Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_11-cv-00250/USCOURTS-azd-4_11-cv-00250-0/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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UNITED STATES DISTRICT COURT 

DISTRICT OF ARIZONA 

United States of America, 

 Plaintiff, 

vs. 

Hilda A. Hernandez & Elvia Callahan, 

 Defendants. 

CV 11-0250-TUC-DCB (JR) 

REPORT AND 

RECOMMENDATION 

 

 In this action, the United States seeks to recover unpaid employment taxes 

and requests judgment against Defendants Hilda Hernandez and Elvia Callahan for 

value received by them as a result of the fraudulent transfer of property to them from 

the tax debtor, Alfonso’s Carnitas, Inc. The United States has filed a Motion for 

Summary Judgment (Doc. 28). In response, Defendants Hernandez and Callahan 

filed a Motion to Dismiss the Motion for Summary Judgment (Doc. 29) and a Motion 

Opposing I.R.S. Motion for Summary Judgment (Doc. 41), which the Court 

collectively construes as the Defendants’ opposition to the United States’ Motion for 

Case 4:11-cv-00250-DCB Document 45 Filed 01/17/13 Page 1 of 17
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Summary Judgment. On December 6, 2012, the Court heard oral argument on the 

motion and now issues its recommendation that the United States’ Motion for 

Summary Judgment be granted in part and denied in part. 

I. Summary judgment standard 

 A motion for summary judgment should be granted if “there is no genuine 

dispute as to any material fact and the movant is entitled to a judgment as a matter of 

law.” Fed.R.Civ.P. 56(a); Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 

2000). The moving party bears the initial burden of informing the court of the basis 

for the motion and identifying the portions of the pleadings, depositions, answers to 

interrogatories, admissions, or affidavits that demonstrate the absence of a triable 

issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 

(1986). If the moving party meets this initial burden, the burden then shifts to the 

non-moving party to go beyond the pleadings and designate “specific facts showing 

that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324. 

The court must regard as true the opposing party's evidence, if supported by 

affidavits or other evidentiary material. Celotex, 477 U.S. at 324. However, the 

assertion that facts are in controversy, as well as conclusory or speculative testimony 

in affidavits and moving papers, is not sufficient to defeat summary judgment. See 

Thornhill Publ'g Co. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). Instead, the 

non-moving party must come forward with admissible evidence to satisfy the burden. 

Fed.R.Civ.P. 56(c); see also Hal Roach Studios, Inc. v. Feiner & Co., Inc., 896 F.2d 

1542, 1550 (9th Cir. 1990). 

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 A genuine issue for trial exists if the non-moving party presents evidence from 

which a reasonable jury, viewing the evidence in the light most favorable to that 

party, could resolve the material issue in his or her favor. Anderson v. Liberty Lobby, 

Inc., 477 U.S. 242, 248–49, 106 S.Ct. 2505 (1986); Barlow v. Ground, 943 F.2d 

1132, 1134–36 (9th Cir. 1991). Conversely, summary judgment must be granted 

where a party “fails to make a showing sufficient to establish the existence of an 

element essential to that party's case, on which that party will bear the burden of 

proof at trial.” Celotex, 477 U.S. at 322. 

 In the context of a motion for summary judgment where a litigant is 

proceeding pro se, the court has an obligation to construe pro se documents liberally 

and to afford the pro se litigant the benefit of any doubt. Erickson v. Pardus, 551 

U.S. 89, 94 (2007) (per curiam); Baker v. McNeil Island Corrections Ctr., 859 F.2d 

124, 127 (9th Cir. 1988). 

II. Facts

 The unpaid employment taxes that are at the heart of this case were incurred 

by Alfonso’s Carnitas, Inc. (“Alfonso’s Inc.”) from 2003 through 2007 and, with 

interest and penalties, now total approximately $47,059.00. Plaintiff’s Separate 

Statement of Facts (“PSOF”), ¶¶ 10 & 13. Defendant Hernandez attempts to create 

some confusion by questioning whether these taxes are properly attributed to 

Alfonso’s, Inc. However, her attempt is a red herring requiring some explanation. 

The taxes in question are owed by an entity registered with the IRS as “Alfonsa’s 

Carnitas, Inc.” (with an “a” instead of an “o”), with an assigned Employment 

Case 4:11-cv-00250-DCB Document 45 Filed 01/17/13 Page 3 of 17
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Identification Number of xx-xxx-8725. Although there is also another Employment 

Identification Number (xx-xxx-9128) assigned to the accurately spelled Alfonso’s 

Carnitas, Inc., Alfonso’s, Inc. never used that EIN to file tax returns. The debt in 

question is due under the 8725 EIN which was the EIN used by Alfonso’s, Inc. even 

though it was assigned to the incorrectly spelled “Alfonsa’s.” PSOF, ¶¶ 1-4. 

Additionally, Alfonso’s Inc., through its president, Rogelio Hernandez, was fully 

aware of that the company was behind in its payment of employment taxes to the IRS 

and was aware of Federal Tax Liens filed against the corporation for unpaid 

employment taxes. PSOF, ¶¶ 11-12. 

 The restaurant Alfonso’s Carnitas, located at 2801 S. 6th Avenue (the 

“Alfonso’s Property”), was founded by Alfonso Perez. In 2003, one of Alfonso’s 

Carnitas’ cooks, Rogelio Hernandez, created the Alfonso’s Inc. corporation with the 

intention of buying the restaurant from Perez. The officers of Alfonso’s Inc. 

included Rogelio Hernandez, who was president, along with his brother, Michael 

Hernandez, who was treasurer (but was imprisoned during the relevant time period), 

and their mother, Defendant Hilda Hernandez, who was the corporation’s secretary. 

PSOF, ¶¶ 5-6. In 2004, Alfonso’s Inc. entered into a lease/purchase agreement for 

the Alfonso’s Property and paid Perez approximately $4,000.00 per month. PSOF, ¶ 

6. 

 In 2006, Perez filed bankruptcy. On March 21, 2007, the bankruptcy court 

approved the sale of the Alfonso’s Property to Alfonso’s Inc. and, as part of sale, 

required that Hilda Hernandez personally guarantee the payment on the loan. PSOF

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¶¶ 15-16. In a somewhat discombobulated order, the following events then 

transpired in relation to the transfer of Alfonso’s Property: 

On April 30, 2007, a Warranty Deed was executed whereby Perez 

conveyed the Alfonso’s Property to Alfonso’s Inc. 

On May 1, 2007, a resolution was prepared for Alfonso’s Inc. 

indicating that the Alfonso’s Property would be purchased for 

$400,000.00 from the bankruptcy estate and title held by Hilda 

Hernandez and Elvia Callahan as Joint Tenants. The purchase was to 

be funded with a loan from Applewood Funding in the amount of 

$325,000.00, and by a seller carryback by Perez in the amount of 

$150,675.001

On May 1, 2007, a Joint Tenancy Deed was executed conveying the 

Alfonso’s Property from Alfonso’s Inc. to Hilda Hernandez and Elvia 

Callahan. The transfer was exempt from completion of an Affidavit of 

Property Value because it was listed as “[a] transfer between husband 

and wife, or parent and child with only nominal actual consideration for 

the transfer.” 

On May 9, 2007, an Affidavit of Property Value was recorded 

reflecting the sale of the Alfonso’s Property for $400,000.00. The 

seller is again identified as Perez and buyer is identified as Alfonso’s 

Inc. 

On October 15, 2007, Hernandez sent a letter to The Salvation Army, 

which owned property adjacent to the Alfonso’s Property, offering to 

sell the Alfonso’s Property for the amount reflected on an enclosed 

appraisal, $560,000.00. 

On November 13, 2007, Hernandez and Callahan executed a Warranty 

Deed conveying the Alfonso’s Property to The Salvation Army. 

On November 28, 2007, an Estimated Settlement Statement reflected a 

sales price of $560,000.00. Deducted from the proceeds were the 

 

1

 The total of the two loan amounts is $475,675.00. However, at settlement, 

Alfonso’s Inc. paid a total of $533,005.75, which included various loan and closing 

fees, insurance and taxes. HUD Settlement Statement. 

 

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balance due on the Applewood Funding2

 note and a payment to the IRS 

of approximately $26,000.00. The payment to the IRS was for taxes 

due on a tax identification number assigned to Hilda Hernandez and not 

for the employment taxes owed by Alfonso’s Inc. The net proceeds, in 

excess of $175,000.00, were paid to Hernandez and Callahan. 

On December 7, 2007, an Affidavit of Property Value was recorded 

reflecting the November sale of the Alfonso’s Property from Hilda 

Hernandez and Elvia Callahan to The Salvation Army for $560,000.00 

in cash. 

 

PSOF, ¶¶ 18-26. 

 After the sale to The Salvation Army, Rogelio did not know where the net 

proceeds went. Deposition of Rogelio Hernandez, 79:1-24. However, he was aware 

of the employment taxes due and surely told his mother about them. His testimony 

indicates that he believed Alfonso’s Inc. would benefit from the sale to The Salvation 

Army. Deposition of Rogelio Hernandez, 33:6-7. Rogelio did not recall how title 

was to be held after the purchase from Perez, but at the time of the sale to The 

Salvation Army, his belief was that: 

the whole thing was to sell that whole thing, and pay off whatever taxes 

were owed, whoever was owed. That also should have been in the 

HUD. Everything should have been squared away, and it would have 

been a book closed. That’s where my mind was at with this. 

Id. at 39:11-16. 

 

2

 The Estimated Settlement Statement appears to identify the Applewood Funding 

note by the names of the individual lenders, Forrest Purdy and Janice Purdy. See 

Estimated Settlement Statement dated November 28, 2007. 

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 Testimony from Hilda Hernandez and Elvia Callahan, along with a review of 

the Estimated Settlement Statement associated with the sale of the Alfonso’s 

Property to The Salvation Army, clears the air somewhat as to where the proceeds of 

the sale went. Of the approximately $200,000.00 in net proceeds from the sale, 

approximately $25,583.72 was paid out of escrow directly to the IRS for personal 

taxes owed by Defendant Hernandez. See Accrual Computation for Tax 

Identification Number xxx-xx-1238, dated November 27, 2007; Estimated Settlement 

Statement, dated November 28, 2007. From the remaining proceeds of 

approximately $175,846.40, Callahan received between $40,000.00 and $50,000.00 

to repay what she had paid on behalf of Alfonso’s Inc. She testified that the amount 

she was paid was to reimburse her for the monthly payments she made on the 

Applewood Funding note in an amount of approximately $3,792.00.3

 Although not 

all of the bank records are available, those that are indicate that Callahan did make 

the payments from the time of the purchase of the Alfonso’s property from Perez in 

May 2007 through the time of the sale of the Alfonso’s Property to The Salvation 

Army in November or December 2007. Deposition of Elvia Callahan, 25:2-27:8. 

After the payments were made to the IRS and Defendant Callahan, Defendant 

Hernandez remained in control of the remaining $135,000.00 to $145,000.00 that 

was paid at closing. 

 

3

 Although Elvia Callahan testified that she made the payments on the Applewood 

loan, Rogelio testified that he and Callahan were making the payments. Deposition 

of Rogelio Hernandez, 53:6-10. 

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DISCUSSION

 The United States contends that Defendants Hernandez and Callahan owe the 

IRS $47,059.00 for employment taxes that were not paid by Alfonso’s Inc. from 

2003 through 2007. The government’s theory is that the transfer of the Alfonso’s 

Property from Alfonso’s Inc. to Hernandez and Callahan amounted to actual or 

constructive fraud under Arizona law and deprived the IRS of the taxes due. 

 The standards for evaluating the government’s claim are found in the Arizona 

Fraudulent Transfer Act (“AFTA”), A.R.S. §§ 44-1001-1010. A successful claimant 

under AFTA must establish its (1) creditor status, (2) a property transfer, and (3) 

actual or constructive fraud on the part of the transferor. 

1. Actual Fraud 

 a. Creditor Status

 The United States becomes a creditor for tax liabilities as of the close of the 

respective tax years at issue. Edelson v. Comm’r of the I.R.S., 829 F.2d 828, 833-34 

(9th Cir. 1987). It is undisputed here that at least Rogelio Hernandez was aware of 

the employment tax liabilities owed by Alfonso’s Inc. even though they were 

assessed against an entity identified as Alfonsa’s. Alfonso’s had filed its taxes under 

the EIN assigned to Alfonsa’s (the 8725 number) and Rogelio Hernandez had gone to 

the IRS to discuss the tax situation.4

 

 

4

 It appears likely that the Alfonso’s Inc. tax liabilities were not discovered by the 

escrow officer before the sale to The Salvation Army either because the Alfonso’s 

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 b. Property Transfer

 Under the AFTA, the term transfer includes: “every mode, direct or indirect, 

absolute or conditional, voluntary or involuntary, or disposing of or parting with an 

asset or an interest in an asset and includes payment of money, release, lease and 

creation of a lien or other encumbrance.” A.R.S. § 44-1001(9). Here, the record 

establishes that on April 30, 2007, pursuant to an order by the bankruptcy court, 

Alfonso Perez transferred the Alfonso’s Property to Alfonso’s Inc. by Warranty 

Deed. The next day, on May 1, 2012, Alfonso’s Inc., functioning through its 

president Rogelio Hernandez, executed a Corporate Resolution stating that the 

subject property was to be held in the names of Hernandez and Callahan. That same 

day, Rogelio Hernandez executed a Joint Tenancy Deed conveying the Alfonso’s 

Property to Hernandez and Callahan. These actions constituted a “transfer” within 

the meaning of AFTA. Kaufmann v. M & S Unlimited, LLC, 211 Ariz. 314, 318 

(App. 2005). 

 c. Actual Fraud 

 The final and determinative issue is whether the transfer defrauded the IRS by 

preventing it from collecting on the Alfonsa’s tax lien. Under the AFTA, fraud can 

be actual or constructive. Actual fraud exists where the debtor made the transfer 

 

Property had been transferred to Hernandez and Callahan or, more likely, because the 

tax lien was issued under the Alfonsa’s name rather than Alfonso’s. 

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“with actual intent to hinder, delay, or defraud any creditor of the debtor.” A.R.S. § 

44-1004(A)(1). 

 To evaluate fraudulent intent, A.R.S. § 44-1004(B) lists eleven “badges of 

fraud” which the court considers in evaluating whether the debtor had an actual intent 

to hinder, delay or defraud the creditor. “Badges of fraud” are “‘facts which throw 

suspicion on a transaction, and which call for an explanation.’” Although they “‘do 

not of themselves or per se constitute fraud, . . . they are facts having a tenancy [sic] 

to show the existence of fraud, . . . [and] their value as evidence is relative and not 

absolute.’” Further, “‘[w]hen . . . several are found in the same transaction, strong, 

clear evidence will be required to repel the conclusion of fraudulent intent.’” 

Torosian v. Paulos, 82 Ariz. 304, 312, 313 P.2d 382, 390 (1957) (quoting Humbird v. 

Arnet, 99 Mont. 499, 44 P.2d 756, 761 (1935)). 

 The eleven badges of fraud are: 

1. The transfer or obligation was to an insider. 

2. The debtor retained possession or control of the property transferred 

after the transfer. 

3. The transfer or obligation was concealed. 

4. Before the transfer was made or obligation was incurred, the debtor 

had been sued or threatened with suit. 

5. The transfer was of substantially all of the debtor's assets. 

6. The debtor absconded. 

7. The debtor removed or concealed assets. 

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8. The value of the consideration received by the debtor was reasonably 

equivalent to the value of the asset transferred or the amount of the 

obligation incurred. 

9. The debtor was insolvent or became insolvent shortly after the 

transfer was made or the obligation was incurred. 

10. The transfer occurred shortly before or shortly after a substantial 

debt was incurred. 

11. The debtor transferred the essential assets of the business to a lienor 

who transferred the assets to an insider of the debtor. 

A.R.S. § 44-1004(B). Here, the government contends that the transfers of the 

Alfonso’s Property bear at least six of these eleven badges of fraud. 

 i. Transfer to an insider 

The first badge, the transfer to an insider, is clearly present as to Hilda 

Hernandez. It is not disputed that Hilda Hernandez was an officer of Alfonso’s Inc. 

and the mother of Rogelio Hernandez, who was the president and operated the 

business. 

 This badge is less clearly present in relation to Elvia Callahan. Callahan is 

Hilda Hernandez’s niece and Rogelio Hernandez’s cousin. However, she was not 

involved in the creation or operation of Alfonso’s Inc. The evidence suggests that 

she became involved in the transfer of the Alfonso’s Property only because she was 

needed to co-sign to obtain the loan from Applewood Funding. Moreover, the 

proceeds she was paid after the sale of the Alfonso’s Property to The Salvation Army 

were purportedly repayment for money she had contributed to operating the 

restaurant and payments she made on the Applewood Funding note. 

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 ii. The debtor retained possession or control of the 

 property 

 The next indicator of fraud is whether the debtor retained possession or 

control of the property after the transfer. The evidence indicates that Alfonso’s Inc. 

continued to operate the restaurant until just before the sale of the Alfonso’s Property 

to The Salvation Army. Rogelio Hernandez testified that the restaurant was 

operating and that bills were incurred. Although that was only for a few months, the 

fact is not disputed and this badge is satisfied. 

 iii. The transfer or obligation was concealed 

By transferring the Alfonso’s Property to Hernandez and Callahan for nominal 

consideration, rather than holding the property in the name of Alfonso’s Inc., the 

sellers were able to conceal the fact that Alfonso’s Inc. was the owner of the asset. 

As such, the escrow company did not discover the Alfonso’s Inc. tax liens and the 

taxes thus went unpaid. By structuring the transfer of the Alfonso’s Property as they 

did, the transfer was concealed from the IRS. 

 iv. The debtor was insolvent after the transfer was made 

At the time of the transfer of the Alfonso’s Property, there is no dispute that 

Alfonso’s Inc. was in dire straits. In addition to the employment taxes, other 

creditors, such as utilities and vendors, were seeking payment for past due accounts. 

Deposition of Rogelio Hernandez, 56:10-61:16 (“No, ma’am, the corporation never 

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had -- never was current on all their bills.”). Alfonso’s Inc. was insolvent throughout 

the time period encompassing the transfers of the Alfonso’s Property. 

 v. The transfer was of substantially all of the debtor's 

 assets 

When Alfonso’s Inc. acquired the Alfonso’s Property from the Perez 

bankruptcy estate, it took title to not only the property and building, but to all the 

fixtures and equipment in the building. PSOF, ¶ 20. With the exception of the 

corporation’s bank accounts, which contained very little, these assets constituted 

substantially all of the corporation’s assets. 

 vi. The consideration received was not reasonably 

 equivalent 

 In determining whether a debtor received a reasonably equivalent value for 

fraudulent conveyance purposes, the court evaluates whether what the debtor 

received was in the range of a reasonable measure of the value of what the debtor 

transferred. In re Viscount Air Services, Inc., 232 B.R. 416 (D. Ariz. 1998). Here, 

the government points out that Hernandez and Callahan received $560,000.00 from 

The Salvation Army for the Alfonso’s Property only months after it was purchased 

by Alfonso’s Inc. for $400,000.00 and then transferred to them subject only to the 

loan from Applewood Funding. Given the $160,000.00, or 40%, increase in value in 

those few months, no reasonable fact-finder could conclude that Alfonso’s Inc. 

received adequate consideration for the transfer of the property to Hernandez and 

Callahan. 

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 This conclusion is further bolstered by the fact that Alfonso’s Inc. received no 

proceeds from the sale to Hernandez and Callahan and none of the net proceeds from 

the eventual sale to The Salvation Army were used to pay Alfonso’s Inc.’s debts, 

including the taxes in question here. 

 vii. Conclusion 

 As discussed above, the transaction, especially as it related to Hilda 

Hernandez, satisfied a number of the actual badges of fraud. After the transaction, 

Alfonso’s Inc. remained in control of the Alfonso’s Property for some time, the 

transaction between Alfonso’s Inc. and Hernandez and Callahan was effectively 

concealed from the IRS, Alfonso’s Inc. was insolvent at the time, with its only 

significant asset being the Alfonso’s Property, and the consideration paid by 

Hernandez and Callahan was not reasonably equivalent to the value of the property 

as evidenced by its sale for $560,000.00 shortly thereafter. 

 The only troubling element of fraud is whether the Alfonso’s Property was 

transferred to an insider. Of course this trouble is not related to Defendant 

Hernandez, who was clearly an insider as an officer of Alfonso’s Inc. and as the 

mother of Rogelio Hernandez. It is the facts surrounding Callahan’s involvement 

that distinguish her situation from that of Hernandez. It is not disputed that she 

became involved only to assist Alfonso’s Inc. obtain the financing necessary to 

purchase the Alfonso’s Property from the Perez bankruptcy estate. It is also 

undisputed that she paid some or all of the payments on the Applewood Funding 

note. For these reasons, she could reasonably be considered a creditor. Couple that 

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with the question of whether she was an insider as that term is used in the AFTA, the 

Court cannot conclude as to her that there are no genuine issues of material fact as to 

her liability under the AFTA. 

2. Constructive Fraud

 The government contends that, even if the Court finds that the badges of 

actual fraud are not sufficient, as it has in relation to defendant Callahan, the 

elements of constructive fraud are present. The AFTA provides that transfers are 

constructively fraudulent as to present creditors if: 

the debtor made the transfer or incurred the obligation without 

receiving a reasonably equivalent value in exchange for the transfer or 

obligation and the debtor was insolvent at that time or the debtor 

became insolvent as a result of the transfer or obligation. 

A.R.S. § 44-1005. The discussion above establishes the transaction between 

Alfonso’s Inc. and Hernandez and Callahan was a violation of section 1005. As a 

threshold matter, the IRS has established that it was a creditor of Alfonso’s Inc. at the 

time of the transfer. Additionally, Alfonso’s Inc. did not receive a reasonably 

equivalent value for the Alfonso’s Property and it was admittedly insolvent at the 

time of the transaction. Thus, the entire transaction was constructively fraudulent as 

to the IRS. 

3. Remedy 

 The AFTA provides several potential remedies for a debtor which establishes 

a fraudulent transfer. These remedies include a judgment, garnishment against the 

fraudulent transferee, avoidance of the transfer, and “any other relief the 

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circumstances may require.” A.R.S. § 44-1007(A) & (B). In its motion, the United 

States requests judgment be entered against Defendants Hernandez and Callahan in 

the amount of the taxes now due. Motion for Summary Judgment, p. 15. The Court 

agrees and recommends that judgment should be entered against Defendant 

Hernandez under A.R.S. § 44-1007(A)(4)(c). 

 As for Defendant Callahan, questions remain. First, as to actual fraud, 

questions remain about her insider status and whether she was acting as a creditor. 

Second, under A.R.S. § 44-1008, Defendant Callahan may have defenses to the 

allegations of constructive fraud. As is relevant here, that section of the AFTA 

provides that “a good faith transferee or obligee is entitled, to the extent of the value 

given the debtor for the transfer or obligation, to . . . [a] reduction in the amount of 

the liability on the judgment.” A.R.S. § 44-1008(D)(3). As to Defendant Callahan, 

the evidence is not such that no reasonable fact-finder could conclude she acted in 

good faith and/or gave value to the debtor. While the evidence is conclusive that 

Alfonso’s Inc., and its officers Rogelio Hernandez and Defendant Hilda Hernandez, 

were aware of the tax debt, Callahan’s knowledge of the debt has not been 

established. Moreover, it is not disputed that Callahan made payments on the 

Applewood Funding note and may be entitled to a credit for those payments which 

could amount to a reduction of the judgment against her. 

IV. RECOMMENDATION

 For the foregoing reasons, the Magistrate Judge recommends the District 

Court, after its independent review, grant in part and deny in part the United 

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States’ Motion for Summary Judgment (Doc. 28), and enter judgment against 

Defendant Hilda Hernandez in the amount of $47,059.00, plus any statutory 

additional, interest, and penalties, accruing from August 31, 2012. 

 Pursuant to Federal Rule of Civil Procedure 72(b)(2), any party may serve and 

file written objections within 14 days of being served with a copy of this Report and 

Recommendation. If objections are not timely filed, they may be deemed waived. 

The parties are advised that any objections filed are to be identified with the 

following case number: CV-11-0250-TUC-DCB. 

 Dated this 17th day of January, 2013. 

Case 4:11-cv-00250-DCB Document 45 Filed 01/17/13 Page 17 of 17