The opinion of the court was delivered by: ROBERT L. ECHOLS
Presently pending before this Court are the parties' Cross-Motions for Summary Judgment filed pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons more fully outlined herein, the Plaintiff's Motion for Summary Judgment is hereby DENIED, the Defendant's Motion for Summary Judgment is hereby GRANTED, and this action is accordingly DISMISSED.
The Plaintiff, Linda Cheryl Knight ("Knight"), filed this action against the Defendant, the United States of America ("US"), pursuant to 26 U.S.C. § 7426(a)(1) (1988) seeking to recover a gold charm bracelet which was seized by the Internal Revenue Service ("IRS") in its execution of several jeopardy assessments and levies upon the property of Tony and Susan Alamo. Knight alleges that she purchased the charm bracelet twenty-two years ago and maintained possession of the charm bracelet until April 1990, when she was forced to consign the bracelet in order to pay her taxes. At the time of consignment, Knight valued the bracelet at approximately thirty five hundred dollars ($ 3,500.00).
The record reveals that Knight contacted a friend, Dan Hoffman, who made arrangements to consign the bracelet to The Alamo of Nashville ("The Alamo"), a store which specialized in western clothing and accessories. Hoffman then transferred the bracelet to The Alamo, and supplied Knight with a receipt from The Alamo dated April 11, 1990. The receipt contained a short description of the bracelet, a note indicating that the bracelet was on consignment from Knight, and Hoffman's signature. According to Knight, The Alamo agreed to try to sell the bracelet for no less than thirty five hundred dollars ($ 3,500.00). In turn, the Alamo would retain any profit which it realized over and above that amount in exchange for its consignment services.
Pursuant to a Notice of Federal Tax Lien dated June 11, 1990, and a Notice of Seizure dated June 22, 1990, the IRS made jeopardy assessments against the Tony and Susan Alamo Foundation, Inc., individually and as a transferee of Tony and Susan Alamo; Twentieth Century Holiness Tabernacle Church, Inc., transferee of Tony and Susan Alamo Foundation, Inc., and Tony and Susan Alamo; and Music Square Church, Inc., transferee of Tony and Susan Alamo Foundation, Inc., and Tony and Susan Alamo, for unpaid federal income tax liabilities for 1977, 1978, 1979, and 1980, in the total amount of $ 4,998,508.00. The IRS additionally executed jeopardy levies against the Tony and Susan Alamo Foundation, Inc., for unpaid employment tax liabilities for the third and fourth quarters of 1981, the four quarters of 1982 through 1985, inclusive, and the first quarter of 1986, in the total amount of $ 2,249,634.75. These jeopardy assessments and levies were executed pursuant to 26 U.S.C. § 6861 (1988). As a result of these jeopardy assessments and levies, the IRS seized all of The Alamo's merchandise, including Knight's charm bracelet.
The Tony and Susan Alamo Foundation, Inc. subsequently challenged the reasonableness of the IRS seizure pursuant to 26 U.S.C. § 7429(b)(3)(A)-(B) (1988), and requested abatement of the jeopardy assessments and levies upon which the seizures were based. See Tony and Susan Alamo Foundation, Inc. v. United States, Civ. Action No. 3-90-00901 (M.D. Tenn. Nov. 1, 1991). In the context of this separate action, this Court found that the June 22, 1990 seizures, and the jeopardy assessments and levies upon which they were based, were unreasonable. Id. As such, this Court ordered the abatement of both the jeopardy assessments and jeopardy levies pursuant to 26 U.S.C. § 7429(b)(4) (1988).
In ruling on a motion for summary judgment, this Court must construe the evidence produced in the light most favorable to the non-moving party, drawing all justifiable inferences in his or her favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). A party may obtain summary judgment if the evidentiary material on file shows "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56. The moving party bears the burden of satisfying the court that the standards of Rule 56 have been met. See Martin v. Kelley, 803 F.2d 236, 239 n.4 (6th Cir. 1986). The ultimate question to be addressed is whether there exists any genuine issue of material fact which is disputed. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 248. If so, summary judgment dismissal is inappropriate. With this standard in mind, the Court will now address the arguments raised by the parties in their respective Motions for Summary Judgment.
The Internal Revenue Code provides a cause of action for any claimant, other than the taxpayer, who contends that his or her property was wrongfully levied upon by the federal government:
If a levy has been made on property or property has been sold pursuant to a levy, any person (other than the person against whom is assessed the tax out of which such levy arose) who claims an interest in or lien on such property and that such property was wrongfully levied upon may bring a civil action against the United Sates in a district court of the United States.
26 U.S.C. § 7426(a)(1) (1988). Pursuant to the Code's express language, a claimant must satisfy three requirements in order to establish their case:
First, the person must not be one "against whom is assessed the tax." Second, the person must claim a legally cognizable "interest" in the property. Third, the property must have been "wrongfully levied upon."
Arford v. United States, 934 F.2d 229, 232 (9th Cir. 1991) (quoting 26 U.S.C. § 7426(a)(1) (1988)).
In this case, it is undisputed that Knight is not the person against whom the taxes were assessed. In addition, this Court's previous finding that the jeopardy assessments and levies pursuant to which the bracelet was seized were unreasonable, and its abatement of those assessments and levies, renders the IRS' ...