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Bietler v. State

United States District Court, E.D. Michigan, Southern Division

August 30, 2017

CYNTHIA M. BIETLER and STEPHANIE STARKS, Plaintiff,
v.
STATE OF MICHIGAN, et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART THE UNITED STATES' MOTION FOR SUMMARY JUDGMENT [#26], CANCELING HEARING AND DISMISSING ACTION

          GERSHWIN A. DRAIN, UNITED STATES DISTRICT JUDGE.

         I. Introduction

         On June 7, 2017, Defendant and Counterclaim Plaintiff, the United States of America, brought the present motion for Summary Judgment [26]. The United States asserts that its federal tax liens against Dorothy Palmer have priority over the requested attorney fees and interest on the unpaid balance of the land contract between Counterclaim Defendant Paul Misiewicz and Palmer. Upon review of the parties' briefing, the Court finds that oral argument will not aid in the resolution of this matter. Accordingly, the Court will resolve the United States' present motion on the submitted briefs. See E.D. Mich. L.R. 7.1(f)(2).

         II. Procedural Posture

         Plaintiffs Cynthia M. Bietler and Stephanie Starks filed the instant action in the Oakland County Circuit Court seeking to quiet title on a parcel of property. The original Defendants included both the State of Michigan and the United States of America; however, the State of Michigan conceded to Plaintiffs' request and is no longer involved in the matter. Dkt. No. 7, p. 3 (Pg ID 66). The United States removed the action to this Court and filed a Counterclaim against Bietler and Starks and joined Paul Misiewicz, who was formerly married to Bietler and currently engaged to Starks, which introduced questions of priority. Dkt. No. 2, p. 7 (Pg. ID 35).

         The United States then filed its first Motion for Summary Judgment asserting that the federal tax liens take priority over the Counterclaim Defendants' interests in the property in question. [17]. Though, upon further litigation, the United States acknowledged Misiewicz's priority and withdrew the motion. Dkt. No. 25, p. 1 (Pg. ID 188). The United States' second Motion for Summary Judgment solely concerns whether attorney fees and interest also have priority over the United States' federal tax liens. [26].

         III. Factual Background

         On July 26, 2010, Plaintiff and Counterclaim Defendant Bietler and Counterclaim Defendant Misiewicz sold, by land contract, the real property at 30649 Whittier Ave., Madison Heights, MI 48071 to Dorothy Palmer. Dkt. No. 1, p. 16 (Pg. ID 16). The agreed upon price came to $119, 900.00. Id. Palmer made all payments under the land contract except for the final lump sum of $82, 746.56. Dkt. No. 26-3, p. 1 (Pg. ID 209). Additionally, on three different dates in 2011 and one final date in 2015, the United States recorded Notices of Federal Tax Liens against Dorothy Palmer. Dkt. No. 1, pp. 18, 20, 22, 26 (Pg. ID 18, 20, 22, 26). The liens were never satisfied. Id.

         Misiewicz gave Palmer a notice of forfeiture of the land contract and subsequently filed suit in Michigan State Court in August 2015. Dkt. No. 26-4, p. 5 (Pg. ID 221). After receiving notice of the filing, Palmer informed Misiewicz that she would vacate the property and quit claim her interest to whomever he requested. Dkt. No. 26-6, p. 1 (Pg. ID 231). On September 8, 2015, Palmer executed and recorded a quitclaim deed to the property in favor of Bietler and Starks. Dkt. No. 1, p. 28 (Pg. ID 28). The forfeiture action was thereafter dismissed because Misiewicz failed to show up for the hearing on September 9, 2015. Dkt. No. 26-4, p. 5 (Pg. ID 221).

         On April 15, 2016, Bietler and Starks filed the current action to quiet title against the State of Michigan and the United States of America, asserting priority over the liens filed by each Defendant against Palmer. Dkt No. 1, p. 1 (Pg. ID 1). The Defendants removed the action on May 20, 2016. Id. On June 22, 2016, this Court entered a stipulated order quieting title against Defendant State of Michigan because it chose to concede to Plaintiffs' requests. [7]. Further, on May 24, 2017, the parties agreed to sell the property in question and hold the disputed proceeds from the sale in escrow pending the Court's adjudication of priority. [24].

         The United States joined Misiewicz so that it could assert its priority against each individual who claimed to have interest in the property. Dkt. No. 2, p. 7 (Pg. ID 35). Misiewicz's counsel asserted from the beginning that the United States had priority over Bietler and Starks, but not over Misiewicz, the original land contract vendor. Dkt. No. 15, p. 4 (Pg. ID 111). Accordingly, the United States focused its claim against Misiewicz, the original land contract vendor.

         At the time of the sale, the United States admitted Misiewicz was due the principle under the land contract, which he was paid at closing. Id. The title company from the closing is holding $69, 818.99 in escrow from the sale. The interest sought by Misiewicz comes to a total of $12, 174.82. Id. Misiewicz also seeks to recover attorney fees in the amount of $26, 587.50, bringing his requested relief to a total of $38, 762.32. Id. Finally, if the proceeds are disbursed so that Misiewicz receives the interest and attorney fees, the United States will receive $31, 056.67 towards Palmer's tax indebtedness. Id.

         As previously mentioned, the United States conceded after its first motion for summary judgment that Misiewicz has priority over the federal liens. Therefore, the only issue presently before the court involves the United States' assertion that the proceeds of the sale should not extend to the payment of interest and attorney fees. [26].

         IV. ...


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