Amoco Production Co. v. Aspen Group, Civil Action No. 97-B-2630.

• Decision Date: 16 August 1999
• Docket Number: Civil Action No. 97-B-2630.
• Parties: AMOCO PRODUCTION COMPANY, Plaintiff, v. ASPEN GROUP, Floyd R. Hester, Carol B. Hester, and United States of America, Defendants.
• Court: U.S. District Court — District of Colorado

Page 1112

59 F.Supp.2d 1112

AMOCO PRODUCTION COMPANY, Plaintiff, v. ASPEN GROUP, Floyd R. Hester, Carol B. Hester, and United States of America, Defendants.

Civil Action No. 97-B-2630.

United States District Court, D. Colorado.

August 16, 1999.

John Robert Riley, Montgomery, Little and McGrew, P.C., Englewood, CO, for plaintiff.

Arthur P. Yoon, U.S. Department of Justice, Tax Division, Washington, DC, Mark S. Pestal, Assistant U.S. Attorney, Denver, CO, for defendant USA.

MEMORANDUM OPINION AND ORDER

BABCOCK, District Judge.

In this interpleader action involving the proper disposition of oil and gas royalty payments, Defendants Floyd R. Hester and Carol B. Hester (collectively the "Hesters") move to dismiss for failure to state a claim pursuant to Rule 12(b)(6). Defendant United States of America ("the government") moves for default judgment, pursuant to Rule 55(b)(2), against Defendant the Aspen Group and summary judgment, pursuant to Rule 56, against the Hesters. The government also moves for summary judgment as to the Hesters' cross-claim. Finally, the Hesters make a cross-motion for summary judgment against the government. The issues are adequately briefed and oral argument will not materially aid their resolution. For the reasons set forth below, I grant the government's motions for default judgment and summary judgment, and I deny the motion to dismiss and motion for summary judgment filed by the Hesters. Jurisdiction over this action is proper in this court pursuant to 28 U.S.C. § 1340 by virtue of 26 U.S.C. §§ 6331 and 6332.

I.

The following facts are relevant to my determination of the motions before me. On June 21, 1971, the Hesters purchased land near Durango, Colorado, including an oil and gas leasehold. The stakeholder, Amoco Production Company ("Amoco"), makes periodic royalty payments to the owner of the leasehold. In 1996, through a series of transactions, the Hesters transferred or assigned their oil and gas leasehold interest to the Aspen Group.

On August 21, 1997, the Internal Revenue Service ("IRS") served Amoco with a notice of levy in the amount of $152,581.62, for unpaid taxes allegedly owed for the 1979, 1981, 1983, and 1984 tax years. The notice of levy lists the delinquent taxpayers as "Floyd R Hester & Carol B Hester, 256 Westview Ter, Arlington, TX." The notice of levy also claims that the Aspen Group is the "nominee, transferee, alter ego, agent, and/or holder of a beneficial interest of the Hesters." (Complaint ¶ 13, quoting Notice of Levy served 8/21/97). On September 23, 1997, the Aspen Group sent Amoco a document entitled "Declaration Regarding Unacceptable IRS Levy" (the "declaration"). Though the declaration is signed by the Hesters as "Trustees" of the Aspen Group, the declaration states that the Aspen Group: (1) is not the alter ego of the Hesters; (2) is not the nominee, transferee, alter ego, agent, and/or holder of a beneficial interest of the Hesters; and (3) has "no knowledge of or nexus with" the Hesters. The IRS served Amoco with a second notice of levy on October 24, 1997. On December 16, 1997, the IRS served Amoco with a final demand for payment warning that Amoco's continued non-compliance would cause the IRS to seek collection of a monetary penalty from Amoco pursuant to the Internal Revenue Code, 26 U.S.C. § 6332.

On December 16, 1997, Amoco filed an Interpleader Complaint with this Court pursuant to Rule 22 to extricate itself from the conflicting claims of the IRS and the Aspen Group. Interpleader is a form of joinder open to one who does not know to which of several claimants it is liable. See General Atomic Co. v. Duke Power Co., 553 F.2d 53, 56 (10th Cir.1977). An interpleader action allows the stakeholder to bring the several claimants into a single action and to require them to litigate among themselves to determine which has the valid claim. See id. Here, there are four defendants and thus four potential claimants to the interpled property. On December 17, 1997, I entered an Order permitting Amoco to deposit the royalty payments and any future royalty payments at issue into the registry of the Court. The subject royalty payments have been and continue to be deposited into the Court's registry by Amoco.

The government filed an Answer and Claim in which it responded to the Complaint and made a claim to the interpled funds. The Aspen Group, through the Hesters, filed a similar Answer and Claim which was later stricken by this Court as violative of federal laws and local rules requiring corporations and all artificial entities to be represented by licensed attorneys. See Amoco Production Co. v. Aspen Group, 25 F.Supp.2d 1162, 1167 (D.Colo. 1998). Because the Aspen Group filed no new Answer or Claim, on December 15, 1998, the Clerk of Court entered a Notice of Default against them. The Hesters, in their individual capacities, have not claimed an interest in the royalty payments.

II.

I construe the Hesters' pleadings liberally and as a whole because they appear pro se. In Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir.1991), the Tenth Circuit established the legal standards by which a pro se pleading is measured:

A pro se litigant's pleadings are to be construed liberally and held to a less stringent standard than formal pleadings drafted by lawyers. We believe that this rule means that if the court can reasonably read the pleadings to state a valid claim on which the plaintiff could prevail, it should do so despite the plaintiffs failure to cite proper legal authority, his confusion of various legal theories, his poor syntax and sentence construction, or his unfamiliarity with pleading requirements. At the same time, we do not believe it is the proper function of the district court to assume the role of advocate for the pro se litigant.

Hall, 935 F.2d at 1110 (citations omitted).

III.

Initially I address the Hesters' 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted. Normally, for purposes of a defendant's 12(b)(6) motion, I do not considered any evidence outside of the pleadings. Sutton v. Utah State School for Deaf and Blind, 173 F.3d 1226, 1236 (10th Cir.1999). In evaluating a 12(b)(6) motion to dismiss,

all well-pleaded factual allegations in the amended complaint are accepted as true and viewed in the light most favorable to the nonmoving party.... "A 12(b)(6) motion should not be granted `unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" ... "The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted."

Id. (internal citations omitted). The Hesters ask me to evaluate the sufficiency of the Complaint in light of my November 3, 1998 Order. Because I conclude that the Hesters mistakenly rely on this Order, I deny their motion to dismiss.

In their motion, the Hesters point to the Complaint's reliance on the IRS' Notice of Levy, sent to Amoco, which lists the name of the delinquent taxpayer as, "The Aspen Group As The Alter Ego of: Floyd R & Carol B Hester." (Complaint, ¶ 13). This Notice also provided that, as to collection of taxes assessed against the Hesters, the levy would attach to all property held by or owing to "the Aspen Trust, as nominee, transferee, alter ego, agent, and/or holder of a beneficial interest of Floyd R Hester and Carol B Hester." (Complaint, ¶ 13). The Hesters next direct my attention to my November 3, 1998 Order in which I summarize the law that corporations, partnerships, and associations may appear in federal court only through licensed attorneys. See Amoco, 25 F.Supp.2d at 1166. I conclude that because 28 U.S.C. § 1654 and the local rules of this Court do not permit non-attorneys to represent anyone other than themselves, the Answer filed by the Hesters on behalf of the Aspen Group must be stricken. See id. at 1167. I also hold that the Hesters are not entitled to appear pro se in defense of their interests as beneficiaries of the Aspen Group because they are trustees who,

by their own admission, do not have "any beneficial interest in The Aspen Group." (Answer of the Hesters ¶ 35). They are not the actual beneficial owners of any right being asserted by The Aspen Group and, therefore, cannot be viewed as parties conducting their "own case personally" within the meaning § 1654.

Id. (emphasis added).

In their motion to dismiss, the Hesters argue that my statements in this Order directly refute the statements by the IRS, relied upon in the Complaint, contending that the Aspen Group is the alter-ego of the Hesters. The Hesters conclude that,

Since the original Complaint in Interpleader sought a determination concerning the validity of the Notice of Levy with respect to The Aspen Group, it is apparent by the Court's Memorandum Opinion and Order that the original conflict for which Amoco was seeking relief is resolved, and the royalty payments should be turned over to The Aspen Group.

(Motion to Dismiss, ¶ 4).

This conclusion is misplaced and mistaken. In my Order I specifically address the Hesters' authority to appear on behalf of the Aspen Group. The Hesters had previously filed a disclaimer of any beneficial interest in the Aspen Group. (Answer of the Hesters, ¶ 35) ("Neither Floyd R. Hester or Carol B. Hester hold or claim any interest in the royalty payments ... nor do they have any beneficial interest in The Aspen Group."). Therefore, I held that they could not appear pro se in defense of their interests as beneficiaries of the Aspen Group. In my Order, I did not address nor adjudicate the rights and claims of the remaining claimants to the interpled property. I simply acknowledged the Hesters' disclaimer of interest and the effect of this disclaimer on their pro se status. Thus, I deny the...