United States v. Dase, 4:18-cv-00501-ACA
| Decision Date | 23 September 2019 |
| Docket Number | 4:18-cv-00501-ACA |
| Citation | 416 F.Supp.3d 1334 |
| Parties | UNITED STATES of America, Plaintiff, v. David Scott DASE, doing business as Advance Tooling, et al., Defendants. |
| Court | U.S. District Court — Northern District of Alabama |
Elizabeth Duncan, U.S. Department of Justice, Washington, DC, for Plaintiff.
Chirayu Madhu Shah, Bomar Law Firm, LLC, Lindan Jerome Hill, Gordon Dana Gilmore & Maner LLC, Birmingham, AL, for Defendant.
Before the court are cross-motions for summary judgment filed by Plaintiff United States (doc. 45), Defendant Rachel Kleinatland (doc. 47), and Defendant David Scott Dase, doing business as Advance Tooling (doc. 49).
A person's failure "to pay any tax" after the government's demand for payment creates "a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person." 26 U.S.C. § 6321. The government may enforce the lien by requesting that the court order a judicial sale of that property. Id. § 7403(c); United States v. Rodgers , 461 U.S. 677, 680, 103 S.Ct. 2132, 76 L.Ed.2d 236 (1983).
In this case, it is undisputed that the government has obtained a default judgment against Mr. Dase for unpaid taxes. (Doc. 45-2 at 3; see also United States v. Dase , case no. 4:16-cv-01957-KOB, Doc. 13 (M.D. Ala. Sept. 27, 2017)). As a result, the government requests that the court order the sale of property that it contends Mr. Dase owns. (See Doc. 21 at 4). The parties agree that Mr. Dase has an interest in the property at issue, but they dispute how much of an interest. The government contends that Mr. Dase owns the property in full; Mr. Dase and Ms. Kleinatland contend that each of them has a one-half interest.
The government seeks summary judgment on its own claims that Mr. Dase owns the property in full and that it is entitled to seek a forced sale of the property under § 7403. (Doc. 45). Ms. Kleinatland seeks partial summary judgment on the government's claim that Mr. Dase owns the property in full, and requests that the court either enter an order preventing the government from foreclosing on her interest in the property, or order the government to compensate her for the loss of her use of the whole property. (Doc. 47). Mr. Dase seeks partial summary judgment on the government's claim that he owns the property in full, and requests a finding that the government cannot enforce its lien against the property. (Doc. 49).
As the court will discuss in more detail below, under Alabama's intestacy laws, the undisputed evidence establishes that Mr. Dase and Ms. Kleinatland each have a one-half interest in the land. Accordingly, the court DENIES the government's motion for summary judgment. The court GRANTS IN PART Mr. Dase's and Ms. Kleinatland's motions for partial summary judgment and ENTERS SUMMARY JUDGMENT in their favor and against the government on the government's claim that Mr. Dase owns the property in full. But the court DENIES IN PART Mr. Dase's and Ms. Kleinatland's motions for partial summary judgment as to their other requests. The three parties to this case must do further briefing on those issues before the court can rule on them.
On cross-motions for summary judgment, the court "draw[s] all inferences and review[s] all evidence in the light most favorable to the non-moving party." Fort Lauderdale Food Not Bombs v. City of Fort Lauderdale , 901 F.3d 1235, 1239 (11th Cir. 2018) (quotation marks omitted). In this case, the parties agree on all of the facts; they disagree only about the legal import of those facts.
Mr. Dase and Ms. Kleinatland's parents, Walter and Anita Dase,1 jointly owned the property at issue in this case, each with a right of survivorship. (Doc. 45-3; see also Doc. 47-1 at 16–17). Mr. Dase and his wife have lived on the property continuously since the mid-2000s, while Ms. Kleinatland has lived elsewhere. (Doc. 47-1 at 17, 23, 36). In 2004, Walter and Anita Dase entered into a lease sale contract with Mr. Dase. (Doc. 45-5). Mr. Dase agreed to make monthly payments of $677.51 to his parents until he had paid $63,703.03, and his parents agreed that once he had paid in full, "the rent paid under this Lease shall be considered a payment for said property, and [they] shall make and execute a warranty deed conveying said property to [Mr. Dase]." (Id. at 1–2).
Mr. Dase made each monthly payment directly to the mortgagee of the property. (Doc. 47-1 at 30–31). While Mr. Dase was making the promised payments, Anita Dase died, followed several years later by Walter Dase. (Doc. 47-1 at 29–31). After Walter Dase died, Ms. Kleinatland produced a handwritten document signed by "W Dase," which stated: the farm being the property at issue in this case. (Doc. 55-1).
Mr. Dase and Ms. Kleinatland did not open a probate estate for either of their parents' estates (see Doc. 47-1 at 34), but Mr. Dase continued to make mortgage payments directly to the mortgagee. (Id. at 30, 32). He completed the payments required under the sale lease contract in 2012 and paid off the mortgage on the property in July 2018. (See Doc. 45 at 4 ¶ 10; Doc. 45-6; Doc. 45-7; Doc. 49 at 4 ¶ 10; Doc. 47-1 at 30–31, 67).
In October 2017, the government obtained a default judgment against Mr. Dase in the amount of $293,114.93 for federal employment taxes, federal unemployment taxes, and a federal civil penalty, plus statutory fees and interest. (Doc. 45-2 at 3; see also United States v. Dase , case no. 4:16-cv-01957-KOB, Doc. 13 (M.D. Ala. Sept. 27, 2017)). Mr. Dase has not satisfied that judgment, although the parties dispute whether he has made any payments toward the judgment. (See Doc. 45-2 at 4). In March 2018, the government filed this lawsuit against Mr. Dase and Ms. Kleinatland, along with several other defendants who have been dismissed. (Docs. 1, 18, 34).
After Mr. Dase paid off the mortgage on the property, the government filed an amended complaint, seeking an order that Mr. Dase owns the property, that the government's tax liens be foreclosed on his interest in the property, that the property be sold under 26 U.S.C. § 7403, and that the proceeds of the sale be distributed to the government and Defendants in accordance with the priority of their claims or interests. (Doc. 21 at 4).
In deciding cross-motions for summary judgment, the court must determine whether, accepting the evidence in the light most favorable to the non-moving party, the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a) ; see also Fort Lauderdale Food Not Bombs , 901 F.3d at 1239. To avoid any confusion about the standard applicable to each motion, the court will address the government's motion first, followed by Mr. Dase's and Ms. Kleinatland's motions.
The government contends that Mr. Dase holds equitable title to the entire property because (1) the evidence shows that Walter and Anita Dase intended to convey the property to Mr. Dase but died before they could effectuate that intent, or alternatively (2) the sale lease contract was an executory contract that gave Mr. Dase an equitable interest in the entire property once Walter and Anita Dase signed it. (Doc. 45 at 6–10 & 10 n.5).
As an initial matter, if Alabama's intestacy law controls the outcome of this case, then Mr. Dase and Ms. Kleinatland each inherited a one-half interest in the property. Under Walter and Anita Dase's survivorship warranty deed, Walter Dase took the real property in fee simple after Anita Dase's death. (Doc. 45-3 at 1); see Fretwell v. Fretwell , 283 Ala. 424, 218 So. 2d 138, 140 (1969) (). The parties agree that Walter Dase later died intestate with two surviving children: Mr. Dase and Ms. Kleinatland.2 (See Doc. 21 at ¶ 14; Doc. 47 at 2 ¶ 6; Doc. 49 at 5).
In Alabama, if a decedent leaves no surviving spouse,3 the estate passes "[t]o the issue of the decedent; if they are all of the same degree of kinship to the decedent they take equally." Ala. Code § 43-8-42(1). "Real estate passes immediately to the heirs upon the death of the intestate." Ala. Code § 28-9-203(c)(1). Thus, when Walter Dase died, the real property passed immediately to Mr. Dase and Ms. Kleinatland as tenants in common, each with a one-half interest in the property. See id. §§ 28-9-203(c)(1), 43-8-42(1) ; Ex parte Arvest Bank , 219 So. 3d 620, 628 (Ala. 2016) ; Clayton v. Clayton , 75 So. 3d 649, 654 (Ala. Civ. App. 2011) ().
The government does not quarrel with that analysis, but contends that because Mr. Dase entered a sale lease contract with his parents before their deaths and fully performed all of his obligations under that contract after their deaths, in equity he is the sole owner of the property, effectively preempting the application of Alabama's intestacy statute. (Doc. 45 at 6–8). In support of that argument, the government points to the Supreme Court's decision Wadsworth v. Hannah , 431 So. 2d 1186 (Ala. 1983). The court finds the Wadsworth decision distinguishable.
In Wadsworth , a landowner promised that he was going to convey parcels of land to two couples who were living on those parcels. 431 So. 2d at 1187. In exchange, the couples provided "valuable services" for the landowner. Id. at 1187–88. The landowner had an attorney prepare deeds for each parcel...
To continue reading
Request your trial
-
United States v. Gachette
...[earlier in the Rodgers opinion]; and (4) the relative character and value of the non-liable and liable interests held in the property. Id. at 1339 (quoting Rodgers, 461 U.S. 710-11) (internal quotations omitted)). The Motion did not discuss the rights and interests of various parties to th......