United States v. Waterer

• Court: District Court, W.D. Washington
• Decided: May 9, 2023
• Docket: 2:22-cv-01417
• Status: Unknown

Opinion

HONORABLE RICHARD A. JONES 1

9 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 10 AT SEATTLE

11 UNITED STATES OF AMERICA, 12 Plaintiff, Case No. 2:22-cv-01417-RAJ 13 v. ORDER ON DEFENDANT 14 CHASE’S MOTION TO DISMISS MICHAEL T. WATERER, et al.,

15 Defendants. 16

17 I. INTRODUCTION 18 Defendant J.P. Morgan Chase Bank, N.A. moves under Fed. R. Civ. P. 12(b)(6) 19 for an order dismissing the claims of the IRS alleged in its Complaint. Dkt. # 27. For the 20 reasons below, the Court DENIES the Motion. 21 II. BACKGROUND This IRS foreclosure action concerns residential, improved real property in King 22 County, Washington (the “Subject Property”) owned by Defendants Michael T. Waterer 23 and Dawn M. Waterer. Dkt. # 1. The United States seeks to reduce federal income tax 24 assessments to judgment against Mr. and Mrs. Waterer, totaling $13,735.74, plus 25 statutory interest and any other additions permitted by law accruing after September 30, 26 2022, until paid in full. Id., ¶ 32. The United States also requests a determination that any 27 purported transfer to or encumbrance of the Subject Property in favor of Defendants 1 Edward P. Weigelt, Jr., Frank McKeehan, and Calkins & Burke Limited, is fraudulent as 2 to the United States. Id., ¶ 48. Third, the United States seeks to foreclose its federal tax 3 liens against the Subject Property. Id., ¶ 61. 4 5 III. DISCUSSION 6 J.P. Morgan Chase Bank, N.A. (“Chase”) moves for dismissal under Fed. R. Civ. 7 P. 12(b)(6) because it claims that its deed of trust on the Subject Property is superior to 8 the IRS lien. Dkt. # 27 at 2. Accordingly, Chase contends that its superiority means there 9 can be no foreclosure relief ordered against it. 10 The United States commenced this action to foreclose federal tax liens under § 11 7403 of the Internal Revenue Code. That statute provides “all persons” who might claim 12 a lien or interest in the subject property must be joined as parties, 26 U.S.C. § 7403(b) 13 (“All persons having liens upon or claiming any interest in the property involved in such 14 action shall be made parties thereto”). This includes lien holders with an interest in the 15 property superior to the United States’ tax lien. See United States v. Hawkins, 1999 WL 16 250765, at *1 (W.D. Wash. 1999) (stating that “the provisions of § 7403 strongly imply 17 that the statute applies regardless of whether the [United States’] claim is superior or 18 inferior”). Section 7403 also requires the Court to determine the merits of all claims to 19 and liens upon the property, and, in all cases where a claim or interest of the United 20 States therein is established, may determine whether a sale of such property is warranted. 21 See 26 U.S.C. §7403(c). The equities of the case cannot and should not be determined at 22 this stage of the litigation. Hawkins, 1999 WL 250765, at *2. 23 Ultimately, the Complaint provides the factual and statutory basis for its inclusion 24 of Chase as a party to this suit. Dkt. # 1, ¶19. There is a recorded mortgage lien on the 25 Subject Property that claims to have been assigned to JP Morgan Chase Bank. See Dkt. # 26 27 at 6-13. Thus, it is properly named. Chase’s contention that it should be dismissed, or 27 should not held to its discovery obligations as a party to this case, is without merit. 1 IV. CONCLUSION 2 For the reasons below, the Court DENIES Chase’s Motion to Dismiss. Dkt. # 27.

3 DATED this 9th day of May, 2023. 4 A 5 6 The Honorable Richard A. Jones 7 United States District Judge 8

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