United States v. Allison
| Decision Date | 24 February 2022 |
| Docket Number | 1:20-cv-00269-DAD-HBK |
| Citation | 587 F.Supp.3d 1015 |
| Parties | UNITED STATES of America, Plaintiff, v. Diane R. ALLISON, et al., Defendants. |
| Court | U.S. District Court — Eastern District of California |
Boris Kukso, US Department of Justice, Tax Division, Washington, DC, for Plaintiff.
James Franklin Drake, III, Drake Legal Group, Newport Beach, CA, for Defendants.
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT
Before the court is a motion for partial summary judgment filed by plaintiff, the United States of America, to reduce to judgment unpaid estate taxes by defendant the Estate of Roger L. Wilson, Sr. and to impose personal liability for the unpaid estate taxes on defendants Diane R. Allison and Sonja R. Wilson. (Doc. No. 29.) Pursuant to General Order No. 617 addressing the public health emergency posed by the COVID-19 pandemic, plaintiff's motion was taken under submission on the papers. (Doc. No. 30.) For the reasons explained below, the court will grant in part and deny in part plaintiff's motion.1
The parties have submitted a joint statement of stipulated facts and disputed issues in advance of plaintiff's motion for partial summary judgment. (Doc. No. 27.) The following is drawn from that joint statement or its exhibits. Roger L. Wilson, Sr. (the "decedent") died on November 27, 2005. (Doc. No. 27 at ¶ 4.) Approximately two weeks before his death, on November 12, 2005, the decedent created a revocable inter vivos trust called the Roger L. Wilson Revocable Trust (the "trust"). (Id. at ¶ 5.) Defendants Diane R. Allison and Sonja R. Wilson were and continue to be the two co-trustees of the trust. (Id. at ¶ 6.) Shortly before decedent's death, he transferred certain assets totaling $518,750 to the trust. (Id. at ¶ 10.)
On or about February 27, 2007, defendants Allison and Wilson filed an estate tax return (Form 706) on behalf of defendant the Estate of Roger L. Wilson, Sr. (the "estate"). (Doc. No. 27 at ¶ 7.) The estate tax return reported that the total gross estate value at the date of decedent's death was $1,663,242. (Id. at ¶ 9.) Presently, all the property of the trust and the estate has been transferred or distributed, and the tax liability reported on the estate tax return—amounting to $192,425—has been paid in full. (Id. at ¶¶ 11–12; Doc. No. 27-1 at 1.)
Three years later, on or about February 9, 2010, defendants Allison and Wilson, acting as the estate's representatives and the trust's trustees, executed a Waiver of Restrictions on Assessments (Form 890) agreeing to an immediate assessment of $96,808 in additional tax on the estate (the "additional assessment"). (Doc. No. 27 at ¶ 13.) Memorializing the additional assessment are three documents attached to the joint statement of stipulated facts: the Report of Estate Tax Examination Changes (Form 1273); the Adjustments to Taxable Estate (Form 3228); and the Explanation of Items (Form 886A). (Doc. No. 27-2.) All but three of the adjustments made in the additional assessment have been agreed to by the parties. (Doc. No. 27 at ¶ 17.) Two of the disputed adjustments are placed at issue by plaintiff's pending motion for partial summary judgment: (1) the inclusion of a $35,000 check made out to the Department of Child Support Services in the gross estate; and (2) the disallowance of $25,000 deduction from a settlement payment paid by the estate. (Id. )
The first disputed adjustment concerns a $35,000 cashier's check that was purchased with funds withdrawn from the decedent's account on November 10, 2005. (Doc. No. 27 at ¶ 18.) The decedent intended the $35,000 cashier's check as a gift to decedent's son, Roger Wilson, Jr., to settle Mr. Wilson, Jr.’s debt for child support. (Id. at ¶ 19.) However, the payment was refused by the Department of Child Support Services and on March 13, 2006 the check was cancelled. (Id. ) That same day, March 13, 2006, the estate issued a $29,000 check to the Department Child Support Services and a $6,000 check to Mr. Wilson, Jr. "to effectuate the gift." (Id. at ¶ 21.) The parties disagree regarding whether the $35,000 total should or should not be included in the decedent's estate. (Id. at ¶ 22.)
The second disputed adjustment concerns a $25,000 settlement payment stemming from a lawsuit filed in Fresno County Superior Court within a week of decedent's death.2 (Doc. No. 27 at ¶ 27.) The lawsuit was initiated by Jannise Lazarus ("Jannise") and Ashli Tree-Ana Wilson-Bolton (a minor) ("Ashli") through her guardian ad litem Jannise against defendants Allison and Wilson as co-trustees of the trust. (Id. at ¶ 27.) The lawsuit sought to determine that certain real and personal property of the decedent's belonged to Jannise and Ashli and was not the property of the trust or decedent's estate. (Id. at ¶ 28.) On or about October 6, 2006, the parties settled the lawsuit and executed a mutual general release and settlement agreement. (Doc. No. 27 at ¶ 29.) Under that settlement agreement, which is attached to the joint statement of stipulated facts, (Doc. No. 27-3), Ashli received $25,000 cash from the trust, among other property, that was sent "directly to Jannise and Ashli's attorneys" and "used to pay Jannise and Ashli's attorney's fees." (Doc. No. 27 at ¶¶ 30, 32.) The parties disagree regarding whether the $25,000 is deductible from the decedent's estate under 26 U.S.C. § 2053(a) and 26 C.F.R. § 20.2053-4. (Id. at ¶ 33.)
Summary judgment is appropriate when the moving party "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).
In summary judgment practice, the moving party "initially bears the burden of proving the absence of a genuine issue of material fact." In re Oracle Corp. Sec. Litig. , 627 F.3d 376, 387 (9th Cir. 2010) (citing Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). The moving party may accomplish this by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials," or by showing that such materials "do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed. R. Civ. P. 56(c)(1)(A), (B).
If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In attempting to establish the existence of this factual dispute, the opposing party may not rely upon the allegations or denials of its pleadings but is required to tender evidence of specific facts in the form of affidavits or admissible discovery material in support of its contention that the dispute exists. See Fed. R. Civ. P. 56(c)(1) ; Matsushita , 475 U.S. at 586 n.11, 106 S.Ct. 1348 ; Orr v. Bank of Am., NT & SA , 285 F.3d 764, 773 (9th Cir. 2002) (). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law, see Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n , 809 F.2d 626, 630 (9th Cir. 1987), and that the dispute is genuine, i.e., the evidence is such that a reasonable jury could return a verdict for the non-moving party, see Anderson , 477 U.S. at 250, 106 S.Ct. 2505 ; Wool v. Tandem Computs. Inc. , 818 F.2d 1433, 1436 (9th Cir. 1987). When establishing the existence of a factual dispute, the opposing party need not resolve a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing versions of the truth at trial." T.W. Elec. Serv. , 809 F.2d at 631. Thus, the "purpose of summary judgment is to ‘pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.’ " Matsushita , 475 U.S. at 587, 106 S.Ct. 1348 (citations omitted).
"In evaluating the evidence to determine whether there is a genuine issue of fact," the court draws "all inferences supported by the evidence in favor of the non-moving party." Walls v. Cent. Contra Costa Cnty. Transit Auth. , 653 F.3d 963, 966 (9th Cir. 2011). It is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. See Richards v. Nielsen Freight Lines , 602 F. Supp. 1224, 1244–45 (E.D. Cal. 1985), aff'd , 810 F.2d 898, 902 (9th Cir. 1987). Undisputed facts are taken as true for purposes of a motion for summary judgment. Anthoine v. N. Cent. Counties Consortium , 605 F.3d 740, 745 (9th Cir. 2010). Finally, to demonstrate a genuine issue, the opposing party Matsushita , 475 U.S. at 587, 106 S.Ct. 1348 (citation omitted).
Gov't of Guam v. Guerrero , 11 F.4th 1052, 1058 (9th Cir. 2021). The government's "deficiency determinations and assessments for unpaid taxes" are presumed correct "so long as they are supported by a minimal factual foundation."...
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