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SEI v. U.S.

August 22, 2005.

JANET L. SEI, Plaintiff/Counterclaim-Defendant,
UNITED STATES OF AMERICA, Defendant/Counterclaim-Plaintiff. UNITED STATES OF AMERICA, Defendant/Counterclaim-Plaintiff, v. KEITH A. SEI, Counterclaim-Defendant.

The opinion of the court was delivered by: BLANCHE MANNING, District Judge


The parties' cross-motions for summary judgment are before the court. For the following reasons, Janet Sei's motion for summary judgment is denied and the United States' motion for summary judgment is granted.

I. Background

  The following facts are drawn from the parties' joint statement of material facts and are undisputed. Janet and Keith Sei were married on December 1, 1984. During their marriage, Keith founded four businesses: (1) Midwest Surgical Assistants, Inc.; (2) The National Surgical Billing Association, Inc.; (3) Midwest Surgical Assistants Northeast Region, Inc.; and (4) Midwest Surgical Assistants Mid America Region, Inc. (collectively, "the businesses"). Starting in 1998, Keith failed to pay employee withholding taxes from the businesses.

  Prior to 2001, the Seis owned a home in South Barrington. Around September of 2001, the Seis purchased a home at 1309 Montclaire Place in Schaumburg, Illinois. Although Janet contends that she was unaware that she and Keith owned the Schaumburg home as tenants-by-the-entireties, the deed for the Schaumburg home stated that the Seis owned the property as tenants-by-the-entireties. No documents exist which state that the Seis did not own the Schaumburg home as tenants-by-the-entireties. After the Seis purchased the Schaumburg home, they sold the South Barrington home and used the proceeds to pay off the mortgage on the Schaumburg home.

  In 2001, Janet learned that the four businesses were having problems paying their federal tax liabilities. On or about May 3, 2002, both of the Seis executed a $285,000 mortgage on their home in Schaumburg. No documents exist which reflect that Janet bought out Keith's interest in the home at any time.

  On May 13, 2002, May 14, 2002 and December 9, 2002, under 26 U.S.C. § 6672, a delegate of the Secretary of the Treasury made assessments against Keith for a total of $1,306,144.78 (including interest and penalties) as a responsible person for the businesses who had failed to collect or truthfully account for and pay over income and Federal Insurance Contribution Act ("FICA") taxes withheld from the businesses' employees. Keith received notices of the assessments on or about the time that they were made. In addition, notices of federal tax liens were filed with the Recorder of Deeds for Cook County relating to the assessments.

  The Seis divorced and a Judgment of Dissolution of Marriage was entered in March of 2003. The judgment stated that title to the Schaumburg home is "presently held jointly by the parties." A quit claim deed that was contemplated by the judgment stated that Keith would deliver a properly executed quit claim deed to Janet "conveying to [Janet] all of [Keith's] interest, if any, in the title to the [Schaumburg home]." No quit claim deed of any type relating to the Schaumburg home was executed by Keith or recorded by Janet.

  On August 4, 2003, the Schaumburg property was sold. The Settlement Statement which described the sale listed the sellers as Keith and Janet Sei. The escrow agent released half the proceeds of the sale ($113,001.40) to Janet. Keith owes the government $1,306,144.78 in back taxes. In the present action to quiet title, the parties disagree as to who gets the remaining half of the proceeds from the Schaumburg home.

  II. Discussion

  A. Standard for A Motion For Summary Judgment

  Summary judgment is proper when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of any material fact." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The party opposing the summary judgment motion "may not rest upon the mere allegations or denials of the adverse party's pleading"; rather, it must respond with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Valenti v. Qualex, Inc., 970 F. 2d 363, 365 (7th Cir. 1992). A court should grant a motion for summary judgment only when the record shows that a reasonable jury could not find for the nonmoving party. Id.

  B. Keith and Janet's Claim to the Proceeds

  Keith has been served and has failed to appear and defend, and the government has submitted admissible evidence showing that he owes the government $1,306,144.78. The court thus finds that entry of a judgment in the amount ...

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