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United States v. Gerard

United States District Court, N.D. Indiana, Hammond Division

September 8, 2016

UNITED STATES OF AMERICA, Plaintiff,
v.
CYNTHIA J. GERARD, ROBERT E. GERARD, and TREASURER, ALLEN COUNTY, INDIANA, Defendants.

          OPINION AND ORDER

          JOSEPH S. VAN BOKKELEN, UNITED STATES DISTRICT JUDGE

         The United States claims Cynthia Gerard owes taxes in connection with her business. (Compl., DE 1, Count I.) The United States further claims federal liens securing most of these liabilities attach to the real property at which Cynthia resides. (Id., Count II.) The United States asks the Court to enter judgment for the tax liabilities and to force the sale of the real property to satisfy the liens.

         The United States moved for summary judgment. For the following reasons, the Court denies this motion.

         A. Background facts

         Plaintiff and the Gerard Defendants essentially agree to the following facts, except as indicated.

         Robert and Cynthia Gerard, husband and wife, bought residential real property (“Property”) in 1990. They owned the Property as tenants by the entireties.

         Cynthia owned and operated a limited liability company as its sole member from 2003 through 2008. Cynthia did not ask the IRS to treat the company as a corporation rather than a sole proprietorship, so the company was a “disregarded entity” under the applicable regulations, and was treated in the same manner as a sole proprietorship for federal tax purposes. (Compl., DE 1, ¶ 6; Answer, DE 4, ¶ 6.)

         Cynthia and her company incurred employment and unemployment tax liabilities, some of which remain unpaid. (Compl., DE 1, ¶ 11.) Plaintiff and the Gerard Defendants disagree regarding the amount of unpaid taxes. (Defs.' Mem. Opp'n Mot. Summ. J., DE 33 at 5-7.) The parties agree Robert is not personally liable for these unpaid taxes.

         Plaintiff claims the vast majority of the tax liabilities gave rise to liens, which attached to the Property. (Compl., DE 1, Count II.)

         In July 2012, Robert and Cynthia conveyed the Property to Robert, individually. The Gerards claim they transferred the Property in this manner on the advice of former counsel, given Cynthia's debilitating brain aneurism and the need for Robert to manage her affairs and assets. (Defs.' Mem. Opp'n Mot. Summ. J., DE 33 at 4.)

         Plaintiff claimed in its Motion for Summary Judgment that this transfer was fraudulent, but withdrew this claim due to the lack of its inclusion in the complaint. (Pl.'s Reply, DE 36 at 2.)

         The parties dispute other factual issues related to the nature of the ownership interests in the property over time, related to the nature of any consideration exchanged for the transfer of the Property to Robert individually, related to the value of the Property, and related to the proper values of disbursements from any sale of the Property.

         B. Legal Standard

         A motion for summary judgment must be granted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). Rule 56(c) further requires the entry of summary judgment, after adequate time for discovery, against a party “who fails to make a showing sufficient to establish the existence of an element essential ...


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