All State Asset Management, LLC v. Internal Revenue Service et al

Filing 41

MEMORANDUM: Setting forth the reasons for the Order to follow as a separate docket entry.Signed by Honorable Matthew W. Brann on 8/6/2013. (km)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
ALL STATE ASSET
MANAGEMENT, LLC

:
:
:
:
Plaintiff
:
:
v.
:
:
INTERNAL REVENUE SERVICE, :
DEPARTMENT OF THE
:
TREASURY,
:
MARY ELLEN DRURY,
:
POCONO ADVANTAGE REAL
:
ESTATE, LLC,
:
ROBERT RAZZAN AND
:
VIRGINIA RAZZAN
:
:
:
Defendants.
:

Case No. 4:11-CV-1009

(Judge Brann)

MEMORANDUM
August 6, 2013
This action to quiet title was commenced in the Court of Common Pleas of
Monroe County, Pennsylvania on April 8, 2011. Notice of Removal ¶ 1, ECF No.
1. It was removed to this Court on May 25, 2011 pursuant to the jurisdiction
conferred by 28 U.S.C. § 1346. Id. Before the Court is Plaintiff’s Motion to Strike

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Default Judgment (ECF No. 29), and Defendant United States of America’s1
(“United States”) Motion to Vacate Order of Sale of Real Property (ECF No. 36)
and Motion to Dismiss and to Remand (ECF No. 39). Plaintiff has not filed an
opposition to either of Defendant’s motions.
I.

BACKGROUND
On September 15, 2010, Plaintiff purchased the real property at issue –

located in the subdivision of Lenape Hills at Lot 28, Commanche Pines Road,
Chestnuthill Township, Monroe County, Pennsylvania (“the Property”) – at a tax
upset sale in Monroe County. Notice of Removal, Ex. A, ECF No. 1-2. Defendant
Mary Ellen Drury (“Drury”) was the previous owner of the Property and at the
time it was sold, the Property was subject to three liens. See Notice of Removal,
Ex. A, ECF No. 1-2.
Defendant United States held one such lien for assessed, unpaid federal
taxes. Id. Defendants Pocono Advantage Real Estate, LLC (“Pocono”), and
Robert and Virginia Razzan (“Razzans”) each also held liens in their favor against
the Property. See Id.

The docket reflects the name of this Defendant as Internal Revenue Service,
Department of the Treasury. But the Answer and Amended Answer make clear
that the proper Defendant is the United States of America. See ECF Nos. 2-3.
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Plaintiff initiated the instant litigation to quiet title against Drury seeking a
court order barring and enjoining Defendant Drury from ever attacking the validity
of Plaintiff’s title. Id. As against the three Defendant lien holders, Plaintiff seeks
the outstanding balance on the liens and, if no response is provided, a discharge of
the liens against the Property. Id.
Defendant United States responded by bringing counter-claims against all
Defendants and Plaintiff for the unpaid federal tax liens, seeking that the Property
be foreclosed upon, sold, and the proceeds applied to the outstanding tax liabilities.
Amd. Answer, ECF No. 3.
Following the Clerk’s Entry of Default against Plaintiff and Defendant
Drury, the Court entered judgment in favor of the United States and ordered that
the Property be sold and the proceeds used, in part, to satisfy Defendant Drury’s
tax liabilities. See Jan. 25, 2012 Order, ECF No. 23. Subsequently, on June 6,
2012, Plaintiff moved to strike the default judgment entered against it on the basis
that service by the United States was improper. ECF No. 29. This case was then
stayed for several months on account of Plaintiff’s Chapter 11 bankruptcy
proceedings. ECF No. 32.
On October 2, 2012, this case was reopened and the United States
immediately filed a motion to vacate the Court’s Order to sell the Property,
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explaining that Plaintiff and Defendant had reached an agreement to settle the tax
liabilities and the federal tax lien had been released from the Property. ECF No.
36. On the same day, the United States also filed a motion to dismiss all the claims
against it and to remand this case to state court. ECF No. 39. No opposition was
filed to either motion.
II.

DISCUSSION
Defendant and counter-claim Plaintiff United States offers identical

arguments and evidence in support of both its motions. Specifically, that Plaintiff
and the United States were engaged in settlement negotiations between May and
July 2012 and that on July 31, 2012, the United States received a check from
Plaintiff for the full settlement amount demanded by the United States. Def. Mot.
Dismiss, Decl. Christopher Belen, ECF No. 40-1. Accordingly, the United States
released the federal tax lien encumbering the Property on August 23, 2012, and all
proceedings to sell the Property were halted. Def. Mot. Dismiss, Ex. 119, ECF No.
40-2.
Because the previously pending federal tax lien has been discharged, the
United States asks to be dismissed from this action. The original claims against it
are moot – as Plaintiff has received the benefit of the relief requested – and,
Defendant’s counter-claims have also been settled. Plaintiff has had ample time
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and opportunity to object to both of these motions, had it wished to do so, and its
silence must be taken as acquiescence. Local Rule 7.6.
Consequently, Defendant United States of America will be dismissed from
this action and the Order authorizing the sale of the Property will be vacated. The
basis for this Court’s exercise of jurisdiction no longer exists, and so this matter
shall be remanded back to the Court of Common Pleas of Monroe County,
Pennsylvania. The Plaintiff’s corresponding motion to strike the default judgment
entered against it has been rendered moot.
III.

CONCLUSION
For the reasons set forth herein, the United States’ Motion to Vacate Order

of Sale of Real Property (ECF No. 36) and Motion to Dismiss and to Remand to
State Court (ECF No. 39) will be granted. Defendant United States will be
dismissed from this action with prejudice and the matter shall be remanded to the
Court of Common Pleas of Monroe County, Pennsylvania. Plaintiff’s Motion to
Strike Default Judgment will be granted as moot. An appropriate Order follows.

BY THE COURT:

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s/Matthew W. Brann
Matthew W. Brann
United States District Judge

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