FI L ED

U.S. COURT OF APPEAL S

EL EVENTH CI RCUI T

J AN 29, 2010

J OHN L EY

ACTI NG CL ERK [PUBLIS H]

IN THE UN ITED STATES COURT OF APPEALS

FOR THE ELE VENTH CIRCUIT

__ __ __ __ __ __ __ __ __ __ __ __

No. 0 9- 11 88 7

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D.C. Dock et No. 0 8- 60 63 0 C V-CMA

EQUITY INVESTMENT PARTNERS, LP,

Pl ai nt iff -Co un te rDefen da nt -Ap pe ll an t,

ve rs us

KARIN LENZ,

Defen da nt -Cro ss

Defen da nt -Ap pe ll ee,

UNITED STAT ES OF AMERIC A,

In te rn al Rev en ue Serv ic e,

Defen da nt -Cro ss -Cl ai m an tCo un te r-Cl ai m an t-Ap pe ll ee.

__ __ __ __ __ __ __ __ __ __ __ __

App eal fro m

th e Uni te d S ta te s Di st ric t Co ur t
fo r th e So ut he rn Dis tri ct of F lo rid a

__ __ __ __ __ __ __ __ __ __ __ __

(J an ua ry 29 , 20 10 )Befo re WILSON and COX, Circ ui t J ud ge s, an d R ESTANI, Ju dg e. *

COX, Cir cu it Ju dg e:

Equ it y In ve st m en t Part ne rs , LP (“ Equ it y ”) cl ai m s to ho ld a se cu rit y in te res t in

cert ai n real pr op ert y own ed by Kari n Len z (“ Kari n” ). The In te rn al Rev en ue Serv ic e

(“ IRS” ) pl aced a li en on th e real pr op ert y du e to Kari n’s an d he r hu sb an d’s un pa id ta x

li ab il it ie s. Equ it y fil e d an act io n ag ai ns t Kari n an d th e Uni te d St at es se ek in g to

fo recl os e it s m or tg ag e an d to e s t a b l i sh th e pr io rit y of it s se cu rit y in te res t ov er th e

fed eral ta x li en

. The IRS co un te rcl ai m ed to es ta bl is h th e pr io rit y of it s ta x li en

. The

di st ric t co ur t gr an te d th e IRS su m m ary jud gm en t es ta bl is hi ng th at th e ta x li en was a

su pe rio r in te res t. The co ur t he ld th at Equ it y di d no t qu al ify as a “ ho ld er of a se cu rit y

i n t e res t” un de r I.R.C. § 63 23

. Equ it y ap pe al s. W e va cat e an d rem an d fo r fu rth er

pr oc eed in gs

.

I. BACK GROUND

Equ it y is an in ve st m en t pa rtn ers hi p; it s m aj o r i t y own ers , St aci e Dale y

(“ Dale y ”) an d Co rb et t Len z ( “Co r be tt ”) are th e ch il dr en of Kari n an d he r hu sb an d

Ran do lp h Len z (“ Ran do lp h” ). Ran do lp h an d Kari n su ffer ed fin an ci al di ffi cu lt ie s as

a res ul t of va rio us pr oc eed in gs br ou gh t ag ai ns t th em by th e Fed eral Dep os it In su ran ce

Honora ble J ane A. Restani, Chief J udg e, United States Court of I nterna tional Trade

, sitti ng * by desig nation.

2Co rp or at io n (“ FDIC” ). To as si s t w i t h pe rs on al ex pe ns es an d co st s rel at ed to th e

FDIC pr oc eed in gs , Dale y an d Co rb et t lo an ed th ei r pa ren ts ov er $3 m il li on

. The fu nd s

were lo an ed th ro ug h Equ it y an d se ve ral ot he r en ti ti es th es e ch il d r e n o w n e d an d

co nt ro ll ed

. Mo st of th e lo an ed m on ie s were tra ns ferr ed to Ran do lp h’s pe rs on al ba nk

acco un t, bu t th ey were us ed fo r th e joi nt ex pe ns es of Ran do lp h an d Kari n. So m e of

th e lo an ed m on ie s wer e tr an sf erre d d ire ct ly to a l aw fi rm to co ve r th e co st s o f le ga l

rep res en ta ti on in th e FDIC pr oc eed in gs

. In ad di ti on to th e lo an s, Co st a Co rp or at io n,

an ot he r en ti ty own ed an d co nt ro ll ed by th es e ch il dr en , tra ns ferr ed ov er $8 m il li on to

th e FDIC as pa rt of a se tt le m en t of al l cl ai m s ag ai ns t Ran do lp h

, K a r i n , Co rb et t,

Dale y , and ot he r en ti ti es

.

K a r i n he ld ti tl e to cert ai n real pr op ert y lo cat ed in Fl or id a. Afte r Dal e y a n d

Co rb et t be ga n lo an in g th ei r pa ren ts m on ey th ro ug h Equ it y an d ot he r en ti ti es , Equ it y

en te red in to a m or tg ag e an d se cu rit y ag reem en t wit h Kari n. The ag reem en t gr an te d

Equ it y a se cu rit y in te res t in th e real pr op ert y in ex ch a ng e fo r a lo an of $1 m il li on

.

Equ it y an d Kari n si gn ed a pr om is so ry no te

, refe ren ced by th e m or tg ag e, es ta bl is hi ng

th e te rm s of th e lo an

. On Octo be r 21

, 20 04

, th e m or tg ag e wa s r e c o r d e d i n pu bl ic

reco rd s. Equ it y di d no t m ak e a co nt em po ran eo us pa y m en t of $1 m il li on to Kari n at

th e ti m e th e m or tg ag e an d pr om is so ry no te were ex ecu te d. Dale y an d Co rb et t as se rt

t ha t th e pu rp os e of th e m or tg ag e was to se cu re rep ay m en t of th e m on ie s th ey ha d

3ad va nc ed to th ei r pa ren ts as of th e ti m e of th e m or tg ag e tra ns act io n. App ro xi m at el y

te n m on th s lat er, after t he am ou nt s l oa ne d t o Kar in an d R an do lp h in crea se d to ov er

$3 m il li on an d aft er th e FDIC se tt le m en t pa y m en t, Equ it y an d Kari n en te red i n to a

m or tg ag e m od ifi cat io n ag reem en t. The ag reem en t in crea se d th e lo an am ou nt se cu red

by the m or tg ag e b y

an ad di ti on al $2 m il li on . The p ro m is so ry no te was a m en de d t o

in cl ud e th e am ou nt of th e ad di ti on al lo an s an d se t fo rth rep ay m en t te rm s. On Aug us t

12

, 20 05

, th is m or tg ag e m od ifi cat io n w a s r eco rd ed in pu bl ic reco rd s. Onc e ag ai n,

Equ it y di d no t co nt em

po ran eo us ly pa y Kari n th e $2 m il li on sp eci fie d in th e

ag reem en t.

Dale y ass ert s t ha t i t was ag reed an d u nd ers to od th at whe n th e v ari ou s fa m il y

m em be rs en te red in to th e se tt le m en t ag reem en t wit h th e FDIC, th e real pr o p e rty

wou ld be us ed to se cu re rep ay m en t of fu nd s ad va nc ed to Ran do lp h an d Kari n. (R.4 6

Ex. 1 3 a t 3 ¶ 22 .) And

, sh e as se rts it was ag reed th at th e m or tg ag e wou ld be is su ed

in Equ it y ’s na m e “ as th e ov eral l en ti ty en ti tl ed to reco ve r rep ay m en t of th e lo an s on

be ha lf of th e va rio us e n t i t i es own ed an d co nt ro ll ed by [Dal ey ] an d [Co rb et t].” ( Id

.

at ¶ 2 3

. ) K a rin te st ifi ed in a de po si ti on th at sh e do es no t reca ll why s he si gn ed th e

m or tg a g e , b u t i n th e sa m e de po si ti on sh e al so te st ifi ed th at th e pu rp os e of th e

m or tg ag e m od ifi cat io n was “ [p ]rob ab ly s o I can p a y my c h il dr en ba ck .” (R.4 3 Ex.

11 at 2 0

. ) K a rin fai le d to m ak e an y pa y m en ts on th e m or tg ag e de bt an d was in

4de fau lt wit hi n a few m on th s aft er th e m or tg ag e m odifi ca tio n ag re em en t w as ex ecu te d.

Acco rd in g to Dale y , Equ it y di d no t im m ed ia te ly fo recl os e it s m or tg ag e be cau se it

wan te d to affo rd Kari n th e op po rtu ni ty to se ll th e real pr op ert y an d real iz e it s fu ll

va lu e.

The IRS m ad e as se ss m en ts ag ai ns t Ran do lp h an d Kar in for un pa id in co m e

ta xe s. It pr ep ared a Not ic e of Fed eral Tax Lien on al l pr op ert y an d rig ht s to pr op ert y

be lo ng in g to Ran do lp h an d Kari n

. The IRS fil ed th e no ti ce in pu bl ic reco rd s on

Aug us t 16

, 20 05

, aft er th e m or tg ag e an d m or tg ag e m od ifi cat io n ag reem en ts be twee n

Equ it y an d Kar in ha d b een fil ed

.

II . PROCEDURAL HIS TORY

Equ it y fil ed su it in th e Uni te d St at es Dis tri ct Co ur t fo r th e So ut he rn Dis tri ct of

Fl or id a ag ai ns t Kari n an d th e Uni t e d St at es se ek in g to fo recl os e it s m or tg ag e an d

es ta bl is h th e pr io rit y of it s secu rit y in te res t ov er the ta x li en

. Kari n di d no t resp on d

to Equ it y ’s Co m

pl ai nt

, an d th e Cl erk en te red he r de fau lt

. Se e Fed

. R. Ci v. P. 55 (a).

The IRS an swe red th e Co m pl ai nt

, fil ed a co un te rcl ai m ag ai ns t Equ it y to es ta bl is h th e

pr io rit y of it s ta x li en ov er Equ it y ’s s ecu rit y in te re s t, an d fil ed a cro ss cl ai m ag ai ns t

Kari n se ek in g to fo recl os e it s ta x li en

. Equ it y m ov ed fo r su m m ary jud gm en t, an d th e

IRS m ov ed fo r pa rti al su m m ary jud gm en t; bo t h mo t i o ns so ug ht to es ta bl is h th e

pr io rit y of th ei r res pe ct iv e in te res ts in th e real pr op ert y

. Equ it y as se rte d th at be cau se

5th e m or tg ag e an d m or tg ag e m od ifi cat io n were fil ed be fo re the no ti ce of the ta x li en

was fil ed

, Equ it y ’s se cu rit y in te res t ta ke s pr io rit y pu rs ua nt to I.R.C. § 63 23 (a). The

IRS co un te r e d t h a t Equ it y ’s m or tg ag e an d m or tg ag e m od ifi cat io n co ul d no t ta ke

pr io rit y be cau se th ey di d no t crea te a se cu rit y in te res t un de r I.R.C. § 63 23

. And

, ev en

if th es e m or tg ag es di d cre a t e a se cu rit y in te res t, th e IRS arg ue d, th e tra ns fer of an

in te res t to Equ it y was frau du le nt an d was th eref or e un en fo rcea bl e ag ai ns t th e ta x li en

.

The di st ric t co ur t co nc lu de d th at be cau se Equ it y di d no t “ pr od uc e ob jecti ve

ev i de nc e th at ‘m on ey or m on ey ’s wor th ’ was ex ch an ge d fo r an in te res t in th e

Pro pe rty, th e Mo rtg a g e M o d i f ic at io n do es no t qu al ify as a se cu rit y in te res t un de r

Sect io n 63 23 (a), an d th e IRS ta x li e n t a k e s p r i o r i ty.” (R.6 7 at 13 .) The co ur t al so

co nc lu de d th at whe th er th e co nv ey an ce was frau du le nt is a di sp ut ed qu es ti on of fact

whi c h c o u l d n o t be res ol ve d on su m m ary jud gm en t. (

Id

. at 14 .) Bec au se it he ld 1

Equ it y di d no t hav e a se cu rit y in te res t un de r se ct io n 63 23

, it gr an te d th e IRS pa rti al

su m m ary jud gm en t and de ni ed Equ it y ’s m ot io n for su m m ary jud gm en t. (

Id

. at 15 ).

Equ it y fil ed a m ot io n to reco ns id er ba se d on ne wly di sc ov ered ev id en ce in th e

fo rm of a lo an an d se cu rit y ag reem en t p u r p o r t i ng to sh ow th at m on ey or m on ey ’s

wor th was ex ch an ge d fo r i t s in te res t in th e real pr op ert y

. The co ur t de cl in ed to

The district court’s conclusion that a g enuine issue of materia l f act prec ludes resolving on 1

summary judgme nt whether

the conve y ance was fr audulent is not challeng ed on this appea l.

6co ns id er th e ev id en ce an d de ni ed Equ it y ’s mo t i o n be cau se th e ag reem en t was in

Equ it y ’s po ss es si on du rin g th e di sc ov ery pe rio d, an d Equ it y di d no t ex erci se

reas on ab le di li g e n c e to di sc ov er an d pr od uc e th e ev id en ce. (R.8 0 at 7.) The co ur t

al so ex pl ai ne d th at

, e v e n i f it were to co ns id er th e ev id en ce, th e ne wly di sc ov ered

ag reem en t wou ld fai l to de m on st rat e th at Equ it y he ld a se cu rit y in te res t un de r se ct io n

63 23 (a). (

Id

. at 8 .)

A f te r it was gr an te d pa rti al su m m ary jud gm en t, th e IRS m ov ed to am en d i t s

co un te rcl ai m an d cro ss cl ai m by ad di ng Me r r i l l Ly nc h Cred it Co rp or at io n as a

de fen da nt be cau se it al so ha s an in te res t in th e real pr op ert y a n d was th eref or e an

in di sp en sa bl e pa rty t o th e cas e. The co ur t d en ie d t he IRS’s m ot io n, an d t he pa rti es

st ip ul at ed to th e di sm is sa l wit ho ut p reju di ce of th e IRS’s co un te rcl ai m an d

cro ss cl ai m . Th e co ur t di sm is se d th es e cl ai m s wit ho ut pr ejud ic e an d e nt ered a fi na l

jud gm en t in th e cas e. Equ it y ap pe al s t he gra nt of par ti al su m m ary jud gm en t to th e 2

Under the Ryan rule, we g ener ally hold that voluntary dismiss als g rante d without prejudice 2

and without further condition are not final, appea lable judgme nts. See Ryan v. Occ idental Petroleum Corp.

, 577 F.2d 298, 303 (5th Cir. 1978); See also Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc) (adopting as prec edent decisions of the For mer Fifth Circuit handed down prior to the close of business on September 30, 1981). The purpose of this rule is to preve nt a party
from voluntarily dismiss ing its rema ining claims without prejudice afte r a non-final adver se district

court order has been entere d in order to manufa ct u re a fi nal j udg ment. Schoenfe ld v. Babbit t

, 168

F. 3 d 1 257, 1266 (11th Cir. 1999). We decline to apply the Ryan rule in this case beca use th e dismiss al without prejudice was not an improper attempt by Equity or the I RS to manufa cture a final judgme nt to pursue an immediate appeal; rathe r, i t wa s p rom pted by the di strict court’s refusa l to permit the I RS to join an indispensable party

. Acc ording ly

, we have jurisdiction to consider this

appea l.

7IRS, th e d en ia l o f it s m ot io n fo r su m m ary jud gm en t, an d t he de ni al of it s m ot io n to

reco ns id er.

II I. I SSUES ON APPEAL AND CONTENTI ONS OF TH E PARTIE S

The m ai n is su e on a p pe al is whe th er th ere ex is ts a di sp ut ed is su e of m at eri al

fact th at pr ecl ud es su m

m ary jud gm en t es ta bl is hi ng th e pr io rit y of in te res ts in th e real

pr op ert y own ed by Kari n. Equ it y co nt en ds th at ev id en ce sh ows th e m or t g a g e an d

m or tg ag e m od i f

i c at io n ag reem en ts crea te d a se cu rit y in te res t in th e real pr op ert y

.

And

, be cau se th e ag reem en ts were reco rd ed in pu bl ic reco rd s pri or to th e reco rd in g

of th e ta x li en , Equ it y a r g u e s it is en ti tl ed to su m m ary jud gm en t es ta bl is hi ng th e

pr io rit y of it s se cu rit y in te res t. The IRS co un te rs th at th e ta x li en is a su pe rio r in te res t

be cau se th e m or tg a ge an d m or tg ag e m od ifi cat io n ag reem en ts are no t se cu rit y

in te res ts

. It arg ue s th at ev id en ce sh ows Equ it y di d no t pa rt wit h “ m on ey or m on ey ’s

wor th ” as req ui red fo r th e f o r mat i o n of a se cu rit y in te res t un de r I.R.C. § 63 23

.

The refo re, th e IRS arg ue s, su m m ary jud gm en t es ta bl is hi ng th e pr io rit y of th e ta x li en

was ap pr op ria te

.

Equ it y al so arg ue s th at th e co ur t ab us ed it s di sc ret io n in de nyin g it s m ot io n fo r

reco ns id erat io n. To pr ev en t m an ife st in jus ti ce, Equ it y co nt en ds th e co ur t shou ld ha ve

reco ns id ered it s jud gm en t in li gh t of a ne wly di sc ov ered lo an an d se cu rit y ag reem en t

pu rp or ti ng to sh ow th at it pa rte d wit h “ m on ey or m on ey ’s wor th ” in ex ch an ge fo r th e

8m or tg ag e an d m or tg ag e m o d i f i c a t io n ag reem en t. The IRS co un te rs th at th e co ur t

pr op er l y d ecl in ed to co ns id er th e ne wly di sc ov ered do cu m en t be cau se it was in

Equ it y ’s po ss es s i o n th ro ug ho ut th e di sc ov ery pe rio d, an d Equ it y fai le d to ex erci se

du e d il ig en ce t o p ro du ce i t.

IV. ST ANDARD OF R EVI EW

W e co ns id er de no vo a gr an t or de ni al of su m m ary jud g men t

. S e e Bak er v.

Bir min gh am Bd . of

Edu c. , 53 1 F .3d 13 36 , 13 37 (11 th Cir . 20 08 ).

W e rev ie w th e de ni al of a m ot io n fo r reco ns id erat io n fo r ab us e of di sc ret io n.

Co rw in v. W

al t Di sn ey Co

. , 47 5 F .3d 12 39 , 12 54 (11 th Cir . 20 07 ).

V. DISCUSSI ON

If a pe rs on accr ue s a fed eral ta x li ab il it y , a li en is crea te d by op erat io n of la w

“ in fav or of t he Uni te d S ta te s up on all pro pe rty and rig ht s t o p ro pe rty, whet he r rea l

or pe rs on al

, be lo ng in g to su ch pe rs on .” I.R.C. § 63 21

. Tha t li en ari se s at th e ti m e th e

as se ss m en t is m ad e an d co nt in ue s un ti l th e ta x li ab il it y is sa ti sf ie d or be co m es

un en fo rcea bl e b y

reas on of l ap se of t im e. Id

. § 6 32 2. A l ie n is no t v al id , ho wev er,

“ ag ai ns t an y pu rch as er, ho ld er of a se cu rit y in te res t, m ech an ic ’s li en or , or jud gm en t

li en cred it or ” un ti l no ti ce ha s be en fil ed

. Id

. § 63 23 (a). Thi s m ean s t ha t “ an y

‘secu rit y in te res t ’ w h i c h ari se s pr io r to th e pr op er fil in g of a fed eral ta x li en ta ke s

pr io rit y ov er th e ta x li en .” Li tt on In du s. Aut oma ti on Sy s., In c. v. Na ti on wi de Pow er

9Co rp

. , 10 6 F.3 d 36 6, 36 8 (1 1 t h C i r

. 1 9 97 ) (ci ta ti on om it te d)

. In th e cas e of real

pr op ert y , no ti ce of th e ta x li en m us t be fil ed “ in on e of

fic e wit hi n t h e St at e

. . . as

de si gn at ed by th e l a w s o f s u ch St at e, in whi ch th e pr op ert y su bjec t to th e li en is

si tu at ed

. . . .” I.R.C. § 63 23 (f)(1 )(A)(i ).

Equ it y cla im s i t h ol ds a se cu rit y in te res t i n t he real pro pe rty t ha t is su pe rio r

to th e ta x li en

. It is un di sp ut ed th at th e m or tg ag e an d m or tg ag e m od i f i c a t i o n were

pr op erl y reco rd ed pr io r to th e fil in g of th e no ti ce of ta x li en

. So

, if th e m or tg ag e an d

m or tg ag e m od ifi cat io n sa ti sf y th e req ui rem en ts of I.R.C. § 63 23 to crea te a se cu rit y

in te res t, t ha t i nt eres t h as pri or it y ov er t he tax li en

.

The In te rn al Rev en ue Co de de fin es a se cu rit y in te res t as “ an y in te res t in

pr op ert y acq ui red by co nt ract fo r th e pu rp os e of se cu rin g pa y m en t or pe rfo rm an ce of

an ob li ga ti on or in de m

ni fy in g aga in st lo ss or li ab il it y .” I.R.C. § 63 23 (h )(1 ). To b e

pr ot ect ed un de r se ct io n 63 23 (a), a ho ld er of a se c u r i t y in te res t m us t sh ow (1 ) th e

se cu rit y in te res t was acq ui red by co nt ract to se cu re pa y m en t or pe rfo rm an ce of an

ob li ga ti on or in de m

ni fy ag ai ns t lo ss ; (2 ) th e pr op ert y to whi ch th e se cu rit y in te res t

was to at ta ch ex is te d at th e ti m e of fil in g o f t h e t a x l i e n; (3 ) at th e ti m e th e ta x li en

was fil ed

, th e se cu rit y in te res t was pr ot ect ed un de r st at e la w ag ai ns t a jud gm en t li en

ari si ng ou t of an un se cu red ob li ga ti o n ; a n d ( 4 ) th e ho ld er of th e se cu rit y in te res t

pa rte d wit h “ m on ey or m on ey ’s wort h.” In re Haa s, 31 F.3 d 10 81 , 1 08 5 (1 1t h Ci r.

1019 94 ) (ci ti ng I.R.C. § 63 23 (h )(1 )). The pa rti es ag ree th at th e fir st th ree req ui rem en ts

are m et

. The di sp ut ed is s u e is whe th er Equ it y pa rte d wit h “ m on ey or m on ey ’s

wor th .”

At th e ti m e th e m or tg ag e an d m or tg ag e m od ifi cat io n were ex ecu te d, Kari n di d

no t rece iv e co nt em

po ran eo us pa y m en ts in th e am ou nt s no te d i n th e ag reem en ts

.

Equ it y cl ai m s th at th e no te s an d m or tg ag es were is su ed to se cu re th e de bt s owe d by

Kari n an d Ran do lp h to Equ it y an d ot he r en ti ti es

. It arg ue s th at it pa rte d wit h “ m on ey

or m on ey ’s wor th ” as de fin ed by th e In te r n a l R ev en ue Co de an d Treas ur y

Reg ul at io ns be cau se th e m or tg ag es were g iv en to sec ur e an te ced en t d eb ts

.

The IRS co un te rs wit h two arg um en ts

. Fi rs t, it co nt en ds th at in or de r to pr ov e

it pa rte d wit h “ m on ey or m on ey ’s wor th ,” Eq u i t y m us t pr es en t ev id en ce th at at th e

ti m e m on ie s were ad va nc ed to Kari n and Ran do lp h, th e pa rti es ag reed th at

, at so m e

fu tu re da te

, th ey wou ld ex ecu te an ag reem en t to se cu re th e lo an s. It cl ai m s Eq u i t y

h a s n ot pr es en te d su ch ev id en ce. Seco nd

, it co nt en ds Equ it y ha s no t pr es en t e d

su ffi ci en t ev id en ce to sh ow th at at th e ti m e th e m or tg ag es were ex ecu te d, th e pa rti es

in te nd ed fo r th e m or tg ag es to se cu re th e an te ced en t de bt s. Acco rd in g to th e IRS, th e

o n ly ev id en ce Equ it y of

fers to sh ow th e pu rp os e of th e m or tg ag es is “ se lf- se rv in g ”

st at em en ts th at are un su pp or te d an d in su ffi ci en t to sa ti sf y Equ it y ’s bu rd en of pr oo f.

11The di st ric t co ur t ob se rv ed th at Equ it y di d no t pr od uc e an y “ ob je ct iv e evi de nc e

de m on st rat in g th at ei th er the Mo rtg ag e or th e Mo rtg ag e Mo di fic at io n was int en de d

to sa ti sf y [th e] an te ced en t de bt s.” (R .67 at 1 0) (em ph as is ad de d) . It ex pl ai ne d th at

ne it he r th e m or tg ag e do cu m en ts no r th e pr om is so ry no te s refe r to th e lo an s Dale y an d

Co rb et t ad va nc ed to th ei r pa ren ts th ro ug h Equ it y an d ot he r en ti ti es , an d it no te d th ere

was no ot he r do cu m en ta ti on to su pp o r t Equ it y ’s co nt en ti on th at th e m or tg ag e an d

m or tg ag e m od ifi cat io n were is s u e d to se cu re rep ay m en t of th e lo an s. The co ur t

ack no wled ge d th at Dale y an d Ran do lp h as se rte d in affi da vi ts an d de po si ti on s th at th e

fam il y m em

be rs ag reed th at th e pu rp os e of th e m or tg ag e an d m or tg ag e m od ifi cat io n

was to rep ay th e lo an s. (

Id

. at 5.) Nev ert he le ss , it reas on ed Equ it y “ fai le d to pr od uc e

an y th in g m or e th an ci rcu m st an ti al ev id en ce” th at th e ag reem en ts were in te nd ed to

se cu re th e an te ced en t de bt s. ( Id

. at 11 .) Bec au se “ Equ it y fai le d to ex pl ic it ly ou tl in e

th is co ns id erat io n in [th e m or tg ag e do cu m en ts ], an d [it fai le d] to pro du ce an y ot he r

ob je ct iv e evi de nc e de m on st rat in g th e pa rti es ’ ag reem en t,” ( id

. at 12 ) (em ph as is

ad de d) , th e co ur t co nc lu de d Eq ui ty did no t p res en t su ffi ci en t ev id en ce t o s ho w th at

it ha d pa rte d wit h “ m on ey or m on ey ’s wor th .” The refo re, th e co ur t he ld

, Equ it y di d

no t ho ld a se cu rit y in te res t as de fin ed by I.R.C. § 63 23 (h )(1 ), an d th e IRS was en ti tl ed

to pa rti al su m

m ary jud gm en t es ta bl is hi ng th e p rio rit y of t he tax li en

.

12Treas ur y reg ul at io ns de fin e “ m on ey or m on ey ’s wor th ” as in cl ud in g m on ey ,

a se cu rit y , ta ng ib le or in ta ng ib le pr op ert y , se rv ic es , an d ot he r co ns id erat io n red uc ib le

to a m on ey va lu e. 26 C.F.R. § 30 1.6 32 3( h) -1 ( a ) ( 3 ). It al so in cl ud es “ an y

co ns id erat io n whi ch ot he rwis e wou ld co ns ti tu te m on ey or m on ey ’s wor th

. . . whi ch

was pa rte d wit h be fo re th e se cu rit y in te res t wou ld ot he rwis e ex is t if, un de r lo cal la w,

pa st co ns id erat io n i s su ffi ci en t to su pp or t an ag reem en t gi vi ng ris e to a se cu rit y

in te res t.” Id

. Und er Fl o r i d a la w, th e lo cal la w in th is cas e, pa st co ns id erat io n is

su ffi ci en t to su pp or t th e crea ti on of a se cu rit y in te res t. Fl a. St at

. § 67 3.3 03 1( 1) (c)

(p ro vi di ng th at an in st ru m en t is is su ed fo r va lu e if “ is su ed or tra ns ferr ed as pa y m en t

of

, or as se cu rit y fo r, an an te ced en t cl ai m ag ai ns t an y pe rs on , whe th er or no t th e cl ai m

is du e”); se e al

so Lea v. Su hl , 41 7 S o. 2 d 1 17 9, 1 18 1 (Fl a. App . 1 98 2) (is su an ce of

a no te in pa y m en t of a n an te ced en t ob li ga ti on ren de red ad di ti on al co ns id erat io n

un ne ces sa ry ).

Fed eral la w de te r mi n e s th e pr io rit y of co m pe ti ng li en s as se rte d ag ai ns t a

ta xp ay er’s pr op ert y

. Aqu il in o v. Uni te d St at es , 36 3 U.S. 50 9, 51 3- 14

, 80 S. Ct

. 12 77

,

12 80 (1 96 0)

. And

, fo r Equ it y ’s in te res t in th e pr op ert y to ha ve pr io rit y , Equ it y m us t

sh ow it is th e ho ld er of a s e c u r i t y i nt eres t as de fin ed by t he In te rn al Rev en ue Co de

an d Treas ur y Reg ul at io ns

. Bu t, beca us e th e Reg ul at io ns di rect us to ap pl y st at e la w

to de te rm in e whe th er pa st co ns id erat io n m ay sa ti sf y th e “ m on ey or m on ey ’s wor th ”

13req ui rem en t, Fl or id a la w co nt ro ls th is is su e. Pas t co ns i d erat io n m ay su pp or t th e

crea ti on of a se cu rit y in te res t un de r Fl or id a la w. So

, Equ it y m ay pr ov e it pa rte d wit h

mon ey or m on ey ’s wor th by sh owi ng th at at th e ti m e th e m or tg ag e an d m or t g a g e

m od ifi cat io n w e r e e x e c u te d, bo th Kari n an d Equ it y ag reed th at th e pu rp os e of th e

ag reem en ts was t o s ecu re re pa y m en t o f th e lo an s. 3

The IRS se em s to co n t e nd th at Equ it y m us t pr es en t ev id en ce of

“ co nt em po ran eo us co ns id erat io n ”

— t h a t is

, at th e ti m e th e lo an s were or ig in al ly

gi ve n, th e pa rti es ag reed th at Equ it y wou ld rece iv e a se cu rit y in te res t at so m e fu tu re

da te

. (Ap pe ll ee’s Br. at 28 .) W e di sa gr ee. Equ it y ne ed no t sh ow th at th e pa rti es

co nt em pl at ed fu tu re ex ecu ti on of a se cu rit y ag reem en t at t h e t i me th e lo an s were

is su ed

. Rat he r, to sh ow pa st co ns id erat io n, Equ it y m us t pr es en t ev id en ce th a t th e

se cu rit y ag reem en t was ex ecu te d fo r th e pu rp os e of rep ay in g th e lo an s. The IRS ci te s

no au th or it y ho ld in g or su gg es ti ng th at Fl or id a la w de m an ds c o n t em po ran eo us

co ns id erat io n, an d we are aware of no ne

. In de ed

, co m m e n t s t o t h e Fl or id a st at ut e

de fin in g co ns id erat io n su gg es t ot he rwi s e

. Th e s e co m m en ts im pl y th at a no te or

se cu rit y in te res t gi ve n to sa ti sf y an an te ced en t de bt is su pp or te d by c o ns id erat io n

Even if evidenc e shows that R an d o l p h was the sole party responsible for the antec edent 3

debts beca

use many of the loans wer e made direc tly to him, the notes and mortg ag es would still be supported by valid considera tion under Florida law if Kar in ag ree d that the purpose of the mortg ag e and mortg ag e modification wer e to secur e Randolph’s antec edent debts. See Fla. Stat. § 673.3031

cmt. 4 (noting subsection (1)( c) “i s intended to apply to an instrument g iven in pay ment of or as

secur ity for the de bt of a third per son . . . .”).

14ev en if, at th e ti m e th e de bt aro se , th e pa rti es di d no t co nt em pl at e fu tu re is su an ce of

a no te or se cu rit y ag reem en t. Fl a. St at

. § 67 3.3 03 1 cm t. 1 (p ro vi di ng as an ex am pl e

of pa st co ns id erat io n, “ X owe s Y $1 ,00 0

. The de bt is no t rep res en te d by a no te

.

Late r X is su es a no te to Y for t he de bt .”).

Su m m ary jud gm en t is ap pr op ria te ly gr an te d whe re th ere is no ge nu in e is su e of

m at eri a l f act , a nd th e m ov in g pa rty i s en ti tl ed to jud gm en t as a m at te r of la w. Fed

.

R. Ci v. P. 56 (c)( 2)

. It sh ou ld be gr an te d “ ag ai ns t a pa rty who fai ls to m ak e a sh owi ng

su ffi ci en t to es ta bl is h th e ex is te nc e of an el em en t es se nt ia l to th at pa rty’ s cas e, an d

on whi ch th at pa rty wil l bear th e bu rd en of pr oo f at tri al .” Cel ot ex Co rp

. v. Ca tr et t

,

47 7 U.S. 31 7, 32 2, 10 6 S. C t

. 2 5 4 8

, 2 5 5 2 (1 98 6)

. Here, bo th th e IRS an d Equ it y

m ov ed fo r su m

m ary jud gm en t, bu t a di sp ut ed i s su e of a m at eri al fact pr ecl ud es it s

gr an t t o e it he r pa rty.

At di sp ut e is whe th er th e m or tg ag e an d m or tg ag e m od ifi cat io n were ex ecu te d

to se cu re rep ay m en t of th e de bt s owe d to Equ it y by Ran do lp h an d Kari n. Ran do lp h

st at ed in an affi da vi t th at “ [i]t was und ers to od an d ag reed at th e ti m e th e lo an s were

m ad e th at m

y wife wou ld ag ree to pl ace a Mo rtg ag e on th e Pro pe rty to pr ov id e

se cu rit y fo r th e lo an s th at were be in g m ad e.” (R.4 6 Ex. 14 at 3 ¶ 17 .) Kari n te st ifi ed

in he r de p o s i t i o n th at sh e di d no t rem em be r why sh e si gn ed th e m or tg ag e, bu t sh e

al so te st ifi ed th at sh e si gn ed th e m or tg ag e m od ifi cat io n “ [p ]rob ab ly so I can pa y m y

15ch il dr en ba ck .” (R.4 3 Ex. 1 1 a t 2 0.) Dal ey st at ed in an affi da vi t th at at th e ti m e of

th e FD I C s et tl em en t, “ it was ag reed an d un de rs to od th at th e Pro pe rty wou ld be

ut il iz ed to se cu re rep ay m en t of th e fu nd s be in g ad va nc ed on be ha lf of [Ran do lp h] an d

[Kari n].” (R.4 6 Ex. 13 at 3 ¶ 22 .) Her affi da vi t al s o c l a i ms th e pa rti es ex ecu te d a

pa rti ci pa ti on ag reem en t “ gi vi ng [Equ it y ] th e rig ht to co ll ect th e lo an pr oc eed s an d to

ob ta in th e m or tg ag es for th e lo an s m ad e b y ou r va rio us en ti ti es .” (

Id

. at ¶ 24 .)

The se st at em en ts co ul d su ffi ce to es ta bl is h th e pu rp os e of th e m or t g a ge an d

m or tg ag e m od ifi cat io n. W hi le th e st at em en ts m ay be “ se lf- se rv in g” an d m ay no t be

“ ob jecti ve ev id en ce,” th ey are ev id en ce no ne th el es s. If be li ev ed

, th ey wou ld su pp or t

a fin di ng th at th e m or tg ag es were gi ve n to sa ti sf y th e an te ced en t de bt s. Thi s fin di ng

wou ld le ad th e co ur t to ho ld th at th e m or tg ag es were su pp or te d by pa st co ns id erat io n

an d th at Equ it y pa rte d wit h “ m on ey or m on ey ’s wor th

. ” Th e tru th of th es e

st at em en ts

, ho wev er, is d i s p u te d. At tri al

, Equ it y wil l ha ve th e bu rd en of pr oo f on

th is ele m en t o f it s cl ai m

.

Wit ho ut de te rm in in g th e cred ib il it y of th es e st at em en ts

, th ere rem ai n s a

ge nu in e is su e of m at eri al fact th at pr ecl ud es su m m ary ju d g men t fo r ei th er

pa rty—whe th er th e m or tg ag e an d mo r t g a ge m od ifi cat io n were ex ecu te d to se cu re

rep ay m en t o f th e lo an s. An d, i t i s no t ap pr op ria te to as se ss cred ib il it y on su m m ary

16jud gm en t. Se e, e.g ., Un it ed St at es v. Fou r Par cel s of Rea l Pro

pe rt y in Gre en e an d

Tu sc al oo sa Co un ti es in St at e of Ala

. , 94 1 F.2 d 14 28

, 14 37 (1 1t h Ci r. 19 91 ) (en ba nc ).

Hav in g co nc lu de d th e co ur t e r r e d i n gr an ti ng th e IRS su m m ary jud gm en t

es ta bl is hi ng th e pr io rit y of th e ta x li en , we ne ed no t co ns id er whe th e r th e co ur t

ab us ed it s di sc ret io n in de nyin g Equ it y ’s m ot io n to reco ns id er. W e rev ers e th e gr an t

of pa rti al su m

m ary jud gm en t in fav or of th e IRS, affi rm th e de ni al of Equ it y ’s m ot io n

fo r su m m ary jud gm en t, an d rem an d fo r fu rth er pr oc eed in gs no t in co ns is te nt wit h th is

op in io n.

REVERSED I N PART; AFFIRMED IN PART; AND REMANDED.

17