Gordon A. Etzler v. Indiana Department of Revenue

Mar 03 2015, 9:14 am
APPELLANT PRO SE ATTORNEYS FOR APPELLEE
Gordon A. Etzler Gregory F. Zoeller
Gordon A. Etzler & Associates, LLP Attorney General of Indiana
Valparaiso, Indiana
John Lowrey
Deputy Attorney General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Gordon A. Etzler, March 3, 2015
Appellant-Plaintiff, Court of Appeals Cause No.
50A04-1406-PL-285
v.
Appeal from the Marshall Superior
Indiana Department of Revenue, Court
The Honorable Curtis D. Palmer,
Appellee-Defendant.
Judge
Case No. 50C01-1308-PL-39
Robb, Judge.
Case Summary and Issue
[1] Gordon Etzler, pro se, appeals the trial court’s award of summary judgment in
favor of the Indiana Department of Revenue (the “Department”). Etzler raises
two issues for our review: (1) whether the trial court abused its discretion by
denying Etzler’s motion to strike an affidavit designated by the Department in
Court of Appeals of Indiana | Opinion 50A04-1406-PL-285 | March 3, 2015 Page 1 of 9
support of its motion for summary judgment; and (2) whether the trial court
erred by awarding summary judgment to the Department. Concluding Etzler is
entitled to summary judgment, we reverse.1
Facts and Procedural History
[2] On December 20, 2000, the Department filed four tax warrants in Marshall
County for unpaid income taxes owed by Dale Dodson. On July 16, 2010, the
Department renewed its tax warrants in Marshall County, extending their life
for an additional ten years.
[3] On November 16, 2010, Etzler filed a UCC Financing Statement with the
Indiana Secretary of State, asserting an interest in any breeder’s award proceeds
owed to Dodson by the Indiana Horse Racing Commission. On November 17,
2010 and October 13, 2011, the Department levied against two separate
breeder’s awards in the amounts of $7,400 and $4,100, respectively. The funds
were payable to Dodson but were intercepted and withheld by the Indiana State
Auditor prior to deposit in Dodson’s bank account. The funds were used to
satisfy Dodson’s outstanding tax liabilities.
[4] Etzler sent several letters to the Department claiming a right to the breeder’s
award funds and demanding that the funds be paid to him. The Department
1
The resolution of Etzler’s motion to strike does not affect the outcome of this case. Therefore, we focus
only on the issue of which party is entitled to summary judgment. We note, however, that the facts
contained in the affidavit Etzler challenges are the same facts on which he relies in his Appellant’s Brief.
Court of Appeals of Indiana | Opinion 50A04-1406-PL-285 | March 3, 2015 Page 2 of 9
denied that Etzler had a superior interest in the funds and refused his demands
for payment. Etzler sought an administrative review hearing to challenge the
validity of Dodson’s tax liability, but the Department denied Etzler’s request.
Etzler then brought an action with the Indiana Tax Court, but the case was
dismissed for lack of subject matter jurisdiction on November 21, 2011. See
Etzler v. Indiana Dep’t of State Revenue, 957 N.E.2d 706, 709-10 (Ind. T.C. 2011).
[5] On November 11, 2012, Etzler filed a complaint against the Department in
Porter County. On June 7, 2013, the case was transferred to Marshall County
as the proper venue. Once in Marshall County Superior Court, both parties
filed motions for summary judgment and designated evidence in support
thereof. Etzler filed a motion to strike the affidavit of Shawna Cole, which was
designated by the Department in support of its motion for summary judgment.
On April 29, 2014, the trial court granted the Department’s motion for
summary judgment, denied Etzler’s motion for summary judgment, and denied
Etzler’s motion to strike. Etzler then filed a motion to correct error, which the
trial court summarily denied. This appeal followed.
Discussion and Decision
I. Summary Judgment
[6] Etzler contends the trial court erred by granting the Department’s motion for
summary judgment and also by denying his own motion for summary
judgment. When reviewing a trial court’s award of summary judgment, we
apply the same standard as the trial court. Manley v. Sherer, 992 N.E.2d 670,
Court of Appeals of Indiana | Opinion 50A04-1406-PL-285 | March 3, 2015 Page 3 of 9
673 (Ind. 2013). Summary judgment is appropriate where there is no genuine
issue of material fact and the moving party is entitled to judgment as a matter of
law. Ind. Trial Rule 56(C). Our review is limited to facts designated to the trial
court. Meredith v. Pence, 984 N.E.2d 1213, 1218 (Ind. 2013). All factual
inferences are made in favor of the non-moving party, and we resolve all doubts
as to the existence of an issue of material fact against the moving party. Manley,
992 N.E.2d at 673. “The fact that the parties have filed cross-motions for
summary judgment does not alter our standard for review. We consider each
motion separately to determine whether the moving party is entitled to
judgment as a matter of law.” Asklar v. Gilb, 9 N.E.3d 165, 167 (Ind. 2014)
(citation omitted). The appellant has the burden of demonstrating that
summary judgment was erroneous. Amaya v. Brater, 981 N.E.2d 1235, 1239
(Ind. Ct. App. 2013), trans. denied. Questions of statutory construction, which
this case presents, are questions of law that are reviewed de novo. Moryl v.
Ransone, 4 N.E.3d 1133, 1137 (Ind. 2014).
[7] If the Department determines that a person owes tax to the State, then it must
issue a demand notice ordering that person to pay. Ind. Code § 6-8.1-8-2(a). If
the person fails to comply with the demand within ten days, then the
Department may issue a tax warrant for the amount of tax owed plus additional
fees, costs, and penalties. Ind. Code § 6-8.1-8-2(b). The Department may issue
a tax warrant in any county where the person owns property, and a circuit court
clerk receiving a tax warrant shall record the tax warrant as a judgment against
the taxpayer. Ind. Code § 6-8.1-8-2(c) & (d).
Court of Appeals of Indiana | Opinion 50A04-1406-PL-285 | March 3, 2015 Page 4 of 9
(e) When the entry is made, the total amount of the tax warrant
becomes a judgment against the person owing the tax. The judgment
creates a lien in favor of the state that attaches to all the person’s
interest in any:
(1) chose in action in the county; and
(2) real or personal property in the county;
excepting only negotiable instruments not yet due.
Ind. Code § 6-8.1-8-2(e).
[8] The Department may collect the tax debt by utilizing the services of the county
sheriff, see Ind. Code §§ 6-8.1-8-3, or it “may proceed in the same manner that
any debt due the state is collected . . . .” Ind. Code § 6-8.1-8-4. The
Department also has some authority to unilaterally collect without further
judicial proceedings; that authority is provided for as follows:
After a tax warrant becomes a judgment under section 2 of this
chapter, a tax warrant is returned uncollected to the department under
section 3 of this chapter, or the taxpayer does not pay the amount
demanded under section 2(b) of this chapter and the taxpayer has
taken an action under section 2(n) of this chapter to foreclose the lien,
the department may take any of the following actions without judicial
proceedings.
(1) The department may levy upon the property of the taxpayer
that is held by a financial institution . . .
(2) The department may garnish the accrued earnings and
wages of a taxpayer by sending a notice to the taxpayer’s
employer. . . .
(3) The department may levy upon and sell property . . . .
Ind. Code § 6-8.1-8-8.
[9] The parties’ dispute turns on who had priority in the breeder’s award proceeds
and whether the Department had authority to levy the proceeds in the manner
Court of Appeals of Indiana | Opinion 50A04-1406-PL-285 | March 3, 2015 Page 5 of 9
it did. “Under the common law, priority in time gives a lien priority in right.”
Johnson v. Johnson, 920 N.E.2d 253, 256 (Ind. 2010). In other words, where a
debtor owes to multiple creditors, the creditor who first perfects its interest in
the debtor’s property has the right to collect on that property first.
[10] The Department filed its tax warrants in 2000 and renewed them in 2010—well
before Etzler filed his first UCC Financing Statement in 2011. The Department
contends that because its liens were established first, it had a superior interest in
the breeder’s award proceeds and properly exercised its authority to levy on the
proceeds pursuant to Indiana Code § 6-8.1-8-8. The Department’s argument
rests on its conclusory assertion that “Indiana law does not limit the
Department’s ability to levy on property to satisfy judgment liens by county.”
Brief of Appellee at 11 (emphasis added). Our own inspection of the relevant
code sections leads us to a different conclusion.
[11] Although Indiana Code section 6-8.1-8-8 does not specifically reference a
county-based limit on the Department’s collection methods, Indiana Code
chapter 6-8.1-8 is laden with indications that the Department’s tax warrant liens
are effective county-by-county. Our law states that once a judgment on a tax
warrant has been entered that judgment “creates a lien in favor of the state that
attaches to all the person’s interest in any: (1) chose in action in the county; and
(2) real or personal property in the county . . . .” Ind. Code § 6-8.1-8-2(e)
(emphasis added). Moreover, the Department’s assertion that a judgment
entered in one county gives it authority to levy on property statewide is
contradicted by the law’s contemplation that tax warrants may be filed in
Court of Appeals of Indiana | Opinion 50A04-1406-PL-285 | March 3, 2015 Page 6 of 9
multiple counties. See Ind. Code § 6-8.1-8-2(a) (“If the department files a tax
warrant in more than one (1) county, the department is not required to issue
more than one (1) demand notice.”).
[12] The Department relies on Indiana Code section 6-8.1-8-8 for a grant of
authority to levy on property anywhere in the state, but the authority in that
section is conditioned such that it may be exercised “[a]fter a tax warrant
becomes a judgment under section 2 of this chapter . . . .” Ind. Code § 6-8.1-8-8
(emphasis added). We read this statute to mean that the Department’s
authority to collect upon its lien “without judicial proceedings” is limited to the
property “in the county” in which a tax warrant was issued and a judgment
created pursuant to Indiana Code section 6-8.1-8-2. Presumably, the
Department must utilize other methods and resources to collect on property of
the taxpayer in a county other than one in which a tax warrant has been issued.
See, e.g., Ind. Code §§ 6-8.1-8-4 and -8.5.2 It does not appear that that the
Department issued a tax warrant in any county other than Marshall County,
nor did it attempt to enforce the judgment by execution, initiate proceedings
supplementary, or engage in any other action available to it in order to satisfy
2
“When the department collects a judgment arising from a tax warrant, it may proceed in the same
manner that any debt due the state is collected, except as provided in this chapter. The department my
employ special counsel or contract with a collection agency for the collection of a delinquent tax . . . .”
Ind. Code § 6-8.1-8-4(a).
“For purposes of this chapter, a judgment arising from a tax warrant is enforceable in the same manner
as any judgment issued by a court of general jurisdiction. . . . The department may initiate proceedings
supplementary to execution in any court of general jurisdiction in a county in which a judgment arising
from a tax warrant has been recorded.” Ind. Code § 6-8.1-8-8.5(a)-(b).
Court of Appeals of Indiana | Opinion 50A04-1406-PL-285 | March 3, 2015 Page 7 of 9
the judgment. We conclude that because the judgment resulting from the
Department’s Marshall County tax warrant only creates a lien on property “in
the county,” Ind. Code § 6-8.1-8-2(e), and because the Department did not take
measures to establish a lien on property located in any other county, the
Department’s ability to levy on Dodson’s property was limited to Marshall
County.
[13] The Department levied on the breeder’s award proceeds prior to their deposit in
Dodson’s bank account and thus prior to the Department’s ability to collect
directly from a financial institution under Indiana Code section 6-8.1-8-8(1).
The Department does not dispute that the funds were located outside of
Marshall County at the time they were seized. Consequently, we conclude that
the Department did not have authority to levy on the breeder’s award proceeds
and that it is not entitled to summary judgment.
[14] Further, the Department does not dispute that Etzler filed a valid UCC
Financing Statement that perfected his interest in the breeder’s awards.
Therefore, Etzler was entitled to collect the breeder’s award proceeds, and his
motion for summary judgment should have been granted.
Conclusion
[15] We conclude that Etzler had priority in the breeder’s award proceeds and that
the Department did not have statutory authority to levy upon those proceeds in
the manner it did. Therefore, the trial court erred by awarding summary
Court of Appeals of Indiana | Opinion 50A04-1406-PL-285 | March 3, 2015 Page 8 of 9
judgment to the Department and denying Etzler’s motion for summary
judgment.
Reversed.
Bailey, J., and Brown, J., concur.
Court of Appeals of Indiana | Opinion 50A04-1406-PL-285 | March 3, 2015 Page 9 of 9