Opinion
Case No. 8:01-cv-440-T-30TGW
July 11, 2003
ORDER
THIS CAUSE comes before the Court upon the Defendant's Motion for Summary Judgment (Dkt. #34) and Plaintiff's response thereto (Dkt. #44). Having reviewed the Motion, the response, and being otherwise advised of the premises therein, the Court finds that the Motion for Summary Judgment should be denied.
STATEMENT OF FACTS
This action is an appeal of an administrative determination by the IRS not to withdraw a notice of federal tax lien that was recorded against Plaintiff on May 5, 2002. Plaintiff in this action operated two sole proprietorships during the 1980's, West Coast Auto Salvage and Nostalgic Auto. Plaintiff failed to remit proper payroll taxes to the IRS. Plaintiff filed a Chapter 11 bankruptcy petition on February 26, 1990. The IRS filed a proof of claim dated July 13, 1994, in the bankruptcy action for Plaintiffs pre-petition taxes which claimed a tax arrearage of $67,031.67.
Plaintiff's Chapter 11 plan established a payment plan by which Plaintiff was to repay the amount in the IRS proof of claim. Plaintiff made payments to the IRS under his plan from December 26, 1996, to November 5, 1999. It is undisputed that, despite numerous payments, Plaintiff did not satisfy his obligations to the IRS under his Chapter 11 plan in full. Plaintiff claims he was in a position to pay off the entire amount owed in January 2000, and that he requested a payoff amount from the IRS. Plaintiff contends that Wanda Williams, an IRS representative, verbally indicated the payoff amount was approximately $51,000. Plaintiff did not receive written verification of the payoff amount, and satisfaction of the debt was not completed.
On May 5, 2000, the IRS filed a notice of federal tax lien. On June 8, 2000, Plaintiff requested a Collection Due Process hearing relating to the recordation of the notice of federal tax lien. A collection due process hearing occurred and, on January 30, 2001, the IRS issued a notice of determination indicating that it would not withdraw the notice of federal tax lien. On March 1, 2001, Plaintiff filed the Complaint in this action, seeking a review of the findings from the collection due process hearing.
Plaintiff tried to reopen his bankruptcy case for the purpose of resolving his dispute with the IRS, but was unsuccessful.
SUMMARY JUDGMENT STANDARD
Motions for summary judgment should only be granted when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The existence of some factual disputes between the litigants will not defeat an otherwise properly supported summary judgment motion; "the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (emphasis in original). The substantive law applicable to the claimed causes of action will identify which facts are material. Id. Throughout this analysis, the judge must examine the evidence in the light most favorable to the non-movant and draw all justifiable inferences in her favor. Id. at 255.
Once a party properly makes a summary judgment motion by demonstrating the absence of a genuine issue of material fact, whether or not accompanied by affidavits, the nonmoving party must go beyond the pleadings through the use of affidavits, depositions, answers to interrogatories and admissions on file, and designate specific facts showing that there is a genuine issue for trial. Celotex, 477 U.S. at 324. The evidence must be significantly probative to support the claims.Anderson, 477 U.S. at 248-49 (1986).
This Court may not decide a genuine factual dispute at the summary judgment stage. Fernandez v. Bankers Nat'l Life Ins. Co., 906 F.2d 559, 564 (11th Cir. 1990). "[I]f factual issues are present, the Court must deny the motion and proceed to trial." Warrior Tombigbee Transp. Co. v. M/V Nan Fung, 695 F.2d 1294, 1296 (11th Cir. 1983). A dispute about a material fact is genuine and summary judgment is inappropriate if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson, 477 U.S. at 248; Hoffman v. Allied Corp., 912 F.2d 1379 (11th Cir. 1990). However, there must exist a conflict in substantial evidence to pose a jury question.Verbraeken v. Westinghouse Elec. Corp., 881 F.2d 1041, 1045 (11th Cir. 1989).
LEGAL ANALYSIS
Defendant in this action argues that the material facts are undisputed, and that summary judgment in Defendant's favor is appropriate. Defendant argues that Plaintiff owes $123,032.20 as of January 29, 2003, and the Federal Tax Lien was properly imposed. Defendant divides Plaintiff's liabilities into four categories. First, in addition to the original $67,031.67 set forth in the proof of claim, the government argues that Plaintiff owes interest and penalties on those taxes at the statutory interest rate computed to February 26, 1990, and interest on the proof of claim amounts computed at simple interest rate of eight percent (8%) from August 23, 1994. According to the IRS, after accounting for Malke's plan payment and the accrual of interest on unpaid amounts at the rate established by the Bankruptcy Court, Plaintiff remains indebted for the proof of claim component of his liabilities in the amount of $55,524.51.
Additionally, the government argues that it is entitled to "gap interest," the interest which had not matured by the petition date but continued to accrue on the pre-petition taxes, penalties and interest during the "gap" between the petition date and the confirmation date in the bankruptcy proceeding. Having reviewed the case of In Re: Tuttle, 291 F.3d 1238, 1240-41 (10th Cir. 2002), the Court agrees that Plaintiff is personally liable for the gap interest on non-dischargeable debts. The Defendant claims that Plaintiff owes gap interest in the amount of $31,412.61. Defendant also argues that it is entitled to interest on gap interest for the time periods between August 23, 1994, to January 29, 2003, totaling $31,205.95.
Finally, Defendant argues that Plaintiff owes taxes arising after the petition date. Specifically, Defendant claims that Plaintiff owes taxes which were an administrative expense of the bankruptcy for tax periods after December 31, 1989. As of January 29, 2003, the government argues that Plaintiffs liability for this category of debt amounted to $4,889.14.
In response, Plaintiff argues that he was not given an opportunity to dispute the liability underlying the notice of federal tax lien and that, as a result of the tax lien encumbering his property, he was prevented from securing a loan or disposing of his property. He argues that the filing of the notice of tax lien was premature, and hindered his ability to satisfy the tax obligations. Plaintiff argues that the IRS never notified him of its claim for gap interest and that he was not made aware of that claim until after commencement of this case, in the year 2003, and that the Defendant should be precluded from collecting interest on the gap interest because of its delay in advising Plaintiff of the amount allegedly due. Finally, Plaintiff argues that his account has not been credited for payments under the Chapter 11 plan of $1,111.60 and $1,050.00, copies of which are attached to Plaintiffs response to the Motion for Summary Judgment.
Having reviewed the documents filed in support of and in opposition to summary judgment, the Court finds that material issues of fact preclude summary judgment in favor of Defendant. The amount owed under the original Chapter 11 bankruptcy plan is in dispute, since Plaintiff asserts that he made payments which were not recorded by the Defendant. The total amount due to the Defendant as set forth in the Federal Tax Lien is a material issue of fact in this action, and the appropriate amount owed remains in dispute. Accordingly, the Court finds that material issues of fact preclude summary judgment as to Plaintiffs claim.
It is therefore ORDERED AND ADJUDGED that:
1. Defendant's Motion for Summary Judgment (Dkt. #34) is DENIED.