United States District Court, N.D. Indiana, Fort Wayne Division
AMENDED OPINION AND ORDER
THERESA L. SPRINGMANN CHIEF JUDGE
March 5, 2014, the United States of America filed a Complaint
[ECF No. 1] against Defendants Cynthia J. Gerard, Robert E.
Gerard, and the Treasurer of Allen County, Indiana seeking
unpaid taxes and a judgment that the United States can
enforce collection against the property of Robert Gerard,
which was formally owned by Robert and Cynthia Gerard as
tenants by the entirety. On November 23, 2015, the Plaintiff
filed a Motion for Summary Judgment [ECF No. 27], which was
denied on September 8, 2016 [ECF No. 37]. On August 10, 2017,
this case was transferred to Chief Judge Theresa L.
Springmann for all further proceedings [ECF No. 38]. The
Plaintiff filed a Motion for Partial Reconsideration [ECF No.
43] of the prior Summary Judgment Order under Rule 54(b),
which the Court granted [ECF No. 49] on October 23, 2017;
however, the Court declined to consider the merits of the
Plaintiff's substantive arguments at that time because
the Defendants had briefed only the procedural propriety of
the Motion rather than responding substantively. On November
29, 2017, the Court held a telephonic scheduling conference
and set a briefing schedule for the merits of the
Plaintiff's Motion. This matter is now fully briefed and
ripe for review.
1990, Robert and Cynthia Gerard bought residential real
property (“the Property”) as husband and wife,
which they owned as tenants by the entirety, and for which
Robert paid at least ninety percent of the purchase price.
From 2003 through 2008, Cynthia owned and operated a limited
liability company as its sole member. Under the applicable
regulations, the company was treated as a sole proprietorship
for federal tax purposes. Over the years, Cynthia and her
company incurred employment and unemployment tax liabilities,
some of which remain unpaid. The Plaintiff and the Gerards
dispute the amount of unpaid taxes but agree that unpaid
taxes exist. The parties do not seem to dispute that all but
two of the assessments associated with these claims
liabilities attached to Cynthia's interest in the
Property prior to its conveyance to Robert.
2012, Robert and Cynthia, as tenants by the entirety,
conveyed the Property to Robert, individually. The Gerards
maintain that, at that time, Cynthia's interest in the
property was far less than Robert's interest due to her
lesser contribution to the purchase of the property and her
consumption of joint assets for the sole benefit of her
company. The deed to the Property specified that the transfer
from Cynthia to Robert was “by way of gift and without
any consideration other than for love and affection.”
The Gerards claim that they transferred the Property in this
manner on the advice of former counsel due to Cynthia's
debilitating brain aneurism and the need for Robert to manage
her affairs and assets. They also claim that Cynthia
transferred her remaining interest in the Property to Robert
for both (1) consideration previously transferred from
Robert's assets to Cynthia, which Cynthia used to support
her business, and (2) the release by Robert of his claim
against Cynthia related to the previous transfers.
(See Def. Opp. Br. 4, ECF No. 56.)
Summary Judgment Order
Motion for Summary Judgment [ECF No. 27], the Plaintiff
addressed three issues. First, the Plaintiff asked for a
determination regarding the amount of taxes owed. Second, the
Plaintiff requested a ruling that the tax liens that arose
upon assessment of the unpaid tax liabilities attached to
Cynthia's interest in the Property and remain attached to
a one-half interest in the Property despite its conveyance to
Robert. Finally, the Plaintiff asked that the tax liens be
enforced against the Property via a sale of the entire
Property pursuant to 26 U.S.C. § 7403.
Gerards responded that the Plaintiff had not submitted
sufficient documentation to support its assertions regarding
the amount of taxes owed and that the documents that the
Plaintiff did submit were contradictory to the
Plaintiff's claims. Therefore, the Gerards argued, there
remains a genuine issue of material fact regarding the amount
allegedly due. The Gerards also argued that because Robert
qualifies as a “purchaser” under 26 U.S.C. §
6323(a), any lien that attached to Cynthia's interest in
the Property prior to its conveyance to Robert is no longer
valid. But, even if the Court were to find the liens valid as
against the Property, the Gerards argued that the Court
should exercise its equitable discretion and decline to
enforce those liens against the Property.
reply, the Plaintiff explained the apparent discrepancies in
the amounts claimed in its brief with the amounts listed in
the supporting documentation, specifically referencing
credits applied to the balances and interest accruals. The
Plaintiff also argued that, as a matter of law, Robert was
not a “purchaser” under § 6323(a) because
there was no consideration for the transfer of Cynthia's
interest. Finally, the Plaintiff argued that the balance of
the equities weighed in favor of enforcing the liens via a
sale of the Property rather than against it.
the denial of the Plaintiff's Motion and the subsequent
transfer of the case to this Court, the Plaintiff moved for
partial reconsideration as to the amount of taxes owed and
whether the tax liens survived the conveyance of the Property
to Robert. The Plaintiff did not ask for reconsideration of
the issue regarding the equitability of a forced sale of the
Property, conceding that there remain factual disputes that
are reserved for the trier of fact. The Court now reconsiders
judgment is proper where the evidence of record shows that
there is no genuine issue of material fact and that the
moving party is entitled to judgment as a matter of law.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986). The moving party bears the initial burden of
informing the Court of the basis for its motion and
identifying those portions of the record it believes
demonstrate the absence of a genuine issue of material fact.
Id. at 323. The burden then shifts to the non-movant
to “go beyond the pleadings” to cite evidence of
a genuine factual dispute that precludes summary judgment.
Id. at 324. “[A] court has one task and one
task only: to decide, based on the evidence of record,
whether there is any material dispute of fact that requires a
trial.” Waldridge v. Am. Heochst Corp., 24
F.3d 918, 920 (7th Cir. 1994). If the non-movant does not
come forward with evidence that would reasonably permit the
finder of fact to find in its favor on a material issue, then
the Court must enter summary judgment against it.
Delinquent Tax Amounts
appears to be no dispute that Cynthia is personally liable
for some amount of unpaid taxes, that the assessments were
properly made, and that the taxes remain unpaid after the IRS
properly sent a notice and demand for payment to Cynthia.
Rather, the dispute on this issue centers on whether ...