Opinion
No. 09-cv-07318
09-06-2011
Joseph Michael O'Callaghan, Plaintiff, v. United States of America; Department of Revenue of the State of Illinois for the use of the People of the State of Illinois; Estate of Alex V. Wasleff, Jr.; Albany Bank and Trust Co, N.A.; Chrysler First Business Credit Corporation f/k/a BancAmerica Business Credit Corporation, f/k/a BA Business Credit Corporation; Security Pacific National Bank, a National Banking Association, as successor and predecessor in Interest to Bank of America NT and SA, n/k/a Bank of America, N.A, alternatively n/k/a Chrysler Financial Services Americas, L.L.C.; Chicago Title Land Trust Company as successor in interest to American National Bank and Trust Company of Chicago, a National Banking Association, as Trustee under Trust Number 26679; Alex Wasleff Services Corporation; Unknown Owners; and Elm Limited, LLC, a corporation, Defendants. United States, Counter- and Cross-claimant, v. Joseph Michael O'Callaghan, Counter-Defendant; and Department of Revenue of the State of Illinois for the use of the People of the State of Illinois; Estate of Alex v. Wasleff, Jr.; Albany Bank and Trust Co, N.A.; Chrysler First Business Credit Corporation f/k/a BancAmerica Business Credit Corporation, f/k/a BA Business Credit Corporation; Security Pacific National Bank, a National Banking Association, as successor and predecessor in Interest to Bank of America NT and SA, n/k/a Bank of America, N.A, alternatively n/k/a Chrysler Financial Services Americas, L.L.C.; Chicago Title Land Trust Company as successor in interest to American National Bank and Trust Company of Chicago, a National Banking Association, as Trustee under Trust Number 26679; and Elm Limited, LLC, a corporation, Cross-Defendants.
WLLIAM C. ELWELL Trial Attorney, Tax Division U.S. Department of Justice JOSEPH O'CALLAGHAN O'Callaghan & Colleagues, P.C. WILLIAM T. EVELAND Arnstein & Lehr LLP STEPHEN DEELY Elm Limited, LLC WILLIAM C. ELWELL, #468013 Trial Attorney, Tax Division United States Department of Justice
Hon. Ruben Castillo
AGREED JUDGMENT AND STIPULATION FOR SALE OF PROPERTY
The plaintiff and counter-defendant, Joseph Michael O'Callaghan, in his own person; the defendant and counter- and cross-claimant, the United States of America, by its undersigned counsel; the defendant and cross-defendant, Estate of Alex V. Wasleff, Jr., by its undersigned counsel, and Elm Limited LLC, by its undersigned counsel, agree that this case should be resolved by the entry of judgment that:
1. On April 14, 1983, a delegate of the Secretary of the Treasury made assessments against Alex V. Wasleff, Jr. ("Wasleff") of trust fund recovery penalties under 26 U.S.C. § 6672, for his failure to withhold, account for, and/or pay over the withholding taxes of a corporation for the second and third quarters of 1981, totaling $463,596.00, and sent notice and demand for payment.
2. As of November 15, 1983, Wasleff was indebted to the United States of America in the amount of $497,603.23 for these trust fund recovery penalties, for which notice and demand had been given and for which tax liability Wasleff had failed or refused to satisfy in full. The foregoing assessment remains unpaid. The attached Declaration of IRS Collection Technical Adviser Alexis Porrata supports the sum certain of Wasleff's outstanding tax liabilities. (Exhibit 1, Declaration of Alexis Porrata).
3. Wasleff's failure, neglect, or refusal to pay the trust fund recovery penalties assessed against him following notice of the assessment and demand for payment of the same, gave rise, as of the date of the assessment, to liens in favor of the United States, pursuant to 26 U.S.C. §§ 6321 and 6322, upon all of Wasleff's property and rights to property in an amount equal to the unpaid assessments, plus interest and other accruals permitted by law. These valid and subsisting liens have attached to Wasleff's interest in a parcel of real property commonly known as 6110 North Mozart Street, Chicago, Illinois (the "Mozart Street Property"), title of which was held in an Illinois Land Trust, and its formal description is as follows:
Lot 40 in Krenn and Dato's Addition to North Edgewater, being a Subdivision of the East Half of the Northwest Quarter of Section 1, Township 40 North, Range 13, East of the Third Principal Meridian in Cook County, Illinois. (PIN: 13-01-120-028-0000)
4. The United States' federal tax liens that have attached to Wasleff's interest in the Mozart Street Property shall be enforced, and said property shall be subjected to the payment of Wasleff's tax liabilities and sold under the authority of 26 U.S.C. § 7403 by a receiver appointed by this Court under 26 U.S.C. § 7403(d) (who will be a local real estate agent nominated by the United States in a subsequent motion and compensated at his usual and customary rate), free and clear of the interests of all parties to this action. The net proceeds (after the payment of ordinary and necessary costs of sale, including any property taxes that are already due but have not been purchased by a tax buyer) will be held in escrow to be distributed in accordance with the priorities and claims of the parties as determined by this Court, subject to the agreements of the parties as outlined below.
5. First, Elm Limited, LLC purchased the delinquent property taxes on the Mozart Street Property at the Illinois State Treasurer's Office Annual Tax Sale, and Elm Limited, LLC is therefore subrogated to the liens of the County Clerk of Cook County for these delinquent property taxes. These liens will have priority over the claims of all the parties in this action in an amount equal to the redemption amount, adjusted as follows — in lieu of the penalties on subsequent taxes under state law, Elm Limited, LLC has agreed to accept 1% per month on the amounts of these subsequent taxes from the respective dates of purchase — and this amount will be paid from the net sales proceeds from the sale of the Mozart Street Property.
6. Second, Joseph Michael O'Callaghan's ("O'Callaghan") security interests in the Mozart Street Property, which arose from (a) an assignment by Wasleff of 100% of the beneficial interest in the Illinois Land Trust as collateral for certain unpaid attorney fees, and (b) a mortgage O'Callaghan acquired on the Mozart Street Property from Chrysler First Business Credit Corporation on September 30,1994, have priority over the United States' security interests in the amount negotiated between the United States and O'Callaghan to resolve all of O'Callaghan's current or future claims based on these security interests — as set forth in a separate agreement between the United States and O'Callaghan — and this amount is to be paid to O'Callaghan from the net sales proceeds from the sale of the Mozart Street Property.
7. Third, the United States's tax liens and levies have priority over any remaining claims to the Mozart Street Property, and the remainder of the net sales proceeds from the sale of the Mozart Street Property, with the exception of the payment to the Estate of Alex V. Wasleff, Jr. ("Estate") described below in paragraph 8, shall be paid to the United States for application to Wasleff's outstanding tax liabilities in the manner that the United States determines is in its best interest.
8. Fourth, while any interest the Estate might have in the Mozart Street Property is junior to the claims of both O'Callaghan and the United States (see ECF 98), the United States and the Estate have nevertheless agreed to the payment of certain expenses of the Estate — as set forth in a separate agreement between the United States and the Estate — to be paid from the net sales proceeds from the sale of the Mozart Street Property.
9. Count I of the United States' counter- and cross-claims — seeking to enforce its levies — is dismissed from this action without prejudice.
10. The remaining cross-defendants in this action — (a) the Department of Revenue of the State of Illinois for the use of the People of the State of Illinois; (b) Albany Bank and Trust Co, N.A.; (c) Chrysler First Business Credit Corporation f/k/a BancAmerica Business Credit Corporation, f/k/a BA Business Credit Corporation; (d) Security Pacific National Bank, a National Banking Association, as successor and predecessor in Interest to Bank of America NT and SA, n/k/a Bank of America, N.A, alternatively n/k/a Chrysler Financial Services Americas, L.L.C.; and (e) Chicago Title Land Trust Company as successor in interest to American National Bank and Trust Company of Chicago, a National Banking Association, as Trustee under Trust Number 26679 — were properly served pursuant to Federal Rule of Civil Procedure 4. (Exhibit 2, Declaration of William C. Elwell). None of these cross-defendants are infants or incompetent persons or currently on active duty in the military within the purview of the Servicemembers Civil Relief Act, 50 App. U.S.C. § 501. Pursuant to Federal Rule of Civil Procedure 12, an answer or other response was due from these cross-defendants on or before September 20, 2010. None of these cross-defendants have served an answer or other response, or indicated an intent to file an answer or other response, to the United States' original, first, or second amended cross-claims. On August 31, 2011, the Clerk of the Court entered a default for all of the above-named cross-defendants for failure to timely appear, answer, or otherwise plead to the amended cross-claims. (ECF 119). This Court may therefore enter an in rem judgement under 26 U.S.C. § 7403(c) that the United States' liens have attached to the Mozart Street Property and are senior to the interests, if any, of these cross-defendants, and that the Mozart Street Property shall be sold free and clear of the interests, if any, of these cross-defendants.
11. The parties shall bear their own costs, including attorney's fees.
WLLIAM C. ELWELL
Trial Attorney, Tax Division
U.S. Department of Justice
JOSEPH O'CALLAGHAN
O'Callaghan & Colleagues, P.C.
WILLIAM T. EVELAND
Arnstein & Lehr LLP
STEPHEN DEELY
Elm Limited, LLC
IT IS SO ORDERED, ADJUDGED, AND DECREED.
Done at Chicago, Illinois, this
_ day of September, 2011.
HON. RUBEN CASTILLO
United States District Court
Northern District of Illinois
CERTIFICATE OF SERVICE
IT IS HEREBY CERTIFIED that service of the foregoing AGREED JUDGMENT has been made has, this 6th day of September, 2011, been made by electronic mail upon all counsel who have appeared in this action, and by United States mail on the following cross-defendants who have not yet appeared in this action:
Department of Revenue of the State of Illinois
for the use of the People of the State of Illinois
100 West Randolph Street
Chicago, IL 60601-3218
Albany Bank and Trust Co, N.A.
3400 W. Lawrence Avenue
Chicago, IL 60625
Chrysler First Business Credit Corporation f/k/a BancAmerica Business Credit
Corporation, f/k/a BA Business Credit Corporation
Bank of America, Legal Order Processing, Building C
2595 West Chandler Boulevard
AZ1-804-01-06
Chandler, AZ 85224
Security Pacific National Bank, a National Banking Association, as successor and
predecessor in Interest to Bank of America NT and SA, n/k/a Bank of America, N.A,
alternatively n/k/a Chrysler Financial Services Americas, L.L.C.
Bank of America, Legal Order Processing, Building C
2595 West Chandler Boulevard
AZ1-804-01-06
Chandler, AZ 85224
Chicago Title Land Trust Company as successor in interest to American National
Bank and Trust Company of Chicago, a National Banking Association, as Trustee
under Trust Number 26679
c/o CT Corporation System
208 S. Lasalle St, Suite 814
Chicago, IL 60604
Elm Limited, LLC
c/o Stephen Deely, Registered Agent
100 North LaSalle Street, #2400
Chicago, Illinois 60602
WILLIAM C. ELWELL, #468013
Trial Attorney, Tax Division
United States Department of Justice
Post Office Box 55
Washington, D.C. 20044
Telephone: (202) 307-1038
William.C.Elwell@usdoj.gov