Simmons Perrine Moyer Bergman PLC v. Coleman
| Decision Date | 14 March 2013 |
| Docket Number | No. C11-0131,C11-0131 |
| Parties | SIMMONS PERRINE MOYER BERGMAN PLC; GORDON JOHNSON, JR. d/b/a THE JOHNSON LAW FIRM, Plaintiffs, v. CHARLES JOSEPH COLEMAN, JR.; SHARON A. COLEMAN; UNITED STATES OF AMERICA; IOWA DEPARTMENT OF REVENUE; STATE FARM MUTUAL INSURANCE COMPANY, Defendants. |
| Court | U.S. District Court — Northern District of Iowa |
I. INTRODUCTION ......................................2
II. PROCEDURAL HISTORY.................................2
III. RELEVANT FACTS.....................................3
IV. DISCUSSION.........................................5
V. SUMMARY.......................................... 17
VI. REPORT AND RECOMMENDATION........................ 19
I. INTRODUCTION
On the 13th day of March 2013, this matter came on for hearing on the Motion for Partial Summary Judgment (docket number 35) filed by Defendant Sharon A. Coleman, the Motion for Summary Judgment (docket number 36) filed by Defendant State Farm Mutual Insurance Company, and the Motion for Summary Judgment (docket number 37) filed by Defendant United States of America. All three motions for summary judgment were filed on January 18, 2013. On March 6, the motions were referred to me for a report and recommendation.
Plaintiffs Simmons Perrine Moyer Bergman PLC ("SPMB") and Gordon Johnson, Jr. were represented by their attorney, Jeffrey A. Stone. Defendants Charles Joseph Coleman, Jr. and Sharon A. Coleman were represented by their attorney, Tyler C. Patrick. Defendant United States of America was represented by its attorney, Gregory S. Seador. Defendant Iowa Department of Revenue was represented by its attorney, Dale T. Baker. Defendant State Farm Mutual Insurance Company was represented by its attorney, Steven C. Leidinger.
II. PROCEDURAL HISTORY
SPMB filed this action on December 6, 2011, seeking an order establishing the parties' respective rights to proceeds obtained in an earlier personal injury action brought by the Colemans. In Count I, SPMB asked that it be permitted to deposit certain funds with the Clerk of Court, and the Court then direct how the funds would be distributed. On February 14, 2012, the Court ordered SPMB to transfer various amounts held in trust to the Clerk of Court for the Northern District of Iowa. On February 21, the Clerk of Court receipted for funds totaling $1,243,377.87. SPMB asks that the Court declare this interpleader action to be "proper," that it direct how the money now held by the Clerk ofCourt should be distributed, and that it discharge SPMB from any further liability regarding those funds.1
In Count II of its complaint, SPMB refers to additional monies still held in its trust account. The balance on October 11, 2011, was approximately $245,010.19. SPMB and Johnson claim that they are entitled to the full amount as additional attorney fees, and that the Colemans "have no rightful claim to the money." SPMB asks that the Court enter an order declaring its legal right to receive the amount held in its trust account. The United States, Iowa Department of Revenue, and State Farm are not named as defendants in Count II, and the instant motions for summary judgment do not address Count II.
On April 17, 2012, the Court adopted a proposed Scheduling Order and Discovery Plan submitted by the parties. In reliance on those deadlines, a bench trial has been scheduled before Chief Judge Linda R. Reade beginning on May 20, 2013. A final pretrial conference is scheduled on April 17.
III. RELEVANT FACTS
On November 22, 2005, Defendant Charles Joseph ("Joe") Coleman, Jr. was seriously injured in a motor vehicle accident. Coleman and his wife, Sharon A. Coleman, retained Gordon S. Johnson, Jr. (an attorney in Sheboygan, Wisconsin) and James E. Shipman (an attorney with SPMB) to represent them in connection with anticipated litigation. The Colemans then filed an action in the Iowa District Court for Polk County, seeking damages for Joe's personal injuries and Sharon's consortium claim.2
Prior to the trial, the Colemans reached a settlement with the defendants in the personal injury action. According to a "recap of settlement proceeds" attached to State Farm's motion for summary judgment, the settlement proceeds totaled $1,900,000.3 Of that amount, $633,333.33 (one-third of the gross amount) was designated on the recap as attorney's fees. Another $73,161.93 was designated as "out of pocket expenses." Thus, the "net proceeds" of the settlement totaled $1,193,505.74. It is that amount, plus interest, which has been deposited with the Clerk of Court.
At the time of his accident, Coleman had car insurance with State Farm, which obligated State Farm to pay certain medical expenses incurred for bodily injuries sustained in the accident. Pursuant to its obligation, State Farm paid medical bills totaling $69,095.69. The insurance policy further provided that State Farm was subrogated to the extent Coleman was entitled to recover against any party liable for his injuries. Accordingly, State Farm claims that it is entitled to $69,095.69 from the settlement proceeds.
The United States also claims entidement to the settlement proceeds. The Colemans filed joint federal tax returns for the tax years 1997 through 2005. Joe admits, however, that he failed to pay all of the federal income tax due for those years. Sharon asserts that she was "an innocent spouse, and as such, had no legal obligation to pay the federal income tax liabilities" for those years.4 The unpaid federal income tax during those years, including accrued penalties and interest, totaled $1,468,498.22 as of January 7, 2013.
In addition to unpaid individual income taxes, it is undisputed that Joe failed to pay Federal Insurance Contributions Act ("FICA") taxes, totaling $69,096.99 as of January 7, 2013, including accrued penalties and interest. Joe also admits that he failed to pay Federal Unemployment Tax Act ("FUTA") taxes, totaling $945.27 as of January 7, 2013, including accrued penalties and interest. That is, Joe owes unpaid federal taxes totaling $1,538,540.48. Sharon argues, however, that, as an "innocent spouse," she has no liability in that regard. Sharon also argues that the portion of the settlement proceeds which are attributable to her consortium claim are not subject to any tax liens.
Unpaid income taxes are also owed to the State of Iowa. In its resistance to Sharon's motion for partial summary judgment, the Iowa Department of Revenue places the unpaid taxes at $453,313.57 as of February 11, 2013, including penalties, interest, and "statutory additions." In its brief, the Department of Revenue advises the Court that it "does not contest the priority of the claims of the United States, or of State Farm Mutual Insurance Company, over the claims of the State of Iowa here."5
IV. DISCUSSION
SPMB's complaint is in two counts. Count I asks that the Court establish the appropriate disposition of approximately $1,243,377.87 on deposit with the Clerk of Court. Defendants Sharon Coleman, United States, Iowa Department of Revenue, and State Farm all claim an interest in that money. At the time of hearing, the parties agreed that this interpleader action was properly invoked to determine the appropriate distribution of the funds now being held by the Clerk of Court. The parties further agreed that SPMB should be discharged from any further liability for those funds, and Defendants are prohibited from bringing any other actions regarding the disposition of the interpleaded funds.
In Count II, SPMB asks that the Court declare its legal right to approximately $245,010.19 held in its trust account.6 SPMB, Johnson, and the Colemans claim an interest in those funds. Count II is not a subject of the instant motions for summary judgment.
The Court will first address the claim made by the United States. The Colemans admit that while they filed federal tax returns for the years 1997 through 2005, they did not pay the full amount of the income taxes due. Sharon asserts that, as an "innocent spouse," she had no legal obligation to pay the federal income taxes for those years.7 The Colemans also admit that the United States timely made assessments against them for the unpaid taxes during those years.8 Joe admits that he received notice of the assessments, although Sharon denies notice of the assessments and/or demands for payment.9 In their response to the United States' motion for summary judgment, the Colemans do not dispute the amount of the unpaid taxes.10 The unpaid taxes owed to the United States totaled $1,538,540.48 as of January 7, 2013.
At the time of hearing, the Colemans' attorney asked that if the Court awarded summary judgment to the United States, that it schedule a second telephonic hearing to "confirm the amounts" of the liens. I believe, however, that the amount owed is established by the attachments to the United States' motion for summary judgment, and the Colemans' responses to the United States' statement of material facts. Attached to the United States' motion is a declaration of Philip J. Ubben, a revenue officer with the Internal Revenue Service, stating under oath the amounts due and owing. Attached to Ubben's declaration are the documents establishing the amounts owed and the assessments. In their resistance to the motion, the Colemans did not submit any affidavits, documents, or argument that the Government had miscalculated the amounts owed or the validity of the assessments. Indeed, when responding to the United States' statement of material facts, the Colemans admitted those matters....
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