Opinion
5-21-CV-00286-OLG-RBF
04-20-2023
UNITED STATES OF AMERICA, Plaintiff, v. PETE E. GUTIERREZ, JEANETTE M. GUTIERREZ, GUTIERREZ P. ENTERPRISES, LLC., FGMS HOLDINGS, LLC, OVATION SERVICES, LLC, CAPITAL ONE, NATIONAL ASSOCIATION, DEUTSCHE BANK TRUST COMPANY AMERICAS, Defendants.
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
UNITED STATES MAGISTRATE JUDGE
To the Honorable United States District Judge Orlando Garcia:
This Report and Recommendation concerns Plaintiff the United States of America's Motion for Partial Summary Judgment, see Dkt. No. 39, and the United States' Motion to Dismiss Defendants Capital One and Ovation Services, see Dkt. No. 46. All pretrial matters in this action have been referred for resolution pursuant to Rules CV-72 and 1 of Appendix C to the Local Rules for the United States District Court for the Western District of Texas. See Dkt. No. 8. Authority to enter this recommendation stems from 28 U.S.C. § 636(b)(1)(B). For the reasons set forth below, the Motion for Summary Judgment, Dkt. No. 39, should be GRANTED. The Motion to Dismiss, Dkt. No. 46, should be GRANTED.
Factual and Procedural Background
This matter concerns federal taxes owed by Defendants Pete and Jeanette Gutierrez (collectively, “Gutierrezes”). On March 22, 2021, the United States (“Government”) filed its original complaint against the Gutierrezes and Gutierrez P. Enterprises, LLC (“Enterprises,” and collectively with the Gutierrezes, “Gutierrez Defendants”) pursuant to 26 U.S.C. §§ 7402 and 7403, seeking to: “(1) reduce to judgment unpaid federal tax liabilities owed by Pete E. and Jeanette M. Gutierrez; (2) determine that Gutierrez P. Enterprises, LLC, is the alter ego of Pete E. Gutierrez, Jeanette M. Gutierrez, or both; (3) alternatively, determine that Gutierrez P. Enterprises, LLC, is the nominee of Pete E. Gutierrez, Jeanette M. Gutierrez, or both; and (4) determine that certain real property is encumbered by tax liens securing the Gutierrezes' federal tax liabilities.” Compl. at 1 (Dkt. No. 1). The Government later filed an amended complaint seeking the same relief against the Gutierrez Defendants. See Am. Compl. at 1 (Dkt. No. 17). Pete and Jeanette Gutierrez each filed separate answers to the Original Complaint pro se. See Dkt. Nos. 6 & 11. Enterprises filed an answer to the Amended Complaint through counsel of record. See Dkt. No. 26.
The properties at issue are: (1) 4631 Del Mar Trail, San Antonio, Texas 78251; (2) 1015 Fresno, San Antonio, Texas 78201; (3) 1017 Fresno, San Antonio, Texas 78201; (4) 1019 Fresno, San Antonio, Texas 78201; and (5) 5710 Pearsall Road, San Antonio, Texas 78201. The Gutierrezes hold title to the Del Mar property. Enterprises holds title to each of the other four properties.
Also named as defendants were various entities that had interests in the real property at issue. Those remaining defendants, in addition to the Gutierrez Defendants, are the following: FGMS Holdings, LLC; Ovation Services, LLC; Capital One, National Association; and Deutsche Bank Trust Company Americas, as Trustee for Residential Accredit Loans, Inc. Mortgage Asset-Backed Pass-Through Certificates, Series 2007-QS4. Capital One never entered an appearance, and the Government filed a motion to dismiss Capital One as a defendant. See Dkt. No. 46. Ovation Services is the authorized mortgage servicer of FGMS and has no secured interest in any of the property at issue. The Government therefore also moved to dismiss Ovation as a defendant, and both FGMS and Ovation agree to such dismissal. See Dkt. Nos. 46 (motion to dismiss) & 48 (advisory from FGMS and Ovation). Each of the other remaining defendants- FGMS and Deutsche Bank-entered into stipulations with the Government, specifying the lien priority of their interest in relation to the tax liens of the Government. See Dkt. Nos. 32 & 33 (stipulations).
The Government filed its Motion for Partial Summary Judgment on September 14, 2022. See Dkt. No. 39 (“Mot.”). Although styled a motion for “partial” summary judgment, the motion, if granted in full, would resolve all outstanding matters in this case in light of the stipulations with Deutsche Bank and FGMS. See Dkt. Nos. 47 & 48 (clarifying impact of stipulations in relation to the motion for summary judgment). FGMS also acknowledged that the stipulation resolved its cross-claims against the Gutierrezes. See Dkt. No. 48. Deutsche Bank filed a response to the motion for summary judgment, agreeing with its substance but requesting the Court enter a revised proposed order correcting Deutsche Bank's name and clarifying the disposition of foreclosure proceeds in the event of the sale of certain real property. See Dkt. No. 40. The Government filed a reply agreeing with Deutsche Bank's revisions, but adding a clarification regarding any outstanding ad valorem tax liabilities should the property be sold in foreclosure. See Dkt. No. 41.
No other defendant, including the Gutierrez Defendants, filed a response to the motion for summary judgment. On November 4, 2022, the Court ordered the Gutierrez Defendants to respond to the motion for summary judgment or otherwise show cause why the Court should not take up the motion as unopposed. As of the date of this Order, none of the Gutierrez Defendants has filed a response.
Analysis
Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure only “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.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Fed.R.Civ.P. 56(c). The party moving for summary judgment bears the burden of demonstrating by competent evidence that there is no genuine issue of material fact and that they are entitled to judgment as a matter of law. Id. at 323. Although the Gutierrez Defendants have failed to respond to the Government's motion, summary judgment can only be granted if the Government has met this initial burden. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc).
The Government included the following summary judgment evidence with its motion: (1) Declaration of trial attorney Thomas Herrin regarding administrative files he received in connection with the lawsuit, and (2) Declaration of IRS Revenue Officer/Reviewer Brett A. Crow with attached exhibits, including numerous IRS records. See Mot. Exs. 1-38; Herrin Decl. (providing complete summary of attached exhibits). As explained more fully below, the Government has submitted enough competent summary judgment evidence to support its motion for summary judgment, and the motion should be granted in its entirety.
The Government filed a revised version of Exhibit 1, the Crow Declaration, to correct the inadvertent omission of Crow's signature. No other changes were made to the revised exhibit. All references to “Ex. 1” refer to the corrected exhibit at Dkt. No. 50-1.
A. The Government Has Established the Federal Tax Liabilities of the Gutierrezes.
As demonstrated by the IRS records submitted by the Government, the Gutierrezes' tax liabilities are as follows: (1) with accruals and costs as of August 28, 2022, the Gutierezzes' joint Form 1040 federal individual income taxes, penalties, and interest for tax years 2009-2012 total $398,854.19, see Exs. 1-5; (2) with accruals and costs as of August 28, 2022, Pete Gutierrez's civil penalties under 26 U.S.C. § 6701(a) for the years 2005-2010 total $373,203.78, see Exs. 1, 6-11; (3) with accruals and costs as of August 28, 2022, Jeanette Gutierrez's civil penalties under 26 U.S.C. § 6701(a) for the year 2005 total $11,355.93, see Exs. 1 & 12; and (4) with accruals and costs as of August 28, 2022, Pete Gutierrez's Form 1040 federal individual income taxes, penalties, and interest for the year 2007 total $278,182.56, see Exs. 1 & 13. The Government asserts that the statute of limitations to collect on these tax liabilities, including the oldest liabilities for tax year 2007, which were assessed on August 9, 2010, has not expired because the applicable deadlines were tolled and then extended pursuant to 26 U.S.C. § 6503(a)(1) and (h) due to Pete and Jeanette's bankruptcy proceedings. See Mot. 4-6 (calculating deadlines), Exs. 14 & 15 (bankruptcy records).
These uncontroverted records sufficiently establish the amount of tax liabilities owed by the Gutierrezes and that the deadline to collect has not passed. Because the Gutierrezes have not pointed to any genuine dispute of material fact on these issues, the Government is entitled to judgment as a matter of law reducing to judgment the Gutierrezes' tax liabilities.
B. The Subject Properties Should Be Encumbered by Tax Liens.
Assessment of a federal tax liability creates a lien against the subject taxpayer's property and rights to property. See 26 U.S.C. § 6321. The lien attaches to all property at any time during the period of the lien, including property acquired after the lien arises. See Treas. Reg. § 301.6321-1. The Gutierrezes acquired the Del Mar property on December 31, 2001. See Ex. 16 (deed). Accordingly, the lien created by the federal tax liabilities assessed against the Gutierrezes attached to that property.
The remaining properties-1015 Fresno, 1017 Fresno, 1019 Fresno, and 5710 Pearsall- are held in the name of Enterprises. See Mot. at 7-8, Ex. 17. The Government argues that the Gutierrezes' tax liabilities also created liens on those properties, because Enterprises is the “nominee” of the one or both of the Gutierrezes. See Mot. at 13. “Specific property in which a third person has legal title may be levied upon as a nominee of the taxpayer if the taxpayer in fact has beneficial ownership of the property.” Oxford Cap. Corp. v. United States, 211 F.3d 280, 284 (5th Cir. 2000). The following factors are generally considered in determining nominee status: “(a) No consideration or inadequate consideration paid by the nominee; (b) Property placed in the name of the nominee in anticipation of a suit or occurrence of liabilities while the transferor continues to exercise control over the property; (c) Close relationship between transferor and the nominee; (d) Failure to record conveyance; (e) Retention of possession by the transferor; and (f) Continued enjoyment by the transferor of benefits of the transferred property.” Id. at 284 n.1; United States v. Burnett, 452 Fed. App'x. 569, 570 (5th Cir. 2011).
The Complaint alleges that Enterprises is the “alter ego” of one or both of the Gutierrezes, or that alternatively it is a “nominee.” Because the Government's motion does not provide any arguments or evidence advancing the “alter ego” argument, the Court has not considered it.
Both Pete and Jeanette underwent separate personal bankruptcy proceedings. Pete Gutierrez submitted a Schedule A list of real property to the bankruptcy court in which he declared ownership of the 1019 Fresno property and the 5710 Pearsall property. See Ex. 22 at 2. He described both properties as “income producing commercial rentals.” Id. Jeanette Gutierrez submitted amended bankruptcy schedules to the bankruptcy court in which she declared a fee simple, community ownership interest in the 1017 Fresno property, the 1019 Fresno property, the 1015 Fresno property, and the 5710 Pearsall property. See Ex. 23. Jeanette designated the properties variously as “rental property,” “commercial rental property” and “income producing parking lot.” Id. In her Third Amended Plan of Reorganization, she claimed community property ownership with Pete Gutierrez of the 1015 Fresno, 1017 Fresno, 1019 Fresno, and 5710 Pearsall properties. See Ex. 24 at 2, Ex. C.
The Government notes that Jeanette Gutierrez's Schedule A has a typographical error, and refers to “1013 Fresno” instead of “1015 Fresno.” There is no 1013 Fresno, and the Amended Plan of Reorganization correctly refers to “1015 Fresno.” See Mot. at 9; Ex. 24 at 2, Ex. C.
“Statements in bankruptcy schedules are executed under penalty of perjury and when offered against a debtor are eligible for treatment as judicial admissions.” In re Rollings, 451 Fed.Appx. 340, 348 (5th Cir. 2011) (internal quotation marks omitted); In re Sissom, 366 B.R. 677, 697 (Bankr.S.D.Tex. 2007) (same). Although the Gutierrez Defendants denied that Enterprises is the “nominee” or “alter ego” of one or both of the Gutierrezes in each of their respective answers, the Gutierrezes admitted to the personal ownership of those properties in their bankruptcy proceedings, meaning those properties could be sold in satisfaction of their personal debts. See Ex. 24 at 2 (plan of reorganization explaining Jeanette proposed to sell the identified properties to fund payments to secured creditors). Jeanette's plan of reorganization specified that the listed properties were community property jointly owned with Pete, and that Pete consented to the reorganization plan including the sale of those properties to pay creditors. Id.Accordingly, the Government has produced evidence showing that the Gutierrezes actually benefited from those properties, even though they were held in the name of Enterprises. The Gutierrez Defendants, in not responding to the motion for summary judgment, have failed to raise a genuine question of material fact as to whether Enterprises is holding the four properties at issue as a “nominee.” The Government is therefore entitled to judgment as a matter of law that Enterprises holds title to the subject properties as the nominee of the Gutierrezes, and that the Gutierrezes' personal tax liabilities create tax liens on those properties.
This included 1015 and 1017 Fresno, which Pete did not list in his own bankruptcy Schedule A.
C. Lien Priority Should Be Determined Consistent with the Stipulations.
Defendant Deutsche Bank has a property interest in the Del Mar property, and Defendant FGMS has a property interest in the 1015, 1017, and 1019 Fresno properties, as well as the 5710 Pearsall property. The Government entered into stipulations with Deutsche Bank and FGMS in which the parties stipulated to the priority of the competing security interests. In accordance with these stipulations, the Government requests that the Court enter judgment determining that Deutsche bank has a secured claim in the Del Mar property senior to the Government's claim, and that FGMS has a secured claim in the 1015, 1017, and 1019 Fresno properties and the 5710 Pearsall property that is senior to the claim of the Government. Deutsche Bank and FGMS are not opposed to such a judgment, except that Deutsche Bank clarified its proper name is “Deutsche Bank Trust Company Americas, as Trustee for Residential Accredit Loans, Inc. Mortgage Asset-Backed Pass-Through Certificates, Series 2007-QS4,” and also requested clarification that the proceeds of a foreclosure on the Del Mar property would be paid to Deutsche Bank after payment of reasonable costs of sale, but before payment of any secured interest lien of the Government. See Dkt. No. 40. The United States agreed, with the qualification that any outstanding ad valorem tax liabilities owed at the time of the sale would be paid prior to distribution to Deutsche Bank. See Dkt. No. 41.
Accordingly, the Court should enter judgment determining the lien priorities of the competing claims on the pertinent properties consistent with the stipulations between the parties, and reflecting the further revisions and clarifications of Deutsche Bank and the United States as to the Del Mar property. Lastly, the Court should grant the Government's Motion to Dismiss, which requests the dismissal of Defendants Capital One and Ovation, because Capital One never entered an appearance and FGMS and Ovation both agreed that Ovation should be dismissed as a defendant.
Conclusion and Recommendation
For the reasons discussed above, it is recommended that that the Government's Motion to Dismiss, Dkt. No. 46, be GRANTED.
For the reasons discussed above, it is recommended that the Government's Motion for Partial Summary Judgment, Dkt. No. 39, be GRANTED.
Judgment should be entered in favor of the Government as follows: (1) against Pete and Jeanette Gutierrez in the amount of $309,854.10; (2) against Pete Gutierrez in the amount of $373,203.78 (civil penalties); (3) against Pete Gutierrez in the amount of $278,182.56; and (4) against Jeanette Gutierrez in the amount of $11,355.93 (civil penalties).
The Court notes that there is some discrepancy in this figure within the Motion for Summary Judgment. This number is based on the figured provided in the Government's Proposed Order and in the Motion at page 11.
Prejudgment and post judgment interest should continue to accrue on those liabilities after August 28, 2022, at the rates set forth in 26 U.S.C. § 6601 and § 6621, as adopted by 28 U.S.C. § 1961(c), until paid. Federal tax liens securing the determined tax liabilities should attach to the properties located at 4631 Del Mar Trail, 1015 Fresno, 1017 Fresno, 1019 Fresno, and 5710 Pearsall Road (each property as more fully identified in the Amended Complaint, Dkt. No. 17).
Judgment should be entered determining that FGMS Holdings, LLC has a secured interest in the 1015 Fresno Property, the 1017 Fresno Property, the 1019 Fresno Property, and the Pearsall Road Property superior to the Government's tax claims against those properties.
Judgment should be entered determining that Deutsche Bank Trust Company Americas, As Trustee for Residential Accredit Loans, Inc. Mortgage Asset-Backed Pass-Through Certificates, Series 2007-QS4, has a first lien mortgage security interest in the Del Mar Trail property senior and superior to and having priority over the tax claim of the Government in that property.
If the District Court accepts this recommendation, it may wish to adopt and sign the revised proposed order attached to Deutsche Bank's response to summary judgment, see Dkt. No. 40, with the added clarification regarding ad valorem taxes as specified in the Government's reply, see Dkt. No. 41.
Instructions for Service and Notice of Right to Object/Appeal
The United States District Clerk shall serve a copy of this report and recommendation on all parties by either (1) electronic transmittal to all parties represented by attorneys registered as a “filing user” with the clerk of court, or (2) by mailing a copy by certified mail, return receipt requested, to those not registered. Written objections to this report and recommendation must be filed within fourteen (14) days after being served with a copy of same, unless this time period is modified by the district court. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). Objections, responses, and replies must comply with the same page limits as other filings, unless otherwise excused by the district court's standing orders. See Rule CV-7. The objecting party shall file the objections with the clerk of the court, and serve the objections on all other parties. A party filing objections must specifically identify those findings, conclusions, or recommendations to which objections are being made and the basis for such objections; the district court need not consider frivolous, conclusory, or general objections. A party's failure to file written objections to the proposed findings, conclusions, and recommendations contained in this report shall bar the party from a de novo determination by the district court. Thomas v. Arn, 474 U.S. 140, 149-52 (1985); Acuna v. Brown & Root, Inc., 200 F.3d 335, 340 (5th Cir. 2000). Additionally, failure to timely file written objections to the proposed findings, conclusions, and recommendations contained in this report and recommendation shall bar the aggrieved party, except upon grounds of plain error, from attacking on appeal the unobjected-to proposed factual findings and legal conclusions accepted by the district court. Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).
IT IS SO ORDERED.