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Arlin Geophysical Co. v. United States

United States Court of Appeals, Tenth Circuit

January 14, 2020

ARLIN GEOPHYSICAL COMPANY; LAURA OLSON, Plaintiffs,
v.
UNITED STATES OF AMERICA, Defendant - Crossclaim Plaintiff -Appellee,
v.
DEBRA GREEN UDY; CLAUDIA GREEN BURTON; REBECCA GREEN EGGERS; BANK OF AMERICA HOME LOANS; CIPRA NON-REVOCABLE TRUST; NANCY KIMMERLY; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS; NEW CENTURY MORTGAGE; BARNEY J. NG; SECURITIZED ASSET BACKED RECEIVABLES; SUSAN SLATTERY; JAMES H. WOODALL, FUJILYTE CORPORATION, Counter Defendants, and JOHN E. WORTHEN, Counter Defendant-Appellant.

          Appeal from the United States District Court for the District of Utah (D.C. No. 2:08-CV-00414-DN)

          David E. Ross II, Park City, Utah, for Counter Defendant-Appellant.

          Paul A. Allulis, Attorney, Department of Justice, Tax Division, Washington, D.C. (Richard E. Zuckerman, Principal Deputy Assistant Attorney General, Bruce R. Ellisen, Attorney, with him on the briefs), for Defendant-Crossclaim Plaintiff-Appellee.

          Before LUCERO, HOLMES, and MORITZ, Circuit Judges.

          LUCERO, CIRCUIT JUDGE.

         We consider the existence of redemption rights in actions under 26 U.S.C. § 7403 to enforce federal tax liens. After John Worthen amassed over eighteen million dollars in unpaid tax liabilities, the federal government placed liens on properties it claimed belonged to his alter egos or nominees. Following a court-ordered sale of the properties, Worthen sought to exercise a statutory right to redeem under Utah state law. The district court concluded there are no redemption rights following sales under § 7403. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm. Neither § 7403 nor 28 U.S.C. § 2001, which governs the sale of realty under court order, explicitly provides for redemption rights. Moreover, federal tax proceedings provide sufficient protection for taxpayers and third parties.

         I

         Worthen owes the United States more than eighteen million dollars in unpaid taxes. In 2000, the government filed a Notice of Federal Tax Lien concerning Worthen's outstanding tax liability. In 2008, the Internal Revenue Service ("IRS") filed additional Notices of Tax Lien against fifteen properties that it claimed were owned by Worthen's nominees or alter egos. Laura Olson, who is Worthen's wife, and Arlin Geophysical Company, which is owned by Worthen and Olson, brought an action to quiet title to these properties. Naming counterclaim-defendants with potential interests in the properties, the government filed a counterclaim seeking to reduce to judgment its tax assessments against Worthen and to foreclose the liens. The district court issued orders addressing the claims regarding thirteen of the properties, ruling that Worthen is indebted to the government in the amount of eighteen million dollars, plus interest, for his federal income tax liabilities. At issue in this case are claims to the two remaining properties, Properties 14 and 15, [1] by (1) the government; (2) Fujilyte, a company owned by Worthen that held title to Properties 14 and 15; (3) John Green's heirs, who purported to hold a trust deed to the properties; and (4) Stephen Homer, who purported to be a successor in interest to Green's trust deed.

         Concluding in part that Fujilyte, as Worthen's nominee, holds title to Properties 14 and 15, the district court granted summary judgment to the government regarding the primacy of its claim over those of Homer and Green's heirs. Subsequently, the court granted final judgment for the government and ordered the properties sold. Worthen and Fujilyte appealed. This court vacated the district court's judgment and order of sale and remanded for further proceedings. Arlin Geophysical Co. v. United States, 696 Fed.Appx. 362, 371 (10th Cir. 2017) (unpublished). Because Worthen and Fujilyte were not parties to the summary judgment proceeding, they had not been given "an adequate opportunity to respond to the government's assertion that Fujilyte holds title to these properties as Worthen's alter ego or nominee." Id.

         While this court was considering Fujilyte and Worthen's appeal, Properties 14 and 15 were sold to Salt Lake County. Although this court's order and judgment subsequently vacated the order of sale, the parties stipulated to confirmation of the sale because of the difficulty of unwinding it.

         Following the stipulation, Worthen claimed a right under Utah Code §§ 78B-6-906(1) and 59-2-1357 to redeem the property for the purchase price, $145, 000.[2] The Salt Lake County District Attorney refused to honor Worthen's claimed right, stating that Properties 14 and 15 were not subject to redemption rights and, in any event, Worthen had not complied with the requisite steps to exercise redemption rights under Utah law. Worthen repeatedly asked the district court for an equitable extension of the redemption period, which the district court denied because Worthen had not shown good cause.

         Disputing in pertinent part whether Worthen had redemption rights in Properties 14 and 15, the parties filed cross-motions for summary judgment. The district court granted the government's motion, holding that Worthen had no redemption right because neither § 7403 nor § 2001 provides for a right of redemption. Worthen appealed.

         II

         We review a district court's grant of summary judgment de novo. Cillo v. City of Greenwood Vill., 739 F.3d 451, 461 (10th Cir. 2013). A party is entitled to summary judgment if "there is no genuine dispute as to any material fact." Fed.R.Civ.P. 56(a). "A fact is material if, under the governing law, it could affect the outcome of the lawsuit." Cillo, 739 F.3d at 461 (quotation omitted). "A factual dispute is genuine if a rational jury ...


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