United States District Court, W.D. Washington
C. COUGHENOUR UNITED STATES DISTRICT JUDGE
matter comes before the Court on the Government's motion
for summary judgment (Dkt. No. 36). Having thoroughly
considered the parties' briefing and the relevant record,
the Court GRANTS in part and DENIES in part the motion for
the reasons explained herein.
Government filed a complaint with this Court in October 2016
seeking the foreclosure and sale of real
property that Defendant Marjorie Wight transferred
to her grandson, Defendant Matthew Migel (Counts II and III)
(Dkt. No. 1 at 5-9). The Government asked the Court to set
aside the transfer as fraudulent. (Id. at 8-9.)
Prior to the transfer, the property was held by the estate of
Ms. Wight's sister. (Dkt. No. 37-6.) Ms. Wight was the
estate's personal representative and sole remaining
beneficiary. (Dkt. Nos. 37-2, 37-3, 37-4.) In May 2012, Ms.
Wight, acting as personal representative, signed a warranty
deed conveying the property to Mr. Migel. (Dkt. No. 37-7.)
Ms. Wight later admitted that she did so “for zero
consideration” and without a directive from her
sister's will. (Dkt. No. 37-8 at 3.) At the time, the
Government held a personal judgment against Ms. Wight for
federal income tax debt exceeding $2 million. (Dkt. No. 37-1.)
Government moves for summary judgment. (Dkt. No. 36.) Ms.
Wight does not oppose the motion but Mr. Migel does. (Dkt.
court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). In doing so, the Court must view the
facts and justifiable inferences in the light most favorable
to the nonmoving party. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986). Once a motion for
summary judgment is properly made and supported, the opposing
party “must come forward with ‘specific facts
showing that there is a genuine issue for
trial.'” Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis
in original) (quoting Fed.R.Civ.P. 56(e)).
The Transfer to Mr. Migel
Uniform Fraudulent Transfers Act (“UFTA”),
chapter 19.40 of the Revised Code of Washington, generally
allows courts to set aside fraudulent transfers. Mr. Migel
argues that UFTA's four-year statute of limitations
applies, and on this basis, the Government's UFTA claim
is untimely. (Dkt. No. 41 at 4.) Mr. Migel further argues
that even if UFTA's statute of limitations does not
apply, genuine issues of material fact exist as to whether
Ms. Wight's conveyance was fraudulent. (Id. at
Court does not find Mr. Migel's statute of limitations
argument persuasive. “[A]lthough the IRS must rely on
the [state's fraudulent transfer law] to establish
Petitioner's transferee liability, the [G]overnment's
right to collect money in this case clearly derives from the
operation of federal law” and as such the court
“will not allow the ‘extinguishment' of a
valid, fully accrued claim by the IRS brought under the
[fraudulent transfer statute].” Bresson v.
C.I.R., 213 F.3d 1173, 1178 (9th Cir.
2000). Meaning, Washington's UFTA statute of
limitations does not apply to the Government's claim.
While the relevant federal statute of limitations for tax
debt is normally ten years, see 26 U.S.C. §
6502(a)(1), that limitation does not apply once a tax
liability is reduced to judgment, as is the case here.
(See Dkt. No. 37-1) (judgment); U.S. v.
Overman, 424 F.2d 1142, 1145-47 (9th Cir. 1970) (holding
that once a tax liability is reduced to judgment, both the
judgment and the tax liens exist until the amount is paid).
Therefore, there is no operative statute of limitations here.
does the Court find merit in Mr. Migel's argument that
even if there is no statute of limitations, summary judgment
is premature based on genuine issues of fact as to whether
the conveyance was fraudulent. (Dkt. No. 41 at 7.) First, he
provides no evidence to support this assertion. (See
generally Dkt. No. 41.) Second, he relies on an
inapplicable UFTA provision. Mr. Migel relies on the
fact-intensive UFTA provision addressing transfers with
demonstrated fraudulent intent. (See Dkt. No. 41 at
7-8) (citing Wash. Rev. Code. 19.40.041). But the
Government's motion is based on UFTA's provision for
constructive fraudulent transfers. (See
Dkt. No. 36 at 4-7) (citing Wash. Rev. Code. 19.40.051).
Under this provision, no intent need be shown. Wash. Rev.
Code. 19.40.051(1). A transfer is constructively
fraudulent if a debtor transferred an asset “without
receiving a reasonably equivalent value in exchange for the
transfer . . . and the debtor was insolvent at that time or
the debtor became insolvent as a result of the transfer . . .
.” Id. Here, the Government presents
uncontroverted evidence supporting these elements: the
property was worth approximately $405, 000 at the time of the
transfer, Ms. Wight had no other significant assets, and she
owed the Government in excess of $2 million. (See
Dkt. Nos. 37 at 4, 37-1 at 4, 37-9 at 3-4). Mr. Migel
provides no evidence in rebuttal. Therefore, the Court GRANTS
summary judgment to the Government and VACATES Ms.
Wight's transfer of the property to Mr. Migel.
Foreclosure and Decree of Sale
Government also seeks foreclosure of tax liens on the
property and a decree of sale (Count III). (Dkt. No. 1 at 9.)
The Government provides uncontroverted evidence that it
recorded an abstract of judgment in King County on August 15,
2014 and a notice of federal tax lien on November 20, 2014.
(Dkt. No. 38-2 at 2.) However, the Court previously
determined that the tax lien is subordinate to deeds of trust
U.S. Bank previously recorded on the property. (See
Dkt. No. 40 at 1-2.) Further, the Court understands that the
Government granted Ms. Wight a life estate in the property in
exchange for her agreement to abandon her administrative
appeal of the underlying tax determination. (Dkt. No. 36 at
2.) Therefore, the Court ORDERS that, subject to Ms.
Wight's life estate, the property be foreclosed and sold
to satisfy outstanding liens pursuant to 26 U.S.C. section
7403(c) and 28 U.S.C. section 2001. The proceeds are to be
distributed pursuant to the Court's previous order
addressing the priority of current liens. (See Dkt.