Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_05-cv-01303/USCOURTS-caed-1_05-cv-01303-4/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 28:1335 Interpleader Action

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

DONALD G. ALUISI and DONALD

ALUISI, )

)

Plaintiffs, )

)

v. )

)

RONALD KOLKKA, FRAN KOLKKA, )

RICHARD A. BELARDINELLI, )

C. RUSSELL GEORGESON, )

GEORGESON AND BELLARDINELLI, )

INTERNAL REVENUE SERVICE, and )

DOES 1 through 50, )

)

Defendants )

____________________________________)

CV F 05-1303 AWI SMS

MEMORANDUM OPINION

AND ORDER DENYING

WITHOUT PREJUDICE

PLAINTIFFS’ MOTION TO BE

DISMISSED FROM THE

INTERPLEADER ACTION

AND FOR ATTORNEY FEES

AND COSTS

[Document # 25]

In this action in interpleader, plaintiffs Donald G. Aluisi and Donald Aluisi

(“Plaintiffs”) deposited a sum of money with the court to satisfy a judgment against them by

defendants Ronald and Fran Kolkka (collectively “Kolkka”) and interpled other claimants to

that money. Plaintiffs now move for discharge from the interpleader action and for award of

attorney fees and costs. The funds deposited by Plaintiffs represent the major cash asset of

the bankruptcy estate of Kolkka. Defendants United States and the law firm of Georgeson

and Bellardinelli (“GB”) assert priority and super-priority claims, respectively, over the

interpleader funds. None of the co-defendants have objected to Plaintiffs’ dismissal from this

interpleader action. All named defendants have objected to the award of attorney fees to

Plaintiffs. For the reasons that follow, the court will deny both Plaintiffs’ motion to dismiss

Case 1:05-cv-01303-AWI -SMS Document 47 Filed 09/29/06 Page 1 of 6
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Plaintiffs allege the tax lien now stands at approximately $993,089.80, counting 1

accumulated interest and penalties.

2

them and the requested award of attorney fees and costs without prejudice. 

FACTUAL SUMMARY AND PROCEDURAL HISTORY

Plaintiffs are judgment debtors to Kolkka from an earlier state court action. In that

action, a defense verdict resulted in an award of attorney fees and costs to Kolkka in the sum

of $515,267.22. This sum of money (the “interpleader fund”) was deposited with the Fresno

County Superior Court, and was the subject of the interpleader action that was removed to

this court. Claims totaling more than $1.5 million have been asserted against the interpleader

fund. Among the claims asserted, United States has served a notice of levy against the

judgment funds to satisfy a tax lien against Kolkka in the amount of $855, 057.02. Kolkka’s 1

attorneys, Defendant Georgeson & Belardinelli (“GB”) asserted claims on the judgment

funds pursuant to 26 U.S.C., § 6323(b)(8), which provides for super-priority of claims against

funds subject to tax liens where a party has been able to bring increased funds to the pool of

money that is subject to the tax lien. Defendant United States alleges that GB and United

States have entered into an agreement whereby GB is to receive the amount of $424,328.72

out of the interpleader fund. Pursuant to this agreement, United States will levy on the

remaining $90,938.50 to partially satisfy the tax lien on Kolkka’s property.

In this motion, Plaintiff asserts entitlement to attorney fees and costs pursuant to

California Code of Civil Procedure, section 386.6 in the sum of $1,193.77 for costs, and

$15,414.75 for attorney fees. Plaintiff alleges the attorney fees requested represents fees for

both the instant interpleader action and fees incurred in the bankruptcy case where

considerable effort went to lifting the automatic stay so that the interpleader case could

proceed.

This interpleader action was filed in Fresno County Superior Court on October 13,

2004, and was removed to this court by defendant United States on the same day. Defendant

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Kolkka filed a voluntary Chapter 7 bankruptcy petition the following day, on October 14,

2004. The instant motion to dismiss Plaintiff from the interpleader action and to award

attorney fees and costs was filed on July 21, 2006. Robert Hawkins, Chapter 7 Trustee of the

Kolkka bankruptcy estate, filed opposition to Plaintiffs’ motion on August 3, 2006. 

Defendant GB, as well as individually named defendants Richard A. Belardinelli and C.

Russell Georgeson, filed their opposition on August 30, 2006. Defendant United States filed

its opposition on September 7, 2006. Plaintiff’s reply was filed September 11, 2006.

LEGAL STANDARD

The parties to this action do not dispute that the interpleader action is appropriate or

that Plaintiff is entitled to be dismissed from the action. The only issue in dispute is whether

Plaintiff is entitled to an award of costs and attorney fees. Subdivision 386.6(a) of the

California Code of Civil Procedure provides as follows:

A party to an action who follows the procedure set forth in Section 386

[interpleader] or 386.5 [dismissal of stakeholder] may insert in his motion,

petition, complaint, or cross complaint a request for allowance of his costs and

reasonable attorney fees incurred in such action. In ordering the discharge of

such party, the court may, in its discretion, award such party his costs and

reasonable attorney fees from the amount in dispute which has been deposited

with the court. At the time of final judgment in the action the court may make

such further provision for assumption of such costs and attorney fees by one or

more of the adverse claimants as may appear proper.

DISCUSSION

While courts have discretion to award attorney fees to a disinterested stakeholder in

an interpleader action, the “existence of prior federal tax liens gives the government a

statutory priority over the interpleader plaintiff’s ability to diminish the fund by an award of

fees. [Citation.]” Abex Corp. v. Ski’s Enterprises, Inc., 487 F.2d 513, 516 (9th Cir. 1984). 

When an individual fails to pay taxes owed to the federal government, the

United States obtains a lien in the amount of the liability on “all property and

rights to property, whether real or personal, belonging to such person.” 26

U.S.C. § 6322. The lien takes priority of all subsequently perfected liens,

unless one of a number of exceptions enumerated in 26 U.S.C. § 6323(b)

applies.

Blimpie Int’l, Inc. v. Peacox Ventures, LLC, 2001 WL 1155076 (N.D. Cal.) at *2.

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In the present case the exception set forth in 26 U.S.C. § 6323(b)(8) applies to the

claim of GB to the interpleader fund. This section provides that the government’s lien under

section 6321 shall not be valid:

With respect to a judgment or other amount in settlement of a claim or

of a cause of action, as against an attorney who, under local law, holds a lien

upon or a contract enforceable against such judgment of amount, to the extent

of his reasonable compensation for obtaining such judgment or procuring such

settlement . . . .

The exception set forth in 26 U.S.C. § 6323(b)(8) serves to maintain the incentive for

claimant parties to bring actions to realize assets that can at least partially satisfy priority

governmental tax liens where there would be no asset, or insufficient assets, but for the

efforts of the claimant party. See Blimpie, 2001 WL 1155076 at *3 (“Without the interpled

fund, the government would have no asset against which to attach its lien”). 

“A federal tax lien is effective upon assessment against all persons, even in the

absence of recordation of the lien.” Noriega & Alexander v. United States, 859 F.Supp. 406,

410 (E.D. Cal. 1994). A federal tax lien takes priority over competing liens unless the

competing lien was fully established prior to the attachment of the federal lien. Id. The taxes

assessed against Kolkkas, which were later filed as a lien against Kolkka’s bankruptcy estate,

were assessed from December 31, 1994 through May 31, 2004. The earliest date the court

could consider Plaintiffs’ lien against the interpleader fund fully established is July 21, 2006.

Consequently, United States claim against the interpleader fund, being first in time, takes

priority over Plaintiffs’ claim. 

There is no dispute in this case that the judgment fund that Plaintiffs interpled became

available as a result of GB’s activities as defense counsel for Kolkka. United States, GB, and

the trustee of Kolkka’s bankruptcy estate have agreed as to the amount GB reasonably

incurred in obtaining the judgment fund. Consequently, there is no dispute that GB’s lien on

the judgment fund have super-priority status pursuant to 26 U.S.C. § 6323(b)(8). 

The crux of Plaintiffs’ argument with respect to United States’ opposition to an award

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of attorney fees is that since United States is willing to settle for considerably less than the

full amount of their lien, the court would be within its discretion to award Plaintiffs’ attorney

the modist sum that would otherwise be appropriate pursuant to Subdivision 386.6(a) of the

California Code of Civil Procedure. 

Plaintiff offers no authority for the proposition that the court has discretion to wander

outside statutory provisions that limit access to funds to which the United States has a

priority claim. Here, access to the entirety of the interpleader fund is strictly limited by

statute. The first priority goes to GB, who has super-priority status pursuant to 26 U.S.C. §

6323(b)(8). Pursuant to 26 U.S.C. § 6322, United States has priority to all remaining funds

up to the extent of its tax lien. Since the tax lien at issue here far exceeds the amount

remaining in the interpleader fund, the court is without discretion to diminish that fund in any

amount for the benefit of Plaintiffs’ attorney or any other non-priority claimant.

It is not clear whether Plaintiff seeks dismissal from the case in the absence of an

award for attorney fees. It is also not clear whether there is to be further adjudication of

United States’ claims or whether there could be additional assets that could become available

in the future that would satisfy United States’ claim while leaving some funds available for

other non-priority claimants. Plaintiffs’ motion for dismissal and for attorney fees will

therefore be denied without prejudice.

Because an award of attorney fees and costs to Plaintiff is prohibited by statute where

United States has a priority claim to those funds, the court need not decide the validity of the

non-federal Defendant parties objections to Plaintiffs’ motion.

THEREFORE, in consideration of the foregoing discussion it is hereby ordered that

Plaintiffs’ motion for dismissal from the interpleader action and for award of attorney fees

and costs is DENIED without prejudice.

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IT IS SO ORDERED.

Dated: September 27, 2006 /s/ Anthony W. Ishii 

0m8i78 UNITED STATES DISTRICT JUDGE

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