U.S. v. Register

• Decision Date: 11 June 2010
• Docket Number: Civil Action No. 2:09cv161
• Citation: 717 F.Supp.2d 517,105 A.F.T.R.2d 2010
• Parties: UNITED STATES of America, Plaintiff, v. Dennis R. REGISTER, Cola Galvin-Register, J.P. Morgan Chase, and Wachovia Bank, N.A., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

717 F.Supp.2d 517
105 A.F.T.R.2d 2010

UNITED STATES of America, Plaintiff,
v.
Dennis R. REGISTER, Cola Galvin-Register, J.P. Morgan Chase, and Wachovia Bank, N.A., Defendants.

Civil Action No. 2:09cv161.

United States District Court,
E.D. Virginia,
Norfolk Division.

June 11, 2010.

717 F.Supp.2d 519

Allie C. Yang-Green, Lawrence R. Leonard, Christopher D. Belen, for Plaintiff.

717 F.Supp.2d 520

Michael P. Cotter, for Defendants, Dennis R. Register and Cola Galvin-Register.

Earl E. Farnsworth, Jr., for Defendant, J.P. Morgan Chase.

Lindsey Kelly, for Defendant, Wachovia Bank, N.A.

OPINION AND ORDER

MARK S. DAVIS, District Judge.

This matter is before the Court on Plaintiff United States of America's ("Government") Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56. (Docket No. 18.) After careful consideration, and for the reasons set forth below, the Court GRANTS the Government's Motion for Summary Judgment.

I. UNDISPUTED FACTS

A. Register's Alleged Tax Liability

Between 1999 and 2007, the Internal Revenue Service ("IRS") assessed Defendant Dennis Register ("Register") with unpaid federal income taxes for the years 1994, 1996, 1998, 1999, and 2002. The Government provided Register with notice of the assessments and demanded payment. In October 2005 and October 2007, the Government filed in the Circuit Court for the City of Chesapeake notices of federal tax liens against Register related to his outstanding tax liabilities. As of March 1, 2010, the unpaid federal taxes, together with statutory penalties and interest, owed by Register to the Government totaled $179,727.84.

B. Galvin's Property Interest

In March 2001, Defendant Cola Galvin-Register ("Galvin") and her son moved to Register's residence in Chesapeake, Virginia (the "Real Property"), which Register jointly owned with his then-wife, Beth Register. Defendants Register and Galvin (collectively the "Defendants") agreed that Galvin would make monthly payments of approximately $1,000 to Register, which represented roughly half of Register's monthly mortgage payment, and was also roughly the equivalent of Galvin's rent and expenses at her previous residence. Defendants further agreed that Galvin would be responsible for buying food and other household products, while Register would pay for the utilities. Defendants' arrangement was to continue as long as Galvin lived at the Real Property.

In March 2004, Register and Beth Register divorced, and she relinquished any property interest in the Real Property to Register. On April 16, 2004, Register transferred his interest in the Real Property to himself and Galvin, by then his fiancee, through a Deed of Gift. At the time the Deed of Gift was executed, the parties did not agree to exchange anything of value in consideration for the interest Galvin received in the Real Property. However, between the time she first moved to the Real Property in 2001 and execution of the Deed of Gift in 2004, Galvin made monthly payments to Register totaling approximately $40,000. At the time Register transferred his interest in the Real Property to Galvin, she was unaware of any federal tax liens encumbering the Real Property. In September 2004, Register and Galvin were married.

II. PROCEDURAL HISTORY

On April 14, 2009, the Government filed a Complaint seeking to reduce to judgment Defendant Register's unpaid tax liabilities for the years 1994, 1996, 1998, 1999, and 2002, together with statutory penalties and interest. (Docket No. 1.) In its Complaint, the Government further seeks to foreclose the federal tax liens and force the sale of the Real Property held by Register and

717 F.Supp.2d 521

Galvin to pay Register's outstanding tax debt.¹

On April 16, 2010, the Government filed the instant Motion for Summary Judgment. (Docket Nos. 18 & 19.) Soon thereafter, on April 28, 2010, Defendants Register and Galvin jointly submitted a response to the Government's motion. (Docket No. 20.) The Government replied on May 4, 2010. (Docket No. 22.) The Court dispensed with oral argument because the facts and legal contentions were adequately presented and oral argument would not aid the decisional process.² The matter is now ripe for decision.

III. STANDARD OP REVIEW

Federal Rule of Civil Procedure 56 permits summary judgment when the Court, viewing the record as a whole and in the light most favorable to the non-moving party, determines that there exists no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 521-22 (4th Cir.2003); Fed.R.Civ.P. 56(c). The moving party bears the initial burden of showing that summary judgment is appropriate by providing evidence illustrating the absence of any genuine issue of material fact. Celotex, 477 U.S. at 322-24, 106 S.Ct. 2548; Bouchat, 346 F.3d at 522. Once such a showing has been made, the non-moving party is not permitted to merely rest upon the pleadings, but must instead provide exhibits or sworn affidavits illustrating specific facts that remain in dispute and justify the matter proceeding to trial. Celotex, 477 U.S. at 322-24, 106 S.Ct. 2548; Bouchat, 346 F.3d at 522.

When considering affidavits and exhibits at the summary judgment stage, the facts must be viewed in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)). The non-moving party must also receive the benefit of all reasonable inferences. Id. (citing Adickes, 398 U.S. at 158-59, 90 S.Ct. 1598). After reviewing the record, a court must assess whether, in light of the parties' burdens, "no genuine issue of material fact" exists. Id. at 248, 106 S.Ct. 2505. A fact is "material" if it "might affect the outcome of the suit under the governing law." Id. A material fact presents a "genuine" issue if "a reasonable jury could return a verdict for the non-moving party." Id. Accordingly, if it appears that "a reasonable jury could return a verdict for [the non-moving party], then a genuine factual dispute exists and summary judgment is improper." Evans v. Techs. Applications & Serv. Co., 80 F.3d 954, 958-59 (4th Cir.1996); see also Anderson, 477 U.S. at 250, 106 S.Ct. 2505 ("The inquiry performed is the threshold inquiry of determining whether there is the need for a trial-whether, in other words, there are any genuine factual issues that properly can be resolved only by a

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finder of fact because they may reasonably be resolved in favor of either party.").

IV. DISCUSSION

The Government moves for summary judgment pursuant to Federal Rule of Civil Procedure 56 on the grounds that (1) it has made an unrebutted prima facie case of Register's tax liabilities, together with statutory penalties and interest, in the amount of $179,727.84, and (2) it is entitled to foreclose the federal tax liens attached to the Real Property and have the Real Property sold to satisfy Register's unpaid tax debt. Defendants do not contest that the Government is entitled to reduce to judgment Register's outstanding tax liabilities. Rather, Defendants argue that the federal tax liens encumbering the Real Property are invalid and that the Government cannot force the sale of the Real Property because Defendant Galvin is protected, under a statutory exemption, as a "purchaser" who paid adequate and full consideration for her interest in the Real Property and had no knowledge of the federal tax liens at the time she acquired that interest. The Government, in turn, claims that although Galvin had no notice of the federal tax liens, she is not a "purchaser" because she did not provide adequate and full consideration for her interest in the Real Property at the time of transfer. However, Defendants contend that, in any event, summary judgment is inappropriate because a dispute exists with respect to a material fact at issue in the case, namely the characterization of Galvin's monthly payments to Register as adequate and full consideration. Analysis of the Government's motion properly begins by examining whether Register's unpaid tax assessments can be reduced to judgment.

A. Judgement for Unpaid Tax Liabilities

The Government first seeks to reduce to judgment Defendant Register's outstanding tax liabilities. In a tax collection action, the Government can establish a prima facie case in support of tax liability by showing that an assessment has been made against a defendant. See United States v. Fior D'Italia, 536 U.S. 238, 242, 122 S.Ct. 2117, 153 L.Ed.2d 280 (2002) ("It is well established in the tax law that an assessment is entitled to a legal presumption of correctness-a presumption that can help the Government prove its case against a taxpayer in court."). The Government may demonstrate that an assessment has properly been made against a defendant by offering a Certificate of Assessments and Payments. See United States v. Pomponio, 635 F.2d 293, 296 (4th Cir.1980) (finding that "the Government established a prima facie case in support of the tax liability ... when it introduced into evidence the certified copies of the certificates of assessment" in a case involving liability under 26 U.S.C. § 6672). Such certificates are presumed correct unless the defendant provides proof to the contrary. United States v. Janis, 428 U.S. 433, 440, 96 S.Ct. 3021, 49 L.Ed.2d 1046 (1976); see also Pomponio, 635 F.2d at 296 (finding presumption of correctness in case involving liability under § 6672).

In the instant action, the Government has offered Certificates of Assessment and Payments as proof that valid assessments of unpaid federal income taxes, together with statutory penalties and interest, have been made against Register for the years 1994, 1996, 1998, 1999, and 2002. (Decl...