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CTC REAL ESTATE SERVICES v. ALL CLAIMANTS TO SURPLUS FUNDS

October 20, 2005.

CTC REAL ESTATE SERVICES, Petitioner,
v.
ALL CLAIMANTS TO SURPLUS FUNDS AFTER TRUSTEE SALE AT 2225 VICTORIA PARK TERRACE, ALPINE, CALIFORNIA 91901; INCLUDING, BUT NOT LIMITED TO: JAMES LEE JUBY JR., BETTY LOU WOOLMAN, GEORGE PHILLIP WOOLMAN, STATE OF CALIFORNIA FRANCHISE TAX BOARD, NORTHWEST FUNDING GROUP, INTERNAL REVENUE SERVICE, AND DOES 1 THROUGH 20, inclusive, Respondents.



The opinion of the court was delivered by: DANA SABRAW, District Judge

ORDER GRANTING RESPONDENT UNITED STATES' MOTION FOR SUMMARY JUDGMENT AND DIRECTING INTERPLEADER FUNDS TO BE DISBURSED
This suit arises from an interpleader action in which CTC Real Estate Services ("CTC") seeks to determine the proper claimants to the surplus funds from the sale of George and Betty Woolman's (the "Woolmans") home, located at 2225 Victoria Park Terrace, Alpine, California 91901 ("Subject Property"). The United States of America ("United States"), on behalf of the Internal Revenue Service ("IRS"), now moves for summary judgment, and requests that the Court direct payment from the surplus proceeds to the United States, for unpaid federal taxes the IRS assessed against the Woolmans in 1996. The Woolmans filed an Opposition to the motion for summary judgment on October 3, 2005. Thereafter, the United States filed a Reply. The Court finds this matter suitable for submission without oral argument pursuant to Local Civil Rule 7.1(d)(1). For the reasons discussed below, the Court grants the United States' motion for summary judgment.

I.

  FACTUAL AND PROCEDURAL BACKGROUND

  On June 19, 2001, James L. Juby ("Juby") conveyed his interest in the Subject Property by quitclaim deed to his mother, Betty Woolman. Thereafter, on April 4, 2002, Betty Woolman recorded the deed to the Subject Property in her name as sole owner of the property.

  After Betty Woolman recorded the deed, a dispute arose between Juby and Betty Woolman as to whether the transfer of interest in the Subject Property was valid. Notwithstanding the dispute, on July 2, 2004, Betty Woolman conveyed her interest in the Subject Property by quitclaim deed to her husband, George Woolman. On that same day, George Woolman filed for Chapter 7 bankruptcy protection and the Subject Property was subsequently sold at a non-judicial trustee's sale.

  On November 8, 2004, CTC initiated an interpleader action in the Superior Court of the State of California in San Diego, to determine the proper claimants to the surplus funds from the sale of the Subject Property. CTC deposited a total of $101,504.97 in the registry of the Superior Court. On December 9, 2004, the United States removed this action to the District Court pursuant to 28 U.S.C. §§ 1444 and 2410.*fn1 After removal, four parties answered the Complaint and claimed a right to the surplus proceeds from the sale: the Woolmans, the United States, the California Franchise Tax Board ("FTB"), and Northwest Funding Group ("Northwest").*fn2

  On May 18, 2005, a portion of the excess proceeds in the amount of $34,600.00 was released to Northwest pursuant to a stipulation signed by the parties and subsequently approved by this Court. Thereafter, Northwest was dismissed from the case. In addition, after the FTB received the Woolmans' state tax returns for the periods of 1999 to 2001, it notified the United States Magistrate Judge in this matter that the only liabilities owed by the Woolmans for the relevant tax years are not covered by the FTB's liens. Accordingly, the FTB acknowledged that it no longer has a valid claim to the excess proceeds. (See Attachment A to the Woolmans' Affidavit in Support of the Opposition to Motion for Summary Judgment.)

  On August 31, 2005, the United States, on behalf of the IRS, filed a motion for summary judgment, contending that it is entitled to $52,830.55 of the excess proceeds from the sale of the Woolmans' home, due to unpaid federal taxes that the IRS assessed against them in 1996.*fn3 The IRS' assessments of the Woolmans' federal tax liabilities covered the periods of 1991, 1992, 1994 and 1995. (See Exhibits A, B, C, and D to United States' Motion for Summary Judgment). All of the IRS' notices of tax deficiencies were served at the Woolmans' last known address. (See Opposition to Motion for Summary Judgment at 5.) In addition, a declaration provided by the United States indicates that on February 2, 1997, a delegate of the Secretary of the Treasury filed a Notice of Federal Tax Lien against the Woolmans with the San Diego County Recorder's Office. (See Exhibit E to United States' Motion for Summary Judgment). According to the United States, despite being properly notified of their tax deficiencies, the Woolmans have failed to pay the taxes assessed. (See United States' Motion for Summary Judgment at 6.)

  On October 3, 2005, the Woolmans filed an Opposition to the United States' motion for summary judgment, contending that genuine issues of material fact exist as to the validity of the federal tax lien. Specifically, the Woolmans raise three contentions in support of their opposition. First, they contend there are genuine issues of material fact as to whether the IRS properly notified them of their tax liabilities, because the notices of deficiencies were mailed to their last known address after they were evicted from that residence. (Id.) Second, they contend the IRS' assessments of their tax liabilities is incorrect as to the amount owed. (Id. at 5-6.) Finally, the Woolmans also argue that the principles of equity, justice, and economy weigh in favor of this Court's denial of the motion for summary judgment. (Id.) II.

  STANDARD OF REVIEW

  Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure on "all or any part" of a claim where there is an absence of a genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a) & (c); Celotex Corp. V. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute about a material fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248.

  A party seeking summary judgment bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. The moving party can satisfy this burden in two ways: (1) by presenting evidence to negate an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element to that party's case on which that party will bear the burden of proof at trial. Id. at 322-23. If the moving party fails to discharge this initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60 (1970).

  If the moving party meets this initial burden, the nonmoving party cannot defeat summary judgment by merely demonstrating "that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); see also Triton Energy Corp. v. Square D. Co., 68 F.3d 1216, 1221 (9th Cir. 1995) ("The mere existence of a scintilla of evidence in support of the nonmoving party's position is not sufficient.") (citing Anderson, 477 U.S. at 252). Rather, the nonmoving party must "go beyond the pleadings and by [his or] her own affidavits, or by `the depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 344 (quoting Fed.R.Civ.P. 56(e)). "Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment." T.W. Elec. Serv. Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). Moreover, "the district court may limit its review to the documents submitted for purposes of summary judgment and those parts of the record specifically referenced therein." Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1030 (9th Cir. 2001). The Court is not obligated "to scour the records in search of a genuine issue of triable fact." Keenan v. Allen, 91 F.3d 1275, 1279 (9th Cir. 1996) (citing Richards v. Combined Ins. Co., 55 F.3d 247, 251 (7th Cir. 1995)).

  When making its determination, the Court must view all inferences drawn from the underlying facts in the light most favorable to the party opposing the motion. See Matsushita, 475 U.S. at 587. "Credibility determinations, the weighing of evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a ...


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