United States v. GZ Constr. St, Inc.
| Decision Date | 31 December 2015 |
| Docket Number | CIVIL NO. 15-1025 (GAG) |
| Citation | 155 F.Supp.3d 147 |
| Parties | United States of America, Plaintiff, v. GZ Construction St, Inc., et al., Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
Beatriz T. Saiz, U.S. Department of Justice, Washington, DC, for Plaintiff.
Emilio E. Sole-de-la-Paz, Sole de la Paz Law Office San Juan, PR, for Defendants.
Plaintiff, the United States of America, brought this action to collect unpaid federal income tax liabilities assessed against Defendant, GZ Construction, Inc. (“GZ Construction”), for several tax periods between December, 2005, and December, 2012. (Docket No. 1 at 1-2.) The United States commenced this action, pursuant to 26 U.S.C. § 7402
, to reduce to judgment tax assessments made against GZ Construction. Id. at 2-3. Additionally, the Government claims Defendant Edgardo Guillén-Bermúdez, in his personal capacity as GZ Construction's President and sole officer, committed tortious conversion by intentionally depriving the United States of its right to property encumbered by a federal tax lien. Id. at 3-5.
Presently before the court is Defendants' motion to dismiss for failure to state a claim upon which relief can be granted, pursuant to Fed. R. Civ. P. 12(b)(6)
. (Docket No. 16.) After reviewing the submissions and the applicable law, the court DENIES Defendants' motion to dismiss at Docket No. 16.
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)
tests the legal sufficiency of the claims asserted in the complaint. Ashcroft v. Iqbal , 556 U.S. 662, 677–78, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
When considering a motion to dismiss for failure to state a claim upon which relief can be granted, the court analyzes the complaint in a two-step process under the current context-based “plausibility” standard established by the Supreme Court. See Schatz v. Republican State Leadership Comm. , 669 F.3d 50, 55 (1st Cir.2012)
(). First, the court must “isolate and ignore statements in the complaint that simply offer legal labels and conclusions or merely rehash cause-of-action elements.” Schatz , 669 F.3d at 55. Second, the court must then “take the complaint's well-pled (i.e., non-conclusory, non-speculative) facts as true, drawing all reasonable inferences in the pleader's favor, and see if they plausibly narrate a claim for relief.” Schatz , 669 F.3d at 55
. Plausible, means something more than merely possible, and gauging a pleaded situation's plausibility is a context-specific job that compels the court to draw on its judicial experience and common sense. Id. (citing Iqbal , 556 U.S. at 678–79, 129 S.Ct. 1937 ). This “simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of” the necessary element. Twombly , 550 U.S. at 556, 127 S.Ct. 1955.
“[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show [n]’—‘that the pleader is entitled to relief.’ ” Iqbal , 556 U.S. at 679, 129 S.Ct. 1937
(quoting Fed. R. Civ. P. 8(a)(2) ). If, however, the “factual content, so taken, ‘allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged,’ the claim has facial plausibility.” Ocasio–Hernández , 640 F.3d at 12 (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ).
Defendant GZ Construction has its principal offices in Puerto Rico. (Docket No. 1 ¶ 2.) Defendant Edgardo Guillén-Bermúdez was GZ Construction's President and sole officer during the tax periods in question. Id. ¶ 3. A delegate of the Secretary of Treasury properly and timely assessed GZ Constructions' tax liabilities on nine different occasions from December 4, 2006, to April 2, 2012.1 Id. ¶ 4. The Government informed Defendants of each assessment, and demanded payment of $146,773.83 for those liabilities. Id. ¶¶ 4-5.
GZ Construction failed to satisfy its obligation. Id. ¶ 6. Consequently, federal tax liens attached upon all property and rights to property belonging to GZ Construction in an amount equal to the unpaid assessments, plus interest and other statutory additions to the tax liability generated. Id. ¶¶ 9-10. Notices of Federal Tax Lien were filed for each period that GZ Construction generated tax liabilities.2 Id. ¶ 10. The most significant asset subjected to a federal tax lien was a 2005 Cessna Skyhawk 172S, a fixed-wing, single-engine aircraft (“the Aircraft”), with Serial Number 172S9777 and Federal Aviation Administration (FAA) registration number N066025, purchased on or about November 28, 2005, for $182,200.00. (Docket No. 1 ¶ 11.)
In the early Fall of 2007, the IRS began levying GZ Construction's revenue stream in an attempt to enforce collection for its outstanding tax liabilities. Id. ¶ 12. By early 2010, GZ Construction's revenue stream had ceased and their only considerable asset left was the Aircraft. Id. ¶ 13. Between February 25, 2010, and August 3, 2010, the IRS Revenue officer contacted Defendant Guillén and explained that he had to sell the Aircraft to satisfy GZ Construction Tax Liabilities, otherwise, the IRS could seize the Aircraft. Id. ¶ 14. On or about August 4, 2010, Defendant instead transferred the title of the Aircraft to his son, Ian Edgardo Guillén. Id. ¶ 15. The Aircraft was then sold to a third party on or about October 27, 2010, for approximately $143,000.00. Id. ¶ 16. On or about December 10, 2010, Defendant Guillén admitted to the revenue officer that the Aircraft's proceeds had been used to satisfy GZ Construction's other creditors, despite the federal tax liens. Id. ¶ 17.
As of December 2, 2013, GZ Construction remains indebted to the United States in the amount of $146,773.83, plus statutory interest, penalties, and fees for collection costs that continue to accrue. Id. ¶ 7.
In support for their motion to dismiss, Defendants first argue the Government has failed to plead sufficient facts in order to reduce a tax assessment to judgment because there are no assets from which to collect the remaining balance. (Docket No. 16 at 4.) The Government counters that because the IRS properly assessed and demanded payment of its tax liabilities, and Defendants still remain liable for $146,773.83, it has asserted enough facts to state a plausible cause of action regardless of whether there are funds available for collection. (Docket No. 18 at 2.) Second, Defendant Guillén claims that the IRS is barred from assessing tax liabilities against him because his individual tax liability was not assessed within the three-year statute of limitations period. (Docket No. 16 at 5.) However, the Government asserts that specifically at issue in this case is only whether Defendant Guillén is personally liable for tortious conversion of federal tax liens, and not whether he is individually accountable for any tax assessments. (Docket No. 18 at 6.) Thus, the Government contends that Defendant Guillén's argument that the United States' tax claims are time-barred lacks merit. Id.
The United States has “a number of distinct enforcement tools available ... for the collection of delinquent taxes.” U.S. v. Rodgers , 461 U.S. 677, 682, 103 S.Ct. 2132, 76 L.Ed.2d 236 (1983)
. “The Government may, for example, simply sue for the unpaid amount, and, on getting a judgment, exercise the usual rights of a judgment creditor.” Id. (referencing 26 U.S.C. § 6502(a), 7401, 7402(a) ). Under 26 U.S.C. § 7402(a), Congress conferred upon district courts “jurisdiction ... to render such judgments ... as may be necessary and appropriate for the enforcement of the tax laws.” 26 U.S.C. § 7402(a) ; see also Rodgers , 461 U.S. at 682–83, 103 S.Ct. 2132.
The IRS has the authority to “make assessments of all [of taxpayer's] unpaid taxes” and then enforce collection of the liabilities. U.S. v. Berk , 374 B.R. 385, 391 (D.Mass.2007)
. Certificates of assessments are presumed correct, so the taxpayer must present specific evidence to contest an assessment. Berk , 374 B.R. at 391 ; U.S. v. Hughes , 44 F.Supp.3d 169, 171–172 (D.Mass.2014). “Once the IRS makes an assessment of tax liability, it must ‘give notice to each person liable for the unpaid tax, stating the amount and demanding payment thereof’ within 60 days of the assessment.” Berk , 374 B.R. at 391
(citing 26 U.S.C. § 6303 ).
Defendants provide no authority or case law to support the proposition that there must be funds available in order for the district court to reduce a tax assessment to judgment. The complaint in this case contains sufficient factual allegations to support a claim to reduce to judgment tax assessments made against GZ Construction. The Government commenced this action at the direction of the Attorney General and with authorization from the IRS. (Docket No. 1 at 1.) The United States claims to have performed nine different assessments, each which serve as notification of the liability assessed. Id. ¶¶ 4. In its motion to dismiss, Defendants failed to offer any specific evidence to challenge the validity of the assessments, and thus, the complaint satisfies its initial burden of proof. Defendants argument that since there are no assets from where to collect the tax liabilities the tax claim cannot be reduced to a judgment is unavailing because the cause of action does not require the existence of assets or lack of thereof.
The Government has alleged that as of December 2, 2013, GZ Construction owed the Government $146,773.83 in unpaid taxes that were properly assessed, and despite the IRS' multiple demands for payment, Defendants failed to make...
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