Foreign Property

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Norbert P. Czajkowski, M.D., et al., Plaintiffs v. Tindall & Associates, P.C. Roll-Over Profit Sharing Plan, et al., Defendants Tindall & Associates, P.C., et al., Cross-Plaintiffs v. The United States of America , Cross-Defendants

U.S. District Court, East. Dist. Mich. , So. Div., 94-75374-DT, 6/8/98

[Code Sec. 6321 ]

Liens and levies: Property subject to: Escrow account.--The government had a lien on attorneys' fees that had been awarded to a delinquent taxpayer in an unrelated case and paid into an escrow fund. The lien attached to all of the taxpayer's property and rights to property.

[Code Sec. 6672 ]

Liens and levies: Trust fund recovery penalty: Application of funds: Failure to object.--A delinquent taxpayer could designate application of levied funds to his trust fund recovery penalty because the government failed to object to his motion to do so.

MEMORANDUM OPINION AND ORDER

I. INTRODUCTION

ZATKOFF, District Judge:

This matter is before the Court on cross-defendant United States of America's (hereinafter "government") "Motion for Summary Judgment in Interpleader Action," and "Motion to Dismiss Cross-Complaint of Tindall & Associates Roll Over Profit Sharing Plan and Michael Tindall." Cross-plaintiffs (hereinafter "Tindall") responded to both motions and the government did not reply. Also before this Court is cross-plaintiff Tindall's "Motion to Apply Escrowed Funds Balance." The government did not respond. The Court finds that the facts and legal arguments are adequately presented in the briefs submitted, and the decisional process would not be significantly aided by oral argument. Therefore, pursuant to E.D. Mich. Local R. 7.1(e)(2), it is hereby ORDERED that the motion be resolved on the briefs submitted. For the reasons set forth below, the government's motions are GRANTED and Tindall's motion is also GRANTED.

II. BACKGROUND

On November 21, 1995, Vincent DiLorenzo deposited $28,766.33 in an interest-bearing escrow account with the Court (hereinafter "interpled funds"). The interpled funds represent an award of attorneys' fees against DiLorenzo in Macomb County Circuit Court. The government, Home Insurance Company (hereinafter "Home Insurance"), and Tindall each claimed a right to the interpled funds. On August 28, 1997, this Court held that Home Insurance is entitled to $15,990.00 of the interpled funds. The instant motion concerns the funds remaining in the escrow account.

The government claims that it is entitled to the remaining interpled funds based on a tax lien by the Internal Revenue Service (hereinafter "IRS") against Tindall and his law firm. The amount of the lien exceeds the remaining interpled funds. Government's Brief, p 3. Tindall responded and does not dispute that the government has a valid tax lien.

III. GOVERNMENT'S MOTION FOR SUMMARY JUDGMENT IN INTERPLEADER ACTION

A. STANDARD OF REVIEW

Under Rule 56, summary judgment is appropriate, after adequate time for discovery, only where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with 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." See e.g. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2552 (1986).

A genuine issue of material fact exists when "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2511 (1986) (citations omitted). The Supreme Court has stated that the standard the Court must apply in determining whether summary judgment is appropriate is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 2512.

In applying this standard, the Court must view all materials offered in support of a motion for summary judgment in the light most favorable to the non-moving party. Id. at 2510. Where the non-moving party has failed, however, to present evidence on an essential element of their case, they have failed to meet their burden and all other factual disputes are irrelevant and thus summary judgment is appropriate. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2553 (1986); Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1356 (1986).

B. DISCUSSION

"Interpleader is a procedural device which enables a person holding money or property, in the typical case conceded to belong in whole or in part to another, to join in a single suit two or more persons asserting mutually exclusive claims to the fund." Gaines v. Sunray Oil Co., 539 F.2d 1136, 1142 (8th Cir. 1976) (citing 3A Moore 's Federal Practice ¶22.02[1].

Section 6321 of the Internal Revenue Code states that:

[i]f any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.

26 U.S.C. §6321. The Supreme Court has consistently held that the federal lien attaches to all property and rights to property belonging to a delinquent taxpayer as of the date of the assessment or acquired by him while the lien is in effect. See United States v. National Bank of Commerce [85-2 USTC ¶9482], 472 U.S. 713, 719-20 (1985). In the instant case, the interpled funds represent the proceeds of Tindall's state court action for attorneys fees. Tindall remains delinquent on the payment of certain income taxes assessed between 1989 and 1993. Therefore, the government has a lien for the value of the assessed penalties on all of Tindall's property and rights to property, including the Tindall's interest in the remaining interpled funds.

Accordingly, the government's motion for summary judgment in interpleader action is GRANTED and the remaining interpled funds are awarded to the government.

II. [sic] TINDALL'S MOTION TO APPLY ESCROWED FUNDS

Tindall filed a Motion to Apply Escrowed Funds Balance in which he claims that "[a]s a voluntary payment, Defendants Tindall have the right to designate application of this amount among the amounts claimed due and hereby designate application of the funds to the Trust Fund Recovery Penalty pursuant to 28 U.S.C. 6672 [sic] . . ." Although Tindall does not identify from where he derives "the right to designate application of [the interpled funds]", the government did not respond and thus does not dispute Tindall's claim of right. Accordingly, Tindall's motion to designate application of the funds to the Trust Fund Recovery Penalty as sessed by the government pursuant to 26 U.S.C. 6672 is GRANTED.

III. [sic] GOVERNMENT'S MOTION TO DISMISS CROSS-COMPLAINT OF TINDALL & ASSOCIATES ROLL OVER PROFIT SHARING PLAN AND MICHAEL E. TINDALL

Finally, the government argues that this Court should dismiss Tindall's cross-complaint because the claims raised therein are either moot or have otherwise been decided. In Count I and II of the Cross-Complaint, the Tindall & Associates Roll Over Profit Sharing Plan (hereinafter "Plan") and Tindall seek declaratory judgment, an injunction, and damages because the IRS failed to properly issue a statutory notice of deficiency as required by law. However, in a March 19, 1997 Memorandum Opinion and Order, this Court held that the government properly issued a notice of deficiency to Tindall as required under 26 U.S.C. §§6212 and 6213. Accordingly, this Court has already disposed of Tindall's Counts I and II.

Tindall claims in Count III that he is entitled to a declaratory judgment, injunction, and damages because the funds interpled into the registry of the Court by Dr. Czajkowski (hereinafter "Czajkowski funds") belonged to the Plan, and that the levies issued by the IRS on those funds were void. However, this Court agrees with the government that this claim is now moot. Judge LaPlata released the Czajkowski funds to Tindall on February 15, 1995. Tindall immediately spent all of those funds on a BMW, computers, furniture, vacations, and bills. Government's Brief, p 3. On March 29, 1996, Judge LaPlata ordered that Tindall redeposit the dissipated Czajkowski funds. ¹ As of September 8, 1997, Tindall has not redeposited any funds. The only funds remaining are the interpled funds relating to the settlement between DiLorenzo and Tindall. The Plan has no claim to the interpled DiLorenzo funds. Accordingly, Count III is moot as there are no funds to which the Plan's interest could attach. Therefore, the government's motion to dismiss the cross-complaint is GRANTED.

IV. [sic] CONCLUSION

For the reasons discussed above, IT IS ORDERED that the government's Motion for Summary Judgment In Interpleader Action is GRANTED. IT IS FURTHER ORDERED that Tindall's Motion to Apply Escrowed Funds Balance is GRANTED. Finally, IT IS FURTHER ORDERED that the government's Motion to Dismiss Cross-Complaint of Tindall & Associates Roll Over Profit Sharing Plan and Michael E. Tindall is GRANTED. LET JUDGMENT BE ENTERED ACCORDINGLY.

IT IS SO ORDERED.

¹ On February 13, 1995, Judge LaPlata entered an "Order Granting in Part and Denying in Part Motion to Amend or for Reconsideration and Vacating Order of Summary Judgment on Corss Complaint." In that Order, Judge LaPlata found that the IRS did not send a proper notice of assessment and demand for payment of taxes. On February 15, the Court released the funds to Tindall because of the failure to send proper notice. On March 26, 1996, the Court found that a notice of assessment and demand for payment only applies when the IRS seeks to collect taxes in an administrative proceeding and is irrelevant in a judicial proceeding. See United States v. Berman [87-2 USTC ¶9460], 825 F.2d 1053 (6th Cir. 1987). Therefore, Judge LaPlata granted the government's motion to alter or amend the February 13, 195 Order and directed Tindall to redeposit the released funds into the escrow account.

 

 

 

Francis L. Cramer v. Robert Burnham, New Hampshire Savings Bank, United States Internal Revenue Service

U.S. District Court, Dist. N.H. , Civ. 91-100-S, 1/22/92

[Code Sec. 6321 ]

Lien for taxes: Pre-judgment attachment: Priority: Escrow account.--The president and principal shareholder of a bankrupt corporation had sufficient legal interest in an escrow account to entitle the IRS to a lien for unpaid corporate taxes. The taxpayer retained legal title to the escrow account despite a bank's competing claim to it for the balance on a line-of-credit loan. The bank had not obtained a judgment against the taxpayer. Further, the tax lien took priority over the bank's competing claim because the bank did not have a perfected security interest in the escrow account. The language of the escrow agreement showed that the parties did not intend to enter into a secured transaction. Instead, the language of the escrow agreement revealed that the parties intended the account to replace the attachment the bank had against the taxpayer's property. The taxpayer agreed to deposit the proceeds from the sale of his house in the account in exchange for the bank's release of its attachment to the property.

Michael F. Merra, Sullivan & Gregg, P.A., Nashua, N.H. 03060-3468, Steven N. Fuller, Banc One New Hampshire Asset Management Corp., Manchester, N.H. 03105-1197, for plaintiff. Robert Burnham, Duxbury, Mass. 02331, pro se. Daniel P. Luker, Sulloway & Hollis, Concord, N.H. 03302-1256, Robert E. Kirby, Gallagher, Callahan & Gartrell, Concord, N.H. 03302, for defendant (New Hampshire Savings Bk.). Gretchen Leah Witt, 55 Pleasant St., Concord, N.H. 03301-0001, Scott H. Harris, Department of Justice, Washington, D.C. 20530, for defendant (IRS).

ORDER

STAHL, District Judge:

In this interpleader action, plaintiff Francis Cramer ("Cramer"), escrow agent for defendant Robert Burnham ("Burnham"), his wife, Susan Burnham, and the New Hampshire Savings Bank ("Bank"), seeks to determine how certain funds in an escrow account should be distributed. ¹ The central dispute is between Bank, which is named alongside Burnham and his wife on the escrow account, and defendant United States Internal Revenue Service ("IRS"), which seeks the escrowed funds to satisfy a tax lien against Burnham. Currently before the Court are Bank's and IRS' motions for summary judgment. ²

1. Background

On July 13, 1987, Atlantic Micro, Inc. ("Atlantic"), a New Hampshire corporation located in Nashua , New Hampshire , negotiated a $250,000 line of credit with Bank. See Defendant IRS's Motion for Summary Judgment ("IRS Motion") at Exhibit B, entitled "Line of Credit Agreement." Although this credit line was secured by the assets of Atlantic, Burnham, the president and principal shareholder of Atlantic , personally guaranteed the corporate indebtedness. See id.

On or about June 6, 1988, Atlantic filed for bankruptcy. See IRS Motion at Exhibit A, entitled "Writ of Summons," at ¶6. By order dated July 26, 1988, the United States Bankruptcy Court for the District of New Hampshire granted Bank the right to take possession of and liquidate Atlantic 's assets. See id. at ¶7. Prior to completing the liquidation of Atlantic, Bank commenced an action in the Merrimack County Superior Court to reduce to judgment Burnham's personal guaranty of Atlantic 's indebtedness. ³ See Memorandum in Support of the United States ' Motion for Summary Judgment ("IRS Brief") at ¶7.

On September 7, 1988, as security for Bank's action against Burnham, the Merrimack Superior Court granted Bank's petition for an ex parte attachment on the Nashua property in the amount of $135,000, the alleged net balance due on the loan. See IRS Motion, Exhibit C, entitled "Petition for Ex Parte Attachment." Subsequently, in February, 1989, a third party sought to purchase the Nashua property. As counsel to Burnham, Cramer negotiated with Bank to release the Nashua property attachment in exchange for the deposit in escrow of $25,138.79, the equity proceeds from the sale of the property. See Defendant Bank's Motion for Summary Judgment ("Bank Motion") at Exhibit B, letters dated February 8, 1989, and February 14, 1989. The escrow account was subject to an agreement that the escrowed funds be held, pending resolution of Bank's action against Burnham, in the name of "Francis L. Cramer, Esq. as escrow agent for Robert & Susan Burnham and New Hampshire Savings Bank." See Bank Motion at Exhibit B, letter dated February 14, 1989.

On August 7, 1989, the IRS assessed Burnham as the president of Atlantic for unpaid corporate taxes, and imposed a $29,222.74 penalty under 26 U.S.C. §6672 .See IRS Motion at Exhibit E. On August 18, 1989, the IRS served a Notice of Levy in the amount of $33,311.34 upon Cramer's law firm. See id. at Exhibit F. This levy demanded that Cramer remit to the United States "[a]ll property, rights to property, money, credits, and bank deposits now in your possession and belonging to this taxpayer (or for which you are obligated) and all money or other obligations you owe this taxpayer . . . [.]" See id. Additionally, on August 21, 1989, the IRS filed a Notice of Federal Tax Lien in United States District Court for the District of Massachusetts "on all property and rights to property" belonging to Burnham. See id. at Exhibit G.

On January 31, 1991, under the threat of sanctions from the IRS for repeated refusal to release the escrowed funds, Cramer requested that the Merrimack County Superior Court assume custody and control of these escrowed funds. See Verified Bill of Interpleader by Francis L. Cramer, Escrow Agent/Trustee at ¶¶1214. On March 5, 1991, the IRS removed the Cramer Interpleader to this Court.

2. Defendant Bank's and Defendant IRS' Opposing Motions for Summary Judgment

In its motion for summary judgment, the IRS asserts that its tax lien on the escrowed funds has priority over Bank's prejudgment claim to those funds. Bank moves for summary judgment, arguing that the tax lien cannot attach to the escrow account because Burnham does not have a sufficient property interest in the funds or, in the alternative, that Burnham gave Bank a security interest that has priority over the IRS tax lien.

The function of summary judgment is to cut through the formal allegations of facts in the pleadings and determine whether a trial is necessary. See Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir. 1975), cert. denied, 425 U.S. 904 (1976); Rule 56, Fed. R. Civ. P. Advisory Committee's note to 1963 amendment. The burden is upon the moving party to establish the lack of a genuine, material, factual issue, Finn v. Consolidated Rail Corp., 782 F.2d 13, 15 (1st Cir. 1986), and the Court must view the record in the light most favorable to the nonmovant, according the nonmovant all beneficial inferences discernible from the evidence. See Caputo v. Boston Edison Co., 924 F.2d 11, 13 (1st Cir. 1991). However, once the movant has made a properly supported motion for summary judgment, the adverse party "must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (citing Rule 56(e), Fed. R. Civ. P.).

The IRS acquired its lien on the escrow account pursuant to 26 U.S.C. §6321 , which provides in pertinent part:

If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount . . . shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.

"The statutory language 'all property and rights to property,' appearing in §6321 . . . is broad and reveals on its face that Congress meant to reach every interest in property that a taxpayer might have." United States v. Nat. Bank of Commerce [85-2 ustc ¶9482 ], 472 U.S. 713, 719-20 (1985). Because a §6321 lien attaches not only to "property" but also to "rights to property," the statutory language "plainly contemplate[s] that a taxpayer's interest in property may be less than full ownership." Id. at 730. "Stronger language could hardly have been selected to reveal a purpose to assure the collection of taxes." Id. at 720.

"When the government asserts a tax lien against a taxpayer's property, the threshold inquiry is directed to the nature of the legal interest the taxpayer has in the property in question." United States v. V & E Eng'g & Constr. Co., Inc. [87-1 USTC ¶9355 ], 819 F.2d 331, 333 (1st Cir. 1987); see also Nat. Bank [85-2 USTC ¶9482 ], 472 U.S. at 722; Rodriguez v. Escambron Dev. Corp. [84-2 USTC ¶9698 ], 740 F.2d 92, 97 (1st Cir. 1984). To determine whether the taxpayer has a sufficient legal interest in the property to satisfy this threshold inquiry, the Court must look to state law. Nat. Bank [85-2 USTC ¶9482 ], 472 U.S. at 722; see also V&E Eng'g & Constr. Co. [87-1 USTC ¶9355 ], 819 F.2d at 333. However, " '[o]nce it has been determined that state law creates sufficient interests in the taxpayer to satisfy the requirements of the statute, state law is inoperative,' and the tax consequences thenceforth are dictated by federal law." Nat. Bank, supra, at 722.

Here, Bank asserts two alternative arguments. First, Bank argues that, because Burnham has no right to withdraw funds from the escrow account, he has no property rights under New Hampshire law to the escrowed funds. As a result, Bank contends that the IRS tax lien cannot attach to the escrow account. Second, Bank asserts that it has a perfected security interest in the escrow account which has priority over the IRS tax lien. The Court finds both of Bank's arguments unpersuasive.

While the Court can locate no authority in New Hampshire on the question of what property rights a depositor has in an escrow account, case law in other jurisdictions uniformly holds that legal title to property placed in escrow remains in the depositor until the condition of the escrow is fulfilled. See, e.g., Marianas Pub. Land Trust v. N. Marianas Islands, 838 F.2d 341, 345 (9th Cir. 1988) (construing California law) (citing 30A C.J.S. Escrows §9 (1965)); Matter of Newcomb, 744 F.2d 621, 626 (8th Cir. 1984) (construing Missouri law); Schupack v. Covelli, 498 F. Supp. 704, 706 (W.D. Pa. 1980) (construing Pennsylvania law); In re AGSY, Inc., 120 B.R. 313, 318 (Bankr. S.D.N.Y. 1990) (construing Florida law); Roberts v. Porter, Davis, Saunders, & Churchill, 193 Ga. App. 898, --, 389 S.E.2d 361, 364 (Ga. Ct. App. 1989); DeBoer v. Oakbrook Home Ass'n, Inc., 218 Neb. 813, --, 359 N.W.2d 768, 771 (1984).

In the instant case, therefore, Burnham retains legal title to the escrow account until the condition of the escrow, i.e., Bank obtains judgment in its case against Burnham, is fulfilled. As it is undisputed that Bank has not yet obtained judgment in its case against Burnham, the Court finds that Burnham has a sufficient property interest in the escrowed funds to satisfy the threshold inquiry under 26 U.S.C. §6321 . ⁴ Thus, the IRS tax lien can attach to the escrow account despite Bank's competing claim to the account. See Nat. Bank [85-2 USTC ¶9482 ], 472 U.S. at 727 (holding that where taxpayer has rights in joint bank account sufficient to satisfy §6321 , the fact that two other named parties on the account "may have competing claims to the accounts is not a legitimate statutory defense").

Bank's argument that it has a security interest in the escrow account is equally unavailing. Under New Hampshire law, a "security interest" is defined as "an interest in personal property or fixtures which secures payment or performance of an obligation . . . [.]" See RSA 382A: 1-201(37). A security interest is created by agreement of the parties. See RSA 382A: 9-201, 9-203. Thus, as a threshold matter, the Court must look to the language of the agreement to determine whether the parties intended to enter into a secured transaction. Cf. Restaurant Operators Inc. v. Jenney, 128 N.H. 708, 710, 519 A.2d 256, -- (1986) ("In reviewing a contract[, a court must] give its language the interpretation that best reflects the parties' intentions."). See also Matter of Equitable Dev. Corp., 617 F.2d 1152, 1155 n.2 (5th Cir. 1980) ("The principal test of whether a transaction comes under Article Nine is whether the transaction is intended by the parties to create a security interest.") (construing Florida law); In re Airwest Int'l, 70 B.R. 914, 919 (Bankr. D. Haw. 1987) ("Although the U.C.C. does not specifically state that intention to create a security interest is an element necessary to creating a valid security agreement, it is clear that intention to do so is required."); J. White & R. Summers, Handbook of the Law Under the Uniform Commercial Code §23 -3, at 905 (2d ed. 1980) ("The court must first resolve as a question of law, whether the language embodied in the writing objectively indicates that the parties may have intended to create or provide for a security interest.").

In the instant case, therefore, the Court must look at the language of the escrow agreement to determine whether Burnham and Bank intended to "secure the payment or performance of an obligation." See RSA 382A: 1-201(37). The escrow agreement is embodied in two letters, one on February 8, 1989, from Cramer to Bank's counsel, Mr. Daniel Luker, and another on February 14, 1989, from Mr. Luker to Cramer. In the February 8, 1989 letter, Cramer included the following request:

It is our request that New Hampshire Savings Bank supply a release of attachment so that the closing can take place as scheduled on February 15, 1989. In return the Burnhams agree to escrow the equity proceeds from the sale, in an interest bearing account, pending resolution of the NHSB suit against them.

See Bank Motion at Exhibit B. In response, Mr. Luker wrote the following release agreement:

Enclosed is an executed release of New Hampshire Savings Bank's attachment on the Burnham real estate. In accordance with our discussions, this release is given to you in escrow, and is not [to] be given effect or recorded until you have established and funded the cash escrow account (the "Account") which is to replace the attachment.

It is my understanding that you will open the Account at the Indian Head Bank in your office building in Nashua, that the Account will be in the name of "Francis L. Cramer, Esq. as escrow agent for Robert & Susan Burnham and New Hampshire Savings Bank," and that the starting balance of the Account (to be deposited from the Quinn-Burnham closing proceeds) will be $25,138.79 . . . [.]"

See Bank's Motion at Exhibit B.

The language of these two letters reveals that Burnham agreed to deposit the proceeds from the sale of his house in an escrow account in exchange for Bank's release of the attachment. Neither letter contains language which suggests that the parties intended the escrow account to "secure the payment or performance of an obligation." See RSA 382A: 1-201(37). Instead, the letters reveal that the parties intended the escrow account to "replace the attachment." See Bank's Motion at Exhibit B. Compare In re Austin , 73 B.R. at 77-8 ("The transfer of the attachment to the escrow account was a practical and expedient method of reducing the homestead to cash. It did not change the substantive nature of [the attachment] . . . [.]").

At best, therefore, Bank's claim to the escrow account is in the form of a pre-judgment attachment. And it is well settled that an IRS tax lien has priority over a pre-judgment attachment. See, e.g., United States v. Acri [55-1 USTC ¶9138 ], 348 U.S. 211, 214 (1955); United States v. Security Trust & Savings Bank [50-2 USTC ¶9492 ], 340 U.S. 47, 50 (1950). Thus, the Court finds that Bank does not have a perfected security interest in the escrow account, ⁵ or a claim to the account, which would defeat the IRS lien.

3. Conclusion

In sum, the Court finds that Burnham has property rights in the escrow account sufficient to entitle the IRS to a lien under 26 U.S.C. §6321 , and that Bank does not have a perfected security interest in the escrow account, or a claim to the account, which would defeat the IRS tax lien. Accordingly, for the reasons herein stated, IRS' motion for summary judgment [document no. 10] is granted, and Bank's motion for summary judgment [document no. 12] is denied.

SO ORDERED.

¹ Defendants have agreed to allow Cramer to withdraw from the case. See Cramer v. Burnham, Pretrial Order (June 21, 1991) (Stahl, J.).

² Defendant Burnham has filed a reply brief in Support of the IRS' Motion for Summary Judgment.

³ In Bank's complaint against Burnham, Bank alleges (1) that Burnham was personally liable for Atlantic's outstanding deficiency, and (2) that Burnham had attempted to avoid this liability by fraudulently transferring his interest in certain Nashua real estate (" Nashua property") to his wife just prior to his filing for Chapter 7 bankruptcy on behalf of Atlantic . At present, Bank's case against Burnham, New Hampshire Savings Bank v. Burnham (No. 88-C-00663-0), has not been resolved.

⁴ Moreover, the fact that Burnham may not have the power to withdraw funds from the account is not determinative on the question of his property rights under 26 U.S.C. §6321 . See United States v. First Nat. Bank and Trust Co. [88-1 USTC ¶9340 ], 695 F. Supp. 194, 196 (W.D. Pa. 1988).

⁵ The Court notes that Bank has cited no case law which even remotely supports its argument that it has a security interest in the escrow account.