Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_07-cv-02372/USCOURTS-caed-2_07-cv-02372-11/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 

EASTERN DISTRICT OF CALIFORNIA 

UNITED STATES OF AMERICA, 

Plaintiff, 

v. 

ELWYN S. DUBEY, JEANNINE M. 

DUBEY, DUANE A. WOODMAN AS 

TRUSTEE FOR GARDEN VALLEY 

INVESTMENTS, EL DORADO SAVINGS 

BANK, EL DORADO COUNTY TAX 

COLLECTOR, CALIFORNIA FRANCHISE 

TAX BOARD, 

Defendants. 

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Case No. 2:07-CV-2372 JAM-KJM

ORDER GRANTING MOTION FOR 

SUMMARY JUDGMENT

This is a civil action brought by the United States to 

determine the property interests of Elwyn S. Dubey and Jeannine M. 

Dubey (“Defendants”) in four parcels of real property.1 The United 

States seeks to foreclose federal tax liens upon said properties in 

order to satisfy a federal tax judgment against the Defendants from 

a previous case. For the reasons stated below, the United States’ 

 1

 The properties at issue are described in detail in the First 

Amended Complaint at ¶¶ 5-8. 

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Motion for Summary Judgment is GRANTED.2

BACKGROUND 

 On December 21, 1998, this Court entered judgment3 against 

Defendants, in their individual and joint capacities, for unpaid 

federal income taxes and unpaid assessed balances of Trust Fund 

Recovery Penalties that amounted to over $1.6 million. First Am. 

Compl. (“FAC”) ¶¶9-12. During this prior litigation, the Court 

determined that two properties were held by trusts as alter egos, 

nominees, or fraudulent transferees of the Dubeys. Mot. Summ. J. 

2:1-3. The properties were sold to pay off the tax liabilities; 

however, the amount obtained was insufficient to fully pay the 

debts. In this action, the United States seeks to enforce the 

judgment lien obtained from Dubey I against four additional 

properties allegedly owned by the Dubeys. The United States 

alleges that the four properties were owned by the Dubeys and then 

fraudulently transferred to Garden Valley Investments (“the 

Trust”), allegedly a sham trust, in order to evade tax liabilities. 

The United States has moved for summary judgment to establish the 

Dubeys’ interest in these properties. 

OPINION 

A motion for summary judgment should be granted “if the 

pleadings, the discovery and disclosure materials on file, and any 

affidavits show that there is no genuine issue as to any material 

fact and that the movant is entitled to judgment as a matter of 

law.” Fed. R. Civ. P. 56(c). In determining whether a genuine 

2

 This motion was determined to be suitable for decision 

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

3

 United States v. Elwyn S. Dubey, Jeannine M. Dubey, Duane 

Woodman as Trustee for Garden Valley Investment, et al., 2:94-cv00417-GEB-PAN (E.D. Cal. December 21, 1998) (hereinafter Dubey I). 

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issue of material fact exists, this Court must view the evidence 

and all of the justifiable inferences therefrom in the light most 

favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc., 

477 U.S. 242, 255 (1986). Once the moving party has identified the 

portions of the record that demonstrate the absence of any genuine 

issue of material fact, the burden then shifts to the nonmoving 

party to show that a genuine issue of material fact does indeed 

exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 

574, 586 (1986). In opposing the motion, the nonmoving party “may 

not rely merely on allegations or denials in its own pleading; 

rather, its response must – by affidavits or as otherwise provided 

in this rule – set out specific facts showing a genuine issue for 

trial.” Fed. R. Civ. P. 56(e)(2) (emphasis added); Anderson v. 

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In setting out 

these specific facts, the opposing party is not required to 

conclusively settle the issue but must, at the very least, present 

sufficient evidence supporting the claimed factual dispute such 

that the parties’ differing versions of the truth may be resolved 

by a judge or jury at trial. Id. at 249 (quoting First Nat’l Bank 

v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968)). 

 The United States bases its claim on California Civil Code § 

3439.05 which states: 

A transfer made or obligation incurred by a debtor is 

fraudulent as to a creditor whose claim arose before the 

transfer was made or the obligation was incurred 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. 

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The United States has sufficiently shown that all of the elements 

for this claim are satisfied and that the Defendants’ opposition is 

insufficient to overcome the Motion for Summary Judgment. 

Defendants owned all four properties before they were transferred 

to Garden Valley Investments in January of 1985. U.S. Statement 

Undisputed Facts in Supp. Mot. Summ. J. ¶ 19. At the time of the 

transfer, the applicable tax years had closed and tax liabilities 

had already been assessed. Mot. Summ. J. at 3:23-25. Furthermore, 

no “reasonably equivalent value” was exchanged during this transfer 

for any of the properties. Finally, given that the Dubeys had not 

been paying their taxes for years before the transfers to the 

Trust, they are presumed to be insolvent. Cal. Civil Code § 

3439.02(c) (“A debtor who is generally not paying his or her debts 

as they become due is presumed to be insolvent.”) 

 None of these elements have been disputed by the Defendants 

with sufficient support. Ownership of the properties, the 

transfers to the Trust, and the issue of insolvency are undisputed. 

Opp’n at ¶¶ 11-19, 43. The only relevant argument asserted by 

Defendants is that they are no longer indebted to the United States 

because their remaining tax liabilities had been completely paid 

off in 2007. Opp’n at 4, 14. The only support they cite for this 

assertion, United States’ Response to Dubeys’ First Set of 

Interrogatories at 2, does not state that their tax liabilities 

have been fully satisfied. The relevant exhibit states that a 

payment of $781,500.00 was received. Decl. Adair F. Boroughs, 

Docket at 59, Exh. A-5 (stating that $781,500.00 payment was posted 

on December 20, 2007, of which $342,373.30 was paid out in 

attorneys’ fees). This would leave $439,126.70 to apply toward 

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their tax liability. However, the total tax liability, as alleged 

by the United States, is $582,201.87. This value is based on June 

2007 Form 4340 assessments by the IRS. Docket at 71, Exs. A-2 to 

A-7. To summarize, the total debt in June 2007 was $582,201.87; 

the payment applied in December 2007 was for $439,126.70 leaving a 

balance of at least $143,075.17. Even viewing the evidence in the 

light most favorable to the Defendants, there is still an 

outstanding tax debt. Defendants’ mere denials and allegations, 

without more evidence, are insufficient to defeat the Motion for 

Summary Judgment on this matter. The United States has 

sufficiently shown that there is no genuine issue as to any 

material fact and is entitled to judgment as a matter of law. 

Therefore, the Court holds that the transfers of the four 

properties to Garden Valley Investments was constructively 

fraudulent and are hereby set aside. As such, Dubeys’ interest in 

the four properties is as if the 1985 transfer never occurred; the 

United States may foreclose the federal tax liens on the subject 

properties to satisfy the tax judgment from Dubey I. Because the 

Court finds that the transfers were fraudulent, it does not need to 

adjudicate whether Garden Valley is a sham trust, nominee, or an 

alter ego of the Dubeys. 

 The United States has sufficiently shown that the Dubeys 

transferred the subject properties to Garden Valley Investments in 

order to evade tax liability. Accordingly, the transfers are void. 

The United States is entitled to any remaining money judgment from 

Dubey I and may enforce this judgment against the four subject 

properties. 

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ORDER 

 For the reasons stated above, the Court GRANTS the Motion for 

Summary Judgment in favor of the United States. 

IT IS SO ORDERED. 

DATED: May 8, 2009 

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