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United States v. Winland

United States District Court, M.D. Florida, Fort Myers Division

August 16, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
DOUGLAS WINLAND, SHERRY JEAN HETZ, NEWLINE HOLDINGS, LLC, LARRY HART, DABTLC5, LLC and STATE OF FLORIDA, Defendants.

          OPINION AND ORDER [1]

          SHERI POLSTER CHAPPELL, UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on the Government's Motion for Default Judgment filed on April 26, 2017. (Doc. 37). Defendants Douglas Winland, Sherry Jean Hetz, Newline Holdings, LLC (“Newline”), DABTLC5, LLC (“DABTLC5”), and the State of Florida have not filed a response and the time to do so has expired. Therefore, the Motion is ripe for review.

         BACKGROUND

         This case arises from Winland's failure to pay tax liabilities in the amount of $1, 115, 884.38, [2] plus ongoing interest and penalties. (Doc. 37 at 9). The Government alleges that, between September and November 2007, the IRS assessed tax liabilities against Winland for the 1998 through 2003 and 2006 tax years (“2007 Tax Assessments”). (Doc. 1 at ¶ 15). Later, on August 24, 2009, the IRS made additional tax assessments against Winland for the 2004 and 2005 tax years (“2009 Tax Assessments”). (Doc. 1 at ¶ 15). To collect on these obligations, the Department of the Treasury sent Winland several notices and demands for payment. (Docs. 1 at ¶¶ 16, 41(f); 37-2 at 4-64). But Winland did not pay. (Doc. 1 at ¶ 17). Tax liens were thus created based upon the unpaid 2007 and 2009 Tax Assessments (respectively, the “2007 Tax Lien” and the 2009 “Tax Lien”) (collectively the “Tax Liens”), and the Government recorded them on October 2, 2008 and November 23, 2009 in Howard County, Maryland. (Doc. 1 at ¶ 22). The Department of the Treasury also filed notices of federal tax liens in Lee County Florida against Winland on May 7, 2014, and against Hetz as Winland's “transferee and/or nominee” with respect to a residence located at 3510 N.W. 47th Street, Cape Coral, Florida 33993 (the “Subject Property”) on December 9, 2014. (Doc. 1 at ¶¶ 36-37).

         At the time of the 2007 Tax Assessments, Winland was the sole owner of a property located in Howard County, Maryland (the “Maryland Property”). (Doc. 1 at ¶ 21). In January of 2008, Winland sold the Maryland Property for $188, 246.43. (Doc. 1 at ¶ 23). Then, on February 21, 2008, Winland deposited $180, 246.43 into a joint checking account he shared with Hetz, with whom he also shared a close romantic relationship. (Doc. 1 at ¶¶ 25, 41(b)). One week later, Hetz withdrew $150, 000.00 from the shared account and purchased a Certificate of Deposit (“CD”) in her name alone. (Doc. 1 at ¶ 26). On October 10, 2008, the value of Hetz's CD was $152, 390.60. (Doc. 1 at ¶ 27). But by December 10, 2008, the CD's value had decreased to $102, 994.80. (Doc. 1 at ¶ 27).

         On December 19, 2008, Hetz redeemed the CD and made two deposits into her personal checking account: one for $103, 073.92 and one for $40, 000.00. (Doc. 1 at ¶ 28). Days later, Hetz used $120, 289.33 from her personal checking account to acquire the Subject Property via a special warranty deed that listed both herself and Winland as co-grantees. (Doc. 1 at ¶¶ 5, 29-30). The parties' ownership interests were not specifically enumerated. (Doc. 1 at ¶ 30).

         Almost a year later, on August 24, 2009, the IRS issued the 2009 Tax Assessment. (Doc. 1 at ¶ 33). Then, on October 29, 2009, Winland executed a quitclaim deed on the Subject Property to Hetz in return for $10.00. (Doc. 1 at ¶ 34). Despite the transfer, Winland continued to reside at the Subject Property until he was later incarcerated for an unrelated series of events. (Doc. 1 at ¶ 44(g)).

         Based on these allegations, the Government filed a four count Complaint against Winland that requested that the outstanding tax liabilities be reduced to judgment, the foreclosure of the Tax Liens on the Subject Property, that the Court set aside Winland's transactions leading up to and regarding the Subject Property as fraudulent, and for a determination that Hetz holds the Subject Property as Winland's nominee. (Doc. 1). Given the possibility that other entities would claim an interest in the property, the Complaint also included Hetz, Hart, Newline, DABTLC5, and the State of Florida. (Doc. 1 at ¶¶ 7-11).

         The Government then served Newline on February 13, 2017 (Doc. 13), Hart and the State of Florida on February 21, 2017 (Doc. 14, 16), Hetz on February 23, 2017 (Doc. 15), DABTLC5 on March 2, 2017 (Doc. 17), and Winland on March 7, 2017 (Doc. 22). Hart timely filed an Answer. (Doc. 18). On April 7, 2017, the Government filed a joint stipulation with Hart as to the priority of interests and the distribution of proceeds from the prospective sale of the Subject Property. (Doc. 32). Thereafter, when Winland, Hetz, Newline, DABTLC5, and the State of Florida (collectively, the “Default Defendants”) failed to act, the Government obtained clerk's defaults. (Doc. 24, 25, 29, 30). Now, the Government seeks default judgments against the Default Defendants.

         LEGAL STANDARD

         Rule 55 of the Federal Rules of Civil Procedure establishes a two-step procedure for obtaining default judgment. First, when a defendant fails to plead or otherwise defend a lawsuit, the clerk of the court must enter a clerk's default against the defendant. See Fed. R. Civ. P. 55(a). Second, after receiving the clerk's default, the court can enter a default judgment provided the defendant is not an infant or incompetent. SeeFed. R. Civ. P. 55(b)(2); see also Solaroll Shade & Shutter Corp. v. Bio-Energy Sys., Inc. 803 F.2d 1130, 1134 (11th Cir. 1986) (stating a default judgment may be entered "against a defendant who never appears or answers a complaint, for in such circumstances the case never has been placed at issue.").

         That said, a court may enter a default judgment only if "the well-pleaded allegations in the complaint, which are taken as true due to the default, actually state a substantive cause of action and that there is a substantive, sufficient basis in the pleadings for the particular relief sought." Tyco Fire & Sec., LLC v. Alcocer, 218 F.App'x 860, 863 (11th Cir. 2007). The upshot of this rule is that “the defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.” Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).[3] Consequently, when considering a motion for default judgment, courts must "examine the sufficiency of plaintiff's allegations to determine whether the plaintiff is entitled to" relief. See PNC Bank, N.A. v. Starlight Props. & Holdings, LLC, No. 6:13-cv-408, 2014 WL 2574040, at *1 (M.D. Fla. June 9, 2014) (citation omitted).

         DISCUSSION

         I. COUNT I: ...


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