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United States v. Wesselman

February 26, 2007

UNITED STATES OF AMERICA, PLAINTIFF,
v.
HERMAN A. WESSELMAN, MILLIE WESSELMAN, KENNETH CAYO, AGENT OF THE TRUSTEE(S) OF THE BOUNTEOUS HARVEST TRUST AND THE SALVATION ROCK TRUST, DAVID WESSELMAN, AGENT OF THE TRUSTEE(S) OF THE BOUNTEOUS HARVEST TRUST AND THE SALVATION ROCK TRUST, WILLIAM BRIAN PATRICK DOWLING, TRUSTEE OF THE J.A.W. HOMESTEAD TRUST, FREDERICK V. WEDEMEIER, AGENT OF TRUSTEE(S) OF THE STEWARD OF THE LORD TRUST, VIRGIL STRAUCH, AGENT TRUSTEES OF THE STEWARD OF THE LORD TRUST, AND ILLINOIS DEPARTMENT OF REVENUE, DEFENDANTS.



The opinion of the court was delivered by: J. Phil Gilbert District Judge

MEMORANDUM AND ORDER

This matter comes before the Court on a variety of matters.

I. Background

On August 18, 2005, the United States filed this suit under 26 U.S.C. § 7403 to collect allegedly unpaid federal taxes. Specifically, the complaint alleges that defendant Herman A. Wesselman ("Taxpayer") has failed to pay federal income taxes and that Wesselman Roofing, a business owned by the Taxpayer, has failed to pay federal employment and unemployment taxes. The lawsuit seeks to reduce to judgment assessments made against the Taxpayer for these unpaid taxes, to foreclose federal tax liens upon certain real properties described in the complaint which were either fraudulently transferred by the Taxpayer or are still owned by the Taxpayer through nominee trusts, and to sell the properties and apply the proceeds to the Taxpayer's unpaid federal tax liabilities.

II. Taxpayer's Address

On December 29, 2006, after mail sent to the Taxpayer was returned as undeliverable, the Court ordered the Taxpayer to provide an address at which he could receive mailings in this case (Doc. 69). The Taxpayer responded by informing the Court that he could receive mail at "c/o General Delivery Postmaster, Effingham, Illinois." The Clerk of Court has noted the change on the docket sheet. The Taxpayer's response satisfies the Court's December 29, 2006, order, but the Court reminds Wesselman that the Court will not undertake extraordinary measures to ensure that he actually receives filings in this case and that he will suffer any consequences that might come because mail directed to that address is returned as undeliverable.

III. Order to Show Cause

On December 15, 2006, the Court ordered the United States to show cause why the claims in this case against defendants Kenneth Cayo, Frederick V. Wedemeier and the Illinois Department of Revenue should not be dismissed for lack of prosecution pursuant to Federal Rule of Civil Procedure 41(b) and the Court's inherent authority to manage its docket, see In re Bluestein & Co., 68 F.3d 1022, 1025 (7th Cir. 1995), because the United States had not moved for entry of default as to those defendants under Federal Rule of Civil Procedure 55(a) (Doc. 58).

The United States responded (Doc. 68) indicating that it believed it had named as defendants the allegedly sham trusts of which defendants Cayo, David Wesselman, William Brian Patrick Dowling, Wedemeier and Virgil Strauch were agents, not those defendants as individuals. It believes the Complaint makes this clear. It also objects to the Clerk of Court's refusal to enter default against three of the four trusts (Doc. 66), which it believes were properly served by service on their respective agents, Cayo, David Wesselman, Wedemeier and Strauch. Alternatively, it asks for an extension of time to serve the trusts or for leave to amend the Complaint to name the trusts.

After a careful review of the Complaint, the Court has determined that the Complaint names Cayo, David Wesselman, Dowling, Wedemeier and Strauch individually as parties, not the trusts they purportedly represent. When the Complaint names the defendants at issue, it lists each defendant with descriptive phrase identifying that he is an agent of one or more trusts, implying that he is being sued individually for acts he did as an agent.

However, because it is clear now that the United States intended to sue entities other than those named in the Complaint and because the Court believes no party will suffer undue prejudice from allowing amendment of the Complaint, the Court finds that justice requires allowing the United States to amend the Complaint to allege the proper party defendants. See Fed. R. Civ. P. 15(a) (providing that once a responsive pleading has been filed, "a party may amend the party's pleading only by leave of court or by written consent of the adverse party."); Fed. R. Civ. P. 21 (providing that "[p]arties may be dropped or added by order of the court on motion of any party or of its own initiative at any stage of the action and on such terms as are just." (emphasis added)); see also Williams v. United States Postal Serv., 873 F.2d 1069, 1073 n. 2 (7th Cir. 1989).

IV. Motion to Dismiss (Doc. 45)

In this motion, the Taxpayer asks the Court to dismiss this case pursuant to Federal Rules of Civil Procedure 4(m) and 12(b)(5) because defendants Cayo and Wedemeier were not served properly with process. The government has responded (Doc. 59) that all defendants in this case were properly served with process within 120 days of the date the Complaint was filed, August 18, 2005.

To the extent that the Taxpayer challenges service on the other defendants, he has no standing to make such an argument. Even if the Taxpayer had had standing to challenge service on others, the returns of service on the other defendants in this case (Docs. 50-56) appear on their face to be in compliance with Rule 4(e) or Rule 4(j), as applicable, and to reflect effective service of process. In the ...


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