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United States v. Cawog

June 15, 2006

UNITED STATES OF AMERICA, PLAINTIFF,
v.
ANTOINE F. CAWOG AND AURORA CAWOG, DEFENDANTS.



The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge

MEMORANDUM OPINION AND ORDER OF COURT

This matter was initiated on November 30, 2005, by the United States of America with the filing of a four-count COMPLAINT FOR FEDERAL TAXES, to wit: Count I -Reduce Tax Assessment Against Antoine and Aurora Cawog; Count II - IV- Foreclose Liens on Real Property.*fn1

Service of the Summons and Complaint was personally served upon Defendants, Antoine F. Cawog and Aurora Cawog, on February 2, 2006. See Document Nos. 3 and 4. Pursuant to Federal Rule of Civil Procedure 12(a)(1)(A), the Defendants were required to serve an Answer to the Complaint on or before February 22, 2006.

On March 23, 2006, the government requested the entry of Default against both Defendants as neither had responded to the Complaint as required by Federal Rule of Civil Procedure 12(a).

On March 27, 2006, Robert V. Barth, Clerk of Courts, entered default against both Defendants in accordance with Federal Rule of Civil Procedure 55(a) because both Defendants "had failed to appear, plead, or otherwise defend the action." See Document Nos. 10 and 11. Defendants never sought to set aside the entry of default pursuant to Rule 55(c) nor did they seek relief pursuant to Rule 60.

On May 8, 2006, the government filed a MOTION FOR DEFAULT JUDGMENT AGAINST ANTOINE F. CAWOG AND AURORA CAWOG in which it requested that a default judgment be entered in favor of the United States and against defendants, Antoine F. Cawog and Aurora N. Cawog in the amount of $2,462,889.75, plus statutory additions in accordance with 26 U.S.C. § 6601 accruing after May 15, 2006.

On May 11, 2006, the Court granted the Motion for Default Judgment in favor of the government and against defendants Antoine F. Cawog and Aurora N. Cawog for the unpaid federal individual income taxes for the years ending December 31, 1986; December 31, 1987; December 31, 1988; December 31, 1989; December 31, 1995; December 31, 1996; and December 31,1997; and penalties and interest thereon, for a total of $2,462,889.75, plus interest according to 28 U.S.C. § 1961(c) from May 15, 2006 until paid.

The Court found that all the federal tax liens of the United States were valid and existing liens against all property and rights to property owned by the defendants, Antoine F. Cawog and Aurora N. Cawog. The federal tax liens were foreclosed against all rights to property owned by the defendants, Antoine F. Cawog and Aurora N. Cawog, in the subject real property located at 102 Foxwood Lane, Greensburg, Pennsylvania; 422 Main Street, Irwin, Pennsylvania; and 30 S. 4th Street, Youngwood, Pennsylvania. The Court ordered that the subject real property be turned over to the Internal Revenue Service, and sold, by the Internal Revenue Service, through its property appraisal and liquidation service, or by such representative as may be appointed or employed, in accordance with Title 28, United States Code, pursuant to any Order of Sale entered by this Court.

On that same date, the Clerk of Courts entered default judgment in favor of Plaintiff, United States of America, against Defendants Antoine F. Cawog and Aurora N. Cawog in the amount of 2,462,889.75, plus interest according to 28 U.S.C. Section 1961(c) from May 15, 2006 until paid.

On May 22, 2006, eleven (11) days after default judgment had been entered, Defendants, through counsel, filed their OBJECTIONS TO MOTION FOR ENTRY OF DEFAULT JUDGMENT (Document No. 14).*fn2 In their objections, Defendants do not seek to set aside the monetary judgment, but rather oppose the foreclosure of the federal tax liens against their three properties. Additionally, Defendants ask the Court to "effect" a permanent settlement and for "innocent spouse" relief for Aurora Cawog. The government has filed an extensive response to Defendants' objections and the matter is ripe for disposition.

Initially, the Court finds and rules that the Defendants have not alleged any grounds under Rule 60(b) to set aside the foreclosure judgment. Specifically, they have not alleged any "(1) mistake, inadvertence, surprise or excusable neglect; (2) newly discovered evidence . . .; (3) fraud, . . ., misrepresentation or other misconduct . . .; (4) the judgment is void; (5) the judgment has been satisfied, released or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application . . . . " Fed. R. Civ. P. 60(b).

However, the Defendants have raised other arguments to support their objections, and these will be addressed seriatim.

First, Defendants argue that the government has failed to follow proper procedural requirements under 26 U.S.C. § 7403 to enforce the liens. The Court finds and rules this objection to be without merit. The government clearly filed this civil action pursuant to 26 U.S.C. § 7403. See Complaint, at ¶¶ 2 and 3. Liens arose against the Cawogs property and rights to property after the tax assessments were made and notice and demand was given to the Cawogs. See 26 U.S.C. § 6332.

Next, Defendants "object to the seizure and foreclosure of the property designated as 102 Foxwood Avenue as being exempt because it is the domicile of the defendants and their five children. (I.R.C. 6334). No compelling reason has been advanced for the Court to waive the defendant's right to this exemption." Defs' Br. at D. The Court finds and rules that neither this lawsuit, nor this Court's judgment ordering foreclosure of the government's liens, constitutes an IRS levy pursuant to which the Defendants could assert some exemption. Rather, this is a civil action filed under 26 U.S.C. ยง ...


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