is no dispute that Mr. Snoeyenbos is the attorney of record, so he
lacks the authority to compromise cases arising under the tax code.
Hohmann argues that § 7122 applies only to cases against taxpayers,
but it cites no authority for that proposition, and the statute
says “any civil or criminal case.” “Any” case means any case, see
United States v. Ballistrea, 101 F.3d 827, 836 (2d Cir. 1996); see
also Lexington Ins. Co. v. Rugg & Knopp, Inc., 165 F.3d 1087, 1089
(7th Cir. 1999) (“‘[E]very’ means ‘every.’”), not just taxpayer
actions. Hohmann also argues that Mr. Snoeyenbos’ signature on a
stipulation for entry of judgment against Mr. Wineberg in the
foreclosure action is evidence that he had authority to compromise
cases. However, that stipulation did not compromise the
government’s claim; it entitled to government to all the relief it
sought, unlike the claim for attorneys’ fees, which would reduce
the government’s recovery. Moreover, even if it were evidence of
authority to compromise, it is evidence only as to the foreclosure
case, not the interpleader case, and redelegations under the
regulations are made “on a case-by-case basis.” Directive 105 § 3.
In response to the government’s motion, it was Hohmann’s burden to
come forward with evidence of Mr. Snoeyenbos’s authority to create

a factual issue for trial; it did not discharge or shift that

* The stipulation was signed before the cases were
consolidated. See attachment to the government’s Response to Motion
to Consolidate, filed 8/6/01; see also Minute Order of 8/15/01
(granting consolidation).


he must bring it into court.”). The government’s motion and

Hohmann’s motion are granted in part and denied in part with regard

to interest: Hohmann is liable for interest from October.10, 2000.
II.

The government’s motion for summary judgment is GRANTED as to
attorneys’ fees, and GRANTED IN PART and DENIED IN PART as to interest.
Somerset and Hohmann’s cross-motion for partial summary judgment
is, accordingly, DgNIED as to attorney’s fees and GRANTED IN PART and
DENIED IN PART aS to interest. The government shall calculate the
total interest due to it, using the 5% interest rate provided for
by the Interest Act, beginning on October 10, 2000, and serve it on
Hohmann, who shall stipulate to the accuracy of the calculations.
The parties are ORDERED to submit the stipulation to me no later

than noon, May 15, 2002. Judgment will be entered on that date.

ENTER 0! BB:
a)
Lote 2 Buhl.
Elaine E. Bucklo
United States District Judge

Dated: AprilQg, 2002


Ill., Inc., 551 N.E.2d 1319, 1321 (111. 1990) (full amount) ;
Steward v. Yoder, 408 N.E.2d 55, 57 (Ill. App. Ct. 1980)
(unconditional). Tender only tolls the accrual of interest if it is
“kept good”; that is, it “must be kept at all times subject to be
received by the creditor when he calls for it.” Aulger v. Clay, 109
Tll. 487, 1884 WL 9815, at *4 (Ill. Mar. 26, 1884); see also
Schmahl v. A.V.C Enters., Inc., 499 N.E.2d 572, 575 (Ill. App. Ct.
1986) (defining tender as an offer to pay “coupled with the present
ability of immediate performance”).

The facts here are not in dispute. On July 1, 1999, when
Hohmann exercised its option to buy Mr. Wineberg’s interest in
Somerset, it became liable to pay Mr. Wineberg. Hohmann (through
Somerset) was aware of the liens and levies against Mr. Wineberg’s
property, so, also on July 1, 1999, it sent a check to Mr.
Wineberg, payable jointly to Mr. Wineberg and the IRS, for
$384,130, or 90% of the amount due under the contract. The check
was never negotiated, and fifteen months later, on October 10,
2000, Hohmann stopped payment on the check. On January 10, 2001,
Hohmann filed the interpleader action. The government argues that
the check was not legally sufficient tender because it was for an
amount less than the total due under the options agreement. Hohmann
attaches to its response and cross-motion the options agreement,
which called for a “holdback amount” of 10% at the closing. §§ 1.3

and 1.4 The options agreement called for only a 90% payment at


burden merely by filing a cross-motion. On Hohmann’s own motion,
Mr. Snoeyenbos’ statement in his affidavit that he never
represented that he was a Section Chief or had the power to
compromise a case or claim would be sufficient to create a question
of fact to avoid summary judgment.

Hohmann urges that, even if Mr. Snoeyenbos lacked actual
authority to enter into an agreement about fees, the government
should be estopped from contesting an award of attorneys’ fees.
Equitable estoppel cannot apply here because Directive 105 clearly
states that mere attorneys-of-record have no authority to
compromise cases, and “those who deal with the [g]overnment are
expected to know the law and may not rely on the conduct of
[glovernment agents contrary to law.” Heckler v. Community Health
Servs. of Crawford County, Inc., 467 U.S. 51, 63, 66 (1984)
(holding that where regulations clearly circumscribed the authority
of government official and party relied on oral statement of
official that exceeded authority, any reliance was unreasonable).
I grant the government’s motion and deny Hohmann’s motion with
regard to attorneys’ fees.

B.

Under the Illinois Interest Act, creditors are entitled to
interest at a rate of 5% a year on debts after they become due. 815
ILCS 205/2. An unconditional tender of the full amount due will

stop the accrual of interest. See Yassin v. Certified Grocers of


Matters of state law, I must predict what the Illinois Supreme
Court would decide, see Mutual Service Cas. Ins. Co. v. Elizabeth
State Banx, 265 F.3d 601, 612 (7th Cir. 2001) (diversity context),
and I conclude that the more recent appellate court cases, relying
on an authoritative standard reference, provide a better basis for
prediction than an older Illinois Supreme Court decision that is
not directly on point. Here Mr. Wineberg could not reasonably have
objected to the fact that the check was jointly payable to the IRS
in light of the substantial liens and levies against him. Nor was
he prejudiced by joint payment, because, as I have already
determined, the lien was valid. Thus the check, jointly payable to
Mr. Wineberg and the IRS, tolled the accrual of interest.
Nevertheless, Hohmann failed to “keep the tender good” when it
stopped payment on the check on October 10, 2000, because Wineberg
could not act immediately to accept the money. See Schmahl, 499
N.E.2d at 575. Hohmann argues that the interpleader lawsuit, filed
three months later, was valid tender. Although Hohmann and Somerset
did not contest the amount due when they filed the interpleader
action, they effectively asked the court to decide how to make the
payment but did not deposit any funds with the court, so action was
not a valid tender because it did not make the money immediately
available. See Aulger, 1884 WL 9815, at *3 (“We have only to turn
to any book of precedents to find that a plea of tender must aver

a readiness, at all times after it is made, to pay the money, and


Minute Order Forma (06297)

* United States District Court, Northern District of Illinois
Name of Assigned Judge Elaine E. Bucklo Sitting Judge if Other |
or Magistrate Judge than Assigned Judge
CASE NUMBER 01 C190 ~ ROC 4095_) DATE | 4/29/2002
CASE Somerset Limited, et al. vs. Wineberg, et al.
TITLE

[{n the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.)

MOTION:
DOCKET ENTRY:
(00) Oo Filed motion of [ use listing in “Motion” box above.]
(2) oO Brief in support of motion due.
(3) Q Answer brief to motion due___. Reply to answer briefdue___.
(4) oO Ruling/Hearing on _ setfor_ at
(5) Oo Status hearing[held/continued to] (set for/re-set for] on setfor sat
(6) o Pretrial conference[held/continued to] [set for/re-set for]on__—ssetfor sat.
(7) a Tria{[set for/re-set for]on___—_at
(8) im] {Bench/Jury trial] [Hearing] held/continued tot
(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) (1) General Rule21 CI FRCP41(a)(1) ( FRCP41(a)(2).
do) [Other docket entry] The government’s motion for summary judgment (19-1) is granted as to

attorneys’ fees, and granted in part and denied in part as to interest. Plaintiffs’ cross-motion for partial
summary judgment (21-1) is denied as to attorneys’ fees and granted in part and denied in part as to
interest. The government shall calculate the total interest due to it and serve it on Hohmann who shall
stipulate to the accuracy of the calculations. The parties are ordered to submit the stipulation to the court
no later than noon, 5/15/02. Judgment will be entered on that day. Enter Memorandum Opinion and Order.

qi) @ [For further detail see order attached to the original minute order.]

No notices required, advised in open court.
3

No notices required. number of notices
| Notices mailed by judge's staff. :
APR § 0. 200g
Notified counsel by telephone. : Wl tate docketed

Docketing to mail notices.

Mait AO 450 form.

Copy to judge/magistrate judge.

4r29/2002

courtroom: date maited notice
MPS deputy’s ;
initials tii
Date/time receiv
central Clerk’s Office. maiting deputy iniiats



closing, so the July 1, 1999, check was a tender of the full amount
due on that day.

The government also argues that the check was not sufficient
to stop the accrual of interest because it imposed a condition not
contemplated by the options agreement that the IRS endorse the
check. The Illinois Supreme Court stated, nearly sixty years ago,
that “[a] tender, to be effectual, must be without conditions other
than those specified in the contract between the parties.” Ortman
v. Kane, 60 N.E.2d.93, 97 (Ill. 1945). There the extra-contractual
condition imposed was payment of interest above and beyond the
amount agreed to by the parties. Id. More recent formulations of
the definition of “tender” suggest that it “must be without
conditions to which the creditor can have a valid objection or
which will be prejudicial to his rights.” Arrio v. Time Ins. Co.,
751 N.E.2d 221, 227 (Ill. App. Ct. 2001) (emphasis added); MXL
Indus., Inc. v. Mulder, 623 N.E.2d 369, 377 (Ill. App. Ct. 1993)
(same; citing 74 Am. Jur.2d Tender § 24, at 561-62 (1974));
Telemark Devel. Group, Inc. v. Mengelt, No. 00 C 3626, 2001 WL
477219, at *2 (N.D. Ill. May 7, 2001) (Shadur, J.). In Telemark,
the court held that a creditor could have no valid objection to a
condition that the creditor admit no greater amount was due because
the amount tendered was in fact everything the creditor was
entitled to. Id. at *4. The “condition” imposed here, signature by

the IRS, did not change the amount due under the contract. On


attorneys’ fees out of the money it owes to Mr. Wineberg and
whether the government is entitled to interest under 815 ILCS
205/2.

A.

The government argues that Hohmann’s attorneys’ fees may not
be taken out of the $426,822 that it will receive as a result of
the lien foreclosure. Hohmann does not contend that its claim for
attorneys’ fees is superior to the government’s lien, which
attached in 1990, more than eight years before Hohmann entered into
the options agreement with Mr. Wineberg. Instead it says that the
government’s attorney, Mr. Snoeyenbos, promised Hohmann that, in
return for its assistance in providing information for the
government’s suit against Mr. Wineberg, Hohmann would be entitled
to take its attorneys’ fees from the money owed to Mr. Wineberg.
The government submits an affidavit stating that there was no such
agreement, so there is a factual question that I cannot decide
here. But even if there were such an agreement, it would be
unenforceable against the government as a matter of law.

The authority to compromise or settle “any civil or criminal
case arising under the internal revenue laws” is vested in the
Secretary of the Treasury, 26 U.S.C. § 7122(a), and may be
redelegated to Section Chiefs and Assistant Section Chiefs, but may
not be redelegated to attorneys~-of-record, 28 C.F.R. Pt. 0, Subpt.

Y, App. (Tax Div. Directive No. 105 § 3) (“Directive 105”). There


property covering tax years from 1978 to 1986. Somerset and Hohmann
(collectively “Hohmann”) filed an interpleader action against the
United States and Mr. Wineberg to determine the appropriate payee
of the money held by Hohmann. The government brought a separate
action to foreclose a lien against Mr. Wineberg’s rights to the
proceeds of the options contract with Hohmann. I consolidated the
cases, see Minute Order of August 15, 2001, and the government
moves for summary judgment. Hohmann responds and moves for partial
summary judgment.
I.

Summary judgment is proper when the record “show[s] 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). In determining whether a genuine issue of material fact
exists, I must construe all facts in the light most favorable to
the non-moving party and draw all reasonable and justifiable
inferences in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 255 (1986). Mr. Wineberg did not respond to the government’s
motion, so I enter judgment in favor of the government and against
Mr. Wineberg in the amount of $1,318,480.21, plus interest and
other statutory penalties, and I find that the government has a
valid and subsisting lien on Mr. Wineberg’s right to money under
the contract with Hohmann. Hohmann has no objection to this

disposition, but the parties dispute whether Hohmann is entitled to


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

SOMERSET LIMITED PARTNERSHIP, an
Illinois limited partnership, and
HOHMANN OP HOLDINGS, LLC, an
Illinois limited liability company,

No. 01 c¢ 0190

Plaintiffs,
(consolidated)

ve

NOCKETED

APR 3 0 2002

JULIAN WINEBERG and THE UNITED
STATES OF AMERICA,

Defendants.

UNITED STATES OF AMERICA,
Plaintiff,

v.
No. O1C 4095

JULIAN WINEBERG and HOHMANN OP
HOLDING, LLC,

Defendants.

MEMORANDUM OPINION AND ORDER

Julian Wineberg had a limited partnership interest in Somerset
Limited Partnership. In 1998, Mr. Wineberg entered into a “Cash
Option Agreement” with Hohmann OP Holdings, L.L.C., giving Hohmann
the option to buy Mr. Wineberg’s interest in Somerset for $426,822.
Hohmann exercised the option on July 1, 1999, but has not paid Mr.
Wineberg because it was uncertain about the status of certain tax
liens and levies on Mr. Wineberg’s property. The federal government

has millions of dollars of tax liens and levies on Mr. Wineberg’