MICHAEL M. ANELLO, District Judge.
On November 29, 2017, Plaintiff Innovative Real Estate Planning Group, Inc. ("Innovative") filed this quiet title action against Ngon T. Le ("Le") and "all other persons unknown, claiming any right, title, estate, lien or interest in the real property described in the complaint, adverse to [Innovative's] ownership or any cloud on plaintiff's title thereto." Doc. No. 1-2 ("Compl."). On February 26, 2018, Le filed a cross complaint against Innovative, Vladymir Frazilus, Chien Thi Nguyen, Dung A Nguyen, Canh M. Phan, Canh Tran, and Thi Truong Nguyen, Trustees of the Truong Family Trust, Elizabeth Persons, the United States of America ("USA"), the State of California, the City of San Diego, Fire Prevention Services, Inc., and "all persons unknown, claiming any right, title, estate, lien or interest in the real property described in the complaint, adverse to plaintiff's ownership or any cloud on plaintiff's title thereto."
The USA filed a motion for summary judgment against Le. Doc. No. 25. Le filed a response in opposition (Doc. No. 32) and a cross motion for summary judgment against the USA (Doc. No. 31). USA replied to Le's opposition (Doc. No. 33) and filed a response in opposition to Le's cross motion (Doc. No. 39). Le replied to the USA's opposition. Doc. No. 40. The Court found these matters suitable for determination on the papers submitted and without oral argument pursuant to Civil Local Rule 7.1.d.1. Doc. Nos. 34, 41. For the following reasons, the Court
From May 5, 2017 to May 10, 2017, San Diego County held an online auction for several pieces of tax-defaulted real property ("auction"), including two pieces of undeveloped land identified as Parcel Nos. 541-130-11-00 and 541-2 0-12-00 (collectively, "Le Properties"). Doc. No. 25-5 ("Heaton Depo.") at 5:23-6:5, 19:22-20:5, 36:14-36:17; see also Cross Compl. ¶ 13; Doc. No. 31-4, Exhibit 3 at 3. To advertise the auction, San Diego County published a notice of the auction in the San Diego Examiner and published information on its website.
Prior to the auction, the Le Properties were owned by Phuc N. Doan and Longngoc N. Doan (the "Doans").
Le bid and ultimately won the Le Properties.
Le raises a variety of evidentiary objections to the USA's evidence. Doc. No. 32-2. These objections are raised on the grounds that the evidence is irrelevant, vague, assumes facts not in evidence, or misstates the evidence or law. Id. "A trial court can only consider admissible evidence in ruling on a motion for summary judgment." Orr v. Bank of Am., NT & SA, 285 F.3d 764, 773 (9th Cir. 2002). At the summary judgment stage, district courts consider evidence with content that would be admissible at trial, even if the form of the evidence would not be admissible at trial. See Fraser v. Goodale, 342 F.3d 1032, 1036 (9th Cir. 2003); Block v. City of Los Angeles, 253 F.3d 410, 418-19 (9th Cir. 2001). "[O]bjections to evidence on the ground that it is irrelevant . . . [is] duplicative of the summary judgment standard itself" and unnecessary to consider here. Burch v. Regents of Univ. of Cal., 433 F.Supp.2d 1110, 1119 (E.D. Cal. 2006); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) ("Factual disputes that are irrelevant or unnecessary will not be counted."). Accordingly, the Court does not consider any relevance objections. Le's remaining objections that the statements misstate the evidence or law, assume facts not in evidence, or are vague, are objections to USA's characterization of the evidence rather than to the evidence itself. Thus, the Court will not consider these objections. See Hanger Prosthetics & Orthotics, Inc. v. Capstone Orthopedic, Inc., 556 F.Supp.2d 1122, 1126 n.1 (E.D. Cal. 2008) (noting that the parties' "`evidentiary objections to [their adversary's] separate statements of undisputed facts are not considered because such objections should be directed at the evidence supporting those statements").
"A party may move for summary judgment, identifying each claim or defense—or the part of each claim or defense—on which summary judgment is sought. The Court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The party seeking summary judgment bears the initial burden of establishing the basis of its motion and of identifying the portions of the declarations, pleadings, and discovery that demonstrate absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party has "the burden of showing the absence of a genuine issue as to any material fact, and for these purposes the material it lodged must be viewed in the light most favorable to the opposing party." Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). A fact is material if it could affect the outcome of the suit under applicable law. See Anderson, 477 U.S. at 248. A dispute about a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party. Id. The party opposing summary judgment cannot "`rest upon the mere allegations or denials of [its] pleading' but must instead produce evidence that `set[s] forth specific facts showing that there is a genuine issue for trial.'" Estate of Tucker v. Interscope Records, Inc., 515 F.3d 1019, 1030 (9th Cir. 2008) (quoting Fed. R. Civ. P. 56(e)).
Le asserts one cause of action against the USA, seeking a decree that Le owns the property free and clear of the federal tax lien. Cross Compl. ¶¶ 15-20. The sole dispute between the parties is whether the date of sale is May 5, 2017 or May 9, 2017. The USA contends the date of sale is May 9, 2017—the date the auction concluded—and Le avers the date of sale is May 5, 2017—the date the auction commenced.
Title 26, section 7425(b) of the United States Code governs nonjudicial sales of property to which the government claims a federal tax lien. 26 U.S.C. § 7425(b). Pursuant to § 7425(b), "[a] nonjudicial sale of property is made `subject to and without disturbing' federal tax liens if (1) the federal tax liens were filed more than 30 days before the sale, and (2) notice of the sale is not given to the IRS in accordance with § 7426(c)(1)." Orme v. United States, 269 F.3d 991, 994 (9th Cir. 2001) (quoting 26 U.S.C. § 7425(b)); see Quality Loan Serv. Corp. v. 24702 Pallas Way, 635 F.3d 1128, 1134 (9th Cir. 2011). If the IRS is not given sufficient notice of a sale and the federal tax lien was timely filed, any purchaser of the property takes the property subject to the IRS's lien.
The parties agree that USA filed a Notice of Federal Tax Lien against the Doans on April 6, 2017. See Notice of Federal Tax Lien. The parties also agree that the USA was not given notice at least 25 days prior to May 9, 2017. Heaton Depo. at 30:5-30:7. Thus, the date of sale is crucial in determining whether the federal tax lien was disturbed by the sale of the Le Properties. If the date of sale is May 5, 2017, then Le took the property free and clear of the federal tax lien. On the other hand, if the date of sale is May 9, 2017, then Le took the property subject to and without disturbing the federal tax lien.
Le argues the government was required to timely record its notice of federal tax lien in accordance with California and federal law.
Additionally, Le avers that the date of sale is defined by California law, which provides that the date of sale is "`the date upon which a public auction begins.'" Doc. No. 32 at 3 (quoting Cal. Rev. & Tax Code § 3692.1(b))). Le also cites to California's Revenue and Tax Code § 3707, which states that "[t]he commencement of the tax sale constitutes the actual sale date regardless of auction conclusion." Id. (quoting Cal. Rev. & Tax Code § 3707).
26 C.F.R. § 301.7425-2(b)(1).
The Fourth Circuit has interpreted the date the "sale is held" to mean the date the purchaser obtained an interest in the property, even an equitable interest, as determined by state law. Southwest Prods. Co., 882 F.2d at 117. In Southwest Prods., the Fourth Circuit asked whether the IRS timely exercised its right of redemption under § 7425(d)(1). Id. The Fourth Circuit reasoned:
Id. Le argues that this case is not about redemption and accordingly the date of sale used in redemption cases is a "red herring." Doc. No. 40 at 3. However, § 7425(d)(1) requires the government to redeem the property within "120 days from the date of sale." Id. The date of sale under § 7425(d) is also the date the public sale is held. See id. As such, the date the "sale is held" for purposes of redemption is the same date the "sale is held" for purposes of determining whether a purchaser of property at a nonjudicial sale took the property subject to and without disturbing a federal tax lien. Moreover, the Seventh Circuit found the date of sale for purposes of § 7425(b) to be the date the purchaser records the tax deed because, under Illinois law, that is when the purchaser obtains an interest in the property. See Ballinger, 437 F. App'x at 482; see also In re Smith, 614 F.3d at 659 (noting that the date the purchaser records the tax deed is when the purchaser obtains an interest in the property under Illinois law).
California law provides that "[i]n an involuntary sale such as foreclosure, equitable title is transferred to the purchaser at the foreclosure auction with acceptance of the highest bid . . . ." In re: RW Meridian LLC, 564 B.R. 21, 30 (B.A.P. 9th Cir. 2017); see also Nguyen v. Calhoun, 105 Cal.App.4th 428, 440-41 (Ct. App. 2003) (holding that acceptance of the final bid in a nonjudicial foreclosure sale constitutes a final adjudication of the rights of the borrower and lender). Here, Le did not obtain any interest in the Le Properties until acceptance of the highest bid on May 9, 2017. See In re RW Meridian LLC, 564 B.R. at 30; Le Depo. at 24:8-24:11; Le Decl. ¶ 1. As such, the date of sale for purposes of § 7425(b) is May 9, 2017. In fact, the tax deed states that the auction sale for the Le Properties was conducted on May 9, 2017.
Because this Order resolves the only claim this Court has original jurisdiction over, only Plaintiff's and Le's state law claims remain. See Compl. (asserting only state law causes of action against non-diverse defendants); see also Cross Compl. (asserting only state law causes of action against non-diverse defendants—except for the cause of action against the USA, which has been resolved by this Order). "Under 28 U.S.C. § 1367(c)(3), a district court has discretion to elect not to exercise supplemental jurisdiction over state claims if it has dismissed the federal claims over which it had original jurisdiction." Brown v. Lucky Stores, Inc., 246 F.3d 1182, 1189 (9th Cir. 2001). In dictum, the United States Supreme Court stated that "if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well." United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966). The Ninth Circuit explained that this statement "`simply recognizes that in the usual case in which federal-law claims are eliminated before trial, the balance of factors . . . will point toward declining to exercise jurisdiction over the remaining state law claims.'" Schneider v. TRW, Inc., 938 F.2d 986, 993 (9th Cir. 1991) (quoting Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988)). Accordingly, this Court declines to exercise supplemental jurisdiction over the parties' remaining state law claims pursuant to 28 U.S.C. §1367(c).
Based on the foregoing, the Court
