Court Opinion

ID: 177327
Source: CourtListenerOpinion
Date Created: 2010-10-15 23:36:05+00
Date Added: 2024-06-11T17:25:41.513885
License: Public Domain

FILED
                            NOT FOR PUBLICATION                             OCT 15 2010

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

LUKE ADAM; CHANDRA MARIE                         No. 07-56358
ADAM,
                                                 D.C. No. CV-05-00987-ODW
              Plaintiffs - Appellants,

  v.                                             MEMORANDUM *

UNITED STATES OF AMERICA;
UNITED STATES INTERNAL
REVENUE SERVICE,

              Defendants - Appellees.

                    Appeal from the United States District Court
                       for the Central District of California
                     Otis D. Wright, District Judge, Presiding

                          Submitted September 2, 2010 **
                              Pasadena, California

Before: O’SCANNLAIN, GOULD and IKUTA, Circuit Judges.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
      Luke and Chandra Marie Adam appeal the district court’s order dismissing

their quiet title action brought under 28 U.S.C. § 2410(a)(1) for lack of standing.

We have jurisdiction pursuant to 28 U.S.C. § 1291, and we vacate and remand.

      Luke and Chandra Marie claim to own the liened Yorba Linda property, and

their claim of right confers standing to litigate the quiet title action. See United

States v. Williams, 514 U.S. 527, 539–40 (1995); Little v. United States, 704 F.2d

1100, 1106 (9th Cir. 1983) (holding that a plaintiff who claims a “valuable right to

property” has standing to challenge a tax lien on the liened property). The

government’s tax lien may properly attach, however, if delinquent taxpayers Dino

and Trina Adam—Luke and Chandra Marie’s parents—retain property rights in the

Yorba Linda property. 26 U.S.C. § 6321; see also G. M. Leasing Corp. v. United

States, 429 U.S. 338, 350–51 (1977) (holding that the government may “properly

regard” an alter ego’s assets as the delinquent taxpayer’s assets for purposes of 26

U.S.C. § 6321).

      In determining whether taxpayers hold property rights to which a tax lien

may attach, the district court must look to state law. United States v. Craft, 535

U.S. 274, 278 (2002) (“The federal tax lien statute . . . attaches consequences,

federally defined, to rights created under state law.” (internal quotation marks

omitted)); Drye v. United States, 528 U.S. 49, 58 (1999) (holding that federal

                                            2
courts “look initially to state law to determine what rights the taxpayer has in the

property the Government seeks to reach”); Aquilino v. United States, 363 U.S. 509,

513 (1960) (“[I]t has long been the rule that in the application of a federal revenue

act, state law controls in determining the nature of the legal interest which the

taxpayer had in the property . . . .” (quotation marks omitted)).

      Here, the district court did not cite to or apply California law in its oral

opinion or written order concluding that Luke and Chandra Marie are their parents’

nominees. Instead, the district court apparently applied a six-factor test that has

been used by some federal courts in evaluating nominee status. See, e.g., Towe

Antique Ford Found. v. IRS, 791 F. Supp. 1450, 1454 (D. Mont. 1992). Applying

this federal law test, without any suggestion that it would most likely be adopted

by the California Supreme Court as a matter of state law, and without analyzing

                                           3
whether the federal six-factor test could be considered as an aid to determining

state law, was error.1

       We hold that Dino and Trina’s rights in the Yorba Linda property, if any,

must be determined under California law. We remand to the district court so that it

may conduct that analysis in the first instance. If the district court determines as a

matter of California law that Luke and Chandra Marie do not have a beneficial

interest in the property, then the district court must provide a reasoned

determination as to whether Luke and Chandra Marie, as holders of bare legal title,

have standing to bring a procedural challenge to the tax lien under 28 U.S.C.

§ 2410. See generally Arford v. United States, 934 F.2d 229, 232 (9th Cir. 1991)

(indicating that “[s]ection 2410 has been interpreted to allow quiet title actions

challenging the procedural aspects of tax liens”).

       VACATED and REMANDED.

       1
         If California law is unclear on the dispositive issue, then it is the task of the
district court to do its best to predict how the California Supreme Court would
likely resolve it. See Giles v. Gen. Motors Acceptance Corp., 494 F.3d 865, 872
(9th Cir. 2007); Dimidowich v. Bell & Howell, 803 F.2d 1473, 1482 (9th Cir.
1986). We have in another context suggested that a prediction may be based on
“intermediate appellate court decisions, decisions from other jurisdictions, statutes,
treatises, and restatements.” Eichacker v. Paul Revere Life Ins. Co., 354 F.3d
1142, 1145 (9th Cir. 2004) (internal quotation marks omitted); Walker v. City of
Lakewood, 272 F.3d 1114, 1125 (9th Cir. 2001) (same).

                                            4