United States v. Spencer Steele ( 2020 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS NOV 30 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 19-16217
Plaintiff-Appellee, D.C. No.
3:18-cv-00063-MMD-WGC
v.
SPENCER J. STEELE, MEMORANDUM*
Defendant-Appellant,
and
JAY SORDEAN, as the successor trustee of
the Desert Lake Trust created on 10/1/2005;
STEWART TITLE COMPANY, as the
successor in interest to Stewart Title of
Douglas County,
Defendants.
Appeal from the United States District Court
for the District of Nevada
Miranda M. Du, Chief District Judge, Presiding
Submitted November 25, 2020**
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: O’SCANNLAIN, TROTT, and N.R. SMITH, Circuit Judges.
Dissent by Judge N.R. SMITH
Spencer Steele appeals from the district court’s grant of summary judgment
in favor of the United States in this tax-enforcement action. Because the facts are
known to the parties, we repeat them only as necessary to explain our decision.
The district court correctly found that the government may impose tax liens
against the Genoa Street property because the record demonstrates that the Desert
Lake Trust held bare title to the property as Steele’s nominee. See Fourth Inv. LP
v. United States, 720 F.3d 1058, 1066–67 (9th Cir. 2013). It is undisputed that:
Steele’s attorney drafted the documents to create the trust, which Steele hoped
would protect his assets from debt collectors; Steele paid for the trust’s purchase of
the home, yet then paid the trust monthly rent to live in the home under a 99-year
lease agreement; the trust had no income other than Steele’s rent payments and
thus “repaid” Steele for the purchase loan by re-routing his own money back to
him; the trust did nothing with its income other than make monthly loan
repayments to Steele, pay for the home’s taxes, insurance, and maintenance, and
cover the trust’s own administrative expenses; and Steele used the home as his
personal residence. On this record, there is no reasonable dispute that the trust
held title to the home only nominally and that Steele “exercised active [and]
2
substantial control over the property.” Id. at 1070 (internal quotation marks
omitted). 1
Because the Desert Lake Trust acted as Steele’s nominee, we do not
consider whether, for tax purposes, the trust itself may be set aside as a sham.
AFFIRMED.
1
Contrary to the suggestion of the dissent, it appears that the district court
did not fail to look to Nevada law on this question. Rather, the district court
looked to Nevada’s law and found that it does not provide clear guidance on how a
court should evaluate whether a nominee relationship exists. Accordingly, the
court could infer that “if the [Nevada] Supreme Court had occasion to evaluate the
factors relevant to determining nominee ownership under [Nevada] law, it would
adopt the uniform set of factors generally recognized by federal courts.” Fourth
Inv. LP, 720 F.3d at 1069; see also id.(“[F]ederal courts evaluating ill-defined
nominee doctrines in Alabama, Maine, Montana, Nebraska, New Jersey, and
Virginia, have looked to federal law to supply standards for evaluating that state’s
nominee doctrine.” (internal quotation marks omitted)).
3
FILED
United States v. Steele, Case No. 19-16217
NOV 30 2020
N.R. SMITH, Circuit Judge, dissenting:
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
Because I believe the district court should have looked to Nevada law to
determine whether a nominee relationship (or a substantively similar agency
relationship, see Edelstein v. Bank of N.Y. Mellon, 286 P.3d 249, 258–59 (Nev.
2012)) existed between Steele and the Desert Lake Trust, I would remand to the
district court to address this question in the first instance, see United States v.
Sellers, 906 F.3d 848, 855 (9th Cir. 2018).
Moreover, even if the district court applied the correct legal test, I question
whether it viewed all facts and drew all inferences in the light most favorable to
Steele, the nonmoving party, as is required on summary judgment. See Tolan v.
Cotton, 572 U.S. 650, 651 (2014) (per curiam). Indeed, the evidence Steele
highlights in his briefing seems to create a genuine issue of material fact as to
“whether the taxpayer exercised active or substantial control over the property.”
Fourth Inv. LP v. United States, 720 F.3d 1058, 1070 (9th Cir. 2013) (quoting In re
Richards, 231 B.R. 571, 579 (E.D. Pa. 1999)).
Finally, addressing the district court’s alternative finding that the Desert
Lake Trust can be set aside as a sham, I am not convinced, given the standard of
review on a motion for summary judgment, see Tolan, 572 U.S. at 651, that the
evidence supports such a finding.
1