U.S. v. Dewes, 4:04CV6.

• Court: United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Indiana
• Writing for the Court: Allen Sharp
• Citation: 315 B.R. 834
• Parties: UNITED STATES of America, Appellant (Defendant below), v. Anne L. DEWES and 1st Source Bank, Appellee (Plaintiff and Defendant below). 1st Source Bank, Appellant (Defendant below), v. Anne L. Dewes and United States of America, Appellee (Plaintiff and Defendant below).
• Docket Number: No. 4:04CV7.,No. 4:04CV6.,4:04CV6.,4:04CV7.
• Decision Date: 13 August 2004

315 B.R. 834 UNITED STATES of America, Appellant (Defendant below),
v.
Anne L. DEWES and 1st Source Bank, Appellee (Plaintiff and Defendant below).
1st Source Bank, Appellant (Defendant below),
v.
Anne L. Dewes and United States of America, Appellee (Plaintiff and Defendant below). No. 4:04CV6. No. 4:04CV7. United States Bankruptcy Court, N.D. Indiana, Hammond Division at Lafayette. August 13, 2004.

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David A. Rosenthal, Lafayette, IN, for Plaintiff.

Karen A. Smith, US Department of Justice, Washington, DC, Robin W. Morlock, US Attorney's Office, Hammond, IN, Cathleen M. Shrader, Henry P. Najdeski, Michael P. O'Hara, Thomas P. Yoder, Barrett and McNagny, Fort Wayne, IN, Mark E. Wagner, Kizer and Neu, Bremen, IN, Michael D. Hardy, Barnes & Thornburg, South Bend, IN, for Defendant.

MEMORANDUM AND ORDER

ALLEN SHARP, District Judge.

The instant appeal is brought from the entry of a final judgment by the United States Bankruptcy Court. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 158(a). The Bankruptcy Court entered its Amended Judgment, which was a final judgment, on December 11, 2003 and Appellants 1st Source Bank ("Bank"), and the United States of America ("IRS") timely filed its Notice of Appeal on or about December 22, 2003. This Court has consolidated the appeals, specifying No. 4:04-cv-6 as lead case. This Court heard oral argument on this matter in Lafayette, Indiana on May 24, 2004.

I. Background

Ann Dewes ("Dewes") filed her bankruptcy petition on November 22, 2000, and on February 28, 2001, she filed a complaint seeking a determination as to the extent and validity of the tax liens and the mortgage of the Bank against certain property

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owned by the debtor and her husband. On October 7, 2002, the Bankruptcy Court determined that, of two notices of federal tax lien, the first one had priority over the Bank's mortgage, but that the debtor may avoid the first tax lien under Section 544(a)(3) of Title 11. The Bankruptcy Court further determined that the first tax lien was preserved for the estate under Section 551, allowing the estate to assert it over the Bank's mortgage. The Bankruptcy Court also ruled that certain transfers were valid notwithstanding mistaken legal description in the deeds, such that a subsequently arising second tax lien never attached to the property.

The October 7, 2002 Judgment was appealed and such appeal was dismissed upon determination by this Court that the October 7, 2002 Judgment was not a final judgment since it did not actually declare the tax lien avoided. On August 29, 2003, the matter was remanded back to the Bankruptcy Court. On December 11, 2003, the Bankruptcy Court indicated that it would enter an amended judgment. It then entered an Amended Judgment providing that the first tax lien of the IRS "is hereby avoided and preserved for the benefit of the bankruptcy estate."

II. Standard of Review

As stated by the Seventh Circuit, "[i]n the course of a district court's decision to affirm, modify or reverse an order of the bankruptcy court, `[f]inding of fact ... shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of witnesses.' ... Both questions of law and mixed questions of law and fact, however, are reviewed de novo." Mungo v. Taylor, 355...