# United States v. Bradley

> District Court, E.D. California · June 8, 2021

URL: https://www.frixlaw.com/law-library/cases/10028155

## Case

- **Court:** District Court, E.D. California
- **Decided:** June 8, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

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UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
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UNITED STATES OF AMERICA, Case No. 2:19-cv-01466-TLN-JDP
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Plaintiff, FINDINGS AND RECOMMENDATIONS
13 THAT PLAINTIFF’S MOTION FOR
v. DEFAULT JUDGMENT BE GRANTED
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RICHARD E. BRADLEY, et al., OBJECTIONS DUE IN 14 DAYS
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Defendants. ECF No. 16
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19 Plaintiff United States of America seeks to reduce to judgment outstanding federal tax
20 assessments made against defendant Richard Bradley and foreclose federal tax liens upon real
21 property commonly known as 15696 Meridian Road, Chico, CA 95973 (“subject property”).
22 ECF No. 16-1 at 2.1 Richard Bradley has not answered the complaint or otherwise appeared. On
23 February 3, 2021, plaintiff moved for default judgment. ECF No. 16. The court held a hearing
24 on April 29, 2021, but only plaintiff’s counsel appeared. Because defendant Richard Bradley was
25 properly served and because the relevant discretionary factors point in favor of default judgment,
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1 Plaintiff also named the State of California, Franchise Tax Board, and Troy Kidd, Butte
27 County Treasurer-Tax Collector as defendants in this action under 26 U.S.C. § 7403 as parties
who may claim an interest in the subject property. Plaintiff reached separate stipulated
28 agreements with those defendants that have been ordered. ECF Nos. 8, 12.
1 I recommend that plaintiff’s motion be granted.
2 DISCUSSION
3 Federal Rule of Civil Procedure 55(b)(2) allows a court to enter judgment against a party
4 who has defaulted. While the decision to do so is “discretionary,” Aldabe v. Aldabe, 616 F.2d
5 1089, 1092 (9th Cir.1980), it is guided by several factors. As a preliminary matter, the court must
6 assess the adequacy of service on the party against whom the default judgment would be entered.
7 See Cranick v. Niagara Credit Recovery, Inc., No. 1:13-CV-671 LJO GSA, 2014 WL 325321, at
8 *1 (E.D. Cal. Jan. 28, 2014); see also Omni Capital Int’l., Ltd. v. Rudolf Wolff & Co., 484 U.S.
9 97, 104 (1987) (“[B]efore a federal court may exercise personal jurisdiction over a defendant, the
10 procedural requirement of service of summons must be satisfied.”). If service was sufficient, the
11 court looks to a number of factors, including: possible prejudice to the plaintiff, the merits of
12 plaintiff’s claim, the sufficiency of the complaint, the sum of money at stake, the possibility of a
13 factual dispute, whether the default was potentially due to excusable neglect, and the general
14 policy that cases be decided on the merits. See Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th
15 Cir.1986). Throughout this analysis, “the factual allegations of the complaint, except those
16 relating to the amount of damages, will be taken as true.” Geddes v. United Fin. Group, 559 F.2d
17 557, 560 (9th Cir. 1977).
18 Here, personal service on defendant Bradley was properly completed, ECF No. 6, and the
19 clerk of court entered a default on November 5, 2019, ECF No. 14. The Eitel factors also point in
20 favor of granting default judgment. Generally, a plaintiff has no means other than a default
21 judgment to recover against a defaulting defendant and would be prejudiced if judgment were not
22 entered. See Moroccanoil, Inc. v. Allstate Beauty Prods., 847 F. Supp. 2d 1197, 1200-01 (C.D.
23 Cal. 2012). Plaintiff’s complaint also states a straightforward claim that appears meritorious:
24 Richard Bradley owes federal income tax, penalties, interests, and fees for tax period years 2002,
25 2003, 2005, and 2006, collectively exceeding $300,000. ECF No. 16-2. Plaintiff thus seeks to
26 foreclose its tax liens against real property owned by Richard Bradley and located at 15696
27 Meridian Road, Chico, CA 95973. ECF No. 1 at 2.
28 As to plaintiff’s first claim, under 26 U.S.C. § 7402(a), the United States is entitled to
1 reduce outstanding tax liabilities to judgment. Here, plaintiff has provided IRS forms 4340 for
2 tax years 2002, 2003, 2005, and 2006. ECF No. 16-3 at 61-93. Forms 4340 are presumptive
3 proof of a valid assessment and are routinely used to prove that tax assessments have been made.
4 See Huff v. United States, 10 F.3d 1440, 1445 (9th Cir. 1993), cert. denied, 512 U.S. 1219 (1994).
5 Thus, defendant Bradley is indebted to the United States in the amount of $308,400.30, as of
6 January 29, 2021, less any subsequent payments or credits, plus interest and other statutory
7 additions, pursuant to 26 U.S.C. §§ 6601, 6621, and 6622, and 28 U.S.C. § 1961(c)(1), until the
8 judgment is fully paid.
9 On the second claim, when a taxpayer neglects or refuses to pay taxes that are due, federal
10 tax liens arise as of the date of assessment on all the taxpayer’s property and rights to property,
11 and those liens continue until the liabilities either are satisfied or become unenforceable. See 26
12 U.S.C. §§ 6321, 6322. Per the forms 4340, the IRS made federal tax assessments against
13 defendant Bradley, and the IRS appropriately issued and recorded notices of federal tax lien.
14 ECF No. 16-3 at 61-127. Tax liens “reach every interest in property that a taxpayer may have.”
15 United States v. National Bank of Commerce, 472 U.S. 713, 720 (1985). Under 26 U.S.C.
16 § 7403, once it is established that the United States has liens upon certain property, the United
17 States may foreclose those liens, sell the property, and apply the proceeds toward the tax liens at
18 issue. See United States v. Craft, 535 U.S. 274 (2002). Accordingly, the United States is entitled
19 to foreclose on the subject property owned by Mr. Bradley.
20 Notices and demands for these tax liabilities were sent to Mr. Bradley, reducing the risk
21 that there is some factual dispute. The amount assessed is governed by statute. And given that
22 defendant was properly served, there is no evidence before the court that his failure to appear is
23 due to excusable neglect. Eitel does make clear that “[c]ases should be decided upon their merits
24 whenever reasonably possible.” 782 F.2d at 1472. But, standing alone, this policy preference is
25 insufficient to deny default judgment against a defendant who has failed to appear and defend
26 himself. See PepsiCo, Inc. v. California Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002).
27 With no appearance from the defendant, a decision on the merits is unworkable.
28 Finally, the United States requests that this court retain jurisdiction over this case but
1 delay ordering sale of the subject property because plaintiff believes that the subject property is
2 Bradley’s primary residence and does not wish to displace him from his home during a global
3 pandemic. Plaintiff seeks permission to update the court periodically with a status report until it
4 eventually files a motion for order of sale.
5 FINDINGS AND RECOMMENDATIONS
6 I recommend that this court grant plaintiff’s motion, ECF No. 16, and enter default
7 judgment as follows:
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9 (A) Defendant Richard E. Bradley is indebted to the United States
10 in the amount of $308,400.30, as of January 29, 2021, less any
11 subsequent payments or credits, plus interest and other statutory
12 additions, pursuant to 26 U.S.C. §§ 6601, 6621, and 6622, and 28
13 U.S.C. § 1961(c)(1), until the judgment is fully paid;
14 (B) The United States has valid federal tax liens against all of
15 defendant Richard E. Bradley’s property and rights to property,
16 including the subject property;
17 (C) The United States may foreclose its liens upon the subject
18 property, with the proceeds to be distributed per the court’s
19 findings as to the validity and priority of the liens and
20 claims of all parties;
21 (D) The court retains jurisdiction over this action pending the
22 United States’ filing of a motion for order of sale and the court
23 later confirming any judicial sale; and
24 (E) The United States shall file a status report every 90 days
25 addressing whether proceeding with a forced sale of the subject
26 property is appropriate until a motion for order of sale is filed.
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28 These recommendations will be submitted to the U.S. district judge presiding over the
1 | case under 28 U.S.C. § 636(b)(1)(B) and Local Rule 304. Within 14 days of the service of the
2 | findings and recommendations, the parties may file written objections to the findings and
3 || recommendations with the court and serve a copy on all parties. That document must be
4 | captioned “Objections to Magistrate Judge’s Findings and Recommendations.” The presiding
5 | district judge will then review the findings and recommendations under 28 U.S.C. $ 636(b)(1)(C).
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7 IT IS SO ORDERED.

Dated: _ June 8, 2021
9 JEREMY D. PETERSON
10 UNITED STATES MAGISTRATE JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10028155. Public record. Not legal advice.