The opinion of the court was delivered by: Donetta W. Ambrose Senior Judge, U.S. District Court
This action arises out of an unpaid tax assessment against decedent, prior to her death. According to the Government, decedent died with an adjudicated tax liability, resulting in a lien against her real property. Prior to her death but after the tax lien attached, decedent transferred the property to her daughter, who then transferred it to herself and her husband. The couple later sold the property, and used the proceeds to purchase another. In this civil action, the Government seeks to foreclose a tax lien against the Defendants‟ property, and alleges that the initial transfer between mother and daughter was fraudulent.
Before the Court is the Government‟s Motion for Summary Judgment, and Defendants‟ opposition thereto. For the following reasons, the Motion will be granted in part and denied in part.
On March 4, 1996, the Tax Court entered a decision against wife-Defendant‟s now-deceased mother, Harriet Nixon Hall (referred to herein as "Ms. Hall," "decedent," or "wife-Defendant‟s mother") and the estate of Ms. Hall‟s husband, James F. Hall. The decision found that the couple had an income tax deficiency for the tax year 1988, in the amount of $287,624.41; notice and demand for payment of this amount, plus interest of $258,170.52, were sent accordingly May 2, 1996.*fn2 Neither Ms. Hall nor the estate paid the tax liabilities.
At the time, Ms. Hall resided at property located on Kings Highway in Carnegie, Pennsylvania, which the Halls had acquired in or about 1965. Following her husband‟s death, Ms. Hall became the sole owner of the property. By deed dated July 31, 2001, Ms. Hall transferred title to the property to her daughter, the present Defendant, in exchange for $1.00 and "natural love and affection." Wife-Defendant asserts that she also promised her mother that she would repair and rehabilitate the property, and take care of her ill mother. Ms. Hall continued to reside at the property. In 2001, the County assessed the property at $195,000.00, and in 2002, at $239,500.00. On December 10, 2001, a notice of tax lien was filed with the Prothonotary of Allegheny County. In addition, on April 4, 2006, in what we shall refer to as McCullough I, the Government filed suit against Ms. Hall and her husband‟s estate in order to reduce the tax assessments to judgment.
On April 17, 2002, wife-Defendant encumbered the property with a mortgage for $82,000.*fn3 She testified that a part of the proceeds were used to make repairs to the property, and a part of the proceeds were used to finance her son‟s education. On October 23, 2004, she was married; her husband is presently a co-Defendant to this action. By deed dated March 30, 2005, on April 4, 2005, wife-Defendant transferred the Kings Highway property to herself and her husband for $1.00. On or about August 22, 2005, Defendants mortgaged the Kings Highway property for $90,000. The loan proceeds were used to pay off the 2002 mortgage, and for other purposes. On November 5, 2005, Ms. Hall died. The notice of tax lien was was refiled on February 1, 2006. On June 30, 2006, wife-Defendant was appointed as executrix of her mother‟s estate. Between approximately 1995 and 2008, wife-Defendant was engaged in a business of reselling industrial lubricants, and also worked at a day care center.
In McCullough I, the Government filed an amended complaint on July 7, 2006, naming wife-Defendant as a party Defendant, in her capacity as executrix of her mother‟s estate. On November 6, 2006, judgment was entered in McCullough I against wife-Defendant, as executrix of her mother‟s estate, in the amount of $1,211,338.05.00 plus interest. By letter dated May 4, 2007, the Government demanded payment from wife-Defendant, from the funds and assets of her mother‟s estate. Subsequently, on July 30, 2009, Defendants sold the Kings Highway property for $375,000, and used the proceeds to pay the balance of the 2005 mortgage, and to purchase property on Winthrop Road in Carnegie, Pennsylvania, for $215,000.
In the present Complaint, the Government seeks, inter alia, a declaratory judgment that the federal tax lien attached to the Kings Highway property on May 2, 1996, and remained attached thereto through the July, 2001 and March, 2005 transfers; and that the lien attached to the proceeds from the sale of the property, and thus to the Defendants‟ Winthrop Road property. The Government also alleges that the July, 2001 transfer of the Kings Highway property from wife-Defendant‟s mother to wife-Defendant was fraudulent, and thus should be set aside as to the Government, and because the property was sold, wife-Defendant should be liable.
Summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). In considering a motion for summary judgment, the Court must examine the facts in a light most favorable to the party opposing the motion. International Raw Materials, Ltd. v. Stauffer Chem . Co., 898 F. 2d 946, 949 (3d Cir. 1990). The moving party bears the burden of demonstrating the absence of any genuine issues of material fact. United States v. Omnicare Inc., 382 F. 3d 432 (3d Cir. 2004). Rule 56, however, mandates the entry of judgment against a party who fails to make a showing sufficient to ...