United States of America v. Gustafson et al, No. 4:2008cv03388 - Document 50 (S.D. Tex. 2010)
Court Description: MEMORANDUM OPINION AND ORDER granting in part and deyning in part 45 MOTION for Summary Judgment. Denying 44 MOTION for Summary Judgment. Joint Pretrial Order due by 9/3/2010, Docket Call set for 9/10/2010 at 04:00 PM in Courtroom 9B before Judge Sim Lake.(Signed by Judge Sim Lake) Parties notified.(hcarr, )
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IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION UNITED STATES OF AMERICA, Plaintiff, V. 5 5 5 5 § RALPH E. GUSTAFSON, DEBORAH W. GUSTAFSON, MARTIN J. SCHOTT, CINDY SCHOTT, and INDYMAC BANK F.S.B., and HSBC MORTGAGE SERVICES, Defendants. CIVIL ACTION NO. H-08-3388 5 5 § 5 § 5 5 § MEMORANDUM OPINION AND ORDER Plaintiff, United States of American, brings this action against the defendants, Ralph E. Gustafson, Deborah W. Gustafson, Martin J. Schott, Cindy Schott, Indymac Bank F.S.B., and HSBC Mortgage Services for liability judgment and tax lien foreclosure pursuant to 26 U.S.C. §§ 6321, 6322, and 7403.l Pending before the court are OneWest Bank, FSB's Motion for Summary Judgment (Docket Entry No. 44), and United Statesf Motion for Summary Judgment (Docket Entry No. 45). For the reasons explained below OneWest's motion will be denied and the United States' motion will be granted in part and denied in part. 'united States of America's Amended Complaint (Amended Complaint), Docket Entry No. 25. By Order entered on August 4, 2009, (Docket Entry No. 29), OneWest has been substituted as the real party in interest instead of IndyMac Bank F.S .B., and by Order entered on January 19, 2010, (Docket Entry No. 41), Martin J. Schott and Cindy Schott have been dismissed as defendants. Standard of Review Summary judgment is authorized if the movant establishes that there is genuine dispute about any material fact and the law entitles judgment. Fed. material facts are reasonable Civ. 'genuine' ' ' 56( c). Disputes about the evidence could return verdict such that the nonmoving party . Anderson v. Libertv Lobby, Incw 106 S. Ct. 2505, 2511 ( 1986). The Supreme Court has interpreted the plain language of Rule 56( to c) mandate the entry summary judgment uafter adequate time discovery and upon motion, against a party who fails to make showing sufficient estab lish the existence of an element essential that party's case , and on wh ich that party will bear the burden of proof trial .' ' Celotex Corp . v . Catrett, 106 S. Ct. 2548, 2552 ( 1986). A party moving for summary judgment 'must 'demonstrate the absence ' genuine issue of m aterial fact,' but need not neqate the elements of the nonmovant's case .' ' Little v . Liquid Air Coro w F.3d 1069, 1075 ( 5th Cir. 1994) ( qû banc), ( quoting Celotex, 106 S. Ct. at 2553-2554). If the moving party meets this burden, Rule 56( requires the nonmovant to go c) beyond the pleadings and show by affidavits, depositions, answers interrogatories, admissions file, other evidence that specific facts exist over which there issue trial. Id. ( citing Celotex, admissible genuine at 2553-2554). reviewing the evidence nthe court must draw al1 reasonable - 2- inferences in favor of the nonmoving party, and may not make credibility determinations or weigh the evidence .' ' Sanderson Plumbinq Products Incw S. Reeves v . 2097, ( 2000). Factual controversies are to be resolved in favor of the nonmovant, 'but only when ' b0th parties have submitted evidence contradictory facts .' Little , ' F .3d at 1075. II . Undisputed Facts On or about April 1976, Ralph E . Gustafson and Deborah W . Gustafson ( the Gustafsons) purchased real property in Simonton, Texas. The Simonton property ( the Property) is more particularly described as Tract Five ( 5) in Block Eleven ( 11) of Brazos Valley, Section Two, a subdivision in Fort Bend County, Texas, according to the plat thereof recorded in Vol . 385, page 521, et seq . of the Deed Records of Fort Bend County, Tex as .z In 1998 the United States began assessing and noticing the Gustafsons for unpaid federal income taxes and 2001 the United States unpaid began assessing Ralph Gustafson for federal employment taxes .3 zDeed of Trust, Exhibit 4 attached to United States' Brief in Support of Its Motion for Summary Judgment ( Plaintiff's Brief), Docket Entry No . 45 . 3see Exhibit 2 attached to United States of America 's Amended Complaint, Docket Entry No . 25 ( copies of notices of federal tax liens). - 3- On or about February 2005, following notice default the Gustafsonsr' Washington Mutual Bank, FA ( Washington Mutual), purchased Property non-judicial foreclosure sale for $81,037.23. Washington Mutual's purchase of the Property at the 4 non-judicial foreclosure sale extinguished the federal tax liens that the United States had previously asserted against the property .5 On April 2005, Washington Mutual issued Warranty transferring the Property Ralph Deed Without Gustafson and Deborah W . Gustafson in exchange for consideration of $82,477.89.6 The Deed Without Warranty was filed and recorded on July 13, 2005.7 The consideration for the deed was paid by the Schotts directly to Washington Mutualx 4 Trustee's Deed, Exhib it 5 attached to Plaintiff's Brief, Docket Entry No . 45. s plaintiff's Brief, Docket Entry No. 45, p . 8 (' 'Ralph and Deborah Gustafson had income tax liabilities for the 1997, 1998, 1999 2000, and 2002 income tax years and Ralph Gustafson owed employment tax liabilities for the quarterly periods ending March 31, 2001 through March 31, 2002 when Washington Mutual foreclosed on the Simonton Property . The liens were extinguished by the Washington Mutual foreclosure sa1e.'). ' E Deed Without Warranty, Exhibit Brief, Docket Entry No . 45. attached to Plaintiff's 7Id . 8 ora1 Deposition of Ralph E . Gustafson, Exhibit A attached to Defendant OneWest Bank, FSB'S Response to Plaintiff's Motion for Summary Judgment, Docket Entry No . 47, pp . 28-29. - 4- 2005, Martin Schott and Cindy Schott executed a Deed of Trust pursuant to which they granted IndyM ac Bank, F . S .B . security interest $136,000.00. 9 Property exchange for loan of The security interest included a power required the Schotts sale, use the Property as their principal place of residence, identified the loan as npurchase moneyr' and required ' the Schotts to agree the loan , and that they would not receive any cash from that any advance not needed to purchase , complete construction, or renew a p rior lien on the Property would be used to reduce the balance evidenced by the notex o On July 2005, Ralph E . Gustafson and Deborah W . Gustafson executed a Warranty Deed with Vendor's Lien conveying the Property to Martin Schott and Cindy Schott, for and in consideration of the sum of TEN AND NO/100 DOLLARS ( $10.00), and other valuable consideration paid to Grantor by MARTIN J . SCHOTT and wife CINDY SCHOTT ( nGrantee'), the receipt of which is hereby acknowledged, ' and the further consideration of the execution and delivery by Grantee of one prom issory note of even date herewith in the principal sum of $34,000.00 2nd Lien Note payable to the order of IndyM ac Bank, F .S .B ., A FEDERALLY CHARTERED SAVINGS BANK t' 'payee'l and secured by the ' vendor's first lien herein retained and a Deed of Trust g Deed of Trust, Exhibit A-3 attached to Defendant Onewest Bank, FSB'S Motion for Summary Judgment ( Defendant's Motion), Docket Entry No . 44. See also Exhibit 7-1 attached to Plaintiff's Brief, Docket Entry No . 45 . 1 Id . at Definitions % R and %% 6, 27 , 28. 0 - 5- of even date herewith LORI GRAY , Trustee, benefit of Payeexl The warranty deed for the sale was filed and recorded in Fort Bend County, Texas, on August On October 2005 .1 2 11, 2005, the Gustafsons filed a Chapter Voluntary Petition in Bankruptcyx 3 On Ap ril 24, 2006, the Gustafsons were granted a bankruptcy discharge of joint income tax liabilities for the 1997, 1998, 1999, and 2000 tax years, and on February 22, 2006, an Agreed Judgment entered an adversary proceeding provided that nE tqhe tax liens relating to debtors' income taxes p ass through the bankruptcy and remain attached to the p roperty or interests in property owned by debtors the time the filing of debtors' petition bankruptcy z/ l4 On March 2009, the Federal Deposit Insurance Corporation ( FDIC) announced that IndyMac Bank FSB had been sold OneWest Bank, FSB, which agreed to purchase sub stantially a1l of the assets of IndyMac, including the loan asset at issue this case .15 ll Warranty Deed With Vendor's Lien, Exhibits A-1 and A-2 attached to Defendant's Motion, Docket Entry No . 44 . See also Exhibit 7 attached to Plaintiff's Brief, Docket Entry No . 45. l 2Id l 3see Docket Entry No . Bankruptcy Case No . 05-48361. l 4see Discharge of Joint Debtors and Agreed Judgment , included in Exhibit 1 attached to Plaintiff's Brief, Docket Entry No . 25, and Exhibit 8 attached to Plaintiff's Brief, Docket Entry No . 45 . l 5see Affidavit of Chris Moore attached to Unopposed Motion for ( continued.- ) - 6- 111 . Analysis The United States asserts two claim s in this action . first claim seeks judgment The outstanding tax assessments holding Ralph and Deborah Gustafson liable for joint federal income taxes, penalties, and interest the 2002, 2003, 2006, and 2007 tax years in the amount of $14,387. 83, as well as for additional interest and statutory additions that continue to accrue until the taxes are paid , and holding Ralph Gustafson liable for federal employment taxesr penalties, and interest for the tax periods ending December December as well continue 2000, March 2001, and March 2001, June 30, 2001, 2002, for additional interest and statutory additions that accrue until the taxes are paid . seeks a judgment allowing the United States liens against the Gustafsons The second claim enforce tax foreclosing upon and selling the Property . In support of this claim , the United States alleges that g plursuant to 26 U.S. $$ 6321 and 6322, liens arose on C. the dates o f assessment outlined in paragraphs 10, 11, and 12 in favor of the United States against a11 property and rights to p roperty belonging to Ralph E . Gustafson and Deborah W . Gustafson on the assessment date as acquired thereafter . The United States has perfected these lien interests by filing notice of its tax liens in the Fort Bend ( County), Texas records. These liens, with the exception of the personal liabilities discharged by O t.- continued) Substitution of Real Party in Interest, Docket Entry No . 28, % 5 ( stating that OneWest Bank, FSB, agreed to pprchase substantially a11 of the assets of IndyMac Federal, including the Loan A sset at issue in this case). the bankruptcy, secure the liabilities to be reduced to judgment in this case. The United States of America's tax liens, including the ân rem liens for liabilities personally discharged by the bankruptcy, attach to the property listed in paragraph 15 of the complaint and have priority over a11 other defendantsx 6 Defendant, OneWest, seeks summary judgment and 'an order ' declaring OneWest's purchase money lien superior to federal tax liens the Government asserts against the Property ./ 7 'l The United States seeks summary judgment the bases that 'Ralph E . Gustafson is indebted to the United States ' the of $79,456.54 and Deborah Gustafson the United States indebted amount the amount of $15,560.44, plus statutory additions accruing from June entitled , as 2010,'18 and that nthe United States ' matter of law, to foreclose its federal tax lien against the real property at issue to satisfy the outstanding tax debts.'l OneWest has filed a response to the United States' motion 'g for summary judgment reasserting contention that holds a purchase money lien against the Property that is superior to any Munited States of America's Amended Complaint, Docket Entry No . 25, 5 %% 22-23 . H Defendant, OneWest Bank, FSB'S Motion for Summary Judgment , Docket Entry No . 44, p . 3 . l united States' Motion for Summary Judgment , Docket Entry 8 45, first unnumbered page . 1 (d . 9j g - 8- prior tax liens . The Gustafsons have not responded to the United States' motion for summary judgment. A. Liability for Outstanding Tax A ssessments Asserting that the Gustafsons are liable for outstanding tax assessments, the United States seeks summary judgment that Ralph Gustafson indebted $63,896.10 and that Ralph the United States the amount of Gustafson and Deborah Gustafson are indebted to the United States amount of $15,560.44, plus statutory additions accru ing from June 28, 2010.2 0 have responded to the United States' motion Gustafsons summary judgment. For the reasons explained below the court concludes that the United States is entitled judgment as a matter of law that the Gustafsons are liable for the outstanding tax assessments identified in the United States' motion for summary judgment. 1. Gustafasons' Failure to Respond Six weeks have passed since the United States filed its motion for summary judgment on June 28, 2010, ( Docket Entry No. 45), three weeks have passed since the Gustafsons' response the pending motion was due on July 19, 2010, and more than four months have z united States' Brief, Docket Entry No . 45, pp . 2-3 %% 2-3. o - 9- passed since the period discovery exp ired on March 2 010 ,2 l yet the Gustafsons have not responded to the United States' motion . Local provides that : nOpposed Rule submitted to the motions will be judge twenty days from filing without notice from the clerk and without appearance by counsel .' ' ( 2000). Local Rule S .D . Tex . R . provides: Failure to respond will be taken as a representation no opposition . Responses to motions A. B. C. D. Must be filed by the submission day; Must be written ; Must include or be accompanied by authority; and Must be accompanied by separate form order denying the relief sought . Tex. ( 2000). In accordance with Local Ru le court takes the Gustafsons' failure States' motion for summary judgment as opposition respond the the United representation of no the United States' summary judgment evidence. Although district court m ay not grant summary judgment by default simply because there is no opposition the motion , court may accept as undisputed the movant's version of the facts and grant a motion for summary judgment when the movant has made a prima facie showing of entitlement to summary judgment. See John v . State of Louisiana ( Board of Trustees for the State Colleqes and Universities), F. 698, 2d ( 5th Cir. 1985) ( when the movant's summary judgment evidence establishes its right to judgment as a 2l see Docket Control Order , Docket Entry No . - 10- % 6. matter law , district court entitled grant summary judgment absent unusual circumstances); and Everslev v . Mbank Dallas, 843 F. 2d ( 5th Cir. 1988)( when the nonmovant fails to respond to a motion for summary judgment, the court does not err by granting the motion when the movant's submittals make facie showing of entitlement 2. prima judgment as a matter of law). Applicable Law An assessment of tax by the Internal Revenue Service ( IRS) presumptively correct therefore, the E taxpayerl must shoulder the burden proving that the assessment was improper .' ' Affiliated Foods, Inc. v. Commissioner, 154 F.3d 527, 530 ( 5th Cir. 1998) ( citing Welch v. Helveringr S. Ct. 8, ( 1933)). lien for non-payment of federal taxes arises upon assessment of the tax . order to be valid as against some classes of lienholdersz notice of the lien must be filed as designated by the laws of the state which the property is located . U. C. S. liens extend to after-acquired property . Jeanette , Pennsvlvania v . United States, 6323 ( ) f Federal tax See Glass Citv Bank of 108, ( 1945) ( ncongress also provided that the lien should A continue until the liability for such amount is satisfied or becomes unenforceable by reason p roperty lapse rights t.' e .' l. m . ( Thus,) the delinquent's hands property time prior to expiration.' '). - continuing lien covers 11- any United States' Prima Facie Showin? The exhibits attached to the United States' motion for summary judgment make a prima facie showing that Ralph E . Gustafson and Deborah Gustafson owe the United States following amounts unpaid federal income taxes, penalties, and interest : Type of Tax Assessment Recording Amount Due Tax Period Date Date 06/28/2010 1040 2002 09/15/2003 04/27/2005 101269.12 Exhibit 2 Exhibit 1 Exhzbit 2-1 11/15/2004 Not Evidenced 1040 2003 Exhibit 2 1040 2006 11/19/2007 Not Evidenced Exhibit 2 1040 2007 06/22/2008 375.63 Exhibit 2-1 3,092.05 Exhibit 2-1 Not Evidenced Exhibit 2 1,823.64 Exhibit 2-1 TOTAT , $15 ,560 . 44 Ralph E . Gu stafson owes the United States the following amounts of unpaid, non-discharged federal employment taxes and interest : Type of Tax Period TOTAT . 03/30/2002 06/11/2001 04/22/2002 221362. 28 Exhibit 1 Exhibit 3-2 09/17/2001 04/22/2002 161995.77 Exhibit 1 Exhibit 3-2 04/08/2002 04/22/2002 16,331. 58 Exhibit 1 Exhibit 3-2 06/17/2002 12/02/2002 8,206.48 Exhibit 1 941 12/31/2001 06/28/2010 Exhibit 3 94l 06/30/2001 Date Exhibit 3 941 03/31/2001 Amount Due Exhibit 3 94l Recording Date Tax Assessment Exhibit 3-2 $63, 96. 8 10 ( 3) Notice and demand for the unpaid taxes listed above have been provided to Ralph E . Gustafson and Deborah Gustafson and filed County , the real property records Texas , Ralph and Deborah Fort Bend Gustafson's liability for the 2002 income tax assessment, and for Ralph Gustafson's liability the above-listed empioyment taX assessments . The United States has not p resented any evidence showing that the United States recorded liens securing the Gustafson s' liability for the 2003, 2006, or 2007 income tax assessments .zz Because the Gustafsons have not submitted any evidence that disputes the United States' evidence the tax assessments that the United States seeks to have reduced to judgment against them, the court concludes that the United States is entitled to judgment as a matter of 1aw that Ralph E . Gustafson and Deborah Gustafson are indebted to the United States for unpaid 2002, 2003, 2006, and 2007 income taxes the amount additions accruing from June $15,560.44, plus statutory 2010, and that Ralph Gustafson is indebted to the United States for unpaid employment taxes for the last three quarters of 2001 and the first quarter of 2002 2 2see Plaintiff's Brief, Docket Entry No . 45, p . 3 % 4 stating only that the United States has recorded tax liens for the 2002 income tax liabilities. the amount $63,896.10, plus statutory additions accruing from June 28, 2010. B. Ability to Foreclose and Sell the Simonton Property The United States seeks summary judgment that nentitled, as a matter of law, to foreclose its federal tax lien against the real property at issue to satisfy the outstanding YeYtS /2 /3 OneWest contends that it its entitled to judgment as a matter of 1aw because Ralph Gustafson 's testimony establishes that the Gustafsons held no interest in the Property to which a federal tax lien could attach ,24 and the Schotts held a purchase-money lien against the Property that is superior to any prior tax 1ien .25 1. Apolicab le Law An individual's failure to pay federal taxes results federal tax lien against property and rights whether real or personal, belonging 5 6321. such person .' ' The Supreme Court has held that a property, U .S.C . 6321 1s ustatutory language 'all property rights and rights to propertyz' is 2 Id 3 M Defendant, OneWest Bank, FSB 'S Response to Plaintiff's Motion for Summary Judgment, Docket Entry No . 47, p . 3 % 6 . z sDefendant, OneWest Bank, FSB'S Motion for Summary Judgment , Docket Entry No . 44; and Defendant OneWest Bank, FSB'S Response to Plaintiff's Motion for Summary Judgment, Docket Entry No . 47. - 14- broad and reveals on face that Congress meant to reach every interest in property that a taxpayer might have,' United States v . ' National Bank of Commerce , after-acquired p roperty . 2919, 2924 ( 1985), including Glass, at lien, however, does not attach has property in which the taxpayer interest under state law . 98 federal tax See Slodov v . United States , 1778, 1790 (1978) ( nthe IRS not given the power to levy on property in the hands of the taxpayer beyond the extent of the taxpayer's interest in the property/). ' The nature and extent of the taxpayer's p roperty interest have traditionally been recognized as matters to be determined by state law. Aquilino v. United States, 80 S. Ct. 1277, 1280 ( 1960); United States v. Bess, other crounds bv U . C. S. 1054, 1057 (1958), surerseded on 6332 ( 5). Thus courts look to state law to determine what rights - if any - the taxpayer has property the United States seeks to reach , then to federal 1aw to determine whether the taxpayer's state-delineated rights qualify as nproperty' ' nrights to property' to which ' attach. Slodov, 98 S. 1790 federal lien can (' have held that the 'We extent of the tax debtor's interest in the property is determined by state law , and no interest.' '). when the debtor has See also Moraan v . Commissioner, 60 424, ( 1940) ( ustate 1aw creates legal interests and rights. federal revenue acts designate - what 15- interests The rights, so created, shall taxed .' . ') Aquilino reaffirmed the holding in Moraan , 60 Supreme Court Ct . at 424, that federal 1aw determ ines whether the taxpayer's interests are sufficient to constitute nproperty' ' 'rights to property' sufficient to be ' ' subjected to the Government's lien, and remanded for determination of whether the taxpayer held beneficial interest in property at issue as opposed to Mbare legal title .' ' 1280-81 . In Drve v . United States, 120 S . the at 474 ( 1999), the Supreme Court noted that Aquilino supports the view that the Court has chosen to apply a federal test of classification, for the E taxpayer) concededly had legal title to the ( property) and yet in remanding the Court indicated that this state-created incident of ownership was not a sufficient 'right to property' in the contract p roceeds to allow the tax lien to attach . In this sense Acuilino follows Bess in requiring that the taxpayer must have a beneficial interest in any property subject to the lien. Id. at 482 & Lien, explained ( quoting Note, Propertv Subnect to the Federal Tax ' Harv. L. ReV . 1485, 1491 ( 1964)). that determining whether a The Supreme Court federal taxpayer's state-law rights constitute ' property' or 'rights to property ,' Al tlhe important consideration the breadth E taxpayer) could exercise over the property.f' ' Morcan, S. 427) the control the Id. ( quoting Only after the court has determined that the taxpayers have property or the right to property to which a federal tax lien may attach, does the question of the priority of a federal tax lien over competing claims become an issue . United - 16- States v. Durham Lumber Co., 80 S. Acuilino, 80 1282, 1284-85 ( 1960) ( citing Ct. at 1285, and Bess, 78 S. Ct. at 1057). Application of the Law to the Facts Gustafsons' Right to the Property Under Texas Law Citing April U .S .C . 6321, United States contends that on 2005, when the Property was repurchased from Washington Mutual, the Gustafsons acquired the Property or rights to the Property which the federal tax liens reattached . See Glass, 66 S. Ct. at 110) ( recognizing that federal tax liens attach after-acquired property) As evidence that the Gustafsons acquired the Property and/or rights the Property to which a federal tax lien attached in April of 2005, the United States cites the Deed Without Warranty executed by Washington Mutual on April 2005, that identifies Washington Mutual as grantor, the Gustafsons as grantees, the amount of consideration as $82,477.89, the property conveyed as the Simonton Property at issue this action , and the date of filing in the official public records of Fort Bend County, Texas, as July 2005.2 6 Asserting that the assessment for delinquent taxes automatically results in a lien on the taxpayers' property , the United States contends that a federal 26 Deed Without Warrantyr Exhib it 6 attached to Plaintiff's Brief, Docket Entry No . 45 . tax lien attached Property when Washington Mutual to the Gustafsons . See Citing the deposition testimony funds used was deeded from U . S . . 55 6231, 6322 . C Ralph Gustafson that the purchase the Property from Washington Mutual were provided by the Schotts, Gustafsons, OneWest argues that the Schotts held equitable title to the Property and the Gustafsons had no interest in the Property to which a federal tax lien could attach , or that the Schotts held an equitable purchase money lien against the Prop erty that was superior to any federal tax liens . 2z OneWest explains that after the Washington Mutual foreclosure , Schott funded the purchase of the Property from the Bank and the deed to the hom e was to be held by Gustafson in trust . ( Exhibit A, Deposition of Ralph Gustafson, p . 28, 1 321). Schott sent the money directly to Washington Mutual to pay for title to the Property out of foreclosure . Jd ., at p . 28-29. Schott purchased the home out of foreclosure , not Gustafson . Id ., at 38, 1 . 24 - p . 39, 1. 1). Gustafson didn't have the money or credit to purchase the home from Washington Mutual . Id., at p . 52, 1. 1-11). Because Schott advanced the purchase money to Gustafson , Schott had an equitable purchase money lien which was superior to the federal tax liens . See IRS v . Fagin, 252 B . 118, 120 ( . Tex. 2000). R. W D. The entire deal was predicated upon Schott purchasing the p roperty for full consideration in exchange for Gustafson executing a contract for deed to purchase the property at a later date. ( Exhibit nA' Deposition of Ralph ' Gustafson, p . 37-38). The fact that Schott was able to take advantage of the lower purchase price out of foreclosure by having Gustafson obtain the title does not negate the fact Schott was the true owner of the Property . OneWest then provided a purchase money z? Defendant, OneWest Bank , FSB'S Response to Plaintiff's Motion for Summary Judgment, Docket Entry No . 47, pp . 3-4 . - 18- mortgage to Schott. These two purchase money mortgages should be protected as the primary liens upon the grounds stated in Slodov because the IRS has not been prejudiced by those liens . Simply put, the Property would not have been in the Gustafson 's estate without the purchase money advanced by Schott and OneWest .2 8 Ralph Gustafson's testimony is sufficient to raise a genuine issue of material fact regarding the nature of the right that the Gustafsons acquired repurchase from Washington Mutual . if any the Property following its light of the evidence that Washington Mutual deeded the Property to the Gustafsons in April of 2005, and that the Gustafsons deeded the Property Schotts three months later in July of 2005, Ralph Gustafson's testimony not sufficient, however, to estab lish that OneWest is entitled to judgment as a matter law. ( b) Priority of Competing Liens Citing IRS v. Facin, 252 B . R. 118, 120 ( .D. Tex. 2000), W OneWest contends that nE blecause Schott advanced the purchase money to Gustafson , Schott had an equitable purchase money lien which was superior to the federal tax liens.'2 In Facin the Bankruptcy Court '9 held that a deed of trust executed by the debtor in favor of his parents was a ntransfer,' within ' fraudulent transfer statute, but merely 2 Id . at îî 8 (l 2 Id . a t % 9 ( emphasis added) the meaning of Texas memorialization of an equitable mortgage that his parents had acquired some years earlier when they advanced money to the debtor to purchase property subject the debtor's p romise not only them lien against the property repay them but also secure the grant loan . The Bankruptcy Court concluded that the equitable mortgage held by the debtor's parents was superior to the United States' federal tax liens because debtor used the proceeds mortgage retire an earlier mortgage that predated the federal tax liens and that the parents' equitable mortgage was thus subrogated to the rights of the earlier mortgage that was senior to the federal tax liens . A lthough OneWest contends that the Bankruptcy Court's opinion Facin supports contention that 'Schott ' an equitable purchase money lien which was superior to the federal tax liens,'o ' OneWest has not explained how and/or why Facin supports this contention . p romised 50th While the evidence in Fagin showed that the debtor repay the loan provided by his parents provide his parents loan proceeds lien against property that he used the purchase, OneWest has not presented any evidence showing that sim ilar agreements existed between the Gustafsons and the Schotts. Absent evidence that the Schotts provided funds purchase the Property from Washington Mutual in exchange for or reliance on the Gustafsons' promises to repay those funds and to a ozd at grant the Schotts a lien against the Property to secure rep ayment, OneWest has failed to present any evidence from which a reasonable fact finder could conclude that the funds used Property purchase from Washington Mutual in April 2005 constituted an equitable mortgage or established an equitab le lien against Property . Nor has OneWest presented any evidence from which a reasonable finder fact could conclude that funds IndyMac loaned the Schotts in Ju ly of 2005 constituted a purchase money loan . OneWest has presented excerpts from the deposition testimony Ralph Gustafson that the Schotts provided the funds used to purchase the Property from Washington Mutual in April of 2005, and that although Washington Mutual deeded the Property the Gustafsons, Gustafsons held the deed in tru st for the Schotts who were the true owners Property . as Ralph Gustafson testified, Schotts owned the Property in Ap ril of 2005, then the loan that IndyMac made a purchase-money loan because the loan proceeds would not have been used to purchase p roperty that the Schotts did not already own . Co nclu sion s - Neither party has prov ided the court enough briefing on Texas law to determ ine what ev idence or if any - right to the Property recognized by Texas 1aw the Gustafsons and/or the Schotts - 21- acquired and/or held in April of 2005 when the Property was purchased from Washington Mutual , in July of 2005 when IndyMac provided the Schotts a loan secured by the Property , or in October of 2005 when the Gustafsons filed their Chapter Petition in Bankruptcy . Absent evidence establish ing the existence of a right to the Property recognized by Texas 1aw that the Gustafsons and/or the Schotts acquired and/or held on these dates, the court is unable to determ ine whether the Gustafsons acquired a right to the Property to which a federal tax lien could attach . Absent evidence that the Gustafsons acquired a right to the Property to which a federal tax lien could attach , the court is unable to determine the Property is subject to competing liens or, if so, which of the competing liens is superior . See Drve , 120 S . Ct . at 482 & n . P% 6 courts should look first to state law to determine 'the nature of the legal interest ' a taxpayer has in the property the Government seeks to reach under its tax 1ien' '). Accordingly, the court concludes that genuine issues of material fact preclude the grant of summary judgment to either party. IV . Conclusions and Order For the reasons explained above in 5 concludes that United States - 22- entitled III. A, the court judgment a matter 1aw that Ralph E . Gustafson and Deborah Gustafson are indebted to the United States for unpaid 2002, 2003 , 2006, and 2007 income taxes the amount of $15,560. plus statutory additions 44 accruing from June 28, 2010, and that Ralph E . Gustafson indebted to the United States for unpaid employment taxes for the last three quarters of 2001 and the first quarter of 2002 $63,896.10 plus statutory additions accruing from amount June 28, 2010 . court concludes that genuine issues grant III.B , the For the reasons explained above material fact p reclude summary judgment to either the United States or OneWest regarding existence and/or priority of competing liens. Accordingly, Defendant One West Bank, FSB'S Motion DENIED , and Judgment, Docket Entry Motion Summary United States' is GRANTED IN Summary Judgment, Docket Entry No . PART and DENIED IN PART . The joint pretrial order shall be filed Friday, September 3, 2010. The joint pretrial order shall include proposed findings of fact and conclusions of law , and shall be accompanied by trial briefs that address, inter alia, what - if any - right to the Property recognized by Texas law the Gustafsons and/or the Schotts acquired and/or held in April of 2005 when the Property was purchased from Washington Mutual , in July of 2005 when IndyMac provided the Schotts a loan secured by the Property , and in October of 2005 when the Gustafsons filed their Chapter 7 Petition - 23- if any in Bankruptcy, and what attachment of a federal tax Docket call will be federal law supports the the Property . held Courtroom 9B Friday, September 1O, 2010 at 4:00 p .m . SIGNED at Houston , Texas, this 10th day of ugust, 2010. SIM LAKE UN ITED STATES DISTRICT JUDGE - 24-
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