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United States v. Uptergrove

December 17, 2008

UNITED STATES OF AMERICA, PLAINTIFF,
v.
CHARLES WAYNE UPTERGROVE, ET AL., DEFENDANTS



The opinion of the court was delivered by: Anthony W. Ishii Chief United States District Judge

MEMORANDUM OPINION AND ORDER DENYING DEFENDANTS' MOTIONS TO VACATE OR SET ASIDE JUDGMENT

[Documents # 135 and 137]

BACKGROUND

On November 14, 2006, Plaintiff United States of America filed this complaint to reduce federal tax assessments to judgments and foreclose on property. The first claim for relief concerned assessments against Defendant Martha Uptergrove relating to a sole proprietorship called IKON Roofing Company for unpaid federal employment taxes, penalties, interest, and other statutory additions during 2002 and 2003. The second claim for relief concerned assessments against Defendant Charles Uptergrove relating his failure to collect, truthfully account for, and pay withheld income and FICA taxes on behalf of Uptergrove Group, Inc., dba Uptergrove Roofing Company, for the periods ending March 31, 1988, through and including June 30, 1989. The third claim for relief sought to foreclose on Defendant Charles Uptergrove's and Defendant Martha Uptergrove's real property. Plaintiff requested that the court: (A) Enter judgment against Plaintiff Martha Uptergrove in the amount of $200,802.70, plus statutory interest and other additions allowed by law, for unpaid federal employment taxes and penalties for the periods ending March 31, 2001, through March 31, 2002; (B) Enter judgment against Defendant Charles Uptergrove in the amount of $336,298,70, plus statutory interest and other additions allowed by law, for the unpaid Trust Fund Recovery Penalty for the periods ending March 31, 1988, through and including June 30, 1989; (C) Enter judgment finding that the United States has valid and subsisting liens on all property and rights to property belonging to Defendants; and (D) Enter judgment finding that the federal tax liens against Defendants be foreclosed upon and Defendants' real property be ordered sold.

On October 31, 2007, Defendants filed a motion to dismiss the complaint for lack of legislative jurisdiction. On December 6, 2007, the court denied Defendants' motion to dismiss this action for lack of jurisdiction. The court found that United States v. Butler, 297 U.S. 1 (1936) allows such taxation by the federal government. The court further found it has jurisdiction over this action pursuant to 28 U.S.C. § 1340, which allows jurisdiction over any civil action arising under any Act of Congress providing for internal revenue, and 28 U.S.C. § 1345, which allows for jurisdiction over suits commenced by the United States.

On February 1, 2008, Plaintiff filed a motion for discovery sanctions based on Defendants' failure to appear at their January 10, 2008 depositions. Plaintiff requested that the court strike Defendants' answer and enter default judgment against them. On March 10, 2008, the Magistrate Judge granted the motion to strike the answer after performing a close review of the record. The Magistrate Judge determined that Defendants' conduct in this matter warranted sanctions. The Magistrate Judge pointed to "an extensive history regarding the Defendants' failure to comply with the discovery process, as well as this court's orders . . ." in this matter. The Magistrate Judge recounted numerous failures by Defendants to appear at hearings, appear scheduling conferences and depositions ordered by the court, respond to timely filed written discovery requests, and accept mail from Plaintiff or the court.

On April 9, 2008, Plaintiff filed a motion for default judgment against Defendants. On August 13, 2008, the Magistrate Judge entered Findings and Recommendations that recommended Plaintiff's motion for default judgment be granted.

On September 24, 2008, the court adopted the Findings and Recommendations and granted Plaintiff's motion for default judgment. The court ordered as follows:

1. Defendant Charles W. Uptergrove is indebted to the United States for unpaid assessed balances of federal taxes for the periods ending March 31, 1988, through and including June 30, 1989, plus interest and statutory additions accruing after the dates of assessment pursuant to 26 U.S.C. §§ 6601, 6621 and 6622, and 27 U.S.C. § 1961(c) until paid. Defendant Charles W. Uptergrove is also indebted to the United States for unpaid sanctions entered by the court on February 1, 2008 and March 10, 2008. On September 23, 2008, the court entered judgment in favor of the United States and against Defendant Charles W. Uptergrove for his federal tax liabilities for the periods ending March 31, 1988, through and including June 30, 1989, calculated through March 31, 2008, in the amount of $385,879.94, plus such additional statutory additions, including interest, as continue to accrue until paid in full, and for his unpaid, court imposed sanctions in the amount of $1,597.81, and in the amount of $308.56.

2. Defendant Martha G. F. Uptergrove is indebted to the United States for unpaid assessed balances of federal taxes for the periods ending March 31, 2001, through and including March 31, 2002, plus interest and statutory additions accruing after the dates of assessment pursuant to 26 U.S.C. §§ 6601, 6621 and 6622, and 28 U.S.C. § 1961(c) until paid. Defendant Martha G. F. Uptergrove is also indebted to the United States for unpaid sanctions entered by the court on February 1, 2008 and March 10, 2008. On September 23, 2008, the court entered judgment in favor of the United States and against Defendant Martha G. F. Uptergrove for her federal tax liabilities for the periods ending March 31, 2001, through and including March 31, 2002, calculated through March 31, 2008, in the amount of $227,716.49, plus such additional statutory additions, including interest, as continue to accrue until paid in full, and for her unpaid court imposed sanctions in the amount of $1,597.81, and in the amount of $308.56.

3. The Subject Property upon which foreclosure is sought is as follows:

The real property located at 26662 Road 23, Chowchilla, California, 93613, legally described as follows:

Real property in the unincorporated area of the County of MADERA, State of California, described as follows: THE NORTH 3/4 OF THE NORTH 1/2 OF THE SOUTHEAST 1/4 OF THE NORTHEAST1/4 OF SECTION 20, TOWNSHIP 9 SOUTH, RANGE 17 EAST, MOUNT DIABLO BASE AND MERIDIAN, ACCORDING TO THE OFFICIAL PLAT THEREOF. APN: 030-120-013.

4. On March 19, 1996, a duly authorized delegate of the Secretary of Treasury made assessments for a Trust Fund Recovery Penalty against defendant Charles W. Uptergrove for the tax for the periods ending March 31, 1988, through and including June 30, 1989.

5. The United States has valid and subsisting tax liens on all property and rights to property of Defendant Charles W. Uptergrove, including the Subject Property, arising from the above-described assessments, which tax liens are effective as of the dates of those assessments.

6. 26 U.S.C. § 7403 entitles the United States to enforce its liens against the Subject Property in order to apply the proceeds towards the tax liabilities of Defendant Charles W. Uptergrove.

7. On October 21, 2002, a duly authorized delegate of the Secretary of Treasury made assessments for unpaid federal employer's quarterly payroll (Form 941) taxes against Defendant Martha G. F. Uptergrove for the tax periods ending March 31, 2001, through and including December 31, 2001.

8. On October 28, 2002, a duly authorized delegate of the Secretary of Treasury made assessments for unpaid federal employer's annual unemployment (Form 940) taxes against Defendant Martha G. F. Uptergrove for the tax period ending December 31, 2001.

9. On September 13, 2004, a duly authorized delegate of the Secretary of Treasury made assessments for a failure to file penalty under 26 U.S.C. § 6721 against Defendant Martha G. F. Uptergrove for the tax period ending December 31, 2001.

10. On October 14, 2002, a duly authorized delegate of the Secretary of Treasury made assessments for unpaid federal employer's quarterly payroll (Form 941) taxes against Defendant Martha G. F. Uptergrove for the tax period ending March 31, 2002.

11. The United States has valid and subsisting tax liens on all property and rights to property of Defendant Martha G. F. Uptergrove, including the Subject Property, arising from the above-described assessments, which tax liens are effective as of the dates of those assessments.

12. 26 U.S.C. § 7403 entitles the United States to enforce its liens against the Subject Property in order to apply the proceeds towards the tax liabilities of Defendant Martha G. F. Uptergrove.

13. The United States' liens against the Subject Property are hereby foreclosed.

14. The United States Marshal for the Eastern District of California, his or her representative, or an Internal Revenue Service Property Appraisal and Liquidation Specialist ("PALS"), is authorized and directed under 28 U.S.C. §§ 2001 and 2002 to offer for public sale and to sell the Subject Property. The United States may choose either the United States Marshal or a PALS to carry out the sale of the Subject Property under this Order and shall make the arrangements for any sale as set forth in this Order.

15. The Marshal, his or her representative, or a PALS representative is authorized to have free access to the Subject Property and to take all actions necessary to preserve the Subject Property, including, but not limited to, retaining locksmiths or other persons to change or install locks or other security devices on any part of the ...


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