888 F.2d 1111 (6th Cir. 1989), 88-1008, William G. Wilcox, D.O., P.C. Employees' Defined Ben. Pension Trust v. United States

Docket Nº:Defendants-Appellants (88-1008),
Citation:888 F.2d 1111
Party Name:WILLIAM G. WILCOX, D.O., P.C. EMPLOYEES' DEFINED BENEFIT PENSION TRUST; and William G. Wilcox, D.O., P.C., Plaintiffs and Counterclaim
Case Date:November 03, 1989
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

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888 F.2d 1111 (6th Cir. 1989)


PENSION TRUST; and William G. Wilcox, D.O., P.C.,

Plaintiffs and Counterclaim

Defendants-Appellants (88-1008),


UNITED STATES of America, Defendant and Counterclaim




Lowell R. Stuckman, Intervenor-Appellant (88-2194).

Nos. 88-1008, 88-2194.

United States Court of Appeals, Sixth Circuit

November 3, 1989

Argued Aug. 4, 1989

Alan C. Applebaum (argued), Reifman & Applebaum, Kevin T. Keena and Erwin A. Rubenstein, Rubenstein, Issacs, Lax & Bordman, Southfield, Mich., William G. Wilcox, D.O. P.C. Employee's Defined Benefit Pension Trust and William G. Wilcox, D.O. P.C., plaintiff-appellant, and Rubenstein, Isaacs, Lax & Bordman, Corp., third-party appellee.

Gary R. Allen, Acting Chief, U.S. Dept. of Justice, Tax Div., Anne B. Durney, U.S. Department of Justice, Tax Div. Appellate Section, Murray S. Horwitz (argued), Dept. of Justice, Tax Div., Washington, D.C., Charles Stroad, Dist. Counsel, I.R.S., Detroit, Mich., Fred Goldberg, Chief Counsel, I.R.S., Todd Luwoma, U.S. Dept. of Justice, Tax Div., Washington, D.C., Frank Poma, Manager, I.R.S. Pontiac, Mich., for the U.S.

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Peter J. Kelley (argued) Kathryn L. Duhamel, Ann Arbor, Mich., for Lowell R. Stuckman, intervenor-appellant.

Before KRUPANSKY and RYAN, Circuit Judges, and LIVELY, Senior Circuit Judge.


This is a consolidated appeal of William G. Wilcox (Wilcox), 1 in appeal number 88-1008, who has appealed from the district court's grant of summary judgment in favor of defendant-appellee, Internal Revenue Service (IRS), permitting the IRS to seize the assets of Wilcox, his medical corporation, and pension trust to satisfy his delinquent tax liabilities which had accrued during the years of 1981 and 1982, and Lowell Stuckman (Stuckman), in appeal number 88-2194, who has appealed the district court's denial of his motion to intervene in appeal number 88-1008 as a party in interest arising from his ownership of a 1935 Auburn automobile which Stuckman had in his possession at the time of the IRS' seizure of Wilcox's property.

Wilcox is a physician licensed to practice osteopathic medicine in the State of Michigan. In 1977, Wilcox incorporated his medical practice, under the laws of Michigan, as William G. Wilcox, D.O., P.C. (the corporation). Wilcox was the sole shareholder, officer, director and employee of the corporation. The corporation employed independent contractors to perform all services not performed by Wilcox.

On June 30, 1981, the corporation created a pension trust, Employee's Defined Benefit Pension Trust (pension trust) which qualified as a tax-exempt retirement plan under the Internal Revenue Code. Wilcox was the sole trustee and beneficiary of the pension trust.

A 1986 Lincoln Continental was titled to the corporation and the following vehicles were titled to the pension trust:

1) 1977 Ferrari

2) 1937 Packard

3) 1910 Maxwell

4) 1981 Chevrolet pick-up truck

Wilcox testified that he has used the 1986 Lincoln Continental, from time to time, for personal purposes and transportation.

In March of 1984, Wilcox belatedly filed his individual federal income tax returns for the 1981 and 1982 tax years. On May 14, 1984, the IRS assessed taxes, penalties, and interest of $244,960.62 against Wilcox for his failure to pay 1981 federal income taxes. Wilcox paid $153,235.79 of this amount, leaving an unpaid balance of $91,724.83. On June 25, 1984, the IRS assessed $177,530.84 against Wilcox as 1982 income taxes, interest and penalties. Wilcox paid $116,958.41, leaving an unpaid balance of $60,572.97.

On February 24, 1986, after failing to receive further payments from Wilcox on the outstanding balances of his tax liabilities, the IRS filed notices of federal tax liens with the Register of Deeds for Oakland County, Michigan, pursuant to 26 U.S.C. Sec. 6321, against the assets of the pension trust and the corporation as alter egos of Wilcox. On February 26, 1986, the IRS seized the 1981 Chevrolet pick-up truck, which was titled to the pension trust, in an attempt to collect Wilcox's delinquent tax liabilities. On March 10, 1986, the IRS notified Wilcox of its intent to sell the pick-up truck at an auction on March 25, 1986.

On March 21, 1986, Wilcox, the corporation and the pension trust filed suit, pursuant to 26 U.S.C. Sec. 7426, in the United States District Court for the Eastern District of Michigan, seeking, inter alia, a temporary restraining order and a preliminary injunction against the IRS to prevent the sale of the 1981 Chevrolet pick-up truck seized by the IRS. Wilcox, the corporation and the pension trust also sought compensatory damages for alleged injuries sustained as a result of the IRS' actions.

On June 5, 1986, the IRS filed an answer and counterclaim against Wilcox, the corporation,

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the pension trust, and the law firm of Rubenstein, Isaacs, Bordman and Lax Corp., which had claimed an interest in the 1981 Chevrolet pick-up truck. 2 The IRS counterclaim sought to foreclose the federal tax liens against the assets of Wilcox, the corporation and the pension trust, alleging that they were his alter egos.

The matter was referred to a magistrate who conducted an evidentiary hearing in October, 1986. On August 14, 1987, the magistrate issued a report and recommendation concluding that Wilcox's request for a preliminary injunction should be denied because he had failed to demonstrate that irreparable harm would result from the sale of the 1981 pick-up truck; the truck was neither unique nor was it necessary for the care and maintenance of the other pension trust assets as claimed by Wilcox. The magistrate further concluded that Wilcox was unlikely to succeed on the merits because it appeared that Wilcox was the alter ego of the corporate entities. "[T]he line between [Wilcox] and the corporate entit[ies] [was] sufficiently vague to permit the corporate veil to be pierced." On November 2, 1987, the district court adopted the magistrate's report and recommendation and...

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