JUDITH G. DEIN, Magistrate Judge
I. INTRODUCTION
This interpleader action was initiated in Worcester County Superior Court by Plaintiff Associates Financial Services, Inc. ("CitiFinancial") following a foreclosure on real property situated at 3 Bluff Avenue, Mashpee, Massachusetts ("the Property"), the title to which was held by the Lawson Family Trust ("the Trust"). The interpleader defendants are Donna S. Lawson, both individually and as trustee of the Trust ("Lawson"), and the Internal Revenue Service of the United States of America ("the Government"). The case was removed to this court on September 19, 2001.
On January 14, 2002, this court allowed CitiFinancial Mortgage Company, Inc. f/k/a Associates Financial Services of America, Inc.'s Motion to Amend Complaint to Substitute Named Plaintiff, pursuant to Fed.R.Civ.P. 15. CitiFinancial bought out Associates Financial Services of America, Inc., and the rights in the involved transaction were transferred to CitiFinancial.
Lawson has moved for summary judgment pursuant to Fed.R.Civ.P. 56(b) (the "Motion"). (Docket #24). The Government, in its opposition to the Motion, has requested that it be allowed to conduct discovery as provided in Fed.R.Civ.P. 56(f) (the "Opposition"). (Docket #29). For the reasons detailed below, this court recommends to the District Court judge to whom this case is assigned that the motion for summary judgment be DENIED without prejudice, as it 15 premature.
II. STATEMENT OF FACTS
When ruling on a motion for summary judgment, the court must "scrutinize the record in the light most favorable to the party opposing summary judgment and indulge all reasonable inferences in that party's favor." Lohnes v. Level 3 Communications, Inc., 272 F.3d 49, 52 (1st Cir. 2001). By applying this standard to the instant case, the relevant facts are as follows:
Although the history of the ownership of the Property is not clearly presented, it appears Donna Lawson and her husband, James T. Lawson, acquired the Property, held jointly, in 1976. See Motion at 1. In 1980 or 1981, title was conveyed to Donna Lawson, individually Id.; Answer of the Defendant Donna S. Lawson (Docket #2) at ¶ 18. On July 12, 1990, Lawson, individually, executed a mortgage on the Property in the amount of $100,000 in favor of CitiFinancial's predecessor. Amended Complaint at ¶ 2. In 1991, the Property was transferred to the Lawson Family Trust, to which Lawson served as trustee. Answer of the Defendant Donna S. Lawson at ¶ 18. Following a default on the mortgage, CitiFinancial's predecessor foreclosed on August 9, 2000, and sold the Property at public auction for $170,000.00. Amended Complaint at ¶ 6.
There was a surplus following the foreclosure sale of approximately $40,000.00. Id. at ¶ 7. Plaintiff contends that Lawson, and James Lawson, as the former owners of the equity of redemption, have a potential claim to the surplus. Id. at ¶¶ 8, 9. However, the Government may also have an interest in the surplus by virtue of a Notice of Federal Tax Lien filed on December 7, 1992 with the Barnstable County Registry of Deeds against James T. Lawson in the amount of $88,806.35. Opposition at 2. On February 13, 2001, plaintiff filed a Complaint in Interpleader with the Worcester Superior Court to adjudicate the claims of the defendants to the surplus. The Government removed the case to this court.
Procedural Background
On or about November 9, 2001, James Lawson filed a "Motion to Dismiss As It Relates to James Lawson" on the grounds that he has no interest in the Property or proceeds. (Docket #9). The Government filed a Response on or about November 16, 2001, in which it did not oppose the dismissal of James Lawson provided its rights were not prejudiced by his dismissal. (Docket #12).
A Rule 16(b) conference was held on November 19, 2001. Neither Donna nor James Lawson appeared, and they were defaulted by the court. (Docket #13). On that same day, November 19, 2001, Donna Lawson mailed a document entitled "Response of Defendant Donna S. Lawson Individually and as Trustee of the Lawson Family Trust to United States of America (Internal Revenue Service) Motion to Dismiss Action" ("Response and Motion to Dismiss"). (Docket #14). The document was received by the court on November 20, 2001, after the Lawsons had been defaulted for failure to appear for the Rule 16(b) conference.
On December 12, 2001, Lawson filed a Motion to Set Aside Entry of Default, along with a supporting affidavit. (Docket #18, 19). On December 21, 2001, the court (by Stearns, J.) allowed the motion to set aside entry of default. James Lawson's (unopposed) motion to dismiss was also granted on December 21, 2001. No responsive pleading was ever filed to Donna Lawson's "Response and Motion to Dismiss" and no action on the pleading was taken by the court.
It appears that this motion was not served on the other parties until after it was allowed, generating additional motions which are not relevant here.
Meanwhile, in October 2001, the plaintiff had served interrogatories and a document request on Lawson, but no responses were ever filed, nor were documents produced. On December 18, 2001, the Government served a First Request for Production of Documents on Lawson, but Lawson objected to each and every request on the grounds that (1) the Government already has some of the requested documents and (2) that neither Donna Lawson nor the Lawson Family Trust have a direct or indirect relationship with the Internal Revenue Service's claim against James Lawson. Declaration of Dept. of Justice Atty. Stephen J. Turanchik Pursuant to Rule 56(f) ("Declaration") at ¶ 7 (Docket #29); Response of Def. Donna S. Lawson as Trustee of the Lawson Family Trust and Individually to Produce Documents at ¶¶ 1-15 (Docket #20).
In the beginning of January 2002, Lawson filed the instant motion for summary judgment. Therein, she contends that the Government's claim to the surplus should be dismissed because it never responded to her motion to dismiss. In addition, she reiterates her contention (also raised in the Response and Motion to Dismiss) that "the United States Government has failed to provide any credible evidence or `theory' that would allow him [sic] to backdate his [sic] claim to 1980, the last date on record of ownership by the Defendant James Lawson[.]" Motion at 3. As noted above, in its Opposition, the Government requested additional time, pursuant to Fed.R.Civ.P. 56(f), to conduct discovery.
On February 14, 2002, the Government moved to compel the production of documents by Lawson. (Docket #35). No opposition was filed. CitiFinancial had also moved to compel Lawson to answer interrogatories and respond to its document request. (Docket #28). Lawson had objected to CitiFinancial's motion. (Docket #30). These discovery motions, along with the motion for summary judgment, were scheduled for hearing on April 29, 2002. Lawson failed to appear at the hearing. After a review of the pleadings and after consideration of argument of counsel for CitiFinancial and the Government, the motions to compel were allowed. Lawson is to answer the interrogatories and produce documents responsive to the outstanding document requests by May 21, 2002.
III. DISCUSSION
A. Standard of Review
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The movant bears the burden of establishing an absence of any genuine issue of material fact, the record must be read in the light most favorable to non-movant, and all reasonable inferences must be drawn in the non-movant's favor. Lohnes v. Level 3 Communication, Inc., 272 F.3d at 52 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986)). The entry of summary judgment is mandated "after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. at 322, 106 S.Ct. at 2552.
Rule 56(f) authorizes the denial of a motion for summary judgment where the record is incomplete. As the Rule provides:
Should it appear from the affidavits of a party opposing the motion that the party, cannot for reasons stated, present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.
Fed.R.Civ.P. 56(f). The decision whether a party should be given additional time for discovery to respond to a motion for summary judgment is largely discretionary with the court, guided by relevant case law. As described in Simas v. First Citizens' Fed. Credit Union, 170 F.3d 37 (1st Cir. 1999):
Normally, a Rule 56(f) motion must: (1) be made within a "reasonable time" after the filing of the summary judgment motion; (2) place the district court on notice that movant wants the court to delay action on the summary judgment motion, whether or not the motion cites Rule 56(f); (3) demonstrate that movant has been diligent in conducting discovery, and show "good cause" why the additional discovery was not previously practicable with reasonable diligence; (4) "set forth a plausible basis for believing that specified facts, susceptible of collection within a reasonable time frame, probably exist," and "indicate how the emergent facts, if adduced, will influence the outcome of the pending summary judgment motion"; and (5) attest that the movant has personal knowledge of the recited grounds for the requested continuance.
Id. at 45-46, n. 4 (citations omitted). Applying these standards to the instant case, this court finds that the Government has met its burden and recommends that the motion for summary judgment be denied as premature.
B. Analysis
As an initial matter, I do not find the fact that no formal response was filed to Lawson's Response and Motion to Dismiss to be controlling. It is unclear from the pleading that it is actually a motion to dismiss, as opposed to a "response," with a prayer for relief that the Government's claim be dismissed. The pleading itself arrived when Lawson was in default and she took no affirmative steps to renew the "motion" after the default was removed. The court was never affirmatively asked to and did not rule on the "motion." Perhaps most significantly, the same legal issues are raised by the pending motion for summary judgment. The Government should, therefore, be given the opportunity to address the merits.
The Government has established that it should be given time to conduct discovery in order to address the merits of Lawson's claim. The Government has met the guidelines set in Simas, as quoted above.
There is no question that the request for additional time was timely, having been made within two weeks of the motion for summary judgment, and that it adequately puts the court on notice that the Government believes the motion for summary judgment is premature. See Resolution Trust Corp. v. N. Bridge Assocs., Inc., 22 F.3d 1198, 1204 (1st Cir. 1994) ("a party must invoke Rule 56(f) within a reasonable time following receipt of a motion for summary judgment"). Further, as detailed in the Government's Opposition and the supporting Declaration, the Government (as well as CitiFinancial) has been diligent in seeking discovery, although Lawson has been non-responsive and has not produced any documents or responded to outstanding interrogatories.
The parties' positions reflect a dispute as to whether facts sought by the Government will affect the outcome of the summary judgment motion. In her motion, Lawson argues that since James Lawson has had no interest in the subject property since around 1980, he could not possibly have any interest in the surplus from the public auction of the subject property. Consequently, the Government could not have any claim to the surplus by way of a tax lien against James Lawson. See Motion at 3. However, the Government has identified several theories which may support its claim to the surplus funds from the sale of the subject property. As detailed in the Declaration, and without in any way pre-judging any legal arguments, the federal tax lien may attach to the proceeds to the extent that James Lawson had a beneficial interest in the Lawson Family Trust, or if the Lawson Family Trust was the alter ego or nominee of James Lawson, or to the extent that James Lawson made payments for the benefit of the real property. See Declaration at ¶ 6. See also United States v. Murray, 217 F.3d 59, 65 (1st Cir. 2000) (federal tax lien may attach to trust property); LiButti v. United States, 107 F.3d 110, 119 (2d Cir. 1997) (tax lien may be enforced against assets held by "alter ego" or "nominee"); Mun. Trust Sav. Bank v. United States, 114 F.3d 99, 101 (7th Cir. 1997) (tax lien "follows any property substituted for what the taxpayer owned, provided the chain of substitution can be traced"). The information requested by the Government in its outstanding document request is directed to obtaining relevant information. The information sought certainly may influence the outcome of the summary judgment motion.
The Government raised these theories in its response to James Lawson's motion to dismiss as well. (Docket #12).
The Government seeks documents (1) from the Lawson Family Trust such as the trust document, accountings, schedules of beneficiaries, federal, state and local tax returns, mortgage statements, bank statements, and correspondence, (2) from Donna Lawson such as bank statements, federal and state income tax returns, W-2 and 1099 forms, and correspondence with the IRS, and (3) mortgage statements, utility and maintenance bills and leases received by the Lawson Family Trust or Donna S. Lawson relating to the subject property. Gov't's First Request for Production of Documents, at ¶¶ 1-15.
Finally, the Government, by filing the Declaration, has satisfied the requirement described in Simas, 170 F.3d at 45-46 n. 4, that the movant have "personal knowledge of the recited grounds for the requested continuance." In sum, since the Government has not had an adequate opportunity to discover facts necessary to oppose summary judgment at this time, Lawson's motion should be denied. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n. 5, 106 S.Ct. 2505, 2511 n. 5, 91 L.Ed.2d 202 (1986).
IV. CONCLUSION
For the reasons stated herein, this court recommends that the Motion for Summary Judgment (Docket #24) be DENIED.
The parties are hereby advised that under the provisions of Rule 3(b) of the Rules for United States Magistrates in the United States District Court for the District of Massachusetts, any party who objects to these proposed findings and recommendations must file a written objection thereto with the Clerk of this Court within 10 days of the party's receipt of this Report and Recommendation. The written objections must specifically identify the portion of the proposed findings, recommendations or report to which objection is made and the basis for such objections. The parties are further advised that the United States Court of Appeals for this Circuit has repeatedly indicated that failure to comply with this rule shall preclude further appellate review. See Keating v. Sec'y of Health Human Servs., 848 F.2d 271, 275 (1st Cir. 1988); United States v. Valencia-Copete, 792 F.2d 4 (1st Cir. 1986); Park Motor Mart, Inc. v. Ford Motor Co., 616 F.2d 603, 604-605 (1st Cir. 1980); United States v. Vega, 678 F.2d 376, 378-379 (1st Cir. 1982); Scott v. Schweiker, 702 F.2d 13, 14 (1st Cir. 1983); see also Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985).Accord Phinney v. Wentworth Douglas Hosp., 199 F.3d 1, 3-4 (1st Cir. 1999); Henley Drilling Co. v. McGee, 36 F.3d 143, 150-151 (1st Cir. 1994); Santiago v. Canon U.S.A. Inc., 138 F.3d 1, 4-5 (1St Cir. 1998).