United States v. Bettan

UNITED STATES DISTRICT COURT CLE RK

4/27/2020 9:28 am

EASTERN DISTRICT OF NEW YORK

-----------------------------------------------------------------------X U.S. DISTRICT COURT

UNITED STATES OF AMERICA, EASTERN DISTRICT OF NEW YORK

LONG ISLAND OFFICE

Plaintiff,

MEMORANDUM & ORDER

-against- 15-CV-5204 (SJF) (AKT)

JEFFREY BETTAN, CAROL JO BETTAN, DEUTSCHE

BANK NATIONAL TRUST CO., CARDIOTHORACIC

SURGERY PC, DONALD KUSTES, EDWARD

CARULLI, INTERBORO ATTORNEY SERVICES

CORP., NEW YORK STATE DEPARTMENT OF LABOR

UNEMPLOYMENT INSURANCE DIVISION, NASSAU

COUNTY OFFICE OF THE COUNTY TREASURER,

NEW YORK STATE DEPARTMENT OF TAXATION

AND FINANCE, NORMAN RIBACK, PROFIT SHARING

TRUST FOR MARPROWEAR CORP., RW LYNCH

COMPANY, INC. VILLAGE OF MINEOLA, and

VILLAGE OF GARDEN CITY,

Defendants.

-------------------------------------------------------------------------X

FEUERSTEIN, J.

Plaintiff the United States of America (the “United States” or “Plaintiff”) commenced

this action pursuant to 26 U.S.C. § 7402 to reduce to judgment unpaid federal income tax

liabilities of Defendant Jeffrey Bettan (“Bettan”) and to enforce federal tax liens against certain

real property. Defendants Carol Jo Bettan (“Carol Jo Bettan”), Deutsche Bank National Trust

Co. (“Deutsche Bank”), and Norman Riback (“Riback”) have also appeared. 1 Currently before

the Court is Plaintiff’s motion for summary judgment pursuant to Rule 56 of the Federal Rules of

1The remaining defendants were named because each has, or may claim, an interest in the real property

upon which the United States seeks to enforce its liens. Defendant Cardiothoracic Surgery PC was

voluntarily dismissed, see Docket Entry (“DE”) [23]; the balance have not appeared and the Clerk has

noted Entry of Default as to these defendants. See DE [47], [48].

Civil Procedure. See Motion, DE [107]. For the reasons set forth below, the motion is granted in

its entirety.

I. BACKGROUND

A. Admission of all Facts in Plaintiff’s Rule 56.1 Statement

The relevant facts as set forth below are taken from Plaintiff’s Local Civil Rule 56.1

Statement (“Pl. 56.1 Stmt” or “Plaintiff’s Rule 56.1 Statement”), DE [107-2]. Defendants failed

to file a counterstatement as required by Local Civil Rule 56.1(b). Pursuant to that Rule, “[e]ach

numbered paragraph in the statement of material facts set forth in the statement required to be

served by the moving party will be deemed admitted for purposes of the motion [for summary

judgment] unless specifically controverted by a correspondingly numbered paragraph in the

statement required to be served by the opposing party.” LOC. CIV. R. 56.1(c). Bettan and Carol

Jo Bettan (collectively, the “Bettans”) have filed an affirmation in opposition that does not

correspond in any way to Plaintiff’s Rule 56.1 Statement. Affirmation in Opposition to Plaintiff

Motion for Summary Judgment (“Defs’ Aff.”), DE [108]. Moreover, this document does not

seek to controvert any of the relevant facts in Plaintiff’s Rule 56.1 Statement.

Plaintiff’s Rule 56.1 Statement properly contains citations to admissible evidence

supporting each asserted material fact. LOC. CIV. R. 56.1(d); see generally Giannullo v. City of

New York, 322 F.3d 139, 140 (2d Cir. 2003) (noting that to be deemed admitted even in the

absence of a counterstatement, the factual assertion must be supported by the record). Given

Defendants’ failure to comply with its obligation to respond, the facts in Plaintiff’s Rule 56.1

Statement are deemed admitted.

B. Facts -- Bettan’s Tax Liability

Based on federal individual tax returns filed by him in 2004, Bettan has been assessed tax

liabilities for the tax periods ending December 31, 1996, December 31, 1997, December 31,

1998, and December 31, 2000. Both statutory penalties and statutory were assessed on the tax

liabilities. As of October 1, 2018, the outstanding balance owed by Bettan was $294,907.88.

See Declaration of IRS Technical Service Advisor Andrew Barone, ¶ 6, DE [107-13]. A Notice

of Federal Tax Lien was recorded with the Nassau County Clerk’s Office on October 12, 2005,

and refiled notices were recorded on September 16, 2014 and October 31, 2014.

Bettan owns real property located at 57 Parkway Drive, Roslyn Heights, New York (the

“Property”). The Property was conveyed on April 13, 1976 to Bettan and Carol Jo Bettan as

tenants by the entirety. Answer, ¶ 24. The Bettans executed a deed dated October 20, 1981

purporting to convey the Property to Carol Jo Bettan, but that transfer was subsequently deemed

invalid by a New York State court and the Bettans remain co-owners by the entirety of the

Property. See Bettan v. Bettan, Index No. 08-00536, (N.Y. Sup. Ct. Dec. 10, 2014), Pl. 56.1

Stmt, Ex. 6.

Deutsche Bank holds a first mortgage on the Property, and Riback holds a second

mortgage on the Property. The Bettans have not made a full payment on the mortgage held by

Deutsche Bank since April 1, 2006, and as of October 7, 2018, owed $532,074.28. They have

not made a payment on the mortgage held by Riback since July 2002 and, as of July 11, 2017,

owed $185,289.00.

C. Procedural History

Plaintiff commenced this action on September 9, 2015 and amended the complaint twice,

most recently on March 17, 2016. See Second Amended Complaint (“SAC”), DE [28]. From

June 15, 2016 through November 2, 2016, Bettan requested and received three extensions of

time to file an answer so that he could retain counsel. See DE [44], [53], [61], Elec. Order of

11/4/16. After the final extension of time expired on November 25, 2016, the United States

requested entry of a Certificate of Default as to the Bettans. The Clerk’s Entry of Default was

issued on December 8, 2016. See DE [64].

On December 14, 2016, District Judge Joseph F. Bianco issued an order directing

defendants Bettan and Carol Jo Bettan to respond in writing within twenty-one days as to why

default judgment should not be entered against them. Order, DE [65]. Bettan then sought, and

received, further extensions, this time so that he could apply for readmission to practice law in

the Eastern District of New York.2 See DE [67], [68], [69], [70]. Bettan moved for readmission

and on April 12, 2017, the deadline for the Bettans answer was stayed pending a decision on that

motion. DE [74].

In the interim, default judgment was entered on April 19, 2017 against defaulting

defendants Interboro Attorney Services Corp., New York State Department of Labor

Unemployment Insurance Division, Nassau County Office of the County Treasurer, New York

State Department of Taxation and Finance, Profit Sharing Trust for Marprowear Corp., RW

Lynch Company, Inc., Village of Mineola, Village of Garden City, Donald C. Kustes, and

Edward Carulli. Judgment, DE [77]. The Judgment declared that the defaulting defendants

“have no right, title, claim, lien or interest” in the Property and that they are “not entitled to a

distribution of any proceeds from any sale” of the Property. Id. at 3. Deutsche Bank and Riback

remain as defendants to this action.

2 According to Bettan, he was disbarred in August 2003 and reinstated to the practice of law in New York

state on January 23, 2013. Defs’ Aff. ¶3.

On August 17, 2017, the United States moved for a default judgment against the Bettans.

DE [78]. In that motion, the United States noted that Bettan’s motion for reinstatement had been

granted. In re Bettan, No. 00-MC-276-ERK, DE [10] (Order of reinstatement dated 4/25/17).

The Bettans were again directed to respond in writing within twenty-one days as to why default

judgment should not be entered against them. Order, DE [80]. After requesting and receiving

an extension of time, see DE [82], [83], the Bettans finally responded by filing an answer with

counterclaim on September 14, 2017. DE [85]. Judge Bianco ultimately ordered the vacateur of

the Clerk’s Entry of Default of the Bettans and accepted their answer. Minute Entry of 12/19/17,

DE [95].

Filings on the docket reflect that during the early part of 2018, the parties attempted to

reach a settlement. According to the United States, the potential settlement contemplated (1) the

Bettans’ completion of an application for loan modification of the Deutsche Bank loan, (2) a

decision on that application qualifying them for a modification, (3) followed by Bettan’s

concession of liability in exchange for the United States’ agreement “not to enforce its liens

while Mr. Bettan resides in the property, provided he stays current on insurance, property taxes,

and the new mortgage payments.” Letter of 2/14/18, DE [100]. In July 2018, the United States

sought a premotion conference in anticipation of its motion for summary judgment, reporting

that the Bettans had failed to apply for the loan modification. Letter of 7/6/18, DE [101]. Judge

Bianco conducted a telephone conference with the parties on July 26, 2018 at which time the

parties discussed a potential settlement whereby Bettan would enter into a consent judgment

conceding liability and agreeing to sever the Bettans’ entireties interest in the Property and

convert it to a tenancy in common. The United States prepared a proposed stipulation and

consent judgment and provided them to defendants, including counsel for Deutsche Bank and

Riback. DE [103]. The defendants failed to execute and return the documents, and a briefing

schedule for the United States’ motion for summary judgment was set. See Elec. Order of

9/7/18.

Briefing on the motion was completed on February 26, 2019. On April 18, 2019, Bettan

requested that the Court hold decision on the motion in abeyance “while negotiations continue”

to modify the Deutsche Bank mortgage. DE [113]. Bettan relayed that he had received a

Repayment Plan that was “totally unrealistic” and was trying to “keep the negotiations open to a

more realistic Repayment Plan.” Id. Judge Bianco denied that request, noting that the United

States had indicated in its response that contrary to defendants’ representations, “the United

States is no longer willing to settle.” Order, DE [115]. The case was reassigned to this Court on

May 31, 2019.

The United States seeks summary judgment against Bettan to (1) reducing his unpaid tax

liability assessments to judgment ; (2) declaring that its federal tax liens attach to Bettan’s

interest in certain real property; and (3) declaring that the it may enforce its federal tax liens

against the Property through a sale by a court-appointed receiver, pursuant to 26 U.S.C. §7403.

II. LEGAL STANDARDS

Rule 56 provides that a court “shall grant summary judgment if the movant shows that

there is no genuine dispute as to any material fact and the movant is entitled to judgment as a

matter of law. FED. R. CIV. P. 56(a). In deciding a motion for summary judgment, the court “is

not to weigh the evidence but is instead required to view the evidence in the light most

favorable to the party opposing summary judgment, to draw all reasonable inferences in

favor of that party, and to eschew credibility assessments.” Amnesty Am. v. Town of W.

Hartford, 361 F.3d 113, 122 (2d Cir. 2004) (quoting Weyant v. Okst, 101 F.3d 845, 854 (2d Cir.

1996)). “Where the record taken as a whole could not lead a rational trier of fact to find for the

nonmoving party, there is no genuine issue for trial.” Ricci v. DeStefano, 557 U.S. 557, 586, 129

S. Ct. 2658, 174 L. Ed. 2d 490 (2009) (internal quotation marks and citation omitted); see also

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)

(holding that a motion for summary judgment should be denied if “the evidence is such that a

reasonable jury could return a verdict for the nonmoving party”).

“The moving party bears the burden of establishing the absence of any genuine issue of

material fact.” Zalaski v. City of Bridgeport Police Dep’t, 613 F.3d 336, 340 (2d Cir. 2010).

Once this burden is met, “the opposing party must come forward with specific evidence

demonstrating the existence of a genuine dispute of material fact.” Brown v. Eli Lilly & Co., 654

F.3d 347, 358 (2d Cir. 2011). When, however, there is nothing more than a “metaphysical doubt

as to the material facts,” summary judgment is proper. Matsushita Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L.Ed.2d 538 (1986); see also Dove v. City

of New York, No. 03-CV-5052, 2007 WL 805786, at *4 (E.D.N.Y. Mar. 15, 2007) (to defeat a

motion for summary judgment, “the non-moving party must provide this Court with some basis

to believe that his version of relevant events is not fanciful” (internal quotation and citations

omitted)). In determining whether summary judgment is warranted, “the court's responsibility is

not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried,

while resolving ambiguities and drawing reasonable inferences against the moving party.”

Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986).

Defendant Bettan is an attorney appearing on his own behalf and on behalf of his wife,

Carol Bettan. Pro se attorneys “cannot claim the special consideration which the courts

customarily grant to pro se parties.” Holtz v. Rockefeller & Co., 258 F.3d 62, 82 n.4 (2d Cir.

2001), abrogated on other grounds by Gross v. FBL Fin. Servs., Inc., 557 U.S. 16 (2009). As

such, Bettan’s submissions are not treated “with the deference generally afforded to pro se

litigants.” Parris v. Fremont Inv. & Loan, No. 14-CV-6907, 2018 WL 3377147, at *2 (E.D.N.Y.

July 11, 2018).

III. DISCUSSION

A. Plaintiff’s Motion3

The United States first seeks to reduce Bettan’s unpaid tax liability to judgment. “A

government tax assessment is generally presumed to be correct, and a taxpayer who contests

such an assessment bears the burden of proving that it is not.” Papandon v. United States ex rel.

Perler, 350 F. App’x 491, 493 (2d Cir. 2009) (citing United States v. Janis, 428 U.S. 433, 440-

41, 96 S. Ct. 3021, 49 L. Ed. 2d 1046 (1976)). “It is well established that the IRS’s tax

calculations (including calculations of interest and penalties) are presumptively valid and create a

prima facie case of liability, such that the Government is entitled to have the assessment reduced

to judgment unless the taxpayer overcomes the presumption by the IRS that the assessment is

correct.” United States v. Chrein, 368 F. Supp. 2d 278, 282 (S.D.N.Y. 2005) (internal quotation

marks and citation omitted), aff’d, 274 F. App’x 56 (2d Cir. 2008).

The United States has submitted certified copies of Form 4340 tax transcripts for each of

the four relevant tax periods. These documents suffice to verify Bettan’s outstanding tax

liability. See United States v. Wales, No. 14 Civ. 864, 2017 WL 2954683, at *5 (S.D.N.Y. July

11, 2017) (“Courts in this circuit routinely consider IRS tax transcripts as competent evidence of

tax liability”); Nassar Family Irrevocable Trust v. United States, No. 13 Civ. 5680, 2016 WL

3 The United States’ arguments in support are unopposed; although the Bettans submitted an

Affirmation in Opposition to the motion, that document does not address the United States’

arguments but rather raises other arguments that will be discussed below. See Section III-B.

5793737, at *12 (S.D.N.Y. Sept. 30, 2016) (the presumption of correctness “extends to the

Forms 4340 generated by the IRS”), aff’d in part, 699 F. App’x 40 (2d Cir. 2017). Defendants

do not contest Bettan’s tax liability or challenge in any way the accuracy of the assessments

made against him. Given the presumption of correctness afforded to the tax assessments and

Defendants’ failure to introduce any evidence whatsoever rebutting Bettan’s underlying tax

liability, the assessments rendered against Bettan are presumed valid and the assessments will be

reduced to judgment.

The United States further seeks a declaration that its federal tax liens attach to Bettan’s

interest in the Property. The United States is entitled to a lien “upon all property and rights to

property” belonging to a taxpayer liable for unpaid taxes. 26 U.S.C. § 6321. That lien continues

“until the liability for the amount so assessed (or a judgment against the taxpayer arising out of

such liability) is satisfied or becomes unenforceable by reason of lapse of time.” Id. § 6322. The

United States’ federal tax liens attach to Bettan’s interest in the Property, which is held by Bettan

and Carol Jo Bettan as tenants by the entirety. Under New York law, “each tenant may sell,

mortgage or otherwise encumber his or her rights in the property, subject to the continuing rights

of the other.” S.E.C. v. Vuono, No. 13-MC-405, 2013 WL 6837568, at *7 (S.D.N.Y. Dec. 26,

2013) (quoting V.R.W., Inc. v. Klein, 68 N.Y.2d 560, 565, 503 N.E.2d 496, 510 N.Y.S.2d 848

(1986)). Thus, the United States’ liens attach to Bettan’s one-half interest in the Property.

Having decided that the United States is entitled to judgment against Bettan and that its

tax liens attach to the Property, the Court turns to the United States’ request that it authorize sale

of the Property. The United States seeks to enforce its liens by sale of the Property pursuant to

26 U.S.C. § 7403, which permits the court, upon notice to the parties, to decree a sale of property

and “a distribution of the proceeds of such sale according to the findings of the court in respect to

the interests of the parties and of the United States.” Id. § 7403(c). The United States has

satisfied the notification requirement as proper notice has been provided to parties with an

interest in the Property. As discussed above, all defendants except the Bettans, Deutsche Bank,

and Riback, have had a default judgment entered against them declaring that they have no

interest in the Property and are not entitled to any sale proceeds.

The Supreme Court has recognized that “district courts may exercise a degree of

equitable discretion in § 7403 proceedings” which may take into account ”both the

Government’s interest in prompt and certain collection of delinquent taxes and the possibility

that innocent third parties will be unduly harmed by that effort.” United States v. Rodgers, 461

U.S. 677, 709, 103 S. Ct. 2132, 76 L. Ed. 2d 236 (1983). However, “the limited discretion

accorded by § 7403 should be exercised rigorously and sparingly, keeping in mind the

Government’s paramount interest in prompt and certain collection of delinquent taxes.” Id. at

711. Furthermore, the Court noted that it “can think of virtually no circumstances. . . in which it

would be permissible to refuse to authorize a sale simply to protect the interests of the delinquent

taxpayer himself or herself.” Id. at 709.

The Bettans have listed several “additional circumstances” in their papers. See Defs’

Aff. at p. 8. To the extent these are offered as reasons to deny the United States’ request to

proceed with sale of the Property, they are unavailing. The Court accords little weight to any

purported harm to the taxpayer, Bettan, nor does it find that reliance on imaginary settlement

negotiations justifies any delay. The only consideration meriting discussion concerns a third-

party, Carol Jo Bettan’s elderly mother, who resides at the Property. The Bettans do not indicate

that she has any legal interest in the Property, but rather make the assertion that moving her

would “cause her irreparable physical Damage.” Defs’ Aff. at p. 8. This lone statement is

conclusory and unsupported by any evidence. Notwithstanding the Court’s sympathy for the

Bettans’ personal circumstances and that of Carol Jo Bettan’s mother, they have failed to raise

any argument warranting an exercise of discretion to deny or delay the sale of the Property.

On the other hand, postponing the sale would not produce an equitable result and instead

would prejudice the United States since, absent a sale, it would have no alternative means to

enforce its valid tax liens. At the end of the day, the United States will be entitled only to

Bettan’s one-half interest or 50% of the sale proceeds minus satisfaction of both mortgages.

Since the Bettans have made no payments on either mortgage since 2006 with the result that their

obligations on those debts continues to grow, the United States’ ability to recover is diminished

monthly.

The motion for summary judgment is granted in its entirety, including a direction for sale

of the Property pursuant to § 7403.

B. Defendants’ Opposition

The Bettans do not suggest that the liens are invalid or challenge Bettan’s tax liability but

instead raise the following arguments in opposition to the motion: (1) the motion should be

denied or held in abeyance while settlement negotiations proceed 2) there are questions of fact

regarding “whether there was compliance with the necessary pre[re]quisites to maintain a

foreclosure action,” Defs’ Aff. at p.4; and (3) the Bettans did not consent to this case’s removal

from state court and thus the matter should be remanded.

As to the purported settlement negotiations, the Bettans contend that “both the plaintiff

United States and the defendants Jeffrey Bettan and Carol J. Bettan are desirous of reaching a

consent Settlement and Entry of Judgment in this action.” Defs’ Aff. at 2. The United States

disagrees, stating that it is no longer willing to settle in light of its discovery that the Bettans

have been arrears in their mortgage payments since 2006. Reply Memorandum at 2, DE [110].

The Court cannot and will not force a settlement between unwilling litigants. “Although a court

cannot force litigants to settle an action, it is well established that a court can require parties to

appear for a settlement conference, and impose sanctions pursuant to Rule 16(f) if a party fails to

do so.” Bulkmatic Transp. Co. v. Pappas, No. 99-Civ.-12070, 2002 WL 975625, at *2 (S.D.N.Y.

May 9, 2002). On this record, the Court declines to exercise any authority it may have to direct

the parties participate in fruitless settlement “negotiations.” The Bettan defendants have

prolonged this litigation at every turn, seeking extension after extension including in applying for

a loan modification in furtherance of settlement discussions. As there is no evidence on the

record that further settlement discussions would be successful, there will be no order mandating

a settlement conference. Of course, the parties may continue to discuss settlement on terms they

find mutually agreeable. Such negotiations will not, however, delay issuance of this decision.

The Bettan defendants’ arguments regarding their lack of consent to removal of a state

court action and whether there has been compliance with the prerequisites for a foreclosure

action arise from same misconception regarding the nature of the current case vis a vis a

foreclosure action filed in New York Supreme Court, Nassau County by Deutsche Bank,

Deutsche Bank National Trust Co. v. Bettan, Index No. 5162/2006 (the “Deutsche Bank action”).

The Bettans first argue that they did not consent to the removal to this Court of the

Deutsche Bank action, and, in light of their lack of consent, seek remand to state court. They

further suggest that the removal was made pursuant to 28 U.S.C. § 1441(a). See Defs’ Aff. at

¶11. The current case is -no-t, in fact, the Deutsche Bank action continued in this Court via

removal but rather a separate, independent action commenced by the United States pursuant to

federal law. See 26 U.S.C. § 7402 (district courts have jurisdiction to, inter alia, “render such

judgments and decrees as may be necessary or appropriate for the enforcement of the internal

revenue laws”); id. § 7403 (where there has been a refusal or neglect to pay any tax, a civil

action may be filed “in a district court of the United States to enforce the lien of the United

States under this title with respect to such tax or liability or to subject any property. . . of the

delinquent . . . to the payment of such tax or liability”). The Bettans do not address the Court’s

jurisdiction to entertain this action beyond its specious removal position, a position that Bettan

has persistently advanced, raising it as a defense in the Answer, see Answer ¶31, and by motion

to remand which was denied by Judge Bianco. See Minute Entry of 12/13/17, DE [95].

The Bettans alternatively argue that even if the case was properly removed, the United

States has failed to comply with various notification requirements under provisions of New York

Banking Law and Real Property and Proceedings Law that act as conditions precedent to a

foreclosure action. Again, they misapprehend the nature of the instant action, which is a federal

action wherein the United States seeks to enforce federal tax liens. The New York state

provisions are simply not relevant to the relief sought here. Under federal law, the court has the

authority to appoint a receiver to sell property to enforce the lien. See 26 U.S.C. § 7403(d).

“The statute does not require...that a separate foreclosure process take place prior to appointment

of a receiver.” United States v. Evseroff, No. 00-CV-6029, 2014 WL 202563, at *2 (E.D.N.Y.

Jan. 16, 2014).

IV. CONCLUSION

For the foregoing reasons, Plaintiff’s motion for summary judgment, DE [107] is granted

in its entirety. The United States shall submit a proposed judgment consistent with this Order

by May 11, 2020.

SO ORDERED.

/s/ Sandra J. Feuerstein

Sandra J. Feuerstein

United States District Judge

Dated: Central Islip, New York

April 27, 2020