U.S. v. Blakeman

• Citation: 997 F.2d 1084
• Decision Date: 21 July 1992
• Docket Number: No. 91-1027,91-1027
• Parties: -5366, 72 A.F.T.R.2d 93-5755, 72 A.F.T.R.2d 93-6742, 72 A.F.T.R.2d 93-6750, 92-2 USTC P 50,455, 93-2 USTC P 50,485 UNITED STATES of America, Plaintiff-Appellant-Cross-Appellee, v. James Neal BLAKEMAN, As Executor of the Estate of C.E. Blakeman, Deceased, Robert Earl Blakeman and Karen A. Whaley, Defendants-Appellees-Cross- Appellants and Cross-Appellees, RIDGLEA BANK, et al., Defendants-Appellees, v. Maudine BLAKEMAN, Defendant-Appellee-Cross-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1084

997 F.2d 1084

70 A.F.T.R.2d 92-5366, 72 A.F.T.R.2d 93-5755,

72 A.F.T.R.2d 93-6742, 72 A.F.T.R.2d 93-6750,

92-2 USTC P 50,455, 93-2 USTC P 50,485

UNITED STATES of America, Plaintiff-Appellant-Cross-Appellee, v. James Neal BLAKEMAN, As Executor of the Estate of C.E.

Blakeman, Deceased, Robert Earl Blakeman and Karen

A. Whaley, Defendants-Appellees-Cross- Appellants and Cross-Appellees, RIDGLEA BANK, et al., Defendants-Appellees, v. Maudine BLAKEMAN, Defendant-Appellee-Cross-Appellant.

No. 91-1027.

United States Court of Appeals, Fifth Circuit.

July 21, 1992.

Order Granting Rehearing July 28, 1993.

Marvin Collins, U.S. Atty., Waymon G. DuBose, Jr., Asst. U.S. Atty., Tax Div., Dallas, TX.

Joy L. Pritts, Gary R. Allen, Chief, David A. Hubbert, Kenneth L. Greene, Appellate Section, Tax Div., Dept. of Justice, Washington, D.C., for U.S.

William L. Kirkman, Bourland & Kirkman, Ft. Worth, TX, for J. Blakeman, C.E. Blakeman, R.E. Blakeman and Whaley.

William D. Elliott, William H. Hornberger, Brian Collins, Jackson & Walker, Dallas, TX, for Maudine Blakeman.

Stephen Meeks, Michael Deeds, Heard, Goggan, Blair, Williams & Harrison, Ft. Worth, TX, for Tarrant County, Ft. Worth School Dist. and City of Ft. Worth.

David R. Seidler, Shannon, Gracey, Ratliff & Miller, Ft. Worth, TX, for Ridglea Bank.

Appeals from the United States District Court for the Northern District of Texas.

Before JOLLY, JONES, and EMILIO M. GARZA, Circuit Judges:

EMILIO M. GARZA, Circuit Judge:

The United States brought this suit seeking judgment against the estate of C.E. Blakeman for federal estate taxes and to foreclose a federal tax lien against property of the estate. ¹ The district court entered judgment in favor of the United States, enforced the government's general federal tax lien, and ordered foreclosure of certain estate property. 750 F.Supp. 216 (N.D.Tex.1990). The parties have filed cross-appeals.

I

A

C.E. Blakeman ("C.E.") died on May 25, 1978. He was survived by his wife, Maudine Blakeman ("Mrs. Blakeman"), and three children from a previous marriage--James Neal Blakeman, Robert Earl Blakeman, and Karen Whaley ("the Blakeman children"). At the time of his death, apart from the community property he shared with his wife, C.E. owned as his separate property a tract of land known as the Randol Mill Property--the major asset of his estate--which consisted of 101.5954 acres of land located in Fort Worth, Tarrant County, Texas.

C.E.'s 1973 will left all real property of his estate, including the Randol Mill Property, to his children. After C.E.'s death, a dispute arose between the Blakeman children and Mrs. Blakeman as to their respective rights in C.E.'s estate. Following a trial, the Tarrant County Probate Court entered judgment declaring that the Randol Mill Property is the rural homestead of C.E. and Mrs. Blakeman. That judgment ordered that Mrs. Blakeman have the use and benefit of 100 acres of the Randol Mill Property for as long as she occupied the property as her homestead. ²

On June 17, 1980, the Secretary of the Treasury made assessments against the estate in the amount of $124,820.93 in federal estate tax and $12,651.37 in interest. On July 21, 1980, the Secretary made an additional assessment of interest and penalties relating to the unpaid estate tax in the amounts of $1,395.26 and $31,205.23, respectively. Another assessment for interest in the amount of $1,436.30 was made on August 18, 1980. On March 16, 1981, the I.R.S. filed a notice of federal tax lien for the assessments against the estate with the Tarrant County Clerk. The I.R.S. made demand upon James Neal Blakeman, as executor of C.E.'s estate, for payment of the outstanding federal estate taxes.

B

The government filed suit on June 16, 1986, seeking judgment against the estate for federal estate taxes and judicial foreclosure on its federal tax lien against the Randol Mill Property. Following trial, the district court found that Mrs. Blakeman had a rural homestead interest in the Randol Mill Property from the date of C.E.'s death until trial. The district court held that the special tax lien under 26 U.S.C. § 6324 had expired, but the general tax lien under 26 U.S.C. § 6321 was valid and attached to the property at issue--subject to Mrs. Blakeman's homestead interest. The district court ordered foreclosure of the federal tax lien, and, from the proceeds of such foreclosure, awarded Mrs. Blakeman her interest in the property as of the foreclosure date, but limited the government's recovery to the estate's interest in the property on the date the federal tax lien The parties cross-appeal, raising various contentions of district court error and challenging specific district court rulings. ⁴ The issues presented are:

                arose in 1980. 3  The district court also ordered that the difference between the value of Mrs. Blakeman's interest on the date the federal tax lien arose and the value of her interest on the date judgment was entered be paid to the estate--irrespective of whether the government was otherwise able to collect the tax liability of the estate
                

(a) Whether the district court properly concluded the government's complaint stated a claim based on the general federal tax lien arising under 26 U.S.C. § 6321;

(b) Whether the district court properly concluded that the Randol Mill Property was the rural homestead of Mrs. Blakeman;

(c) Whether the district court properly valued the Randol Mill Property; and

(d) Whether Mrs. Blakeman is entitled to compensation for the taxes she will pay as a result of the foreclosure sale.

II

A

The district court found that the government's complaint stated a claim arising under 26 U.S.C. § 6321--the general federal tax lien statute. ⁵ A tax lien arising under section 6321 is one of two types of tax liens the United States has available to it to enforce the estate tax liability of a decedent's estate. See United States v. Cleavenger, 517 F.2d 230, 232 (7th Cir.1975). The other type of lien to secure payment of federal estate taxes is known as the special estate tax lien. Id. The special estate tax lien arises under The general tax lien arises under 26 U.S.C. § 6321 when the taxpayer fails to pay a federal tax liability, after assessment and notice are given and demand upon the taxpayer is made. See Harris v. United States, 764 F.2d 1126, 1128 (5th Cir.1985). The lien continues until the taxpayer satisfies the debt or the statute of limitations runs. See 26 U.S.C. § 6322; United States v. Wilkes, 946 F.2d 1143 (5th Cir.1991); Texas Commerce Bank--Fort Worth v. United States, 896 F.2d 152, 161 (5th Cir.1990) (citations omitted). The government must collect the assessed tax liability "by levy or by a proceeding in court ... within 6 years after the assessment of the tax ..." 26 U.S.C. § 6502(a); McCray v. United States, 910 F.2d 1289, 1290 (5th Cir.1990), cert. denied sub nom., --- U.S. ----, 111 S.Ct. 1313, 113 L.Ed.2d 246 (1991); United States v. Verlinsky, 459 F.2d 1085, 1086-87 (5th Cir.1972). Section 6503(b) tolls the limitations period, however, "for the period the assets of the taxpayer are in the control or custody of the court in any proceeding before any court of the United States or of any State or the District of Columbia, and for 6 months thereafter." 26 U.S.C. § 6503(b).

                26 U.S.C. § 6324(a)(1), which provides that, "[u]nless the estate tax imposed by chapter 11 is sooner paid in full, or becomes unenforceable by reason of lapse of time, it shall be a lien upon the gross estate of the decedent for 10 years from the date of death...."  The special estate tax lien automatically attaches to all property in the decedent's estate upon the decedent's death;  the government need not make an assessment or a demand.   See Kleine v. United States, 539 F.2d 427, 429 (5th Cir.1976);  accord United States v. Vohland, 675 F.2d 1071, 1074 (9th Cir.1982);  see also Detroit Bank v. United States, 317 U.S. 329, 332, 63 S.Ct. 297, 298, 87 L.Ed. 304 (1943)
                

The Blakeman children argue that the district court erred in concluding that the government's complaint stated a claim under 26 U.S.C. § 6321 because the complaint does not contain a specific reference to the general federal tax lien under 26 U.S.C. § 6321. The government argues, on the other hand, that the complaint states a claim based on the general tax lien under the strictures of Rule 8 and notice pleading. See Fed.R.Civ.P. 8. Moreover, the government argues that, even if the Blakeman children did not ascertain from the complaint that the government's claim was based on section 6321's general tax lien, the Blakeman children had sufficient notice of the government's theory before trial. ⁶ The government argues also that, because the special estate tax does not depend upon the filing of the notice of a lien, there would have been no reason to make such an allegation in the complaint unless the government also sought relief under section 6321.

The Blakeman children's challenge consists simply of the argument that the complaint does not contain a specific reference to the general federal tax lien or section 6321 and the government relied solely on the special estate tax lien. We find that the Blakeman children's argument misapprehends the allegations in the complaint, the language of the The Federal Rules of Civil Procedure create a presumption against rejecting pleadings for failure to state a claim. See Auster Oil & Gas, Inc. v. Stream, 764 F.2d 381, 386 (5th Cir.1985), cert. denied sub nom., 488 U.S. 848, 109 S.Ct. 129, 102 L.Ed.2d 102 (1988). A plaintiff must comply with Rule 8 in pleading a claim for relief in federal court; this court has determined that Rule 8 may be satisfied by a "plain recitation of the facts that a party believes entitles her to relief." Id. While the complaint does not expressly state that the government sought foreclosure of its tax lien under section 6321, the allegations in the complaint support a claim based on a general...