EDWARD J. EMMONS, CLERK 13 □□ \o. U.S. BANKRUPTCY COURT □□ NORTHERN DISTRICT OF CALIFORNIA □□ Sal □□ 1 . . . \ □□□ □□ Signed and Filed: April 23, 2021 □□□□□□ □□ 2 Mini hi 4 Vine 5 DENNIS MONTALI U.S. Bankruptcy Judge 6 7 UNITED STATES BANKRUPTCY COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 In re ) Bankruptcy Case 10 ) No. 18-30194-DM REBECCA BROWN BRINSKELE, ) 11 ) Chapter 11 12 Debtor. ) )} Date: March 26, 2021 13 ) Time: 10:30 AM 1 ) Via Tele/Videoconference <= 15 MEMORANDUM DECISION REGARDING IRS’S MOTION FOR SUMMARY JUDGMENT AND DEBTOR’ S CROSS-MOTION FOR SUMMARY JUDGMENT 16 AND OBJECTION TO IRS’S CLAIM 17 The Internal Revenue Service (“IRS” or “United States”) 18 and Edward A. Brinskele (“Spouse”) have been at war for more 19 \lthan two decades, with the IRS repeatedly winning these legal 20 llpattles. Rebecca Brown Brinskele (“Debtor”) has now assumed 21 llthe mantle from Spouse but the undisputed facts and governing 22 once again mandate a result in favor of the IRS as 23 lldiscussed below. 24 I. THE UNDERLYING PROOF OF CLAIM AND MOTIONS FOR SUMMARY 25 JUDGMENT 26 On December 21, 2001, the United States assessed over 27 |}$950,000 in trust-fund-recovery penalties against Spouse under 2g U.S.C. § 6672. The IRS filed a proof of claim that included -l1-
1 these trust fund penalties and a judgment relating to them. 2 See Claims 1-1, 1-2, 1-3, and 1-4. Debtor filed an objection 3 to the IRS’s claim on July 16, 2019. See Debtor’s Objection to 4 Claim No. 1 of the IRS (dkt. 53) (“Claim Objection”). 5 On November 30, 2020, the United States filed a motion for 6 summary judgment (the “Motion”) in opposition to the Claim 7 Objection (dkt. 98). It asserted that Debtor is precluded from 8 challenging taxes assessed against Spouse and that Debtor 9 cannot meet her burden of showing that the IRS’s claim has been 10 paid. Debtor opposed the Motion and filed a cross-motion for 11 summary judgment, asserting that tax transcripts reflect that 12 the IRS’s judgment lien had been removed, that the tax 13 assessments against Spouse violated due process and 14 constitutional law, and that she had standing to object to the 15 assessments against Spouse. For the reasons set forth below, 16 the court determines the IRS’s position is well-taken and that 17 Debtor’s position is inconsistent with existing judicial 18 rulings regarding the tax assessments against Spouse. 19 II. UNDISPUTED FACTS 20 On May 30, 2002, the United States recorded a Notice of 21 Federal Tax Lien with the Marin County Assessor-Recorder 22 Clerk’s office for an unpaid assessment of $957,146.40 against 23 Spouse. See Exhibit 2 appended to the first supplemental 24 declaration of Mahana K. Weidler (dkt. 113). Spouse paid a 25 portion of the assessed amount, but thereafter unsuccessfully 26 sued the United States for a refund in the U.S. Court of 27 Federal Claims. Id. at 4. 28 -2- 1 The United States filed a counterclaim in the Court of 2 Federal Claims for the balance of the assessments, prevailed at 3 trial, and was awarded a judgment of $1,514,140.14 plus 4 statutory interest against Spouse on September 3, 2009 (the 5 “Judgment”). See Judgment, Brinskele v. United States of 6 America, No. 1:02-cv-00911-NBF (Cl. Ct. Sept. 3, 2009). Spouse 7 appealed the Judgment but lost. See Brinskele v. United 8 States, 397 F. App'x 662 (Fed. Cir. 2010). 9 The United States recorded an abstract of the Judgment in 10 Marin County on June 23, 2011. See Claim Objection at 4; see 11 also Certified Abstract of Judgment (appended to the Motion at 12 dkt. 98-7 and appended to the first supplemental declaration of 13 Mahana K. Weidler at dkt. 113). The recorded abstract 14 indicated that, pursuant to 26 U.S.C. § 3201, its filing 15 created a lien (the “Judgment Lien”) on all real property of 16 Spouse that has priority over all other liens or encumbrances 17 which are perfected later in time. The Judgment Lien is 18 effective, unless satisfied, for a period of 20 years (i.e., 19 until June 23, 2031) and may be renewed by filing a notice of 20 renewal. See id; see also 26 U.S.C. § 3201. 21 On April 23, 2012, Spouse quit-claimed his interests in 22 certain real property located in Nicasio, California (the 23 “Property”) to Debtor. Debtor values that Property at 24 $1,595,000.00 on her schedules. 25 Separately, an IRS tax account transcript dated April 20, 26 2020, pertaining to Spouse (dkt. 106-1) reflects a “removed 27 lien” in the amount of $0.00 from Spouse’s account on January 28 -3- 1 27, 2012. See Transcript at dkt. 106-1, pg. 29 of 72. The 2 type of lien is not disclosed on the transcript, but counsel 3 for the IRS indicated in its response and at the hearing that 4 it pertains to the 2002 tax lien, and not to the Judgment Lien. 5 Counsel for Debtor conceded at the hearing that the nature of 6 the “removed lien” has been clarified and the removal of the 7 lien reflected on the tax transcript is unrelated to and does 8 not affect the Judgment Lien. 9 Debtor filed this chapter 11 case on February 23, 2018 and 10 seeks a judicial determination through the cross-motion that 11 the Judgment Lien is unenforceable against the Property as a 12 matter of law and undisputed fact. Conversely, the IRS seeks 13 summary judgment that its Judgment Lien remains enforceable 14 even if Debtor now holds title to the Property owned by Spouse 15 at the time the IRS recorded the Judgment Lien. For the 16 reasons set forth below, the court concludes that under 17 governing law, the IRS must prevail. 18 III. STATEMENT OF ISSUES 19 A. Is the Judgment Lien enforceable against the 20 Property? 21 B. Is Debtor barred by issue or claim preclusion from 22 challenging the merits of the IRS’s Judgment 23 against Spouse? 24 IV. DISCUSSION 25 A. Enforceability of the Judgment Lien 26 The record unquestionably shows that the Judgment Lien 27 itself remains on the real property records of the Marin County 28 -4- 1 Recorder’s Office and has not been cancelled, revoked, or 2 otherwise rendered ineffective. 3 The Judgment against Spouse created the enforceable 4 Judgment Lien when IRS recorded its abstract of judgment, as 5 provided in 26 U.S.C. § 3201(a): 6 (a) Creation. -- A judgment in a civil action shall create a lien on all real property of a judgment 7 debtor on filing a certified copy of the abstract 8 of the judgment in the manner in which a notice of tax lien would be filed under paragraphs (1) 9 and (2) of section 6323(f) of the Internal Revenue Code of 1986. A lien created under this 10 paragraph is for the amount necessary to satisfy 11 the judgment, including costs and interest. 12 Section 6323(f) of the Internal Revenue Code, in turn, requires 13 a notice of lien to be filed in “one office within the State or 14 the county (or other governmental subdivision), as designated 15 by the laws of such State, in which the property subject to the 16 lien is located.” 17 As noted in subsections (b) and (c) of 26 U.S.C. § 3201, 18 the Judgment Lien created has priority over any later-perfected 19 encumbrances and is effective for 20 years, subject to renewal. 20 Most importantly, such a judgment lien “shall be released on the 21 filing of a satisfaction of judgment or release of lien in the 22 same manner as the judgment is filed to obtain the lien.” 23 26 U.S.C. § 3201(d)(emphasis added). No such release has been 24 recorded in accordance with Internal Revenue Code § 3201(d).
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EDWARD J. EMMONS, CLERK 13 □□ \o. U.S. BANKRUPTCY COURT □□ NORTHERN DISTRICT OF CALIFORNIA □□ Sal □□ 1 . . . \ □□□ □□ Signed and Filed: April 23, 2021 □□□□□□ □□ 2 Mini hi 4 Vine 5 DENNIS MONTALI U.S. Bankruptcy Judge 6 7 UNITED STATES BANKRUPTCY COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 In re ) Bankruptcy Case 10 ) No. 18-30194-DM REBECCA BROWN BRINSKELE, ) 11 ) Chapter 11 12 Debtor. ) )} Date: March 26, 2021 13 ) Time: 10:30 AM 1 ) Via Tele/Videoconference <= 15 MEMORANDUM DECISION REGARDING IRS’S MOTION FOR SUMMARY JUDGMENT AND DEBTOR’ S CROSS-MOTION FOR SUMMARY JUDGMENT 16 AND OBJECTION TO IRS’S CLAIM 17 The Internal Revenue Service (“IRS” or “United States”) 18 and Edward A. Brinskele (“Spouse”) have been at war for more 19 \lthan two decades, with the IRS repeatedly winning these legal 20 llpattles. Rebecca Brown Brinskele (“Debtor”) has now assumed 21 llthe mantle from Spouse but the undisputed facts and governing 22 once again mandate a result in favor of the IRS as 23 lldiscussed below. 24 I. THE UNDERLYING PROOF OF CLAIM AND MOTIONS FOR SUMMARY 25 JUDGMENT 26 On December 21, 2001, the United States assessed over 27 |}$950,000 in trust-fund-recovery penalties against Spouse under 2g U.S.C. § 6672. The IRS filed a proof of claim that included -l1-
1 these trust fund penalties and a judgment relating to them. 2 See Claims 1-1, 1-2, 1-3, and 1-4. Debtor filed an objection 3 to the IRS’s claim on July 16, 2019. See Debtor’s Objection to 4 Claim No. 1 of the IRS (dkt. 53) (“Claim Objection”). 5 On November 30, 2020, the United States filed a motion for 6 summary judgment (the “Motion”) in opposition to the Claim 7 Objection (dkt. 98). It asserted that Debtor is precluded from 8 challenging taxes assessed against Spouse and that Debtor 9 cannot meet her burden of showing that the IRS’s claim has been 10 paid. Debtor opposed the Motion and filed a cross-motion for 11 summary judgment, asserting that tax transcripts reflect that 12 the IRS’s judgment lien had been removed, that the tax 13 assessments against Spouse violated due process and 14 constitutional law, and that she had standing to object to the 15 assessments against Spouse. For the reasons set forth below, 16 the court determines the IRS’s position is well-taken and that 17 Debtor’s position is inconsistent with existing judicial 18 rulings regarding the tax assessments against Spouse. 19 II. UNDISPUTED FACTS 20 On May 30, 2002, the United States recorded a Notice of 21 Federal Tax Lien with the Marin County Assessor-Recorder 22 Clerk’s office for an unpaid assessment of $957,146.40 against 23 Spouse. See Exhibit 2 appended to the first supplemental 24 declaration of Mahana K. Weidler (dkt. 113). Spouse paid a 25 portion of the assessed amount, but thereafter unsuccessfully 26 sued the United States for a refund in the U.S. Court of 27 Federal Claims. Id. at 4. 28 -2- 1 The United States filed a counterclaim in the Court of 2 Federal Claims for the balance of the assessments, prevailed at 3 trial, and was awarded a judgment of $1,514,140.14 plus 4 statutory interest against Spouse on September 3, 2009 (the 5 “Judgment”). See Judgment, Brinskele v. United States of 6 America, No. 1:02-cv-00911-NBF (Cl. Ct. Sept. 3, 2009). Spouse 7 appealed the Judgment but lost. See Brinskele v. United 8 States, 397 F. App'x 662 (Fed. Cir. 2010). 9 The United States recorded an abstract of the Judgment in 10 Marin County on June 23, 2011. See Claim Objection at 4; see 11 also Certified Abstract of Judgment (appended to the Motion at 12 dkt. 98-7 and appended to the first supplemental declaration of 13 Mahana K. Weidler at dkt. 113). The recorded abstract 14 indicated that, pursuant to 26 U.S.C. § 3201, its filing 15 created a lien (the “Judgment Lien”) on all real property of 16 Spouse that has priority over all other liens or encumbrances 17 which are perfected later in time. The Judgment Lien is 18 effective, unless satisfied, for a period of 20 years (i.e., 19 until June 23, 2031) and may be renewed by filing a notice of 20 renewal. See id; see also 26 U.S.C. § 3201. 21 On April 23, 2012, Spouse quit-claimed his interests in 22 certain real property located in Nicasio, California (the 23 “Property”) to Debtor. Debtor values that Property at 24 $1,595,000.00 on her schedules. 25 Separately, an IRS tax account transcript dated April 20, 26 2020, pertaining to Spouse (dkt. 106-1) reflects a “removed 27 lien” in the amount of $0.00 from Spouse’s account on January 28 -3- 1 27, 2012. See Transcript at dkt. 106-1, pg. 29 of 72. The 2 type of lien is not disclosed on the transcript, but counsel 3 for the IRS indicated in its response and at the hearing that 4 it pertains to the 2002 tax lien, and not to the Judgment Lien. 5 Counsel for Debtor conceded at the hearing that the nature of 6 the “removed lien” has been clarified and the removal of the 7 lien reflected on the tax transcript is unrelated to and does 8 not affect the Judgment Lien. 9 Debtor filed this chapter 11 case on February 23, 2018 and 10 seeks a judicial determination through the cross-motion that 11 the Judgment Lien is unenforceable against the Property as a 12 matter of law and undisputed fact. Conversely, the IRS seeks 13 summary judgment that its Judgment Lien remains enforceable 14 even if Debtor now holds title to the Property owned by Spouse 15 at the time the IRS recorded the Judgment Lien. For the 16 reasons set forth below, the court concludes that under 17 governing law, the IRS must prevail. 18 III. STATEMENT OF ISSUES 19 A. Is the Judgment Lien enforceable against the 20 Property? 21 B. Is Debtor barred by issue or claim preclusion from 22 challenging the merits of the IRS’s Judgment 23 against Spouse? 24 IV. DISCUSSION 25 A. Enforceability of the Judgment Lien 26 The record unquestionably shows that the Judgment Lien 27 itself remains on the real property records of the Marin County 28 -4- 1 Recorder’s Office and has not been cancelled, revoked, or 2 otherwise rendered ineffective. 3 The Judgment against Spouse created the enforceable 4 Judgment Lien when IRS recorded its abstract of judgment, as 5 provided in 26 U.S.C. § 3201(a): 6 (a) Creation. -- A judgment in a civil action shall create a lien on all real property of a judgment 7 debtor on filing a certified copy of the abstract 8 of the judgment in the manner in which a notice of tax lien would be filed under paragraphs (1) 9 and (2) of section 6323(f) of the Internal Revenue Code of 1986. A lien created under this 10 paragraph is for the amount necessary to satisfy 11 the judgment, including costs and interest. 12 Section 6323(f) of the Internal Revenue Code, in turn, requires 13 a notice of lien to be filed in “one office within the State or 14 the county (or other governmental subdivision), as designated 15 by the laws of such State, in which the property subject to the 16 lien is located.” 17 As noted in subsections (b) and (c) of 26 U.S.C. § 3201, 18 the Judgment Lien created has priority over any later-perfected 19 encumbrances and is effective for 20 years, subject to renewal. 20 Most importantly, such a judgment lien “shall be released on the 21 filing of a satisfaction of judgment or release of lien in the 22 same manner as the judgment is filed to obtain the lien.” 23 26 U.S.C. § 3201(d)(emphasis added). No such release has been 24 recorded in accordance with Internal Revenue Code § 3201(d). 25 Accordingly, the Judgment Lien against the Property remains 26 effective through at least June 23, 2031. 27 The Judgment Lien remains enforceable. The Judgment 28 remains unsatisfied, the IRS has not released the Judgment Lien -5- 1 and no release of the Judgment Lien has been recorded in the 2 Marin County. 3 B. Debtor’s Standing to Challenge Validity of Taxes 4 Purportedly Owed by Spouse 5 In 2006, the IRS announced that it would no longer require 6 customers of long-distance phone carriers like those owned by 7 Spouse through MTC Telemanagement Corp. to pay excise taxes and 8 set up a rebate/credit program for such customers. In short, 9 the IRS no longer imposes an excise tax on certain types of 10 long-distance communications and set up a procedure to issue 11 credits and provided rebates billed to customers between 12 February 28, 2003 and August 1, 2006. 13 Spouse has repeatedly asserted that the United States 14 should offset his tax obligations with these credits, although 15 courts have repeatedly denied the relief he seeks, holding that 16 owners/operators of long distance telecommunications companies 17 are not customers for whom the tax rebate program was designed. 18 See, e.g, Brinskele v. United States, 73 Fed. Cl. 227, 227 19 (2006)(“Brinskele I”), reconsideration denied, 2006 WL 5726105 20 (Fed. Cl. Dec. 5, 2006)(“Brinskele II”)(court denies motion for 21 reconsideration; denies motion to refund excise tax payments to 22 Spouse and orders him to remit excise taxes already paid by 23 customers even though such taxes are no longer chargeable to 24 customers); Brinskele v. United States, 88 Fed. Cl. 334 (2009) 25 (“Brinskele III”) (holding that telecommunications company 26 owned by Spouse collected federal excise tax but failed to pay 27 over portion of that tax to IRS; Spouse, as owner, was 28 -6- 1 responsible person for paying over tax; Spouse acted willfully 2 in failing to pay over taxes already paid by customers; and 3 amount of penalty assessment was not erroneous, even if such 4 taxes are no longer chargeable to customers). The Federal 5 Circuit, acting per curiam, affirmed Brinskele III. See 6 Brinskele v. U.S., 397 Fed. Appx. 662, 2010 WL 4085181 (Fed. 7 Cir. 2010). 8 Debtor is now challenging the merits of these trust fund 9 recovery penalty assessments against Spouse. These arguments 10 have already been raised by Spouse before other courts which in 11 turn have rejected them. Any statute of limitations would have 12 already tolled with respect to a rebate program that expired on 13 August 1, 2006. The court finds that Debtor has not pled a 14 cognizable claim for relief and her cross-motion must be 15 denied. Debtor held no interest in the Property until after 16 the IRS recorded its Judgment Lien. Whatever rights she 17 acquired are subject to the Judgment Lien. Moreover, the court 18 rejects Debtor’s unsupported theory that the IRS has released 19 its Judgment Lien when it released the prior 2002 lien. 20 Spouse unsuccessfully presented similar arguments to 21 multiple courts, as discussed above. Ironically, she asserts 22 that res judicata bars the IRS from exercising its remedies 23 here because other taxpayers have prevailed against the IRS on 24 similar grounds. She, however, does not stand in privity with 25 those unknown parties; she stands in privity with Spouse, who 26 quitclaimed the Property to her after the Judgment Lien was 27 recorded. 28 -7- 1 The remaining arguments by Debtor in opposition to the 2 Motion are rejected. She has not been denied due process. She 3 acquired Spouse’s interest in the Property after all of his 4 efforts had been exhausted and took it with all of its burdens. 5 She has no personal liability by virtue of this decision. Her 6 “Additional Due Process Concerns” and complaints about the 7 Excessive Fines Clause of the Eight Amendment are without merit. 8 The court has also considered the post-hearing filings by 9 both parties (dkts. 113 and 114). Debtor’s submission of 10 portions of the record in the case of MTC Telemanagement Corp. 11 (No. 97-12893), does not change the outcome. Debtor has not 12 established what happened or did not happen in that case 13 compels a different result here. 14 V. CONCLUSION 15 For the foregoing reasons, the court will GRANT the IRS’s 16 motion for summary judgment and DENY Debtor’s cross-motion for 17 summary judgment and overrules the Claim Objection. It is 18 concurrently entering orders to that effect. 19 The court will conduct a Status Conference in this Chapter 20 11 case on May 13, 2021, at 9:30 AM. 21 Due to the Coronavirus (COVID-19) threat, the Courthouses 22 for the United States Bankruptcy Court for the Northern District 23 of California are closed to the public until further 24 notice. See the Court Operations During COVID-19 Outbreak at 25 https://www.canb.uscourts.gov/content/page/court-operations- 26 during-covid-19-outbreak. No hearings are conducted in 27 person. All hearings will be conducted by telephone or video 28 -8- 1 conference (unless otherwise noted). Please review the specific 2 calendar page (pdf) posted on the Bankruptcy Court’s website for 3 further instructions one week prior to the hearing. 4 *** END OF MEMORANDUM DECISION *** 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -9- 1 COURT SERVICE LIST ECF Recipients 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -10-