Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_01-cv-02301/USCOURTS-caed-2_01-cv-02301-1/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 26:7403 Suit to Enforce Federal Tax Lien

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- 1 -

McGREGOR W. SCOTT

United States Attorney

PAUL S. HAM

JUSTIN S. KIM

Trial Attorneys, Tax Division

United States Department of Justice

P.O. Box 683, Ben Franklin Station

Washington, DC 20044-0683

Telephone: (202) 307-6421

Telephone: (202) 307-0977

Facsimile: (202) 307-0054

E-mail: paul.s.ham@usdoj.gov

E-mail: justin.s.kim@usdoj.gov

Attorneys for the United States of America

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA,

 Plaintiff,

 v.

J. LEONARD PADILLA, et al.,

 Defendants.

Civil No. 2:01-cv-2301-DFL-GGH

UNITED STATES’ REQUEST FOR

LEAVE TO FILE ITS SECOND

AMENDED COMPLAINT, and

[Proposed] ORDER

The United States of America, through undersigned counsel, hereby requests the Court to

grant it leave to file its Second Amended Complaint (attached). In support thereof, the United

States states as follows:

1. On December 17, 2001, the United States filed this action seeking, inter-alia, to

reduce Rose Moreno-Padilla’s (“Moreno-Padilla”) tax liabilities to judgment and to foreclose its

tax liens securing J. Leonard Padilla’s (“Padilla”) and Moreno-Padilla’s tax liabilities against a

sixty-acre parcel of real property located in Natomas, California (“Natomas Property”). In a

separate but related action (United States v. J. Leonard Padilla, et al., No. Civ-S-01-2300-DFLGGH (E.D. Cal. filed on December 17, 2001)), the Court has already adjudged that Padilla is

indebted to the United States in the amount of $2,158,760.41 plus accrued interest and penalties

since February 29, 2004 for unpaid income taxes for the years 1986-1988 and 1992-1999. See

Case 2:01-cv-02301-JAM-GGH Document 159 Filed 01/31/06 Page 1 of 5
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US’ REQUEST - 2 -

Docket (United States v. J. Leonard Padilla, et al., No. Civ-S-01-2300-DFL-GGH), No. 73. The

Court, in this action (CIV-S-01-2301-FCD-JFM), has adjudged that Moreno-Padilla is indebted

to the United States in the amounts of $429,755.03 and $734.23 for the 1996 and 1997 tax years,

respectively, plus any accrued interest and penalties since August 16, 2001 for unpaid income

taxes. See Docket, No. 146. 

2. The United States, Padilla, Moreno-Padilla, and Julie Padilla are the only

remaining active parties in this action. The United States has entered into stipulations with

defendants Nelly Patino, State of California Franchise Tax Board, and Robert Wilkes, agreeing to

their relative lien priorities on the Natomas Property. See Docket, Nos. 120, 121, & 147. The

remaining defendants have been terminated from this action as follows: (1) Clifford W. Elridge

& Clifford J. Elridge - defaults entered on June 10, 2005 (see Docket, Nos. 149 & 150); (2)

Natomas Central Mutual Water Company - disclaimer of interest and dismissal entered on

October 17, 2003 (see Docket, No. 103); and (3) Carlos M. Alcala - dismissal entered on

November 18, 2004 (see Docket, No. 122). 

3. After the parties filed their Joint Status Report on September 23, 2005, the 

United States discovered another party, California Service Bureau of Marin County, Inc.

(“Service Bureau”), that may claim an interest in the Natomas Property from its analysis of a title

report generated on October 27, 2005 (“Title Report”). See Exhibit A (copy of Title Report, ¶ 11

of page 4), attached to the Declaration of Paul Ham (“Ham Decl.”); see also Exhibit B (copy of

judgment entered against Moreno-Padilla that forms the basis of Service Bureau’s claim),

attached to Ham Decl. On a previous title report relied upon by the United States, Service

Bureau did not appear as a potential claimant against the Natomas Property. See generally,

Exhibit C (copy of a title report relied upon by the United States previous to the generation of the

Title Report on October 27, 2005), attached to Ham Decl.

4. Pursuant to 26 U.S.C. § 7403, “[a]ll persons having liens upon or claiming

any interest in the property involved in such action shall be made parties thereto.” See 26 U.S.C.

§ 7403(b) (emphasis added). As described above, Service Bureau may claim an interest in the

Natomas Property and, thus, under Section 7403(b) must be made a party to this action. 

Case 2:01-cv-02301-JAM-GGH Document 159 Filed 01/31/06 Page 2 of 5
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US’ REQUEST - 3 -

Consequently, the only amendment the United States proposes in its Second Amended

Complaint is alleging that Service Bureau may be a claimant. See United States’ Second

Amended Complaint, ¶ 9(g). 

5. Morever, there is a presumption in favor of granting leave to amend

because such leave should be freely granted unless there is undue delay, bad faith or dilatory

motive on the part of the movant, undue prejudice to the opposing party, or the amendment

would be futile. See, e.g., Fed R. Civ. P. Rule 15; Foman v. Davis, 371 U.S. 178, 182 (1962);

Moore v. Kayport Package Express, Inc., 885 F.2d 531, 538 (9th Cir. 1989). In this case, the

United States did not act in bad faith, did not have a dilatory motive, nor was there undue delay

in not including Service Bureau as a named defendant. The United States only recently

discovered Service Bureau’s potential claim to the Natomas Property from its analysis of the

Title Report generated on October 27, 2005. A previous title report relied upon by the United

States did not reflect Service Bureau as being a potential claimant. See generally, Exhibit C

(copy of previous title report relied upon by the United States), attached to Ham Decl. The

United States further submits that the parties would not be unduly prejudiced because the

judgment is against Moreno-Padilla (entered by the Municipal Court of California, County of

Marin); consequently, the parties, including Moreno-Padilla, do not have a basis to contest this

judgment in this action. The United States does not contest the validity of the judgment and

anticipates filing a stipulation with Service Bureau regarding their relative priorities to their

claims against the Natomas Property. See Ham Decl., ¶ 8. 

6. The United States does not seek additional discovery nor does it seek a

continuance of the Final Pretrial Conference and Trial start dates, April 28, 2006 and June 19,

2006, respectively.

7. The United States has contacted Padilla, Padilla, Moreno-Padilla, Julie

Padilla, Nelly Patino, State of California Franchise Tax Board, and Robert Wilkes, either directly

or through represented counsel. See Ham Decl., ¶ 7. No defendant, except for Padilla, objects to

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 Peter Brixie, counsel for Julie Padilla, has not yet responded to the United States’ inquiry regarding Julie 1

Padilla’s acquiescence to this Request. See Ham Decl., ¶ 7.

US’ REQUEST - 4 -

this Request.1

8. Alternatively, in lieu of granting this Request, the United States 

respectfully requests a status conference for it to consider the various reasons for and against the

amended complaint and for guidance regarding Service Bureau’s claim against the subject

property within the context of this action.

9. A proposed Order is provided herewith.

WHEREFORE, the United States requests the Court to grant it leave to file its Second

Amended Complaint.

Dated this 12th day of January, 2006.

McGREGOR W. SCOTT

United States Attorney

 /s/ - Paul Ham 

PAUL S. HAM

Trial Attorney, Tax Division

U.S. Department of Justice

P.O. Box 683 

Ben Franklin Station

Washington, D.C. 20044-0683

Telephone: (202) 307-6421

Facsimile: (202) 307-0054

Attorneys for the United States

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US’ REQUEST - 5 -

[Proposed]

ORDER

Having considered the United States’ Request for Leave to File its Second Amended

Complaint, and good cause being shown, the Request is hereby GRANTED and the Court directs

the Clerk of Court to file the United States’ Second Amended Complaint.

IT IS SO ORDERED.

Dated: 1/31/2006 .

/s/ David F. Levi 

DAVID F. LEVI

CHIEF JUDGE

UNITED STATES DISTRICT COURT

Case 2:01-cv-02301-JAM-GGH Document 159 Filed 01/31/06 Page 5 of 5