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finding that Dewsnup "has since been extended to include nonconsensual federal tax liens"
Summary of this case from In Matter of DevensOpinion
Case No. 02-10508-8B7, Adv. No. 02-419
March 14, 2003
BUDDY D.FORD, Tampa, Fl., Attorney for Plaintiff.
FRANK M. DALE, JR., ESQ., Washington, D.C., Attorney for Defendant.
ORDER DISMISSING COUNT II OF AMENDED COMPLAINT
THIS CAUSE came on for consideration upon Motion to Dismiss Count II of Amended Complaint ("Dismissal Motion") filed by the Internal Revenue Service ("IRS") in the above captioned case. The Court, having heard the arguments of counsel, reviewed the record, and being otherwise fully advised, finds as follows.
count I of the Amended complaint concerns the dischargeability of $104, 737.44 in federal income taxes owed from 1992 and 1993. The IRS concedes the tax debt is dischargeable.
The court notes the parties were given the opportunity to submit briefs on the issues raised by the Dismissal Motion. The IRS submitted its Supplemental Memorandum of Law in Support of Defendants Motion to Dismiss Count II of Amended complaint on January 23, 2003. The Debtors/Plaintiffs, the carpenters, chose not to submit a brief.
The Amended Complaint filed by Debtors/Plaintiffs, the Carpenters, ("Debtors") seeks in Count II to have the Court determine the extent, validity and priority of federal tax liens filed by the IRS prepetition. The Debtors assert the IRS liens, which total approximately $117,000.00, should be limited to $2,715.OO — the alleged value of the Debtors' unencumbered personal assets at the time of the filing of the petition. The Dismissal Motion asserts the relief sought by Debtors is impermissible "lien stripping" which is disallowed under the United States Supreme Court opinion in Dewsnup v. Timm, 502 U.S. 410 (1992).
The Court previously denied a motion filed in the general case seeking to value the claim of the IRS.
In Dewsnup, the Supreme Court held a Chapter 7 debtor may not use the provisions of 11 U.S.C. § 506 to "strip down" a mortgage lien to the judicially determined value of the property. Id. at 417. The Supreme Court reiterated liens on real property pass through bankruptcy unaffected. Id. at 418. The holding in Dewsnup has since been extended to include nonconsensual federal tax liens, like those at issue in this case. See, e.g., In re Doviak, 161 B.R. 379, 381-2 (E.D. Texas 1993), In re Thomas, 260 B.R. 884, 885 (Bankr.M.D.Fla. 2001), Koppersmith v. United States, (In re Koppersmith), 156 B.R. 537, 538-9 (Bankr. S.C. Texas 1993); see also In re Windham, 136 B.R. 878, 882-3 (Bankr.M.D.Fla. 1992) (applying Dewsnup to personal property); 4 Collier on Bankruptcy, § 506.06[1][b] (Resnick, et al., ed., 15th ed. rev'd 2003) (recognizing the extension of Dewsnup to nonconsensual liens).
Clearly under Dewsnup, relief in the form of 11 U.S.C. § 506 is not available to Debtors under the facts of this case. Further, tax liens are not subject to 11 U.S.C. § 522(f), and are allowed to remain against exempt property under 11 U.S.C. § 522(c)(2)(B). See Doviak, 161 B.R. at 381. This Court finds no support for the relief requested in Count II, and cannot envision any legal argument which would support the Debtors' assertions. Therefore, the Court shall grant the Dismissal Motion for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6); see F.R.Bankr.P. 12(b).
The court notes the tax liens in question are still valid even though the underlying tax debt is dischargeable. See Dishong v. United States (In re Dishong), 188 B.R. 51, 54 (Bankr.M.D.Fla. 1995) (holding discharge of underlying taxes limits associated federal tax lien to assets acquired prepetition).
To the extent Debtors may rely on cases involving chapter 13 cases, this court rejects such an analysis. This case arises under chapter 7 and is squarely within the line of cases interpreting Dewsnup, which also was a chapter 7 case.
Accordingly, it is
ORDERED, ADJUDGED AND DECREED that the Motion to Dismiss Count II of Amended Complaint filed by the Internal Revenue Service in the above captioned adversary is granted and Count II is dismissed.