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United States v. Edwards

United States District Court, D. New Mexico

December 11, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
JUAN R. EDWARDS, and NEW MEXICO DEPARTMENT OF TAXATION AND REVENUE, Defendants.

          MAGISTRATE JUDGE'S PROPOSED FINDINGS AND RECOMMENDED DISPOSITION

          JERRY H. RITTER, UNITED STATES MAGISTRATE JUDGE

         THIS MATTER comes before the Court on the Motion to Intervene (Doc. 15) (“Motion”), filed by Robert Mason, Trustee for the Ford Ruthling Administrative Trust, a non-party and proposed Intervenor in this action (“Movant” or “Proposed Intervenor”), and Memorandum of Law in Support of Robert Mason's Motion to Intervene (Doc. 16), on July 11, 2017. Movant also filed a Proposed Complaint in Intervention (Doc. 19) and a Proposed Answer in Intervention (Doc. 18) as appendices/supplements to the Motion on July 12, 2017. Plaintiff United States of America and Defendant New Mexico Taxation and Revenue Department (“NMTRD”)[1] do not oppose the Motion, but Defendant Juan R. Edwards (“Edwards”) opposes the Motion. Edwards filed, pro se, “Defendant's Answer & Response to Proposed Intervenors' Complaint in Intervention & Motions Defendant's [sic] Motion to Amend Case Caption” on August 3, 2017. Movant then filed its “Reply to Defendant Juan R. Edwards' Response in Opposition to the Motion to Intervene” (Doc. 21) on August 11, 2017. Having thoroughly considered the parties' briefings, supplemental proposed pleadings and attached exhibits, and relevant law, I find that the Motion has merit, and therefore recommend that the Motion be granted.

         Background

         On February 28, 2017, the United States of America filed a Complaint in this Court against Juan R. Edwards (“Edwards”) to:

(1) reduce to judgment against defendant Edwards unpaid federal tax liabilities,
(2) foreclose federal tax liens against, and sell, certain real property located in Santa Fe County, New Mexico, owned by the defendant Edwards, and
(3) obtain, if appropriate, the 10% surcharge available under sub-chapter B or C of the Federal Debt Collection Procedure Act.

(Doc. 1 at 1). The Complaint alleges that Edwards has a total tax liability of $35, 815.68, which remains unpaid, and that a federal tax lien arose upon each assessment of tax liability that “attached to all property or rights to property then owned, or thereafter acquired, by defendant Edwards.” (Id. at ¶¶ 6-8). The Complaint then alleges that “Defendant Edwards is the owner of certain real property located at 309 and 311 East Berger Street, Santa Fe, Santa Fe County, New Mexico…” (“subject real property”), and that the Internal Revenue Service had recorded Notices of Federal Tax Lien in the Office of the County Clerk of Santa Fe County, New Mexico against Edwards that attach to and encumber his real property including the subject real property. (Id. at ¶¶ 9-11). The United States seeks to foreclose the tax liens against Edwards' interest in the subject real property. (Id. at ¶ 12).

         Edwards filed a Response to the Complaint on March 16, 2017 (Doc. 4), in which he asserts, “Due to the nature of the property, past construction, lot ownership and legal lot-line reconfigurations, upon which foreclosure is sought there are additional parties and entities which may be joined in this case as defendants. Therefore, the legal description of property in the motion, under Count II (SUBJECT PROPERTY) and supporting legal description is incorrect.” (Doc. 4 at ¶ 2).

         The United States filed a First Amended Complaint upon leave of the Court on August 4, 2017. (Doc. 22; Doc. 23). In its Amended Complaint, the United States seeks to clarify “the legal description of the property (¶ 9) upon which the United States seeks to foreclose its tax liens.” (Doc. 23 at 1). The amended legal description adds certain exceptions to the legal description for an apparent conveyance of a five-foot wide parcel, but otherwise includes all other real property with the physical description of “309 East Berger Street (Edwards Tract 1) and 311 East Berger Street (Edwards Tract 2), Santa Fe, Santa Fe County, New Mexico.”

         The Motion to Intervene

         In the Motion to Intervene, Movant states that the “validity of the conveyance and defendant Edwards' interest in the subject real property is the subject of litigation pending in a New Mexico state district court, Mason v. Edwards, D-101-CV-2017-00581 (“State Court Action”), between Movant and defendant Edwards.” (Doc. 15 at ¶ 8). More specifically, the Motion states that Edwards, as Grantee of real property with the physical description of 309 and 311 E. Berger Street, Santa Fe, Santa Fe County, New Mexico (the subject real property), failed to deliver the purchase price to Grantor, the Ford Ruthling Administrative Trust (the “Trust”). (Id. at ¶ 9; Doc. 19-1 at ¶¶ 3, 19). As such, Movant argues that the Trust's interest in the subject real property will be impaired if the Court grants the United States' request for relief. (Doc. 15 at ¶ 11).

         In his Response, Edwards argues that the allegations in Movant's Proposed Complaint in Intervention that are parallel to those in the State Court Action should be “barred by the Abstention Doctrine and, therefore, could only rest after legal determination of res judicata from the NM Complaint.” (Doc. 21 at 3). In addition, Edwards argues that his “ownership of ‘Subject Property' is supported with a legally, [sic] recorded Deed with Ford Ruthling, ” and that in contesting the deed, Movant is violating the Trust Agreement and should be removed as Trustee. (Id. at 4-5).[2] Movant replies that it is not asking the Court to adjudicate the nature and scope of its interest in the subject real property but merely requesting to intervene in this case to protect its interest in the property sought to be foreclosed. (Doc. 25 at 2-4).[3]

         Legal ...


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