United States v. Arthur
| Decision Date | 19 September 2011 |
| Docket Number | Case No. 4:10CV01561 AGF |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. JOHN P. ARTHUR, also known as, JOHN P. ARTHUR, JR., and TANDY C. THOMPSON, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on Defendant Tandy Thompson's Motion to Dismiss or for a More Definite Statement [Doc. No. 10]. The United States brings this action to reduce to judgment federal tax assessments made against Defendant John P. Arthur, to foreclose federal tax liens on the real property described in the complaint as "Parcels A, B, C, and D," and to set aside allegedly fraudulent conveyances of Parcels B and C made by Arthur to himself and Thompson. Acting pursuant to 26 U.S.C.§ 7403(b), the United States has named Thompson as a Defendant to allow her to assert any interest she claims in the subject real estate prior to a court-ordered sale of the properties.
The complaint alleges that from 1989 through 2001, Arthur acquired interests in Parcel A, which is located in Saint Louis County, Missouri, and in Parcels B, C and D, which are located in Pike County, Missouri.1 Arthur allegedly has delinquent taxliabilities for tax years 1994 through 1998 and 2001 through 2005.2 The earliest assessment for these liabilities arose on September 9, 2000. On May 1, 2009 and July 14, 2009, the United States filed notices of federal tax liens tied to these assessments with the Saint Louis County, Missouri, Recorder of Deeds and the Pike County, Missouri, Recorder of Deeds, respectively.3
Thompson acquired an interest in Parcel A in November 1989 and in Parcels B, C, and D in June 2001. The United States alleges that purported transfers of Parcels B and C from Arthur to Thompson were made without adequate and fair consideration, allowed Arthur to retain control of Parcels B and C, and rendered him insolvent, and that the purported conveyances were made with the intent to defraud Arthur's creditors and are of no effect. The United States asserts that each of the assessments remains unpaid and forms the basis for a valid federal tax lien that it seeks to enforce.
In her motion to dismiss, filed pursuant to Federal Rule of Civil Procedure 12(b)(6), Thompson asserts that United States' allegations fail to state a claim. In the alternative, she asserts that the allegations should be clarified in an amended complaintpursuant to Federal Rule of Civil Procedure 12(e). Specifically, Thompson contends that the United States has miscalculated the amounts allegedly owed by Arthur under Count I of the complaint. Thompson also asserts, in the alternative, that Count II lacks a statutory or other legal basis, and that United States has not adequately pled the elements of a fraudulent conveyance claim under either the Missouri Uniform Fraudulent Transfer Act ("UFTA"), Mo. Rev. Stat. §§ 428.005-135 (2000) or the Federal Debt Collection Procedure Act ("FDCPA"), 28 U.S.C. §§ 3304-3308 (2006). Thompson further contends that the claims for fraudulent conveyance under the UFTA or FDCPA are time-barred. Finally, she argues that the United States cannot claim a lien interest in Parcel A and that the United States' asserted lien interests in Parcels B, C, and D are limited to the tax assessments levied in September 2000 for tax years 1994 through 1998.
A motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim tests the legal sufficiency of a complaint so as to eliminate claims "which are fatally flawed in their legal premises . . . thereby sparing litigants the burden of unnecessary pretrial and trial activity." Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir. 2001) (citing Neitzke v. Williams, 490 U.S. 319, 326-27 (1989)). To survive a motion to dismiss for failure to state a claim, a complaint need not contain "detailed factual allegations," but it must contain facts with enough specificity "to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). As the United States Supreme Court reiterated in Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009),"[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements," will not pass muster under Twombly.
Upon considering a motion to dismiss, a federal court must accept as true all factual allegations in the complaint and view them in the light most favorable to the plaintiff. Fed. R. Civ. P. 12(b)(6); Erickson v. Pardus, 551 U.S. 89, 94 (2007); Davenport v. Farmers Ins. Grp., 378 F.3d 839, 842 (2004). The task of a court is then "to review the plausibility of the plaintiff's claim as a whole, not the plausibility of each individual allegation." Zoltek Corp. v. Structural Polymer Grp., 592 F.3d 893, 896 n.4 (8th Cir. 2010) (citing Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) ().
Rule 12(e), Fed. R. Civ. P., provides that a party may move for a more definite statement in response to a pleading that is "so vague or ambiguous that the party cannot reasonably prepare a response." Fed. R. Civ. P. 12(e). "A pleading that meets Rule 8(a)'s notice pleading standard and puts the other party on notice of the claim does not provide a basis for requesting a more definite statement." Blankenship v. Chamberlain, 695 F. Supp. 2d 966, 977 (E.D. Mo. 2010) (citation omitted).
Thompson first contends that the amounts alleged as owed under the disputed tax assessments in Count I are improperly calculated and that the amount should be limited to $230,537.24, rather than $305,136.66. The United States responds that the amounts setforth in the complaint are correct, and that Thompson has failed to take into account the accrued interest and penalties on the delinquent tax assessments.
At the outset, one must question Thompson's challenges to Count I as that claim is directed only at Arthur. In any event, however, the objection fails because the calculation of damages is ultimately a fact specific determination and not one which is properly resolved by way of a motion to dismiss. Peck v. Hoff, 660 F.2d 371, 374 (8th Cir. 1981) ().
In its response to the motion to dismiss, the United States proposes to amend Count I to set forth the methodology used to determine the delinquent tax liability. While the Court is denying Thompson's motion to dismiss Count I, in the interest of clarity, the Court will grant, in part, the motion for a more definite statement, requiring the United States to amend its complaint as set forth in its response to Defendant's motion to dismiss [Doc. No. 19 at 3].
Thompson next asserts that the United States fails to denominate the legal theory or theories that form the basis of Count II, and that if the United States intends to plead a claim for fraudulent conveyance, it has not adequately pled the elements of such a claim under the Missouri UFTA or the FDCPA.
The Court finds, however, that the United States has identified a valid legal basis for Count II. The United States identifies 26 U.S.C. §§ 7402-7403 as a statutory and jurisdictional basis for this count. Section 7403(a) of the Internal Revenue Code permits the United States to seek the judicial sale of property on which the United States has a tax lien in order to satisfy delinquent tax liability. 26 U.S.C. § 7403(a); United States v.Rodgers, 461 U.S. 677, 681 (1983). The United States is required to name as parties to the action all persons claiming an interest in the subject property. 26 U.S.C. § 7403(b). The Code further provides that after the Court has resolved all claims to the property, including questions of fraudulent conveyance, it may order a sale of the property and distribute the proceeds according to the respective interests. 26 U.S.C. § 7403(c).
When pursuing claims for fraudulent conveyance, the United States may proceed under either the Missouri UFTA or the FDCPA. United States v. Upton, 967 F. Supp. 57, 58 (D. Conn. 1997) ().
Here, Count II properly states a claim for the fraudulent conveyance of Parcels B and C. The essential elements of a fraudulent conveyance are: "(1) a conveyance or assignment (2) of . . . [an] interest in land (3) with the intent to hinder, delay, or defraud creditors." Howard v. Whiteside, 4:10CV00013 CAS, 2010 WL 1463018 at *5 (E.D. Mo. April 13, 2010); Fisher v. Brancato, 147 S.W.3d 794, 799 (Mo. Ct. App 2004) (citing Behr v. Bird Way, Inc., 923 S.W.2d 470, 473 (Mo. Ct. App. 1996)). In addition to these elements under the Missouri UFTA, there are eleven factors,4 or "badges offraud" to be given consideration in determining the presence of "the intent to hinder, delay or defraud" a creditor. See Mo. Rev. Stat. § 428.024.2(1)-(11).
The United States here alleges facts which satisfy several of these indicia of intent. Specifically, the United States alleges that the purported transfers of Parcels B and C from Arthur to Thompson were made without adequate and fair consideration, allowed Arthur to retain control of Parcels B and C, and rendered Arthur insolvent. Complaint at ¶¶ 9-11, 13-20, & 21-27. The United States further alleges that Arthur's purported transfers of Parcels B and C to Thompson were fraudulent as to the United States because Arthur conveyed them to Thompson in order to hinder or defraud his creditors. Id. at ¶¶ 21-27. As such, the Court concludes that the United States has properly alleged alternate statutory bases for recovery in Count II, and that the allegations of fraudulent conveyance provide sufficient specificity "to raise a right to relief above the speculative level." Twombly at 555...
To continue reading
Request your trial