Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-00421/USCOURTS-caed-2_06-cv-00421-0/pdf.json

Parties Involved:
Leslie John Hollingshead
Defendant
United States of America
Plaintiff

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McGREGOR W. SCOTT

United States Attorney

JUSTIN S. KIM

G. PATRICK JENNINGS

Trial Attorneys, Tax Division

U.S. Department of Justice

P.O. Box 683, Ben Franklin Station

Washington, D.C. 20044-0683

Telephone: (202) 307-0097

Facsimile: (202) 307-0054

justin.s.kim@usdoj.gov

Attorneys for the United States of America

IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA )

)

Plaintiff, )

)

v. )

)

LESLIE JOHN HOLLINGSHEAD, )

)

Defendant. )

)

)

Civil No. 2:06-cv-00421-GEB-DAD

FINDINGS AND RECOMMENDATIONS

Plaintiff’s motion for summary judgment came before the Court for hearing June 9, 2006. G.

Patrick Jennings, Trial Attorney, Tax Division, United States Department of Justice, appeared for the

United States. Defendant Leslie John Hollingshead did not appear. Upon review of the motion and the

documents in support and opposition, and good cause appearing therefor, THE COURT FINDS AS

FOLLOWS:

I. BACKGROUND

On August 1, 2005, Defendant Hollingshead filed with the Secretary of State of the State of

California a UCC Financing Statement, Document Number 057036238084, (“UCC Financing

Statement”) describing as debtors Revenue Officer Dayna McGrady and Mark W. Everson,

Commissioner of the Internal Revenue Service. The UCC Financing Statement stated: 

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Case 2:06-cv-00421-GEB-DAD Document 16 Filed 06/27/06 Page 1 of 9
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28 - 2 - Findings and Recommendations

The Debtors have consented to this Admiralty Maritime lien filing in the

International Commercial Claim Within the Admiralty Administrative Remedy Judgment

by Estoppel Agreement/Contract File # LJH03142005, Registered # RA 705 126 642 US,

perfected on June 27, 2005 in the accounting and True Bill Amount of $47,643,078.24. 

All personal and real property; bank accounts, foreign and domestic; private

exemptions; government risk management accounts; insurance policies; stocks and bonds;

asset accounts; investments and future earnings of the Debtors, is now property of the

Secured Party.

(Declaration of Justin S. Kim (“Kim Decl.”), Ex. 1.)

On February 28, 2006, the United States filed this action seeking declaratory relief that the UCC

Financing Statement filed by Defendant Hollingshead is null, void and of no legal effect and for

permanent injunctions enjoining him from filing any further documents which purport to create a

non-consensual lien or encumbrance against the person or property of any government employee. 

Defendant Hollingshead was served on March 22, 2006, and filed an answer on April 10, 2006. (Docket

Nos. 7, 9.) In his answer, Defendant Hollingshead argues that this Court lacks personal jurisdiction over

him in this action. The United States filed its motion for summary judgment on May 9, 2006, which was

properly served on Defendant Hollingshead. (Docket No. 10.) Defendant Hollingshead did not file an

opposition. 

II. JURISDICTION AND LEGAL STANDARD

This Court has jurisdiction under 28 U.S.C. § 1345 and 26 U.S.C. § 7402(a). Summary judgment

is appropriate when it is demonstrated by a party that “there is no genuine issue as to any material fact

and that the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). A party

may seek summary judgment on all or any part of another party’s claims. Id. The moving party 

always bears the initial responsibility of informing the district court of the basis for its

motion, and identifying those portions of “the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any,” which it

believes demonstrate the absence of a genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)). “[W]here the

nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion

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28 - 3 - Findings and Recommendations

may properly be made in reliance solely on the ‘pleadings, depositions, answers to interrogatories, and

admissions on file.’” Id.

Summary judgment should be entered, after adequate time for discovery and upon motion, against

a party who fails to make a showing sufficient to establish the existence of an element essential to that

party’s case and on which that party will bear the burden of proof at trial. Id. at 322. “[A] complete

failure of proof concerning an essential element of the nonmoving party’s case necessarily renders all

other facts immaterial.” Id. Summary judgment should be granted “so long as whatever is before the

district court demonstrates that the standard for entry of summary judgment, as set forth in Rule 56(c), is

satisfied.” Id. at 323.

If the moving party meets its initial responsibility, the burden shifts to the opposing party to

establish that a genuine issue as to any material fact does exist. Matsushita Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574, 586 (1986). In attempting to establish the existence of this factual dispute,

the opposing party may not rely upon the allegations or denials of his pleadings but is required to tender

evidence of specific facts in the form of affidavits or admissible discovery material in support of the

contention that a dispute exists. Fed. R. Civ. P. 56(e); Matsushita, 475 U.S. at 586 n.11. The party

opposing summary judgment must show that any fact in contention is material, i.e., a fact that might

affect the outcome of the suit under the governing law, and that the dispute is genuine, i.e., the evidence

is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 248 (1986); T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626,

630 (9th Cir. 1987); Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1436 (9th Cir. 1987). 

In trying to establish the existence of a factual dispute, the party opposing summary judgment

need not establish a material issue of fact conclusively in his or her favor. It is sufficient that “the

claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing versions of the

truth at trial.” T.W. Elec. Serv., 809 F.2d at 631. Thus, the “purpose of summary judgment is to ‘pierce

the pleadings and to assess the proof in order to see whether there is a genuine need for trial.’”

Matsushita, 475 U.S. at 587 (quoting Fed. R. Civ. P. 56(e) advisory committee’s note on 1963

amendments). 

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The evidence of the party opposing summary judgment is to be believed, and all reasonable

inferences that may be drawn from the facts placed before the court must be drawn in favor of the party

opposing summary judgment. Anderson, 477 U.S. at 255; Matsushita, 475 U.S. at 587. Inferences will

not be drawn out of the air, however; it is the opposing party’s obligation to produce a factual predicate

from which an inference may be drawn. Richards v. Nielsen Freight Lines, 602 F. Supp. 1224, 1244-45

(E.D. Cal. 1985), aff’d, 810 F.2d 898, 902 (9th Cir. 1987). The opposing party “must do more than

simply show that there is some metaphysical doubt as to the material facts . . . . Where the record taken

as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine

issue for trial.’” Matsushita, 475 U.S. at 587 (citation omitted).

III. UNCONTROVERTED FACTS

1. On August 1, 2005, Leslie John Hollingshead filed with the Secretary of State of the State

of California a UCC Financing Statement, Document Number 057036238084, falsely describing as

debtors Revenue Officer Dayna McGrady and Mark W. Everson, Commissioner of the Internal Revenue

Service. (See Declaration of Dayna McGrady (“McGrady Decl.”) ¶¶ 6-7; Kim Decl., Ex. 1.)

2. At all times pertinent to this action, Mark W. Everson was the Commissioner of the

Internal Revenue Service, and Dayna McGrady was an employee of the Internal Revenue Service. 

(McGrady Decl. ¶¶ 1-2, 4.)

3. Revenue Officer McGrady and Commissioner Everson are not personally acquainted with

Defendant Hollingshead and have had no contact or relationship with him outside the scope of their

employment. (See McGrady Decl. ¶¶ 2-4.) They have not engaged in any contract or personal

transaction with Defendant Hollingshead and do not owe money to Hollingshead. (Id.) They have not

consented to the filing of any liens by Defendant Hollingshead, and there is no legitimate reason for

Defendant Hollingshead to impose liens on the personal property of them. (See id. ¶¶ 6-7.) 

4. Revenue Officer McGrady is aware of the false UCC Financing Statement that Defendant

Hollingshead filed against her with the California Secretary of State. The document has caused her to

experience distress and anxiety, raising concerns that the false UCC Financing Statement may have a

negative impact on her permanent credit record. (Id.) 

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IV. ANALYSIS

A. Personal Jurisdiction

Defendant Hollingshead, a citizen of Arizona, maintains that this Court lacks personal jurisdiction

over him in this action. The United States argues that this Court may nevertheless exercise “specific”

jurisdiction over a nonresident defendant where the following elements are satisfied: 

(1) The non-resident defendant must purposefully direct his activities or consummate

some transaction with the forum or resident thereof; or perform some act by which he

purposefully avails himself of the privilege of conducting activities in the forum, thereby

invoking the benefits and protections of its laws;

(2) the claim must be one which arises out of or relates to the defendant's forum-related

activities; and

(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it

must be reasonable.

(U.S. Mem. at 3 (citing Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199,

1205-06 (9th Cir. 2006)).) The Court finds that the United States has established the requirements for

specific jurisdiction over Defendant Hollingshead. Defendant Hollingshead purposefully availed himself

of the privilege of conducting activities in the forum and invoked the benefits and protections of the

forum’s laws by filing a UCC Financing Statement with the California Secretary of State. The United

States’ complaint, which seeks to nullify this UCC Financing Statement and to enjoin Defendant

Hollingshead from filing similar baseless liens, arises out of and relates to his forum-related activities. 

Finally, the exercise of specific jurisdiction over Defendant Hollingshead in this action is reasonable, as

he chose to file the UCC Financing Statement with the State of California. Thus, the Court exercises

personal jurisdiction over Defendant Hollingshead. 

B. DECLARATORY RELIEF

Internal Revenue Code § 7402(a) grants district courts jurisdiction to "render such judgments and

decrees as may be necessary or appropriate for the enforcement of the internal revenue laws." I.R.C. §

7402(a); see Ryan v. Bilby, 764 F.2d 1325, 1327 (9th Cir. 1985). The Ninth Circuit has found that §

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7402(a) “empowers the district court to void common-law liens imposed by taxpayers on the property of

government officials assigned to collect delinquent taxes.” Ryan, 764 F.2d at 1327; see also Cook v.

Peter Kiewit Sons Co., 775 F.2d 1030, 1035 (9th Cir. 1985), cert. denied, 476 U.S. 1183 (1986); United

States v. Ekblad, 732 F.2d 562, 563 (7th Cir.1984); United States v. Hart, 701 F.2d 749, 750 (8th

Cir.1983); see also United States v. Van Dyke, 568 F. Supp. 820 (D.Or.1983) (enjoining the filing of

common-law liens to harass IRS employees and thereby deter enforcement of the tax laws).

Defendant Hollingshead has provided no evidence demonstrating that the UCC Financing

Statement claiming a debt of $47,643,078.24 is based on legitimate debt or law, or controverting the

undisputed facts set forth above. Nor has he provided any evidence of a contractual or other legal

relationship with Revenue Officer McGrady or Commissioner Everson to establish the validity of the

UCC Financing Statement. 

The United States has submitted uncontroverted evidence that Revenue Officer McGrady and

Commissioner Everson are not personally acquainted with Defendant Hollingshead and have had no

contact or relationship with him outside the scope of their employment. Furthermore, the evidence

indicates that any interaction they may have had with Defendant Hollingshead was in the course of their

official capacity as employees of the United States. They have not engaged in any contract or personal

transaction with Defendant Hollingshead and do not owe money to Hollingshead. Thus, there is no

legitimate reason for Defendant Hollingshead to impose liens on their personal property. 

After carefully reviewing the record, this Court finds that the UCC Financing Statement filed by

Defendant Hollingshead is a frivolous device used to harass government employees and to interfere with

the proper administration of the internal revenue laws of the United States. Thus, the lien is

non-consensual, non-judicial and non-statutory and should be declared null and void. Under I.R.C. §

7402(a), the Court may “void common-law liens imposed by taxpayers on the property of government

officials assigned to collect delinquent taxes.” Ryan v. Bilby, 764 F.2d 1325, 1327 (9th Cir. 1985). As

no genuine issues of material fact exist, the United States’ motion for summary judgment should be

granted, and the UCC Financing Statement filed against Revenue Officer McGrady and Commissioner

Everson is declared null and void. 

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C. INJUNCTIVE RELIEF

The United States seeks a permanent injunction against Defendant Hollingshead from filing any

document or instrument which purports to create a non-consensual lien or encumbrance of any kind

against any employee of the federal government. Injunctive relief “is available to a party who

demonstrates either (1) a combination of probable success on the merits and the possibility of irreparable

harm; or (2) that serious questions are raised and the balance of hardships tips in its favor.” Sammartano

v. First Judicial District Court, 303 F.3d 959, 965 (9th Cir. 2002). 

For the reasons noted above, the United States has demonstrated success on the merits. In filing

the UCC Financing Statement, Defendant Hollingshead also imposes irreparable harm upon the

employees of the federal government with whom he quarrels. False liens potentially cloud title to

property owned by the IRS employees and damage their credits ratings. Moreover, these false liens

“threaten substantial interference with the administration and enforcement of the Internal Revenue laws.” 

See United States v. Hart, 545 F.Supp. 470, 473 (D.N.D. 1982), aff’d, 701 F.2d 749 (8th Cir. 1983). 

The IRS employees and the United States will suffer harm if an injunction is not granted. 

Because these UCC Financing Statement has no factual or legal basis and thus are of no legal effect,

Defendant Hollingshead will not be injured by an injunction which enjoins him from filing similar

nonconsensual common law liens or encumbrances in the future. See In re Martin-Trigona, 763 F.2d

140, 141-42 (2nd Cir. 1985), cert. denied, 474 U.S. 1061 (1986). Thus the balance of hardships tips in

the United States’ favor.

Finally, this court finds that the public interest will be served by an injunction forbidding this

harassment in the future, and such an injunction should issue. Title 26 U.S.C. § 7402 authorizes this

court to make such orders as are necessary for the enforcement of the internal revenue laws. See United

States v. Hart, supra; Ryan ,764 F.2d at 1327 (noting, with approval, a district court’s order enjoining

filing of frivolous liens against IRS employees). 

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IV. RECOMMENDATION

Based upon the foregoing IT IS HEREBY RECOMMENDED that:

1. The United States' motion for summary judgment be granted and judgment for the United

States be entered on all claims.

2. Any UCC Financing Statement that purports to create a lien or any other non-consensual

lien or encumbrance filed by Defendant Hollingshead against the person or property of any IRS employee

or others who authorized or performed any act in connection with the assessment or collection of his tax

liabilities be declared null and void ab initio and declared to have no force and effect.

3. An order may be filed and recorded by the United States with the California Secretary of

State, any county clerk's office, assessor's office, or registrar of deeds in the state of California where

such liens have or will be filed by Defendant Hollingshead.

4. Regardless of nomenclature, caption, title, or terms used to describe the document,

Defendant Leslie John Hollingshead should be permanently enjoined from filing, or attempting to file,

any document or instrument which purports to create a lien or any other purported non-consensual lien or

encumbrance against the person or property of the above named IRS employees or others who authorized

or performed any act in connection with the assessment or collection of Defendant Hollingshead’s tax

liabilities.

Nevertheless, this recommended permanent injunction should not prevent Defendant

Hollingshead from applying to any state or federal court of competent jurisdiction in order to obtain relief

of any non-frivolous legal claim, and this recommended injunction should not apply to or prohibit liens

lawfully created by any judgment of a court of competent jurisdiction. It is further recommended that

willful violation of this order shall be punished by fine or imprisonment, or both.

5. An order be entered specifically declaring and adjudging that the UCC Financing

Statement, Document Number 057036238084, filed by Defendant Hollingshead against Mark W.

Everson, Dayna McGrady is null, void and of no legal effect.

These findings and recommendations are submitted to the United States District Judge assigned to

the case, pursuant to the provisions of Title 28 U.S.C. § 636(b)(l). Within ten days after being served with

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these findings and recommendations, any party may file written objections with the court and serve a

copy on all parties. Such a document should be captioned "Objections to Magistrate Judge's Findings and

Recommendations." Any reply to the objections shall be served and filed within ten days after service of

the objections. The parties are advised that failure to file objections within the specified time may waive

the right to appeal the District Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).

DATED: June 26, 2006.

Submitted by:

McGREGOR W. SCOTT

United States Attorney

 /s/ Justin S. Kim 

JUSTIN S. KIM

G. PATRICK JENNINGS

Trial Attorneys, Tax Division

U.S. Department of Justice

Post Office Box 683, Ben Franklin Station

Washington, D.C. 20044

Telephone: (202) 307-0977

Facsimile: (202) 307-0054

Dad1/orders.civil/hollingshead0421.f&r

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