Opinion
Case No. 6:97-cv-900-Orl-28JGG
June 17, 2002
ORDER
This is an action by the United States of America ("United States" or "the Government") against Defendant Patricia Labato ("Ms. Labato"), her daughter, Denise Labato a/k/a Denise Labato Hunt ("Ms. Hunt"), and Brevard County, Florida arising from Ms. Labato's alleged failure to pay income tax for the year ended December 31, 1992. The Government seeks to reduce to judgment the balance of Ms. Labato's unpaid income tax liability, to set aside as fraudulent a 1993 conveyance of real property from Ms. Labato to Ms. Hunt, and to foreclose the federal tax lien against that property. This Court has jurisdiction pursuant to 28 U.S.C. § 1340 and 1345.
This case is currently before the Court on the Motion for Summary Judgment (Doc. 101, filed January 30, 2002) filed by Defendant Ms. Labato, and the Opposition of Plaintiff United States of America to Motion for Summary Judgment by Defendant Patricia Labato and Plaintiffs Cross-Motion for Summary Judgment (Doc. 104, filed February 12, 2002). The United States has also filed a Memorandum of Law in Support of Opposition of Plaintiff United States of America to Motion for Summary Judgment by Defendant Patricia Labato and Plaintiffs Cross-Motion for Summary Judgment (Doc. 105, filed February 12, 2002). Defendant Ms. Labato has filed Defendant's Amended Memorandum in Opposition to the Government's Counter-Motion for Summary Judgment (Doc. 113, filed March 13, 2002). Upon consideration of the record in this matter, and as more specifically set forth below, the Court concludes that the Government's motion shall be granted and that Defendant's motion shall be denied.
Defendant's Amended Memorandum in Opposition to the Government's Counter-Motion for Summary Judgment (Doc. 113) supersedes the initial Defendant's Memorandum in Opposition to the Government's Counter-Motion for Summary Judgment (Doc. 111).
I. Factual Background
On July 10, 1992, Ms. Labato and her husband, Gennaro Labato, sold approximately one hundred sixity acres of land and improvements thereon in Woodstown, New Jersey for $3,140,022. (Ex. 6 Doc. 18.). The Labatos had purchased the land in the early 1970s for approximately $70,000, and consequently, upon the sale of substantial capital gain was realized. Despite this significant capital gain, however, the Labatos failed to pay income tax on that gain and failed to file an income tax return for the year 1992.
The proceeds from the sale of the Jew Jersey property were used, inter alia, to purchase some real property, including a $450,000-500,000 house in St. Cloud, Florida, and the subject property, a house in Cocoa, Florida. The Cocoa house, located at 3034 Winchester Drive, was purchased for $62,145.24 on June 29, 1993. Ms. Labato signed the settlement statement for that property (Ex. 8 to Doc. 105), and a warranty deed dated June 29, 1993 was recorded reflecting the sale from the sellers, Timothy and Diedre Decker, to Ms. Labato (Ex. 10 to Doc. 105). A "corrective" warranty deed from Ms. Labato to Ms. Hunt was recorded on July 23, 1993 (Ex. 11 to Doc. 105).
On February 1, 1995, the IRS made a jeopardy assessment of Ms. Labato's income tax liability for 1992. The jeopardy assessment totalled $947,289.12, representing the tax liability plus penalties and interest. As noted by the Government, on that same date a jeopardy assessment was also made against Ms. Labato's husband, Gennaro Labato; as explained by the Government, "[s]eparate assessments were made because Mr. and Mrs. Labato had not filed a tax return for 1992, and thus, had not elected the filing status "married filing joint.'" (Government's Memorandum of Law, Doc. 105 at 4 n. 6). Mr. Labato's tax liability has since been satisfied.
On March 29, 1995, the IRS sent notices of deficiency by certified mail to Ms. Labato at four different addresses: (1) 4540 Albritton Road, St. Cloud, Florida 34772, certified mail number 058869; (2) Rural Delivery 1, Box 540, Woodstown, New Jersey 08098, certified mail number 058870; (3) 204 South Main Street, Woodstown, New Jersey 08098, certified mail number 058871; and (4) Rural Delivery 4, Box 254, Woodstown, New Jersey 08098, certified mail number 058872. Copies of all four letters (Exs. 2-5 to Doc. 105) as well as a certified mail list reflecting delivery of those letters to the Postal Service on March 29, 1995 (Ex. 6 to Doc. 105) are contained in the record. Ms. Labato claims that she did not receive a notice of deficiency, and she has submitted an "Affidavit of Truth" that she "never received an original, Notice of Deficiency, (either direct or forwarded from another address), at my current address, 4540 Albritton Rd. St. Cloud Florida. I have lived at this St. Cloud address since 1992." (Attach. to Doc. 101). However, only the notice mailed to the South Main Street address (certified mail number 058871) was returned to the IRS unclaimed. (Ex. A-2 to Doc. 101). According to the Government's memorandum and a supporting affidavit (Doc. 107), some payments have been made since 1995, but as of January 31, 2002, Ms. Labato's federal income tax liability totalled $1,377,706.93.
II. Procedural Background
This case has a long and somewhat complicated procedural history. The Government filed its Complaint (Doc. 1) on July 18, 1997, against Ms. Labato, Ms. Hunt, and Brevard County, Florida. The Complaint notes that Ms. Hunt is named as a Defendant because she may claim an interest in the subject real property, and Brevard County is named as a Defendant because it is owed ad valorem real property taxes and may claim a lien or other interest in the subject real property. (Doc. 1 at 3). After Answers (Docs. 7 9) were filed, on May 6, 1998, the Government filed its Motion for Summary Judgment against Defendants Labato and Hunt (Doc. 18) and supporting Memorandum of Law (Doc. 19). On May 29, 1998, United States District Judge G. Kendall Sharp granted the motion, finding that Ms. Labato was indebted to the United State for unpaid federal income taxes for 1992, setting aside as fraudulent the transfer of the Cocoa house from Ms. Labato to Ms. Hunt, declaring that the United States has a valid tax lien on all of Ms. Labato's property, and foreclosing that tax lien (Doc. 24).
The Government concedes that any lien that Brevard County may claim for unpaid ad valorem property taxes is superior to the federal tax lien. (Doc. 105 at 2 n. 2).
Ms. Labato and Ms. Hunt attempted to appeal the order granting summary judgment (Doc. 25), but the Court of Appeals for the Eleventh Circuit dismissed the appeal for lack of jurisdiction, finding that the order (Doc. 24) was not final or otherwise appealable. (Doc. 27). A Decree of Foreclosure and Order of Forfeiture was entered on June 19, 1998 (Doc. 26), and on August 12, 1998, the property was sold to Charles Campbell for the highest bid of $42,000. (Doc. 29).
Ms. Labato and Ms. Hunt filed an Emergency Motion to stay the transfer of the property (Doc. 30, filed August 28, 1998). A hearing on the motion was held on September 24, 1998, after which the court took the matter under advisement. (Docs. 34 40). Meanwhile, the United States filed a Motion for Confirmation of Sale (Doc. 35, filed October 1, 1998), and that motion was heard on November 17, 1998 (Docs. 38 41). At that hearing, the Court found that a factual dispute existed regarding the conveyance of the property and an alleged scrivener's error in the property initially being placed in Ms. Labato's name rather than Ms. Hunt's name; the Court apparently was reconsidering its order granting the Government's motion for summary judgment. (Doc. 41 at 7). The hearing was continued pending completion of an IRS audit regarding Mr. Gennaro Labato, and the Court ordered that Ms. Hunt would be permitted to temporarily occupy the house. (Doc. 41 at 9). On July 13, 1999, the Court ordered the U.S. Marshal to assist Defendants in gaining access to the house. (Doc. 47).
On June 13, 2000, the Government filed its Notice of Withdrawal of Plaintiff's Motion fro Confirmation of Sale (Doc. 55), advising that confirmation of the sale was no longer desirable. The Government also filed Plaintiffs Motion for an Order Permitting the United States Marshal to Return Funds to Successful Bidders (Doc. 56, filed June 16, 2000). On June 20, 2000, Ms. Labato and Ms. Hunt filed a "Motion for Clarification of Issues" (Doc. 57).
The case was reassigned to the undersigned United States District Judge on June 29, 2000 (Doc. 59). A status hearing was held on September 22, 2000 (Doc. 62), during which the court granted the Government's withdrawal of motion to confirm sale, granted the motion for return of funds to successful bidders, and announced that Mr. Gennaro Labato would be permitted to intervene if he moved to do so within ten days thereof. (Doc. 62). On October 4, 2000, the Court entered an Order (Doc. 66) declining to confirm the sale of the property, directing the return of the purchase price to Mr. Campbell, denying Defendants' Motion for Clarification of Issues (Doc. 57) as moot, and denying Defendants' motion for an order removing all tax liens from the property (Doc. 57). On October 25, 2000, the Court granted (Doc. 67) Mr. Gennaro Labato's Motion to Intervene (Doc. 64).
On January 8, 2001, Ms. Labato advised the Court that she had filed a Chapter 7 Bankruptcy petition (Doc. 71), and this matter was stayed (Docs. 72 76) until April 9, 2001 (Doc. 79). A Case Management and Scheduling Order was entered on September 4, 2001 (Doc. 90) setting this matter for trial in July 2002. The summary judgment motions filed by the parties (Docs. 101 104) are now ripe for consideration by the Court.
III. Discussion
A. Summary Judgment Standards
Summary judgment "shall be rendered forthwith 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." Fed.R.Civ.P. 56(c). The moving party bears the burden of establishing that no genuine issues of material fact remain. Celotex Corp. v. Catrett, 477 U.S. 317 (1986).
In ruling on a motion for summary judgment, the Court construes the facts and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986). However, summary judgment is mandated "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. At the summary judgment stage, "[t]he function of the court is not to "weigh the evidence and determine the truth of the matter butte determine whether there is an issue for trial.'" Lockett v. Wal-Mart Stores, Inc., No. Civ. A. 99-0247-CBC, 2000 WL 284295, at *2 (S.D. Ala. Mar. 8, 2000) (quoting Anderson, 477 U.S. at 249).
When faced with a "properly supported motion for summary judgment, [the nonmoving party] must come forward with specific factual evidence, presenting more than mere allegations." Gargiulo v. G.M. Sales, Inc., 131 F.3d 995, 999 (11th Cir. 1997). "The evidence presented cannot consist of conclusory allegations or legal conclusions." Avirgan v. Hull, 932 F.2d 1572, 1577 (11th Cir. 1991); see also Fed.R.Civ.P. 56(e) (providing that nonmovant's response "must set forth specific facts showing that there is a genuine issue for trial.").
B. The Merits of the Parties' Summary Judament Motions i. Ms. Labato's Motion for Summary Judgment (Doc. 101)
In her motion (Doc. 101), Ms. Labato makes only one argument: that the IRS did not serve her with a Notice of Deficiency and that therefore she was denied an opportunity to petition the tax court for redress. Ms. Labato contends that she never received a Notice of Deficiency, but she does not contest that the Government delivered the notices to the Post Office for mailing. The Government responds that Ms. Labato's alleged failure to receive the deficiency notice does not invalidate the tax assessment where the Government has presented unrebutted evidence of mailing the deficiency notice to Ms. Labato.
Section 6212 of Title 26 provides in part, "If the Secretary determines that there is a deficiency in respect of any tax imposed . . ., he is authorized to send notice of such deficiency to the taxpayer by certified mail or registered mail." 26 U.S.C. § 6212(a). "The notice is valid even if not received by the taxpayer, if it is mailed to the taxpayer's last known address." United States v. Zolla, 724 F.2d 808, 810 (9th Cir. 1984); accord Wiley v. United States, 20 F.3d 222 (6th Cir. 1994) ("The only requirement is that the IRS send the notice of deficiency by certified or registered mail to the taxpayer's last known address; actual receipt of the notice is not necessary."); United States v. Dixon, 672 F. Supp. 503, 506 (M.D. Ala. 1987) ("[A]ctual receipt of the Notice is not necessary."), aff'd, 849 F.2d 1478 (11th Cir. 1988).
In the instant case, both parties have submitted with their motions a copy of an IRS certified mail list stamped "March 29, 1995" and listing four certified mail items — one for each of the four addresses to which the IRS sent the notice to Ms. Labato. (Ex. A to Doc. 101; Ex. 6 to Doc. 105). The Government has also submitted certification that this list is a true copy of an official record of the IRS. (Ex. 6 to Doc. 105). Ms. Labato does not dispute that only one of these notices was returned unclaimed or that notice was sent to her "last known address, " but she has submitted an affidavit stating that she never received a deficiency notice at her St. Cloud address. (Attach. to Doc. 101).
Ms. Labato cites several cases where the sufficiency of a notice of deficiency was allegedly determined based on whether it was actually received by the taxpayer. See. e.g., Berger v. Comm'r of Internal Rev., 404 F.2d 668 (3d Cir. 1968); see also Sicker v. Comm'r of Internal Revenue, 815 F.2d 1400, 1401 (11th Cir. 1987) (finding notice of deficiency which was improperly addressed by the IRS was not effective when mailed where notice was not "actually received by the taxpayer within ample time to file a petition for redetermination") (citingPugsley v. Comm'r of Internal Rev., 749 F.2d 691 (11th Cir. 1985) (holding notice sufficient even though not sent to "last known address" of taxpayer where taxpayer was not prejudiced because he actually received the notice)). Ms. Labato reads these cases as requiring actual receipt of the notice of deficiency.
However, these cases do not hold that receipt of the notice by the taxpayer is required. Berger, for example, dealt with the situation where the IRS does not send the notice to the last known address but the taxpayer nevertheless receives it. In such a situation, actual receipt can, depending on the circumstances, overcome the IRS's failure to send the notice to the taxpayer's last known address. This does not mean that a notice sent to the last known address is not effective even if not received; indeed, the Berger court noted that when notice is sent to the last known address, "the notice is adequate and effective even though it may later be shown in fact it was never delivered to the taxpayer." 404 F.2d at 673. Hence, these cases do not support Ms. Labato's position that the notice must be received to be effective, nor does her affidavit which states she never received a notice at her St. Cloud address. See Dixon, 672 F. Supp. at 506 ("[D]efendant's affidavit that he did not receive the statutory notice is not evidence that it was not mailed."). Despite Ms. Labato's arguments to the contrary, it is the mailing of the notice rather than the receipt of the notice that determines its sufficiency.See. e.g., Zolla.
In her memorandum (Doc. 113) in opposition to the Government's summary judgment motion, Ms. Labato argues, citing three cases, that the absence of signed return receipts shows that she did not receive the deficiency notice. However, all three of those cases — McPartlin v. Commissioner of the IRS, 653 F.2d 1185 (7th Cir. 1981), Mulder v. Commissioner of Internal Revenue, 855 F.2d 208 (5th Cir. 1988), andPowell v. Commissioner of Internal Revenue, 958 F.2d 53 (4th Cir. 1992) — dealt with the issue of whether notice had been sent to the taxpayer's last known address and whether the IRS had acted with due diligence in determining that address. In each of those cases, the court viewed the IRS's actions under the circumstances as not amounting to due diligence, considering in part the presence or absence of a return receipt as it bore on the IRS's actions in determining the taxpayer's last known address_________________
In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (en banc), the Eleventh Circuit adopted as binding precedent all Fifth Circuit decisions handed down as of September 30, 1981.
None of these cases relied upon by Ms. Labato addressed the issue before this Court — whether a notice properly sent to the taxpayer's last known address is sufficient — and they are not instructive on this point. Indeed, the language of McPartlin regarding error of the post office has been rejected as dicta. See Keado v. United States, 853 F.2d 1209, 1212 n. 9 (5th Cir. 1988) (affirming summary judgment for Government where Government had presented proof of delivery by IRS to the postal service and rejecting taxpayers argument, based onMcPartlin, that receipt of notice is required, noting that "[i]n McPartlin, however, the Seventh Circuit found that the IRS did not mail the notice of deficiency to the taxpayers last known address. This finding was sufficient to support the court's holding. The court's comments regarding the effect of the post office's error were dicta.").
Moreover, Keado preceded the Fifth Circuit's Mulder decision by a few weeks, and the Fifth Circuit has reiterated its Keado holding sinceMulder. See. e.g., Jones v. United States, 889 F.2d 1448, 1450 (5th Cir. 1989) ("Section 6212 does not require actual receipt by the taxpayer of the notice of deficiency. Rather, it provides that the notice "shall be sufficient" if mailed to the taxpayer at his "last known address.' . . . The statutory scheme, therefore, provides a method of notification which insures that the vast majority of taxpayers will be informed that a tax deficiency has been determined against them without imposing on the Commissioner the virtually impossible task of proving that the notice actually has been received by the taxpayer.") (citing Keado); Pomeroy v. United States, 864 F.2d 1191, 1195 (5th Cir. 1989) ("The relevant statutes simply require that the deficiency notice be mailed to the taxpayer's last known address, not that it be received.") (citing Keado) (emphasis in original).
Hence, although Ms. Labato attempts to create an issue by arguing that there is no return receipt to show that she received the notice of deficiency, the Court finds her arguments insufficient to create an issue of fact to defeat summary judgment for the Government. Again, the cases on which she relies relate to the IRS's diligence in ascertaining the taxpayer's "last known address" rather then to the sufficiency of a notice properly sent to the "last known address" as in the case at bar. Ms. Labato does not contend that the notice was not sent to her last known address. Indeed, the Government has presented evidence that in March 1995 it sent notices to four different addresses including Ms. Labato's address on Albritton Road in St. Cloud — the address at which Ms. Labato admittedly has resided since 1992. The record includes copies of the four letters dated March 29, 1995, as well as a certified mail list reflecting delivery of those four letters to the Postal Service. The evidence is unrebutted that only one of the four letters was returned "unclaimed." Although the record is silent as to whether the letters in the instant case were sent certified with a requested return receipt or certified without a return receipt, this silence does not create a material issue of fact on the issue of whether the IRS properly mailed the notice of deficiency to Ms. Labato.
The evidence is unrebutted that the IRS mailed a notice of deficiency to four addresses, including Ms. Labato's correct "last known address," and that only one letter was returned unclaimed. This evidence is sufficient to establish as a matter of law that the IRS properly mailed the deficiency notice to Ms. Labato. Hence, Ms. Labato's motion for summary judgment based on her alleged failure to receive a deficiency notice will be denied, and the Government's motion on this issue will be granted.
ii. The Government's Cross-Motion for Summary Judgment (Doc. 104)
In its motion (Doc. 104) and supporting memorandum (Doc. 105), the Government contends that there are no genuine issues of material fact and that it is entitled to summary judgment on the issues of Ms. Labato's outstanding tax debt and the transfer of property from Ms. Labato to her daughter, Ms. Hunt. In her amended opposition memorandum (Doc. 113), Ms. Labato argues only the issue of the notice of deficiency discussed above in part lll.B.i. of this Order and does not respond to the Government's other arguments, each of which will now be addressed in turn.
a. Ms. Labato's Tax Liability
The Government first argues that it is entitled as a matter of law to reduce to judgment the unpaid balance of Ms. Labato's 1992 federal income tax liability. The Government avers that Ms. Labato's tax debt has been duly assessed, that notice of deficiency was properly sent to Ms. Labato, and that Ms. Labato did not file a complaint challenging the jeopardy assessment within the allowable time period. Therefore, the Government argues, there are no remaining issues as to Ms. Labato's tax liability.
The Government correctly notes that the assessment of Ms. Labato's tax debt is presumed correct. Welch v. Helvering, 290 U.S. 111, 115 (1933);accord United States v. Pomponio, 635 F.2d 293 (4th Cir. 1980). Thus, upon a showing like the Government has made here of certified copies of the certificate of assessment (Ex. 1 to Doc. 105), the Government establishes a prima facie case. Pomponio, 635 F.2d at 296; see also United States v. Chila, 871 F.2d 1015, 1017 (11th Cir. 1989) ("'[A] Certificate and Assessments and Payments is presumptive proof of a valid assessment.'") (quoting appellant's brief therein) (citing United States v. Dixon, 672 F. Supp. 503 (M.D. Ala. 1987), aff'd, 849 F.2d 1478 (11th Cir. 1988)).
The Government having presented its proof, the burden shifts to Ms. Labato to contest the tax assessment as arbitrary or incorrect. Bar L Ranch. Inc. v. Phinney, 426 F.2d 995, 998 (5th Cir. 1970) ("Of course we agree with the District Court that the Commissioner's determination of a deficiency is prima facie Correct and that the burden is on the taxpayer to prove to the contrary."). Ms. Labato has not presented any evidence or argument regarding the propriety of the tax assessment other than her contention, discussed earlier, that she did not receive the notice of deficiency. Accordingly, the Government is entitled to summary judgment on the issue of Ms. Labato's 1992 federal income tax liability.
b. Transfer of the subject Real Property to Ms. Hunt
The Government next seeks to foreclose its tax lien on the subject real property in Cocoa, Florida. The Government contends that the property is subject to foreclosure on the I tax lien because Ms. Labato fraudulently transferred the property to Ms. Hunt and the transfer should be set aside.
Upon Ms. Labato's refusal to pay or neglect in not paying her tax liability after demand for payment, the amount of her tax liability became "a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to [her]." 26 U.S.C. § 6321. As set forth in the Internal Revenue Code, "the lien imposed by section 6321 shall arise at the time the assessment is made and shall continue until the liability for the amount so assessed (or a judgment against the taxpayer arising out of such liability) is satisfied or becomes unenforceable by reason of lapse of time." 26 U.S.C. § 6322. Section of the Code provides for enforcement of liens and subjection of property to payment of tax. 26 U.S.C. § 7403.
In the instant case, the IRS assessed Ms. Labato's tax liability in 1995 — more than a year and a half after Ms. Labato acquired and then transferred the subject Cocoa real property. Therefore, as noted by the Government, a federal tax lien did not attach to the property before Ms. Labato conveyed it to Ms. Hunt. Nevertheless, the Government may still seek to enforce its lien against the property pursuant to state fraudulent conveyance law. See, e.g., Ressler v. United States, 433 F. Supp. 459, 463 (S.D. Fla. 1977) ("[W]here a taxpayer disposes of property prior to the existence of federal tax liens, the United States may seek relief under the applicable fraudulent conveyance laws of the particular state in which the property and taxpayer are located."), affd, 576 F.2d 650 (5th Cir. 1978), cert. denied, 440 U.S. 929 (1979).
Florida's fraudulent conveyance law is codified in Florida's Uniform Fraudulent Transfer Act, Sections 726.101 et seq., Florida Statutes. The Government contends that the transfer of the Cocoa property from Ms. Labato to Ms. Hunt was fraudulent under section 726.106(1), Florida Statutes, which deems fraudulent "as to a creditor whose claim arose before the transfer was made" a transfer of property made "without receiving a reasonably equivalent value in exchange" where the debtor was insolvent at the time of the transfer or became insolvent as a result of the transfer.
Even though the IRS did not assess Ms. Labato's 1992 tax liability until 1995, the Government's "claim arose" before the July 1993 transfer of the subject property from Ms. Labato to Ms. Hunt as required by section 726.106(1). As noted by the Ressler court, "[r]egardless of when federal taxes are actually assessed, taxes are considered as due and owing, and constitute a liability, as of [the] date the tax return for the particular period is required to be filed." 433 F. Supp. at 463. Accordingly, Ms. Labato's 1992 federal income tax liability arose on April 15, 1993, when her tax return was due. See 26 U.S.C. § 6072, 6151 (prescribing, respectively, that tax return are to be filed by April fifteenth of the following year and that tax owed is to be paid at time return is due). At the time of the July 1993 transfer of the property to Ms. Hunt, therefore, the Government's claim had already arisen.
Turning to the remaining elements of section 726.106(1), the Government correctly notes that it is undisputed that Ms. Labato did not receive any consideration for the transfer of the Cocoa property. (Dep. of Patricia Labato, Ex. 4 to Doc. 18, at 44). Additionally, the Government points out that Ms. Labato admitted in her 1998 deposition that she was insolvent and had been for several years as a result of the IRS's attempts to collect the tax debt. (Dep. of Patricia Labato, Ex. 4 to Doc. 18, at 57-61). The Court agrees that the unrebutted evidence establishes that the conveyance of the Cocoa property to Ms. Hunt was fraudulent under section 726.106, Florida Statutes.
The Government also argues that the transfer to Ms. Hunt was fraudulent and should be set aside under section 726.105(1)(a), Florida Statutes, which provides that a transfer of property made "[w]ith actual intent to hinder, delay, or defraud any creditor of the debtor" is fraudulent as to that creditor "whether the creditor's claim arose before or after the transfer was made." The statute provides a nonexclusive list of factors which may be considered in determining the transferor's intent. § 726. 105(2). Applying those factors to the instant facts, the transfer was to an insider, § 726.105(2)(a); Ms. Hunt did not take possession of the property until 1995 — two years after the sale — implying that Ms. Labato "retained possession or control of the property transferred after the transfer," § 726.105(2)(b); the transfer was not for reasonably equivalent value, § 726.105(2)(h); as discussed above Ms. Labato "was insolvent or became insolvent shortly after the transfer was made," § 726.105(2)(i); and the 1993 transfer occurred shortly after Ms. Labato's tax liability arose, § 726.105(2)(j).
Section 726.105(2) provides:
(2) In determining actual intent under paragraph (1)(a), consideration may be given, among other factors, to whether:
(a) The transfer or obligation was to an insider.
(b) The debtor retained possession or control of the property transferred after the transfer.
(c) The transfer or obligation was disclosed or concealed.
(d) Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit.
(e) The transfer was of substantially all the debtor's assets.
(f) The debtor absconded.
(g) The debtor removed or concealed assets.
(h) The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred.
(i) The debtor was insolvent or became insolvent shotly after the transfer was made or the obligation was incurred.
(j) The transfer occurred shortly before or shortly after a substantial debt was incurred.
(k) The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.
"Insider" is defined in subsection 726.102(7), Florida Statutes, to include "[a] relative of the debtor." Ms. Hunt is Ms. Labato's daughter.
Considering these factors, the Court finds that the transfer of the Cocoa property from Ms. Labato to her daughter, Ms. Hunt, was fraudulent under Florida law and should be set aside. The Government — anticipating in its supporting memorandum that Ms. Labato would argue in response that her husband, Gennaro Labato, and not she, purchased the property and gave it to Ms. Hunt — aptly notes that the undisputed record evidence reflects that it is Ms. Labato's name and signature on the closing documents and warranty deed. A corrective" deed was entered a month later conveying the property from Ms. Labato to Ms. Hunt, and the Court finds that taking into account all of the circumstances the property was purchased by Ms. Labato and then was conveyed by Ms. Labato to Ms. Hunt for no consideration. Thus, the transfer was fraudulent under section 726.105(1)(a) as well as under section 726.106(1).
Although earlier in the case Ms. Labato contended that the initial titling of the property in her name was a mistake, she has not made that or any other argument in opposition to this portion of the Government's current motion. In any event, the Court finds that any such mistake would not create an issue of material fact sufficient to defeat the Government's motion for summary judgment.
Ms. Labato has not presented any evidence to rebut the Government's evidence of actual and constructive fraud. Accordingly, the transfer of the property shall be set aside and the Government shall be permitted to foreclose its tax lien against the Cocoa property.
IV. Conclusion
In accordance with the foregoing, it is ORDERED and ADJUDGED as follows:
1. The Motion for Summary Judgment (Doc. 101, filed January 30, 2002) filed by Defendant Patricia Labato is DENIED.
2. Defendant's Motion for a Hearing on Defendant's Motion for Summary Judgment (Doc. 115) is DENIED.
3. Plaintiff's Cross-Motion for Summary Judgment (Doc. 104, filed February 12, 2002) is GRANTED in all respects.
4. Patricia Labato is indebted to the United States for unpaid federal income taxes for 1992 in the total amount of $1,377,706.93, plus interest accruing between January 31, 2002, and the date of judgment.
5. The purported transfer on July 23, 1993, of the subject real property at 3034 Winchester Drive in Cocoa, Florida, from Patricia Labato to Denise Labato a/k/a Denise Labato Hunt is hereby set aside as a fraudulent conveyance.
6. The United States, as a result of Defendant Patricia Labato's failure to pay her assessed federal income tax liability for 1992, has a valid federal tax lien upon and against all property, and all rights to property, belonging to Defendant Patricia Labato, including the subject real property at 3034 Winchester Drive in Cocoa, Florida.
7. The federal tax lien is hereby FORECLOSED, and the United States may sell the subject real property and apply the sale proceeds to the payment or partial payment of Defendant Patricia Labato's outstanding federal income tax liability for 1992.
A judgment and order of foreclosure will be entered separately. The Government shall file a proposed judgment and order of foreclosure within five (5) days of the date of this Order.
9. The Motion by Plaintiff United States of America to Strike Defendant's Demand for Trial by Jury (Doc. 114) is DENIED as moot. DONE and ORDERED