Submitted: January 13, 2016
from United States District Court for the Eastern District of
Missouri - St. Louis
LOKEN, GRUENDER, and KELLY, Circuit Judges.
GRUENDER, Circuit Judge.
United States of America ("Government") brought
suit to determine whether its 2004 tax lien on a foreclosed
property had priority over several other competing interests
in the property. These included an interest held by U.S. Bank
National Association ("U.S. Bank") via a 2006 deed
of trust. The district courtgranted summary judgment in favor
of the Government, and U.S. Bank appeals. We affirm.
and Kimberly Tolin purchased a parcel of real property in
Ballwin, Missouri in March 2004. The Tolins financed the
purchase with a $277, 000 loan from New Century Mortgage
Corporation ("New Century"). They then executed a
deed of trust to secure the loan, recording the deed of trust
on March 29, 2004.
years later, the Tolins began preparations to apply for a new
loan. On March 24, 2006, they completed a uniform residential
loan application, which indicated a loan request in the
amount of $366, 350 for a refinance. On this application, the
Tolins described the purpose of the refinance as
"cash-out/debt consolidation." The application did
not disclose any unpaid federal tax liabilities. That same
day, the Tolins' loan closed, and a deed of trust to
secure the loan was executed but not recorded. The loan was
disbursed five days later. There is no evidence in the record
that New Century or the closing agent performed a title
search on the Ballwin property before closing on the new
loan. Of the total funds disbursed, $274, 410 was used to pay
New Century for the remainder of the 2004 loan for the
Ballwin property purchase, $83, 005 went toward settling
various other debts, and $8, 934 went to the Tolins. New
Century executed a deed of release for the 2004 deed of trust
on April 10 and recorded this deed of release in St. Louis
County on May 2. The deed of trust for the 2006 loan was not
recorded until July 11, 2006. New Century assigned the 2006
deed of trust to U.S. Bank on November 23, 2009, and U.S.
Bank subsequently recorded the assignment.
in November 2005, the Internal Revenue Service
("IRS") began to assess unpaid income taxes against
Josh Tolin from tax years 2001, 2002, 2004, and 2006,
totaling more than $700, 000. The IRS assessed the 2004 taxes
that are at issue in this case on November 21, 2005 and
recorded a notice of federal tax lien in St. Louis County
related to those taxes on March 30, 2006.
Government initiated the instant suit in 2013, seeking to
reduce to judgment the unpaid federal tax liabilities
assessed against Josh Tolin, to foreclose on federal tax
liens encumbering the Ballwin property, and to have the
proceeds from the foreclosure sale distributed in the amounts
determined by the court. Josh Tolin conceded the tax
liabilities, and Kimberly Tolin disclaimed any interest in
the property. After all competing claims to the property
except U.S. Bank's were resolved, the Government moved
for summary judgment regarding the priority of its tax lien
for unpaid 2004 taxes against U.S. Bank's 2006 deed of
trust. The Government argued that, under Internal Revenue
Code §§ 6323(a) and (h)(1), its 2004 tax lien had
priority over U.S. Bank's lien because notice of the tax
lien was recorded on March 30, 2006-more than three months
before the 2006 deed of trust was recorded on July 11, 2006.
U.S. Bank also moved for summary judgment, arguing that,
because the 2006 loan merely refinanced the 2004 loan, the
2006 deed of trust retained the priority of the 2004 deed of
trust for the $277, 000 amount of the 2004 loan.
district court granted summary judgment for the Government,
finding that the 2006 deed of trust did not retain the
priority of the 2004 deed of trust because the 2004 deed of
trust had been released more than two months before the 2006
deed of trust was recorded. The 2006 deed of trust thus did
not replace the 2004 deed of trust as part of the transaction
that released the earlier deed of trust. The court reasoned
that, when the 2004 deed of trust was released on May 2-after
the Government had recorded the 2004 tax lien on March
30-there no longer existed a lien on the Ballwin property
traceable to the 2004 loan, and the 2006 deed of trust could
not revive the priority of the 2004 deed of trust after such
a lengthy gap between the time the 2004 deed of trust was
released and the time the 2006 deed of trust was recorded.
Additionally, the court found that the significant, $89, 350
increase in principal over the 2004 loan, used in part to pay
off other creditors of the Tolins, meant that the 2006 loan
was not merely a refinance of the prior loan. The court thus
awarded priority to the Government's 2004 tax lien over
U.S. Bank's interest arising from the 2006 deed of trust.
U.S. Bank now appeals.
review de novo a district court's grant of
summary judgment. Evance v. Trumann Health Servs.,
LLC, 719 F.3d 673, 677 (8th Cir. 2013). Summary judgment
is appropriate only when, viewing the facts in the light most
favorable to the nonmoving party, there is no genuine issue
of material fact, and the moving party is entitled to
judgment as a matter of law. Fed.R.Civ.P. 56(c); Raines
v. Safeco Ins. Co. of Am., 637 F.3d 872, 874 (8th Cir.
dispute in this case turns on whether the 2006 deed of trust
retained the priority of the released 2004 deed of trust. The
district court determined that it did not. The "priority
[of liens] for purposes of federal law is governed by the
common-law principle that 'the first in time is the first
in right.'" Minn. Dep't of Revenue v. United
States, 184 F.3d 725, 728 (8th Cir. 1999) (quoting
United States v. McDermott, 507 U.S. 447, 449
(1993)). The "time" for assessing priority
"depends on the time the lien attached to the property
in question and became choate." Id. (quoting
Cannon Valley Woodwork, Inc. v. Malton Const. Co.,
866 F.Supp. 1248, 1250 (D. Minn. 1994)). Although federal tax
liens attach and become choate at assessment, 26 U.S.C.
§ 6322, a state-created lien, such as a deed of trust
securing a mortgage loan, "is 'choate' for
'first in time' purposes only when it has been
'perfected' in the sense that there is nothing more
to be done, i.e., when 'the identity of the
lienor, the property subject to the lien, and the amount of
the lien are established, '" Minn. Dep't of
Revenue, 184 F.3d at 728 (quoting United States v.
City of New Britain, 347 U.S. 81, 84 (1954)). Under
Missouri law, perfection of a deed of trust occurs when it
has been recorded in the office of the recorder in the county
where the property is located. Mo. Rev. Stat. §§
442.380, 442.390; see Reed v. Austin's Heirs, 9
Mo. 722, 730 (1846) ("As far back as the year 1835, this
court determined that a title under a junior judgment would
prevail over a prior unregistered deed.").
chronological order, the relevant dates for assessing the
choateness of the competing interests consist of the date the
2004 deed of trust was recorded (March 29, 2004), the date
the Government's tax lien for unpaid 2004 taxes was
assessed (November 21, 2005), and the date the 2006 deed of
trust was recorded (July 11, 2006). In this sequence,
normally, the 2004 deed of trust would have priority over the
tax lien for unpaid 2004 taxes, and the 2006 deed of trust
would be last in priority. U.S. Bank argues, however, that
the 2006 deed of trust has the priority of the released 2004
deed of trust because the 2006 loan merely refinanced the
2004 loan. ...