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United States v. Fitzgerald

United States District Court, D. New Jersey

June 22, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
MICHAEL FITZGERALD individually and as Trustee of the Fitzgerald Family Trust, CAROLYN FITZGERALD, individually and as Trustee of the Fitzgerald Family Trust, ANCORA PSYCHIATRIC HOSPITAL, and U.S. BANK, Defendants.

          ERIN FAITH DARDEN U.S. DEPARTMENT OF JUSTICE On behalf of Plaintiff

          OPINION

          NOEL L. HILLMAN, U.S.D.J.

         Presently before the Court is the motion of Plaintiff, the United States of America, for default judgment against Defendant Michael J. Fitzgerald. Plaintiff seeks judgment against Fitzgerald for unpaid federal income tax liabilities that encumber his half-interest in his house in Swedesboro, New Jersey through federal tax liens. The Plaintiff seeks to foreclose on those liens. The United States also seeks default judgment against Defendant Carolyn Fitzgerald, decreeing that she has a half-interest in the property, and against Defendants Ancora Psychiatric Hospital and Michel J. Fitzgerald and Carolyn Fitzgerald, as trustees of the Fitzgerald Family Trust, decreeing that they have no interest in the property.[1] For the reasons expressed below, the United States' motion will be granted.

         BACKGROUND

         The Internal Revenue Service assessed federal income taxes, plus penalties and interest, against Michael J. Fitzgerald for tax years 2004 through 2007. Despite notice and demand for payment by the IRS, Michael J. Fitzgerald failed to pay the federal income taxes assessed against him. As of October 31, 2017, Michael J. Fitzgerald owed $656, 094.53 in unpaid federal income taxes plus statutory additions to the tax.

         On the dates that the federal income tax assessments were made against Michael J. Fitzgerald, tax liens in favor of the United States arose by operation of law under 26 U.S.C. §§ 6321 and 6322, and attached to all property and rights to property belonging to Michael J. Fitzgerald, including his undivided half-interest in the real property located at 102 Shire Lane in Swedesboro, New Jersey, which Michael J. Fitzgerald and Carolyn Fitzgerald purchased on September 8, 1989.

         On February 11, 2014, after the federal tax liens arose and attached to Michael J. Fitzgerald's interest in the property, defendants Michael J. Fitzgerald and Carolyn Fitzgerald transferred ownership of the property to the Fitzgerald Family Trust (the “Family Trust”) for one dollar.

         The United States filed its complaint on October 31, 2017 to collect Michael J. Fitzgerald's unpaid income tax liabilities and to enforce the corresponding federal tax liens against the property. The United States named all persons and entities it believed to claim an interest in the property it is seeking to sell.

         On November 30, 2017, Michael J. Fitzgerald and Carolyn Fitzgerald, individually and as trustees of the Fitzgerald Family Trust, and Ancora were served with the summons and complaint. They failed to appear, plead or otherwise defend. The Clerk of the Court entered default against them on February 15, 2018. The United States filed the instant motion for default judgment on April 20, 2018. None of the defendants has responded.[2]

         DISCUSSION

         A. Subject Matter Jurisdiction

         This Court has jurisdiction over this action pursuant to 28 U.S.C. §§ 1340 and 1345, and 26 U.S.C. §§ 7402 and 7403.

         B. Default

         The first step in obtaining a default judgment is the entry of default. “When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the Clerk must enter the party's default.” ...


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