United States v. Brooks
| Decision Date | 11 October 2018 |
| Docket Number | Case No. 6:17-cv-02010-TMC-JDA |
| Parties | United States, Plaintiff, v. Dennis D. Brooks, Barbara D. Brooks, Greenville County Tax Collector, Coach Hills Homeowner's Association Inc., South Carolina Department of Revenue, Defendants. |
| Court | U.S. District Court — District of South Carolina |
This matter is before the Court on motion for summary judgment and for default judgment filed by Plaintiff in this civil action. [Doc. 111.] Pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Local Civil Rule 73.02(B)(2)(e), D.S.C., this magistrate judge is authorized to review all pretrial matters in cases involving litigation by individuals proceeding pro se—which Dennis D. Brooks ("Brooks") and Barbara D. Brooks (collectively, "the Brookses") are—and to submit findings and recommendations to the District Court.
Plaintiff filed this action on July 28, 2017, seeking to reduce to judgment Brooks' outstanding tax liabilities and enforce and foreclose the corresponding federal tax liens on real property located at 10 Twin Oaks Court, Greenville, South Carolina ("the Subject Property").1 [Doc. 1.] The Complaint named Coach Hills Homeowner's Association, Inc.[sic] ("Coach Hills"), Greenville County Tax Collector, and South Carolina Department of Revenue ("SCDOR") as Defendants "pursuant to 26 U.S.C. § 7403(b) by virtue of liens [they might] claim against" the Subject Property.2 [Doc. 1 ¶ 7-9.] On October 13, 2017, with Coach Hills not having filed a pleading or otherwise participated in the case, Plaintiff filed a request for entry of default against Coach Hills [Doc. 23], and the Clerk entered default against Coach Hills the same day [Doc. 24].
On August 16, 2018, Plaintiff filed a motion for summary judgment against Brooks and for default judgment as to Coach Hills. [Doc. 111.] The following day, the Court issued an Order in accordance with Roseboro v. Garrison, 528 F.2d 309 (4th Cir. 1975), advising Brooks of the summary judgment/dismissal procedure and of the possible consequencesif he failed to adequately respond to the motion. [Doc. 112.] Brooks did not respond to the motion, nor did Coach Hills, and the motion is now ripe for review.
Because Brooks did not respond to Plaintiff's summary judgment motion, the following facts are uncontroverted.
Brooks failed to file tax returns for the years 2000, 2005, 2006, 2007, and 2011. [Doc. 111-2 at 3 ¶ 3.] As a result, the Internal Revenue Service determined the income tax Brooks owed for those years and sent deficiency notices to his last known address. [Id.] See 26 U.S.C. § 6212. Brooks did not petition the United States Tax Court to challenge those deficiency determinations within the time period allowed for such challenges. [Doc. 1 at ¶ 11.] See 26 U.S.C. § 6213.
As of August 6, 2018, Brooks owed the United States $622,849.14 on the assessments, penalties, and interest. [Doc. 111-2 at 52.] In light of Brooks' failure to satisfy the assessments after notice and demand for payment, federal tax liens arose on the dates of the assessment and attached to all of Brooks' property and rights to property, including the Subject Property. See 26 U.S.C. §§ 6321, 6322; United States v. Carter, No. 3:16-cv-674, 2018 WL 4356773, at *11 (E.D. Va. Sept. 12, 2018). The Brookses acquired title to the Subject Property by a deed dated December 17, 1979, and the deed was recorded on January 24, 1980, in the public records of Greenville County, South Carolina. [Doc. 111-2 at 58.] On the following dates, a delegate of the United States Secretary of the Treasury caused notices of federal tax lien to be recorded in the public records of Greenville County, South Carolina: July 20, 2010 for assessments relating to tax years2000, 2005, and 2006; September 29, 2015 for assessments relating to tax years 2007 and 2011; and December 7, 2016 for another assessment relating to tax year 2006.3 [Doc. 111-2 at 54-56.]
Coach Hills was served with the summons and complaint in this action by delivery to its registered agent for service of process on August 16, 2017. [Doc. 8-1 at 2.] Coach Hills was required to answer or otherwise respond on or before September 6, 2017. [Doc. Id. at 1.] However, it has not filed a responsive pleading or otherwise appeared in this case, and the Clerk has entered its default. [Doc. 24.]
Rule 56 of the Federal Rules of Civil Procedure states, as to a party who has moved for summary judgment:
The court shall grant summary judgment if the movant 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). A fact is "material" if proof of its existence or non-existence would affect disposition of the case under applicable law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue of material fact is "genuine" if the evidence offered is suchthat a reasonable jury might return a verdict for the non-movant. Id. at 257. When determining whether a genuine issue has been raised, the court must construe all inferences and ambiguities against the movant and in favor of the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).
The party seeking summary judgment shoulders the initial burden of demonstrating to the court that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has made this threshold demonstration, the non-moving party, to survive the motion for summary judgment, may not rest on the allegations averred in his pleadings. Id. at 324. Rather, the non-moving party must demonstrate specific, material facts exist that give rise to a genuine issue. Id. Under this standard, the existence of a mere scintilla of evidence in support of the non-movant's position is insufficient to withstand the summary judgment motion. Anderson, 477 U.S. at 252. Likewise, conclusory allegations or denials, without more, are insufficient to preclude granting the summary judgment motion. Ross v. Commc'ns Satellite Corp., 759 F.2d 355, 365 (4th Cir. 1985), overruled on other grounds, 490 U.S. 228 (1989). Anderson, 477 U.S. at 248. Further, Rule 56 provides in pertinent part:
Fed. R. Civ. P. 56(c)(1). Accordingly, when Rule 56(c) has shifted the burden of proof to the non-movant, he must produce existence of a factual dispute on every element essential to his action that he bears the burden of adducing at a trial on the merits.
Even when a summary judgment motion is unopposed, a district court must review the motion "and determine from what it has before it whether the moving party is entitled to summary judgment as a matter of law." Maryland v. Univ. Elections, Inc., 729 F.3d 370, 380 (4th Cir. 2013) (internal quotation marks omitted).
The Court has jurisdiction to enforce a lien and subject property to payment of tax where, as here, the United States has brought suit at the request of the Secretary of the Treasury to enforce a tax liability. See 26 U.S.C. § 7403(a). This Court is authorized to resolve all claims upon or liens to subject property, to order the property's sale if appropriate, and to determine how the sale proceeds will be distributed. 26 U.S.C. § 7403(c).
An assessment by the IRS of federal tax liability is presumed valid. Balkissoon v. Comm'r, 995 F.2d 525, 529 (4th Cir. 1993). A "Certificate of Assessments and Payments" is "presumptive proof of a valid assessment." United States v. Dixon, 672 F. Supp. 503, 506 (M.D. Ala. 1987) (cited Audio Invs. v. Robertson, 203 F. Supp. 2d 555,561 (D.S.C. 2002)). Thus, "[a] district court may properly rely on [such] forms to conclude that valid assessments were made unless a taxpayer presents evidence to the contrary." United States v. Taylor, No. 6:99-9247-24, 2000 WL 1683007, at *4 (D.S.C. Sept. 27, 2000). In this case, the United States has provided such forms demonstrating that the assessments were made and that they remain unpaid. [Doc. 111-2 at 9-50.]
The Brookses assert in their Answer that the assessments against him in this case are incorrect. For example, their Answer states that "the [assessed] amounts . . . are erroneous as they did not take into account the cost basis for the years mentioned." [Doc. 14 ¶ 12.] Brooks explained in his deposition that the assessments are based on erroneous computations of capital gains from stock and/or mutual fund sales to which the IRS attributed a zero basis. [Doc. 111-3 at 6.]
The Internal Revenue Code provides that gain from the sale of property is the amount realized from the sale less the property's adjusted basis, as defined in section 1011. 26 U.S.C. § 1011(a). Here, the basis of the stock or mutual funds on which Brooks' gain is to be computed was its cost. 26 U.S.C. §§ 1011, 1012(a); see also Brannen v. Comm'r, 722 F.2d 695, 701 (11th Cir. 1984). It is the taxpayer that bears the burden of establishing the basis for each transaction, see, e.g., Gen. Ins. Agency, Inc. v. Comm'r, 401 F.2d 324, 329 (4th Cir. 1968) (...
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