Kpmg Peat Marwick v. Texas Commerce Bank

Decision Date12 February 1997
Docket NumberCivil Action No. H-96-1512.
Citation976 F.Supp. 623
PartiesKPMG PEAT MARWICK, Plaintiff, v. TEXAS COMMERCE BANK, et al., Defendants.
CourtU.S. District Court — Southern District of Texas

J. Clifford Gunter, III, Bracewell & Patterson, Houston, TX, for Plaintiff.

Bill Jones, Cash, Jones & Springhetti, Houston, TX, for Texas Commerce Bank.

Manuel P. Lena, Jr., Dept. of Justice, Dallas, TX, for the U.S.

Barry Allan Brown, Houston, TX, for Jerry W. Claiborne.

Paul D. Pruitt, Pruitt and Garland, Tyler, TX, for KS Financial Group, Inc.

Michael J. Durrschmidt, Hirsch & Westheimer, Houston, TX, for Houston National Bank.

Charles L. Black Aycock, Houston, TX, for Heritage Bank.

MEMORANDUM AND ORDER

ATLAS, District Judge.

This is an interpleader action brought by Plaintiff KPMG Peat Marwick, L.L.P., ("KPMG") to determine creditor priority as to property of KPMG partner Jerry W. Claiborne ("Claiborne"). The property consists of finds in the registry of the Court as well as finds KPMG seeks to deposit in the Court's Registry, which monies were paid to Claiborne on June 30, 1996, as partner distributions and bonuses for 1996. Claiborne, the Internal Revenue Service ("IRS"), and Texas Commerce Bank, N.A. ("TCB") all claim rights to the finds. KPMG brought this action in state court, and the IRS subsequently removed to this Court. Since removal, Houston National Bank ("HNB"), KS Financial Group, Inc. ("KS"), and Heritage Bank ("Heritage") have all intervened in this action because they also assert claims against Claiborne's assets.

Pending before the Court is a Joint Motion for Payment of Funds to Defendant, United States of America [Doc. # 11].1 In addition, TCB has filed a motion to dismiss crossclaims brought against it by Claiborne, as well as a request that this Court issue a judgment declaring the rights, status and other legal relations between TCB and other creditors of Claiborne as to the wages, salary, income and capital account of Claiborne held by KPMG. TCB's Motion to Dismiss Original Answer and Complaint for Declaratory Judgment [Doc. # 24].2

For reasons stated herein, the Court determines that the IRS is entitled to all of the funds currently in the registry of the Court in partial satisfaction of its Notice of Lien filed on March 2, 1995. The Court further holds that Claiborne's crossclaim against TCB under the Fair Debt Collection Practices Act, as well as his crossclaim for declaratory judgment pursuant to 28 U.S.C. § 2201, are dismissed. All other claims and crossclaims between the parties are remanded to state court.

FACTUAL BACKGROUND

On March 2, 1995, the IRS filed a Notice of Federal Tax Lien in the public records of Harris County, Texas for Claiborne's tax liability for tax years 1984, 1992, and 1993. See Notice of Federal Tax Lien, filed March 2, 1995 (Exhibit A to TCB's Response) ("1995 IRS Lien"). This lien is based upon assessments made in 1993 and 1994 totalling $182,941.97.3

The IRS has filed several notices of levy based upon the 1995 IRS Lien, which calculate the "statutory additions" to the original amount of the lien. On December 12, 1995, the IRS served a "Notice of Levy" on KPMG to turn over all property or rights to property that KPMG has which belongs to Jerry and Mildred Claiborne, or that KPMG is obligated to pay the Claibornes, in the amount of $229,986.26.4 On January 22, 1996, the IRS served a "Notice of Levy on Wages, Salary, and Other Income" upon KPMG for taxes owed by Claiborne, in the amount of $229,986.26.5 Finally, on June 10, 1996, the IRS served an additional "Notice of Levy on Wages, Salary, and Other Income" on KPMG for the amount of $238,601.11.6

On February 8, 1996, the IRS issued a Release of Property from Levy. Release of Levy/Release of Property from Levy (Exhibit F to TCB's Response) ("Release of Property from Levy"). Pursuant to this Release, wages, salary and other income greater than $1,600.00 per month were released from the IRS levy.7

KPMG filed this interpleader action, as well as a request for a temporary restraining order and for injunctive relief on April 15, 1996, requesting that the court declare the rights of Claiborne, the United States, TCB,8 and any other parties who claimed an interest in Claiborne's property in the custody of KPMG. See Original Petition. The IRS removed the action to federal court on May 10, 1996. HNB, KS, and Heritage have each intervened in order to assert their claims to Claiborne's current and future property.9

On August 19, 1996, the IRS filed a second Notice of Federal Tax Lien. Notice of Federal Tax Lien, filed August 19, 1996 (Exhibit B to TCB's Response) ("1996 IRS Lien"). This second lien is based upon Claiborne's liability for tax year 1995, and is for the amount of $162,247.88.

KPMG has deposited funds with the Court, which are amounts payable to Claiborne for the year ending June 30, 1996, totaling $201,354.68. On August 13, 1996, $90,000 was accepted into the Court's registry; an additional $60,000 was accepted into the Court's registry on October 24, 1996. See Docs. # 13, 43. On November 7, 1996, KPMG moved the Court for leave to tender an additional $51,354.68 into the Court's registry. Plaintiff's Motion for Leave to Tender Balance of Drawing Account Into Registry of the Court [Doc. # 52]. TCB opposes this motion because the movement of Claiborne's assets to Texas may prevent TCB from maintaining the lien position it claims from its New York levy. See Doc. # 53.

For the reasons stated below, the Court concludes that TCB's interest in the funds at issue is inferior to that of the IRS. Plaintiff's motion to tender an additional $51,354.68 into the Court's registry therefore is granted over TCB's objection.

DISCUSSION
A. Creditor Priority

The only pending motion on the issue of creditor priority is KPMG's Joint Motion for Payment of Funds to Defendant, United States of America [Doc. # 11] ("Motion for Payment to IRS").10 Since the parties' numerous submissions regarding the Motion for Payment to IRS have provided the Court with a sufficient factual record and legal briefing, the Court will analyze the issue of creditor priority according to summary judgment standards, as though IRS had made a motion for summary judgment on the issue of its priority.11

In deciding a motion for summary judgment, the Court must determine whether "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 judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc); Bozé v. Branstetter, 912 F.2d 801, 804 (5th Cir.1990). The facts are to be reviewed with all inferences drawn in favor of the party opposing the motion. Bozé, 912 F.2d at 804 (citing Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir.1986)). However, factual controversies are resolved in favor of the nonmovant "only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." McCallum Highlands, Ltd. v. Washington Capital Dus, Inc., 66 F.3d 89, 92 (5th Cir.), revised on other grounds upon denial of reh'g, 70 F.3d 26 (5th Cir.1995).

The party moving for summary judgment has the initial burden of demonstrating the absence of a material fact issue with respect to those issues on which the movant bears the burden of proof at trial. For any matter on which the nonmovant carries the burden of proof at trial, however, the movant may, by merely pointing to the absence of evidence supporting the essential elements of the nonmovant's case, shift to the nonmovant the burden of demonstrating by competent summary judgment proof that there is an issue of material fact so as to warrant a trial. Taylor v. Principal Financial Group, Inc., 93 F.3d 155, 161 (5th Cir.), cert. denied, ___ U.S. ___, 117 S.Ct. 586, 136 L.Ed.2d 515 (1996) (citing Engstrom v. First Nat'l Bank, 47 F.3d 1459, 1462 (5th Cir.), cert. denied, ___ U.S. ___, 116 S.Ct. 75, 133 L.Ed.2d 35 (1995)); Transamerica Ins. Co. v. Avenell, 66 F.3d 715, 718-19 (5th Cir.1995); Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, 513 U.S. 871, 115 S.Ct. 195, 130 L.Ed.2d 127 (1994).

The nonmovant's burden may not be satisfied by conclusory allegations, unsubstantiated assertions, metaphysical doubt as to the facts, or a scintilla of evidence. Douglass v. United Servs. Auto. Ass'n, 65 F.3d 452, 459 (5th Cir.1995), revised on other grounds, 79 F.3d 1415 (5th Cir.1996) (en banc); Little, 37 F.3d at 1075. In the absence of any proof, the court will not assume that the nonmovant could or would prove the necessary facts. McCallum Highlands, 66 F.3d at 92; Little, 37 F.3d at 1075 (citing Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888, 110 S.Ct. 3177, 3188-89, 111 L.Ed.2d 695 (1990)). Rule 56 mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a sufficient showing of the existence of an element essential to the party's case, and on which that party will bear the burden at trial. Little, 37 F.3d at 1075 (citing Celotex, 477 U.S. at 322, 106 S.Ct. at 2552).

For the reasons stated herein, the Court determines that there is no genuine issue of material fact as to the IRS' priority over all other creditors until the 1995 IRS lien is fully satisfied.12

1. Priority of the IRS under McDermott

Under the Supreme Court's holding in United States By and Through Internal Revenue Service v. McDermott, 507 U.S. 447, 113 S.Ct. 1526, 123 L.Ed.2d 128 (1993), the IRS has priority over all private creditors in this case, including HNB whose security interest was recorded before the IRS filed its Notice of Lien. In McDermott, the IRS had assessed the McDermotts for...

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