Ansel Capital Investment, LLC v. United States Ex Rel. Internal Revenue Service , 448 F. App'x 709 ( 2011 )

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT AUG 24 2011
MOLLY C. DWYER, CLERK
U .S. C O U R T OF APPE ALS
ANSEL CAPITAL INVESTMENT, LLC, No. 10-35489
a Tennessee limited liability company,
D.C. Nos. 9:08-cv-00057-DWM
Plaintiff - Appellee, 9:08-cv-00093-DWM
v.
MEMORANDUM *
UNITED STATES OF AMERICA,
through its agency, Internal Revenue
Service,
Defendant - Appellee,
BRIAN MARCHANT and MARY
MARCHANT,
Defendants - Appellants,
and
RAVALLI COUNTY,
Defendant.
Appeal from the United States District Court
for the District of Montana
Donald W. Molloy, District Judge, Presiding
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Argued and Submitted June 9, 2011
Portland, Oregon
Before: FISHER, GOULD, and PAEZ, Circuit Judges.
Appellants Brian and Mary Marchant appeal from the district court’s
judgment ordering the sale of certain real property pursuant to 28 U.S.C. § 2410.
The Marchants contend that, because they had an interest in the property and they
never agreed to the sale, the district court violated their due process rights when it
ordered the sale the of property as stipulated by the United States and the owner of
the property. They also argue that the district court erred in ordering sale of the
property to satisfy a federal tax lien because the lien had been discharged under 26
U.S.C. § 7425 when the United States failed to redeem the property. We have
jurisdiction under 28 U.S.C. § 1291, and we affirm.
The Marchants concede they had notice of the pending litigation in the
district court between the United States and the owner of the property upon reading
the notice of lis pendens filed in the county where the property was located. See
Mont. Code Ann. § 70-19-102. Despite this notice, the Marchants did not
intervene immediately in the lawsuit to assert their rights in the property. Had the
Marchants intervened when they obtained their interest, they could have
challenged the factual basis on which the United States relied to obtain a judgment
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ordering the sale of the property. Instead, the Marchants chose not to intervene in
the litigation until after the court had entered judgment, and only then complained
that they were bound by a stipulation to which they were not a party. Because the
Marchants had ample opportunity to intervene in the district court litigation prior
to entry of the district court’s judgment ordering judicial sale of the property, there
was no deprivation of the Marchants’ due process rights. See Mathews v. Eldrige,
424 U.S. 319, 333 (1976) (“The fundamental requirement of due process is the
opportunity to be heard at a meaningful time and in a meaningful manner.”
(internal quotation marks and citation omitted)). Even though the Marchants did
not receive the process they preferred, they were afforded the process that was
constitutionally required.
Moreover, the district court correctly concluded that the federal tax lien had
not been discharged before the sale of the property. The Marchants argue that their
notice to the United States that they intended to take title to the property together
with the United States’ subsequent failure to redeem its interest in the property
discharged the federal tax lien pursuant to 26 U.S.C. § 7425. This argument is
without merit. As the district court properly determined, the Marchants could not
circumvent the court’s valid judgment ordering sale of the property by utilizing the
procedure for discharging liens under § 7425. The United States was under no
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obligation to redeem the property under § 7425(d) because it had already asserted
its rights through the suit in district court, and the court had already determined the
validity of the federal tax lien and ordered the sale. See I.R.C. § 7403(c)
(providing that in an action brought under section 7403, the court “shall . . .
proceed to adjudicate all matters involved therein and finally determine the merits
of all claims to and liens upon the property”); see also Fox v. Clarys, 738 P.2d 104,
105 (Mont. 1987) (explaining that a notice of lis pendens “generally renders third
persons who subsequently purchase or encumber an interest in the subject property
bound by the final disposition of the action”). Accordingly, the court did not err in
ordering the sale of the property or in denying the Marchants’ motions to set aside
the judgment.
AFFIRMED
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