Rd. & Hwy. Bldrs., LLC v. United States, No. 12-5063 (Fed. Cir. 2012)Annotate this Case
The IRS assigned a taxpayer identification number to Crystal Cascades, LLC. The company changed its name to Crystal Cascades Civil, LLC (CCC), but did not notify the IRS and continued using the original number. A Nevada bank made loans to CCC and recorded trust deeds. CCC failed to pay employment taxes in 2003 and 2004. The IRS filed tax lien notices in 2004-2005, under the identification number and directed to “Crystal Cascades, LLC.” In 2005 RHB made loans to CCC. The Nevada bank initiated foreclosure. CCC filed under Chapter 11. RHB argued seniority over the tax liens. During foreclosure, RHB purchased the property. Under I.R.C. 7452(d), the IRS may redeem properties against which it has a valid tax lien. The parties negotiated for RHB to pay $100,000; the IRS released its right of redemption. The bankruptcy court concluded that the lien notices did not impart constructive notice to third parties and awarded RHB surplus sale proceeds. The Ninth Circuit Bankruptcy Appellate Panel affirmed. RHB sought return of the $100,000, asserting that the agreement was void for lack of consideration because the right of redemption was illusory. The Court of Federal Claims held that RHB failed to prove that the IRS acted in bad faith. The Federal Circuit affirmed.