In re Mungan, Bankruptcy No. 01-31472.

• Decision Date: 18 November 2002
• Docket Number: Adversary No. 01-3169.,Bankruptcy No. 01-31472.,Bankruptcy No. 01-31712.
• Citation: 292 B.R. 613
• Parties: In re Ragip Sinan MUNGAN, a/k/a R.S. Mungan, a/k/a Sinan Mungan, a/k/a R. Sinan Mungan, Debtor. Mary Cathryn Jedlicka, a/k/a Mary C. Jedlicka, a/k/a Cathy Jedlicka, Debtor. Kenneth Hunley and wife, Peggy Hunley, Plaintiffs, v. Ragip Sinan MUNGAN, a/k/a R.S. Mungan, a/k/a Sinan Mungan, a/k/a R. Sinan Mungan, Mortgage Masters, Inc., Mortgage Masters Financial Services Corporation, G. Wayne Walls, Trustee, First Tennessee Bank National Association, Mary Cathryn Jedlicka, a/k/a Mary C. Jedlicka, a/k/a Cathy Jedlicka, William T. Hendon, Trustee, Robert Long and wife, Melissa Long, Fidelity National Insurance Company of New York, State of Tennessee, by and through both Department of Labor and Workforce Development and through the Department of Revenue, the United States of America, by and through the Internal Revenue Service, IMC Mortgage Company, Joe M. Kirsch, Trustee, Tennessee Water Service, Inc., New Century Mortgage Corporation, Firstar Bank Milwaukee N.A., as trustee under Salomon Brother Mortgage Securities VII Mortgage Pass-Through Certificates Series 1999-NCS, Michael Hunley and wife, Robin Hunley, Steven J. Lusk, Trustee Defendants.
• Court: U.S. Bankruptcy Court — Eastern District of Tennessee

Page 613

292 B.R. 613

In re Ragip Sinan MUNGAN, a/k/a R.S. Mungan, a/k/a Sinan Mungan, a/k/a R. Sinan Mungan, Debtor Mary Cathryn Jedlicka, a/k/a Mary C. Jedlicka, a/k/a Cathy Jedlicka, Debtor Kenneth Hunley and wife, Peggy Hunley, Plaintiffs, v. Ragip Sinan MUNGAN, a/k/a R.S. Mungan, a/k/a Sinan Mungan, a/k/a R. Sinan Mungan, Mortgage Masters, Inc., Mortgage Masters Financial Services Corporation, G. Wayne Walls, Trustee, First Tennessee Bank National Association, Mary Cathryn Jedlicka, a/k/a Mary C. Jedlicka, a/k/a Cathy Jedlicka, William T. Hendon, Trustee, Robert Long and wife, Melissa Long, Fidelity National Insurance Company of New York, State of Tennessee, by and through both Department of Labor and Workforce Development and through the Department of Revenue, the United States of America, by and through the Internal Revenue Service, IMC Mortgage Company, Joe M. Kirsch, Trustee, Tennessee Water Service, Inc., New Century Mortgage Corporation, Firstar Bank Milwaukee

N.A., as trustee under Salomon Brother Mortgage Securities VII Mortgage Pass-Through Certificates Series 1999-NCS, Michael Hunley and wife, Robin Hunley, Steven J. Lusk, Trustee Defendants.

Bankruptcy No. 01-31472.

Bankruptcy No. 01-31712.

Adversary No. 01-3169.

United States Bankruptcy Court, E.D. Tennessee.

November 18, 2002.

J. Myers Morton, Morton & Morton, PLLC, Knoxville, TN, for Plaintiffs.

Jason S. Zarin, United States Department of Justice, Tax Division, Washington, D.C., Harry S. Mattice, Jr., United States Attorney, Pamela G. Steele, Assistant United States Attorney, Knoxville, TN, for the Internal Revenue Service.

F. Chris Cawood, Kingston, TN, for Robert and Melissa Long.

MEMORANDUM ON UNITED STATES' MOTION FOR SUMMARY JUDGMENT

RICHARD S. STAIR, Jr., Bankruptcy Judge.

On October 19, 2001, the Plaintiffs, Kenneth and Peggy Hunley, filed the Complaint initiating this adversary proceeding in which they seek equitable relief from this court setting aside certain recorded deeds transferring the Plaintiffs' real property, which the Plaintiffs claim were fraudulently obtained by the Debtor, Ragip Sinan Mungan d/b/a Mortgage Masters, Inc. The United States of America, "by and through the Internal Revenue Service" (IRS) is named as a defendant due to federal tax liens levied against the real property on account of taxes assessed against the Plaintiffs and Defendant Mortgage Masters, Inc. (Mortgage Masters).

Before the court is a Motion for Summary Judgment (Motion) filed by the IRS on October 4, 2002, asserting that regardless of which entity actually owns the real property at issue, the Plaintiffs or Mortgage Masters, the IRS has liens encumbering the real property based on recorded federal tax liens. The Plaintiffs filed a "Plaintiffs' Response to United States' Motion for Summary Judgment" on October 15, 2002, stating that their tax liability has been satisfied pursuant to payment and settlement with the IRS. Neither Mortgage Masters, the Longs, nor any other defendant filed a response to the Motion. Accordingly, no defendant opposes the Motion.¹

This is a core proceeding. 28 U.S.C.A. § 157(b)(2)(A), (K), and (O). (West 1993).

I

The facts, as pertinent to the Motion, are set forth in the Plaintiffs' Complaint and the Motion. Prior to December 1997, the Plaintiffs owned two parcels of real property, one located at 4220 Van Dyke Drive, Knoxville, Tennessee, and the other located at 610 Jade Road, Knoxville, Tennessee (collectively, the Real Property). For reasons in dispute and still to be litigated, the Plaintiffs transferred the Van Dyke property to Defendants Michael and Robin Hunley and transferred the Jade Road property to Defendants Robert and Melissa Long sometime after August 1, 1999. The Van Dyke property was subsequently transferred to Mortgage Masters. By this adversary proceeding, the Plaintiffs are seeking to set aside these conveyances as fraudulent.

The IRS filed four federal tax liens against the Plaintiffs: (1) on August 15, 1994, in the aggregate amount of $12,920.98; (2) on September 29, 1994, in the amount of $1,617.00; (3) on February 10, 1998, in the aggregate amount of $2,285.64; and (4) on March 23, 2001, in the amount of $1,083.34 (the Federal Tax Liens).² The IRS claims that these tax liens are secured by the Real Property, regardless of whether it is owned by the Plaintiffs, the Longs, or Mortgage Masters. The IRS argues that if the Plaintiffs still own the Real Property, the 1994 tax liens attached to it prior to any alleged fraudulent conveyances or other encumbrances. Additionally, if the court later determines that the Real Property is owned by Mortgage Masters and/or the Longs, the IRS again claims to be a secured creditor by virtue of its tax liens.³

II

Rule 56 of the Federal Rules of Civil Procedure provides for summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). Rule 56(c) is made applicable to this adversary proceeding by Rule 7056 of the Federal Rules of Bankruptcy Procedure.

The IRS, as the moving party, bears the initial burden of proving both that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Owens Corning v. Nat'l Union Fire Ins. Co., 257 F.3d 484, 491 (6th Cir.2001). The burden then shifts to the nonmoving party, in this case, the Plaintiffs, to produce specific facts showing that there is, in fact, a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (citing Fed. R. Civ. P. 56(e)). In doing so, the nonmoving party must cite specific evidence and may not merely rely upon allegations contained in the pleadings. Harris v. Gen. Motors Corp., 201 F.3d 800, 802 (6th Cir.2000). The facts, and all resulting inferences, must be viewed in the light most favorable to the nonmovant. Matsushita, 106 S.Ct. at 1356. The court must then decide whether "the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986).

III

In support of its Motion for Summary Judgment, the IRS attached copies of the Federal Tax Liens recorded against both the Plaintiffs and Mortgage Masters. The Federal Tax Liens concerning the Plaintiffs are itemized as follows:

(1) Lien filed August 15, 1994, which includes taxes in the amount of $12,920.98 for the periods ending December 31, 1989, and December 31, 1992. These taxes were assessed on May 28, 1990, and October 4, 1993, respectively.

(2) Lien filed September 29, 1994, which includes taxes in the amount of $1,617.00 for the period ending December 31, 1993, which were assessed on September 5, 1994.

(3) Lien filed February 10, 1998, which includes taxes in the amount of $2,285.64 for the periods ending December 31, 1994, December 31, 1995, and December 31, 1996. These taxes were assessed on October 2, 1995, September 9, 1996, and September 29, 1997, respectively.

(4) Lien filed March 23, 2001, which includes taxes in the amount of $1,083.34 for the period ending December 31, 1997, and assessed on November 16, 1998.

In response, the Plaintiffs rely upon the Affidavit of the Plaintiff, Kenneth Hunley, together with a payment receipt showing payment to the IRS in the amount of $359.84 on October 9, 2001, and a second copy of the payment receipt with a handwritten "Paid in full. D. Sester ID 62-11031" and marked "Received October 10, 2001 Internal Revenue Service, W & I Area 3, Territory 4, Knoxville, Tennessee." In his Affidavit, the Plaintiff states that Ms. Sester, an employee of the IRS in Knoxville, Tennessee, told him that payment of the $359.84 would clear the Plaintiffs' debt with the IRS because "the rest of the debt was in a `non-collectable [sic] status.'" The Plaintiff also avers that Ms. Sester told the Plaintiffs that "the uncollectable [sic] debt liens would be gone or expire by the end of 2003." The Plaintiffs therefore contend that their debt to the IRS has been "fully satisfied and paid in full."

IV

Federal Tax Liens are governed by the Internal Revenue Code (I.R.C.), located at title 26 of the United States Code. The statutes pertinent to this action are, as follows:

§ 6321. Lien for taxes.

If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.

I.R.C. § 6321 (West 2002).

§ 6322. Period of lien.

Unless another date is specifically fixed by law, the lien imposed by section 6321 shall arise at the time the assessment is made and shall continue until the liability for the amount so assessed (or a judgment against the taxpayer arising out of such liability) is satisfied or becomes unenforceable by reason of lapse of time.

I.R.C. § 6322 (West 2002).

§ 6325. Release of lien or discharge of property.

(a) Release of lien. — Subject to such regulations as the Secretary may prescribe, the Secretary shall issue a certificate of release of any lien imposed with respect to any internal revenue tax not later than 30 days after the day on which —

(1) Liability satisfied or unenforceable. — The Secretary finds that the liability for the amount assessed, together with all interest in respect thereof, has been fully satisfied or has become legally unenforceable; ...

....

(f) Effect of certificate. —

(1) Conclusiveness. — ... [I]f a certificate is issued pursuant to ...