Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States v. Talmage

United States District Court, D. Utah

May 24, 2019

UNITED STATES OF AMERICA, Plaintiff,
v.
RONALD B. TALMAGE, et al., Defendants.

          MEMORANDUM DECISION AND ORDER DENYING MOTIONS FOR SUMMARY JUDGMENT

          David Nuffer, United States District Judge.

         District Judge David Nuffer Defendants Western Land & Livestock LLC (“Western Land”) and Western Reserve Mortgage LLC (collectively, the “Western Entities”) filed a motion for summary judgment (“Motion 1”)[1] against Plaintiff United States of America to quiet title to the real property that is the subject of this lawsuit. Consideration of Motion 1 was deferred under Fed.R.Civ.P. 56(d) pending the completion of discovery.[2] After discovery ended, the Western Entities filed a “supplemental and renewed” motion for summary judgment (“Motion 2”) on the same grounds as previously asserted in Motion 1.[3] Motion 2 expressly incorporates “by reference the ‘Statement of Undisputed Facts' and all evidence in support thereof from”[4] a separately filed motion for partial summary judgment (the “MPSJ”).[5] The MPSJ was later denied based on the existence of genuine issues of material fact.[6] The existence of genuine issues of material fact also require that Motion 1 and Motion 2 (collectively, the “Motions”) be DENIED.[7]

         BACKGROUND

         This action concerns a dispute between the Western Entities and the United States regarding the ownership of certain real property, referred to as the “Liberty Property, ” on which the United States seeks to foreclose to satisfy liens arising from the tax obligations of Defendants Ronald B. Talmage and Annette C. Talmage.[8] Although title to the Liberty Property is recorded in the name of Western Land, [9] the United States contends that this is a fraudulent transaction and that the Talmages have beneficial interests in the property through a purchase-money resulting trust and constructive trust.[10]

         Sometime in 2009 or 2010, Ronald Talmage introduced his then-friend John Wadsworth, the principal of the Western Entities, to the Liberty Property and encouraged him to purchase it.[11]On September 14, 2011, Wadsworth did so through Western Land for $575, 000.[12] The funds for this purchase came, either in whole or in part, from entities under the Talmages' control.[13] At that time, the Talmages owed millions of dollars in taxes to the United States.[14]

         While record title to the Liberty Property has never been in the Talmages' name, the Talmages resided on the property from 2010 through 2016.[15] During that time, they deliberately avoided having their names appear on any contracts associated with the property.[16] They paid $5, 000/month in “rent” to Western Land-even though the market rate was approximately $2, 220/month.[17] They made customized alterations and renovations to the property totaling $362, 031-at least some of which were made without Western Land's permission.[18] And they caused $292, 219 to be provided for the property's taxes and utilities.[19] Altogether, the Talmages caused $1, 129, 719 to be paid toward the Liberty Property on a net basis.[20] Wadsworth and the Western Entities, on the other hand, did not pay anything toward the property on a net basis.[21]

         After vacating the Liberty Property, the Talmages absconded, and bench warrants for their arrest are presently outstanding.[22]

         DISCUSSION

         Summary judgment is appropriate if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”[23] A dispute is “genuine” if “there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either w a y. ”[24] A fact is “material” if “it is essential to the proper disposition of [a] claim.”[25] In ruling on a motion for summary judgment, the evidence and all reasonable inferences are viewed in the light most favorable to the nonmoving party.[26]

         Section 6321 of the Internal Revenue Code provides that a lien arises “in favor of the United States upon all property and rights to property, whether real or personal, belonging to” “any person liable to pay any tax” who “neglects or refuses to pay the same after demand.”[27]This “lien applies to property owned by the delinquent at any time during the life of the lien.”[28] “Unless another date is specifically fixed by law, the lien . . . arise[s] at the time the assessment is made and . . . continue[s] until the liability . . . is satisfied or becomes unenforceable by reason of lapse of time.”[29] To determine whether the tax lien attaches to specific property, courts engage in a two-step process.[30] First, they “look to state law to determine what rights the taxpayer has in the property.”[31] And, second, they look “to federal law to determine whether the taxpayer's state-delineated rights qualify as ‘property' or ‘rights to property' within the compass of the federal tax lien legislation.”[32]

         The Western Entities seek summary judgment based solely on the first step of this analysis. Specifically, they argue that “the Government cannot prove . . . that the Talmages have a state-law property interest in the Liberty Property [under purchase-money resulting trust and constructive trust theories] or that the purchase of the Liberty Property was a voidable fraudulent transfer.”[33] Because there is sufficient evidence on which the existence of a purchase-money resulting trust, constructive trust, and fraudulent transfer could reasonably be found at trial, [34]genuine disputes of material fact preclude summary judgment on this basis.

         There is a genuine dispute of material fact regarding the existence of a purchase-money resulting trust.

         A purchase-money resulting trust is an equitable remedy designed to implement what the law assumes to be the intentions of a putative trustor.[35] When a property transfer is made to one person but another person pays the purchase price, a resulting trust arises in favor of the payor.[36] For a resulting trust to exist, the fact that must be proved “is that one party paid the purchase price for property and another party was given legal title.”[37] However, a resulting trust does not arise if the payor “manifests an intention that no resulting trust should arise.”[38] “[I]t is the intention at the time of the transfer and not at some subsequent time which determines whether a resulting trust arises.”[39] Evidence indicating the payor's intention to retain a beneficial interest in property includes:

(1) that the circumstances are such that the payor would have a reason for taking title in the name of another other than an intention to give him the beneficial interest . . . as, for example, where the payor had reasons for wishing that it should not be known that he was purchasing the property; and (2) that the payor manages the property, collects rents, pays taxes and insurance, pays for repairs and improvements, or otherwise asserts ownership, and the acquiescence by the transferee in such assertion of ownership.[40]

         It is undisputed that title to the Liberty Property was transferred to Western Land in 2011, and that the funds for this purchase came, at least in part, from entities affiliated with the Talmages. But whether the Talmages intended at the time of this transfer not to retain a beneficial interest in the property is genuinely disputed, as there is sufficient evidence on which it could reasonably be found that the Talmages did intend to retain an interest in the property. Specifically, there is sufficient evidence on which it could reasonably be found that the Talmages “had reasons for wishing that it should not be known that [they were] purchasing the property.”[41] And there is also sufficient evidence on which it could reasonably be found that the Talmages managed the property, paid for its taxes, repairs, and improvements, and otherwise asserted ownership in the property-all with Western Land's acquiescence.[42] As a result, the Western Entities are not entitled to judgment as a matter of law on this issue.

         There is a genuine dispute of material fact regarding the existence of a constructive trust.

         “A constructive trust is an equitable remedy to prevent unjust enrichment.”[43] “Courts recognize a constructive trust as a matter of equity where there has been (1) a wrongful act, (2) unjust enrichment, and (3) specific property that can be traced to the wrongful behavior.”[44]To establish a wrongful act, a person must have “received funds by mistake or participated in active or egregious misconduct.”[45] “Unjust enrichment occurs when the moving party has an ‘equitable interest' in the property it seeks a constructive trust over.”[46]

         There is sufficient evidence on which it could reasonably be found that the Western Entities committed a wrongful act by helping the Talmages conceal assets from the United States and other creditors.[47] There is sufficient evidence on which it could reasonably be found that these assets were used to purchase and improve the Liberty Property.47 And there is sufficient evidence on which it could reasonably be found that the Western Entities will be unjustly enriched if they are allowed to retain the Liberty Property.47 Thus, the Western Entities are not entitled to judgment as a matter of law on this issue.

         There is a genuine dispute of material fact regarding the existence of a fraudulent transfer.

         Section 25-6-5(1) of Utah's Uniform Fraudulent Transfer Act-which applies to the transactions at issue in this case[48]-reads:

A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
(a) with actual intent to hinder, delay, or defraud any creditor of the debtor; or
(b) without receiving a reasonably equivalent value in exchange for the transfer or obligation; and the debtor:
(i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
(ii) intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.