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United States v. Church

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

May 3, 2019

United States of America, Plaintiff,
Tammy M. Church, et al., Defendants.


          Paul L. Maloney United States District Judge.

         Defendant Tammy Church filed a motion to set aside a consent judgment. (ECF No. 53.) The matter was referred to the magistrate judge, who held an evidentiary hearing. (ECF No. 82.) The magistrate judge issued a report recommending the motion be denied. (ECF No. 84.) Two parties filed objections.

         After being served with a report and recommendation (R&R) issued by a magistrate judge, a party has fourteen days to file written objections to the proposed findings and recommendations. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b)(2). A district court judge reviews de novo the portions of the R&R to which objections have been filed. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b)(3). Only those objections that are specific are entitled to a de novo review under the statute. Mira v. Marshall, 806 F.2d 636, 637 (6th Cir. 1986) (per curiam).

         A. Old Republic Title Insurance (ECF No. 85)

         Old Republic objects to footnote 4 in the report and recommendation. Specifically, Old Republic objects to the magistrate judge's statement that a proposed consent order filed with the Court would be moot should the Court deny the motion to set aside the Agreed Final Order.

         Old Republic's objection is AFFIRMED and the footnote R&R will be modified to omit the footnote. Given the amount of taxes owed to the IRS and the outstanding mortgage, Church will likely not receive any proceeds from the sale of her home beyond what the Agreed Final Order specifies. On that assumption, the portion of the Consent Order that transfers additional proceeds from Church to Old Republic would be an event that would never occur. But, there are other provisions in the Consent Order and those would not be rendered moot were this Court to deny Church's motion to set aside the Agreed Final Order.

         B. Tammy Church (ECF No. 90)

         Church has not objected to the portion of the Report and Recommendation outlining the relevant legal standard and burden of proof. A presumption exists that Church's attorney acted with her authority. Accordingly, Church bears the burden of proving that her attorney did not have the authority to settle the case and to consent to the entry of judgment.

         Church has objected to various proposed findings of fact. The Court has reviewed her objections de novo. In addition to the documents submitted by the parties, the Court has reviewed the transcript of the evidentiary hearing. Church's objections are overruled.

         Objection 1 - Retainer Agreement. The retainer agreement speaks for itself. The stated "goal of our representation" was to reach an agreement with the IRS so that Church could sell the house, excuse or eliminate the remaining tax obligation, and stay in the home until it sold. Nothing in the retainer agreement supports Church's assertion that the goals outlined in the agreement would be pursued only after discovery established that she was obligated to pay her creditors the amount that they were demanding. In fact, one of the phrases in the retainer on which Church relies (Objection at 2 PageID.597)-"we will vigorously defend your rights"-is followed immediately by language undermining her assertion.

however, conceding your ultimate liability on taxes, there is little to no likelihood that you will be able to defeat the lien of the IRS or retain your home. You also understand that in addition to the IRS, several other creditors have either an unsecured interest or a secured interest in your home, which would, regardless of our success with the IRS lien and claim, have to be satisfied also, before you could retain your home.

(ECF No. 61-1 PageID.324.)

         The purpose of Attorney Gezon's representation was to negotiate a settlement. This makes intuitive sense. Between the IRS and Old Republic, the allegation is that Church owes approximately $1, 200, 000. (R&R at 11 PageID.565.) For discovery to be useful in this situation, Church would have to find evidence that would bring her obligations down by more than half in order to simply satisfy her debts by selling her house, which was worth approximately $500, 000. (Id.)

         The answer to the complaint and Mediation Letter do not establish that Church and her attorney reached any agreement about discovery as a prerequisite to the authority to settle. The fact that the attorney investigated the validity of the tax liens (ECF No. 58-5 Mediation Letter PageID.294), albeit not to Church's satisfaction, is not ...

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