Shirehampton Drive Trust v. US Dept. of Treasury

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS OCT 28 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

SHIREHAMPTON DRIVE TRUST, No. 19-17254

Plaintiff-Appellant, D.C. No. 2:16-cv-02276-RFB-EJY v.

UNITED STATES DEPARTMENT OF MEMORANDUM* THE TREASURY; INTERNAL REVENUE SERVICE COMMISSIONER,

Defendants-Appellees,

and

JPMORGAN CHASE BANK, N.A.; et al.,

Defendants.

Appeal from the United States District Court for the District of Nevada Richard F. Boulware II, District Judge, Presiding

Submitted September 2, 2020** Seattle, Washington

Before: HAWKINS and McKEOWN, Circuit Judges, and KENDALL,*** District

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Judge.

Shirehampton Drive Trust appeals the district court’s entry of summary

judgment in favor of the United States Department of the Treasury. We have

jurisdiction under 28 U.S.C. § 1291. We review the district court’s decision de

novo, LN Mgmt., LLC v. JPMorgan Chase Bank, N.A., 957 F.3d 943, 949 (9th Cir.

2020), and we affirm.

Beginning in 2003, Louisa Oakenell began falling behind on her federal

income tax obligations. She has outstanding tax liabilities for tax years 2003, 2006,

and 2007. The IRS filed notices of federal tax liens with the Clark County

Recorder on May 1, 2009 and June 24, 2009.

Oakenell purchased a home in Las Vegas in 2008. On March 1, 2009, she

failed to pay her monthly assessment to the Homeowner’s Association (“HOA”).

On March 10, 2009, the HOA assessed her a late fee. A debt collector working on

behalf of the HOA sent her a letter via certified mail on June 26, 2009, explaining

that it would record a lien for delinquent assessments on her property if she failed

to make her payments. Then on July 21, 2009, the HOA’s debt collector recorded

with the Clark County Recorder’s Office a delinquent assessment lien on the

Oakenell property in the amount of $832.33. The debt collector sent Oakenell a

*** The Honorable Virginia M. Kendall, United States District Judge for the Northern District of Illinois, sitting by designation.

2 copy of the delinquent assessment lien via certified mail on July 24, 2009.

The sole issue in this case is the priority of liens as between the IRS liens

and the HOA lien. The district court here found that the IRS tax lien has priority

over the HOA lien because the HOA lien was not perfected at the time that the IRS

recorded its notice of tax liens.

When the IRS assesses an individual for unpaid federal taxes, a lien is

created in favor of the United States “upon all property and rights to property,

whether real or personal, belonging to such person.” 26 U.S.C. § 6321. The lien

attaches at the time of assessment and continues until the liability is satisfied.

26 U.S.C. § 6322.

“Federal law governs the relative priority of federal tax liens.” Feiler v.

United States, 62 F.3d 315, 316 (9th Cir. 1995). Indeed, “it would be contrary to

the federal policy of uniformity in the federal tax laws to permit the relative

priority of federal tax liens to ‘be determined by the diverse rules of the various

states.’” United States v. Equitable Life Assur. Soc’y. of the U.S., 384 U.S. 323,

331 (1966) (quoting United States v. Speers, 382 U.S. 266, 270 (1965)). The

common law rule of “first in time is the first in right” governs the relative priority

of a federal tax lien vis-à-vis a lien created under state law. United States v.

Pioneer Am. Ins. Co., 374 U.S. 84, 87 (1963). Under the first-in-time rule, choate

state-created liens take priority over later-created federal tax liens; inchoate state-

3 created liens do not. Pioneer Am. Ins. Co., 374 U.S. at 88; see also Feiler, 63 F.3d

at 318 n.2 (explaining that the Pioneer choateness analysis still applies). A state-

created lien is inchoate for priority purposes until the lienholder takes some

administrative step to establish the lien. In re Priest, 712 F.2d 1326, 1329 (9th Cir.

1983).

Shirehampton argues that the HOA lien became choate on March 1, 2009, as

soon as Oakenell failed to make an on-time payment. This argument lacks merit

because the relevant date for choateness purposes is the date of the first

administrative step. See In re Priest, 712 F.2d at 1329. The HOA took no

administrative step to establish the lien until July 21, 2009 at the earliest, when it

recorded the lien with the Clark County Recorder’s Office.

The latest possible dates relevant to the relative priority of the IRS liens are

May and June of 2009, when the IRS recorded its liens. The HOA’s lien remained

inchoate until July 21, 2009 at the earliest. Accordingly, the IRS liens have priority

over the HOA’s state-created lien under the first-in-time rule. See Pioneer Am.

Ins. Co., 374 U.S. at 87.

AFFIRMED.