Opinion
No. 2:03-cv-0288-LJM-WTL.
January 11, 2005
ORDER ON INTERVENOR'S MOTION FOR SUMMARY JUDGMENT
This cause is now before the Court on intervenor's, the United States of America ("United States"), Motion for Summary Judgment. The United States contends that pursuant to 26 U.S.C. § 6321, and according to the U.S. Supreme Court's opinion in United States v. McDermott, 507 U.S. 447 (1993), its tax lien on the accounts receivable of defendants, R.H. Electronic Systems, Inc. ("R.H."), Robert E. Rost, II, and Mary Y. Rost (collectively, "Defendants"), currently held by a receiver ("Receiver") take priority over plaintiff's, Old National Bank ("Old National"), simultaneously perfected security interest. Neither Old National nor Defendants have opposed the United States' Motion for Summary Judgment.
For the reasons stated herein, the Court GRANTS the United States' Motion for Summary Judgment.
I. BACKGROUND
The undisputed facts are: In June 1997, Old National lent R.H. $50,000.00. In exchange, R.H. and its owners gave Old National various forms of security, including a security interest in all of RCH's accounts receivable in 1997. Compl. Count 1, ¶¶ 1-5; Count II, ¶¶ 2-3. R.H. defaulted on its obligations under the promissory note, and Old National commenced a collection action against R.H. in state court. Id. Count 1, ¶ 7; Count II, ¶ 4. Eventually, the state court appointed a receiver ("Receiver") to gather and distribute RCH's assets. Oath of Receiver.Receiver collected $12,650.28 in accounts receivable on behalf of R.H. Receiver's Pet. for Approval, ¶ 8. These accounts receivable came into existence beginning on August 16, 2000, and continued through November 9, 2000. U.S. Exh. 1, Invoices. Receiver submitted a plan to the Court for the distribution of these assets. Receiver's Pet. for Approval, ¶ 8. Receiver's plan does not provide for the amount that R.H. owes the United States.
The United States, acting through the IRS, filed two Notices of Federal Tax Liens ("NFTLs") against R.H.; one was filed on November 19, 1999, in the amount of $6,649.14, the other was filed on March 16, 2000, in the amount of $31,760.99. U.S. Exh. D, Notices of Fed'l Tax Lien. The NTFLs were filed after the consensual security agreement was given.
II. SUMMARY JUDGMENT STANDARD
Federal Rule of Civil Procedure 56(c) provides that summary judgment is appropriate "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 summary judgment as a matter of law." In determining whether a genuine issue of material fact exists, "a trial court must view the record and all reasonable inferences drawn therefrom in the light most favorable to the non-moving party." Robin v. Espo Eng'g Corp., 200 F.3d 1081, 1088 (7th Cir. 2000). "The non-moving party, however, cannot rest on the pleadings alone, but instead must identify specific facts to establish that there is a genuine triable issue." Bilow v. Much Shelist Freed Denenberg Ament Rubenstein, P.C., 277 F.3d 882, 893 (7th Cir. 2001). "[C]onclusory statements, not grounded in specific facts, are not sufficient to avoid summary judgment," Lucas v. Chi. Transit Auth., 367 F.3d 714, 726 (7th Cir. 2004), rather, "[t]he party must supply evidence sufficient to allow a jury to render a verdict in his favor." Robin, 200 F.3d at 1088. Finally, the non-moving party bears the burden of specifically identifying the relevant evidence of record, and "the court is not required to scour the record in search of evidence to defeat a motion for summary judgment." Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th Cir. 2001).
III. DISCUSSION
The United States contends that the tax liens take priority over a simultaneously attaching state lien. Br. in Supp., at 5 (citing United States v. McDermott, 507 U.S. 447 (1993)). Here, the United States avers, Old National's interest in the accounts receivable attached when R.H. gained rights in the accounts receivable. The facts brought before the Court indicate that date was August 16, 2000, through November 9, 2000, when Receiver issued invoices on behalf of R.H.U.S. Exh. 1, Invoices. See also Ind. Code § 26-1-9.1-203(b)(2) (stating that a security interest is perfected when the debtor obtains rights in the collateral); Nat'l City Bank of Ind. v. All-Phase Elec. Supply Co., 790 N.E.2d 488, 490 (Ind.Ct.App. 2003) (stating that a debtor obtains rights in an accounts receivable when a debt is owed by a third party to the debtor).
The Court finds the United States' argument persuasive. There is no evidence to contradict the fact that the accounts receivable at issue here came into existence after the United States issued the two NFTLs. According to law, the date at which the accounts receivable came into existence is the time at which Old National's security interest perfected. In other words, Old National's lien attached when Receiver issued invoices on August 16, 2000, through November 9, 2000. The latest of the two NFTL issued on March 16, 2000. The Supreme Court, in McDermott, held that a properly filed NFTL takes priority over a simultaneously attaching state lien. McDermott, 507 U.S. at 453-55. Therefore, the United State's tax liens take priority over Old National's perfected security interest in the accounts receivable.
IV. CONCLUSION
For the foregoing reasons, intervenor's, the United States of America, Motion for Summary Judgment is GRANTED. Receiver is hereby ordered to pay to the United States the $12,650.28, in accounts receivable collected on behalf of defendant, R.H. Electronics Inc.
IT IS SO ORDERED.