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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Civil Action No. 11-cv-02708-WYD-KLM

UNITED STATES OF AMERICA,

Plaintiff,

v.

NANCY D. BERRYMAN;

THE TEMPLE OF THE UNVEILED GOD; and

THE OFFICE OF THE OVERSEER OF DEDICATION TO ENLIGHTENMENT, AND HER

SUCCESSORS, A CORPORATION SOLE;

Defendants.

_______________________________________________________________________

RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

_______________________________________________________________________

ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX

This matter is before the Court on the United States’ Motion for Summary

Judgment Against Nancy D. Berryman, for Default Judgment Against The Temple of

the Unveiled God and the Office of The Overseer of Dedication to Enlightenment, and

her Successors, a Corporation Sole, and for Sanctions Pursuant to FRCP 37 [Docket

No. 52; Filed October 15, 2012] (the “Motion”). On November 21, 2012, Defendant Nancy

D. Berryman (“Berryman”), who proceeds in this matter as a pro se litigant, filed a

Response [#58]. On December 12, 2012, Plaintiff filed a Reply [#59]. The Motion has now

been fully briefed. Pursuant to 28 U.S.C. § 636(b)(1) and D.C.COLO.L.Civ.R. 72.1.C., the

Motion has been referred to this Court for recommendation [#53]. Having considered the

pleadings and the docket in this case, the Court is fully advised of the issues. For the

reasons set forth below, the Court respectfully RECOMMENDS that Plaintiff’s Motion [#52]

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 Two parcels of property are located at 3295 Tunnel Road, Estes Park, Colorado 80517,

and are legally described in paragraph 8 of the Complaint [#1] in this case. Parcel B is commonly

referred to as 3295 Tunnel Road, Estes Park, CO 80517, and Parcel A is adjacent vacant land. Id.

¶ 9. As the two parcels were bought and transferred together, the Court hereafter refers to them,

along with their associated water rights, as the “Subject Property.”

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be GRANTED IN PART and DENIED without prejudice IN PART. 

I. Procedural Background

Plaintiff United States initiated this lawsuit on October 18, 2011. Compl. [#1] ¶ 1.

The case arises from federal tax liens imposed against Defendant Berryman for her unpaid

federal income tax liabilities for 1997, 1999, 2000, 2001, 2002, 2003, 2004, 2005, and 2006

(“tax years at issue”). See id. at 4-6. The purpose of this action is to reduce the federal tax

assessments for these years to judgment and to foreclose the federal tax liens on real

property and water rights presumably owned by Defendant Berryman (“Subject Property”).1

See id. Plaintiff asserts that this Court has jurisdiction pursuant to 28 U.S.C. §§ 1331,

1340, and 1345, and to 26 U.S.C. §§ 7402 and 7403. Id. ¶ 3. Plaintiff premises venue on

28 U.S.C. §§ 1391 and 1396, on the bases that the real property at issue is located within

this District and that the tax liability giving rise to the foreclosure accrued in this District.

Id. ¶ 4. Plaintiff requests: (1) that default judgment be entered against Defendants Temple

of the Unveiled God (“Temple”) and Defendant Office of the Overseer of Dedication to

Enlightenment (“Overseer”), finding that they have no interest in the Subject Property, and

that Defendant Berryman is the true beneficial owner of the property; (2) that summary

judgment be entered against Defendant Berryman, finding that she is indebted to the

United States for federal income tax liabilities for the tax years at issue and that the United

States has valid and subsisting federal tax liens which attach to all property and rights to

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property of Defendant Berryman, including her interest in the Subject Property; (3) that “the

United States’ tax liens encumbering the [S]ubject [P]roperty be foreclosed” and the Court

enter an Order of Foreclosure and Decree of Sale setting forth the terms and conditions of

the sale; and (4) that, should Defendant Berryman attempt to oppose these claims by

introducing previously undisclosed evidence or testimony, the Court order sanctions against

Defendant Berryman prohibiting her from introducing such evidence or testimony. Id. ¶¶

26-29, 38, 43, 49. 

Plaintiff asserts that the Internal Revenue Service (“IRS”) timely and properly made

assessments for unpaid federal income taxes and related penalties and interest against

Defendant Berryman for the tax years at issue, as set forth in the nine Forms 4340

pertaining to Defendant Berryman. See Exhibits 2-10, Forms 4340 Certificates of

Assessments, Payments, and Other Specified Matters (“Forms 4340") [#52-3, -4, -5, -6, -7,

-8, -9, -10, -11]. There is no dispute that Defendant Berryman received notices of her

alleged tax liability and demands for payment. Exhibits 18-23, Notices of Federal Tax Lien

[#52-19, -20, -21, -22, -23, -24]. According to Plaintiff, as of October 1, 2012, the

outstanding liability of Defendant Berryman with respect to the assessments made against

her for the tax years at issue totals $601,437.27. Declaration of Lee Routledge (“Routledge

Decl.”) [#52-1] ¶ 4; see Exhibit 1, INTSTD Calculations of Liability [#52-2].

Neither Defendant Temple nor Overseer has appeared or filed a responsive pleading

in this matter, despite having been served with process. Affidavits of Service [#10, #14].

 Defendant Overseer was served on November 12, 2011, and its answer was due on

December 5, 2011 [#10]. Defendant Temple was served on November 27, 2011, and its

answer was due on December 19, 2011 [#14]. The Clerk of Court entered default pursuant

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to Fed. R. Civ. P. 55(a) against Defendant Overseer on January 10, 2012 [#24], and

against Defendant Temple on September 20, 2012 [#51]. To date, no answer or other

response has been filed by counsel on behalf of Defendant Temple or Overseer.

II. Request for Default Judgment Pursuant to Fed. R. Civ. P. 55

A. Standard of Review

Pursuant to Fed. R. Civ. P. 55, default may enter against a party who fails to appear

or otherwise defend the case brought against him or her. As a threshold issue, the Court

must examine whether default was entered properly against Defendants Temple and

Overseer. In determining whether entry of default is warranted, the Court first considers

whether it has personal and subject matter jurisdiction in the case. Dennis Garberg &

Assoc. v. Pack-Tech Int’l Corp., 115 F.3d 767, 772 (10th Cir. 1997); Williams v. Life Sav.

& Loan, 802 F.2d 1200, 1202-03 (10th Cir. 1986). With regards to personal jurisdiction, the

Court must address the adequacy of service of process on defendants against whom

default is requested. Brill Gloria v. Sunlawn, Inc., No. 08-00211, 2008 WL 5651458, at *2

(D. Colo. Aug. 5, 2008).

Even after entry of default, it is for the Court to decide “whether the unchallenged

facts create a legitimate basis for the entry of a judgment.” See Greenwich Ins. Co. v.

Daniel Law Firm, No. 07-2445, 2008 WL 793606, at *1 (D. Colo. Mar. 22, 2008) (citations

omitted). “[A] party is not entitled to a default judgment as of right; rather the entry of

default judgment is entrusted to the ‘sound judicial discretion’ of the court.” Id. at *2

(quoting Cablevisions of S. Conn., Ltd. P’ship v. Smith, 141 F. Supp. 2d 277, 281 (D. Conn.

2001)). Where the complaint states an adequate legal basis for relief against a party in

default, default judgment is appropriate. Id. (citing Weft, Inc. v. G.C. Inv. Assocs., 430 F.

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 The legal analysis is the same regardless of whether the Court analyzes the question of

whether Defendant Berryman placed title to the Subject Property in Defendants Temple and

Overseer while retaining all or some of the benefits of being the true owner under federal nominee

law, the Colorado state fraudulent transfer law (see, e.g., United States v. Stonier, No. 88-993,

1994 WL 395644, at *5 (D. Colo. Feb. 28, 1994), aff’d 48 F.3d 1233 (10th Cir. 1995) (“Whether this

case is analyzed under a nominee theory or under Colorado’s fraudulent conveyance statute, the

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Supp. 1138, 1143 (E.D.N.C. 1986)). 

Upon review of a motion for default judgment after entry of default, Plaintiff enjoys

the benefit of deferential pleading interpretation, and the Court deems the well-pleaded

facts of the complaint as true. Olcott v. Delaware Flood Co., 327 F.3d 1115, 1125 (10th

Cir. 2003) (“[D]efendant by his default, admits the plaintiff’s well-pleaded allegations of fact,

is precluded from challenging those facts by the judgment, and is barred from contesting

on appeal the facts thus established.”) (internal quotation marks and citations omitted);

Marcus Food Co. v. DiPanfilo, 671 F.3d 1159, 1172 (10th Cir. 2011) (citing Wenz v.

Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995)). As it is pertinent to the case at

hand, the Court notes that corporations cannot appear in this Court without legal

representation. Harrison v. Wayatoyas, LLC, 253 F.3d 552, 556 (10th Cir. 2001);

D.C.COLO.LCivR 83.3D. 

B. Analysis

To obtain a default judgment pursuant to Federal Rule of Civil Procedure 55,

Plaintiff must first secure the entry of default against Defendants Temple and Overseer in

a court with proper jurisdiction. Fed. R. Civ. P. 55(a). Once default is secured, Plaintiff

may seek a default judgment pursuant to Fed. R. Civ. P. 55(b) by pleading allegations in

its Complaint which, if taken as true, establish that Defendants Temple and Overseer are

the nominees or alter egos of Defendant Berryman.2

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result is the same.”)), or Colorado state constructive trust law (see, e.g., Shepler v. Whalen, 119

P.3d 1084, 1089 (Colo. 2005)). Because Plaintiff pleads sufficient facts to meet the requirements

of a nominee theory, the Court declines to address these alternate theories.

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1. Jurisdiction

In determining whether the entry of default judgment is warranted here, the Court

must first consider whether it may exercise subject matter and personal jurisdiction over

the parties and the dispute. Dennis Garberg & Assocs., 115 F.3d at 772; Williams, 802

F.2d at 1202-03. The Court must do so in consideration of the well-established law that “a

judgment is void if the court that enters it lacks jurisdiction over either the subject matter

of the action or the parties to the action.” Williams, 802 F.2d at 1203. 

a. Subject Matter Jurisdiction

Subject matter jurisdiction in this case is based on federal statutes 28 U.S.C. §§

1331, 1340, and 1345, and pursuant to the Internal Revenue Code, 28 U.S.C. §§ 7401,

7402, and 7403. Compl. [#1] ¶ 3. “Congress vested in the district courts ‘jurisdiction of any

civil action arising under any Act of Congress providing for internal revenue.’” United States

v. Christiansen, 414 F. App’x 218, 220 (11th Cir. 2011) (citing 28 U.S.C. § 1340). “[D]istrict

courts [also] have the right to order the sale of property encumbered by a tax lien, 26

U.S.C. § 7403(c), and ‘to render such judgments and decrees as may be necessary or

appropriate’ to complete that sale[.]” Id. (citation omitted). Thus, the Court is satisfied that

it may exercise subject matter jurisdiction over this lawsuit. 

b. Personal Jurisdiction

Despite the fact that Defendants Temple and Overseer did not raise personal

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jurisdiction as a defense, “[d]efects in personal jurisdiction . . . are not waived by default

when a party fails to appear or to respond.” Williams, 802 F.2d at 1202 (citing V.T.A., Inc.

v. Airco, Inc., 597 F.2d 220, 225 (10th Cir. 1979)). Thus, when entry of a default judgment

is sought against a party who has failed to plead or otherwise defend, the Court has an

affirmative duty to look into its jurisdiction both over the subject matter and the parties. Id.

In reviewing its personal jurisdiction, the Court does not assert a personal defense of the

parties; rather, the Court exercises its responsibility to determine that it has the power to

enter the default judgment. Id. at 1203.

Plaintiff bears the burden of establishing personal jurisdiction. Intercon, Inc. v. Bell

Atl. Internet Solutions, Inc., 205 F.3d 1244, 1247 (10th Cir. 2000). “[P]laintiff need only

make a prima facie showing [of personal jurisdiction] if the motion [for default judgment] is

decided only on the basis of the parties’ affidavits and other written materials.” Dennis

Garberg & Assocs., Inc., 115 F.3d at 773. As further explained below, in making a

determination on a motion for default judgment, the Court accepts the well-pleaded

allegations of Plaintiff’s Complaint as true. Cf. Miller v. Kelly, No. 10-02132, 2010 WL

4684029, at *4 (D. Colo. Nov. 12, 2010). However, this deferential pleading standard does

not extend to statements of legal conclusion couched as fact. Id. (“While the Court accepts

Plaintiff’s well-pled allegations as true for the purpose of establishing personal jurisdiction

over Defendant . . . [i]t accords no deference to Plaintiff’s conclusory and wholly

unsupported allegations.”).

The Court must first address the adequacy of service in making its determination as

to whether it has personal jurisdiction over the entity Defendants. See United States v.

Elsberg, No. 08-00522, 2010 WL 5177439, at *2 (D. Colo. Aug. 17, 2010); Brill Gloria,

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 While Courts may presume proper service for entry of a default judgment where

Defendants answer without contesting service and do not, while represented by counsel, raise the

issue by motion, those circumstances are not present here. Compare Elsberg, 2010 WL 5177439,

at *2 (“Service of the Elsberg Defendants has not been a straightforward process.”) with GreenTree

Transp. Co. v. Speedy Heavy Hauling, Inc., No. 10-02657, 2011 WL 5834746, at *2 n.2 (D. Colo.

Sept. 19, 2011).

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2008 WL 5651458, at *2.3 Plaintiff’s Complaint identifies Defendants as “corporations sole.“

See Compl. [#1] ¶¶ 6-7. Therefore, the Court analyzes the adequacy of service in the

context of Fed. R. Civ. P. 4(h), which establishes the requirements for service of a

corporation, partnership, or association. Rule 4(h) provides that service on a corporation,

partnership, or association is adequate if effected “by delivering a copy of the summons

and of the complaint to an officer, a managing or general agent, or any other agent

authorized by appointment or by law to receive service of process . . . .” Fed. R. Civ. P.

4(h)(1)(B). On November 18, 2011, Plaintiff filed a return of service demonstrating that a

private process server personally delivered the summons to Defendant Overseer’s

registered agent. See Summons [#10]. Therefore, the Court finds that Plaintiff has

obtained adequate service with respect to Defendant Overseer. On December 5, 2011,

Plaintiff also filed a return of service demonstrating that a private process server personally

delivered the summons to Defendant Temple’s registered agent, Defendant Berryman.

See Summons [#14]. Therefore, the Court finds that Plaintiff has obtained adequate

service with respect to Defendant Temple and has satisfied Fed. R. Civ. P. 4(h) with

respect to both entity Defendants. 

Plaintiff alleges that both entities are made party to this action pursuant to 26 U.S.C.

§ 7403(b) because each may claim some interest in the Subject Property. Compl. [#1] ¶¶

6-7. Although Defendant Overseer was incorporated and has a registered agent in

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 “[I]t is well settled that a corporation is ‘found’ in any district in which personal jurisdiction

might be obtained over it.” Battle Creek Equipment Co. v. Roberts Manufacturing Co., 460 F. Supp.

18, 22 (W.D. Mich. 1978); see also Shaffer v. Heitner, 433 U.S. 186 (1977) (holding that where

claims to the property itself are the source of the underlying controversy, a state may generally

exercise in rem jurisdiction over property located within the state).

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Nevada, Plaintiff alleges that Defendant Overseer resides at 3295 Tunnel Road, Estes

Park, CO 80517, the Subject Property. Id. ¶ 7.4 Defendants fail to counter this assertion.

At this stage, the Court accepts as true all well-pleaded allegations made by Plaintiff.

Miller, 2010 WL 4684029, at *4. Thus, on the facts alleged in the Complaint, Defendant

Overseer is a resident of Colorado, and personal jurisdiction over this Defendant is proper.

On the other hand, as a court of limited jurisdiction, this Court may only exercise

jurisdiction over the non-resident Defendant Temple if: (1) the long-arm statute of Colorado

permits personal jurisdiction in this case; and (2) the exercise of personal jurisdiction in

Colorado comports with the Due Process Clause of the United States Constitution. See

Dudnikov v. Chalk & Vermillion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008). The

Supreme Court of Colorado interprets Colorado’s long-arm statute “to confer the maximum

jurisdiction permitted by the due process clauses of the United States and Colorado

constitutions.” Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187, 1193 (Colo. 2005).

Therefore, a due process analysis of jurisdiction in this case will also satisfy Colorado’s

long-arm statute.

The Due Process Clause requires that the Court conduct a two-step analysis of

personal jurisdiction. First, the Court must examine “whether the non-resident defendant

has ‘minimum contacts’ with the forum state such that [it] should reasonably anticipate

being haled into court there.” TH Agric. & Nutrition, LLC v. Ace European Grp., Ltd., 488

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F.3d 1282, 1287 (10th Cir. 2007) (citation and quotation mark omitted). Second, if the

defendant has sufficient contacts, the Court then asks “whether the court’s exercise of

jurisdiction over the defendant offends ‘traditional notions of fair play and substantial

justice,’” that is, whether the exercise of jurisdiction is “reasonable” under the

circumstances. Id. (citation and some quotation marks omitted).

I. Minimum Contacts

The “minimum contacts” requirement of due process may be met by showing the

existence of general or of specific jurisdiction. Trierweiler v. Croxton & Trench Holding

Corp., 90 F.3d 1523, 1532 (10th Cir. 1996). The requisite minimum contacts exist if the

non-resident defendant has continuous and systematic contacts with the forum state

(general jurisdiction) or if the defendant (I) has purposefully directed activities at forum

residents or otherwise acted to avail itself purposefully of the privilege of conducting

activities there and (ii) the litigation results from alleged injuries that arise out of or relate

to those activities (specific jurisdiction). Impact Prods. Inc. v. Impact Prods., LLC, 341 F.

Supp. 2d 1186, 1190 (D. Colo. 2004).

General jurisdiction lies when the defendant’s contacts with the forum state are so

“continuous and systematic” that the state may exercise personal jurisdiction over the

defendant, even if the suit is not related to the defendant’s activities within the state.

Trierweiler, 90 F.3d at 1533. Here, there is no clear indication on the face of the Complaint

[#1] that Defendant Temple had continuous and systematic contact with the forum state,

Colorado. Plaintiff asserts in its Complaint that Defendant Temple is located at 3782 West

Masfield Circle, West Jordan, Utah 84084. Compl. [#1] ¶ 6. Notably, Plaintiff’s private

process server failed to personally deliver the summons to this address, as the current

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 Notably, this is the same address where Defendant Berryman was served and where

Defendant Overseer is alleged to reside. See Summons [#7, #10]; see Compl. [#1] ¶ 7.

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resident had no affiliation with Defendant Temple. See Summons [#14] at 4. Service was

instead accomplished by serving Defendant Berryman, whom Defendant Temple had

indicated to be its legal representative, at the Subject Property.5

 Id. at 2. Still, Plaintiff fails

to provide any allegations that would lead the Court to believe that Defendant Temple’s

contacts with the forum state of Colorado have been continuous and systematic. Because

Plaintiff has not alleged in its Complaint that Defendant Temple has “continuous and

systematic general business contacts” with Colorado, the exercise of general personal

jurisdiction over Defendant Temple would be improper. See Benton v. Cameco, 375 F.3d

1070, 1081 (10th Cir. 2004).

To determine whether specific jurisdiction over Defendant Temple is appropriate, the

Court must examine whether: (1) Defendant Temple purposefully directed its activities at

Colorado or its residents or acted in some other way by which it purposefully availed itself

of the benefits and protections of conducting business in Colorado, and (2) Plaintiff’s claims

arise out of or relate to Defendant Temple’s forum-related activities. Impact Prods., 341

F. Supp. 2d at 1190. Plaintiff, citing the various transfers of the Subject Property from party

to party, alleges in its Complaint that there existed a business relationship between

Defendant Temple and the two Colorado residents, Defendants Berryman and Overseer.

Compl. [#1] ¶¶ 12-15, 30-38. Plaintiff asserts that on April 29, 2003, Defendant Berryman

purportedly transferred the Subject Property to Defendant Temple via two quitclaim deeds

that were recorded in the Larimer County Recorder’s Office on May 7, 2003. Id. ¶ 12.

Subsequently, Defendant Temple purportedly transferred the Subject Property to

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Defendant Overseer via a Grant, Bargain, and Sale Deed. Id. ¶ 14. Plaintiff also alleges

that Defendant Temple continues to pay for utilities and other expenses for the Subject

Property, located in Colorado. Id. ¶¶ 34, 36. Each of these transfers and business

interactions constitutes an activity purposefully directed at residents of Colorado. See

Dudnikov, 514 F.3d at 1080. Additionally, Defendant Temple has “otherwise acted to avail

itself purposefully of the privilege of conducting activities” in Colorado by designating

Defendant Berryman, a Colorado resident, as its legal agent for service. See Summons

[#14]; Impact Prods. Inc., 341 F. Supp. 2d at 1190. 

According to Plaintiff, the purported transfers of the Subject Property from Defendant

Berryman to Defendant Temple and from Defendant Temple to Defendant Overseer were

intended to hinder, delay, or defraud the United States of lawful taxes. Compl. [#] ¶¶ 40,

42. Thus, the claims for relief in this case result from alleged injuries that relate to these

purposefully directed activities, and accordingly, the Court finds that the Court may exercise

specific jurisdiction over Defendant Temple. Impact Prods. Inc., 341 F. Supp. 2d at 1190

(D. Colo. 2004).

ii. Traditional Notions of Fair Play and Substantial Justice

Additionally, the Court finds that exercising jurisdiction over Defendant Temple does

not “offend traditional notions of fair play and substantial justice.” Impact Prods., 341 F.

Supp. 2d at 1190. Regarding “traditional notions of fair play and substantial justice,” courts

consider:

(1) the burden on the defendant, (2) the forum state’s interests in resolving

the dispute, (3) the plaintiff’s interest in receiving convenient and effectual

relief, (4) the interstate judicial system’s interest in obtaining the most

efficient resolution of controversies, and (5) the shared interest of the several

states [or foreign nations] in furthering fundamental social policies.

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Dudnikov, 514 F.3d at 1080 (citation omitted). The Court addresses each of these factors

in turn.

First, the Court’s exercise of jurisdiction over Defendant Temple would not create

an undue burden on Defendant Temple. “[I]t is only in highly unusual cases that

inconvenience will rise to a level of constitutional concern . . . . [I]n this age of instant

communication, and modern transportation, the burdens of litigating in a distant forum have

lessened.” Peay v. Bellsouth Med. Assistance Plan, 205 F.3d 1206, 1212-13 (10th Cir.

2000) (citations, quotations, and footnote omitted). The failed delivery of a summons to

Defendant Temple’s original address suggests it is no longer located in Utah. See

Summons [#14] at 4. Even if Defendant Temple were still located in Utah, by designating

Defendant Berryman as its legal representative in Colorado, Defendant Temple has made

the judicial system of Colorado very convenient to access. Therefore, requiring Defendant

Temple to defend this action in Colorado would not create an undue burden.

Second, “[s]tates have an important interest in providing a forum in which their

residents can seek redress for injuries caused by out-of-state actors.” OMI Holdings, Inc.

v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1096 (10th Cir. 1998). Plaintiff alleges that

the Subject Property at issue is located within this District and that the tax liability giving rise

to the foreclosure accrued in this District. Compl. [#1] ¶ 4. Therefore, any injury to Plaintiff

occurred in Colorado and any threatened injury was threatened to occur in Colorado.

Accordingly, Colorado has an important interest in providing a forum for Plaintiff to seek

redress for its debts.

The third factor “hinges on whether the [p]laintiff may receive convenient and

effective relief in another forum,” Benton, 375 F.3d at 1079, and the fourth factor asks

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“whether the forum state is the most efficient place to litigate the dispute.” Id. at 1080

(quotations and citation omitted). In this case, Colorado is the most efficient forum to

litigate this dispute because the Subject Property is located in Colorado and the other two

Defendants, including Defendant Temple’s designated legal representative, reside in

Colorado. Compl. [#1] ¶¶ 6-7. Therefore, the third and fourth factors weigh in favor of

exercising personal jurisdiction over Defendant Temple in Colorado.

The fifth factor “focuses on whether the exercise of personal jurisdiction by [the

forum] affects the substantive social policy interests of other states or foreign nations.”

Dudnikov, 514 F.3d at 1080 (quotations and citations omitted). Under 26 U.S.C. § 6321,

the IRS may satisfy a tax deficiency by a lien on any rights to property belonging to the

taxpayer. In order to effectuate this authority, it is often necessary to identify whether

property is illegitimately held by a third party. See Rev. Rul. 2004-27, 2004-1 C.B. 625.

Therefore, exercising personal jurisdiction over Defendant Temple in Colorado furthers the

policy interests of all states in identifying nominees in cases of purported tax evasion.

Accordingly, the Court recommends finding that exercising jurisdiction over Defendant

Temple does not “offend traditional notions of fair play and substantial justice,” and that

the Court may exercise personal jurisdiction over Defendant Temple as a non-resident

defendant. Thus, jurisdiction is proper over both entity Defendants.

2. Entry of Default Pursuant to Fed. R. Civ. P. 55(a)

Defendants Temple and Overseer have not answered or otherwise responded in

opposition to the Complaint, despite proper service. Affidavits of Service [#10, #14].

Additionally, the Court has informed Defendant Berryman that she, as a non-attorney, may

not represent Defendants Temple and Overseer in Court. [#35, #43]. Nevertheless, no

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answer or responsive pleading has been filed by either Defendant Temple or Overseer, and

the Clerk entered default against Defendants Overseer and Temple on January 10, 2012

[#24], and September 20, 2012 [#51], respectively. On these facts, Defendants Temple

and Overseer have “failed to . . . otherwise defend” this lawsuit, and the entries of default

were appropriate. See Fed. R. Civ. P. 55(a); Hoxworth v. Blinder, Robinson & Co., 980

F.2d 912, 917 (3rd Cir. 1992) (recognizing that Rule 55(a)’s “otherwise defend” language

provides the court with inherent authority to enter default even if a party has timely

answered); see also Eagle Assocs. v. Bank of Montreal, 926 F.2d 1305, 1310 (2nd Cir.

1991) (authorizing entry of default where party failed to comply with order to obtain

counsel); Yates v. Portofino Equity & Mgmt Co., No. 08-00324, 2009 WL 2588831, at *3

(D. Colo. Aug. 17, 2009) (same); DC Aviation, LLC v. Avbase Flight Servs., LLC, No. 06-

01960, 2007 WL 2683554, at *1 (D. Colo. Sept. 7, 2007) (same). There are therefore

grounds for the entries of default judgment against these Defendants, and the Court finds

that the entry of default was properly made by the Clerk of the Court. See Fed. R. Civ. P.

55(a); Cessna Fin. Corp. v. Bielenberg Masonry Contracting, Inc., 715 F.2d 1442, 1444

(10th Cir. 1983) (Parties must be held “to a reasonably high standard of diligence in

observing the courts’ rules of procedure. The threat of judgment by default serves as an

incentive to meet this standard.”). 

3. Default Judgment Pursuant to Fed. R. Civ. P. 55(b)

Having found jurisdiction over this matter and a failure to “otherwise defend” under

Rule 55(a), the Court next determines whether Plaintiff is entitled to relief. See Fed. R. Civ.

P. 55(b). Where a complaint states an adequate legal basis for relief against a party in

default, default judgment is appropriate. Greenwich Ins. Co., 2008 WL 793606, at *2 (citing

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Weft, Inc., 630 F. Supp. at 1143). To obtain default judgment against the entity

Defendants, Plaintiff must plead allegations in its Complaint which, if taken as true,

establish that Defendants Temple and Overseer are the nominees or alter egos of

Defendant Berryman, with no separate interest in the Subject Property. See Olcott, 327

F.3d at 1125; Archer v. Eiland, 64 F. App’x 676, 679 (10th Cir. 2003) (“all factual

allegations in the complaint, except those pertaining to the amount of damages” are taken

as true).

“A nominee is one who holds bare legal title to property for the benefit of another.”

Scoville v. United States, 250 F.3d 1198, 1202 (8th Cir. 2001). It is a well-settled principle

that the “Government may foreclose on property held by a nominee of a taxpayer in order

to collect the taxpayer’s debt.” United States v. Schaeffer, 245 B.R. 407, 415 (D. Colo.

1999) (citing G.M. Leasing Corp. v. United States, 429 U.S. 338, 351 (1977)). Plaintiff

argues that Defendants Temple and Overseer are nominees or alter-egos of Defendant

Berryman, and that neither has a separate interest in the Subject Property. Compl. [#1] ¶¶

30-38. Plaintiff therefore asserts that the IRS is entitled to foreclose on the Subject

Property to satisfy Defendant Berryman’s outstanding tax liability. Id. ¶¶ 38, 45. 

Courts consider several factors when determining whether a title holder is merely

a nominee, the most important of which is the taxpayer’s ability to exert control, either

directly or indirectly, over the property at issue. See Schaeffer, 245 B.R. at 415 (citing

Valley Fin., Inc. v. United States, 629 F.2d 162, 172 (D.C. Cir. 1980)). The following

considerations are relevant to the Court’s determination of whether an individual holds

property as the nominee of another: 

(1) the lack of consideration paid by the nominee; (2) the control exercised

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over the property by the transferor while the title is in the nominee’s name;

(3) the close relationship between the transferor and the nominee; (4) the use

by the transferor of the transferred property; and (5) the lack of interference

in [the] transferor’s use of [the] property by the nominee . . . Additionally,

courts sometimes consider whether the property was placed in the name of

a nominee in anticipation of a suit or the occurrence of liabilities.

United States v. Novotny, 90 A.F.T.R.2d (RIA) 2002-5684, 2002-5695 through -5696 (D.

Colo. 2002) (citations omitted). Plaintiff argues that the facts in its pleadings are sufficient

to show that Defendants Temple and Overseer are mere nominees of Defendant

Berryman.

Plaintiff asserts in its Complaint that a business relationship existed between

Defendants Temple, Berryman, and Overseer, citing the various transfers of the Subject

Property from party to party. Compl. [#1] ¶¶ 12-15, 30-38. As to the issue of consideration,

the Complaint asserts that on April 29, 2003, Defendant Berryman purportedly transferred

the Subject Property to Defendant Temple via two quitclaim deeds. Id. ¶ 12. These deeds

cite no consideration, and there is no evidence that Defendant Temple ever paid

consideration for these purported transfers. Id. ¶ 33. Subsequently, Defendant Temple

purportedly transferred the Subject Property to Defendant Overseer via a Grant, Bargain,

and Sale Deed. Id. ¶ 14. The Complaint notes that this grant lists a mere $10 as the

consideration paid, and goes so far as to claim that even this nominal compensation was

never paid. Id. ¶¶ 14, 35. Given that the first deed cites no consideration and the second

deed lists a mere $10 as consideration, the Court accepts the uncontradicted evidence that

either little or no consideration was exchanged in these transfers. Id. ¶¶ 12, 14, 33, 35.

The Complaint pleads facts concerning Defendant Berryman’s control over the

Subject Property, alleging that she has full use, enjoyment, and control over the Subject

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Property, without any interference from Defendant Temple or Overseer. Id. ¶¶ 31, 32.

Plaintiff also alleges that Defendant Berryman pays no rent to Defendant Temple or

Overseer and indirectly pays the other expenses for the Subject Property. Id. ¶¶ 34, 36.

Thus, the facts alleged concerning control over the Subject Property weigh heavily in favor

of finding that Defendant Berryman is the true beneficial owner of the Subject Property. 

The Court also considers the possibility that these transfers, and perhaps even the

incorporation of these entities, were merely attempts to avoid tax liability. A bona fide

religious leader, such as a bishop or other authorized religious official, may incorporate as

a “corporation sole” under state law, in his capacity as a religious official. See, e.g., Berry

v. Soc’y of Saint Pius X, 69 Cal. App. 4th 354 (1999). A legitimate corporation sole is

designed to ensure continuity of ownership of property dedicated to the benefit of a

legitimate religious organization, and may own property and enter into contracts as a

natural person for the purposes of the religious entity and not for the individual office

holder’s personal benefit. See C.R.S. § 7-52-103.

 The IRS has warned of the rising trend of taxpayers applying for incorporation

under the pretext of being an official of a church or other religious organization to avoid tax

liability. See Rev. Rul. 2004-27, 2004-1 C.B. 625. These individuals contend that their

income is exempt from taxation because the income allegedly belongs to the corporation

sole, which is claimed to be a tax exempt organization. Id. A taxpayer cannot avoid

income tax or other financial responsibilities by purporting to be a religious leader and

forming a corporation sole for tax avoidance purposes, and any claims that assignment of

income and transfer of assets to such an entity will exempt an individual from income tax

are meritless. Courts have repeatedly rejected similar arguments as frivolous, imposed

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penalties for making such arguments, and upheld criminal tax evasion convictions against

those making or promoting the use of such arguments. See, e.g., United States v.

Heineman, 801 F.2d 86 (2d Cir. 1986) (upholding conviction for promoting use of purported

church entities to avoid taxes); United States v. Adu, 770 F.2d 1511 (9th Cir. 1985)

(upholding conviction for aiding and assisting in the preparation and presentation of false

income tax returns with respect to false charitable contribution deductions to same type of

purported church entities involved in Heineman); Svedahl v. Comm’r, 89 T.C. 245 (1987)

(sanctioning taxpayer for using contributions to purported church entities similar to those

involved in Heineman to shield income and pay personal expenses). 

Plaintiff alleges in its Complaint that each transfer of the Subject Property was made

(1) without adequate consideration, and (2) during a period when Defendant Berryman

reasonably should have believed that she would incur debts beyond her ability to pay.

Compl. [#1] 41, 43. According to exhibits presented by Plaintiff, Defendant Berryman

incorporated Defendant Temple on October 3, 2002. Articles of Incorporation [#52-30]. 

On April 29, 2003, less than a year later, Defendant Berryman purportedly transferred the

Subject Property to Defendant Temple. Quitclaim Deeds to Temple [#52-17]. More

notably, Defendant Berryman incorporated Defendant Overseer on July 10, 2009. Entity

Details of Overseer [#52-31]. However, on July 8, 2009, two days before Overseer had

been officially incorporated, Defendant Berryman purportedly transferred the Subject

Property from Temple to Overseer. Grant, Bargain, and Sale Deed [#52-18]; Berryman

Responses and Replies [#52-29] at 8; Berryman Depo. [#52-27] 42:14. In the face of

Defendant Berryman’s persistent silence on the matter, the Court notes the high danger

that these rapid transfers to newly incorporated entities were made in anticipation of

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6

 Although the Court notes that the purported transfer from Temple occurred before

Overseer was incorporated, possibly bringing into question whether the Subject Property was ever

legally transferred to Overseer, all the factors of the nominee analysis weigh against both Temple

and Overseer. If Temple had never transferred the Subject Property, Temple would still be found

to be a nominee of Defendant Berryman with no individual interest in the Subject Property. As

Plaintiff has requested default judgment against both corporations sole, the distinction is irrelevant

to the Court’s findings.

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litigation or other collection action concerning Defendant Berryman’s federal tax debts.

Grant, Bargain, and Sale Deed [#52-18]; Berryman Responses and Replies [#52-29] at 8;

Berryman Depo. [#52-27] 42:14; Mitchell v. United States, 526 U.S. 314, 327 (1999); 

Baxter v. Palmigiano, 425 U.S. 308, 319 (1976) (quoting (quoting United States v. Hale,

422 U.S. 171, 176 (1975)). According to Plaintiff, the purported transfers of the Subject

Property from Defendant Berryman to Defendant Temple, and from Defendant Temple to

Defendant Overseer, were intended to hinder, delay, or defraud the United States of lawful

taxes, in violation of the Colorado Uniform Fraudulent Transfer Act. Id. ¶¶ 40, 42; Colo.

Rev. Stat. § 38-8-105.

After weighing these factors, all of which tend to support a nominee theory, the Court

finds that, regardless of whether Defendant Berryman intended to avoid tax liability through

these transfers, Plaintiff’s Complaint [#1] has sufficiently asserted that Defendants Temple

and Overseer are nominees of Defendant Berryman. Therefore, the Court finds that

Defendants Temple and Overseer have no interest in the Subject Property, and respectfully

recommends that Plaintiff’s request for default judgment against Defendants Temple and

Overseer be granted.6

 

C. Recommendation.

For the reasons stated above, the Court respectfully RECOMMENDS that Plaintiff’s

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Motion [#52] be GRANTED IN PART. 

The Court respectfully RECOMMENDS that Plaintiff’s request for default judgment

against Defendants Temple and Overseer be GRANTED. 

III. Request for Summary Judgment Pursuant to Fed. R. Civ. P. 56(c)

A. Standard of Review

Summary judgment is proper when the record “show[s] 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). A dispute is “genuine” if the outcome could be decided in favor of

either party. Farthing v. City of Shawnee, 39 F.3d 1131, 1135 (10th Cir. 1994). A fact is

“material” if it could reasonably affect the outcome of the case. Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 248 (1986). 

Where the movant bears the ultimate burden of proof at trial, it must submit evidence

to establish every element of its claims. In re Ribozyme Pharm. Inc. Sec. Litig., 209 F.

Supp. 2d 1106, 1111 (D. Colo. 2002). Once the Motion has been properly supported, the

burden shifts to the non-movant to show the existence of a genuine dispute of a material

issue by going beyond the allegations in its pleading and providing “specific facts showing

there is a genuine issue for trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). To

satisfy its burden of providing specific facts, the nonmoving party must tender affidavits or

other competent evidence. Concrete Works, Inc. v. City & Cnty. of Denver, 36 F.3d 1513,

1517 (10th Cir. 1994). The factual record and inferences therefrom are viewed in the light

most favorable to the nonmoving party. Byers v. City of Albuquerque, 150 F.3d 1271, 1274

(10th Cir. 1998). However, the Court is not obligated to consider conclusory statements

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or testimony based on conjecture, subjective belief, or inadmissible evidence. Rice v.

United States, 166 F.3d 1088, 1092 (10th Cir. 1999). 

At the outset, the Court notes that a litigant who refuses to present testimony or

evidence may have to accept certain negative consequences that flow from that action.

Baxter, 425 U.S. at 318-19; United States v. Rylander, 460 U.S. 752, 758 (1983). Adverse

inferences may be drawn against a party who refuses to testify in response to probative

evidence offered against her. Mitchell, 526 U.S. at 327. “[A]s Mr. Justice Brandeis

declared, speaking for a unanimous court . . . ‘[s]ilence is often evidence of the most

persuasive character.’” Baxter, 425 U.S. at 319 (quoting United States ex rel. Bilokumsky

v. Tod, 263 U.S. 149, 153-154 (1923)). “‘Failure to contest an assertion . . . is considered

evidence of acquiescence . . . if it would have been natural under the circumstances to

object to the assertion in question.’” Baxter, 425 U.S. at 319 (quoting Hale, 422 U.S. at

176). However, in ruling on motions for summary judgment, all inferences are generally

drawn in favor of the non-movant. Byers, 150 F.3d at 1274. Therefore, where there is any

doubt that Plaintiff has clearly met its summary judgment burden, the Court hesitates to

draw an adverse inference against one who refuses to provide information at the summary

judgment stage. See In re Marrama, 445 F.3d 518, 522 (1st Cir. 2006); see also MuleroRodríguez v. Ponte, Inc., 98 F.3d 670, 678 (1st Cir. 1996) (explaining that a party’s

invocation of the Fifth Amendment in discovery does not alter the requirement that

inferences for summary judgment be drawn in favor of non-movant); accord LaSalle Bank

Lake View v. Seguban, 54 F.3d 387, 390 (7th Cir. 1995) (“[E]ven in a civil case a judgment

imposing liability cannot rest solely upon a privileged refusal to admit or deny at the

pleading stage.”).

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B. Analysis

1. Undisputed Material Facts

Pursuant to Fed. R. Civ. P. 56(c), when submitting a motion for summary judgment

for the Court's review, “[a] party asserting that a fact cannot be . . . genuinely disputed must

support the assertion by . . . citing to particular parts of materials in the record, including

. . . documents [and] affidavits.” If the responding party “fails to properly address [the

movant's] assertion of fact as required by Rule 56(c),” the Court may “grant summary

judgment if the motion and supporting materials-including the facts considered

undisputed—show that the movant is entitled to it.” Fed. R. Civ. P. 56(e)(3).

Plaintiff included a “Statement of Undisputed Facts” in its Motion. Motion [#52] at

1-6. Review of Defendant Berryman’s Response [#58] demonstrates to the Court that

Defendant Berryman offers no substantive challenge to the factual statements presented

by Plaintiff, nor does Defendant Berryman set forth any other facts which would create a

genuine issue for trial. See Response [#58]. The Court, after review of Plaintiff's statement

of facts and accompanying evidentiary support, concludes that Plaintiff's statement is

properly supported. Thus, the Court recommends finding that the following facts are

material and undisputed.

a. Federal Income Tax Assessments Against Defendant Berryman

Plaintiff’s exhibits and Defendant Berryman’s testimony at her deposition

demonstrate that Defendant Berryman received income for each of the tax years at issue

that she failed to report to the Internal Revenue Service (“IRS”). See Exhibits 2-10, Forms

4340 [#52-3, -4, -5, -6, -7, -8, -9, -10, -11]; Berryman Depo. [#52-27] at 73:18-20. In 1997,

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Defendant Berryman received over $300,000 in capital gains from the sale or exchange of

assets, over $140,000 in distributions from her IRA retirement accounts, and other income

from sources such as Social Security, dividends, and interest income, all of which she failed

to report to the IRS. Exhibit 11, 1997-2001 Form 4549 Income Tax Examination Changes

[#52-12] at 2. In the following years, Defendant Berryman again received interest,

dividends, and IRA distributions, amounting to nearly $120,000 unreported income in 1999,

over $98,000 unreported income in 2000, and over $33,000 unreported income in 2001.

Id. at 8, 13, 18. In 2006, Defendant Berryman also appears to have received $4,875 in

income from Teachers Insurance and Annuity Association – College Retirement Equities

Fund (“TIAA-CREF”), in addition to over $50,000 in other income. Exhibit 12, 2002-2006

Form 4549 Income Tax Examination Changes [#52-13] at 17-18. TIAA-CREF, however,

withheld $975 in federal taxes from this $4,875, and Defendant Berryman subsequently

filed a Form 1040 with the IRS, claiming that this $975 in withheld taxes was her only

income and demanding a refund of $975 from the IRS. Exhibit 13, Form 1040 for 2006

[#52-14]. 

Plaintiff asserts that the IRS timely and properly made assessments for unpaid

federal income taxes and related penalties and interest against Defendant Berryman for

the tax years at issue, as set forth in the nine Forms 4340 attached as exhibits to the

Motion. See Exhibits 2-10, Forms 4340 [#52-3, -4, -5, -6, -7, -8, -9, -10, -11]. There is no

dispute that Defendant Berryman received notices of her alleged tax liability and demands

for payment. Exhibits 18-23, Notices of Federal Tax Lien [#52-19, -20, -21, -22, -23, -24].

b. Acquisition, Transfer, and Ownership of Subject Property

On August 1, 1997, Defendant Berryman purchased the Subject Property with her

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own funds via two warranty deeds from Mary and George S. Clausen, both dated August

1, 1997, and both recorded in the Larimer County Recorder’s Office on August 6, 1997.

Exhibit 14, Warranty Deeds to Berryman [#52-15]. 

On October 3, 2002, Defendant Berryman incorporated Defendant Temple in the

State of Utah. Articles of Incorporation [#52-30]. Defendant Berryman is the sole director,

officer, rector, overseer, and/or member of Defendant Temple. Id.; Berryman Responses

& Replies [#52-29] at 5-6; Berryman Depo. [#52-27] 42:14. On July 10, 2009, Defendant

Berryman incorporated Defendant Overseer in the State of Nevada. Entity Details of

Overseer [#52-31]. Defendant Berryman is also the sole director, officer, rector, overseer,

and/or member of Defendant Overseer. Id.; Berryman Responses & Replies [#52-29] at

5-6; Berryman Depo. [#52-27] at 47:23-49:11.

On April 29, 2003, Defendant Berryman transferred the Subject Property to

Defendant Temple via two quitclaim deeds that were recorded in the Larimer County

Recorder’s Office on May 7, 2003. Quitclaim Deeds to Temple [#52-17]. Plaintiff alleges,

and Defendants fail to contest, that Defendant Temple paid no consideration for this

transfer. Id. at 2, 4; see Berryman Depo. [#52-27] 45:14-19, 52:3-53:18. On July 8, 2009,

Defendant Berryman, as sole director of Defendant Temple, purportedly transferred the

Subject Property from Defendant Temple to Defendant Overseer via a “Grant, Bargain, and

Sale Deed.” Grant, Bargain, & Sale Deed [#52-18]; Berryman Responses & Replies [#52-

29] at 8; Berryman Depo. [#52-27] at 42:14. Notably, this occurred two days prior to

Defendant Overseer’s incorporation on July 10, 2009. Entity Details of Overseer [#52-31].

The Grant, Bargain, and Sale Deed was recorded in the Larimer County Recorder’s Office

on July 9, 2009. Grant, Bargain, & Sale Deed [#52-18]. The Grant, Bargain, and Sale

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Deed lists ten dollars as the consideration, but there is no evidence that Defendant

Overseer paid this consideration for the purported transfer. Grant, Bargain, & Sale Deed

[#52-18]; Berryman Responses & Replies [#52-29] at 8-10; Berryman Depo. [#52-27] at

40:8-43:2; 52:3-53:18; 54:5-12. 

Defendant Berryman has not denied that Defendant Overseer paid no consideration

for this transfer. Berryman Responses & Replies [#52-29] at 8-10; Berryman Depo. [#52-

27] at 40:8-43:2; 52:3-53:18; 54:5-12. Rather, she denies Plaintiff’s request that she admit

that Defendant Overseer paid no consideration for this transfer solely on the basis that she

does not recognize the entity “Temple” as defined by the United States. Berryman

Responses & Replies [#52-29] at 5. Defendant Berryman also refused during her

deposition to answer almost all questions relating to Defendants Temple and Overseer,

including questions regarding whether Defendant Temple paid any consideration for this

transfer. See Berryman Depo. [#52-27] at 40:14-41:1, 47:16-18, 52:3-53:18.

Notwithstanding these purported transfers, Defendant Berryman admits that she has

full use, enjoyment, and control over the Subject Property, without any interference from

Defendant Temple or Overseer. Berryman Responses & Replies [#52-29] at 8-10. It is

uncontested that Defendant Berryman resides at the Subject Property without paying rent

to Defendant Temple or Overseer. Id. at 4, 8-10. It is also uncontested that Defendant

Berryman directly pays for certain expenses for the Subject Property, such as the

homeowner’s insurance for the Subject Property. Berryman Depo. [#52-27] at 56:10-57:12.

However, Defendant Berryman contends that this payment should not prove her status as

the legal homeowner. See id. at 57:11-15 (“[T]hat does not mean that I am the

homeowner, because there is collateral protection . . . . The true owner of the [Subject

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Property] is protected. And that is not [Defendant] Nancy Dell Berryman.”). She also

admits to paying the other expenses for the Subject Property by giving money to Defendant

Overseer and by then, as sole officer of Defendant Overseer, paying the expenses using

this money. Berryman Responses & Replies [#52-29] at 8-9.

2. Plaintiff’s Entitlement to Judgment as a Matter of Law 

Plaintiff requests summary judgment foreclosing its federal tax lien on the Subject

Property to satisfy Defendant Berryman’s outstanding tax liabilities. Because the United

States is the Plaintiff in this suit, it has the ultimate burden of demonstrating that foreclosure

is appropriate. See In re Ribozyme Pharms., 209 F. Supp. 2d at 1111. Plaintiff must

establish that (1) it has a valid federal tax lien, and (2) that the taxpayer has an interest in

the property that the lien seeks to foreclose. See United States v. Janis, 428 U.S. 433,

440-41 (1976); United States v. Miller Bros. Const. Co., 505 F.2d 1031, 1036 (10th Cir.

1974). 

Plaintiff moves for summary judgment in its favor, asking the Court (1) to reduce to

judgment federal tax assessments against Defendant Berryman for tax years 1997 and

1999-2006, and (2) to foreclose those tax liens against the Subject Property. Motion [#52]

at 1. In support of the Motion, Plaintiff first contends that it has a valid federal tax lien

because it has conclusively established tax liabilities with presumptively valid tax

assessments. Id. at 9; Exhibits 2-10, Forms 4340 [#52-3, -4, -5, -6, -7, -8, -9, -10, -11].

Plaintiff next argues that it is entitled to foreclose its tax liens against the Subject Property

at issue in this suit because Defendant Berryman is the true beneficial owner of the Subject

Property. Motion [#52] at 12. 

a. Valid Tax Lien

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Pursuant to 26 U.S.C. § 6321, a tax lien arises when (1) the taxpayer is found to be

liable to pay any tax; (2) a demand has been made for such payment; and (3) the taxpayer

has refused to pay. In this case, there is no dispute that Defendant Berryman received

demands for the tax liability in question. Exhibits 18-23, Notices of Federal Tax Lien [#52-

19, -20, -21, -22, -23, -24]. There is also no dispute that Defendant Berryman has not paid

the requested tax liability. All that remains is it determine her liability.

A “federal tax lien is perfected upon assessment and no further action need be

taken.” Novotny, 90 A.F.T.R.2d (RIA) at 2002-5695 (citing United States v. Vermont, 377

U.S. 351, 352 (1964)). Further, “[a]n assessment of tax as well as an assessment for

failure to file tax returns and make estimated tax payments are entitled to a presumption

of validity.” Id. at 2002-5694 (citations omitted). Courts have repeatedly held that a

Certificate of Assessments is sufficient evidence that tax assessments were properly made,

and that these certificates may be relied on in ruling on a motion for summary judgment.

See, e.g., Long v. United States, 972 F.2d 1174, 1181 (10th Cir. 1992); United States v.

Chila, 871 F.2d 1015, 1017 (11th Cir. 1989); United States v. Miller, 318 F.2d 637, 639 (7th

Cir. 1963); see also United States v. Nuttall, 713 F. Supp. 132, 135 (D. Del. 1989) aff’d, 893

F.2d 1332 (3rd Cir. 1989) (finding that Forms 4340 establish government’s prima facie case

that assessment is valid for purposes of summary judgment); Nestor v. Comm’r, 118 T.C.

162 (2002) (holding that it was not an abuse of discretion for the Appeals Officer to use

Form 4340 to verify the assessment). In support of this Motion [#52], Plaintiff has

submitted Forms 4340, Certificates of Assessments, Payments and Other Specified

Matters, pertaining to Defendant Berryman’s federal tax liabilities for each tax year at issue.

Exhibits 2-10, Forms 4340 [#52-3, -4, -5, -6, -7, -8, -9, -10, -11]. Because these

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assessments are given a presumption of correctness, the burden now shifts to Defendants

to submit admissible evidence to rebut that presumption. Novotny, 90 A.F.T.R.2d at 2002-

5694. 

Defendant Berryman’s Response [#58] did not dispute any of the above arguments

or set forth any additional facts. Rather, her Response consists solely of standard tax

protestor arguments that the Court has previously rejected and that the IRS has deemed

“frivolous.” See The Truth About Frivolous Tax Arguments, Internal Revenue Service, 44

(Feb. 16, 2012), http://www.irs.gov/pub/irs-utl/friv_tax.pdf (last viewed on Feb. 21, 2013).

Defendant Berryman advanced the frivolous arguments that: (1) this case is one of admiral

or maritime jurisdiction but not civil; (2) the United States of America is not the same as the

United States, and that it is a private corporation; (3) the United States is not the real party

in interest; (4) the United States lacks standing to bring this claim; (5) the United States

lacks capacity; (6) the United States has not proved agency; (7) the IRS no longer exists;

(8) all tax collectors have been decommissioned; (9) the “Income Tax Law” was repealed

in 1939; (10) the United States was dissolved in 1933; (11) federal taxes are voluntary; and

(12) no verified assessments exist. 

Defendant Berryman’s argument that this case is one of admiral or maritime

jurisdiction lacks merit. Plaintiff properly alleged that this Court has jurisdiction over this

action pursuant to 28 U.S.C. §§ 1331, 1340, and 1345, and to 26 U.S.C. §§ 7402 and

7403. Compl. [#1] ¶ 3; see United States v. Dawes, 161 F. App’x 742, 745 (10th Cir. 2005)

(dismissing as frivolous defendants’ assertions that the court lacked subject matter

jurisdiction over a suit involving the foreclosure of federal tax liens and noting that the

United States had “properly alleg[ed] jurisdiction in its complaint under 26 U.S.C. §§

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7402(a) and 7403 and 28 U.S.C. §§ 1340 and 1345"). The argument that the “United

States” is the real party of interest pursuant to Fed. R. Civ. P. 17(a) is also frivolous.

Dawes, 161 F. App’x at 745-46.

With respect to the argument that the “United States of America” and the “United

States” are not the same entity, this argument is patently frivolous. Nothing in 28 U.S.C.

§ 1746 or the United States Constitution remotely supports Defendant Berryman’s assertion

that the “United States of America” is a separate legal entity from the “United States,” or

that such a distinction affects the standing of Plaintiff to bring this suit. See, e.g., United

States v. Jacob, 242 F.3d 391 (Table) (10th Cir. Nov. 13, 2000). Defendant Berryman also

contends that the authority of the Untied States is limited to the confines of the District of

Columbia. This argument is also “patently frivolous.” Lonsdale v. United States, 919 F.2d

1440, 1448 (10th Cir. 1990). Similarly frivolous is the contention that the United States of

America does not exist and therefore lacks standing or capacity. United States. v. UMB

Bank Account No. 1290923, No. 10-cv-00538-REB-MJW, 2013 WL 673984, at *2 (D. Colo.

Feb. 22, 2013). 

Defendant Berryman also asserts that the IRS no longer exists, that all tax collectors

have been decommissioned, and that the “Income Tax Law” was repealed in 1939.

Response [#59] at 14-17. These arguments each concern the authority of the IRS to

collect taxes. There is a plethora of constitutional and statutory authority establishing that

the IRS is an agency of the United States with the authority to collect taxes, and the

Supreme Court has explicitly stated “that the Internal Revenue Service is organized to carry

out the broad responsibilities of the Secretary of the Treasury under § 7801(a) of the 1954

Code for the administration and enforcement of the internal revenue laws.” Donaldson v.

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7

 Defendant Berryman also asserted in her deposition that the Federal Reserve Notes

currently used in the United States are not valid currency and cannot be taxed. Berryman Depo.

[#52-27] at 73:18-20. The courts have rejected this argument on numerous occasions. See, e.g.,

United States v. Rickman, 638 F.2d 182, 184 (10th Cir. 1980) (affirming a conviction for willfully

failing to file a return and rejecting the taxpayer’s argument that “the Federal Reserve Notes in

which he was paid were not lawful money within the meaning of Art. 1, § 8, United States

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United States, 400 U.S. 517, 534 (1971). Thus, any argument challenging the authority of

the IRS to collect taxes is patently frivolous. See, e.g., United States v. Springer, 427 F.

App’x 650, 652-53 (10th Cir. 2011) (recognizing tax protestor arguments challenging the

tax collecting authority of the IRS as “patently frivolous”); United States v. Collins, 920 F.2d

619, 629 (10th Cir. 1990) (“For seventy-five years, the Supreme Court has recognized that

the sixteenth amendment authorizes a direct nonapportioned tax upon United States

citizens throughout the nation, not just in federal enclaves; efforts to argue otherwise have

been sanctioned as frivolous.”) (citations omitted).

As for the argument that federal taxes are “voluntary,” the word “voluntary,” as used

in IRS publications, refers to the practice of allowing taxpayers initially to determine the

correct amount of tax and complete the appropriate returns, rather than having the

government determine tax liability from the outset. See The Truth About Frivolous Tax

Arguments, Internal Revenue Service, 44 (Feb. 16, 2012), http://www.irs.gov/pub/irsutl/friv_tax.pdf (last viewed on Mar. 22, 2013). However, the requirement to file an income

tax return is not voluntary and is clearly set forth in sections 6011(a), 6012(a), and 6072(a)

of the Internal Revenue Code. See also 26 C.F.R. § 1.6011-1(a). The Tenth Circuit has

rejected this argument as frivolous. United States v. Tedder, 787 F.2d 540, 542 (10th Cir.

1986) (upholding a conviction for willfully failing to file a return, stating that the premise “that

the tax system is somehow ‘voluntary’ . . . is incorrect”).7

 

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Defendant Berryman lastly argues that the Assessments presented by Plaintiff are

“void upon their face” for failing to meet the factors and requirements Defendant Berryman

lists in an attachment to her Response. [#58] at 20, 24. The IRS has repeatedly refuted

the argument that before the IRS may collect overdue taxes, the IRS must provide

taxpayers with a summary record of assessment made on a Form 23-C or on another

particular form. See Rev. Rul. 2007-21, 2007-1 C.B. 865; see also The Truth About

Frivolous Tax Arguments, Internal Revenue Service, 42 (Feb. 16, 2012)

http://www.irs.gov/pub/irs-utl/friv_tax.pdf (last reviewed on Feb. 21, 2013). In an Internal

Revenue Bulletin published on April 2, 2007, the IRS addressed this very argument:

[A]lthough an assessment is recorded on a summary record of assessment,

such as the Form 23C . . . there is no legal requirement that a summary

record of assessment be provided to a taxpayer before the Service may

proceed with collection activity. Further, if a taxpayer requests proof that an

assessment was made, the Service is not required to provide any particular

form or information in any particular format to the taxpayer so long as the

Service provides the information required by Treasury Regulation §

301.6203-1 to the taxpayer. Any position to the contrary has no merit and is

frivolous. 

Rev. Rul. 2007-21, 2007-1 C.B. 865 (emphasis added). In Nestor, 118 T.C. at 166, the tax

court held that the petitioner was not entitled to production of Form 23-C at his collection

due process hearing, and that it was not an abuse of discretion for the Appeals Officer to

use Form 4340 to verify the assessment for purposes of section 6330(c)(1). Similarly, in

Powell v. Comm’r, T.C. Memo. 2009-174, 98 T.C.M. (CCH) 56, *6 (2009), the court

awarded a $25,000 penalty against the petitioner for frivolously asserting that the

respondent was obligated to produce a Form 23-C where, just as Defendant Berryman has,

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petitioner had received notices of deficiency. See Exhibits 18-23, Notices of Federal Tax

Lien [#52-19, -20, -21, -22, -23, -24]. 

To support a valid assessment, a summary record of assessment must identify the

taxpayer, the character of the liability, the taxable period, and the amount of the

assessment. 62 C.F.R. § 301.6203-1. In support of this Motion, Plaintiff has submitted

Forms 4340 pertaining to Defendant Berryman’s federal tax liabilities and civil penalties for

each of the tax years at issue. Exhibits 2-10, Forms 4340 [#52-3, -4, -5, -6, -7, -8, -9, -10,

-11]. Forms 4340 are generated under seal and signed by an authorized delegate of the

Secretary of the Treasury, and are thus self-authenticating pursuant to Federal Rule of

Evidence 902(1). Forms 4340 are also admissible into evidence as a trustworthy public

record. Fed. R. Evid. 803(8). Though the Forms 4340 in this case use the term

“assessment date” rather than “23C date,” the Forms 4340 plainly set forth the assessment

dates and are sufficient to support summary judgment. See, e.g., Long, 972 F.2d at 1181;

Chila, 871 F.2d at 1017; Miller, 318 F.2d at 639; Exhibits 2-10, Forms 4340 [#52-3, -4, -5,

-6, -7, -8, -9, -10, -11]. There are no additional requirements for the IRS to produce either

a separate Form 23-C or any of the other documents requested by Defendant Berryman

in her attachment. Response [#58] at 24. 

 Every citizen’s responsibility to pay taxes is well settled. See Helvering v. Mitchell,

303 U.S. 391, 399 (1938); Tedder, 787 F.2d at 542; Abell v. Sothen, 214 F. App’x 743, 757

(D. Colo. 2007). Defendant Berryman has utterly failed to offer evidence suggesting that

she should be exempt from that rule. See Rylander, 460 U.S. at 758. Therefore, the Court

finds that Defendant Berryman is liable to Plaintiff for unpaid taxes in the years 1997, 1999,

2000, 2001, 2002, 2003, 2004, 2005, and 2006.

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b. True Beneficial Owner

 Pursuant to the Internal Revenue Code, the IRS may satisfy a tax deficiency by

imposing a lien on any “property” or “rights to property” belonging to the taxpayer. Drye v.

United States, 528 U.S. 49, 55 (1999) (quoting 26 U.S.C. § 6321). The statutory language

“is broad and reveals on its face that Congress meant to reach every interest in property

that a taxpayer might have.” Id . at 56 (internal quotation marks omitted). Thus, the terms

“property” and “rights to property” may include “not only property and rights to property

owned by the taxpayer but also property held by a third party if it is determined that the

third party is holding the property as a nominee . . . of the delinquent taxpayer.” Spotts v.

United States, 429 F.3d 248, 251 (6th Cir. 2005); see G.M. Leasing Corp, 429 U.S. at 347,

350-51 (holding that luxury or vintage model automobiles transferred by a delinquent

taxpayer to a nominee corporation remained subject to the collection of the taxpayer’s tax

liability); Macklin v. United States, 300 F.3d 814, 818 n.2 (7th Cir. 2002) (“In the case of a

nominee lien, the IRS proceeds ‘against an alter ego or nominee of a delinquent taxpayer

for purposes of satisfying the taxpayer’s obligations.’”) (quoting United States v. Letscher,

83 F. Supp. 2d 367, 375 (S.D.N.Y. 1999)).

Default judgment has been granted against Defendants Temple and Overseer,

holding that neither has a valid interest in the Subject Property. Thus, as a matter of law,

Defendant Overseer holds the Subject Property as a nominee corporation of Defendant

Berryman rather than as a valid corporation sole, and Defendant Berryman is the true

beneficial owner. Therefore, the Subject Property transferred to Defendant Overseer

remains subject to the collection of Defendant Berryman’s tax liability. See G.M. Leasing

Corp., 429 U.S. at 350-51. The Court finds that the United States has the authority to

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encumber the Subject Property with a valid tax lien.

c. Amount of Tax Liability

In addition to the issues raised above, the parties dispute what amount, if any,

Defendant Berryman owes the IRS. Berryman Responses & Replies [#52-29] at 2. At the

time Plaintiff filed its Motion on October 15, 2012, Plaintiff contended that Defendant

Berryman’s outstanding tax liability was $601,437.27. Motion [#52] at 17; Routledge Decl.

[#52-1] ¶ 4. The Court has carefully reviewed the parties’ motions and evidence presented,

and has considered them in light of the applicable law. However, the Court is unable to

conclude that Plaintiff has presented sufficient factual allegations as to the precise amount

of Defendant Berryman’s tax liability. Compare United States v. McMullin, 948 F.2d 1188,

1192 (10th Cir. 1991) (“In a suit brought by the government to collect taxes resulting from

unreported income, the government generally establishes a prima facie case when it shows

a timely assessment of the tax due, supported by a minimal evidentiary foundation, at

which point a presumption of correctness arises.”) (emphasis added), with United States

v. Holmes, No. 08-02446, 2011 WL 1158675, at *6 (D. Colo. Mar. 20, 2011) (declining to

make a summary determination of the government’s entitlement to interest and penalties

where there were two separate time periods during which interest could be calculated and

awarded, and where the government did not fully clarify their calculations of interest under

applicable authority). 

 Defendant Berryman has refused to provide documents or testimony from which her

income may be determined, yet argues that the tax liability assessed against her is

incorrect. United States’ First Set of Interrogatories, Requests for Production, & Requests

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for Admission [#52-28] ¶¶ 1-5; Berryman Responses & Replies [#52-29] at 2. A

defendant’s failure to testify regarding the tax liabilities at issue typically allows the court

to draw the negative inference that the testimony would have supported the plaintiff’s

position. See United States v. Sullivan, 274 U.S. 259, 264 (1927) (holding that a taxpayer

may not, by silence, “draw a conjurer’s circle around the whole matter” of his or her tax

liability); Chaffin, 689 P.2d at 688-89 (holding that adverse inferences were permissible in

the face of defendants’ repeated invocation of Fifth Amendment privilege in discovery

responses); accord Libutti v. United States, 107 F.3d 110, 121 (2nd Cir. 1997) (holding that

a court may draw an adverse inference from a party’s failure to testify in a civil action). 

The following exchange is representative of most of Defendant Berryman’s

deposition:

Q. I’m asking you, sitting here today, to tell me what your understanding of

who the owner of the Subject Property is?

A. I refuse to answer on the basis that the Corporations Sole’s business is

the Corporations Sole’s business and it is not public. It is private.

Q. So if I understand you correctly, you’re refusing to answer --

A. Anything about either Corporations Sole. Is that your understanding, yes

or no; is that your understanding.

Q. Again, Ms. Berryman, if we could try not to talk over each other, so the

record is clear. I’m asking you, Is it your testimony that you’re refusing to

answer the question, Who is the current owner of the Subject Property?

A. I am refusing to answer any questions about either Corporations Sole on

the basis that they are private and not public.

Berryman Depo. [#52-27] at 53:1-18. Here, Defendant Berryman is attempting to do

precisely what the Supreme Court in Sullivan forbade—to draw a ‘conjurer’s circle’ around

any determination of her tax liability for the years at issue by refusing, on the grounds that

the business of a corporation sole is private, to answer nearly every question asked at her

deposition. See generally Berryman Depo. [#52-27]; see also Chaffin, 689 P.2d at 688-89;

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Sullivan, 274 U.S. at 264; Robert Heidt, The Conjurer’s Circle-The Fifth Amendment

Privilege in Civil Cases, 91 Yale L.J. 1062 (1982). 

Plaintiff has provided Forms 4340 for the years in question. See Exhibits 2-10,

Forms 4340 [#52-3, -4, -5, -6, -7, -8, -9, -10, -11]. Accordingly, the government’s

assessment is entitled to a presumption of correctness. See McMullin, 948 F.2d at 1192

(holding that a presumption of correctness attaches to the Commissioner’s assessment,

once some substantive evidence is introduced demonstrating that the taxpayer received

unreported income); but see Doyal v. Comm’r of Internal Revenue, 616 F.2d 1191, 1192

(10th Cir. 1980) (citing Helvering v. Taylor, 293 U.S. 507, 515 (1935), for the holding that

it was proper to remand a case in which the taxpayer had proved the amount of the

Commissioner’s assessment to be arbitrary and excessive). However, upon a closer

analysis of the Forms 4340 presented by Plaintiff, the INTSTD program evidence presented

by Plaintiff, and the figures cited in Plaintiff’s Motion, the Court is unable to assure itself that

the outstanding balance claimed in Plaintiff’s Motion is clear on the face of the Forms 4340.

Motion [#52] at 17; Exhibit 1, INTSTD Calculations of Liability [#52-2]; Exhibit 2 , Form 4340

for 1997 [#52-3]; Exhibit 4, Form 4340 for 2000 [#52-5].

The sum of $601,437.27 seems to be taken from the Declaration of Lee Routledge,

Technical Advisor of the IRS, who determined the figure using the INTSTD computer

program to compute the tax liability, penalties, and applicable interest. Routledge Decl.

[#52-1] ¶¶ 3-4. As far as the Court can determine, the Balance Due for each year’s

INTSTD calculation is the sum of the figures under “Assessed Total” and “Total Accruals.”

Exhibit 1, INTSTD Calculations of Liability [#52-2]. The “Assessed Total” figures for all

years but 1997 and 2000 each seem to be drawn from the “Balance” figure on the

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corresponding Form 4340. Compare Exhibit 1, INTSTD Calculations of Liability [#52-2],

with Exhibits 3, 5-10, Forms 4340 [#52-4, -6, -7, -8, -9, -10, -11]. However, the “Assessed

Total” figure from the year 1997 is nearly nine thousand dollars short of the “Balance” figure

of the corresponding Form 4340, and the Court is unable to determine from Routledge’s

declaration, the INTSTD calculations, or the face of the Form 4340 the reason for this

discrepancy. Compare Exhibit 1, INTSTD Calculations of Liability [#52-2] at 2, with Exhibit

2 , Form 4340 for 1997 [#52-3] at 14. Similarly, the “Balance” figure from the Form 4340

for the year 2000 indicates an Assessed Total of $9,617.12. Exhibit 4, Form 4340 for 2000

[#52-5] at 9. However, the “Assessed Total” entered into the INTSTD computer program

for that year was -9,059.28, a figure the Court has been unable to explain from the face of

the year 2000 assessment. Exhibit 1, INTSTD Calculations of Liability [#52-2] at 20. 

Had Plaintiff demonstrated in a transparent manner how the liability it requests

follows from the valid assessments presumed from the Forms 4340, the Court would be

prepared to find fully in Plaintiff’s favor regarding the amount of the valid tax lien. However,

without knowing that these figures are accurately and directly drawn from the presumptively

valid assessment figures found in the Forms 4340, the Court hesitates to presume that the

INTSTD Calculations of Liability are alone sufficient to determine the proper amount of

liability. The Court declines to speculate as to the legitimacy of such a high figure without

confidence that the liability is correct on the face of valid tax assessments. Gross v.

Burggraf Constr. Co., 53 F.3d 1531, 1546 (10th Cir. 1995). In the absence of such

certainty, the Court declines to make a summary determination of the government’s

entitlement to interest and penalties. See, e.g., Holmes, 2011 WL 1158675, at *6.

However, the Court will permit Plaintiff to submit another dispositive motion for

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determination of the total amount of liability in light of these concerns for accuracy on the

face of a valid assessment. Defendant may respond in accordance with the Federal Rules

of Civil Procedure and the Local Rules of this Court. 

There is no admissible evidence to refute Plaintiff’s presentation of the facts

establishing that (1) it had a valid tax lien and that (2) Defendant Overseer holds the

Subject Property as a nominee of Defendant Berryman. Defendant Berryman offers only

frivolous arguments and conclusory claims in an attempt to satisfy her burden as the

nonmoving party and does not sufficiently satisfy her burden of providing “specific facts

showing there is a genuine issue for trial.” Celotex Corp., 477 U.S. at 324. As such,

Defendant Berryman’s arguments provide no basis for denial of summary judgment.

Plaintiff has met its burden of showing that no genuine issue of material fact exists and that

it is entitled to judgment as a matter of law concerning Defendant Berryman’s status as the

true beneficial owner of the Subject Property and the validity of the tax lien. Because

Plaintiff has met its burden as the party with the ultimate burden of proof at trial, and

because Defendant has failed to demonstrate that there are any genuine factual issues for

trial, summary judgment should be entered in Plaintiff’s favor, excepting only the accuracy

of the precise amount of tax liability requested for the tax years of 1997 and 2000.

Accordingly, the Court recommends that Plaintiff’s request for summary judgment finding

valid and accurate tax liability be granted in part, for tax year 1999 in the amount of

$77,765.47, for tax year 2001 in the amount of $7,264.97, for tax year 2002 in the amount

of $19,123.86, for tax year 2003 in the amount of $14,304.81, for tax year 2004 in the

amount of $15,611.59, for tax year 2005 in the amount of $14,086.97, and for tax year

2006 in the amount of $13,561.77. 

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The Court also recommends that Plaintiff’s request for summary judgment with

respect to the tax years 1997 and 2000 be denied without prejudice. However, the Court

will permit Plaintiff to submit another dispositive motion for determination of the total

amount of liability for 1997 and 2000 in light of these concerns for accuracy on the face of

a valid assessment. Defendant Berryman may respond in accordance with the Federal

Rules of Civil Procedure and the Local Rules of this Court. 

C. Recommendation

The Court respectfully RECOMMENDS that Plaintiff’s request for summary judgment

be GRANTED regarding Defendant Berryman’s tax liability for the tax years 1999, 2001,

2002, 2003, 2004, 2005, and 2006, in the amount of $142,595.58, plus other statutory

additions from October 1, 2012, in accordance with 28 U.S.C. § 1961(c)(1) and 26 U.S.C.

§ 6621, until judgment is paid in full. 

Further, the Court respectfully RECOMMENDS that Plaintiff’s Motion [#52] be

GRANTED with respect to Defendant Berryman’s liability for tax years 1997 and 2000 but

DENIED without prejudice with respect to the validity of the requested amount of tax

liability for the tax years 1997 and 2000.

IT IS HEREBY ORDERED that within 21 days of the District Judge’s resolution of

this Recommendation, Plaintiffs shall file either: (1) a motion for summary judgment

regarding the amount of Defendant Berryman’s liability for the years 1997 and 2000, or (2)

a motion to set Final Pretrial Conference regarding Defendant Berryman’s tax liabilities for

the years 1997 and 2000.

VI. Request for Sanctions Pursuant to Fed. R. Civ. P. 37

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A. Standard of Review

Federal Rule of Civil Procedure 37 allows a party to move for an order compelling

discovery and imposing sanctions in appropriate circumstances. Pursuant to Rule 37, the

Court may prevent a party who has failed to provide information as required by Rule 26(a)

or (e) from using information wrongfully withheld in subsequent proceedings. Under Rule

37(d), if a party fails to answer interrogatories or to respond to a request for production, the

Court may, among other sanctions, refuse to allow the disobedient party to present

evidence. The Court may also order payment of “the reasonable expenses, including

attorney’s fees, caused by the failure” and “may impose other appropriate sanctions,”

including but not limited to striking pleadings, prohibiting the disobedient party from

opposing designated claims, and entering default judgment against the disobedient party.

Fed. R. Civ. P. 37(b)(2)(A)(I)-(vii), (c)(1)(A), (c)(1)(C).

Rule 37 sanctions are imposed not merely to reimburse the wronged party or

penalize the offending party, but to deter others from engaging in similar conduct. Nat’l

Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643 (1976). “[T]he limit of any

sanction should be that [penalty] reasonably necessary to deter the wrongdoer.” White v.

Gen. Motors Corp., 908 F.2d 675, 685 (10th Cir. 1990). “[T]he chosen sanction must be

both ‘just’ and ‘related to the particular ‘claim’ which was at issue in the order to provide

discovery.’” Ehrenhaus v. Reynolds, 965 F.2d 916, 920 (10th Cir. 1992) (citation omitted).

Further, when imposing discovery sanctions against a pro se litigant, the Court

carefully considers whether some sanction short of dismissal is appropriate so that the

litigant does not unknowingly lose her right of access to the courts because of a technical

violation. See Ehrenhaus, 965 F.2d at 920 n.3; see also Anderson v. Home Ins. Co., 724

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F.2d 82, 84 (8th Cir. 1983) (dismissing a pro se litigant’s complaint with prejudice for failure

to answer interrogatories, but only after an extension and a court order to comply).

B. Analysis

Citing Defendant Berryman’s failure to respond, admit, and answer, Plaintiff requests

that, should Defendant Berryman attempt to oppose these claims by introducing previously

undisclosed evidence or testimony, the Court order sanctions against Defendant Berryman

prohibiting her from introducing such evidence or testimony. See Fed. R. Civ. P.

37(b)(2)(A)(ii) (the Court may enter a sanction “prohibiting the disobedient party from

supporting or opposing designated claims or defenses, or from introducing designated

matters in evidence”); Fed. R. Civ. P. 37(d)(1)(A)(ii) and (d)(3) (a party’s failure to answer

interrogatories under Rule 33 is sanctionable by any of the sanctions listed in Rule

37(b)(2)(A)(I)-(vi)).

Plaintiff has failed to provide a persuasive basis to impose the preemptive sanctions

it seeks. Federal Rule of Civil Procedure 37(c)(1) provides that, “[i]f a party fails to provide

information or identify a witness as required by Rule 26(a) or (e), the party is not allowed

to use that information or witness to supply evidence . . . at a trial, unless the failure was

substantially justified or is harmless.” Rule 37(c)(1)(C) also permits a court to “impose

other appropriate sanctions, including any of the orders listed in Fed. R. Civ. P.

37(b)(2)(A)(I)-(vi).” Plaintiff seeks sanctions pursuant to Fed. R. Civ. P. 37(b)(2)(A)(ii),

which permits a court, upon determining that a party “fail[ed] to obey an order to provide

or permit discovery,” to prohibit “the disobedient party from supporting or opposing

designated claims or defenses, or from introducing designated matters in evidence.”

However, Plaintiff identifies no specific court order that Defendant Berryman has

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disobeyed. Even assuming such a preemptive sanction is available in the absence of a

court order pursuant to Rule 37(c)(1)(C), Plaintiff identifies no bases upon which to impose

these sanctions, as its Reply [#59] cites no previously undisclosed evidence presented in

Defendant Berryman’s Response [#58]. Thus, the Court denies Plaintiff’s request for Rule

37 sanctions.

C. Recommendation

IT IS HEREBY ORDERED that the Motion [#52] is DENIED with respect to Plaintiff’s

request for Rule 37 sanctions.

V. Conclusion

For the reasons stated above, the Court respectfully RECOMMENDS that Plaintiff’s

Motion [#52] be GRANTED IN PART and DENIED without prejudice IN PART. 

The Court respectfully RECOMMENDS that Plaintiff’s request for default judgment

against Defendants Temple and Overseer be GRANTED. 

The Court further respectfully RECOMMENDS that Plaintiff’s request for summary

judgment be GRANTED regarding Defendant Berryman’s tax liability for the tax years

1999, 2001, 2002, 2003, 2004, 2005, and 2006, in the amount of $142,595.58, plus other

statutory additions from October 1, 2012, in accordance with 28 U.S.C. § 1961(c)(1) and

26 U.S.C. § 6621, until judgment is paid in full. 

Further, the Court respectfully RECOMMENDS that Plaintiff’s Motion [#52] be

GRANTED with respect to Defendant Berryman’s liability for tax years 1997 and 2000 but

DENIED without prejudice with respect to the validity of the requested amount of tax

liability for the tax years 1997 and 2000.

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IT IS HEREBY ORDERED that the Motion [#52] is DENIED with respect to Plaintiff’s

request for Rule 37 sanctions.

IT IS FURTHER ORDERED that within 21 days of the District Judge’s resolution of

this Recommendation, Plaintiffs shall file either: (1) a motion for summary judgment

regarding the amount of Defendant Berryman’s liability for the years 1997 and 2000, or (2)

a motion to set Final Pretrial Conference regarding Defendant Berryman’s tax liabilities for

the years 1997 and 2000.

IT IS FURTHER ORDERED that pursuant to Fed. R. Civ. P. 72, the parties shall

have fourteen (14) days after service of this Recommendation to serve and file any written

objections in order to obtain reconsideration by the District Judge to whom this case is

assigned. A party’s failure to serve and file specific, written objections waives de novo

review of the Recommendation by the District Judge, Fed. R. Civ. P. 72(b); Thomas v. Arn,

474 U.S. 140, 147-48 (1985), and also waives appellate review of both factual and legal

questions. Makin v. Colo. Dep’t of Corr., 183 F.3d 1205, 1210 (10th Cir. 1999); Talley v.

Hesse, 91 F.3d 1411, 1412-13 (10th Cir. 1996). A party’s objections to this

Recommendation must be both timely and specific to preserve an issue for de novo review

by the District Court or for appellate review. United States v. One Parcel of Real Prop., 73

F.3d 1057, 1060 (10th Cir. 1996). 

Dated: April 12, 2013

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