USA v. Talmage et al
Filing
106
MEMORANDUM DECISION AND ORDER granting 88 Motion re Rule 56(d) re 64 MOTION for Summary Judgment; denying 84 Motion to Strike. Signed by Judge David Nuffer on 3/6/17 (alt)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.
MEMORANDUM DECISION AND
ORDER GRANTING [88] 56(d) MOTION
RONALD B. TALMAGE and ANNETTE C.
TALMAGE,
Defendants; and
Case No. 1:16-cv-00019
District Judge David Nuffer
WESTERN LAND & LIVESTOCK, LLC,
and WESTERN RESERVE MORTGAGE,
LLC,
Defendants and
Counterclaim Plaintiffs,
v.
UNITED STATES OF AMERICA
Counterclaim
Defendant.
The United States moves under Federal Rule of Civil Procedure 56(d) to defer decision
on the motion for summary judgment. 1 Defendants Western Land & Livestock, LLC and
1
United States’ Motion to Deny or Defer Decision on Motion for Summary Judgment Under Fed. R. Civ. P. 56(d)
(56(d) Motion), docket no. 88, filed February 2, 2017. Contrary to DUCivR 7-1(b)(1)(A), the government embedded
the Fed. R. Civ. P. 56(d) motion in its response to the Motion for Summary Judgment. See United States’ Response
to Motion for Summary Judgment—Errata at 26, docket no. 78-1, filed January 17, 2017. In CM/ECF, the Western
defendants styled their opposition to that embedded motion as a motion to strike. See Memorandum in Opposition to
the Government’s Rule 56(d) Motion (Opposition), docket no. 84, filed January 31, 2017. This will be treated as the
Opposition. The government responded to the “motion to strike” in United States’ Response to Motion to Strike
Regarding Rule 56(d) Argument, docket no. 87, filed February 2, 2017. This will be treated as the Reply.
Simultaneous to filing its Reply to the “motion to strike,” the government filed this 56(d) Motion.
Western Reserve Mortgage, LLC (Western defendants) responded in opposition. 2 The
government replied in support of its motion. 3
BACKGROUND
The United States seeks to reduce federal tax assessments to judgment and foreclose
federal tax liens on certain real property. 4 Before much or any discovery had been done, the
Western defendants brought a Motion for Summary Judgment. 5 The thrust of that motion is that
the Western defendants are the rightful owners of the real property, that the Western defendants
are not subject to the tax assessments, and that accordingly the United States “cannot extinguish
the Western [defendants’] interest in the [real property] via the tax judgment.” 6 The United
States attempts to respond to the substance of the Western defendants arguments. And in the
alternative, “if the Court is not inclined to deny the motion on its merits,” filed this 56(d) Motion
asking that the “United States have until thirty (30) days after the close of discovery to
supplement the response.” 7
DISCUSSION
Federal Rule of Civil Procedure 56(d) states that
If a nonmovant shows by affidavit or declaration that, for specified reasons, it
cannot present facts essential to justify its opposition, the court may:
(1) defer considering the motion or deny it;
(2) allow time to obtain affidavits or declarations or to take discovery; or
(3) issue any other appropriate order.
2
Memorandum in Opposition to the Government’s Rule 56(d) Motion (Opposition), docket no. 84, filed January 31,
2017. This memorandum was docketed as a motion to strike though that designation does not appear in the title of
the document and the word “strike” does not appear in the text of the document.
3
United States’ Response to Motion to Strike Regarding Rule 56(d) Argument, docket no. 87, filed February 2,
2017.
4
Complaint, docket no. 2, filed February 18, 2016.
5
Motion for Summary Judgment to Dismiss the Government’s Foreclosure Claim, docket no. 64, filed December
19, 2016.
6
Motion for Summary Judgment at 2.
7
56(d) Motion at 2.
2
“Unless dilatory or lacking in merit, [a Rule 56(d)] motion should be liberally treated.” 8
“The general principle of Rule [56(d)] is that summary judgment should be refused where the
nonmoving party has not had the opportunity to discover information that is essential to his
opposition.” 9 Also, “[t]he movant’s exclusive control of such information is a factor weighing
heavily in favor of relief under Rule [56(d)].” 10
“A prerequisite to granting relief pursuant to Rule [56(d)] is an affidavit furnished by the
nonmovant.” 11 Though the affidavit need not
contain evidentiary facts, it must explain why facts precluding summary judgment
cannot be presented. This includes identifying the probable facts [for which proof
is] not available and what steps have been taken to obtain these facts. In this
circuit, the nonmovant also must explain how additional time will enable him to
rebut movant's allegations of no genuine issue of fact. 12
The United States attached a declaration to its motion. 13 In that declaration, the attorney
declares under penalty of perjury the following (divided into required averments): 14
1.
“probable facts not available”: 15
o That Ronald Talmage, not John Wadsworth and/or the Western Entities, actually
owns the Liberty Property;
8
Committee for First Amendment v. Campbell, 962 F.2d 1517, 1522 (10th Cir. 1992).
9
Prince ex rel. Price v. Western Resources, Inc., 232 F.3d 779, 783 (10th Cir. 2000) (internal quotation marks
omitted) (punctuation normalized).
10
Id.
11
Id.
12
Id.
13
Declaration of Jennifer Y. Golden in Support of United States’ Response to Motion for Summary Judgment
(Declaration), docket no. 88-1, filed February 2, 2017.
14
Defendants add a fourth category of facts “why those facts cannot be presented currently”
15
Prince ex rel. Price, 232 F.3d at 783 (internal quotation marks omitted) (punctuation normalized). This list is
drawn from the Reply summary of the Declaration’s probable facts. Reply at 3–4. Though each probable fact listed
is supported by an averment in the Declaration, the better form would be to affirmatively list the probable facts
instead of listing the facts stated in the motion for summary judgment and supporting declarations that will “be
evaluated.” Declaration ¶ 6. See also Declaration ¶ 12. Reciting these “probable facts” does not suggest they are
essential or necessary to either party’s claims.
3
o That Ronald Talmage owns Asia Pacific Partners, LLC, and therefore controls at
least one of the Western Entities directly;
o That Ronald Talmage, via Heng Cheong Pacific Limited (“HCPL”), actually paid for
the Liberty Property;
o That “Mrs. Chen” and HCPL are fronts for Ronald Talmage;
o That the alleged “lease” with “Mrs. Chen” is fictitious, and merely served as a way
for Ronald Talmage to purchase and live in the Liberty Property while hiding it from
his creditors;
o That the alleged “loans” by HCPL to Fortus Property Group, LLC to pay for the
Liberty Property are similarly fictitious;
o That HCPL, as controlled by Ronald Talmage, reimbursed Fortus Property Group,
LLC for the entire purchase price of the Liberty Property;
o That the Western Entities’ structure is in reality an asset-hiding scheme for Ronald
Talmage; and
o That Mr. Wadsworth’s “business” is fictitious and in reality part of an assethiding
scheme gone south.
2. “why those facts cannot be presented currently”: 16
The government avers that these facts cannot be presented currently because discovery
has not yet been completed. 17
3. “steps . . . taken to obtain these facts”: 18
The government has issued numerous subpoenas 19 and taken a limited-scope deposition
of John Wadsworth, the principal of the Western defendants. 20
4. “how additional time will enable” the government to obtain probable facts “to rebut
movant’s allegations of no genuine issue of fact”: 21
Throughout the declaration, 22 the government avers that additional time will enable it to
conduct discovery, which is necessary to obtain the probable facts.
16
Prince ex rel. Price, 232 F.3d at 783 (internal quotation marks omitted) (punctuation normalized).
17
Declaration ¶¶ 2–13.
18
Prince ex rel. Price, 232 F.3d at 783 (internal quotation marks omitted) (punctuation normalized).
19
Declaration ¶ 7.
20
Id. ¶ 6.
21
Prince ex rel. Price, 232 F.3d at 783 (internal quotation marks omitted) (punctuation normalized).
22
See, e.g., Declaration ¶ 6.
4
The Western defendants argue that the Motion seeks to conduct a “fishing expedition.”23
They argue that the United States “does not identify any ‘probable facts not available,’ which are
necessary to respond to the Western Parties’ summary judgment motion.” 24 The Western
defendants argue that the United States has had time to do this discovery “[p]rior to referring this
case to the Department of Justice and initiating a foreclosure action.” 25 The Western defendants
argue that the United States does not satisfactorily “explain what steps have been taken to
investigate claims prior to initiating this action.” 26 And finally, the Western defendants argue
that the United States makes “no effort to explain” how additional time will enable the
government to obtain the probable facts. 27
Though it is true that the United States’ declaration suffered from poor drafting, it still
satisfies the 10th Circuit’s requirements. This case would benefit from discovery. Evidence must
be developed on the central question of who owns the Liberty Property. Given that Rule 56(d)
motions should be “liberally treated,” 28 especially when the “nonmoving party has not had the
opportunity to discover information that is essential to [its] opposition,” 29 the United States’
motion will be granted.
The extent of the discovery is one of the Western defendants’ principal concerns. That
can be resolved in the upcoming scheduling conference. 30 This order does not grant the United
23
Opposition at 3.
24
Id.
25
Id. at 5.
26
Id. at 6.
27
Id.
28
Committee for First Amendment, 962 F.2d at 1522.
29
Prince ex rel. Price, 232 F.3d at 783 (internal quotation marks omitted) (punctuation normalized).
30
See Amended Notice of Hearing on Motion, docket no. 94, entered February 10, 2017.
5
States indiscriminate license to conduct any discovery. The rules apply. And the magistrate judge
may tailor discovery in a preliminary phase to an amount appropriate for issues on this motion,
or the magistrate judge may determine that the economies of the case and the need to prevent
repeated depositions of witnesses require that all discovery be completed before the
supplemental briefing on the summary judgment motion is due.
ORDER
IT IS HEREBY ORDERED that the United States’ Motion to Deny or Defer Decision on
Motion for Summary Judgment Under Fed. R. Civ. P. 56(d) 31 is GRANTED. The motion to
strike (titled Memorandum in Opposition to The Government’s Rule 56(d) Motion) 32 is
DENIED.
Unless the magistrate judge orders otherwise, after the close of discovery, the Western
defendants shall have 14 days to supplement the Motion for Summary Judgment. The United
States shall then have 14 days to respond to the supplemented Motion for Summary Judgment.
And the Western defendants shall then have 7 days to reply to the United States’ response.
Signed March 6, 2017.
BY THE COURT
________________________________________
District Judge David Nuffer
31
Docket no. 88, filed February 2, 2017.
32
Docket no. 84, filed January 31, 2017.
6
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