Johansen v. U.S.

• Decision Date: 02 August 2005
• Docket Number: No. CIV.A.2004-11789-RCL.,CIV.A.2004-11789-RCL.
• Citation: 392 F.Supp.2d 56
• Parties: Marlene JOHANSEN, Plaintiff, Defendant-in-Counterclaim, v. UNITED STATES of America, Defendant, Plaintiff-in-Counterclaim, v. National City Mortgage Company, Timothy Burke, Additional Defendants-in-Counterclaim.
• Court: U.S. District Court — District of Massachusetts

392 F.Supp.2d 56

Marlene JOHANSEN, Plaintiff, Defendant-in-Counterclaim, v. UNITED STATES of America, Defendant, Plaintiff-in-Counterclaim, v. National City Mortgage Company, Timothy Burke, Additional Defendants-in-Counterclaim.

No. CIV.A.2004-11789-RCL.

United States District Court, D. Massachusetts.

August 2, 2005.

Timothy J. Burke, Burke & Associates, Braintree, MA, for Plaintiff.

Michelle C. Davenport, Harmon Law Offices, Newton, MA, James H. Everett, Burke & Associates, Braintree, MA, Melissa L. Halbig, Burke & Associates, Braintree, MA, Richard A. Oetheimer, Goodwin Procter, LLP, Boston, MA, David M. Rosen, Harmon Law Offices, P.C., Newton, MA, for Counter Defendants.

David Sean McMahon, Law Office of Meilman & Costa, PC, Newton, MA, for Intervenor Plaintiff.

Stephen J. Turanchik, U.S. Department of Justice, Trial Attorney, Tax Division Washington, DC, for United States of America, Counter Claimant.

ORDER ADOPTING REPORT AND RECOMMENDATIONS

LINDSAY, District Judge.

ORDER ADOPTING REPORT AND RECOMMENDATIONS regarding [28] Motion to Dismiss by Timothy Burke and [9] Motion to Dismiss filed by Marlene Johansen. Action on motions: both motions are DENIED as recommended.

REPORT AND RECOMMENDATION ON PLAINTIFF'S MOTION TO DISMISS AND STRIKE COUNTERCLAIMS (# 9) AND ON THE COUNTERCLAIM DEFENDANT'S MOTION TO DISMISS COUNTERCLAIM (# 28)

COLLINGS, United States Magistrate Judge.

I. Introduction

This matter is before the Court on the plaintiffs motion to dismiss and strike counterclaims (# 9) and the counterclaim defendant's motion to dismiss counterclaim (# 28). The plaintiff, Marlene Johansen ("Ms.Johansen"), filed this quiet title suit pursuant to 28 U.S.C. § 2410(a)(1) against the United States (the "defendant"), challenging a federal tax lien on residential property located at 71 Pleasant Street, Stoneham, Massachusetts ("the Stoneham property"). Both Ms. Johansen and the plaintiffs ex-husband, Ralph Johansen ("Mr.Johansen"), maintain that Mr. Johansen transferred his ownership interest in the Stoneham property to Ms. Johansen as part of a divorce agreement, that Ms. Johansen owns the Stoneham property free and clear of any federal tax liens, and that the Stoneham property is not available to satisfy Mr. Johansen's tax liability.

The motions currently before the Court involve the defendant's counterclaims against Ms. Johansen, Timothy Burke ("Burke"), Ms. Johansen's attorney, and National City Mortgage Company ("National City Mortgage"), a mortgage company that holds a lien on the Stoneham property. In its Answer (# 7), the defendant purports to assert counterclaims against Ms. Johansen, Burke and National Mortgage because they may all "claim an interest in the [Stoneham] property upon which the [defendant] seeks to foreclose liens." (# 7 ¶¶ 27, 28)¹. The Court shall recommend that the plaintiff's motion to strike and dismiss counterclaims and the counterclaim defendant's motion to dismiss both be denied.

II. Factual Background

The following facts are gleaned from the Complaint (# 1) and other documents currently before the Court. Ms. Johansen is an individual who currently resides at 71 Pleasant Street, Stoneham, Massachusetts. (# 1 ¶ 1) Mr. Johansen filed for divorce on November 16, 1998. (# 1 ¶ 5) The Judgment of Divorce Nisi issued by the Massachusetts Probate and Family Court dated March 21, 2001 found that Mr. Johansen had federal tax liability of $171,379.00, and ordered the Stoneham property to be sold to settle the federal tax liability. (# 1, Exh. 2) Subsequently, on December 24, 2001, the Johansens submitted a modification of the divorce decree in which Mr. Johansen agreed, among other things, to transfer his interest in the Stoneham property to Ms. Johansen by quitclaim deed, to assume sole responsibility for his tax liability and to hold Ms. Johansen harmless for his tax liability. (# 1, Exh. 4) That modification was incorporated into the Judgment of Divorce Nisi. (# 1, Exh. 4)

On January 4, 2002, the Johansens executed a quitclaim deed. (# 1, Exh. 5) The deed was recorded on December 11, 2002. (# 1 ¶ 16) On December 18, 2002, a Notice of Federal Tax Lien was recorded on the Stoneham property against Mr. Johansen as taxpayer. (# 1 ¶ 17; Exh. 6) On January 21, 2004, a Notice of Federal Tax Lien was recorded on the Stoneham property against Ms. Johansen as nominee for Mr. Johansen. (# 1 ¶ 19; Exh. 7) On August 17, 2004, Ms. Johansen filed this action against the United States asserting that the tax lien is invalid, and seeking to quiet title on the Stoneham property.

III. Discussion

A. Burke and National City Mortgage

In its Answer and Counterclaim, the defendant answers the complaint filed by Ms. Johansen and asserts counterclaims against Burke and National City Mortgage. According to the defendant, the basis of these counterclaims is that both Burke and National City Mortgage may claim an interest in the Stoneham property, the property which is the subject of the underlying action, because Ms. Johansen gave mortgages on the Stoneham property to both Burke and National City Mortgage. (# 7 ¶¶ 39, 40) In response, both Ms. Johansen and Burke filed the instant motions to dismiss with supporting memoranda of law; Ms. Johansen asserts that the counterclaims must be dismissed because Burke and National City Mortgage are not parties to this action and because there is no "reasonable application of law" which would support the counterclaims and, similarly, Burke posits that the defendant's counterclaim against him should be dismissed because the defendant could not prevail on its counterclaim. (## 9, 28)²

Ms. Johansen argues that the defendant's counterclaims against Burke and National City Mortgage must be dismissed because a party cannot assert a counterclaim against an entity that is not a party to the action. However, Burke and National City Mortgage actually have been made parties to the instant action, although proof service on them has not yet been filed with the Court.³

It is a fairly basic premise that counterclaims can be lodged only against those entities which are already parties to the action. "[A] counterclaim or cross-claim may not be directed ...against persons who are not already parties to the original action...." Charles A. Wright & Arthur R. Miller, 6 Fed. Prac. & Procedure Civ.2d § 1435 (2005); see also Wright & Miller, 6 Fed. Prac. & Procedure Civ.2d § 1404 (2005) ("[T]he first sentence of [Federal] Rule 13(b) allows...a pleader to state a counterclaim that he has against an `opposing party' at the time he serves his pleading."); Operating Engineers Pension Trust v. Cecil Backhoe Service, Inc., 795 F.2d 1501, 1504, n. 1 (9 Cir., 1986)("Although styled a `counterclaim', ...the claim against Local 12 and Joseph Chaves was in fact a third party claim because Local 12 and Chaves were not already parties to the action."); UMLIC VP LLC v. Belardo, No. Civ.2003/0037, 2003 WL 23218497, *1 (D.Virgin Islands, May 8, 2003)("Rule 13 of the Fed.R.Civ.P. allows persons who are already parties to an action to assert counterclaims against an opposing party."); Bank of Vermont v. Lyndonville Say. Bank & Trust Co., 906 F.Supp. 221, 228 (D.Vt., 1995)(holding that counterclaim could not be stated against a nonparty to the lawsuit who had not been served with a summons as a third party).

However, Fed.R.Civ.P. 13(h) provides that "[p]ersons other than those made parties to the original action may be made parties to a counterclaim or cross-claim in accordance with the provisions of Rules 19 and 20 [the joinder rules]." Thus, Burke and National City Mortgage have been made parties to the defendant's counterclaim against Ms. Johansen pursuant to Fed.R.Civ.P. 19(a) which explains that:

[a] person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in the person's absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple or otherwise inconsistent obligations by reason of the claimed interest. If the person has not been so joined, the court shall order that the person be made a party.

In the case at bar, it seems that complete relief could not properly be accorded without the presence of Burke and National City Mortgage. Ms. Johansen sued the defendant to "quiet title" on the Stoneham property and the defendant counterclaimed against Ms. Johansen in order to foreclose its tax liens on that property. Both Burke and Johansen hold liens on that same property. Thus, in order for a proper determination to be made in this case — that is, who has valid liens on the Stoneham property and which liens take priority — Burke and National City Mortgage should be parties to the counterclaim asserted by the defendant against Ms. Johansen.⁴

Because the defendant has made Burke and National City Mortgage parties to the counterclaim against Ms. Johansen, the Court shall recommend that the Motion to Dismiss and Strike Counterclaims and the Counterclaim Defendant's Motion to Dismiss Counterclaim be denied.⁵

B. Ms. Johansen

Ms. Johansen moved to dismiss or strike the two counterclaims against her on the grounds that they are unsupportable as a matter of law. (# 10, pp. 5, 11) First, she argues that there is "no reasonable application of law which would support the contention that [she] is holding the property as a nominee" for her ex-husband (# 10, p. 5) and next, she contends that the Stoneham property could not have been fraudulently conveyed to her because it was done at the behest of the probate court. (#...