Petition for Writ of Certiorari — Blakeman v. United States

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In The

Supreme Court of the United ‘States:

October Term, 1993

ey .

MAUDINE BLAKEMAN,

UNITED STATES OF AMERICA,

yo Ilo rf

Re spondenl

JAMES NEAL BLAKEMAN, as Executor of the Estate

of C.E. BLAKEMAN, Deceased, ROBERT EARI

BLAKEMAN and KAREN A. WHALEY,

Respondents

ssuseequenigeesenanemenngntaminneenena * -

Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Fifth Circuit

— & —__—_

PETITION FOR WRIT OF CERTIORARI

$$ $$$ &

Wm. D. Etuiom

Cow es & THompsoNn, P.C.

901 Main Street, Suite 4000

Dallas, ~peotld 75202

(214) 670-1100

rT)

' ,; ;

Counsel Of Nnecora

WittiAM H. HorNBERGER

JACKSON & Wa ker, L.L.P.

901 Main Street, Suite 6000

Dallas, Texas 75202

(214) 953-6000

Counsel for Petitioner

October 25, 1993

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

Bic

QUESTIONS PRESENTED FOR REVIEW

I. Is ar innocent property owner, whose interest in

real property was forced to be sold a. a result of a

judicial foreclosure pursuant to 26 U.S.C. §7403(c),

and who was free of any responsibility for the tax

liability sought to be foreclosed, justly compensated

if she receives only a fixed percentage of the fore-

closure proceeds without receiving reimbursement

for litigation expenses and federal income taxes det-

rimentally incurred by the innocent property owner

in the judicial foreclosure proceeding?

Il. Was the Fifth Circuit justified in refusing to con-

sider this question under the record in this case?

LIST OF PARTIES TO THE PROCEEDING

The following were parties to the proceeding in the

Fifth Circuit Court of Appeals, which is the court whose

judgment is sought to be reviewed:

Plaintiff, the United States of America; and

Defendants, Maudine Blakeman, and Messrs.

James Neal Blakeman, as executor of the estate

of C.E. Blakeman, Deceased, and individually,

and Robert Earl Blakeman and Mrs. Karen A.

Whaley.

ill

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW ........... i

LIST OF PARTIES TO THE PROCEEDING ......... ii

TABLE OF AUTHORITIES ............--0-+ ee eee Vv

@. . ©) 9 00) See 2

TENE isc vaccesncerrsneresesrsevewesness 2

PROVISIONS OF LAW INVOLVED ..........-----. 2

STATEMENT OF THE CASE..........----0- ++ eee: 4

A. Statement of Facts............-ssseeeeeeeeees 4

B. Proceedings Below.........---...eeeeeeeeeees 5

REASONS FOR GRANTING WRIT........-----+--- 9

I. CERTIORARI SHOULD BE GRANTED

BECAUSE THE FIFTH CIRCUIT’S METHOD OF

COMPUTING MRS. BLAKEMAN’S COMPEN-

SATION FOR HER HOMESTEAD INTEREST,

WHICH IS SUBJECT TO JUDICIAL FORE-

CLOSURE DUE TO THE NONPAYMENT OF

TAX LIABILITIES OF OTHERS, DEPARTS SERI-

OUSLY FROM THE STANDARD ARTICU-

LATED BY THIS COURT... ......--.-.eceeeeees 9

A. Mrs. Blakeman should be compensated for

her litigation expenses and the federal

income taxes she will incur as a result of the

forced sale of her homestead interest ..... 9

TABLE OF CONTENTS - Continued

Page

B. If this Court determines that-Mrs. Blakeman

. Should be compensated for her litigation

expenses and federal income taxes arising

from a forced sale of her homestead interest,

“the District Court has the authority to fash-

ion suitable relief on remand.............. 14

Il. THE FIFTH CIRCUIT ERRED IN REFUSING TO

CONSIDER WHETHER MRS. BLAKEMAN IS

ENTITLED TO JUST COMPENSATION FOR

LITIGATION EXPENSES INCURRED BY HER IN

THIS ACTION AND FOR FEDERAL INCOME

TAXES INCURRED ON THE FORCED SALE OF

HER HOMESTEAD INTEREST ........--+esees: 16

A. Mrs. Blakeman sufficiently presented her

compensation argument to the District Court

EP Oe TE ECT ee Te ee ere 16

B. This Court’s refusal to consider Mrs. Blake-

man’s compensation argument would result

in a miscarriage of justice ................. 19

CAG LIE Seu buadde dtavarhevupsee ch uabeouarn? 23

TABLE OF AUTHORITIES

Page

CASES:

Batiansila v. Advanced Cardiovascular Systems, Inc.,

ee 8 8 Ee AB, /) ere 18, 19

Callejo v. Bancomer, S.A., 764 F.2d 1101 (5th Cir.

rr ror rr rrr err rr rer: ry: 21

Dobosz v. Walsh, 892 F.2d 1135 (2d Cir. 1989)........ 18

Evans v. Triple R Welding & Oil Field Maintenance

Corp., 472 F.2d 713 (5th Cir. 1973) ...........----. 21

Giovson v. United States, 761 F. Supp. 685 (C.D. Cal.

| Sane eee aa B iru rere et 13, 17

Heartline Farms, Inc. v. Daly, 128 B.R. 246 (D. Neb.

SR cv cccc cen sexenvycvevadésee)ecensaeneene eae 15

Higginbotham v. Ford Motor Co., 540 F.2d 762 (Sth

per ether er iyi 3 21

Hormel v. Helvering, 312 U.S. 552, 61 S.Ct. 719, 83

\ 8 160? (908). o ccc eee 20

Payne v. McLemore’s Wholesale & Retail Stores, 654

eee k Bi Ew ae.) Serer rey ere 21

Pegues v. Morehouse Parish School Board, 706 F.2d

Foe Cy Cie TOG nia hes tc bce cic eer 21

Self Directed Placement Corp. v. Control Data Corp.,

S06 F.2d G62 (OG Cie. TSR. 6 ic cece cider eer ceves: 18

Singleton v. Wulff, 428 U.S. 106 (1976)........... 20, 21

Tandy Brands, Inc. v. Harper, 760 F.2d 648 (5th Cir.

ee pe te Pe Hele 18

Texas v. United States, 730 F.2d 339 (5th Cir. 1984).... 21

TABLE OF AUTHORITIES —- Continued

Page

United States v. Blakeman, 750 F. Supp. 216 (N.D.

Det. BOM kekceecassecssdaceeti ae 2

United States v. Blakeman, 997 F.2d 1084 (5th Cir.

ON ob vee Nn Geer eee ete 64ers ee 2

United States v. Boyd, 246 F.2d 477 (5th Cir.), cert.

denied, S55 US. GO CGR) «ok 0c vce iseaseseis ts 14, 15

United States v. Commodities Trading Corp., 339 U.S.

Bad CORO) ss 5 uv0 Ceoa kone eevee eee eee 12

United States v. Morrison, 247 F.2d 285 (5th Cir.

| aaa Marre aren mrs ge gee Cao) Le einen ar be 15

United States v. Myers, 76-2 U.S.T.C. (CCH) { 9534,

38 A.F.T.R.2d (P-H) 5400 (D. Mont. 1976) ......... 14

United States v. Overman, 424 F.2d 1142 (9th Cir.

PN oe bode eawn dee ke eceine bee 12, 13, 15

United States v. Rodgers, 461 U.S. 677 (1983)

TiGa ieee we tke eae een ain ae te eee 9, 10, 12, 13, 14

Whitaker Corp. v. Execuair Corp., 953 F.2d 510 (9th

Ce: FOES sks 2cbcseakeene tease ocee cele 17

STATUTES:

, Eh a S.A cerry oe 11

y Bis Col Fs Pre eT eet rrr ee 5

. Obs Ss all 2. Serer ae ekaeeeineurawecen 5

ee is Oe Ps 9:00 va enannicnde eke 2, 7, 9, 10, 14

y Bk ae eo, rT Pre ren rr Arr ye e 16

Be Re. © Fee 5c ccs eves enssicitedewsens 7, 8, 12, 22

TABLE OF AUTHORITIES - Continued

Page

et Shas ae ES oo hace cere eeneneexceeer ee ieneu 2

ee a ae SE oon ok Cee erate cee tad eet eee: 6

OTHER AUTHORITIES:

Eee webermtems TGS... cc cccccvccuvcevckcsusuces 22

Rev. Rul. 93-51, 1993 I.R.B. 26...... 22

oe.

In The

Supreme Court of the United States

October Term, 1993

MAUDINE BLAKEMAN,

Petitioner,

UNITED STATES OF AMERICA,

Respondent,

JAMES NEAL BLAKEMAN, as Executor of the Estate

of C.E. BLAKEMAN, Deceased, ROBERT EARL

BLAKEMAN and KAREN A. WHALEY,

Respondents.

Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Fifth Circuit

PETITION FOR WRIT OF CERTIORARI

The petitioner, Maudine Blakeman, respectfully prays

that a writ of certiorari issue to review the opinion of the

United States Court of Appeals for the Fifth Circuit,

entered in the above-entitled proceeding on July 21, 1992,

and modified by the Fifth Circuit’s opinion on rehearing

entered July 28, 1993.

—e ¢

OPINIONS BELOW

The opinion of the Court of Appeals for the Fifth

Circuit (la-24a),! as modified on rehearing (56a-64a), is

reported in full at 997 F.2d 1084 (5th Cir. 1993). The Fifth

Circuit’s opinion, as modified, affirms in part and

reverses and remands in part the judgment (43a-55a) and

opinion (25a-42a) of the United States District Court for

the Northern District of Texas, which is reported at 750 F.

Supp. 216 (N.D. Tex. 1990).

JURISDICTION

The judgment of the Court of Appeals was entered

on July 21, 1992. The Court granted Mrs. Blakeman’s

petition for rehearing and on July 28, 1993, entered its

opinion modifying its original opinion of July 21, 1992.

The jurisdiction of this Court is invoked pursuant to 28

U.S.C. § 1254(1).

PROVISIONS OF LAW INVOLVED

26 U.S.C. § 7403(a)-(c) :

ACTION TO ENFORCE LIEN OR TO SUBJECT PROP-

ERTY TO PAYMENT OF TAX

(a) Filing. —- In any case where there has been a

refusal or neglect to pay any tax, or to discharge any

liability in respect thereof, whether or not levy has been

' References herein to “ ___a” are to pages in the appendix

of this Petition.

made, the Attorney General or his delegate, at the request

of the Secretary [of the Treasury], may direct a civil action

to 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 abject any property,

of whatever nature, of the delinquent, or in which he has

any right, title, or interest, to the payment of such tax or

liability. For the purposes of the preceding sentence, any

acceleration of payment under section 6166(g) shall be

treated as a neglect to pay tax.

(b) Parties. - All persons having liens upon or

claiming any interest in the property involved in such

action shall be made parties thereto.

the parties have been duly notified of the action, proceed

to adjudicate all matters involved therein and finally

determine the merits of all claims to and liens upon the

property, and, in all cases where a claim or interest of the

United States therein is established, may decree a sale of

such property, by the proper officer of the court, 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. If the property is sold to

satisfy a first lien held by the United States, the United

States may bid at the sale such sum, not exceeding the

amount of such lien with expenses of sale, as the Secre-

tary directs.

STATEMENT OF THE CASE

A. Statement of Facts.

C.E. Blakeman (“C.E.”) died on May 25, 1978. He was

survived by his wife, Maudine Blakeman (“Mrs. Blake-

man”), and three children from a previous marriage -

James Neal Blakeman, Robert Earl Blakeman and Karen

Whaley (sometimes collectively referred to herein as the

“children”). At the time of his death, C.E. and Mrs. Blake-

man resided upon 101.5954 acres of land located in Fort

Worth, Texas (the “Randol Mill Property”). The Randol

Mill Property was owned by C.E. as his separate property

at the time of his death and was the major asset of his

estate (the “estate”).

C.E. left the Randol Mill Property to his children by

his last will and testament. After C.E.’s death, a dispute

arose between Mrs. Blakeman and the children as to the

rights of each in the Randol Mill Property. Suit, to which

they were all parties, was brought in the Probate Court in

Tarrant County, Texas, to determine their respective

rights, and on May 7, 1980, a final judgment was entered.

The judgment determined that Mrs. Blakeman had a rural

homestead in the Randol Mill Property and that she was

entitled to the use of 100 acres of the Randol Mill Prop-

erty, to be selected by her, for as long as she occupied the

same as her homestead. The United States was not a

party to the Probate Court action.

After the Probate Court judgment was entered, Mrs.

Blakeman designated 100 acres of the Randol Mill Prop-

erty as her homestead (the “Homestead Property”), and

she has resided there continuously since C.E.’s death in

1978.

Li eeeeeereeenneceeceimmmeeiiiiiaiaiiiiil

On July 17, 1980, the Secretary of the Treasury made

assessments against C.E.’s estate in the amount of

$124,820.93 in federal estate tax and $12,651.37 in interest.

On July 21, 1980, and August 18, 1980, the Secretary made

additional assessments for interest and penalties relating

to the unpaid estate tax. On March 16, 1981, the Internal

Revenue Service filed a notice of federal tax lien for the

assessments against the estate with the Tarrant County

Clerk. The Service made demand upon James Neal Blake-

man, as executor of C.E.’s estate, for payment of the

outstanding federal estate taxes.

The United States filed suit on June 16, 1986, to

reduce to judgment the assessment of the federal estate

tax liabilities of the estate; to foreclose federal tax liens

against certain real property located in Fort Worth, Tar-

rant County, Texas; and to obtain judgment against James

Neal Blakeman, as executor of the estate and individually,

for the estate taxes to the extent of all payments of debts

of the estate, and against the survivors of C.E. based on

the value of any assets they might have received from the

estate.

B. Proceedings Below.

The District Court determined that Mrs. Blakeman

had a rural homestead interest in the Randol Mill Prop-

erty from the date of C.E.’s death until trial. The District

Court held that the special tax lien under 26 U.S.C. § 6324

had expired, but the general tax lien under 26 U.S.C.

§ 6321 was valid and attached to the property at issue -

subject to Mrs. Blakeman’s homestead interest.

The District Court ordered foreclosure of the federal

tax lien, and, from the proceeds of such foreclosure,

awarded Mrs. Blakeman her interest in the property as of

the foreclosure date, but limited the government's recov-

ery to the estate’s interest in the Randol Mill Property on

the date the federal tax lien arose in 1980. The District

Court found that Mrs. Blakeman had a 60.352% interest in

the Homestead Property and that the United States had a

25.577% interest in the Homestead Property. The District

Court also ordered that the difference between the value

of Mrs. Blakeman’s interest in the Homestead Property on

the date the federal tax lien arose and the value of her

interest on the date judgment was entered be paid to the

estate — irrespective of whether the government was oth-

erwise able to collect the tax liability of the estate.

The District Court entered judgment providing for

distribution of the foreclosure sale proceeds as follows:

(1) 60.352% of the gross proceeds of sale to

Mrs. Blakeman;

(2) Satisfaction of the reasonable and necessary

costs of sale;

(3) To the United States, in satisfaction of its

federal tax lien, but not more than 25.577%

of the gross sales proceeds from such prop-

erty; and

(4) The excess, if any, to C.E.’s estate.

The United States appealed to the Fifth Circuit and

the children and Mrs. Blakeman cross-appealed. The Fifth

Circuit had jurisdiction over the appeal pursuant to 28

U.S.C. § 1291.

On July 21, 1992, the Fifth Circuit held that the Dis-

trict Court was not clearly erroneous in concluding that

Mrs. Blakeman’s homestead interest in the property was

rural. The Court concluded that the District Court erred

in holding that the reach of the federal tax lien — arising

from the unpaid estate tax —- was limited to the estate’s

interest in the Randol Mill Property on the lien’s attach-

ment date. The Court found that the federal tax lien

reached the interests of C.E.’s estate as of the date of the

foreclosure sale.

The Fifth Circuit also found that Mrs. Blakeman did

not properly urge the applicability of 26 U.S.C. § 7520 to

the District Court and, therefore, she waived her right to

raise on appeal the propriety of using the tables promul-

gated under 26 U.S.C. § 7520 for valuation purposes.

The Fifth Circuit did not address Mrs. Blakeman’s

claim that she should be compensated for the taxes she

will pay due to the sale of her Homestead Property, on

the ground that Mrs. Blakeman did not raise in the Dis-

trict Court her position that the District Court could

require the government to pay the costs and expenses

attendant to the judicial foreclosure, including compensa-

tion for taxes Mrs. Blakeman will pay due to the sale of

the Homestead Property.

The Fifth Circuit stated that it did not believe that its

refusal to allow Mrs. Blakeman to raise the issue on

appeal would result in a substantial miscarriage of jus-

tice. The Fifth Circuit reasoned that Mrs. Blakeman could

have presented in the District Court her position that,

pursuant to 26 U.S.C. § 7403, the District Court could

require the United States to pay the costs and expenses

attendant to the judicial foreclosure.

Mrs. Blakeman filed a petition for rehearing on the

grounds that the Court of Appeals erred in refusing to (1)

apply the tables promulgated under 26 U.S.C. § 7520 for

valuation of Mrs. Blakeman’s interest in the Homestead

Property and (2) consider Mrs. Blakeman’s claim for taxes

she will pay arising from the judicial foreclosure in this

case.

On rehearing, the Fifth Circuit modified its opinion

by holding that (1) Mrs. Blakeman’s homestead interest

should be valued according to the tables promulgated

pursuant to 26 U.S.C. § 7520, (2) Mrs. Blakeman did

properly raise the issue of the applicability of § 7520 in

the District Court, and (3) Mrs. Blakeman did not waive

her right to assert that the District Court should have

used the tables promulgated pursuant to 26 U.S.C. § 7520.

REASONS FOR GRANTING WRIT

I. CERTIORARI SHOULD BE GRANTED BECAUSE

THE FIFTH CIRCUIT’S METHOD OF COMPUT-

ING MRS. BLAKEMAN’S COMPENSATION FOR

HER HOMESTEAD INTEREST, WHICH IS SUB-

JECT TO JUDICIAL FORECLOSURE DUE TO THE

NONPAYMENT OF TAX LIABILITIES OF OTHERS,

DEPARTS SERIOUSLY FROM THE STANDARD

ARTICULATED BY THIS COURT.

A. Mrs. Blakeman should be compensated for her

litigation expenses and the federal income

taxes she will incur as a result of the forced sale

of her homestead interest.

Mrs. Blakeman is an innocent bystander in a judicial

foreclosure proceeding arising under 26 U.S.C. § 7403(c).

The Fifth Circuit’s method of computing Mrs. Blakeman’s

compensation for her lost homestead interest departs sig-

nificantly from the standard articulated by this Court in

United States v. Rodgers, 461 U.S. 677 (1983). The Fifth

Circuit’s method of computation significantly undercom-

pensates Mrs. Blakeman for her homestead interest.

Section 7403(c) empowers district courts to “deter-

mine the merits of all claims to and liens upon the prop-

erty, and, in all cases where a claim or interest of the

United States therein is established, may decree a sale of

such 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.”

This Court has read Section 7403(c) “to contemplate, not

merely the sale of the delinquent taxpayer’s own interest,

but the sale of the entire property (as long as the United

States has any ‘claim or interest’ in it), and the recogni-

tion of third-party interests through the mechanism of

judicial valuation and distribution.” United States v.

Rodgers, 461 U.S. at 693-94. Several guiding principles

derive from Rodgers, and these lodestars are missing in

the Fifth Circuit’s method of computing Mrs. Blakeman’s

compensation for her homestead interest:

(1) “The exact method for the distribution

required by § 7403 is not before us at this

time.” Id. at 698.

(2) While “the provisions of Section 7403 are

broad and profound:”

§ 7403 is punctilious in protecting

the vested rights of third parties

caught in the Government's collec-

tion effort, and in ensuring that the

Government not receive out of the

proceeds of the sale any more than

that to which it is properly enti-

tled.” Id. at 699.

(3) “[T]he exercise in any particular case of the

power granted under § 7403 to seek the

forced sale of property interests other than

those of the delinquent taxpayer is left in

the first instance to the good sense and

common decency of the collecting authori-

ties.” Id.

(4) “Whatever property rights attach to a

homestead under Texas law are adequately

discharged by the payment of the compen-

sation, and no further deference to state

law is required, either by § 7403 or by the

Constitution.” Id. at 702.

hes aecnreneeeeneeenneaiiamneaiititeee |

(5) “[W]e are not blind to the fact that in prac-

tical terms financial compensation may not

always be a completely adequate substitute

for a roof over one’s head.” Id. at 704.

The Fifth Circuit awarded Mrs. Blakeman only a

fixed percentage of the foreclosure proceeds. This method

for computing Mrs. Blakeman’s compensation does not

adequately compensate Mrs. Blakeman for her homestead

interest. Mrs. Blakeman will suffer financially in various

ways that have not been addressed or considered by the

courts below and, as a result, she has not been adequately

compensated for her interest in the property.

First, Mrs. Blakeman will be liable for federal income

taxes on the gain she realizes and recognizes on the

forced sale of her homestead. Victims of eminent domain

or other forms of government condemnation have been

provided relief by Congress from this type of gain arising

from a forced sale of the property as a result of govern-

ment taking by virtue of 26 U.S.C. § 1033. Mrs. Blakeman

does not appear to come within that tax deferral provi-

sion. Therefore, the sale proceeds received by Mrs. Blake-

man will be subject to a 28% federal income tax rate (the

present maximum tax rate on capital gain income recog-

nized by individuals) and, as a result, the proceeds avail-

able to Mrs. Blakeman will be subject to a 28% reduction.

Second, Mrs. Blakeman has been required to incur

substantial litigation costs necessary to defend her claim

in the courts below from contrary views urged by the

United States and the Blakeman children. Mrs. Blakeman

has prevailed in the courts below on almost all of the

critical points asserted by her, namely, that (1) her home-

stead interest in the Randol Mill Property was a rural

homestead, (2) she had not abandoned her homestead,

and (3) her homestead interest should be valued under

applicable Treasury tables pursuant to 26 U.S.C. § 7520.

The total amount of her litigation costs, plus income

taxes, will cause Mrs. Blakeman to suffer an approx-

imately one-half reduction in the proceeds available to

her to replace her homestead.

Without full compensation to Mrs. Blakeman for her

interest in the foreclosed property, “manifest injustice,”

United States v. Commodities Trading Corp., 339 U.S. 121,

123 (1950), to Mrs. Blakeman would result. In the words

of this Court in Commodities Trading Corp., a decision

arising in the context of determining just compensation in

an eminent domain case but applicable here nevertheless,

“the dominant consideration always remains the same:

What compensation is ‘just’ both to an owner whose

property is taken and to the public that must pay the

bill?” Id.

This Court has stated as a goal in judicial foreclosure

proceedings in compensating innocent third parties, who

have no responsibility for the tax liability sought to be

foreclosed, that the courts should use “good sense and

common decency.” Rodgers, 461 U.S. at 699. The Ninth

Circuit in United States v. Overman, 424 F.2d 1142 (9th Cir.

1970), has emphasized that the foreclosing court is to

grant innocent parties “just compensation” for their inter-

ests:

Thus, the statute contemplates that the district

court may subject the interests of persons other

than the taxpayer to an involuntary conversion

during the course of enforcing the Govern-

ment’s lien on the delinquent taxpayer's interest

in the same property. The owners other than the

taxpayer, however, are entitled to just compensa-

tion from the proceeds of the sale for that “tak-

ing.” 424 F.2d at 1146 (emphasis added).

To allow Mrs. Blakeman to suffer at least a one-third

reduction in proceeds attributable to federal income

taxes, and an additional reduction in her award for litiga-

tion costs, perhaps totaling in the aggregate up to a one-

half diminution, means that Mrs. Blakeman will not have

been justly compensated for the United States having

forcibly sold her property. Mrs. Blakeman has not been

treated fairly or justly. She has contributed not one thing

to the circumstances that have been forced upon her. Yet,

under the Fifth Circuit’s decision in this case, she will

receive less than one-half of her interest in her homestead

because of income taxes and litigation costs required to

be suffered by her. This Court’s decision in United States

v. Rodgers, supra, has not been fulfilled.

In another context, the courts have recognized the

severe consequences resulting from the imposition of a

tax liability on taxpayers who are to experience a forced

sale of their property by the government. In Gibson v.

United States, 761 F. Supp. 685 (C.D. Cal. 1991), the court

held that taxpayers were entitled to an injunction against

the Internal Revenue Service on account of the irrepar-

able injury that they would suffer. In that case, the court

found that (1) the taxpayer “would be unable to recover

compensation for all of the costs they would incur,”2 (2)

“the increased tax liabilities caused by liquidation of

2 761 F. Supp. at 692.

assets and any tax liabilities, forfeitures, or other penal-

ties resulting from early distribution of the retirement

plan would not be compensable,”* (3) the taxpayers

“would not be compensated for the sacrifices and hard-

ships they would suffer if forced to sell their home and

other belongings and go deep into debt to raise the funds

needed to pay the deficiency,”4 (4) the taxpayers “may

not be deprived of the necessities of life, the monetary

harm they will suffer will not be compensable at a later

time,”° and (5) taxpayers’ “injury is irreparable as their

remedy at law is not adequate because it will not fully

compensate them for the harm caused.”

B. If this Court determines that Mrs. Blakeman

should be compensated for her litigation

expenses and federal income taxes arising from

a forced sale of her homestead interest, the Dis-

trict Court has the authority to fashion suitable

relief on remand.

Section 7403 empowers district courts, sitting in

equity, to find the interests of the parties and order a

distribution accordingly. United States v. Rodgers, 461 U.S.

677, 703-13 (1983); United States v. Boyd, 246 F.2d 477 (5th

Cir. 1957), cert. denied, 355 U.S. 889 (1957); see also United

States v. Myers, 76-2 U.S.T.C. (CCH) ¥ 9534, 38 A.F.T.R.2d

(P-H) 5400 (D. Mont. 1976). The emphases of the power of

a court adjudging foreclosures under Section 7403 are

3 Id.

4 Id.

> Id.

6 Id.

flexibility, Boyd, supra, and to do justice. Heartline Farms,

Inc. v. Daly, 128 B.R. 246, 253 (D. Neb. 1990) (“Equity and

justice become obscure where black letter law is applied

literally with the effect of minimizing or even defeating

underlying policies.”). No precise formula is mandated

for the court to follow.

The Ninth Circuit in United States v. Overman, 424

F.2d 1142 (9th Cir. 1970), has confirmed the broad power

of the district court in ordering foreclosure and compel-

ling relief appropriate to the interests of all of the parties.

The Ninth Circuit said in Overman that Section 7403:

confers broad discretionary powers upon the

court in shaping a decree designed to work sub-

stantial justice among all interested persons.

“Congress [in enacting § 7403] intended that the

Court function with the full traditional flex-

ibility of the Chancellor, United States v. Mor-

rison, 5 Cir., 247 F.2d 295.” (United States v. Boyd

(Sth Cir.) 246 F.2d 477, 481, cert. denied, 355 U.S.

889 (1957)).

424 F.2d at 1146.

Here, the District Court can fashion suitable relief

appropriate to a court sitting in equity. The court there-

fore can award to Mrs. Blakeman sufficient compensation

to make her whole.

Il. THE FIFTH CIRCUIT ERRED IN REFUSING TO

CONSIDER WHETHER MRS. BLAKEMAN IS

ENTITLED TO JUST COMPENSATION FOR LITI-

GATION EXPENSES INCURRED BY HER IN THIS

ACTION AND FOR FEDERAL INCOME TAXES

INCURRED ON THE FORCED SALE OF HER

HOMESTEAD INTEREST.

A. Mrs. Blakeman sufficiently presented her com-

pensation argument to the District Court.

The Fifth Circuit concluded that Mrs. Blakeman had

not preserved her claim that her share of the sales pro-

ceeds from the Randol Mill Property should include not

only the value of her interest in the property but also a

reimbursement of the amount of the federal income tax

liability Mrs. Blakeman would incur as a result of the

capital gain she would realize upon the involuntary sale

of her interest in the property. Mrs. Blakeman submits,

however, that she did in fact preserve a claim for com-

plete compensation for her losses resulting from the

forced sale of her interest in the property, by (1) making a

claim for litigation expenses in her brief accompanying

her Motion for Partial Summary Judgment and Brief in

Support Thereof (65a-100a) filed in the District Court; (2)

claiming she is entitled to litigation expenses in her Pro-

posed Findings of Fact and Conclusions of Law; and (3)

joining in the statement in the Joint Pretrial Order that

one of the issues to be resolved in this case was “If the

Court grants Defendant Maudine Blakeman’s Motion for

Leave to Amend her First Amended Answer, whether,

under Section 7430 of the [Internal Revenue] Code,

Defendant Maudine Blakeman is entitled to an award of

judgment for costs and attorneys’ fees.” These statements

were sufficient to put the District Court and the other

parties in the case upon notice of Mrs. Blakeman’s claim

to be fully compensated for the economic losses she

would suffer as a result of the forced sale of her prop-

erty.”

The rule controlling this issue is the rule that, for an

appellate court to decide an issue that the trial court did

not address, the argument must be raised sufficiently for

the trial court to have ruled on it. Whittaker Corp. v.

Execuair Corp., 953 F.2d 510, 515 (9th Cir. 1992) (issue of

validity of relief granted by trial court adequately pre-

served by appellant’s filing of motion for reconsideration,

? The statements in Mrs. Blakeman’s Motion for Summary

Judgment and the Joint Pretrial Order referred to Mrs. Blake-

man’s claim for attorneys’ fees and other litigation expenses but

not to the federal income tax liability on Mrs. Blakeman’s capital

gain from the forced sale. During the course of Mrs. Blakeman’s

appeal to the Court of Appeals, new authority developed to

support Mrs. Blakeman’s claim for reimbursement of the federal

income tax liability, in the decision in Gibson v. United States, 761

F. Supp. 685 (C.D. Cal. 1991), a claim for which no clear author-

ity existed at the time of the District Court proceeding. Mrs.

Blakeman therefore raised the specific claim for such taxes for

the first time at the appellate level. Mrs. Blakeman did not

specifically address her other expenses, such as the attorneys’

fees and other litigation costs, before the Court of Appeals. Both

the tax liability and the attorneys’ fees and other litigation

expenses are substantial amounts that Mrs. Blakeman will have

incurred involuntarily and through no fault of her own. Accord-

ingly, in the interest of serving equity, the Court of Appeals

should have exercised its discretion to determine the issue of

fully compensating Mrs. Blakeman for that economic loss. Since

the Court of Appeals failed to exercise its discretion in that

manner, this Court should take the opportunity to exercise its

own discretion to grant equity in this case. -

giving trial court sufficient opportunity to consider

issue). Several courts of appeals have held that an issue

that was not argued in the trial court nevertheless was

preserved for consideration by the appellate court when

the party raising the issue raised it in pleadings or

motions filed with the trial court. E.g., Batiansila v.

Advanced Cardiovascular Systems, Inc., 952 F.2d 893 (5th

Cir. 1992) (joint pretrial order contained “contested issue

of fact” that referred to whether party was entitled to

recover attorneys’ fees and penalties; court determined

this issue could be interpreted to mean that other party

had not waived its equitable defense to the penalties); Self

Directed Placement Corp. v. Control Data Corp., 908 F.2d 462,

467 (9th Cir. 1990) (issue raised in opposition to motion

for summary judgment and supporting deposition and

declaration); Dobosz v. Walsh, 892 F.2d 1135, 1140 (2d Cir.

1989) (issue raised in reply memorandum on motion for

summary judgment); and Tandy Brands, Inc. v. Harper, 760

F.2d 648, 652 (5th Cir. 1985) (issue raised in answer to

complaint, motion for summary judgment, and motion

for judgment notwithstanding verdict).

An example of an appellate court’s determination

that a party had adequately raised an issue in the trial

court is Batiansila v. Advanced Cardiovascular Systems, Inc.,

supra. In that case, the defendant, Advanced Cardio-

vascular Systems, Inc. (“ACS”), appealed from a judg-

ment of the district court finding ACS liable on a

terminated employee’s claim of penalties and attorneys’

fees for failure to pay bonus. 952 F.2d at 894. On appeal,

ACS contended that the plaintiff, Mr. Batiansila, was not

entitled to penalties because he had failed to show that

the failure to pay bonus was due to bad faith on the part

of ACS. Mr. Batiansila contended that ACS had waived

this point by not raising it in the district court. Id. at 896.

ACS contended that it had not waived the bad faith

argument and pointed to the pretrial order for support.

The pretrial order contained a “Contested Issue of Fact”

that “refers to whether Mr. Batiansila is entitled to

recover attorney’s fees and penalties.” Id. The court rea-

soned that “if ACS had waived its equitable defense, this

issue of fact would be completely unnecessary - the

penalties and fees would automatically follow a finding

of liability for the bonus (which was listed as Issue of

Fact Number Six.)” Id. at 896 n.9.

The Batiansila decision and the other cases cited

above indicate that Mrs. Blakeman’s raising the issue of

complete compensation for her economic losses in her

Motion for Summary Judgment, in her Proposed Finding

of Fact and Conclusions of Law, and by joining in the

Joint Pretrial Order was adequate to put the District

Court and the other parties in this case upon notice of her

claim for such compensation and thus to preserve the

issue for the Court of Appeals. Accordingly, the Court of

Appeals erred in holding that Mrs. Blakeman failed to

preserve this issue.

B. This Court’s refusal to consider Mrs. Blake-

man’s compensation argument would result in a

miscarriage of justice.

Even if Mrs. Blakeman were to assume, for the sake

of argument, that she did not properly urge her compen-

sation argument to the District Court, a view with which

she does not agree, Mrs. Blakeman respectfully submits

that this Court’s refusal to consider the compensation

argument would result in a miscarriage of justice. In

Singleton v. Wulff, 428 U.S. 106, 120-21 (1976), this Court

stated:

The matter of what questions may be taken

up and resolved for the first time on appeal is

one left primarily to the discretion of the courts

of appeals, to be exercised on the facts of indi-

vidual cases. We announce no general rule. Cer-

tainly there are circumstances in which a federal

appellate court is justified in resolving an issue

not passed on below, as where the proper reso-

lution is beyond any doubt... or where ‘injus-

tice might result.’ Hormel v. Helvering, 312 US.,

at 557, 61 S.Ct. at 721.8

8 These examples are not intended to be exclu-

Sive.

428 U.S. 106, 120-121.

Pursuant to this Court’s opinion in Singleton, the

matter of what questions may be taken up and resolved

for the first time on appeal is one left primarily to the

discretion of the courts of appeal. Mrs. Blakeman recog-

nizes that

[i]t is the general rule, of course, that a

federal appellate court does not consider an

issue not passed upon below. In Hormel v.

Helvering, 312 U.S. 552, 556, 61 S.Ct. 719, 721, 83

L.Ed. 1037 (1941), the Court explained that this

is ‘essential in order that parties may have the

opportunity to offer all the evidence they

believe relevant to the issues . . . [and] in order

that litigants may not be surprised on appeal by

final decision there of issues upon which they

have had no opportunity to introduce evidence.’

Singleton, 428 U.S. at 120.

The Fifth Circuit, however, has recognized three

exceptions to this general rule, all of which require a

showing that a miscarriage of justice will result if the

issue is not considered on appeal. These three exceptions

are (i) the issue is purely a question of law:8 (ii) the

proper resolution of the issue is beyond doubt;? and (iii)

consideration of the issue would not require any further

factual development.!° Two of the three exceptions are

applicable in this case: (1) The issue of whether Mrs.

Blakeman should be compensated for her costs of litiga-

tion and taxes on a sale of the property is purely a

® See, e.g., Pegues v. Morehouse Parish School Board, 706 F.2d

735, 738 (5th Cir. 1983); Evans v. Triple R Welding & Oil Field

Maintenance Corp., 472 F.2d 713, 716 (5th Cir. 1973).

9 See, e.g., Callejo v. Bancomer, S.A., 764 F.2d 1101, 1117 n.20

(Sth Cir. 1985); Texas v. United States, 730 F.2d 339, 358 (5th Cir.

1984).

10 See, e.g., Payne v. McLemore’s Wholesale & Retail Stores, 654

F.2d 1130, 1145 (5th Cir. 1981) (“When no further factual devel-

opment is required and a miscarriage of justice would otherwise

result, appellate courts in this Circuit have been willing to con-

sider new issues for the first time on appeal.”); Higginbotham v.

Ford Motor Co., 540 F.2d 762, 768 n.10 (Sth Cir 1976) (“[T]he

rationale for the rule [of not considering issues raised for the

first time on appeal] requires its application if additional facts

would have been developed in the trial court had the new

theory been presented there; in that case judicial economy is

served and prejudice is avoided by binding the parties to the

facts presented and the theories argued below.”).

question of law; and (2) consideration of this issue would

not require any further factual development.!!

Mrs. Blakeman respectfully submits that this Court’s

refusal to consider whether she is entitled to costs of

litigation and taxes would result in a miscarriage of jus-

tice. If this Court refuses to consider the question, Mrs.

Blakeman’s costs of litigation and taxes will account for

approximately 50% of her share of the gross proceeds

from a foreclosure sale of the Homestead Property. To

illustrate, assume the government had sold the Home-

stead Property for $2,200,000 at a foreclosure sale during

August 1993.12 Under 26 U.S.C. § 7520, Mrs. Blakeman

would be entitled to 58.536% of the sales proceeds, or

$1,287,792,!3 on a foreclosure sale of the property.'4

11 Mrs. Blakeman recognizes, however, that, if this Court

decides she should be compensated for her costs of litigation

and taxes arising from a sale of the Homestead Property, the

District Court would be required to hold an evidentiary hearing

to determine the amount of such costs and taxes.

12 The Internal Revenue Service recently provided the

undersigned with an appraisal valuing the 100-acre Homestead

Property at $2,200,000.

13 $2,200,000 (gross proceeds) x 58.536% (Mrs. Blakeman’s

share of the gross proceeds).

14 The interest rate (rounded to the nearest 2/10ths of 1%)

equal to 120% of the federal mid-term rate in effect for August

1993, the month in which the valuation date falls, is 6.4%. Rev.

Rul 93-51, 1933 I.R.B. 26 (Table 5). The remainder factor set forth

I.R.S. Publication 1457, Table S(6.4) for a person age 65 (Mrs.

Blakeman’s age as of August 1993), based upon an interest rate

of 6.4%, is .41464, or 41.464%. The life estate factor is therefore

58536, or 58.536%. Accordingly, under 26 U.S.C. § 7520, Mrs.

Blakeman would be entitled to 58.536% of the gross proceeds

from a foreclosure sale of the Homestead Property in August

1993.

SN |

Assuming a 28% federal income tax rate on capital gain

income, Mrs. Blakeman would be liable for $360,58215 in

federal income taxes. The amount remaining after pay-

ment of federal income taxes would be $927,210. From

this amount, Mrs. Blakeman would pay her costs of liti-

gating this action since 1986. The amount remaining

would be less than 50% of the gross proceeds realized by

Mrs. Blakeman.

The loss of over 50% of the gross sales proceeds

would be particularly egregious since Mrs. Blakeman, as

an innocent third party who was not liable for the estate

taxes due in this case, has had to endure the expense and

inconvenience of over six years of litigation. Moreover, in

Mrs. Blakeman’s Motion for Partial Summary Judgment,

she pointed out to the government that it should not have

asserted personal liability against her for the estate taxes

at issue in this case. The government finally accepted this

argument at trial (nearly 10 months after Mrs. Blakeman

filed her Motion for Summary Judgment) and abandoned

its claim against Mrs. Blakeman for personal liability. (See

Transcript of Trial, pp. 45-46.)

CONCLUSION

For the foregoing reasons, the petition for a Writ of

Certiorari should be granted. If this Court finds that Mrs.

Blakeman should be compensated for her litigation

expenses and federal income taxes arising from the

1S $1,287,792 (Mrs. Blakeman’s share of the gross proceeds)

x 28% (maximum tax rate on capital gains).

forced sale of her homestead interest, the case should be

remanded for an evidentiary hearing concerning the

amount that Mrs. Blakeman is entitled to receive as reim-

bursement for litigation expenses and federal income

taxes incurred on the sale of her homestead interest.

October 25, 1993

Respectfully submitted,

Wm. D. Exuiott

Cowes & THompson, P.C.

901 Main Street, Suite 4000

Dallas Texas 75202

(214) 670-1100

Counsel of Record

WittiAM H. HorNBERGER

JaAcKSON & Wa ker, L.L.P.

901 Main Street, Suite 6000

Dallas, Texas 75202

(214) 953-6000

Counsel for Petitioner

APPENDIX

Opinion and Judgment of Fifth Circuit Court of

ta stmaneat COE OT Ee OE OA PLEAS IES Sy la

Memorandum Opinion of the U.S. District Court

for the Northern District of Texas ............... 25a

Judgment of the U.S. District Court for the North-

ern District of Texas............................. 43a

Opinion on Rehearing of Fifth Circuit Court of

US xtkcicessnsiictiaeseiel een 56a

Motion for Summary Judgment with Supporting

Memorandum of Law ........................... 65a

UNITED STATES of America,

Plaintiff-Appellant-Cross-Appellee,

Vv.

James Neal BLAKEMAN, As Executor of the

Estate of C.E. Blakeman, Deceased, Robert Earl

Blakeman and Karen A. Whaley, Defendants-Appellees-

Cross-Appellants and Cross-Appellees,

RIDGLEA BANK, et al., Defendants-Appellees,

Maudine BLAKEMAN, Defendant-

Appellee-Cross-Appellant

No. 91-1027.

United States Court of Appeals,

Fifth Circuit

July 21, 1992.

Appeals from the United States District Court for the

Northern District of Texas.

Before JOLLY, JONES, and EMILIO M. GARZA, Cir-

cuit Judges:

EMILIO M. GARZA, Circuit Judge:

The United States brought this suit seeking judgment

against the estate of C.E. Blakeman for federal estate

taxes and to foreclose a federal tax lien against property

of the estate.! The district court entered judgment in

' The United States also sought judgment against James

Neal Blakeman, individually and as executor of C.E.’s estate, for

monies paid out of the estate while federal estate tax remained

favor of the United States, enforced the government’s

general federal tax lien, and ordered foreclosure of cer-

tain estate property. 750 F. Supp. 216 (N.D.Tex. 1990). The

parties have filed cross-appeals.

C.E. Blakeman (“C.E.”) died on May 25, 1978. He was

survived by his wife, Maudine Blakeman (“Mrs. Blake-

man”), and three children from a previous marriage -

James Neal Blakeman, Robert Earl Blakeman, and Karen

Whaley (“the Blakeman children”). At the time of his

death, apart from the community property he shared with

his wife, C.E. owned as -his separate property a tract of

land known as the Randol Mill Property — the major asset

of his estate —- which consisted of 101.5954 acres of land

located in Fort Worth, Tarrant County, Texas.

C.E.’s 1973 will left all real property of his estate,

including the Randol Mill Property, to his children. After

C.E.’s death, a dispute arose between the Blakeman chil-

dren and Mrs. Blakeman as to their respective rights in

C.E.’s estate. Following a trial, the Tarrant County Pro-

bate Court entered judgment declaring that the Randol

Mill Property is the rural homestead of C.E. and Mrs.

Blakeman. That judgment ordered that Mrs. Blakeman

have the use and benefit of 100 acres of the Randol Mill

unpaid. Ridglea Bank, the State of Texas, Tarrant County, Texas,

Fort Worth Independent School District, and the City of Fort

Worth, were also parties to the lawsuit.

Property for as long as she occupied the property as her

homestead.

On June 17, 1980, the Secretary of the Treasury made

assessments against the estate in the amount of

$124,820.93 in federal estate tax and $12,651.37 in interest.

On July 21, 1980, the Secretary made an additional! assess-

ment of interest and penalties relating to the unpaid

estate tax in the amounts of $1,395.26 and $31,205.23,

respectively. Another assessment for interest in the

amount of $1,436.30 was made on August 18, 1980. On

March 16, 1981, the I.R.S. filed a notice of federal tax lien

for the assessments against the estate with the Tarrant

County Clerk. The I.R:S. made demand upon James Neal

Blakeman, as executor of C.E.’s estate, for payment of the

outstanding federal estate taxes.

The government filed suit on June 16, 1986, seeking

judgment against the estate for federal estate taxes and

judicial foreclosure on its federal tax lien against the

Randol Mill Property. Following trial, the district court

found that Mrs. Blakeman had a rural homestead interest

in the Randol Mill Property from the date of C.E.’s death

until trial. The district court held that the special tax lien

under 26 U.S.C. § 6324 had expired, but the general tax

lien under 26 U.S.C. § 6321 was valid and attached to the

* After the Probate Court judgment was entered, Mrs.

Blakeman designated the Randol Mill Property as her home-

stead and has resided there continuously since C.E.’s death in

1978.

property at issue — subject to Mrs. Blakeman’s homestead

interest. The district court ordered foreclosure of the fed-

eral tax lien, and, from the proceeds of such foreclosure,

awarded Mrs. Blakeman her interest in the property as of

the foreclosure date, but limited the government's recov-

ery to the estate’s interest in the property on the date the

federal tax lien arose in 1980.* The district court also

ordered that the difference, between the value of Mrs.

Blakeman’s interest on the date the federal tax lien arose

and the value of her interest on the date judgment was

entered, be paid to the estate — irrespective of whether

the government was otherwise able to collect the tax

liability of the estate.

The parties cross-appeal, raising various contentions

of district court error and challenging specific district

court rulings.4 The issues presented are:

> The district court found Mrs. Blakeman had a 60.352 per-

cent interest in the property and the government had a 25.577

percent interest in the property.

4 The following is a summation of the parties’ arguments

on appeal:

The government. The government argues that the district

court erred in holding that the reach of the government’s federal

tax lien — arising from the unpaid estate tax — was limited to the

estate’s interest in the Randol Mill Property on the lien’s attach-

ment date. The government does not challenge the district

court's finding relating to the special estate tax lien.

The Blakeman Children. The Blakeman children argue that

the government does not have a valid lien on the Randol Mill

Property because the government's complaint contains no spe-

cific reference to 26 U.S.C. § 6321 and fails to state a claim based

on the general tax lien. The Blakeman children argue, therefore,

that the government is not entitled to foreclose on the Randol

Mill Property. Alternatively, the Blakeman children argue, if the

(a) Whether the district court properly con-

cluded the government’s complaint stated a

claim based on the general federal tax lien aris-

ing under 26 U.S.C. § 6321;

(b) Whether the district court properly con-

cluded that the Randol Mill Property was the

rural homestead of Mrs. Blakeman;

the Randol Mill Property; and

(d) Whether Mrs. Blakeman is entitled to com-

pensation for the taxes she will pay as a result of

the foreclosure sale.

The district court found that the government’s com-

plaint stated a claim arising under 26 U.S.C. § 6321 — the

government has a valid lien on the Randol Mill Property and is

entitled to foreclose, the district court erred in finding that Mrs.

Blakeman has a rural homestead in the Rando! Mill Property.

The Blakeman children argue that the character of the home-

stead should be determined at the time of the trial or at the time

of the foreclosure sale.

Mrs. Blakeman. Mrs. Blakeman contends that the district

court erred in failing to value her homestead interest as of June

17, 1980 — the date the general tax lien attached to the remainder

interest in the homestead property. Mrs. Blakeman argues that

she is entitled to at least 74.42 percent of the gross proceeds

from the sale of the Randol Mill Property, without any reduction

to account for the period she occupied the property. Mrs. Blake-

man also contends that she should be compensated for the taxes

she will pay as a result of a sale of her homestead interest.

Other defendants. Ridglea Bank, State of Texas, Tarrant

County, Texas, Fort Worth Independent School District, and the

City of Fort Worth did not appeal.

general federal tax lien statute.° A tax lien arising under

section 6321 is one of two types of tax liens the United

States has available to it to enforce the estate tax liability

of a decedent’s estate. See United States v. Cleavenger, 517

5 The district court found that:

Although it is not drawn as articulately as might

be desired, plaintiff’s complaint constitutes a claim to

foreclose on the general federal tax lien described in

26 U.S.C. § 6321 and is sufficient to give defendants

notice of such a claim. Conley v. Gibson, 355 U.S. 41,

47, 48 (1957).

Requirements of the general tax lien include: (a)

assessment within three years after a return is filed,

and (b) collection began within six years of assess-

ment. 26 U.S.C. § 6501(a); 26 U.S.C. § 6502(a). The

parties have stipulated that the following assess-

ments were made:

June 17, 1980 $124,820.93 estate taxes

$ 12,651.37 interest

July 21, 1980 $ 31,205.23 penalties

$ 1,395.26 interest

August 18, 1980 $ 1,436.30 interest

As a result of a payment and the abatement of a

delinquent penalty, which was stipulated, the balance

of the assessments due was $90,495.65 as of July 21,

1980. There is apparently no dispute that the assess-

ments were timely... . [O]n March 16, 1981, plaintiff

filed a notice of federal tax lien with the Clerk of

Tarrant County, Texas; . . . plaintiff made demand on

defendant James Neal Blakeman, as executor of the

estate of C.E. Blakeman, deceased; .. . the taxes were

not paid; ... the plaintiff filed its complaint June 16,

1986. Accordingly, the Court finds that plaintiff’s suit

to enforce its general tax lien was timely filed.

750 F.Supp. at 221 (“Memorandum Opinion”). The district court

found the special federal estate tax lien had expired as a matter

of law.

F.2d 230, 232 (7th Cir. 1975). The other type of lien to

secure payment of federal estate taxes is known as the

special estate tax lien. Id. The special estate tax lien arises

under 26 U.S.C. § 6324(a)(1), which provides that,

“[uJnless the estate tax imposed by chapter 11 is sooner

paid in full, or becomes unenforceable by reason of lapse

of time, it shall be a lien upon the gross estate of the

decedent for 10 years from the date of death... .” The

special estate tax lien automatically attaches to all prop-

erty in the decedent’s estate upon the decedent's death;

the government need not make an assessment or a

demand. See Kleine v. United States, 539 F.2d 427, 429 (5th

Cir. 1976); accord United States v. Vohland, 675 F.2d 1071,

1074 (9th Cir. 1982); see also Detroit Bank v. United States,

317 U.S. 329, 332, 63 S.Ct. 297, 298, 87 L.Ed. 304 (1943).

The general tax lien arises under 26 U.S.C. § 6321

when the taxpayer fails to pay a federal tax liability, after

assessment and notice are given and demand upon the

taxpayer is made. See Harris v. United States, 764 F.2d

1126, 1128 (5th Cir. 1985). The lien continues until the

taxpayer satisfies the debt or the statute of limitations

runs. See 26 U.S.C. § 6322; United States v. Wilkes, 946 F.2d

1143 (5th Cir. 1991); Texas Commerce Bank — Fort Worth v.

United States, 896 F.2d 152, 161 (5th Cir. 1990) (citations

omitted). The government must collect the assessed tax

liability “by levy or by a proceeding in court .. . within 6

years after the assessment of the tax...” 26 U.S.C.

§ 6502(a); McCray v. United States, 910 F.2d 1289, 1290 (5th

Cir. 1990), cert denied sub nom, __ U.S. __, 111S. Ct. 1313,

113 L.Ed.2d 246 (1991); United States v. Verlinsky, 459 F.2d

1085, 1086-87 (5th Cir. 1972). Section 6503(b) tolls the

limitations period, however, “for the period the assets of

the taxpayer are in the control or custody of the court in

any proceeding before any court of the United States or of

any State or the District of Columbia, and for 6 months

thereafter.” 26 U.S.C. § 6503(b).

The Blakeman children argue that the district court

erred in concluding that the government’s complaint

stated a claim under 26 U.S.C. § 6321 because the com-

plaint does not contain a specific reference to the general

federal tax lien under 26 U.S.C. § 6321. The government

argues, on the other hand, that the complaint states a

claim based on the general tax lien under the strictures of

Rule 8 and notice pleading. See Fed.R.Civ. P. 8. Moreover,

the government argues that, even if the Blakeman chil-

dren did not ascertain from the complaint that the gov-

ernment’s claim was based on section 6321's general tax

lien, the Blakeman children had sufficient notice of the

government's theory before trial. The government

argues also that, because the special estate tax does not

depend upon the filing of the notice of a lien, there would

have been no reason to make such an allegation in the

(1) the government's motion for partial summary

judgment explicitly stated that its legal theory was

based upon the § 6321 general tax lien;

(2) following the pretrial conference, the parties

briefed the issue whether the government's liens had

expired and these briefs dealt with both the general

and the special tax liens; and

(3) onthe morning of trial, the district court notified

the parties that it determined the special lien had

expired, but the general tax lien was still in effect and

would be the basis for the government's claim.

complaint unless the government also sought relief under

section 6321.

The Blakeman children’s challenge consists simply of

the argument that the complaint does not contain a speci-

fic reference to the general federal tax lien or section 6321

and the government relied solely on the special estate tax

lien. We find that the Blakeman children’s argument mis-

apprehends the allegations in the complaint, the language

of the Federal Rules of Civil Procedure and the substance

of “notice pleading.” See Fed.R.Civ. P. 8.

The Federal Rules of Civil Procedure create a pre-

sumption against rejecting pleadings for failure to state a

claim. See Auster Oil & Gas, Inc. v. Stream, 764 F.2d 381,

386 (5th Cir. 1985), cert denied sub nom., 488 U.S. 848, 109

S. Ct. 129, 102 L.Ed.2d 102 (1988). A plaintiff must comply

with Rule 8 in pleading a claim for relief in federal court;

this court has determined that Rule 8 may be satisfied by

a “plain recitation of the facts that a party believes enti-

tles her to relief.” Id. While the complaint does not

expressly state that the government sought foreclosure of

its tax lien under section 6321, the allegations in the

complaint support a claim based on a general federal tax

lien under 26 U.S.C. § 6321. The complaint: (i) sets forth

the date of C.E.’s death and the date the government

assessed the estate tax against the estate; (ii) contains

allegations that the government gave notice of the assess-

ment, demanded payment and filed notice of the lien

with the Tarrant County Clerk; and (iii) states that the

sovernment was “seek[ing] foreclosure of its federal tax

lien.” Although neither the general or specific federal tax

lien statute was referenced in the government’s com-

plaint, these allegations were sufficient to put defendants

10a

on notice that the government was seeking foreclosure

under the general federal tax lien statute. Therefore, find-

ing that the government’s complaint contains a claim to

foreclose on the general federal tax lien described in 26

U.S.C. § 6321 and is sufficient to give defendants notice of

such a claim, we hold that the government's general

federal tax lien is valid and enforceable.

The district court concluded that Mrs. Blakeman had

a rural homestead interest in the Randol Mill Property.”

We review the district court’s factual findings under the

clearly erroneous standard, and review de novo the dis-

trict court’s application of law to those facts. See In re

Bradley, 960 F.2d 502, 507 (5th Cir. 1992); see also Zink v.

United States, 929 F.2d 1015, 1020-21 (5th Cir. 1991).

7 The district court found:

1. Until the death of C.E. Blakeman, the Randol Mill

property was the rural homestead of C.E. Blakeman

and Mrs. Blakeman.

2. At all times since the death of C.E. Blakeman,

Mrs. Blakeman has continued to use, occupy and

claim at least a 100-acre part of the Rando! Mill prop-

erty as her homestead.

3. The 100-acre part of the Randol Mill property

Mrs. Blakeman selected as her homestead pursuant to

the May 7, 1980, Probate Court judgment is legally

described in Exhibit “B” to the judgment... .

4. Mrs. Blakeman has never abandoned the 100

acres as her rural homestead.

5. The 100 acres has been the homestead of Mrs.

Blakeman at all times since the death of C.E. Blake-

man.

Memorandum Opinion at 10-11.

Mea Da shae

lla

The Blakeman children challenge the district court’s

finding that Mrs. Blakeman has a rural homestead inter-

est in the Randol Mill Property. They argue that, pursuant

to section 41.002(c) of the Texas Property Code,® Mrs.

Blakeman’s homestead is urban as a matter of law. The

Blakeman children take the position that, under this stat-

ute, the presence of any one of the factors enunciated in

section 41.002(c) mandates an urban characterization.?

Mrs. Blakeman contends the district court properly

concluded that she has a rural homestead interest in the

Randol Mill Property. Mrs. Blakeman argues that section

41.002(c) is not the exclusive test for determining the

character of a homestead interest. Mrs. Blakeman argues

that, at most, section 41.002(c) creates a presumption of a

rural homestead when the section applies and does not

create any presumption when it does not.!°

5 Section 41.002(c) states:

time the designation is made, the property is not

served by municipal utilities and fire and police pro-

tection.

Tex. Prop. Code Ann. § 41.002(c) (West Supp. 1992).

® Further, they argue that, even if the property is not served

by municipal utilities, police or fire protection, there would still

remain a fact question as to urban or rural status. In effect, the

Blakeman children suggest a two-pronged analysis:

They propose that we inquire as to whether the property is

served by municipal utilities, police or fire protection?

~ If the answer is “yes,” they propose that we classify

it “urban” as a matter of law;

~ If the answer is “no,” they propose that this presents

a fact question to be decided by the finder of fact.

'0 On appeal the government does not take a position con-

cerning the character of Mrs. Blakeman’s homestead interest.

12a

In Texas, the law recognizes both rural and urban

homesteads. See Tex. Const. art. XVI, § 51;!! Tex. Prop.

Code Ann. § 41.002 (West Supp. 1992);!? see also Bradley,

The government states, however, that “[s]hould this Court

decide this issue in the children’s favor, the Government's lien

would necessarily attach to the estate’s increased interest in the

Randol Mill property.”

11 Section 51 provides,

The homestead, not in a town or city, shall consist of

not more than two hundred acres of land, which may

be in one or more parcels, with the improvements

thereon; the homestead in a city, town or village, shall

consist of lot or lots amounting to not more than one

acre of land, together with any improvements on the

land; provided, that the same shall be used for the

purposes of a home, or as a place to exercise the

calling or business of the homestead claimant,

whether a single adult person, or the head of a family;

provided also, that any temporary renting of the

homestead shall not change the character of the same,

when no other homestead has been acquired.

12 Section 41.002, “Definition of Homestead” provides:

“(a) If used for the purposes of an urban home or as

a place to exercise a calling or business in the same

urban area, the homestead of a family or a single,

adult person, not otherwise entitled to a homestead,

shall consist of not more than one acre of land which

may be in one or more lots, together with any

improvements thereon.

(b) If used for the purpose of a rural home, the

homestead shall consist of:

(1) for a family, not more than 200 acres, which

may be in one or more parcels, with the improve-

ments thereon; or

(2) forasingle, adult person, not otherwise enti-

tled to a homestead, not more than 100 acres,

13a

960 F.2d at 506. An urban homestead cannot amount to

more than one acre of land; a rural homestead cannot

total more than 200 acres of land, for a family, or 100

acres, for a single adult person not otherwise entitled to a

homestead. See Bradley, 960 F.2d at 506. While the charac-

terization of a homestead is subject to change, the initial

homestead characterization status, once established, is

presumed to continue. See In re Niland, 825 F.2d 801, 808

(Sth Cir. 1987). “Once the claimant has established the

homestead character of her property, the burden shifts to

the creditor to disprove the existence of the homestead.”

Bradley, 960 F.2d at 507, citing Sullivan v. Barnett, 471

S.W.2d 39, 43 (Tex. 1971); Lifemark Corp. v. Merritt, 655

S.W.2d 310, 314 (Tex. App. - Houston [14th Dist.}] 1983,

writ ref’d n.r.e.).13

which may be in one or more parcels, with the

improvements thereon.

time the designation is made, the property is not

served by municipal utilities and fire and police pro-

tection.

(d) The definition of a homestead as provided in this

section applies to all homesteads in this state when-

ever created.”

Tex. Prop. Code Ann. § 41.002 (West Supp. 1992). This section of

the Texas Property Code was amended and subsection (c)

became effective August 28, 1989.

'S After the property has been dedicated as homestead

property, the only way for the property to lose its homestead

status is by death, abandonment, or alienation. See Garrard v.

Henderson, 209 S.W.2d 225, 229 (Tex.Civ.App. - Dallas 1948, no

writ). To prove the discontinuance of a homestead, a party may

demonstrate that the homestead claimant abandoned the prop-

erty — that is, the homestead claimant had the permanent intent

to cease use of the property for homestead purposes. See West

l4a

Historically, Texas courts examining the homestead

characterization question have regarded the issue

whether a homestead is rural or urban as a question of

fact. See Fajkus v. First Nat'l Bank of Giddings, 735 S.W.2d

882, 885 (Tex. App. — Austin 1987, writ denied), citing

Wilder v. McConnell, 91 Tex. 600, 45 S.W. 145, 147 (1898);

Roberts v. Cawthon, 26 Tex. Civ. App. 477, 63 S.W. 332, 334

(1901, no writ); First State Bank of Grapeland v. Brown, 490

S.W.2d 248, 250 (Tex. Civ. App. - Tyler 1973, no writ)

(citations omitted); Kimmey v. Goodrum, 346 S.W.2d 901,

902 (Tex.Civ.App. - Waco 1961, writ ref’d n.r.e.) (citations

omitted). Indeed, federal courts, interpreting and apply-

ing Texas law, have also considered this “urban” /“rural”

differentiation as a determination rightly made by the

factfinder. See In re Moody, 862 F.2d 1194, 1200 (5th Cir.

1989) (“Whether property is rural or urban is a question

of fact....”), cert denied sub nom., __ U.S. __, 112 S. Ct.

1562, 118 L.Ed.2d 209 (1992), aff’g, In re Moody, 77 B.R. 580

(S.D. Tex. 1987); In re Spencer, 109 B.R. 715, 716 (W.D. Tex.

1989) (“question of rural or urban character is one of

fact”) (citation omitted); In re Moody, 77 B.R. 580, 591

(S.D. Tex. 1987). In Moody, the bankruptcy court recog-

nized that the analysis involved in differentiating rural

from urban cannot be reduced to a simple formula:

“lujnder Texas law, no set formula exists to label land as

rural or urban [and t]he courts have examined and bal-

anced many factors.” Moody, 77 B.R. at 591.

Texas State Bank of Snyder v. Helms, 326 S.W.2d 47, 49

(Tex.Civ.App. — Eastland 1959, no writ). See also Niland, 825 F.2d

808, quoting McFarland v. Rousseau, 667 S.W.2d 929, 931

(Tex.App. - Corpus Christi 1984, no writ).

15a

At the outset, we note that the Blakeman children

argue a change in the law - that is, that section 41.002(c)

(effective 1989) retroactively applies to previously desig-

nated homesteads - even where there were no other

changed circumstances concerning the homestead. There-

fore, we consider whether the legislative amendment to

section 41.002(c) has altered our inquiry for determining

whether a homestead is rural or urban: that is, we deter-

mine whether section 41.002(c) has overturned more than

100 years of Texas law to become the exclusive consider-

ation for determining Texas homestead status.

This court’s recent decision in In re Bradley aids us in

the disposition of the present appeal. In re Bradley, 960

F.2d 502 (5th Cir. 1992). In Bradley, this court addressed a

bankruptcy appeal where the creditor challenged the

rural characterization of the debtor’s homestead prop-

erty. After a review of Texas homestead law, we acknowl-

edged that, under current law, “[i]t is unclear whether

section 41.002(c) applies in all homestead disputes.” Id. at

511 n. 18. We said that, “[a]t the least the definition of

‘homestead’ in section 41.002(c) applies in cases, like

[Bradley], involving the threatened foreclosure of home-

Stead property.” Id. (citation omitted). Accordingly, we

determined that, because Bradley’s homestead received

no utility or other municipal services at the time she

began to use the property as her homestead, Bradley was

entitled to a rural homestead interest in the property. Id.

at 511-12.

As we noted in Bradley, “section 41.002(c) might not

displace the traditional common law definition of ‘home-

stead’ in all cases.” In re Bradley, 960 F.2d 502, 511 n. 18

(5th Cir. 1992). Prior to 1989, we said, the Texas courts

l6a

generally examined several factors which were relevant

to the determination whether a homestead was urban or

rural.!4 We then construed section 41.002(c) to be a clari-

fication of the test to determine homestead status. We did

not then, nor do we now, construe section 41.002(c) to be

the exclusive test to determine a property’s homestead

status: it is but one factor a court considers to determine

whether the homestead is urban or rural. Therefore, we

reject the Blakeman children’s contention that a home-

stead property is urban simply because it is served by

municipal utilities or fire and police protection.

The 1980 probate court judgment declared that the

property was the rural homestead of C.E. and Mrs. Blake-

man and ordered that Mrs. Blakeman have the use and

the benefit of the property for so long as she occupied the

property as her homestead. The district court found that

Mrs. Blakeman continued to occupy the property and that

the evidence did not establish that Mrs. Blakeman had

abandoned her rural homestead interest in the property.

The Blakeman children have not pointed to any contra-

dictious evidence. Accordingly, we hold that the district

14 These factors include: “(1) the location of the land with

respect te the limits of the municipality; (2) the situs of the lot in

question; (3) the existence of municipal utilities and services; (4)

the use of the lot and adjacent property; and (5) the presence of

platted streets, blocks, and the like.” Jd. at 511-12 n. 18, citing

Vistron Corp. v. Winstead, 521 S.W.2d 754, 755 (Tex.Civ.App. -

Eastland 1975, no writ); Rockett v. Williams, 78 S.W.2d 1077, 1078

(Tex.Civ.App. — Dallas, 1935, writ dism’d); Purdy v. Grove, 35

S.W.2d 1078, 1081-82 (Tex.Civ.App. — Eastland 1931, writ ref’d);

43 Tex.Jur.3d Homesteads § 15 (1985).

17a

court was not clearly erroneous in concluding that Mrs.

Blakeman’s homestead interest in the property was rural.

‘

The district court, finding that Mrs. Blakeman’s

homestead interest was the economic equivalent of a life

estate, used the Treasury tables set forth in Treasury

Regulation § 20.2031-10(f),!5 to determine its value.!© The

district court measured the value of the estate as of the

date of the tax assessment and determined that the value

of Mrs. Blakeman’s homestead estate (life estate) was

74.423 percent of the total value of the 100 acres. The

district court then held the government's lien attached

only to the estate’s remainder interest in the 100 acres

and held the remainder interest was worth 25.577 percent

of the value of the homestead as of the date of the

assessment.'” The district court, however, found that

“inequity would result if Mrs. Blakeman were to .. . have

the use of the homestead for the ten years that have

'S See 26 C.F.R. § 20.2031-10(f).

'e The court found that the parties agreed that “the value of

Mrs. Blakeman’s homestead estate is the economic equivalent of

a life estate and that use of the tables set forth in Treas.Reg.

§ 20.2031-10(f) in determining the value of said estate is appro-

priate.” Memorandum Opinion at 222.

'7 The court so reasoned because “the general federal tax

lien described in 26 U.S.C. § 6321 and on which federal levy may

be had under 26 USC § 7403(a) attaches only to the interest of

the delinquent taxpayer in particular property and not to the

entire property.” Memorandum Opinion at 222, citing United

States v. Rodgers, 461 U.S. 677, 690, 103 S. Ct. 2132, 2141, 76

L.Ed.2d 236 (1983). This amount represents 14.071 percent.

18a

passed since date of assessment, as she has had, and at

the same time to receive sales proceeds representing the

value of the homestead life estate for that same ten-year

period, and” concluded that Mrs. Blakeman’s interest in

the 100 acres should be determined by the value of Mrs.

Blakeman’s homestead interest as of the present date.

Using the Treasury tables, then, the district court found

Mrs. Blakeman’s interest in the property to be 60.352

percent of the value of the land as of judgment. The

district court then determined that the difference,

between the 74.423 percent representing the value of Mrs.

Blakeman’s homestead estate at date of assessment (June

17, 1980) and the 60.352 percent (Mrs. Blakeman’s interest

at judgment), should be given to the estate.'®

The government argues that Mrs. Blakeman’s interest

in the Randol Mill Property should be valued as of the

foreclosure date and contends that the district court erred

in holding that the government's tax lien was limited to

the estate’s interest in the property on the lien’s attach-

ment date. Mrs. Blakeman, on the other hand, argues that

the district court should have determined the interests of

the respective parties as of the date the lien arose. In the

alternative, Mrs. Blakeman argues that if her homestead

interest is to be valued as of the foreclosure date, it

should be valued under the tables promulgated pursuant

to 26 U.S.C. § 7520, and the district court erred in using

the tables under Treas. Reg. § 20.2031-10.'9

18 See Memorandum Opinion at 222.

'9 Federal district courts in tax foreclosure cases are autho-

rized to order a sale of the homestead property and distribute

the sale proceeds in accordance with the interests of the parties.

19a

Mrs. Blakeman contends that she is entitled to at

least 74.423 percent of the gross proceeds realized from

the sale of the homestead property without any reduction

to account for the period she occupied the property. Mrs.

Blakeman relies on Harris v. United States, 764 F.2d 1126

(Sth Cir. 1985), contending that the government should be

estopped from asserting a position contrary to that taken

in Harris. We find Mrs. Blakeman’s contention without

merit.

It is well-settled that a federal tax lien reaches prop-

erty and interests in property owned by the taxpayer on

the date of the assessment, as well as property and inter-

ests in property acquired by the taxpayer from that date

until the tax debt is satisfied. See Texas Commerce Bank-

Fort Worth v. United States, 896 F.2d 152, 161 (5th Cir.1990)

(“The lien arises on the date the IRS assesses unpaid taxes,

applies to currently owned as well as after-acquired prop-

erty, and continues until the taxpayer satisfies the debt or

the statute of limitations runs.”), citing 26 U.S.C. § 6322;

Glass City Bank v. United States, 326 U.S. 265, 267, 66 S.Ct.

108, 110, 90 L.Ed. 56 (1945); United States v. Cache Valley

Bank, 866 F.2d 1242, 1244 (10th Cir. 1989); Prewitt v. United

States, 792 F.2d 1353, 1355 (5th Cir. 1986); see also Rice

Investment Co. v. United States, 625 F.2d 565, 568 (5th Cir.

1980) (“After-acquired property . . . is reached by the

lien.”) (citations omitted). Therefore, the federal tax lien

See 26 U.S.C. § 7403(c). Section 7403(c) does not, however, pro-

vide a precise method of (1) valuing the interests of the parties

to the foreclosure and (2) distributing the sales proceeds real-

ized on the foreclosure sale. Id.

20a

reaches the interests of C.E.’s estate as of the date of the

foreclosure sale.

Mrs. Blakeman’s next argument is that, if her home-

stead interest is to be valued as of the foreclosure date,

her interest should be valued according to the tables

promulgated pursuant to 26 U.S.C. § 7520.79 The govern-

ment agrees that the tables promulgated pursuant to 26

U.S.C. § 7520 are the proper tables to determine Mrs.

Blakeman’s interest in the property, but argues that,

because Mrs. Blakeman failed to properly raise the issue

of the applicability of section 7520 in the district court,

she has waived her right to assert that the district court

should have used the tables promulgated pursuant to 26

U.S.C. § 7520. We agree.

This court generally will not address a claim on

appeal that was not properly raised in the trial court. See

Savers Federal Sav. & Loan Ass‘n v. Reetz, 888 F.2d 1497,

1501 & n. 5 (5th Cir. 1989); United States v. Indiana Bonding

& Sur. Co., 625 F.2d 26, 29 (5th Cir. 1980). In Indiana

Bonding, we declined to review an issue on appeal

because the defendant failed to affirmatively plead it, and

failed to list it in its proposed findings of facts and

conclusions of law or at trial, despite the fact that the

defendant had listed this issue as one of its contentions in

the pretrial order. See Indiana Bonding, 625 F.2d at 29. In

contrast, in Batiansila v. Advanced Cardiovascular Systems,

Inc., 952 F.2d 893, 896 (5th Cir. 1992), we found that the

20 Mrs. Blakeman contends that the district court erred

when it stated that she agreed that the tables under Treas.Reg.

§ 20.2031-10 should be used to determine the extent of her

homestead interest.

2la

defendant had not waived its right to present an argu-

ment where it listed this issue as a contested issue of fact

in the pretrial order, the defendant orally requested, but

was denied, an opportunity to brief the issue, and also

elicited testimony at trial regarding the issue. See id.

We find that Mrs. Blakeman did not properly urge

the applicability of section 7520 to the district court and,

therefore, she has waived her right to raise on appeal the

propriety of using the tables promulgated under 26

U.S.C. § 7520 for valuation purposes.*! Mrs. Blakeman

21 In Mrs. Blakeman’s brief supporting her motion for par-

tial summary judgment, she stated that, “as a matter of law, the

value of her life estate (homestead interest) in the Homestead

Property should be determined by the use of the tables set forth

January 8, 1990 in Treasury Regulation Sections 20.2031.10(a)

and (f).” See Record on Appeal, Vol. I at 132, United States v.

Blakeman, 750 F.Supp. 216 (5th Cir.1991). The district court

denied Mrs. Blakeman’s motion and the parties subsequently

attended a pretrial conference in order to narrow the issues for

trial. The pretrial order listed as a contested issue of law

whether Mrs. Blakeman’s homestead interest should be mea-

sured as of the date of death of C.E. Blakeman or the date of the

sale of the Rando! Mill Property. See Record on Appeal, Vol. 2 at

444. In response to the district court’s order directing the parties

to submit briefs with respect to the proper date of valuation and

how to value Maudine’s interest, Mrs. Blakeman submitted a

memorandum of law wherein she asserted that her interest

should be determined as of the date of C.E.’s death and that the

tables set forth in the Treasury Regulations should be used. See

Record on Appeal, Vol. 2 at 538-39. The government responded

to the district court’s directive by submitting a brief wherein the

sovernment agreed “that the value of the Maudine Blakeman’s

life estate (homestead interest) should be determined by the use

of the tables set forth in Treasury Sections 20.2031.10(a) and (f).”

id. at 520. Mrs. Blakeman’s response in opposition to the gov-

ernment’s brief did not discuss the proper tables to be used to

22a

failed to: (1) affirmatively plead; (2) list as a contested

issue in her pretrial order; (3) brief; (4) elicit testimony, or

(5) argue to the district court the applicability of section

7520. Although Mrs. Blakeman, in her proposed findings

of fact and conclusions of law, submitted one week prior

to trial, mentions that section 7520 should be used in the

event the district court valued her interest at the time of

the foreclosure sale, she effectively abandoned her condi-

tional argument by not raising it at trial. There is nothing

in the record to suggest that Mrs. Blakeman addressed

the applicability of section 7520 at trial. To be preserved

for appeal, we require something more than an intimation

of an argument in a party’s proposed findings of fact and

conclusions of law. See Indiana Bonding & Surety Co., 625

F.2d at 29; cf. Batiansila, 952 F.2d at 896. Accordingly, we

find that Mrs. Blakeman waived her right to assert that

the tables promulgated under section 7520 should be

used.

Mrs. Blakeman argues that she is entitled to compen-

sation for taxes she will pay due to the sale of her

homestead property. Mrs. Blakeman did not raise this

issue in the district court, but she contends on appeal that

determine her interest in the Randol Mill Property. See Record

on Appeal, Vol. 3 at 595-98. It was only in her proposed findings

of fact and conclusions of law that Mrs. Blakeman suggested, for

the first time, that, if the proper valuation date was the date of

sale, then her interest should be determined under the tables

issued pursuant to 26 U.S.C. § 7520. See Record on Appeal, Vol. 4

at 866-67.

23a

Gibson v. United States, 761 F.Supp. 685 (C.D.Cal. 1991),

presents new law warranting this court’s examination of

the question whether she should be compensated for the

tax consequences of selling the homestead property.

We generally do not allow parties to raise issues for

the first time on appeal. See Colburn v. Bunge Towing, 883

F.2d 372, 375 (5th Cir. 1989), citing Edwards v. Sears,

Roebuck & Co., 512 F.2d 276 (Sth Cir. 1975) (“We are

reluctant to address for the first time on appeal alleged

errors, which the trial court was not given an opportunity

to consider and correct”). We make an exception to this

general rule, however, when this prohibition would result

in a “substantial miscarriage of justice.” Id.

The government argues that a substantial miscarriage

of justice would not result if Mrs. Blakeman was prohib-

ited from raising this assertion for the first time on

appeal.*? We are not persuaded that our refusal to allow

Mrs. Blakeman to raise this issue on appeal would result

in a substantial miscarriage of justice. Indeed in her brief,

Mrs. Blakeman cites a case from the Second Circuit

which, she argues, stands for the proposition that the

costs and expenses attendant to section 7403 judicial fore-

closure proceedings may be shifted to the government in

order to make innocent third parties whole. See Reply

Brief for Maudine Blakeman at 10, United States v. Blake-

man, 750 F.Supp. 216 (5th Cir. 1991), citing United States v.

110-118 Riverside Tenants Corp., 886 F.2d 514 (2d Cir. 1989),

22 Moreover the government argues, there is nothing in 26

U.S.C. § 7403 or its legislative history to suggest that a nonliable

third party’s tax liability should be paid out of the proceeds of a

foreclosure sale

24a

cert. denied, 495 U.S. 956, 110 S. Ct. 2560, 109 L.Ed.2d 743

(1990). We see no reason why Mrs. Blakeman could not at

least have presented in the district court her position that,

pursuant to 26 U.S.C. § 7403, the district court could

require the government to pay the costs and expenses

attendant to the judicial foreclosure. Accordingly, we will

not consider Mrs. Blakeman’s untimely assertion.

Il]

For the foregoing reasons, we AFFIRM in part and

REVERSE and REMAND in part for the district court to

determine the government’s interest in the Randol Mill

Property as of the date of the foreclosure sale, in accor-

dance with the tables set forth in the Treasury Regula-

tions.

25a

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

UNITED STATES OF

AMERICA CIVIL ACTION NO.

VS CA4-86-511-A

JAMES NEAL BLAKEMAN

AS EXECUTOR OF THE

ESTATE OF C. E. BLAKEMAN,

DECEASED, ET AL

MMMM MM MM MM

MEMORANDUM OPINION

(Filed Oct. 30, 1990)

This action was brought by the United States of

America (hereinafter “plaintiff”) to reduce to judgment

the assessment of certain federal estate tax liabilities of

the estate of C. E. Blakeman, deceased (“the estate”); to

foreclose plaintiff’s federal tax lien(s) against certain real

property (hereinafter described) located in Fort Worth,

Tarrant County, Texas; and to obtain judgment against

defendant James Neal Blakeman, as executor of the estate

and individually, for the estate taxes to the extent of all

payments of debts of the estate, and, against the sur-

vivors of C. E. Blakeman based on the value of any assets

they might have received from the estate.

Defendant Maudine Blakeman (hereinafter “Mrs.

Blakeman”) is the widow of C. E. Blakeman; defendants

James Neal Blakeman, Robert Earl Blakeman, and Karren

A. Whaley (hereinafter “defendant children”) are the chil-

dren of C. E. Blakeman by a previous marriage; defen-

dant Keep Fresh Filters, Inc., d/b/a Diversified Financial

26a

Planners, Inc., formerly NCNB, formerly known as

Ridglea Bank, (hereinafter “Keep Fresh”) is a judgment

creditor of the estate; and defendants Tarrant County,

Texas, Fort Worth Independent School District and City of

Fort Worth, Texas, (hereinafter “defendant taxing authori-

ties”) are taxing entities to whom ad valorem taxes, pen-

alties and interest are due and owing by the estate.

The primary dispute in this case centers around

101.5954 acres of land that was owned by C. E. Blakeman

as his separate property at the time of his death. A legal

description of this land is given in Exhibit “A” to the

judgment in this action that bears the same date as this

memorandum opinion. This acreage will be referred to

herein as the “Randol Mill property.”

At the time of his death, C. E. Blakeman and defen-

dant Mrs. Blakeman resided upon the Randol Mill prop-

erty. Thereafter, Mrs. Blakeman continued to reside on a

100 acre part of the Randol Mill property. C. E. Blakeman

left the property to the defendant children by his last will

and testament. A dispute arose between Mrs. Blakeman

and defendant children as to the rights of each in the

Randol Mill property. Suit, to which they were all parties,

was brought in Probate Court in Tarrant County, Texas, to

determine their respective rights, and on May 7, 1980, a

final judgment was entered. The judgment determined

that Mrs. Blakeman had a rural homestead in the Rando!

Mill property and that she was entitled to the use of 100

acres, to be selected by her, of the Randol Mill property

for so long as she occupies the same as her homestead.

Neither plaintiff nor defendant Keep Fresh or any of the

taxing authorities was a party to the Probate Court

action.

27a

The Contentions of the Parties Relative

to the Randol Mill Property

The contentions of the parties relative to the Randol

Mill property are, briefly, as follows:

Plaintiff contends that the Randol Mill property is

encumbered with a special federal estate tax lien pur-

suant to 26 U.S.C. §6324(a)(1), as well as a general federal

tax lien pursuant to 26 U.S.C. §6321, to secure payment of

the federal estate tax liability of the estate and that plain-

tiff is entitled to foreclosure of its liens.

Mrs. Blakeman contends that plaintiff’s special fed-

eral estate tax lien has expired because more than ten

years have passed since the date of C. E. Blakeman’s

death, and, further, that plaintiff’s complaint fails to state

a claim based on 26 U.S.C. §6321. She claims in the

alternative that, if the Court finds that plaintiff’s com-

plaint is sufficient to state a claim under §6321, she con-

tinues to have a rural homestead in 100 acres of the

Randol Mill property and that, if the Court orders fore-

closure of the property, she is entitled to recover the

economic equivalent of a life estate in the 100 acres that

she selected as her homestead pursuant to the authority

of the May, 7, 1980, Probate Court judgment. Specifically,

Mrs. Blakeman claims that she is entitled to 74.432 per-

cent of the proceeds of any foreclosure-sale of the 100

acres.

Defendant children do not contest that the Randol

Mill property is encumbered with a general federal tax

lien or that plaintiff is entitled to foreclose the tax lien.

They contend that Mrs. Blakeman now has only an urban

28a

homestead interest, rather than a rural homestead inter-

est, in the Randol Mill property. Put another way, defen-

dant children claim that Mrs. Blakeman is entitled only to

the use of one acre of the Randol Mill property and that,

upon foreclosure of the property, they will be entitled to

receive the bulk of the proceeds after payment of the

outstanding debts of the estate. However, the defendant

children join with Mrs. Blakeman in contending that

plaintiff’s lien rights are subject and inferior to whatever

homestead rights Mrs. Blakeman had in the Randol Mill

property when the estate tax assessments were made.

Keep Fresh and defendant taxing authorities do not

dispute the validity of plaintiff’s general federal tax lien

or its right to a judgment of foreclosure. These defen-

dants merely seek a determination of the priority of their

liens, if any, against the Randol Mill property and recov-

ery from the sales proceeds of the sums due and owing to

them in the event a foreclosure sale is ordered.

Stipulations

Prior to trial, the parties stipulated to the following

facts:

1. C.E. Blakeman died on May 25, 1978, in

Fort Worth, Tarrant County, Texas, while mar-

ried to Mrs. Blakeman, and that he was survived

by three children from a prior marriage, who are

defendant children.

2. C. E. Blakeman left a will dated January

18, 1973, which appointed James Neal Blakeman

as independent executor, and which was admit-

ted to probate by order dated June 12, 1978.

29a

3. James Neal Blakeman was appointed

independent executor of the estate by Probate

Court order dated June 12, 1978: on or about

June 12, 1978, he executed and filed with the

Probate Court an oath that he would well and

truly perform the duties of the executor of the

estate; he was issued letters testamentary as

independent executor of the estate by the Pro-

bate Court; and, he, as independent executor of

the estate, filed an inventory, appraisement and

list of claims with the Probate Court on or about

November 10, 1978, which was approved by the

Probate Court, by order dated November 27,

1978.

4. On the date of his death, C. E. Blakeman

owned the Randol Mill property, consisting of

over 100 acres of land located in Fort Worth,

Texas.

5. The Randol Mill property was the sepa-

rate property of C. E. Blakeman and was

included in the estate.

6. The will of C. E. Blakeman left all real

property of his estate, including the Randol Mill

property, to defendant children, who are the

sole beneficiaries of the estate and will of C. E.

Blakeman, in equal shares, share and share

alike.

7. On May 7, 1980, the Probate Court

entered a final judgment declaring that the Ran-

dol Mill property was the rural homestead of C.

E. Blakeman and Mrs. Blakeman. The Probate

Court’s judgment ordered that Mrs. Blakeman

have the use and benefit of 100 acres of the

Randol Mill property for so long as she shall

occupy the same as her homestead. Plaintiff was

not made a party to the Probate Court action

30a

between Mrs. Blakeman and defendant children

that resulted in the Probate Court’s judgment.

8. A delegate of the Secretary of the Treas-

ury made assessments against the estate of C. E.

Blakeman on June 17, 1980, in the amount of

$124,820.93 for federal estate taxes and

$12,651.37 interest. On July 21, 1980, the Secre-

tary of the Treasury assessed penalties and

interest in the amounts of $31,205.23 and

$1,395.26, respectively. On August 18, 1980, the

Secretary of the Treasury assessed interest in the

amount of $1,436.30. A payment received. April

25, 1983, reduced the outstanding balance of the

assessments to $121,522.34. An abatement of a

delinquency penalty reduced the outstanding

balance of the assessments to $90,495.65 as of

July 21, 1980.

9. The assessments were made on the basis

of a return prepared by the Internal Revenue

Service and agreed to by defendant James Neal

Blakeman as executor of the estate.

10. On March 16, 1981, a notice of federal

tax lien for the assessment against the estate of

C. E. Blakeman was filed with the Tarrant

County Clerk.

11. The Internal Revenue Service made

demand upon defendant James Neal Blakeman,

as executor of the estate, for payment of federal

estate taxes due and owing from the estate prior

to the filing of the complaint.

12. The complaint was filed on June 16,

1986.

13. James Neal Blakeman, as executor of

the estate, has failed to pay the federal estate tax

aerial eens

3la

liability due and owing from the estate. There

were insufficient funds to do so.

14. Mrs. Blakeman has continuously resi-

ded on the Randol Mill property since the death

of C. E. Blakeman.

15. Mrs. Blakeman, who was born on June

20, 1928, was forty-nine years old at the date of

death of C. E. Blakeman and is currently sixty-

two years old.

16. As of October 9, 1990, the unpaid bal-

ance of the federal estate tax, interest and statu-

tory additions due and owing to plaintiff United

States of America from the estate of C. E. Blake-

man, deceased, is $350,627.24.

17. As of October 1, 1990, the unpaid bal-

ance of ad valorem taxes, penalty, and interest

due and owing to defendant taxing authorities

from the estate is $27,731.13. This sum includes

interest and penalty through October 31, 1990.

18. As of October 8, 1990. the aggregate

unpaid balance of principal, interest, and attor-

ney’s fees due and owing by the estate to Keep

Fresh pursuant to a judgment signed March 28>

1980 (in favor of Ridglea Bank, as plaintiff and

against James Neal Blakeman, executor, as

defendant) in Cause No. 48-55927-79 in the 48th

District Court of Tarrant County, Texas is

$96,865.89. Defendant Keep Fresh is the current

owner and holder of the March 28, 1980, judg-

ment.

19. All parties except plaintiff have agreed

and stipulated that Keep Fresh, through its pre-

decessors, duly perfected a judgment lien

against the Randol Mill Property by filing an

abstract of judgment on May 30, 1980.

32a

The Court adopts each of the stipulated facts, as set

forth above, as a finding of fact by the Court.

The case was tried to the Court, without a jury, on

October 11, 1990. Plaintiff and all defendants appeared by

and through their respective attorneys of record. Mrs.

Blakeman and the defendant children also appeared in

person. The Court, having considered the record in this

case and the evidence presented, has reached the addi-

tional findings and conclusions that are contained in the

parts of this Memorandum Opinion that follow.

The Special Federal Estate Tax Lien

has Expired but Plaintiff's General Tax

Lien has Been Sufficiently Pleaded

C. E. Blakeman died May 25, 1978, and more than ten

years have passed since the date of his death. As a matter

of law, the special federal estate tax lien described in 26

U.S.C. §6324(a)(1) has expired. United States v. Potemken,

841 F.2d 97 (4th Cir. 1988). Contrary to plaintiff’s argu-

ment, the phrase “or becomes unenforceable by reason of

lapse of time,” as used in §6324(a)(1), operates only to

shorten the duration of the special lien, not to lengthen it.

Although it is not drawn as articulately as might be

desired, plaintiff's complaint constitutes a claim to fore-

close on the general federal tax lien described in 26 U.S.C.

§6321 and is sufficient to give defendants notice of such a

claim. Conley v. Gibson, 355 U.S. 41, 47, 48 (1957).

Requirements of the general tax lien include: (a)

assessment within three years after a return is filed and

(b) collection begun within six years of assessment. 26

U.S.C. §6501(a); 26 U.S.C. §6502(a). The parties have stip-

ulated that the following assessments were made:

33a

June 17, 1980 $124,820.93 estate taxes

$ 12,651.37 interest

July 21, 1980 $ 31,205.23 penalties

$ 1,395.26 interest

August 18, 1980 $ 1,436.30 interest

As a result of a payment and the abatement of a delin-

quent penalty, which was stipulated, the balance of the

assessments due was $90,495.65 as of July 21, 1980. There

is apparently no dispute that the assessments were timely

and the Court so finds. The parties have further stipu-

lated, and the Court finds, that on March 16, 1981, plain-

tiff filed a notice of federal tax lien with the Clerk of

Tarrant County, Texas; that plaintiff made demand on

defendant James Neal Blakeman, as executor of the estate

of C. E. Blakeman, deceased; that the taxes were not paid;

and that plaintiff filed its complaint June 16, 1986.

Accordingly, the Court finds that plaintiff’s suit to

enforce its general tax lien was timely filed.

Nature and Extent of the Homestead

Claimed by Mrs. Blakeman

Texas law is clear that each Spouse in a marriage has

a separate and undivided PoOssessory interest in the

homestead, which is only lost by death or abandonment.

Tex. Const. Art. XVI, §52; United States v. Rodgers, 461 U.S.

677, 685 (1983). The homestead right is not a mere statu-

tory entitlement, but a vested property right. Williams v.

Williams, 569 S.W.2d 867 (Tex. 1978). Upon the death of

one spouse, the survivor has the same homestead rights

(except as to size of a rural homestead) as both spouses

had prior to the death of one and is entitled to use and

occupy the homestead, even though it was the separate

34a

estate of the deceased. Hunter v. Clark, 687 S.W.2d 811,

815 (Tex. App. — San Antonio 1985, no writ). The right of

the survivor vests immediately upon the death of the

spouse and continues unless abandoned. Id.

A Texas homestead can be either rural or urban. Tex.

Prop. Code Ann. §41.002 (Vernon Supp. 1990). If urban, it

cannot amount to more than one acre of land, with

improvements thereon; and, if rural, it cannot total more

than 200 acres of land, with improvements thereon, for a

family, or 100 acres, with improvements thereon, for a

single adult person who is not otherwise entitled to a

homestead. Id.

The evidence in this action establishes, and the Court

finds, that:

1. Until the death of C. E. Blakeman, the

Randol Mill property was the rural homestead

of C. E. Blakeman and Mrs. Blakeman.

2. At all times since the death of C. E.

Blakeman, Mrs. Blakeman has continued to use,

occupy and claim at least a 100-acre part of the

Randol Mill property as her homestead.

3. The 100-acre part of the Randol Mill

property Mrs. Blakeman selected as her home-

stead pursuant to the May 7, 1980, Probate

Court judgment is legally described in Exhibit

“B” to the judgment in this action that bears the

same date as this memorandum opinion. This

100 acres is hereinafter called the “100 acres.”

4. Mrs. Blakeman has never abandoned

the 100 acres as her rural homestead.

35a

5. The 100 acres has been the homestead of

Mrs. Blakeman at all times since the death of C.

E. Blakeman.

Courts that have considered the abandonment of

homestead rights have likened abandonment to waiver,

i.e., the intentional release, relinquishment or surrender

of a right. Hunter, 687 S.W.2d at 815. So long as the

surviving spouse has no actual intent to abandon his or

her homestead rights, even conveyances that are other-

wise void do not extinguish those rights. In re Moody, 862

F.2d 1194, 1201 (5th Cir. 1989). Abandonment is an affir-

mative defense that must be proven by clear, conclusive

and undeniable evidence. Taylor v. Mosty Bros. Nursery,

Inc., 777 S.W.2d 568, 569 (Tex. App. - San Antonio 1989,

no writ); Farrington v. First National Bank, 753 S.W.2d 248,

251 (Tex. App. —- Houston [1st Dist.] 1988, writ denied);

McFarland v. Rousseau, 667 S.W.2d 929, 931 (Tex. App. -

Corpus Christi 1984, no writ). Once the initial homestead

character of property is established, the homestead status

is presumed to continue. In re Niland, 825 F.2d 801, 808

(Sth Cir. 1987).

The evidence in this case does not establish that Mrs.

Blakeman has lost her rural homestead interest in the 100

acres for any reason.

Share of Sales Proceeds Allocable to

Mrs. Blakeman’s Homestead Estate

The parties have agreed, and the Court finds, that the

value of Mrs. Blakeman’s homestead estate is the eco-

nomic equivalent of a life estate and that use of the

Treasury tables set forth in Treas. Reg. §20.2031-10(f) in

36a

determining the value of said estate is appropriate. The

effect of Mrs. Blakeman’s homestead interest in the 100

acres is that she has, and has had at all times since her

husband’s death, a life estate in those acres, with the

remainder interest being vested in the estate. Rodgers, 461

U.S. at 686. The value of Mrs. Blakeman’s homestead

estate (life estate), measured as of date of tax assessment,

was 74.423 percent of the total value of the 100 acres.

Plaintiff's lien attached only to the estate’s remainder

interestin the 100 acres. Therefore, plaintiff’s share, sub-

ject to any prior lien claims of creditors of the estate, of

the proceeds to be realized from foreclosure of its lien on

the 100 acres shall be only 25.577%. This is so because the

general federal tax lien described in 26 U.S.C. §6321 and

on which federal levy may be had under 26 U.S.C.

§7403(a) attaches only to the interest of the delinquent

taxpayer in particular property and not to the entire

property. Rodgers, 461 U.S. at 690. The lien attaches as of

the date of assessment, June 17, 1980. 26 U.S.C. §6322. In

this case, the delinquent taxpayer is the estate of C. E.

Biakernam, deceased. As of the date of assessment of the

taxes, the estate had only a remainder interest in the 100

acres. The remainder interest was worth 25.577% of the

value of the homestead, because Mrs. Blakeman was fifty-

one years old at the date of assessment.

However, the sharing between Mrs. Blakeman and

the estate in the 100 acres should be determined by the

value of Mrs. Blakeman’s homestead estate as of the

present date. This is so because inequity would result if

Mrs. Blakeman were to be permitted to have the use of

the homestead for the ten years that have passed since

date of assessment, as she has had, and at the same time

37a

to receive sales proceeds representing the value of the

homestead life estate for that same ten-year period. In

other words, she should not be permitted to realize twice

the benefits of the homestead for the ten years since date

of assessment.

Pursuant to the Treasury tables, the value as of the

present time of Mrs. Blakeman’s homestead estate (life

estate) in the 100 acres is 60.352 percent of the value of

the land. Thus, her share of proceeds from foreclosure

sale of the 100 acres would be 60.352 percent. The differ-

ence between the 74.423 percent that represents the value

of the homestead estate at date of assessment and the

60.352 percent shall be received by the estate, to be dis-

posed of in administration of the estate under state law.

The Claims of Keep Fresh

The Court has determined that Keep Fresh is not

entitled to direct payment of the proceeds of the two

foreclosure sales described herein. Pursuant to Tex. Prop.

Code §52.006 (Vernon 1984), the duration of a judgment

lien is ten years following the date of recording and

indexing the abstract of judgment. In this case, an

abstract of judgment was filed by Keep Fresh’s prede- ~

cessor May 30, 1980; therefore, the judgment lien would

have expired in May 1990 unless extended. Although the

record supports a finding that defendant Keep Fresh’s

lien was duly perfected by filing an abstract and by

obtaining the issuance of a writ of execution within ten

years of the date of judgment, there is no evidence that

Keep Fresh’s judgment lien is still viable.

38a

Plaintiff and all other defendants stipulated that

Keep Fresh is the owner and holder of a judgment against

the estate and that the amount due and owing as of

October 8, 1990, is $96,865.89. The record establishes that

an abstract of judgment was filed of record in Tarrant

County, Texas, within one year of the date of judgment

and that a writ of execution was issued within ten years

of the date of judgment. Thus, Keep Fresh’s judgment lien

was duly perfected and the judgment itself has been kept

alive. Tex. Civ. Prac. & Rem. Code §34.001 (Vernon 1986);

Hicks v. First National Bank, 778 S.W.2d 98, 100 (Tex. App.

—~ Amarillo 1989, writ denied); Cox v. Nelson, 223 S.W.2d

84 (Tex.Civ.App. — Texarkana 1949, writ ref’d). However,

though the judgment is still alive, there is no evidence

that the judgment lien against the Randol Mill property

was kept alive by refiling of the abstract. Tex. Prop. Code

§52.001; Burton Lingo Co. v. Warren, 45 S.W.2d 750, 753

(Tex.Civ.App. — Eastland 1931, writ ref’d). Nevertheless,

Keep Fresh should be able to assert against the estate any

rights it has as a judgment creditor of the estate.

The Claims of the Taxing Authorities

Though the parties stipulated that as of October 1,

1990, the unpaid balance of the ad valorem taxes, penalty

and interest due and owing to defendant taxing authori-

ties from the estate is $27,731.13, there is no stipulation or

proof that these ad valorem taxes, etc., were assessed or

owed as to, or against, the Randol Mill property. For all

that is shown from the record, the ad valorem taxes owed

to defendant taxing authorities could have accrued

because of taxes assessed against property entirely differ-

ent from the Randol Mill property, which could have been

39a

owned by C. E. Blakeman prior to his death. As a conse-

quence, the Court is not allowing defendant taxing

authorities to participate directly in the proceeds of the

foreclosure sales described in this memorandum opinion.

However, the taxing authorities should be able to assert,

under state law, against the estate any rights they have as

judgment creditors of the estate.

Foreclosure and Application of Proceeds of Sale

Defendant children argue, in their post-trial brief,

that this Court does not have to order the foreclosure of

the Randol Mill property, or, alternatively, that the prop-

erty should be put on the market for a reasonable length

of time. In support of this proposition, defendant children

cite to United States v. Boyd, 246 F.2d 477 (Sth Cir.), cert.

denied, 355 U.S. 889 (1957); United States v. National Bank

of Commerce, 472 U.S. 713 (1985); and United States v.

Rodgers, 461 U.S. 677 (1983). The exceptions to forced sale

described in the Boyd case are inapposite. Likewise, the

National Bank of Commerce case is not governing because it

is a levy case and not a foreclosure case. Finally, although

the Rodgers case indicates that a court may sometimes

refuse to order foreclosure, the Supreme Court emphas-

izes “that the limited discretion accorded by §7403 should

be exercised rigorously and sparingly, keeping in mind

the Government's paramount interest in prompt and cer-

tain collection of delinquent taxes.” 461 U.S. at 711.

In this case, the parties have not presented evidence

to support the exercise of the Court’s discretion not to

order foreclosure. Accordingly, the Court will order fore-

closure of the Randol Mill property. The Court will first

40a

order foreclosure saie of the 1.5954 acres in which Mrs.

Blakeman does not have a homestead interest. The sale is

to be conducted within sixty (60) days after the date of

signing of this memorandum opinion. The proceeds from

the sale of the 1.5954 acres shall first be applied to the

reasonable and necessary costs of sale, and then any

balance remaining shall be distributed as follows, in the

sequence set forth below:

1. First, the balance, if any, shall be used to

satisfy the debt of the estate to plaintiff.

2. If any remains, the balance shall be paid

to the estate, through its personal representa-

tives.

If the proceeds from the sale of said 1.5954 acres are

insufficient to pay the sums due and owing to plaintiff,

then the remaining 100 acres of the Randol Mill property

shall be sold by foreclosure, which sale, if it is necessary,

shall be conducted within one hundred twenty (120) days

after the date of signing of this memorandum opinion.

The proceeds from the sale of the 100 acres shall be

distributed as follows, in the sequence set forth below:

1. Mrs. Blakeman shall receive 60.352% of

the sales proceeds.

2. Next, the sales proceeds shall be applied

to the reasonable and necessary costs of sale.

3. Next, the debt of the estate to plaintiff

shall be paid in full, except that the amount to

be received by plaintiff from the proceeds of the

second sale shall not in any event exceed

25.577% of the gross proceeds of sale.

4la

4. If any remains, the balance shall be paid

to the estate, through its personal representa-

tive.

Liability of James Neal Blakeman

The Court previously determined that defendant

James Neal Blakeman is personally liable to plaintiff to

the extent that he has used funds of the estate to pay

debts of the estate. The evidence at trial showed that this

defendant paid by use of funds of the estate $13,525.00 to

the State of Texas for inheritance taxes. The Court finds

that defendant James Neal Blakeman, individually, is lia-

ble to plaintiff in the amount of $13,525.00, pursuant to 31

U.S.C. §3713. Defendant James Neal Blakeman, as execu-

tor of the estate, is liable to plaintiff in the amount of

$350,627.24, as stipulated by the parties as the amount

due and owing at time of trial.

Liability of Remaining Individual Defendants

At trial, plaintiff announced that it is no longer seek-

ing judgment against defendants Maudine Blakeman,

Robert Earl Blakeman or Karren A. Whaley, individually.

Accordingly, the Court finds that plaintiff should take

nothing from these defendants.

Distribution to be Made of Sales Proceeds

to be Received by the Estate

Because of the joinder of James Neal Blakeman, as

executor of the estate of C. E. Blakeman, deceased, as a

party to this action, the estate, for practical purposes is a

party to the action, through its personal representative.

42a

The Court has concluded that the foreclosure sales to be

ordered by the Court could, if accomplished, result in the

creation of funds that would be an asset of the estate,

against which creditors of the estate, as well as the defen-

dant children as beneficiaries of the estate, might assert

claims and interests. These potential claimants include

Keep Fresh, defendant taxing authorities and defendant

children. The Court is unable to determine from the

record in this case whether there are other potential

claimants against the estate.

Rather than to involve itself in allocation of the sales

proceeds that might be received by the estate pursuant to

foreclosure, the Court is providing in the judgment that

the excess funds, if any, shall be paid to the estate.

Thereafter, all claimants against, and beneficiaries in, the

estate can resolve through appropriate state law pro-

cedures entitlement to any sales proceeds received by the

estate.

Judgment to be Entered

The Court’s judgment in accordance with this mem-

orandum opinion shall be set forth in a separate docu-

ment, signed the same date as the date of signing of this

memorandum opinion.

SIGNED this 30th day of October, 1990.

/s/ John McBryde

JOHN McBRYDE

United States

District Judge

43a

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

UNITED STATES OF AMERICA §

: S)

ve. § CIVIL ACTION

JAMES NEAL BLAKEMAN, AS § NO. CA 4-86-511-A

EXECUTOR OF THE ESTATE OF §

C. E. BLAKEMAN, DECEASED, §

ET AL §

JUDGMENT

(Filed Oct. 30, 1990)

Came on for trial before the Court without a jury the

above-styled and numbered action. Plaintiff is United

States of America, and defendants are James Neal Blake-

man, individually and as executor of the estate of C. E.

Blakeman, deceased, Maudine Blakeman, Robert Earl

Blakeman, Karren A. Whaley, Keep Fresh Filters, Inc..

d/b/a Diversified Financial Planners, Inc., formerly

NCNB, formerly known as Ridglea Bank, Tarrant County,

Texas, Fort Worth Independent School District, and City

of Fort Worth, Texas. The Court's findings of fact and

conclusions of law are set forth in a separate memoran-

dum opinion signed the same date on which this judg-

ment is being signed.

The Court ORDERS, ADJUDGES and DECREES that:

1. Plaintiff have and recover judgment against

defendant James Neal Blakeman, as executor of the estate

of C. E. Blakeman, deceased, in the amount of THREE

HUNDRED FIFTY THOUSAND SIX HUNDRED

TWENTY SEVEN AND 24/100 DOLLARS ($350,627.24),

44a

plus post-judgment interest thereon at the rate of SEVEN

AND 78/100 PERCENT (7.78%) per annum from date of

judgment until paid.

2. Plaintiff have and recover judgment against

defendant James Neal Blakeman, individually, in the

amount of THIRTEEN THOUSAND FIVE HUNDRED

TWENTY-FIVE AND NO/100 DOLLARS ($13,525.00),

plus post-judgment interest thereon at the rate of SEVEN

AND 78/100 PERCENT (7.78%) per annum from date of

judgment until paid.

3. a. The general federal tax lien of plaintiff is

ORDERED foreclosed against all land, together with all

improvements thereon, that is included in the property

description that is attached hereto as Exhibit “A” and that

is not included in the property description that is

attached hereto as Exhibit “B” (hereinafter called the

“first tract”).

b. The Clerk of the Court shall issue an order of

sale commanding the United States Marshal to seize and

sell the first tract, as a whole, at public auction in accord-

ance with 28 U.S.C. §§2001 and 2002.

c. Notice of the sale shall be published once a

week for at least four weeks prior to the sale in the Fort

Worth Star Telegram and in the Arlington Citizen Journal.

Said notice shall describe the first tract by statements in

the notice that the property to be sold is all property that

is included in the property that is described as:

(The notice shall give at this point the exact

description contained in Exhibit “A” to this

judgment.)

arene

45a

and that is not included as a part of the property that is

described as:

(The notice shall gave [sic] at this point the exact

description contained in Exhibit “B” to this

judgment.)

and shall contain the terms and conditions of sale as set

forth in this judgment.

c. The sale of the first tract shall occur prior to

expiration of sixty days after the date of signing of this

judgment.

d. The terms and conditions of the sale shall be

as follows:

(1) The property shall be sold as a whole

at public sale at the courthouse door, south

entrance of the Tarrant County Courthouse (the

original Tarrant County courthouse building),

Fort Worth, Texas.

(2) The terms of sale shall be cash. The

successful bidder, called purchaser herein, shall

be required to deposit with the United States

Marshal cash equal to twenty percent of his total

bid immediately upon the property being struck

off and awarded to him as the highest and best

bidder, and the remaining eighty percent of said

purchase price shall be paid on or before 5:00

p-m. on the date five days from the date of sale.

Should any person bid off property at sale by

virtue of this judgment and order of sale and fail

to comply with the terms of the 6, he shall be

liable to the plaintiff for twenty percent of the

value of the property thus bid off as a penalty, in

addition to costs and expenses. Said penalty

shall be recovered on motion, five days’ notice

46a

of such motion being given to such purchaser;

and said deposit by purchaser shall be paid over

and delivered to plaintiff to be applied toward

payment of said penalty. Payment of said pen-

alty by purchaser shall be a credit on the judg-

ment of plaintiff against defendant James Neal

Blakeman as executor of the estate. Should the

property on second sale bring less than on the

former, the defaulting purchaser at first sale

shall be liable to pay the defendants at judicial

sale all loss which they sustain, including the

amount of the difference between the bid at the

first sale and the bid under which the property

finally sold, to be recovered on motion.

(4) The United States Marshal shall make

his report of sale within ten (10) days from the

date of sale.

(5) If no objections have been filed in writ-

ing in this action with the Clerk of the Court by

10:00 a.m., fifteen (15) days from the date of

sale, the sale shall be confirmed without neces-

sity of motion, or upon motion of the plaintiff,

the purchaser, any party in interest in this cause,

or by the Court upon its own motion, and the

United States Marshal shall be directed to

deliver his deed without warranty to said pur-

chaser.

e. The United States Marshal shall apply the

proceeds of the sale of the first tract first to reasonable

and necessary costs of sale, then to satisfaction of plain-

tiff’s judgment as set forth in paragraph 1 herein. If the

property shall sell for more than is sufficient to pay off

and satisfy said sums of money, then the Marshal shall

pay over the excess to the estate of C. E. Blakeman,

deceased, through its personal representative.

47a

4. a. If the proceeds of the sale of ‘he first tract, as

ordered above, are not sufficient to satisfy the expenses of

sale and the amounts awarded to plaintiff by paragraph 1

above, the general federal tax lien of plaintiff is

ORDERED foreclosed against all land that is described in

Exhibit “B” hereto, together with all improvements

thereon (hereinafter called the “second tract”).

b. The Clerk of the Court shall issue an order of

sale commanding the United States Marshal to seize and

sell the second tract, as a whole, at public auction in

accordance with 28 U.S.C. §§2001 and 2002.

c. Notice of the sale shall published once a

week for at least four weeks prior to the sale in the Fort

Worth Star Telegram and in the Arlington Citizen Journal.

Said notice shall describe second tract by stating the

description contained in Exhibit “B” hereto and shall

contain the terms and conditions of sale as set out herein.

d. The sale of the second tract shall occur prior

to expiration of 120 days after the date of signing of this

judgment.

e. The terms and conditions of the sale shall be

as follows:

(1) The property shall be sold as a whole

at public sale at the courthouse door, south

entrance of the Tarrant County Courthouse (the

original Tarrant County courthouse building),

Fort Worth, Texas.

(2) The terms of sale shall be cash. The

successful bidder, called purchaser herein, shall

be required to deposit with the United States

Marshal cash equal to twenty percent of his total

48a

bid immediately upon the property being struck

off and awarded to him as the highest and best

bidder, and the remaining eighty percent of said

purchase price shall be paid on or before 5:00

p-m. on the date five days from the date of sale.

Should any person bid off property at sale by

virtue of this judgment and order of sale and fail

to comply with the terms of the sale, he shall be

liable to the plaintiff for twenty percent of the

value of the property thus bid off as a penalty, in

addition to costs and expenses. Said penalty

shall be recovered on motion, five days’ notice

of such motion being given to such purchaser;

and said deposit by purchaser shall be paid over

and delivered to plaintiff to be applied toward

payment of said penalty. Payment of said pen-

alty by purchaser shall be a credit on the judg-

ment of plaintiff against defendant James Neal

Blakeman as executor of the estate. Should the

property on second sale bring less than on the

former, the defaulting purchaser at first sale

shall be liable to pay the defendants at judicial

sale all loss which they sustain, including the

amount of the difference between the bid at the

first sale and the bid under which the property

finally sold, to be recovered on motion.

(3) The United States Marsha! shall make

his report of sale within ten (10) days from the

date of sale.

(4) If no objections have been filed in writ-

ing in this action with the Clerk of the Court by

10:00 a.m., fifteen (15) days from the date of

sale, the sale shall be confirmed without neces-

sity of motion, or upon motion of the plaintiff,

the purchaser, any party in interest in this cause,

or by the Court upon its own motion, and the

ca a a a ae

49a

United States Marshal shall be directed to

deliver his deed without warranty to said pur-

chaser.

f. The United States Marshal shall apply the

proceeds of sale of the second tract as follows:

(1) Defendant Maudine Blakeman shall

receive 60.352 percent of the gross proceeds of

sale;

(2) Next, the reasonable and necessary

costs of sale shall then be deducted:

(3) Next, plaintiff’s judgment, as set forth

in paragraph 1 herein, shall be paid in full,

except that the amount received by plaintiff

from the sale of the second tract shall not in any

event exceed 25.577 percent of the gross pro-

ceeds of the sale of such tract; and

(4) The excess, if any, shall be paid by the

Marshal to the estate of C. E. Blakeman,

deceased, through its personal representative.

5. Plaintiff shall have any and all writs necessary to

execute the terms of this judgment.

6. All relief sought by any party to this action that is

not granted herein is hereby denied, except that whatever

claims have been made against the proceeds of sales that

are ordered to be paid to the estate of C. E. Blakeman,

deceased, through its personal representative, or for

money judgment against such estate or its personal repre-

sentative, are, except to the extent granted herein, hereby

dismissed without prejudice to the assertion of such

claims through state law procedures. Each party shall

bear court costs incurred by such party.

50a

SIGNED this 30th day of October, 1990.

/s/ John McBryde

JOHN McBRYDE

United States District Judge

LEGAL DESCRIPTION OF 101.5954 ACRES,

WHICH IS REFERRED TO IN THE JUDGMENT

IN CIVIL ACTION NO. CA4-86-511-A AS

“FIRST TRACT”

The subject property is located on the south side of

Randol Mill Road approximately one mile east of its

intersection with Interstate Highway Loop 820. It is

legally described in three tracts as follows:

TRACT NO. 1: Part of the William Linn Survey, Patent

No. 316, Volume 25 and part of the James M. Robinson

Survey, Patent No. 632, Volume 13, in Tarrant County,

Texas, and described as follows:

BEGINNING at a point in the West line of County Road

No. 2041, said point being 7 varas West of the Northeast

corner of said William Linn Survey;

THENCE West along the North line of said Linn and

Robinson Surveys 772-1/2 varas to the point for corner;

THENCE South 751 varas to a point for corner in the

North line of the tract of land conveyed by A. B. Rice and

wife, C. T. Willoughby, by deed dated February 11th,

1922, and recorded in Volume 693, Page 161, of the Deed

Records of said County;

5la

THENCE East along the North line of said Willoughby

tract, 210 varas to a point in the West line of the tract

conveyed by John Anderson and wife to Natline Witcher

by deed dated October 18th, 1911, and recorded in Vol-

ume 390, Page 149, Deed Records, of said County;

THENCE North along the west line of said Witcher tract

138 varas to its Northwest corner; >

THENCE North 88° 40’ East along the North line of said

Witcher Tract and along the North line of the tract con-

veyed to W. L. Jett by H. P. Carver and wife, by deed

dated February 11th, 1907, and recorded in Volume 247,

Page 182 of the Deed Records of said County, in all 544

varas to a point in the West line of County Road No. 2041.

THENCE North with the West line of said road, 200 varas

and continuing North 2 degrees 40’ East along the West

line of said road, 401 varas to the PLACE OF BEGIN-

NING.

SAVE AND EXCEPT an approximate two acre site

located in the extreme north central section. Tract No. 1,

exclusive of the two acres, contains 85.0414 acres, more or

less.

TRACT NO. 2: Being County Tract 1-C out of the | Oe ae

Davis Survey, Abstract No. 423 and containing 14.434

acres, more or less.

TRACT NO. 3: Being County Tract 4A01 out of the W.

Masters Survey, Abstract No. 1049 and containing .12

acres, more or less.

TRACT NO. 4: The subject property is a single family

residence located at 7500 Randol Mill Road. It is legally

52a

described as being two acres out of the James M. Robin-

son Survey, Abstract No. 1337, Fort Worth, Tarrant

County, Texas;

LEGAL DESCRIPTION OF 100 ACRES,

WHICH IS REFERRED TO IN THE JUDGMENT

IN CIVIL ACTION NO. CA4-86-511-A AS

“SECOND TRACT”

Parts of the James M. Robinson Survey, Abstract No.

1337, the Joseph C. Davis Survey, Abstract No. 423 and

the Wm. Linn Survey, Abstract No. 924 all situated about

8 miles north 79 degrees east from the courthouse in

Tarrant County, Texas; and embracing a portion of the

TRACT NO. 1 and a portion of the TRACT NO. 2

described in the deed to C. E. Blakeman and wife, Mary

A. Blakeman recorded in volume 2286, page 247 of the

Tarrant County Deed Records and a portion of said Rob-

inson Survey lying between said Tracts.

Beginning at a point in the south line of said Davis

Survey and the north line of said Robinson Survey for the

southerly southeast corner of said TRACT NO. 2, being

453-3/10 varas (1259-2/10 feet) west of the southeast

corner of said Davis Survey.

Thence south 22 degrees 04-1/2 minutes west 143-9/10

feet to a 3/4" pipe in the north line of said TRACT NO. 1.

Thence south 89 degrees-36 minutes east, along the said

north line of TRACT NO. 1 through said Robinson Survey

and into the said Linn Survey, 771 feet to a 3/4’ iron rod,

53a

from which the northeast corner of said TRACT NO. 1

bears south 89 degrees-36 minutes east 482-3/10 feet.

Thence south 250 feet to a 3/4" iron rod.

Thence south 89 degrees-36 minutes east 482-3/10 feet to

a 3/4" iron rod in the easterly east line of said TRACT

NO. 1 for the west line of Cook’s Lane, from which the

_ northeast corner of said TRACT NO. 1 bears north 250

feet.

Thence south, along the easterly east line of said TRACT

NO. 1 for the said west line of Cook’s Lane, 1417-1/10

feet to a 3/4" pipe for the southeast corner of said TRACT

NO. 1.

Thence south 89 degrees 18-1/2 minutes west, along the

northerly south line of said TRACT NO. 1 through said

Linn Survey and into said Robinson Survey, 1505-4/10

feet to a 2" pipe for a reentrant corner of said TRACT NO.

Thence south no degrees-07 minutes east, along an east

line of said TRACT NO. 1, a distance of 381-3/10 feet to a

1/2" galvanized pipe for the southerly southeast corner

of said TRACT NO. 1.

Thence south 89 degrees-14 minutes west, along a south

line of said TRACT NO. 1, a distance of 581-7/10 feet toa

3/4' iron rod for the southwest corner of said TRACT NO.

Thence north 1 degrees 24-3/4 minutes west, along the

west line of said TRACT NO. 1, at 2089-9/10 feet past a

3/4" iron rod for the northwest corner of said TRACT

NO. 1, and continue in all 2214-2/10 feet to a 3/4" iron

54a

rod in the south line of said Davis Survey and TRACT

NO. 2.

Thence south 89 degrees-49 minutes west, along the said

south line of the Davis Survey and said TRACT NO. 2, a

distance of 130-2/10 feet to a 3/4" iron rod from which

the southerly southwest corner of said TRACT NO. 2

bears south 89 degrees-49 minutes west 308-6/10 feet.

Thence north 11 degrees-28 minutes east, 485-6/10 feet to

a 3/4" iron rod.

Thence north 81 degrees 14-1/2 minutes west 86-4/10

feet to a 3/4" iron rod.

Thence north 13 degrees 42 1/2 minutes west 117-4/10

feet to a 3/4" iron rod in a line for the south line of

Randol Mill Road.

Thence along said line for the south line of Randol Mill

Road:

north 73 degrees-11 minutes east 79 feet;

north 88 degrees-51 minutes east 97-3/10 feet;

south 81 degrees-50 minutes east 98 feet;

south 77 degrees-27 minutes east 98-8/10 feet;

south 74 degrees-42 minutes east 102-3/10 feet;

south 72 degrees-42 minutes east 460-1/10 feet;

and

south 72 degrees-33 minutes east 331-4/10 feet

to a 1/2" iron road in an easterly line of said

TRACT NO. 2.

Thence south 22 degrees 04-1/2 minutes west, along said

easterly line of TRACT NO. 2, a distance of 351-7/10 feet

55a

to the place of beginning and containing 100 acres of

which 57-41/100 acres are within said Robinson Survey,

12-95/100 acres are within said Linn Survey, and

29-64/100 acres are within said Davis Survey.

56a

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

No. 91-1027

UNITED STATES OF AMERICA,

Plaintiff-Appellant-

Cross-Appellee,

VERSUS

JAMES NEAL BLAKEMAN,

As Executor of the Estate of

C. E. BLAKEMAN, Deceased,

ROBERT EARL BLAKEMAN

and KAREN A. WHALEY,

Defendants-Appellees-

Cross-Appellants and Cross-

Appellees,

RIDGLEA BANK, ET AL.,

Defendants-Appellees,

VERSUS

MAUDINE BLAKEMAN,

Defendant-Appellee-

Cross-Appellant.

Appeals from the United States District Court

for the Northern District of Texas

ON PETITION FOR REHEARING

(Opinion July 21, 5th Cir, 1992, _. F.2d __)

(Filed July 28, 1993)

Before JOLLY, JONES, and EMILIO M. GARZA, Cir-

cuit Judges.

57a

PER CURIAM:

IT IS ORDERED that the petition for rehearing filed

in the above entitled and numbered cause be and the

same is hereby GRANTED. We hereby WITHDRAW Parts

II.C. and III. of our original opinion, __ F.2d ___ (5th Cir.

1992), and substitute the following:

The district court, finding that Mrs. Blakeman’s

homestead interest was the economic equivalent of a life

estate, used the Treasury tables set forth in Treasury

district court measured the value of the estate as of the

date of the tax assessment and determined that the value

of Mrs. Blakeman’s homestead estate (life estate) was

74.423 percent of the total value of the 100 acres. The

district court then held that the government’s lien

attached only to the estate’s remainder interest in the 100

acres and held that the remainder interest was worth

25.577 percent of the value of the homestead as of the

'S See 26 C.F.R. § 20.2031-10(f).

Mrs. Blakeman’s homestead estate is the economic equivalent of

a life estate and that use of the tables set forth in Treas. Reg.

§ 20.2031-10(f) in determining the value of said estate is appro-

priate.” United States v. Blakeman, 750 F. Supp. 216, 222 (N.D.

Tex. 1990) (“Memorandum Opinion”).

58a

date of the assessment.!”7 The district court, however,

found that “inequity would result if Mrs. Blakeman were

to... have the use of the homestead for the ten years that

have passed since date of assessment, as she has had, and

at the same time to receive sales proceeds representing

the value of the homestead life estate for that same ten-

year period,” and concluded that Mrs. Blakeman’s inter-

est in the 100 acres should be determined by the value of

Mrs. Blakeman’s homestead interest as of the present

date. Using the Treasury tables, then, the district court

found Mrs. Blakeman’s interest in the property to be

60.352 percent of the value of the land as of judgment.

The district court then determined that the difference

between the 74.423 percent representing the value of Mrs.

Blakeman’s homestead estate at date of assessment (June

17, 1980) and the 60.352 percent (Mrs. Blakeman’s interest

at judgment) should be given to the estate.'®

The government argues that Mrs. Blakeman’s interest

in the Randol Mill Property should be valued as of the

foreclosure date and contends that the district court erred

in holding that the government's tax lien was limited to

the estate’s interest in the property on the lien’s attach-

ment date. Mrs. Blakeman, on the other hand, argues that

17 The court so reasoned because “the general federal tax

lien described in 26 U.S.C. § 6321 and on which federal levy may

be had under 26 U.S.C. § 7403(a) attaches only to the interest of

the delinquent taxpayer in particular property and not to the

entire property.” See Blakeman, 750 F. Supp. at 222 (“Memoran-

dum Opinion”) (citing United States v. Rodgers, 461 U.S. 677, 690

(1993)). This amount represents 14.071 percent.

18 See Blakeman, 750 F. Supp. at 222 (“Memorandum Opin-

ion”).

59a

the district court should have determined the interests of

the respective parties as of the date the lien arose. In the

alternative, Mrs. Blakeman argues that, if her homestead

interest is to be valued as of the foreclosure date, it

should be valued under the tables promulgated pursuant

to 26 U.S.C. § 7520, and the district court erred in using

the tables under Treas. Reg. § 20.2031-10.19

Mrs. Blakeman contends that she is entitled to at

least 74.423 percent of the gross proceeds realized from

the sale of the homestead property without any reduction

to account for the period she occupied the property. Mrs.

Blakeman relies on Harris v. United States, 764 F.2d 1126

(Sth Cir. 1985), contending that the government should be

estopped from asserting a position contrary to that taken

in Harris. We find Mrs. Blakeman’s contention without

merit.

It is well-settled that a federal tax lien reaches prop-

erty and interests in property owned by the taxpayer on

the date of the assessment, as well as property and inter-

ests in property acquired by the taxpayer from that date

until the tax debt is satisfied. See Texas Commerce Bank —

Fort Worth v. United States, 896 F.2d 152, 161 (5th Cir.

1990) (“The lien arises on the date the IRS assesses unpaid

taxes, applies to currently owned as well as after-

'9 Federal district courts in tax foreclosure cases are autho-

rized to order a sale of the homestead property and distribute

the sale proceeds in accordance with the interests of the parties.

See 26 U.S.C. § 7403(c). Section 7403(c) does not, however, pro-

vide a precise method of (1) valuing the interests of the parties

to the foreclosure and (2) distributing the sales proceeds real-

ized on the foreclosure sale. Id.

60a

acquired property, and continues until the taxpayer satis-

fies the debt or the statute of limitations runs.”), citing 26

U.S.C. § 6322; Glass City Bank v. United States, 326 U.S.

265, 267, 66 S. Ct. 108, 110, 90 L. Ed. 56 (1945); United

States v. Cache Valley Bank, 866 F.2d 1242, 1244 (10th Cir.

1989); Prewitt v. United States, 792 F.2d 1353, 1355 (5th Cir.

1986); see also Rice Investment Co. v. United States, 625 F.2d

565, 568 (5th Cir. 1980) (“After-acquired property .. . is

reached by the lien.”) (citations omitted). Therefore, the

federal tax lien reaches the interests of C.E.’s estate as of

the date of the foreclosure sale.

Mrs. Blakeman’s next argument is that, if her home-

stead interest is to be valued as of the foreclosure date,

her interest should be valued according to the tables

promulgated pursuant to 26 U.S.C. § 7520.79 The govern-

ment agrees that the tables promulgated pursuant to 26

U.S.C. § 7520 are the proper tables to determine Mrs.

Blakeman’s interest in the property, but argues that,

because Mrs. Blakeman failed to raise properly the issue

of the applicability of § 7520 in the district court, she has

waived her right to assert that the district court should

have used the tables promulgated pursuant to 26 U.S.C.

§ 7520. We disagree.

Mrs. Blakeman raised her argument concerning

§ 7520 in her proposed findings of fact and conclusions of

20 Mrs. Blakeman contends that the district court erred

- when it stated that she agreed that the tables under Treas. Reg.

§ 20.2031-10 should be used to determine the extent of her

homestead interest.

61la

law, but she did not raise it again at trial.2! We believe, in

light of our decision in Laney v. Comm'’r of Internal Reve-

nue, 674 F.2d 342 (5th Cir. 1982), and decisions of other

courts of appeals, that that was sufficient to preserve Mirs.

Blakeman’s argument for appeal. In Laney the taxpayers

urged an issue on appeal which they had not pleaded

before the tax court, and which the tax court had not

addressed. See id. at 351. The Commissioner contended

that the taxpayers had waived the argument. See id. We

held that the argument was not waived, because the

taxpayers had included the issue in their trial memo

before the tax court. The D.C. Circuit reached a similar

*I Mrs. Blakeman’s Proposed findings and conclusions

stated:

3. In 1988, congress enacted Section 7520, which

is the determining provision for valuing life estates

and remainder interests at this time. Section 7520

requires the life estate and remainder to be deter-

mined

a. Under the tables prescribed by the Secre-

tary, and

b. By using an interest rate equal to 120% of

the Federal midterm rate in effect under

Section 1274(d)(1) for the month in which

the valuation date falls.

If the date of measurement is the date of foreclosure,

then the Federal midterm rate for September 1990 is

8.53%. The second element of the formula is 120% of

the Federal midterm rate, which is 10.28%. Table R(1)

(located at [paragraph] 311AB of CCH Standard Fed-

eral Tax Reporter) for a person age 62 (Maudine

Blakeman’s current age) at 10.2% reflects a remainder

factor of .25532% [sic], and therefore, results in a life

estate factor of 74.468% of the gross sale price of the

property sold at foreclosure.

Record on Appeal, vol. 4, at 866-67.

62a

result in Kapar v. Kuwait Airways Corp., 845 F.2d 1100

(D.C. Cir. 1988), where it held that an unpleaded issue

was preserved for appeal by inclusion in memoranda of

law submitted to the district court. See id. at 1103 n.7. In

Hellenic Lines, Ltd. v. United States, 512 F.2d 1196 (2d Cir.

1975), the Second Circuit held that an issue was pre-

served for appeal because it was raised in proposed con-

clusions of law and in a post-trial memorandum. See id. at

1205 n.15. Because in those cases memoranda of law and

proposed conclusions of law were adequate to preserve

issues for appeal, we conclude that Mrs. Blakeman’s pro-

posed findings and conclusions were adequate to pre-

serve her argument under § 7520.

The holding in United States v. Indiana Bonding & Sur.

Co., 625 F.2d 26 (5th Cir. 1980), appears at first blush to

support a contrary conclusion. In Indiana Bonding we held

that the defendant, Indiana Bonding and Surety Com-

pany (“Indiana”), had waived its statute-of-limitations

defense, because “[e]ven though this issue was listed as

one of [Indiana’s] contentions in the pretrial order .. .

Indiana’s failure to present evidence in support of the

defense before the district court preclude[d] our review

of it.” See Indiana Bonding, 625 F.2d at 29. However, Ind1-

ana Bonding is distinguishable. Because the issue waived

there — whether a cause of action was barred by the

statute of limitations — required the presentation of evi-

dence, we recognized Indiana’s failure to present evi-

dence as a waiver of the issue.?2 See id. (“Indiana’s failure

22 We do not mean to suggest that, in every case where the

admission of evidence is appropriate to the resolution of a

disputed issue, failure to elicit testimony leads to waiver of the

63a

to present evidence in support of the defense before the

district court precludes our review of it here.”). In this

case, by contrast, there was no need for Mrs. Blakeman to

offer evidence regarding the applicability of § 7520,

because the applicability of that section followed auto-

matically from the date of valuation of Mrs. Blakeman’s

homestead interest.23 Because it was unnecessary for Mrs.

Blakeman to present evidence, we do not recognize her

failure to do so as a waiver of her argument. Therefore,

the logic of Indiana Bonding lacks force here, and we

believe that Laney, Kapar and Hellenic Lines offer better

guidance for the resolution of this dispute.

Because Mrs. Blakeman did not waive her argument

under § 7520, and because the government concedes that

§ 7520 is applicable, we reverse and remand so that Mrs.

Blakeman’s homestead interest may be valued according

to the tables promulgated pursuant to 26 U.S.C. § 7520.

IT]

For the foregoing reasons, we AFFIRM in part and

REVERSE and REMAND in part for the district court to

determine the government's interest in the Randol Mill

issue. That question is not before us, and we express no opinion

on the subject.

23 Section 7520 applies if the valuation date occurs on or

after May 1, 1989. The district court determined that the valua-

tion date was the date of foreclosure, and ordered a foreclosure

sale within 120 days of October 30, 1990. Therefore, the valua-

tion date occurred after May 1, 1989, and it automatically fol-

lowed that § 7520 applied.

64a

Property as of the date of the foreclosure sale, in accord-

ance with the tables set forth in the Treasury Regulations,

and for the district court to determine the value of Mrs.

Blakeman’s homestead interest according to the tables

promulgated pursuant to 26 U.S.C. § 7520.

65a

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

UNITED STATES OF AMERICA,

Plaintiff

VS.

JAMES NEAL BLAKEMAN, as

Executor of the Estate of C.E.

BLAKEMAN, Deceased,

MAUDINE BLAKEMAN,

ROBERT EARL BLAKEMAN,

KAREN A. WHALEY, RIDGLEA

BANK, STATE OF TEXAS,

TARRANT COUNTY, TEXAS,

FORT WORTH INDEPENDENT

SCHOOL DISTRICT and CITY

OF FORT WORTH, TEXAS,

CIVIL NO.

4-86-511-K

MMMM MMmMMmMmMMmMMMmMMmMM Mm

Defendants

MOTION OF DEFENDANT, MAUDINE BLAKEMAN,

FOR PARTIAL SUMMARY JUDGMENT AND

BRIEF IN SUPPORT THEREOF

(Filed Jan. 8, 1990)

JACKSON & WALKER

Suite 6000

901 Main Street

Dallas, Texas 75202

ATTORNEYS FOR DEFENDANT,

MAUDINE BLAKEMAN

66a

IN THE UNITED STATES DISTRICT COURT

FOR The NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

UNITED STATES OF AMERICA,

Plaintiff

VS.

JAMES NEAL BLAKEMAN, as

Executor of the Estate of C.E.

BLAKEMAN, Deceased,

MAUDINE BLAKEMAN,

ROBERT EARL BLAKEMAN,

KAREN A. WHALEY, RIDGLEA

BANK, STATE OF TEXAS,

TARRANT COUNTY, TEXAS,

FORT WORTH INDEPENDENT

SCHOOL DISTRICT and CITY

OF FORT WORTH, TEXAS,

CIVIL NO.

4-86-511-K

Defendants

MMMM MmMmMm MM MMM Mm Mm Mm Mm

MOTION OF DEFENDANT, MAUDINE BLAKEMAN,

FOR PARTIAL SUMMARY JUDGMENT

COMES NOW MAUDINE BLAKEMAN, Defendant

herein, and respectfully moves the Court as follows:

That the Court enter pursuant to Rule 56 of the

Federal Rules of Civil Procedure, a partial Summary

Judgment solely on behalf of Defendant, Maudine Blake-

man, and against Plaintiff, United States of America, for

the relief demanded in the First Amended Answer of

67a

Maudine Blakeman, since the pleadings, depositions of

Defendants, Maudine Blakeman and James Neal Blake-

man, and affidavit of Defendant, Maudine Blakeman,

show that there is no genuine issue as to any material fact

and that Defendant, Maudine Blakeman, is entitled to

judgment, as a matter of law, on Plaintiff’s action against

her for unpaid federal estate taxes of the Estate of CE.

Blakeman.

IT.

In support of this Motion, Defendant, Maudine

Blakeman, submits her Brief, the depositions of Defen-

dants, Maudine Blakeman and James Neal Blakeman, and

affidavit of Defendant, Maudine Blakeman.

WHEREFORE, PREMISES CONSIDERED, Defendant

Maudine Blakeman prays that upon consideration by the

Court she be granted partial Summary Judgment against

Plaintiff, United States of America, for the relief

demanded in her First Amended Answer and for such

other and further relief to which she may be entitled to at

law and in equity.

Respectfully submitted,

JACKSON & WALKER

By: /s/ Wm. D. Elliott

Wm. D. Elliott

901 Main Street, Suite 6000

Dallas, Texas 75202

(214) 953-6000

ATTORNEYS FOR DEFENDANT,

MAUDINE BLAKEMAN

68a

TABLE OF CONTENTS

TABLE OF CASES

TABLE OF STATUTES

TABLE OF OTHER AUTHORITIES CITED

INDEX TO AFFIDAVIT AND DEPOSITION PAGES

REFERENCED IN MOTION OF DEFENDANT,

MAUDINE BLAKEMAN, FOR PARTIAL SUM-

MARY JUDGMENT AND BRIEF IN SUPPORT

PR 5 kb ork Ree ees thas a eka nee tensa iss iv.

OPENING STATEMENT

SUMMARY JUDGMENT ISSUES................... 2

LPR as ee SOE Six kee ee sh serkearesetsneeseds 3

EE ED odo ee ko a wee ON se COME Se Roe Re 6

SUMMARY JUDGMENT STANDARD.............. 7

PP ds eae es eee ek oe eee eee 9

I. SECTION 6324(a)(2) OF THE CODE IS

UNAVAILABLE TO PLAINTIFF AS A BASIS

FOR PROCEEDING AGAINST DEFENDANT,

Pe ee a errr rrr Ser rere 9

Il. PURSUANT TO CODE SECTION 7430,

DEFENDANT, MAUDINE BLAKEMAN, IS

ENTITLED TO AN AWARD OF JUDGMENT

FOR COSTS AND ATTORNEYS’ FEES ...... 1]

A. Defendant, Maudine Blakeman, Has Sub-

stantially Prevailed on the Issue of Per-

Se ee err er Pere rere? 1]

ITT.

IV.

69a

B. Defendant, Maudine Blakeman, Did Not

Have an Opportunity to Exhaust Admin-

istrative Remedies Since No Such

Remedies Were Available to Her........

C. Plaintiff’s Position is Not Substantially

NES 05 86049 os che oo one ekki ces’.

IN THE ALTERNATIVE, DEFENDANT,

MAUDINE BLAKEMAN, IS ENTITLED TO

AN AWARD OF JUDGMENT FOR COSTS

UNDER SECTION 2412(a) OF TITLE 28 OF

THE UNITED STATES CODE............

THERE IS NO GENUINE ISSUE AS TO ANY

MATERIAL FACT AND DEFENDANT,

MAUDINE BLAKEMAN, IS ENTITLED TO

JUDGMENT AGAINST PLAINTIFF, AS A

MATTER OF LAW, ON PLAINTIFF’S ACTION

WHICH SEEKS TO IMPOSE PERSONAL LIA-

BILITY ON DEFENDANT, MAUDINE BLAKE-

MAN, FOR UNPAID FEDERAL ESTATE

GEE eel Fadctacteessd ola ee

THE HOMESTEAD INTEREST OF DEFEN-

DANT, MAUDINE BLAKEMAN, IN THE

HOMESTEAD PROPERTY IS WORTH 74.423%

OF THE VALUE OF THE HOMESTEAD PROP-

ok eee ey eee re ates Les

A. The Interest of Defendant, Maudine Blake-

man, in the Homestead Property is a

Vested, Possessory and Rural Homestead

Interest and is Economically Equivalent to

WS BO orice oe eee ee

70a

B. The Life Estate of Defendant, Maudine

Blakeman, Should be Valued, as a Matter

of Law, by the Use of Tables Set Forth in

Treasury Regulation Sections 20.2031-10(a)

ee ar eee odie rsa riyiy> Bin 2: 17

C. If This Court Orders a Foreclosure of the

Plaintiff’s Lien on the Homestead Prop-

erty to Satisfy Any Remaining Estate Tax

Liability, Maudine Blakeman’s Interest in

the Homestead Property is 74.423% and,

As a Result, She is Entitled to 74.423%

From the Gross Proceeds of Such Fore-

Cg PPC rey err reese 18

VI. THE EXPENSES OF SALE AND ANY LITIGA-

TION EXPENSES OF DEFENDANT,

MAUDINE BLAKEMAN, WHICH ARE NOT

AWARDED UNDER CODE SECTION 7430,

SHOULD BE CHARGED AGAINST THE

GROSS PROCEEDS ATTRIBUTABLE TO THE

REMAINDER INTEREST IN THE HOME-

STEAD PROPERTY.................ceeeeeees 22

RAPER scree e ee cee es ewennerecereveseceuenss 25

CERTIFICATE OF SERVICE.................0.00045. 26

7la

TABLE OF CASES

PAGE

Celotex Corp. v. Catrett, 477 U.S. 317 (1986)......... 7, 8

Fontenot v. Upjohn Co., 780 F.2d 1190 (5th Cir. 1986) ..... 8

Harris v. United States, 764 F.2d 1126 (5th Cir. 1985)

+c aN ated ahead ee ree eee 17, 18, 20, 21

Leewaye v. Commissioner, 55 T.C.M. 485 (1988)..... 13, 14

Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio

Corp, 475 US. S76 CORRS). 5 occ ccccvcscuveciccetsu: 8

Slaughter v. Allstate Insurance Co., 803 F.2d 857 (5th

Oy Re net Maen Stare erinenel apt ely @ arco 8

Stafford v. United States, 611 F.2d 990 (5th Cir. 1980) .... 16

Street v. United States, 310 F.Supp. 657 (S.D. Tex.

oo. See per te re een rere ban 10, 12 13, 14, 15

United States v. Boyd, 246 F.2d 477 (5th Cir.), cert.

meen, Fae US. GOP CGP) ng a vvnccdidscaccsecscs 22

United States v. Molina, 764 F.2d 1132 (5th Cir.

Cre PE Oy RCs Seyret Ta iylein Mouths f 21

United States v. National Bank of Commerce, 472 U.S.

TED PHP nabs PON gaa Fda REE Cres 22

United States v. 110-118 Riverside Tenants Corp., 886

2G SiG Gnd Cie. W909) akc noc cicvcssecesnss 22, 23, 24

United States v. Rodgers, 461 U.S. 677 (1983)

he hoe seas eeae kh bee ee eee eee 17, 18 19, 20, 21

Williams v. Williams, 569 S.W. 2d 867 (Tex. 1978)..... 17

TABLE OF STATUTES

iene QE i ke bie ee eee eeceiwees 9, 10, 12, 13, 14, 15

Ss Es tak nas cuvae cones cetav eres 9, 10, 12, 13

72a

0 2 en. . Se oe 9, 10

SE MN ac eae vine uaavaruucesvenceasien dees 9, 10

ta freer errr eee eh ore 9, 10

SO OU ich cere reds tun vanvincnsy eeetenenes 9, 10

ols |. | Sewer errr errr rrr ree ae 9, 10

8 Seam @. ) ene ec 9, 10

ER.C. & 2042 .. 22. ccc cece cece cer ererenerccecens 9, 10

LRG. § 7400 2. ncn ccces 11, 12, 13, 14, 15, 16, 22, 24, 25

28 U.S.C.A. § 2412 (West Supp. 1989)......-. 14, 15, 16

28 U.S.C.A. § 1920 (West Supp. 1989) ....-.------ ++: 14

TABLE OF OTHER AUTHORITIES CITED

2 es Oh 2, Sener rrr rrr rr eee 8

Tex. Const. art. XVI, §§ 50, 52 ....---- ee ee eee eee eres 17

Treas. Reg. §§ 20.2031-10(a) & (f) .....--0065 17, 18, 21

W. Elliott, Federal Tax Collections, Liens, and Levies

q 9-8 (Prentice Hall/Rosenfeld Launer Publica-

She WOOGD .. cc ccd an vec cc ters encieecssasennacteres 21

73a

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

UNITED STATES OF AMERICA,

Plaintiff

VS.

JAMES NEAL BLAKEMAN, as

Executor of the Estate of C.E.

BLAKEMAN, Deceased,

MAUDINE BLAKEMAN,

ROBERT EARL BLAKEMAN,

KAREN A. WHALEY, RIDGLEA

BANK, STATE OF TEXAS,

TARRANT COUNTY, TEXAS,

FORT WORTH INDEPENDENT

SCHOOL DISTRICT and CITY

OF FORTH WORTH, TEXAS,

CIVIL NO.

4-86-511-K

Defendants

MMMM MMMMMMMMMmMMMM M M

INDEX TO AFFIDAVIT AND DEPOSITION PAGES

REFERENCED IN MOTION OF DEFENDANT,

MAUDINE BLAKEMAN, FOR PARTIAL SUMMARY

JUDGMENT AND BRIEF IN SUPPORT THEREOF

I. AFFIDAVIT

Maudine Blakeman

Il. DEPOSITION PAGES

A. James Neal Blakeman

B. Maudine Blakeman

74a

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

UNITED STATES OF AMERICA,

Plaintiff

VS.

JAMES NEAL BLAKEMAN, as

Executor of the Estate of C.E.

BLAKEMAN, Deceased,

MAUDINE BLAKEMAN,

ROBERT EARL BLAKEMAN,

KAREN A. WHALEY, RIDGLEA

BANK, STATE OF TEXAS,

TARRANT COUNTY, TEXAS,

FORT WORTH INDEPENDENT

SCHOOL DISTRICT and CITY

OF FORTH WORTH, TEXAS,

Defendants

CIVIL NO.

4-86-511-K

MMMM M MM MM MM MM MM MM) MM MM

BRIEF OF DEFENDANT, MAUDINE BLAKEMAN,

IN SUPPORT OF MOTION FOR

PARTIAL SUMMARY JUDGMENT

OPENING STATEMENT

This is a civil action by the United States to reduce to

judgment certain federal estate tax liabilities of the Estate

of C.E. Blakeman, deceased (the “Estate”); to foreclose the

United States’ federal tax lien against real property

located in Tarrant County, Texas; for judgment against

James Neal Blakeman, as Executor of the Estate; and for

judgment against, among others, Defendants Maudine

Blakeman, James Neal Blakeman, Robert Earl Blakeman

and Karen A. Whaley.

75a

Defendant, Maudine Blakeman, is the surviving

widow of C.E. Blakeman, who died testate on May 25,

1978. Prior to his death, C.E. Blakeman resided with

Maudine Blakeman on over 100 acres of real property

located in Tarrant County, Texas (the “Tarrant County

Property”). By Final Judgment entered May 7, 1980, the

Probate Court of Tarrant County, Texas (i) designated the

Tarrant County Property a rural homestead and (ii) con-

firmed Maudine Blakeman’s homestead interest in 100

acres of the Tarrant County Property (the “Homestead

Property”). Maudine Blakeman has continuously resided

on the Homestead Property since the death of C.E. Blake-

man.

On June 17, 1980, the Internal Revenue Service (the

“Service”) assessed the Estate for unpaid federal estate

taxes and interest. The unpaid balance of the Estate’s

federal estate tax liability plus penalties and interest

remain due and owing from the Estate. The Service has

filed a Notice of Federal Tax Lien for the assessments

against the Estate with the Tarrant County Clerk. Plaintiff

seeks foreclosure of its federal tax lien on the Tarrant

County Property.

Defendant, Maudine Blakeman, prays that this Court

find as follows:

SUMMARY JUDGMENT ISSUES

I. That Defendant, Maudine Blakeman, is

not personally liable for any of the estate taxes

assessed against the Estate, thus, Plaintiff

should take nothing against her;

76a

Il. That Defendant, Maudine Blakeman, is

entitled to recover from Plaintiff the amount of

her litigation expenses, including attorney’s

fees, incurred in connection with her defense of

this action;

III. That, by reason of the findings of the

Probate Court, (a) the Homestead Property is a

rural homestead and (b) Defendant, Maudine

Blakeman, has a homestead right for life in the

Homestead Property;

IV. That the homestead right is the eco-

nomic equivalent of a life estate in the Home-

stead Property and, as a result, that the value of

the homestead interest of Defendant, Maudine

Blakeman, is 74.423% of the total value of the

Homestead Property;

V. That Defendant, Maudine Blakeman, be

awarded 74.423% of the gross proceeds of a

foreclosure sale if this Court orders a foreclosure

of the Plaintiff's lien on the Homestead Property

and a judicial sale of the Homestead Property to

satisfy any remaining estate tax liability; and

VI. That any expenses of sale and any liti-

gation expenses of Defendant, Maudine Blake-

man, which are not recovered from Plaintiff, be

charged against any gross proceeds attributable

to the remainder interest in the Homestead

Property.

UNDISPUTED FACTS

The following pertinent and undisputed facts are

derived from the pleadings, documents and uncon-

troverted deposition and affidavit testimony.

77a

1. C.E. Blakeman and Maudine Blakeman were mar-

ried in 1973.

2. During their marriage, C.E. Blakeman and

Maudine Blakeman resided on the Tarrant County Prop-

erty, which was acquired by C.E. Blakeman prior to his

marriage to Maudine Blakeman. (Deposition of Maudine

Blakeman filed herewith, p. 7, hereinafter MB Dep.).

3. C.E. Blakeman died testate on May 25, 1978. He

was survived by his wife, Maudine Blakeman, and by

three adult children from a former marriage, who are

Defendants, James Neal Blakeman, Robert Earl Blakeman

and Karen A. Whaley.

4. Maudine Blakeman, who was born on June 20,

1928, was 49 years old at the date of death of C. E.

Blakeman. (MB — Dep., p. 132).

5. Pursuant to the Last Will and Testament of C.E.

Blakeman (the “Will”), James Neal Blakeman was appoin-

ted Independent Executor of the Estate by the Probate

Court.

6. The Will provides that after the payment of (i) all

debts of the Estate and (ii) a bequest of $100,000.00 to

James Neal Blakeman, the balance of the property in the

Estate is to pass equally to James Neal Blakeman, Robert

Earl Blakeman and Karen A. Whaley.

7. On May 7, 1980, the Probate Court entered a final

judgment, a certified copy of which is attached as Exhibit

“A,” designating the Tarrant County Property a rural

homestead and awarding Maudine Blakeman a home-

stead interest in the Homestead Property. The Probate

Court ordered that Maudine Blakeman have the use and

78a

benefit of the Homestead Property for so long as she shall

occupy the same as her homestead. (Exhibit “A”, p. 3).

8. Defendant, Maudine Blakeman, has continuously

resided on the Homestead Property since the death of

C.E. Blakeman and she intends to continue to occupy the

Homestead Property as her homestead in the future. (MB

Dep. p. 22 and Affidavit of Maudine Blakeman filed here-

with, p. 1, hereinafter “MB Aff.”).

9. Maudine Blakeman has paid the property taxes

on the Homestead Property since 1980; moreover, her

present intention is to continue to pay the property taxes.

(MB Dep., pp. 34-35).

10. James Neal Blak*man, as executor of the Estate,

neglected to timely file the Estate’s federal estate tax

return or pay the Estate’s federal estate tax liability on

the due date as required by law. (Deposition of James

Neal Blakeman filed herewith, pp. 21-22, 108-109 here-

inafter JNB Dep.). Thereafter, the Service prepared and

filed a federal estate tax return on behalf of the Estate.

(JNB Dep., pp. 21-22, 109 & Dep. Exhibits 2 and 3).

11. The federal estate tax return of the Estate

reflects that $21,223.86 of life insurance proceeds were

paid to the Estate and includible in the gross estate of the

Estate. (JNB Dep., Exhibits 2 and 3). Defendant, Maudine

Blakeman, has not received any proceeds from life insur-

ance policies payable upon the death of C.E. Blakeman

and includible in the gross estate of the Estate. (MB Aff,

p. 1).

12. On June 17, 1980, the Service assessed the Estate

for unpaid federal estate taxes plus penalties and interest.

79a

The unpaid balance of the Estate’s federal estate tax

liability, plus penalties and interest, remain due and

owing from the Estate. (JNB Dep., p. 23 & Dep. Exhibit 4).

13. James Neal Blakeman, executor of the Estate,

has admitted that there are no funds in the Estate to

satisfy the federal estate tax obligation of the Estate. (J/NB

Dep., p. 108).

14. The Service has filed a Notice of Federal Tax

Lien with the Tarrant County Clerk.

15. Plaintiff seeks foreclosure of its federal tax lien

on the Tarrant County Property. Plaintiff commenced this

action to reduce to judgment the federal estate tax lia-

bilities of the Estate; to foreclose the alleged federal tax

lien against the Tarrant County Property; for judgment

against Defendant, James Neal Blakeman, as Executor of

the Estate; and against, among others, Defendants,

Maudine Blakeman, James Neal Blakeman, Robert Earl

Blakeman and Karen A. Whaley.

ISSUES OF LAW

On the facts set forth above, we may summarize the

issues before the Court as follows:

1. Is Defendant, Maudine Blakeman, person-

ally liable for any of the estate taxes

assessed against the Estate, and is summary

judgment appropriate?

2. If this Court grants summary judgment in

favor of Defendant, Maudine Blakeman, is

she entitled to recover from Plaintiff her liti-

gation expenses, including attorneys’ fees,

80a

which she incurred in connection with her

defense of this action?

3. Is the Homestead Property a rural home-

stead, and, if so, (i) does Defendant,

Maudine Blakeman, have a homestead inter-

est in the Homestead Property and (ii) is the

homestead right the economic equivalent of

a life estate in the Homestead Property?

4. If this Court decrees that there must be a

foreclosure of Plaintiff’s lien on the Home-

stead Property and a judicial sale of the

Homestead Property to satisfy any remain-

ing estate tax liability of the Estate, is Defen-

dant, Maudine Blakeman, entitled to a

portion of the gross proceeds realized at

such judicial sale?

5. If this Court decrees that there must be a

foreclosure of Plaintiff’s lien on the Home-

stead Property and a judicial sale of the

Homestead Property, how should the

expenses of sale and litigation expenses of

Maudine Blakeman be charged against the

gross proceeds from the sale?

SUMMARY JUDGMENT STANDARD

As we shall show, applicable statutes and case law

clearly support partial summary judgment for Defendant,

Maudine Blakeman, in the relief she seeks, and in connec-

tion with Plaintiff’s action to impose personal liability on

Defendant, Maudine Blakeman. In Celotex Corp. v. Catrett,

477 U.S. 317 (1986), the Supreme Court stated that:

8la

Summary judgment procedure is properly

regarded not as a disfavored procedural short-

cut, but rather as an integral part of the Federal

Rules as a whole,

This text is long and has been trimmed here. Open the source document for the complete record.

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