Hardy v. US
| Decision Date | 21 February 1996 |
| Docket Number | CV-N-94-824-ECR. |
| Citation | 918 F. Supp. 312 |
| Parties | Cathy HARDY; The Hardy Family Trust; Cathy Hardy, Trustee, Plaintiffs, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — District of Nevada |
COPYRIGHT MATERIAL OMITTED
William P. Koontz, Cottage Grove, Oregon, for Plaintiffs.
Kathryn E. Landreth, United States Attorney, Reno, Nevada, W. Carl Hankla, Trial Attorney, Tax Division, U.S. Department of Justice, Washington, DC, for Defendant.
Before the court is the government's motion for summary judgment (Doc. # 18). Plaintiffs have brought this wrongful levy action under 26 U.S.C. § 7426. The central dispute concerns a married couple's respective ownership interests in certain real property: The government has levied against real property to which plaintiff Cathy Hardy has title, on the ground that as community property of her and her husband Ray Hardy, the realty is subject to levy in satisfaction of Ray Hardy's federal income tax delinquencies. Cathy Hardy has sued the government under the federal wrongful levy statute, arguing that the subject property is her separate property, and therefore not subject to levy for her husband's tax debts. See Schmit v. United States, 896 F.2d 352 (9th Cir.1989).
If the property in question, consisting of some eighty acres of land near Golconda, Nevada, together with various improvements, is truly community property, then Ray and Cathy Hardy, as husband and wife, are both owners of it, and the property is subject to levy in satisfaction of the federal income tax liability of either spouse. Babb v. Schmidt, 496 F.2d 957 (9th Cir.1974).
The government seeks summary judgment on the ground that there exists no issue of fact to be tried regarding the ownership interests of Ray and Cathy Hardy; the government seeks the benefit of the state law presumption that property acquired during marriage is community property, and argues that Plaintiff has failed to provide the requisite "clear and convincing evidence" sufficient to rebut that presumption. See Cord v. Cord, 98 Nev. 210, 644 P.2d 1026 (1982).
The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court. Zweig v. Hearst Corp., 521 F.2d 1129 (9th Cir.), cert. denied, 423 U.S. 1025, 96 S.Ct. 469, 46 L.Ed.2d 399 (1975). The moving party is entitled to summary judgment as a matter of law where, viewing the evidence and the inferences arising therefrom in favor of the nonmovant, there are no genuine issues of material fact in dispute. Fed. R.Civ.P. 56(c); Semegen v. Weidner, 780 F.2d 727 (9th Cir.1985). Where reasonable minds could differ on the material facts at issue, summary judgment is not appropriate. See v. Durang, 711 F.2d 141 (9th Cir.1983).
The moving party bears the burden of informing the court of the basis for its motion, together with evidence demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Once the moving party has met its burden, the party opposing the motion may not rest upon the mere allegations or denials of his pleadings but must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).
In evaluating the appropriateness of summary judgment, three steps are necessary: (1) determining whether a fact is material; (2) determining whether there is a genuine issue for the trier of fact, as determined by the documents submitted to the court; and (3) considering that evidence in light of the appropriate standard of proof. Anderson, supra. As to materiality, only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes which are irrelevant or unnecessary will not be considered. Id. at 248, 106 S.Ct. at 2510. Where there is a complete failure of proof concerning an essential element of the nonmoving party's case, all other facts are rendered immaterial, and the moving party is entitled to judgment as a matter of law. Celotex, supra.
Summary judgment is not a disfavored procedural shortcut, but an integral part of the federal rules as a whole. Id. When faced with a motion for summary judgment, the material before the court "must be viewed in the light most favorable to the non-moving party." Adickes v. S.H. Kress and Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970).
The briefs filed by both parties in this summary judgment motion appear to assume that this dispute over the community or separate character of the subject realty should be resolved via resort to state law marital property rules. This court, however, is not convinced that state law marital property rules should automatically apply in this case. See generally Gary C. Randall & Katti Telstad, Community Property Rules or American Indian Tribal Law — Which Prevails?, 31 Idaho L.Rev. 1071 (1995).
Plaintiff Cathy Hardy is a certified member of the Te Moak band of the Western Shoshone tribe. She married Ray Hardy in 1981. The property in question, on which Ray and Cathy Hardy have lived since 1985, although not within the boundaries of an Indian reservation, is situated on what Ms. Hardy claims to be ancestral Shoshone land. The question thus arises whether, within the context of a federal income tax dispute, the legal character of real estate owned by Indians should be determined by reference to state marital property law.
The legal status of Indian property is subject to plenary Congressional authority. Winton v. Amos, 255 U.S. 373, 391, 41 S.Ct. 342, 349, 65 L.Ed. 684 (1921). Congress exercised that authority when in 1953 it enacted Public Law 280.1 That statute authorizes the several States to adjudicate civil disputes to which an Indian is a party. Nevada is a "Public Law 280 state," having in 1955 enacted a state statute assuming state judicial jurisdiction over civil actions to which an Indian is a party and which arise in Indian Country.2 Nev.Rev.Stat. § 41.430. Therefore, Nevada is free to impose its marital property rules on Indian married couples, whether residing on or off the reservation.
But this court must decide whether a Nevada court would in fact make that choice. Only once has the Nevada Supreme Court been asked to invoke § 41.430 to establish a state-law rule of decision for a civil dispute involving Indians. In Voorhees v. Spencer, 89 Nev. 1, 504 P.2d 1321 (1973) the Nevada Supreme Court affirmed a state trial court's civil jurisdiction over the probate of an Indian decedent's estate. The court held that Nevada had legitimate interest in requiring probate of property located within its borders, and ruled that because the action of the probate court did not infringe on the Indians' right to enact and to be governed by their own laws, that state probate law applied to the decedent Indian's estate.
For those reasons the Voorhees court found that the state trial court properly exercised jurisdiction over the decedent Indian's estate. Under Voorhees, then, a state court would be entitled to adjudicate a dispute whose outcome depended on whether the property at issue belonged to a single spouse, or to the marital community, and that state court would further be entitled to apply state marital property rules to the Indian litigants. The Voorhees court ruled explicitly that absent some federal prohibition, "if the event or matter in controversy which calls for judicial action arises outside Indian country, Indians are subject to the laws of the jurisdiction involved." 504 P.2d at 1324-25 (citing In re Wolf, 27 F. 606 (D.Ark.1886); Ex parte Moore, 28 S.D. 339, 133 N.W. 817 (1911)).
If the property rights of the Indian couple in Voorhees, who lived on an Indian reservation, were subject to adjudication under state law, then a fortiori Voorhees should apply to the present case, where the Indians involved live entirely outside the boundaries of the reservation.
This court must assume that the Nevada Supreme Court would rule that determinations of the separate or community character of Indian marital property should be resolved by reference to state law. The court will therefore, in the context of this wrongful levy action, apply Nevada marital property rules to the present dispute over the character of the property upon which the government has levied.
In Nevada all property acquired by either spouse during coverture is presumed to be community property.3 This presumption may be rebutted by clear and convincing evidence. Forrest v. Forrest, 99 Nev. 602, 668 P.2d 275, 277 (1983); Kelly v. Kelly, 86 Nev. 301, 468 P.2d 359 (1970). The personal opinion of either spouse as to the character of the property is of no moment whatsoever. Peters v. Peters, 92 Nev. 687, 557 P.2d 713, 716 (1976).
Plaintiff has maintained that in fact neither she nor her husband owned the property levied upon. She claims that the property is held in a revocable inter vivos trust, with herself as settlor, sole trustee and sole beneficiary. But there is no evidence that Cathy Hardy created a valid trust with respect to the subject realty; the only evidence of a trust is a single page styled "Declaration of Trust," appended as Ex. H to Defendant's Motion for Summary Judgment, Doc. # 18.
In Nevada, a trust created in relation to realty is not valid unless either created by operation of law or evidenced by a written instrument signed by the trustee or by a written instrument conveying title to the property and signed by the settlor. Nev. Rev.Stat. § 163.008. The "Declaration of Trust" bears no signature at all. Nor does plaintiff's counsel's affidavit provide any basis to believe that Cathy Hardy ever executed an instrument which would have satisfied § 163.008. Though counsel swears to the existence of a second page, the...
To continue reading
Request your trial