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United States v. Loreno

United States District Court, W.D. Pennsylvania

January 31, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
LARRY A. LORENO, et al., Defendants.

          MEMORANDUM OPINION

          Arthur J. Schwab United States District Judge

         I. Introduction

         This is a federal tax lien/foreclosure action wherein the United States of America has sought to foreclose federal tax liens on several pieces of property owned by Defendant Larry Loreno (Counts II to VII), as well as a firearms collection (Count VIII). This case has a lengthy procedural history dating back to July 28, 2010, and the undersigned is the third member of the United States District Court for the Western District of Pennsylvania to be assigned this case. The Court will recite the procedural history below, but a critical consideration in the Court's analysis on the issues now raised by pro se Defendants, Gary Lawhead and Tina Gilpin (“Lawhead/Gilpin”), [1] in their (renewed) Motion to Dismiss, as well as Plaintiff's Motion for Partial Summary Judgment, is the fact that the United States of America and Defendant Loreno executed a settlement agreement which was embodied in a Consent Order, that resolved the tax liens at issue, and closed the case. The Court retained jurisdiction to enforce the Consent Order.

         That settlement agreement, which was signed and Ordered by the Court on March 3, 2015, set forth a payment schedule for Defendant Loreno, and a list of the properties upon which the United States of America could seek an Order of Sale upon default by Defendant Loreno. That list did not include the property upon which Defendants Lawhead/Gilpin own a leasehold interest.

         Accordingly, while staged in the context of a Motion to Dismiss, the issue is whether, in light of the Consent Order, and the fact that the lien appears to be satisfied (see doc. 151), it would be appropriate to GRANT Defendants' Lawhead/Gilpin Motion to Dismiss (which the Court will convert to a Motion for Summary Judgment). Under the circumstances, the Court finds that it is appropriate to do so. Accordingly, for the reasons set forth herein, the Court will GRANT Defendants' Motion to Dismiss/Motion for Summary Judgment (doc. 155) and will DENY as MOOT Plaintiff's Motion for Partial Summary Judgment (doc. 157).

         II. Procedural History/Undisputed Facts

         To recap, Defendant Loreno was delinquent in paying his federal income taxes for tax years 2000, 2001 and 2002. Plaintiff, the United States of America, brought suit against Defendant Loreno based upon the failure to pay these federal tax liens, and pursued liens which attached to all property and right to property then owned or thereafter acquired by Loreno. In accordance with 26 U.S.C. §7403(b), the United States of America originally named as Defendants Loreno, his former wife, Darlene A. Loreno (Darlene Hoy), the Mercer County Tax Claim Bureau, Greenville Borough, Bank of America, the Commonwealth of Pennsylvania, and the Crawford County Tax Claim Bureau.

         Notices of these federal tax liens were filed in the office of the Mercer County Prothonotary and the Crawford County Prothonotary. On June 10, 2013, the Honorable Sean McLaughlin entered a default judgment against all of the named Defendants except for Loreno and Bank of America (doc. 45). On June 12, 2013, Judge McLaughlin entered an Order finding that the Government established that its assessment of Loreno's tax liability for the years 2000 through 2002 was accurate, thereby entitling the Government to a judgment in the amount of $141, 768.70, plus interest accruing from January 14, 2013 until paid. (doc. 48).

         The case was then reassigned to the Honorable Terrence F. McVerry, and the United States entered into a stipulation with Bank of America, thereby resolving all of its claims against Bank of America, which was approved on September 17, 2013 (doc. no. 54). An Amended Complaint (doc. 59) was filed adding new Defendants (including a claim at Count V as to Defendant Lawhead/Gilpin) and other allegations relative to Counts V, VI and VIII. As discussed in fn 1, Lawhead/Gilpin purchased a leasehold interest in property upon which the United States had a tax lien; the Tax Authority of Crawford County, however, allegedly failed to properly give the United States notice of the lien.

         Another Motion for Partial Summary Judgment was filed on behalf of the United States of America, and against Defendant Loreno, and on March 26, 2014, the Court entered judgment in favor of the United States and against Defendant as to Counts II, III, IV and VII of the Amended Complaint. The March 26, 2014 Order further decreed that the United States has valid and subsisting Federal tax liens on all property and rights to property of Defendant Loreno, including his interest in the properties at issue in Counts II, III, IV, and VII of the Amended Complaint; and, that the federal tax liens relating to Defendant Loreno's federal income tax liabilities and attaching to the properties of Defendant Loreno at issue in Counts II, III, IV, and VII of the Amended Complaint shall be foreclosed. (doc. 70 and 71).

         Following a Motion for Order of Sale (doc. 81), Defendant Loreno was adjudged to be in civil contempt for his failure to respond to discovery requests by the United States of America. (doc. 94). An arrest warrant was issued on December 8, 2014, and following his purge of the civil contempt, on December 19, 2014, the Court released Defendant Loreno from imprisonment.

         More Motion practice ensued and, significantly, as discussed in the Introductory section of this Memorandum, on March 13, 2015, the parties (the United States of America and Loreno) settled this case, and the Court entered an Order granting a Joint Motion for Entry of a Consent Order (doc. 109). The text of the Consent Order resolved all payment issues and set forth the Order of properties upon which the United States could obtain Orders of Sale. It is noted that at doc. no. 73, Defendant/Cross-claimants Gilpin and Lawhead had filed a Motion to Dismiss, which the Court by Consent Order mooted by Order of March 19, 2015, in light of the settlement of the case (doc. 109).

         Importantly, the March 13, 2015 Consent Order changed the real estate that is subject to IRS execution (doc. 109). It added properties that were held in the name of Loren Corporation and were not listed in the Amended Complaint; and critically, it deleted several of the properties that were specified in the Amended Complaint, including the “real estate office” in Count II and the Lawhead/Gilpin property in Count V. The Consent Order also omitted the Firearms collection in Count VIII.

         On March 13, 2015, the Court entered the Consent Order upon settlement of the claims by the parties, and closed the case, except to enforce the terms of the Settlement, and Ordered the parties to file status reports on the status of the ...


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