the “personal knowledge” required by the Federal Rules of Civil
Procedure, see FED. R. CIV. P. 56(c)(4), and offers no contrary evidence to support its
denials of the government’s statements as required by the Local Rules. See LOCAL
RULE OF COURT 56.1. The court concludes that the challenged paragraphs of the
government’s Rule 56.1 statement are fully and properly supported by
uncontroverted record evidence and affidavits. See FED. R. CIV. P. 56(c)(4); LOCAL
RULE OF COURT 56.1.
2

also noting that other courts in the Third Circuit have evaluated tax sales in the
context presenting sub judice and have concluded that a Pennsylvania tax sale
pursuant to 72 PA. STAT. & CONS. STAT. ANN. §§ 5860.611-612—based on a judge’s
order—qualifies as a judicial sale under § 7425(a), see First N. Bank & Tr. Co. v.
United States (I.R.S.), No. 3:13-CV-01446, 2014 WL 2810118, at *5-9 (M.D. Pa. June
20, 2014); Acquisto v. United States, No. 1:08-CV-2184, 2010 WL 2852900, at *4 (M.D.
Pa. June 30, 2010), report and recommendation adopted by 2010 WL 2852910 (M.D.
Pa. July 20, 2010); United States v. Aultman, No. 04-1153, 2006 WL 544401, at *2
(W.D. Pa. Mar. 6, 2006), and the court agreeing with the ratio decidendi of these
opinions and concluding that the two judicial orders (Doc. 33-1 at 5-6) authorizing
the sale of the contested property pursuant to 72 PA. STAT. & CONS. STAT. ANN.
§ 5860.612(a) qualify the disputed sale as a § 7425(a) judicial sale; and second, with
respect to proper service on the government, the court observing that Congress
enacted 26 U.S.C. § 7425 to “prevent the discharge of federal tax liens by operation
of local law in circumstances where the government was not given notice or an
opportunity to protect its interests,” Capobianco, 836 F.2d at 817, and it appearing
that the United States must receive statutorily-prescribed notice of a judicial sale
affecting property with a federal tax lien for the discharge of said lien to occur, 26
U.S.C. § 7425(a); 28 U.S.C. § 2410(b), and that a state tax bureau must serve the
United States Attorney for the district in which said bureau will conduct the judicial
sale and the Attorney General of the United States to satisfy the notice requirement,
see 28 U.S.C. § 2410(b), and it further appearing that the York County Tax Claim
Bureau failed to serve notice upon both federal entities, (see Doc. 31-5 ¶ 7; Doc.
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31-6), and the court thus finding that the government did not receive proper notice
of the disputed tax sale, see 28 U.S.C. § 2410(b); Acquisto, 2010 WL 2852900, at *3;
Aultman, 2006 WL 544401, at *3 & n.2; see also First N. Bank & Tr. Co., 2014 WL
2810118, at *4-5, and therefore concluding that the Pennsylvania judicial sale sub
judice did not divest the government of its tax lien on the contested property ipso
jure, see 26 U.S.C. §7425(a), it is hereby ORDERED that:
1.

The government’s motion (Doc. 29) for summary judgment is
GRANTED.

2.

Judgment is ENTERED in favor of the government and against Noble
Colt. The federal tax liens identified at (Doc. 31-3) shall continue to
encumber the property located at 27 Pine Street York, Pennsylvania.

3.

The Clerk of Court is directed to close this case.

/S/ CHRISTOPHER C. CONNER
Christopher C. Conner, Chief Judge
United States District Court
Middle District of Pennsylvania