United States District Court, D. Nebraska
MEMORANDUM AND ORDER
F. Bataillon Senior United States District Judge
matter is before the Court on motion of the United States of
America (“United States or “the
Government”) for summary judgment, Filing No.
This is a civil action to reduce tax assessments to judgment
and to enforce a tax lien. The Court has jurisdiction over
this action pursuant to 28 U.S.C. §§ 1340 and 1345
and 26 U.S.C. §§ 7402 and 7403.
Government sued Jan M. Mengedoht, in his individual capacity
and in his official capacities as Executor of the Carl M.
Mengedoht Estate (“the Estate”) and as Trustee of
HCJ Holdings Trust (the “Trust”), and the
Washington County Treasurer in order to enforce its Internal
revenue service (“IRS”) tax liens against the
Estate. The Washington County Treasurer and Jan Mengedoht,
individually and as trustee of the Trust, were sued only so
that they could protect any interest they may claim in the
property at issue. The United States and Washington County
Treasurer have since agreed that any real property taxes that
are owed to Washington County Treasurer on the property are
entitled to priority over the federal tax liens. Filing No.
30, Stipulation. The record shows defendant Mengedoht, as the
executor (and as trustee and in his individual capacity), was
personally served with a summons and copy of the complaint on
July 27, 2017. Filing No. 7.
property on which the United States seeks to enforce its
federal tax lien is located in Washington County,
Nebraska. In its Complaint and Amended Complaint,
Government alleges that federal taxes have been assessed on
the Estate, a tax lien was issued and filed, and interest
continues to accrue. Filing No. 1 & Filing No. 24. The
Court denied Mengedoht's motion to dismiss for failure to
state a claim, rejecting the defendant's contention that
statute of limitations in the Uniform Trust Code barred the
action. Filing No. 22, Memorandum and Order at 6.
the Estate nor the Trust properly appeared or answered in
this suit, and the Court entered default judgment against
them on December 12, 2017. Filing No. 15, Memorandum and
Order at 3. The remaining issue in this case is whether Jan
Mengedoht has a personal interest in the subject real
property that is superior to the federal tax liens that
attached to the subject real property. See Filing
No. 22, Memorandum and Order at 1.
Government moves for summary judgment, asking the Court to
enter judgment in favor of the United States and against Jan
M. Mengedoht, Executor of the Carl A. Mengedoht Estate, for
federal estate tax liabilities in the amount of $2, 635,
555.16, plus statutory interest and additions accruing after
June 13, 2017. It also seeks a judgment that the United
States has a valid and subsisting federal tax lien for the
liabilities described herein against all property and rights
to property of the Carl A. Mengedoht Estate, including the
subject property and an order enforcing the federal tax lien
attaching to the subject property.
response, defendant Jan Mengedoht alleges the default
judgment was the result of the Government's knowing and
deliberate misrepresentations to the Court. See
Filing No. 46, Notice of Fraud on the Court. In related
filings, he requests production of documents, seeks
additional time under Federal Rule of Civil Procedure 56(d),
seeks to extend discovery, contends he has never received
notices of deficiencies or assessments, and moves to compel a
fact witness to answer interrogatories. Filing Nos. 40, 48,
50, 52, 53 and 54. He has not shown good cause for any of
those requests. He does not challenge the factual
statements or legal arguments presented by the Government.
support of its motion, the Government has shown that Carl A.
Mengedoht died May 29, 1998. Filing No. 39-1, Affidavit of
Shawn Kennedy (“Kennedy Aff.”), Exhibit
(“Ex.”) A, Death Certificate. Carl
Mengedoht's Estate failed to file a federal estate tax
return (Form 706) with the IRS. Id., Ex. B,
Certification of Lack of Record (Form 3050). Jan Mengedoht is
the Executor of the Estate and Trustee of the Trust.
Filing No. 27, Answer, Attachment # 1 at 3, 11,
& 19. The IRS examined the Estate's tax liabilities
and a delegate of the Secretary of Treasury assessed federal
estate tax, penalties and interest against the Estate on
April 18, 2011. Filing No. 39-1, Kennedy Decl. at 2; Filing
No. 39-2, Ex. C. The amount due with interest and statutory
additions through October 1, 2018, is over 2.7 million
dollars. Filing No. 39-1, Kennedy Aff. at 2. The tax
assessments are shown in the certified IRS transcript of the
Estate's tax account. Filing No. 39-1, Kennedy Decl. at
3; Filing No. 39-2, IRS Form 4340, Certificate of Assessments
and Payments (“certified IRS transcript”).
Government has also shown that the assessments were based on
the value of the Estate's property at the time of Carl
Mengedoht's death. Filing No. 39, Kennedy Decl. at 3;
Filing No. 39-2, Ex C, certified IRS transcript. The major
asset of the Estate, constituting more than 90% of the
Estate's value, is the subject property. Id.,
Kennedy Decl. at 3. The present titleholder to the property
is the Trust. Filing No. 27, Answer, Attachment # 2 at 24-25.
subject property was found to be property of the Estate, and
included for estate tax computational purposes, under the
Internal Revenue Code (“IRC”) because documents
associated with the Trust showed that the decedent, Carl
Mengedoht, retained the full use, possession, and enjoyment
of the subject property and its income during his lifetime
and conveyed it to the Trust for less than full and adequate
consideration. Filing No. 39-1, Kennedy Aff. at 3. Under
the terms of the Trust, Carl Mengedoht retained the power to
alter, amend, revoke, or terminate the transfer of the
subject property at the time of his death. Under 26 U.S.C.
§§ 2036 and 2038, such property is part of the
record also shows that a notice of the federal lien
associated with the estate tax liabilities was filed with the
Register of Deeds of Washington County, Nebraska, on October
7, 2011. Filing No. 39-1, Kennedy Aff. at 3; Filing No. 39-3,
Ex. D, Notice of Federal Tax Lien; see also Ex. E,
Assignment. Attached to his answer to the Government's
Amended complaint, defendant Jan Mengedoht filed copies of
documents associated with the Trust, including the Trust
Registration, the Trust Agreement, Co-Trustee Appointment
Acceptances, various Assignments and Bills of Sale associated
with the trust property, the Grant Deed for the subject real
property, and the Last Will and Testament of Carl A.
Mengedoht. Filing No. 27, Answer, Attachments # 1 & # 2.
Those documents are also contained in the IRS administrative
file associated with the examination of the Carl Mengedoht
Estate's taxes. Filing No. 39-1, Kennedy Aff. at 4.
Jan Mengedoht was deposed in this case. See Filing
No. 39-4, Declaration of Martin M. Shoemaker
(“Shoemaker Decl.”); Filing No. 39-5, Ex. F,
Transcript of the Deposition of Jan Mengedoht
(“Mengedoht Dep. Tr.”). When asked if he had a
personal interest in the property, Jan Mengedoht refused to
answer and stated, “I don't want to waive my
natural right to not be compelled to be a witness ...