United States District Court, W.D. Washington, Seattle
ORDER GRANTING UNITED STATES' MOTION FOR PARTIAL
SUMMARY ADJUDICATION REGARDING PRIORITY
S. Lasnik United States District Judge.
matter comes before the Court on the United States'
“Motion for Partial Summary Adjudication Regarding
Priority.” Dkt. #56.
Plaintiff's Property Interest
Jessica Saepoff acquired an interest in property located at
4003 92nd Avenue SE, Mercer Island, WA 98040
(“the Property”) on November 2, 2006. Ex. 8, Dkt.
#56-2 at 166-67. On the same day, she obtained two loans
against it from WMC Mortgage Corp. (“WMC”) for
$490, 000 and $122, 500, respectively. Exs. 9-10, Dkt. #56-2
at 170-199; see Ex. 1 (Saepoff Dep.), Dkt. #56-2 at
24:25-25:25:13. She stopped making mortgage payments in July
2010. Saepoff Dep. at 27:4-11. On September 23, 2010, she
conveyed her interest in the Property to the 4003
92nd Avenue SE Land Trust with Martin Victor Brunt
as Trustee (“Brunt”), via a Quitclaim Deed. Ex.
11, Dkt. #56-2 at 201-03. She received no consideration for
it. See Ex. 3, Dkt. #56-2 at 129; Ex. 4, Dkt. #56-2
at 139. Less than three weeks later, on October 11, 2010,
Brunt conveyed his interest in the Property back to plaintiff
via another Quitclaim Deed. Ex. 12, Dkt. #56-2 at 205-06.
the transfer, plaintiff testified that she lived on and
retained the power to manage the Property, that she remained
the owner of the Property, and that she made all payments on
the Property, such as utility bills and property taxes.
Saepoff Dep. at 41:25-42:4, 42:23-43:2, 46:14-47:11, 51:3-12;
see Ex. 14 (Brunt Decl.), Dkt. #56-2 at ¶¶
7, 10. Plaintiff was also the sole beneficiary of and in
control of the Trust. Saepoff Dep. at 42:15-18, 43:12-16,
52:12-22; see Brunt Decl. at ¶ 8. She testified
that the IRS contacted her regarding her tax liabilities in
2008, prior to her transfer to Brunt, although she also
testified that she “had an agreement with [the IRS] and
[she] was in compliance with [it], so everything was paid up
as agreed at the time.” Saepoff Dep. at 53:6-54:25.
Brunt stated that he knew at the time of the transfer that
plaintiff “had tax liabilities and other debts, ”
and that he believes that “she was trying to shelter
her assets from debtors.” Brunt Decl. at ¶ 9. On
January 26, 2011, the IRS recorded a Notice of Federal Tax
Lien against plaintiff. Ex. 16, Dkt. #56-2 at 229-31. This
was released on August 7, 2017. Ex. 17, Dkt. #56-2 at 234-35.
November 7, 2012, plaintiff again conveyed her interest in
the Property to the 4003 92nd Avenue SE Land Trust
with Randy Styer as Trustee (“Styer”) via a
Quitclaim Deed and received no consideration for it.
See Ex. 3, Dkt. #56-2 at 130; Ex. 4, Dkt. #56-2 at
139. At the time, Styer was living on the Property with
plaintiff. Saepoff Dep. at 60:21-24; see Ex. 2
(Styer Dep.) at 14:5-8. They were later married on February
13, 2015. Id. at 60:17-18; see Styer Dep.
at 14:11-15. Despite the transfer, plaintiff remained the
owner of the Property, controlled the Property, and continued
making the payments on the Property. Saepoff Dep. at
64:22-66:5; see Styer Dep. at 22:19-23:16, 24:12-21,
25:20-26:1. On October 2, 2014, the IRS recorded a Notice of
Federal Tax Lien with King County against plaintiff for her
unpaid federal income tax assessments for the taxable years
2009 to 2012. Ex. 18, Dkt. #56-2 at 237-38.
April 25, 2016, plaintiff filed a complaint in the King
County Superior Court to invalidate the Deed of Trust and
Notice of Trustee's Sale issued by defendant HSBC Bank
USA, N.A. as Trustee on Behalf of Ace Securities Corp. Home
Equity Loan Trust and for the Registered Holders of Ace
Securities Corp. Home Equity Loan Trust, Series 2007-WM2,
Asset Backed Pass-Through Certificates (“HSBC”).
Dkt. #25 at 2. Plaintiff also asserted claims for violations
of Washington's Consumer Protection Act
(“CPA”), the Real Estate Settlement Procedure
Act, and the Truth in Lending Act. Id. Plaintiff
filed a Second Amended Complaint on February 10, 2017,
asserting claims for injunctive and declaratory relief
regarding the loan documents, mortgage fraud and fraudulent
misrepresentation, quiet title, and violations of the
Consumer Loan Act, the Deed of Trust Act, and the CPA.
Id. On April 11, 2017, HSBC, MERSCORP Holdings, Inc.
and Mortgage Electronic Registration Systems, Inc. and Ocwen
Mortgage Servicing, LLC filed their answer and counterclaimed
for judicial foreclosure of the subject Deed of Trust,
joining, among others, the United States of America.
Id.; see Dkt. #1-2 at 7-20.
United States removed the case to this Court on June 22,
2017. Dkt. #1 at 1-5; see 28 U.S.C. §§
1442(a)(1), 1444, 2410. It then filed its answer and claim,
seeking a determination that its tax liens are valid and
attach to plaintiff's interest in the Property.
See Dkt. #19. On October 5, 2017, the Court approved
the stipulation regarding priority between HSBC and the
United States. Dkt. #28; see Dkt. #27. The United
States then filed this motion for summary judgment. Dkt. #56.
It argues that it is entitled to a judgment determining that
its liens from the taxable years 2009 to 2012 are valid,
attach to the Property, and have priority over any interest
that Styer has in the Property. Id. at 10. No
response was filed. See Dkt. #60; see LCR
Court grants 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.”
any person liable to pay any tax neglects or refuses to pay
the same after demand, the amount … shall be a lien in
favor of the United States upon all property and rights to
property, whether real or personal, belonging to such
person.” 26 U.S.C. § 6321. The lien attaches at
the time the assessment is made and continues until the
liability for the amount so assessed “is satisfied or
becomes unenforceable by reason of lapse of time.”
Id. at § 6322.
Court “‘look[s] initially to state law' to
determine the taxpayer's ownership interest in the
property.” Id. at 1067 (quoting Drye v.
United States, 528 U.S. 49, 58 (1999)). Under Washington
law, § 6321 applies “not only [to] the property
and rights to property owned by the delinquent taxpayer, but
also [to] property held by a third party if it is determined
that the third party is holding the property as a nominee or
alter ego of the delinquent taxpayer.” United
States v. Smith, No. C11-5101 RJB, 2012 WL 1977964, at
*5 (W.D. Wash. June 1, 2012) (quoting Spotts v. United
States, 429 F.3d 248, 251 (6th Cir. 2005)).
“Whether a person … holds property as a nominee
of a taxpayer is determined by the degree to which a party
exercises control over an entity and its assets.”
Id. (citing United States v. Bell, 27
F.Supp.2d 1191, 1195 (E.D. Cal. 1998)). District courts in
Washington consider the following factors: “(1) Whether
the nominee paid no or inadequate consideration … (2)
Whether the property was placed in the name of the nominee in
anticipation of litigation or liabilities; (3) Whether there
is a close relationship between the transferor and the
nominee; (4) Whether the parties to the transfer failed to
record the conveyance; (5) Whether the transferor retained
possession; and (6) Whether the transferor continues to enjoy
the benefits of the ...