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UNITED STATES v. DIEMER

August 1, 1994

UNITED STATES OF AMERICA, Plaintiff,
v.
JAMES D. DIEMER, et al., Defendants.



The opinion of the court was delivered by: ALFRED M. WOLIN

 WOLIN, District Judge

 Additionally, the Diemers' cross-motion for partial summary judgment seeks a ruling that they are entitled to be equitably subrogated to those liens which have priority over the tax lien, to the extent that such liens were satisfied by their grantor. The Court will deny this cross-motion.

 BACKGROUND

 Herbert Sylvester and his then wife Frances Sylvester acquired their marital residence in the Borough of Leonia, Bergen County, New Jersey (the "Property") as tenants by the entirety in 1973. Due to Mr. Sylvester's failure to pay income and social security taxes of the employees of his construction firm, the Internal Revenue Service ("IRS" or "Government") filed a tax lien against him on June 26, 1980. The lien was properly filed with the Bergen County Clerk's Office in the amount of $ 62,523.21.

 In October, 1980, Mr. Sylvester conveyed his interest in the Property subject to the IRS lien and other "unsatisfied mortgages or liens of record" to his wife. Mrs. Sylvester then mortgaged the property to Midlantic National Bank. This mortgage was also properly recorded. Pursuant to a subordination agreement, the IRS expressly agreed to subordinate its lien to this mortgage. On June 4, 1985, its penalty assessment remaining unpaid, the IRS refiled the lien against Mr. Sylvester.

 The Sylvesters' marriage was dissolved on December 19, 1986 pursuant to a Judgment of Divorce. That Judgment incorporated a "Property Settlement Agreement", dated December 11, 1986, which inter alia, provided that the Property was to be sold, that prior liens (including the IRS lien) were to be paid from the proceeds of the sale, and that Frances Sylvester would be entitled to retain any surplus proceeds.

 On November 4, 1988, Mrs. Sylvester entered into a contract for sale with Fred A. Avila and Molly Avila (collectively "Avilas") for the purchase of the property for $ 580,000. Closing was held on April 18, 1989. The Avilas secured TICOR Title Insurance Company ("Ticor") for a title insurance commitment. Ticor noted as an exception to title the existence of the IRS lien. However, the exception for this lien was omitted, apparently upon the belief that the original 1980 lien had expired and that the 1985 lien was a new lien, arising at a time when Mr. Sylvester no longer had an interest in the Property. Accordingly, while a portion of the purchase money was used to satisfy other liens and claims against the Property, the IRS lien remained unpaid.

 The Avilas, after commencing litigation in the state court to compel Mrs. Sylvester to satisfy the lien, *fn1" sold the Property to the Diemers.

 By way of this action, the IRS seeks to foreclose the tax lien which attached to Mr. Sylvester's interest in the Property and to use the proceeds of the foreclosure sale to satisfy the lien, plus inter alia interest.

 DISCUSSION

 I. Standard of Review

 Summary judgment shall be granted if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see Hersh v. Allen Products Co., 789 F.2d 230, 232 (3d Cir. 1986). In making this determination, a court must draw all reasonable inferences in favor of the non-movant. Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 n.2 (3d Cir. 1983), cert. dismissed, 465 U.S. 1091, 104 S. Ct. 2144, 79 L. Ed. 2d 910 (1984). Whether a fact is "material" is determined by the substantive law defining the claims. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986); United States v. 225 Cartons, 871 F.2d 409, 419 (3d Cir. 1989).

 "At the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249, 106 S. Ct. at 2511. Summary judgment must be granted if no reasonable trier of fact could find for the non-moving party. Id.

 When the non-moving party will bear the burden of proof at trial, the moving party's burden can be "discharged by 'showing'--that is, pointing out to the District Court--that there is an absence of evidence to support the non-moving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S. Ct. 2548, 2554, 91 L. Ed. 2d 265 (1986). If the moving party has carried its burden of establishing the absence of a genuine issue of material fact, the burden shifts to the non-moving party to "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986). When the non-moving party's evidence in opposition to a properly-supported motion for summary judgment is merely "colorable" or "not significantly probative," the Court may grant summary judgment. Anderson, 477 U.S. at 249-50, 106 S. Ct. at 2511.

 Further, when a non-moving party who bears the burden of proof at trial has failed, in opposition to a motion for summary judgment, to raise a disputed fact issue as to any essential element of his or her claim, summary judgment should be granted because "a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex, 477 U.S. at 322-233, 106 S. Ct. at 2552.

 In opposing summary judgment, a non-movant may not "rest upon mere allegations, general denials, or . . . vague statements." Quiroga v. Hasbro, Inc., 934 F.2d 497, 500 (3d Cir.), cert. denied, 116 L. Ed. 2d 327, 112 S. Ct. 376 (1991); Schoch v. First Fidelity Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990) ("unsupported allegations in [a nonmovant's] memorandum and pleadings are insufficient to repel summary judgment"); see Fed. R. Civ. P. 56(e). The summary judgment procedure enables a party "who believes there is no genuine issue as to a specific fact essential to the other side's case to demand at least one sworn averment of that [specific] fact before the lengthy process of litigation continues." Lujan v. National Wildlife Federation, 497 U.S. 871, 110 S. Ct. 3177, 3188-89, 111 L. Ed. 2d 695 (1990). The ...


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