Phillips v. Internal Revenue Serv. (In re Phillips)
| Citation | 620 B.R. 287 |
| Decision Date | 17 April 2020 |
| Docket Number | Case No. 17-30589-L,Adv. Proc. No. 18-00143 |
| Parties | IN RE Ivan K. PHILLIPS and Linda A. Phillips, Debtors. Ivan K. Phillips and Linda A. Phillips, Plaintiffs, v. Internal Revenue Service, Defendant. |
| Court | United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Western District of Tennessee |
Toni Campbell Parker, Memphis, TN, for Plaintiffs.
Nishant Kumar, U.S. Dept of Justice-Tax Division, Washington, DC, Barbara Zoccola, Office of the US Attorney, Monica M. Simmons-Jones, Memphis, TN, for Defendant.
ORDER GRANTING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT
BEFORE THE COURT is the United States' Motion for Partial Summary Judgment filed December 6, 2019. [Dkt. No. 24]. The United States asks the court to rule that federal tax liens against Debtor/Plaintiff Ivan K. Phillips attached pre-petition to annuity payments owed to Mr. Phillips under a contract with TIAA-CREF and that these liens will continue to attach to future annuity payments whether or not Mr. Phillips receives a discharge of his pre-petition tax liabilities.
With its Motion for Partial Summary Judgment, the United States filed a Memorandum in Support of its Motion for Partial Summary Judgment together with Exhibits A through C. [Dkt. No. 24]. Exhibit A consists of federal tax liens: (1) Recorded May 16, 2017, in the amount of $165,747.03; (2) Recorded October 24, 2017, in the amount of $50,956.68; (3) Recorded May 16, 2017, in the amount of $20,206.11; (4) Recorded September 3, 2014, in the amount of $84,664.51; (5) Recorded February 13, 2017, in the amount of $67,755.42; (6) Recorded May 16, 2014, in the amount of $49,511.85; (7) Recorded December 23, 2014, in the amount of $2,956.38; and (8) Recorded December 23, 2014, in the amount of $22,939.99. Exhibit B consists of excerpts from (1) College Retirement Equities Fund ("CREF") Rules of the Fund Effective as of May 1, 2019; (2) Teachers Insurance and Annuity Association of America ("TIAA") Retirement Annuity Contract; (3) TIAA Rate Schedule To Be Effective on July 1, 2001 for all TIAA Retirement Annuity Contracts; (4) TIAA Endorsement to Your TIAA Retirement Annuity Contract; and (5) CREF Retirement Unit-Annuity Certificate. Exhibit C consists of the Plaintiffs' Answer to the United States' Second Set of Interrogatories and Requests for Production dated June 26, 2019.
The Plaintiffs filed an objection to the motion on January 7, 2020. [Dkt. No. 27]. The Plaintiffs do not assert that there is a genuine issue of material fact in dispute, but rather that they, rather than the United States, are entitled to judgment as a matter of law. The Debtors argue that: (1) the federal tax liens did not attach to pre-petition annuity payments; (2) the tax liabilities of the Debtors are dischargeable; (3) the federal tax liens did not attach to post-petition annuity payments because the annuity payments are not property of the bankruptcy estate; (4) because the amounts of the payments from the annuities vary, there is no right to payment, and thus, there can be no attachment until a payment is actually distributed.
Together with their Objection to the Motion for Partial Summary Judgment [Dkt. No. 27], the Plaintiffs have submitted for consideration by the court copies of: (1) TIAA Retirement Annuity Contract; (2) CREF Retirement Unit-Annuity Certificate; and (3) CREF Rules of the Fund Effective as of May 1, 2019.
The parties were given an opportunity to file additional reply briefs before the matter was decided by the court. The United States filed its Reply Brief on March 17, 2020 [Dkt. No. 30], which contained additional case citations for the court's consideration. The Plaintiffs did not file a sur-reply.
In the motion for partial summary judgment, the following issues are presented for consideration:
Jurisdiction over a complaint arising under the Bankruptcy Code lies with the district court. 28 U.S.C. § 1334(b). Pursuant to authority granted to the district courts at 28 U.S.C. § 157(a), the district court for the Western District of Tennessee has referred to the bankruptcy judges of this district all cases arising under title 11 and all proceedings arising under title 11 or arising in or related to a case under title 11. In re Jurisdiction and Proceedings Under the Bankruptcy Amendments Act of 1984 , Misc. No. 81-30 (W.D. Tenn. July 10, 1984). Proceedings to determine the dischargeability of particular debts are core proceedings arising under the Bankruptcy Code as are proceedings to determine the validity, extent, or priority of liens. See 28 U.S.C. § 157(b)(2)(I) and (K). Accordingly, the bankruptcy court has authority to enter its judgment granting the United States' motion for partial summary judgment subject only to appellate review under section 158 of title 28. 28 U.S.C. § 157(b)(1).
Federal Rule of Civil Procedure 56 made applicable in bankruptcy proceedings by Federal Rule of Bankruptcy Procedure 7056 provides that summary judgment is appropriate if the movant can show that there is no genuine dispute as to any material fact and thus, the movant is entitled to judgment as a matter of law. Substantive law will identify which facts are material and a genuine issue of material fact exists only when, "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). When deciding a motion for summary judgment, the court does not weigh the evidence to determine the truth of the matter asserted but to determine whether a genuine issue for trial exists. Id. In reaching its decision, the court views the evidence in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986).
The moving party bears the initial burden of proof that there are no genuine issues that might affect the outcome of the action under governing law. In re Oliver , 414 B.R. 361, 367 (Bankr. E.D. Tenn. 2009), citing, Owens Corning v. Nat'l Union Fire Ins. Co. , 257 F.3d 484, 491 (6th Cir. 2001) ; Fed. R. Civ. P. 56(a), incorporated at Fed. R. Bankr. P. 7056.
The Court of Appeals for the Sixth Circuit has described the standards for granting summary judgment as follows:
A genuine issue of material fact exists when, "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). In deciding whether this burden has been met by the movant, this court views the evidence in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). However, to survive summary judgment, the Plaintiff must present affirmative evidence sufficient to show a genuine issue for trial. Anderson , 477 U.S. at 249, 106 S. Ct. 2505. Therefore, "[i]f evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50, 106 S. Ct. 2505.
White v. Wyndham Vacation Ownership, Inc. , 617 F.3d 472, 475-76 (6th Cir. 2010).
Only disputes over facts that might affect the outcome of the suit under governing law will preclude the entry of summary judgment. Id. " ‘Summary judgment is proper if the evidence, taken in the light most favorable to the nonmoving party, shows that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law.’ " Pazdzierz v. First American Title Ins. Co. (In re Pazdzierz) , 718 F.3d 582, 586 (6th Cir. 2013), quoting Mazur v. Young , 507 F.3d 1013, 1016 (6th Cir.2007).
Although the Plaintiffs did not file a cross motion for summary judgment, they assert that they are entitled to judgment on the issues raised by the United States as a matter of law. When cross motions for summary judgment are filed, the court must consider each motion in turn to determine whether it may be granted. Westfield Ins. Co. v. Tech Dry, Inc. , 336 F.3d 503, 506 (6th Cir. 2003) ; Taft Broadcasting Co. v. U.S. , 929 F.2d 240, 248 (6th Cir. 1991).
The Plaintiffs filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on December 4, 2017, Case No. 17-30589.
At the time of the filing of their petition, the Plaintiffs were indebted to the United States for unpaid income tax liabilities in an amount in excess of $230,000.
Prior to the filing of the petition, the United States recorded tax liens in Indiana and Tennessee. .
Mr. Phillips is an annuitant under contracts with TIAA and CREF.
The starting date for both annuities was October 10, 2008, before the Plaintiffs filed their bankruptcy petition.
Monthly annuity payments under the TIAA contract are calculated based upon a guaranteed interest rate and any "Additional Amounts" declared by the TIAA Board of Trustees. [Dkt. No. 24, Ex. B, p. 6.] Under the TIAA contract, the guaranteed life income is a specified number of dollars per payment period. [CREF Rules of Fund, Dkt. No. 24, Ex. B, p. A2.]
Monthly annuity payments under the CREF contract are calculated based upon the value of "Accumulation Units" purchased by the participant during his lifetime. The Accumulation Units represent the participant's proportionate share in CREF. [Dkt. No. 24, Ex. B, p. 7.]. Under CREF, the guaranteed life income is a specified number of annuity units per payment period. [CREF Rules of Fund, Dkt. No. 24, Ex. B, p. A2].
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