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United States v. Gregg

United States District Court, Third Circuit

December 11, 2013

UNITED STATES OF AMERICA, Plaintiff,
v.
RONALD C. GREGG, DEBORAH L. GREGG, ESTATE OF IRVIN G. KLUGH, and DEPARTMENT OF REVENUE, Defendants.

MEMORANDUM OPINION

NORA BARRY FISCHER, District Judge.

I. INTRODUCTION

Presently before the Court is the Motion for Summary Judgment (Docket No. 48) filed by the United States of America ("Plaintiff") seeking judgment as a matter of law pursuant to Federal Rule of Civil Procedure 56(a) with respect to all claims asserted in Plaintiff's Complaint of March 15, 2012. (Docket No. 1). Plaintiff's claims are asserted under 26 U.S.C. §§ 6203, 6321, 6322, and 6672, seeking judgment for unpaid taxes by Defendants Ronald C. Gregg ("Ronald") and Deborah L. Gregg ("Deborah") and partial satisfaction of monies owed through judicial sale of Ronald and Deborah's real property. The Estate of Irvin G. Klugh and the Commonwealth of Pennsylvania Department of Revenue were joined as defendants due to coexisting claims upon Ronald and Deborah's real property. (Docket No. 1 at 3). This Court exercises subject-matter jurisdiction over Plaintiff's claims pursuant to 26 U.S.C. §§ 7401-7403, and 28 U.S.C. §§ 1331, 1340 and 1345. For the following reasons, Plaintiff's Motion for Summary Judgment will be GRANTED.

II. PROCEDURAL AND FACTUAL BACKGROUND

Ronald and his wife, Deborah, are residents of Pennsylvania, and share a home on property located in Butler, Pennsylvania, which they own. (Docket No. 55-1 at 7-8). In addition, Ronald formerly owned a number of businesses in the field of metal fabricating and glazing, also based in Butler, Pennsylvania. ( Id. at 7-9, 14-20). The first, doing business as Fenestech, was a sole proprietorship in 2001 - the beginning of the time period relevant to the present case. ( Id. at 8-9). At some point during 2001, Ronald became concerned about his potential exposure to liability as a sole proprietor, and so decided to incorporate Fenestech. ( Id. at 13-14). Ronald became the sole corporate officer of the newly incorporated entity, thereafter doing business as Fenestech, Inc. ( Id. at 15). Fenestech, Inc. had a number of employees including Deborah, who performed secretarial duties. ( Id. at 15-17, 77-78).

On a day-to-day basis, Ronald was in charge of assigning work schedules, creating estimates, monitoring construction sites, resolving construction site problems, and negotiating contracts. (Docket No. 55-1 at 9, 15). Ronald hired office employees to handle correspondence, filing, time-keeping, receivables, payables, invoices, payment scheduling and tracking, debt management, and check signing. ( Id. at 15-16). Ronald had final authority over all these matters. ( Id. at 16-17). He determined the priority of bill payment, but did not review every check that was written before it was sent out. ( Id. at 17). An employee by the name of Mary Nutter completed monthly reports for Ronald with respect to Fenestech, Inc.'s general business, including expenditures and tax obligations. ( Id. at 18-19). Ronald was notified if Fenestech, Inc. failed to make a required tax deposit. ( Id. ).

Fenestech, Inc. declared bankruptcy in 2002. (Docket No. 55-1 at 19-20). In late 2002, Ronald incorporated another venture doing business as Island Metals, Inc. ( Id. ). Island Metals, Inc. was also a metal fabricator, and did the same work as Fenestech, Inc. ( Id. ). Once again, Ronald was the sole officer, and had sole authority over all financial affairs. ( Id. at 20-21). However, Island Metals, Inc. had no office staff, and Mary Nutter did not prepare monthly reports for Island Metals, Inc. ( Id. at 21-22).

A Complaint was filed by the United States in this Court on March 15, 2012. (Docket No. 1). In Count I, Plaintiff asserted that both Ronald and Deborah failed to pay all personal income taxes due for the fiscal years 2004, 2006, and 2009. (Docket Nos. 1 at 3-4; 48-1 at 2-3; 49 at 1-2). As of March 5, 2012, the couple collectively owed Plaintiff $25, 286.18, including interest and penalties. ( Id. ). In Count II, Plaintiff claimed that while in business as a sole proprietorship, Fenestech had failed to make necessary employment tax payments to the United States for the tax periods ending on June 30, September 30, and December 31, 2001. (Docket Nos. 1 at 4-5; 48-1 at 3-4; 49 at 10-11). Further, Fenestech had failed to make necessary unemployment tax payments for the tax period ending December 31, 2001. ( Id. ). As of March 5, 2012, unpaid tax liabilities for Fenestech, as a sole proprietorship, including penalties, allegedly totaled $613, 699.82. ( Id. ).

In Count III it was alleged that Fenestech, Inc. had failed to pay employment taxes for the tax periods ending June 30, September 30, and December 31, 2002. (Docket Nos. 1 at 5-6; 48-1 at 4-10; 49 at 11-12). As of March 5, 2012, unpaid tax liabilities for Fenestech, Inc., as a corporation, including penalties, allegedly totaled $115, 394.37. ( Id. ). Similarly, in Count IV it was alleged that Island Metals, Inc. had failed to pay employment taxes for tax periods ending March 31, June 30, September 30, and December 31, 2003. (Docket Nos. 1 at 7-8; 48-1 at 10-12; 49 at 12-13). As of March 5, 2012, unpaid tax liabilities for Island Metals, Inc., including penalties, allegedly totaled $63, 410.70. ( Id. ).

As a result of these outstanding tax liabilities, in Count V Plaintiff sought to foreclose upon all property and rights to property held by Ronald and Deborah - specifically, their real property in Butler, Pennsylvania. (Docket Nos. 1 at 8-9; 48-1 at 12-15; 49 at 13-14). Plaintiff further asked this Court to hold that its tax assessment liens have priority over competing liens held by the Estate of Irvin G. Klugh and the Commonwealth of Pennsylvania Department of Revenue with respect to Ronald and Deborah's property in Butler, Pennsylvania. ( Id. ).

Ronald and Deborah filed their respective Answers pro se on May 7, 2012, admitting liability for unpaid taxes, but disputing the amount owed and the propriety of foreclosing upon their real property, and alleging unfair delay by the government in prosecution of its claims. (Docket Nos. 13, 14). Default Judgment was entered in favor of Plaintiff as against the Commonwealth of Pennsylvania Department of Revenue on June 5, 2012. (Docket No. 21). The Estate of Irvin G. Klugh filed its Answer on June 13, 2012, alleging that a judgment awarded against Ronald in a Pennsylvania court gave its judgment lien priority over Plaintiff's liens. (Docket No. 29).

Following a case management conference on November 7, 2012 (Docket No. 38), the parties engaged in discovery, receiving one extension of time (Docket Nos. 43, 44), with the parties ultimately agreeing to end discovery on July 10, 2013 (Docket Nos. 46, 47). A Motion for Summary Judgment, accompanying brief in support, and concise statement of material facts were filed by Plaintiff on August 6, 2013. (Docket Nos. 48, 48-1, 49). Ronald, proceeding pro se, filed a Response on September 10, 2013. (Docket Nos. 51, 52). No responses were filed by Deborah or the Estate of Irvin G. Klugh. Plaintiff filed a Reply on September 12, 2013. (Docket No. 53). No further filings were made by any of the parties to this suit. The matter is now ripe for disposition.

III. STANDARD OF REVIEW

Summary judgment may only be granted where the moving party shows that there is no genuine dispute as to any material fact, and that judgment as a matter of law is warranted. FED. R. CIV. P. 56(a). Pursuant to Rule 56, the Court must enter summary judgment against a party who fails to make a showing sufficient to establish an element essential to his or her case, and on which he or she will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In evaluating the evidence, the Court must interpret the facts in the light most ...


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