United States District Court, E.D. Michigan, Southern Division
Mona
K. Majzoub United States Magistrate Judge
OPINION AND ORDER GRANTING PLAINTIFF UNITED STATES OF
AMERICA'S MOTION FOR SUMMARY JUDGMENT (ECF #24)
Paul
D. Borman United States District Judge
I.
BACKGROUND
On
January 18, 2018, Plaintiff United States of America
initiated this action against Defendant Patricia Harold,
Leslie Drury as Successor Trustee of the Sara Rose Revocable
Living Trust u/a/d May 21, 1997, the State of Michigan, and
the Treasurer of Wayne County, seeking to recover $403,
801.66 in Harold's unpaid income tax liabilities. (ECF
#1.) On August 29, 2018, Plaintiff filed a one-count Amended
Complaint, requesting enforcement of federal tax liens that
it had filed against real property in which Harold has an
interest of approximately $425, 000 through a land purchase
contract. (ECF #16.)
Related
to this matter, on January 20, 2016, Harold filed for Chapter
7 bankruptcy, In re Patrice Harold, No. 16-40659
(Bankr. E.D. Mich. 2016). On November 15, 2016, Plaintiff
United States of America initiated an adversary proceeding in
the Bankruptcy Court, alleging nondischargeability of the
income tax debts, inter alia, in a three-count
“Complaint to Determine
Dischargeability.” United States of
America v. Harold (In rem Harold), No. 16-5041,
ECF #1. Plaintiff filed a Motion for Partial Summary Judgment
on Counts I (“Nondischargeability of Tax Debt for Tax
Years 2012 and 2014 Pursuant to 11 U.S.C. §§
523(a)(1)(A) and 507(a)(8)(A)(i)”) and II
(“Nondischargeability of Tax Debt for Tax Years 2008
and 2010 Pursuant to 11 U.S.C. § 523(a)(1)(B)”),
noting that if the motion was granted, years 2004-2009 and
2011 would remain for adjudication pursuant to Section
523(a)(1)(C) (Count III, “Nondischargeability of Tax
Debt for Tax Years 2004-12 and 2014 Pursuant to 11 U.S.C.
§§ 523(a)(1)(C)”). (Id. at ECF ##1,
75.) The Parties' arguments in the adversary proceeding
motion, a substantial portion of which is devoted to tax
years 2008 and 2010 (Count II), is repeated in the briefing
on the instant Motion. (See, e.g., Pl.'s Br.,
ECF #75, Ex. 4.) On August 20, 2018, Plaintiff's Motion
for Partial Summary Judgment was granted by the Bankruptcy
Court in the adversary proceeding as to both Counts I and II.
(ECF #105.)[1]
On
November 21, 2018, Plaintiff filed the instant Motion for
Summary Judgment. (ECF #24.)[2] Harold filed her Response on December 28,
2018. (ECF #42.)[3] On March 4, 2019, Plaintiff filed its
reply. (ECF #51.) The Court held a hearing on the matter on
June 5, 2019.
II.
FACTS
A.
Property At-Issue
On or
around August 19, 2005, Harold entered into a land contract
(the “Land Contract”) with Robert J. Drury, the
attorney-in-fact for Sara Rose, Trustee of the Sara Rose
Revocable Living Trust u/a/d May 21, 1997, as may now be or
hereafter amended (“Trust”) regarding the
property commonly known as Part of 9100-9110 Dwight, Detroit
(the “Property”). (Pl.'s Mot., Ex. B, ECF
#24-1, PgID 228.) The Land Contract, as originally executed,
provided for the sale of the Property to Harold for $625, 000
in installments over the course of eight years.
(Id.) On or around October 31, 2013, Harold, and
Leslie Drury, Successor Trustees of the Trust, agreed to
amend the Land Contract, providing for the remaining balance
to be paid in installments over approximately nine years as
of September 13, 2013. (Id. at PgID 233-35.) The
principal balance remaining on the Land Contract at that time
was $401, 410.29. (Id. at PgID 234.)
B.
Federal Tax Liens
Patrice
Harold has incurred over $400, 000 in federal income tax
liabilities since 2004. The chart below illustrates the
assessments made by a delegate of the Secretary of the
Treasury owed to the Internal Revenue Service
(“IRS”) on the amounts Harold reported on joint
federal income tax returns for those tax years. The chart
reflects the balance due as of January 5, 2018 and includes
any payment or other credits:[4]
-
Tax Year
|
Assessment Date
|
Assessment Type
|
Assessed Amount
|
Balance Due as of 1/5/2018
|
2004
|
11/27/06 11/27/06 11/27/06 11/27/06 11/27/06
8/15/11 8/11/14
|
Federal Income Tax
Estimated Tax Penalty
Late Filing Penalty
Late Payment Penalty
Interest
Late Payment Penalty
Interest
|
$12, 177.00
$348.95
$2, 289.82
$857.54
$1, 216.03
$925.95
$4, 545.26
|
$16, 909.82
|
2005
|
1/8/07 12/11/06 1/8/07 1/8/07 1/8/07 8/15/11
8/11/14
|
Federal Income Tax
Estimated Tax Penalty
Late Filing Penalty
Late Payment Penalty
Interest
Late Payment Penalty
Interest
|
$48, 606.00
$61.00
$10, 936.35
$2, 187.27
$3, 470.92
$9, 142.59
$23, 238.68
|
$89, 762.46
|
2006
|
11/26/07 11/26/07 11/26/07 11/27/07 8/15/11 8/11/14
|
Federal Income Tax
Estimated Tax Penalty
Late Payment Penalty
Interest
Late Payment Penalty
Interest
|
$22, 810.00
$1, 079.00
$910.00
$1, 149.91
$4, 777.49
$8, 257.56
|
$43, 874.67
|
2007
|
11/17/08
11/17/08
11/17/08
11/17/08
11/24/08
5/17/10
5/17/10
8/15/11
8/13/12
8/11/14
|
Federal Income Tax Estimated Tax Penalty Late
Payment Penalty Interest Interest
Miscellaneous Penalty Federal Income Tax Late
Payment Penalty Late Payment Penalty Interest
|
$28, 548.00
$1, 154.00
$1, 131.92
$954.67
$36.50
$1, 786.00
$8, 932.00
$6, 966.87
$893.20
$10, 136.34
|
$64, 962.14
|
2008
|
4/4/16 4/4/16 4/4/16 4/4/16 4/4/16
|
Federal Income Tax Estimated Tax Penalty Late
Filing Penalty Late Payment Penalty Interest
|
$38, 604.00
$797.80
$7, 089.97
$6, 762.67
$8, 674.10
|
$53, 462.24
|
2009
|
11/15/111/15/111/15/111/15/1 8/15/11 8/13/12
8/11/14 8/11/14
|
Federal Income Tax
Estimated Tax Penalty
Late Payment Penalty
Interest
Late Payment Penalty
Late Payment Penalty
Interest
Late Payment Penalty
|
$41, 625.00
$498.63
$860.19
$583.16
$1, 966.16
$2, 940.24
$3, 633.39
$364.15
|
$37, 363.12
|
2010
|
4/4/16 4/4/16 4/4/16 4/4/16 4/4/16
|
Federal Income Tax Estimated Tax Penalty Late
Filing Penalty Late Payment Penalty Interest
|
$29, 559.00
$633.92
$6, 470.77
$7, 121.72
$5, 647.19
|
$51, 099.29
|
2011
|
11/26/111/26/111/26/111/26/1 8/11/14 8/11/14
|
Federal Income Tax
Estimated Tax Penalty
Late Payment Penalty
Interest
Interest
Late Payment Penalty
|
$25, 759.00
$415.91
$870.99
$405.31
$1, 174.06
$4, 026.37
|
$30, 188.65
|
2012
|
12/9/13 12/9/13 12/9/13 12/9/13 8/11/14 8/11/14
|
Federal Income Tax
Estimated Tax Penalty
Late Payment Penalty
Interest
Interest
Late Payment Penalty
|
$21, 655.00
$50.00
$217.69
$107.42
$113.58
$391.63
|
$6, 833.40
|
2014
|
2/22/16 2/22/16 2/22/16 2/22/16
|
Federal Income Tax Estimated Tax Penalty Late
Payment Penalty Interest
|
$27, 424.00 $79.00 $624.77 $295.57
|
$9, 345.87
|
|
|
|
TOTAL
|
$403, 801.66
|
(Am. Dec. of Christopher Smith, Nov. 27, 2018, ECF #26,
¶6, PgID 386-88.)
On
September 25, 2008, the IRS recorded a Notice of Federal Tax
Lien (“NFTL”) relating to the income tax
liabilities for the years 2004, 2005, and 2006 with the Wayne
County Register of Deeds.[5] (Dec. of Philip Bednar, Nov. 21, 2018, Ex.
C, PgID 241, ECF #24-1.) On February 13, 2009, the IRS
recorded an NFTL for the 2007 tax year liabilities.
(Id. at PgID 242.) The NFTL for tax years 2009 and
2011 was recorded on August 5, 2013, (id. at PgID
243), and the NFTL relating to 2012 was recorded on April 3,
2015 (id. at PgID 244). The IRS timely refiled the
NFTL for tax years 2004, 2005 and 2006. (Id. at PgID
245.) Plaintiff stated that there is not an NFTL filed with
respect to the 2008, 2010 and 2014 tax years, as the
assessment liens for those years were made after Harold filed
for Chapter 7 bankruptcy. However, Plaintiff has included the
assessments for tax years 2008, 2010 and 2014, citing 26
U.S.C. § 6321 (lien arises on assessment and demand), in
this lawsuit.
In her
Response Brief, Harold states that she is not
“challenging the IRS' tax assessments” but
rather argues that the IRS misapplied refunds due from tax
returns filed in 1993, 1995, 1996, and 1998 - well over 20
years ago - to her spouse's tax liabilities. (Def.'s
Resp., ECF #42, PgID 970.) Harold also states that the 1996
and 1998 transaction were “reversed, ” yet she
never received a refund for the 1998 tax year. (Id.)
Yet, at no point did Harold contact the IRS regarding these
alleged missing multi-thousand dollar refunds.
Harold
also states that the IRS “misapplied” payments
that she directed toward her 2003 tax liability.
(Id. at 980.) Harold was assessed in June 2005 and
July 2008 for income tax liability relating to 2003. (Dec. of
Christopher Smith, Feb. 22, 2019, Ex. D., ECF #51, PgID
1080-81.) She points to her unauthenticated QuickBooks ledger
and her unauthenticated chart, apparently generated for
purposes of this litigation, to demonstrate a
“code” that Harold and her spouse used to
“detect whether payments for certain periods were
properly applied properly as directed or misapplied without
her authorization.” Harold does not, however, attach
any cancelled checks demonstrating this “system.”
III.
STANDARD OF REVIEW
Summary
judgment is appropriate where the moving party demonstrates
that there is no genuine dispute as to any material fact.
See Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986); Fed.R.Civ.P. 56(a). A fact is “material”
for purposes of a summary judgment motion where proof of that
fact “would have [the] effect of establishing or
refuting one of the essential elements of a cause of action
or defense asserted by the parties.” Midwest Media
Prop., L.L.C. v. Symmes Twp., Ohio, 503 F.3d 456, 469
(6th Cir. 2007) (quoting Kendall v. Hoover Co., 751
F.2d 171, 174 (6th Cir. 1984)). A dispute over a material
fact is genuine “if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986).
“Rule
56(e) identifies affidavits, depositions, and answers to
interrogatories as appropriate items that may be used to
support or oppose summary judgment.” Alexander v.
CareSource, 576 F.3d 551, 558 (6th Cir. 2009). “Of
course, [the moving party] always bears the initial
responsibility of informing the district court of the basis
for its motion, and identifying those portions of the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,
which it believes demonstrate the absence of a genuine issue
of material fact.” Taft Broadcasting Co. v. United
States, 929 F.2d 240, 247 (6th Cir. 1991) (internal
quotation marks omitted) (quoting Celotex, 477 U.S.
at 323). If this burden is met by the moving party, the
non-moving party's failure to make a showing that is
“sufficient to establish the existence of an element
essential to that party's case, and on which that party
will bear the burden of proof at trial, ” will mandate
the entry of summary judgment. Celotex, 477 U.S. at
322. “[A] complete failure of proof concerning an
essential element of the nonmoving party's case
necessarily renders all other facts immaterial.”
Id. at 323.
“The
test is whether the party bearing the burden of proof has
presented a jury question as to each element in the case. The
plaintiff must present more than a mere scintilla of the
evidence. To support his or her position, he or she must
present evidence on which the trier of fact could find for
the plaintiff.” Davis v. McCourt, 226 F.3d
506, 511 (6th Cir. 2000) (internal citations and quotation
marks omitted). The non-moving party may not rest upon the
mere allegations or denials of his pleadings, but the
response, by affidavits or as otherwise provided in Rule 56,
must set forth specific facts which demonstrate that there is
a genuine issue for trial. Fed.R.Civ.P. 56(e). “When
the moving party has carried its burden under Rule 56(c), its
opponent must do more than simply show that there is some
metaphysical doubt as to the material facts . . . . Where the
record taken as a whole could not lead a rational trier of
fact to find for the nonmoving party, there is no genuine
issue for trial.” Matsushita Elec. Indus. Co., Ltd.
v. Zenith Radio Corp., 475 U.S. 574, 586- 587 (1986)
(footnote and internal quotations omitted).
In
making the determination on summary judgment whether there
are genuine issues of material fact for trial, the court must
draw all reasonable inferences in favor of the non-moving
party. See Moran v. Al Basit LLC, 788 F.3d 201, 204
(6th Cir. 2015). “‘The central issue is whether
the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one
party must prevail as a matter of law.'” Binay
v. Bettendorf, 601 F.3d 640, 646 (6th Cir. 2010)
(quoting In re Calumet Farm, Inc., 398 F.3d 555, 558
(6th Cir. 2005)).
At the
same time, plaintiff must produce enough evidence to allow a
reasonable jury to find in his favor by a preponderance of
the evidence, Anderson, 477 U.S. at 252, and
“[t]he ‘mere possibility' of a factual
dispute is not enough.” Martin v. Toledo Cardiology
Consultants, Inc., 548 F.3d 405, 410 (6th Cir. 2008)
(quoting Mitchell v. Toledo Hosp., 964 F.2d 577, 582
(6th Cir. 1992)). “If the evidence is merely colorable,
or is ...