Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_14-cv-00993/USCOURTS-caed-2_14-cv-00993-0/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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Stipulation to Priority 1 2:14-cv-993-JAM-KJN 

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KATHRYN KENEALLY 

Assistant Attorney General 

ADAM R. SMART 

Trial Attorney, Tax Division 

U.S. Department of Justice 

P.O. Box 683 

Washington, D.C. 20044 

202-307-6422 (v) 

202-307-0054 (f) 

Adam.R.Smart@tax.usdoj.gov 

Attorney for the United States of America 

BENJAMIN B. WAGNER 

United States Attorney 

Eastern District of California 

Of Counsel 

IN THE UNITED STATES DISTRICT COURT FOR THE 

EASTERN DISTRICT OF CALIFORNIA 

UNITED STATES OF AMERICA, 

 

 Plaintiff, 

 v. 

JAMES P. DEFAZIO, KATHLEEN J. 

ELLIS, CITIBANK, N.A., successor to 

CITIBANK FSB, BANK OF AMERICA, 

N.A., successor to SECURITY PACIFIC 

NATIONAL BANK, N.A., WILLIAM 

DEFAZIO INC. PROFIT SHARING PLAN 

AND MONEY PURCHASE PENSION 

PLAN DATED 9/14/1981, STATE OF 

CALIFORNIA FRANCHISE TAX BOARD, 

and COUNTY OF SACRAMENTO, 

 

 Defendants. 

_______________________________________ 

Case No. 2:14-cv-993-JAM-KJN 

STIPULATION AND ORDER 

REGARDING LIEN PRIORITY 

AMONG THE CALIFORNIA 

FRANCHISE TAX BOARD, COUNTY 

OF SACRAMENTO, AND THE 

UNITED STATES 

Case 2:14-cv-00993-JAM-KJN Document 10 Filed 06/05/14 Page 1 of 7
Stipulation to Priority 2 2:14-cv-993-JAM-KJN 

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The United States of America (“United States”), California Franchise Tax Board, the 

County of Sacramento, through undersigned counsel, stipulate and agree as follows: 

 1. On April 22, 2014, the United States filed its Complaint in this matter seeking to 

reduce to judgment federal tax assessments against Defendant James P. DeFazio and to foreclose 

its federal tax liens against real property located at located at 349 Wyndgate Road, Sacramento, 

California, 95864 (the “Subject Property”), which is situated in the County of Sacramento, State 

of California, the legal description of which is attached to the Complaint in this matter. 

2. The United States named the California Franchise Tax Board and the County of 

Sacramento as defendants in this action in order to fulfill the requirements of 26 U.S.C. § 

7403(b) that “[a]ll persons having liens upon or claiming any interest in the property involved in 

such action [to enforce a tax lien] shall be made parties thereto.” 

3. It is agreed that the United States is the holder of federal tax liens, which are 

referenced in paragraphs 16 through 19 of the Complaint in the above-captioned matter, which 

arose on the corresponding dates set forth in paragraph 6 below, encumber the Subject Property. 

Notices of Federal Tax Lien were filed with the Sacramento County Recorder on the dates set 

forth in paragraphs 25 through 29 of the Complaint. Copies of these notices are attached as 

Exhibit A hereto. 

4. It is agreed that the Franchise Tax Board is the holder of state tax liens against 

James P. DeFazio that arose on the corresponding dates identified in paragraph 6 below, which 

encumber the Subject Property. Notices of State Tax Lien were recorded with the Sacramento 

County Recorder on October 20, 2006, January 16, 2008, and August 4, 2011. Copies of these 

notices are attached hereto as Exhibit B. 

Case 2:14-cv-00993-JAM-KJN Document 10 Filed 06/05/14 Page 2 of 7
Stipulation to Priority 3 2:14-cv-993-JAM-KJN 

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5. It is agreed that Sacramento County is the holder of a lien against the Subject 

Property as the result of delinquent utility charges, in the amount of $948.94 as of May 7, 2014. 

It is agreed that the County of Sacramento’s liens for delinquent utility payments arose on July 

14, 2008 and July 18, 2011. Copies of the recorded Statements of Delinquent Utility Charges are 

attached hereto as Exhibit C. 

6. It is agreed that, for the purposes of the above captioned action only, the lien 

priorities among the United States, the California Franchise Tax Board, and the County of 

Sacramento are as follows: 

Priority Lien Holder Tax Period Assessment Date 

Recording Date 

Balances Due1

1 FTB 540 (TY 1990) 8/26/2003 

10/20/2006 

$9,096.24

2 FTB 540 (TY 1991) 8/26/2003 

10/20/2006 

$17,864.23

3 FTB 540 (TY 1992) 8/26/2003 

10/20/2006 

$9,351.26

4 FTB 540 (TY 1994) 8/26/2003 

10/20/2006 

$11,176.41

5 IRS 1040 (TY2003) 6/14/2004 

11/4/2004 

$47,455.24

6 Sacramento 

County 

Delinquent 

Utility Charges 7/5/2008 / 8/2/2011

$948.94

 

1 IRS values are as of May 1, 2014. Franchise Tax Board values are as of February 10, 2014. 

County of Sacramento values are as of May 7, 2014.

Case 2:14-cv-00993-JAM-KJN Document 10 Filed 06/05/14 Page 3 of 7
Stipulation to Priority 4 2:14-cv-993-JAM-KJN 

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Priority Lien Holder Tax Period Assessment Date 

Recording Date 

Balances Due1

7 IRS 1040 (TY2000) 10/13/2003 

3/04/2014 

$41,178.20

8 IRS 1040 (TY2001) 10/13/2003 

3/04/2014 

$7,151.47

9 IRS 1040 (TY2002) 10/20/2003 

3/04/2014 

$25,886.48

10 IRS 1040 (TY1999) 10/27/2003 

3/04/2014 

$59,291.18

11 IRS 1040 (TY2004) 11/21/2005 

7/5/2013 

$4,993.62

12 IRS 1040 (TY2005) 11/27/2006 

7/5/2013 

$14,264.00

13 FTB 540 (TY2002) 10/30/2007 

1/16/2008 

$888.45

14 IRS 1040 (TY2006) 11/12/2007 

7/5/2013 

$2,529.29

15 IRS 1040 (TY2007) 11/24/2008 

7/5/2013 

$7,851.50

14 FTB 540 (TY2008) 11/5/2009 

8/4/2011 

$696.24

15 IRS 1040 (TY2008) 11/16/2009 

7/5/2013 

$9,060.47

15 FTB 540 (TY2009) 10/20/2010 

8/4/2011 

$794.22

16 IRS 1040 (TY2009) 11/15/2010 

7/5/2013 

$8,367.53

17 IRS 1040 (TY2010) 11/14/2011 

7/5/2013 

$1,839.39

Case 2:14-cv-00993-JAM-KJN Document 10 Filed 06/05/14 Page 4 of 7
Stipulation to Priority 5 2:14-cv-993-JAM-KJN 

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Priority Lien Holder Tax Period Assessment Date 

Recording Date 

Balances Due1

18 IRS 1040 (TY2011) 11/19/2012 

7/5/2013 

$4,218.83

19 IRS 1040 (TY2012) 9/9/2013 

11/5/2013 

$2,321.20

 7. Should the real property described in paragraph 1 above be sold pursuant to an 

order of the Court, the United States will ensure that any proposed order of sale provides for the 

relative priority of the liens as set forth in this stipulation, and that the proceeds of the sale, if any 

remain, be applied in accordance with the aforementioned priority (at least as between these 

three parties) to the extent these liabilities still exist at that time. 

 8. Sacramento County and the California Franchise Tax Board will cooperate with 

counsel for the United States and timely respond to reasonable requests for information 

regarding the status of their outstanding liens so that the United States can properly account for 

all distribution of sale proceeds. In addition, Sacramento County and the California Franchise 

Tax Board agree to cooperate with respect to any further stipulations as to priority of the liens 

held by Citibank and Bank of America once they appear in this action. 

 9. In consideration of the foregoing, the interests of the County of Sacramento and 

the Franchise Tax Board in the outcome of this litigation are protected and their continued 

participation in this action, except as specified herein, is not needed for a complete adjudication 

of the relief sought by the United States. 

 10. Accordingly, the County of Sacramento and the California Franchise Tax Board 

request an order that they need not further participate in the litigation, unless ordered by the 

Case 2:14-cv-00993-JAM-KJN Document 10 Filed 06/05/14 Page 5 of 7
Stipulation to Priority 6 2:14-cv-993-JAM-KJN 

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Court to do so, and that each party to this stipulation bear its costs, including any possible 

attorney’s fees or other expenses of litigation, excepting the costs incurred in selling the 

Property, which are to be reimbursed from the proceeds of the sale of the Property prior to 

satisfying the outstanding liens on the Property. 

IT IS SO STIPULATED. 

Dated: June 4, 2014 KATHRYN KENEALLY 

 Assistant Attorney General 

 

 By:_/s/ Adam R. Smart________________ 

 ADAM R. SMART 

 Trial Attorney, Tax Division 

 U.S. Department of Justice 

 P.O. Box 683, Ben Franklin Station 

 Washington, D.C. 20044 

 Telephone: (202) 307-6422 

 Attorney for the United States of America 

 BENJAMIN B. WAGNER 

United States Attorney 

Eastern District of California 

Of Counsel 

Dated: June 4, 2014 JOHN F. WHISENHUNT, County Counsel 

 SACRAMENTO, CALIFORNIA 

 By: _/s/ Diane E. McElhern__________ 

 Diane E. McElhern, Deputy 

 Attorneys for Defendant 

 COUNTY OF SACRAMENTO 

// 

Case 2:14-cv-00993-JAM-KJN Document 10 Filed 06/05/14 Page 6 of 7
Stipulation to Priority 7 2:14-cv-993-JAM-KJN 

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Dated: May 29, 2014 CALIFORNIA FRANCHISE TAX 

 BOARD 

 

 By: _/s/ Todd M. Bailey_______________ 

 TODD M.BAILEY 

 Franchise Tax Board 

 Legal Department, MS: A-260 

 P.O. Box 1720 

 Rancho Cordova, CA 95741-1720 

 Telephone: (916) 845-6340 

 Facsimile: (916) 845-3648 

IT IS SO ORDERED

Dated: June 4, 2014 /s/ John A. Mendez_____________ 

 John A. Mendez 

 United States District Court Judge

Case 2:14-cv-00993-JAM-KJN Document 10 Filed 06/05/14 Page 7 of 7