Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_04-cv-02174/USCOURTS-caed-2_04-cv-02174-1/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1444 Petition for Removal- Foreclosure

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* This matter was determined to be suitable for decision

without oral argument. L.R. 78-230(h).

1 Defendant James C. Brown, Trustee of the Mammoth

Preservation Trust (the assigned beneficiary under the Second

(continued...)

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

FIDELITY NATIONAL FORECLOSURE )

SOLUTIONS, ) 2:04-cv-2174-GEB-JFM

)

Plaintiff, )

) ORDER*

v. )

) 

ALL CLAIMANTS TO SURPLUS )

PROCEEDS AFTER TRUSTEE’S SALE )

OF REAL PROPERTY LOCATED AT )

216 CONVICT DRIVE, MAMMOTH, )

CA 93546, )

)

Defendants. )

)

Defendant United States of America moves for summary

judgment in this interpleader action regarding surplus proceeds

resulting from the foreclosure of real property located at 216 Convict

Drive, Mammoth, California 93546 (“Property”). The United States

contends the proceeds should be applied to its federal tax liens

against Defendant Carstens, the former owner of the Property.1 The

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1(...continued)

Deed of Trust), joins in the United States’s motion for summary

judgment. (Brown Notice of Joinder at 2:3-6.)

1 “The standards applicable to motions for summary

judgment are well known, see, e.g., Rodgers v. County of Yolo,

889 F. Supp. 1284 (E.D. Cal. 1995), and need not be repeated

here.” Reitter v. City of Sacramento, 87 F. Supp. 2d 1040, 1042

(E.D. Cal. 2000).

2

United States asserts that “as of July 31, 2005 there remains due and

owing from Defendant Carstens the sum of $205,659.90 for [federal tax]

assessments,” for which “on January 2, 2001, a Notice[s] of Federal

Tax lien was recorded with the County Recorder.” (Statement of

Undisputed Facts (“SUF”) ¶¶ 7, 10(I).) Further, the United States and

James C. Brown stipulated to payment of $25,000 in full satisfaction

of the Trust’s claims for attorney’s fees and costs incurred in

defending the priority of the Second Deed of Trust. (July 8, 2005,

Stipulation ¶ 4.) 

Defendant Carstens opposes the motion for summary judgment,

arguing: (1) an alleged $75,000 offset was not properly applied to his

tax obligation; (2) the stipulated attorney’s fees are unreasonable

and he is entitled to a homestead exemption as to the $25,000 for

attorney’s fees; and (3) this action should be stayed pending the

outcome of his motion in the bankruptcy court for a rescission of the

trustee’s sale.

DISCUSSION1

It is undisputed that under the federal tax lien “filed

against the subject property with the County Recorder” (Ham Decl.,

exh. F), “as of July 31, 2005, there remains due and owing from 

Mr. Carstens the sum of $201,659.89, inclusive of accrued interest and

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2 Defendant Carstens’s opposition failed to comply with

Local Rule 56-260(b). Although Defendant Carstens is litigating

in propria persona, “any individual representing himself . . .

without an attorney is bound by the Federal Rules of Civil . . .

Procedure and by [the] Local Rules.” L.R. 83-183. 

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penalties.”2 (SUF ¶¶ 6-7.) 

I. $75,000 offset

Defendant Carstens’s opposition states that he “believe[s]

there was an offset of $75,000 on [his] tax obligation in 1993 or 1994

following a tax audit by the IRS,” and he does “not know if this was

applied as an offset at a later period.” (Carstens Decl. ¶ 2.) He

further claims that his “tax obligation would be greatly reduced if

the offset was not applied.” (Id.) The United States counters since

it has introduced Certificates of Assessments and Payments for the tax

periods at issue, Defendant Carstens’s conclusory allegations “cannot

create any genuine issue to preclude summary judgment.” (Reply at

4:9-10.)

Defendant Carstens has the burden of establishing, by a

preponderance of the evidence, that the IRS’s determinations and

assessments of his tax liabilities are somehow incorrect. Palmer v.

Internal Revenue Serv., 116 F.3d 1309, 1312 (9th Cir. 1997). He must

present evidence beyond mere allegation or denial, setting forth

specific facts showing that there is a genuine issue for trial. Fed.

R. Civ. Proc. 56(e). Defendant Carstens’s mere “belief” that an

offset may not have been applied against his tax liability fails to

create any genuine issue of fact regarding the amount owed under the

federal tax lien. (Carstens Decl. ¶ 2.) 

II. Attorney’s fees

Defendant Carstens argues that the stipulated attorney’s

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3 While Defendant Carstens opposed the original amount of

attorney’s fees in the amount of $65,240, that objection is not

responsive to the reduced amount reflected in the stipulation.

(July 8, 2005, Stipulation ¶ 5.)

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fees are unreasonable and that his homestead exemption entitles him to

an offset of the portion of the surplus proceeds stipulated as

attorney’s fees. (Id. ¶ 3.) Although Defendant Carstens argues that

“$25,000 is [far] in excess of any amount obligated by law and

Attorney work due under law” for the “Attorney fees and costs claimed

in defending the Second Deed of Trust” (id.), he provides no evidence

to support his contention that the stipulated amount is unreasonable.3

Further, the homestead exemption applies only where there is

a sale of property in satisfaction of a money judgment. See Cal. Civ.

Proc. Code §§ 704.710-704.995. On a foreclosure sale under a deed of

trust, the junior judgment creditor, not the homeowner, is entitled to

the surplus sales proceeds, because voluntarily assumed liens, such as

deeds of trust, fall outside the homestead exemption. Spencer v.

Lowery, 235 Cal. App. 3d 1636, 1638 (1991). The priority of a federal

tax lien security interest extends to “reasonable expenses, including

reasonable compensation for attorneys, actually incurred in collecting

or enforcing the obligation secured.” I.R.C. § 6323(e). The

homestead exemption does not apply to the attorney’s fees incurred

defending the Second Deed of Trust because this Deed’s priority

extends to those fees. Id.

III. Request for Stay

Defendant Carstens also requests “the present action be

Stayed” pending his “Motion to request trustee to abandon property

with the United States bankruptcy court” because “the funds deposited

with the Court could be due to be reimbursed to the purchaser at the

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foreclosure sale.” (Carstens Decl. ¶ 4.) The United States rejoins

since the bankruptcy court “lifted the automatic stay to allow the

foreclosure of the [Property,] . . . Mr. Carsten[s’s] request to stay

the current proceedings with this Court while his ‘Quiet Title and

Rescission of the Sale’ motion is heard before the bankruptcy court

should be summarily denied.” (Reply at 5.) The United States also

contends that “[t]o the extent that Mr. Carstens’[s] present motion

before the bankruptcy court can be construed as an appeal, 

Mr. Carstens has not requested a stay pending appeal as required by

Rule 8005 of the Federal Rules of Bankruptcy Procedure.” (Id.) 

Since Defendant Carstens has not shown that a stay is

warranted, the request for a stay is denied.

CONCLUSION

For the above stated reasons, the United States’s motion for

summary judgment is granted. 

IT IS SO ORDERED.

Dated: August 25, 2005

/s/ Garland E. Burrell, Jr.

GARLAND E. BURRELL, JR.

United States District Judge

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