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Bucksport Water System Inc. v. Weaver Engineering Inc.

United States District Court, District of South Carolina, Florence Division

March 23, 2015

Bucksport Water Systems, Inc., Plaintiff,
v.
Weaver Engineering, Inc., Robert L. Weaver, the South Carolina Department of Revenue and the United States of America, Defendants.

OPINION AND ORDER

Bruce Howe Hendricks United States District Judge

This matter is before the Court on the Defendant United States of America’s motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. This is an action for interpleader filed by the plaintiff, Bucksport Water System, Inc. (hereinafter “BWS”). At issue is the priority of certain liens belonging to the the Defenant United States of America and the Defendant South Carolina Department of Revenue (“SCDOR”) as it relates to the collection of certain funds held by BWS that would otherwise be payable to Defendant Weaver Engineering (hereinafter “Weaver Engineering”) for engineering services and other work it performed for BWS. On summary judgment, the United States contends that it has a valid and enforceable lien, with priority over comparable liens of the SCDOR, and that the Clerk of Court should disburse the interpleader funds to the United States.

BACKGROUND

BWS engaged Weaver Engineering to “perform preliminary engineering studies and design work for a planned expansion of its rural water services in exchange for payment.” (ECF No. 1 ¶ 11; ECF No. 48 ¶ 3.) Weaver Engineering began preliminary work on the project, on or about April 2010. (Vanaskie Decl. Ex. 5, Answer to SCDOR’s Interrog. No. 2.) In August 2010, Weaver Engineering and BWS entered into an engineering contract, which was approved by the U.S. Department of Agriculture, Rural Development, in March 2011. Id. From June 2011 to the present, BWS has not paid Weaver Engineering any money owed under their contract. (Vanaskie Decl. Ex. 1, Resp. to First Set of Interrogs., Req. for Produc. of Docs., and Req. for Admis. Nos. 4, 5.)

Separately, Weaver Engineering has accumulated hundreds of thousands of dollars in unpaid employment and unemployment taxes, penalties and interest. (Alford Decl. ¶ 3.) Specifically, Weaver Engineering has unpaid employment tax liabilities for the last three quarters of 2007, all four quarters in 2008 through 2012, and the first quarter of 2013. Id. As of June 12, 2014, Weaver Engineering owes $844, 581.36, plus interest accruing after that date, for its unpaid employment and unemployment tax liabilities. Id. The Internal Revenue Service (“IRS”) assessed the above-referenced liabilities against Weaver Engineering. Id. ¶ 5.

Weaver Engineering has refused to pay the full amount of the assessments for the tax periods ending June 30, 2007 through December 31, 2008. Id. ¶ 7. With respect to these periods, Weaver Engineering owes a total of $384, 860.45 including penalties and interest, as of June 12, 2014. Id. ¶ 9. As a result, federal tax liens have arisen and attached to all of Weaver Engineering’s property and rights to property, including the $61, 440 at issue, as well as to any additional funds BWS owes, or may in the future owe, to Weaver Engineering. See U.S.C. §§ 6321 and 6322. The United States recorded notices of federal tax liens in the public records of Florence County, South Carolina, on the December 10, 2010, and June 10, 2011. (Alford Decl. ¶ 10.)

Robert L. Weaver is the principal of Weaver Engineering. (ECF No. 1 ¶ 18; ECF No. 48 ¶ 3.) Consequently, the IRS assessed trust fund recovery penalties under 26 U.S.C. § 6672 against Weaver as a responsible officer of Weaver Engineering who willfully failed to truthfully account for, collect, or pay over to the United States the federal income and employment taxes withheld from the wages of Weaver Engineering’s employees for the tax periods ending March 31, 2008 through March 31, 2009. (Alford Decl. ¶ 12.) Weaver has failed to pay in full the balance of his trust fund recovery penalties. Id. As of June 12, 2014, Weaver owes $115, 219.69, plus interest until paid, for the unpaid trust fund recovery penalties identified above. Id. ¶ 16. The IRS then recorded notices of federal tax lien against Weaver in the public records of Florence County, South Carolina, on March 23, 2012 for the tax periods ending March 31, 2008, and on January 25, 2013, for the tax periods ending June 30, 2008, through March 31, 2008. Id. ¶ 17.

In addition to federal tax liabilities, Weaver Engineering owes unpaid state tax liabilities. (Vanaskie Decl. Ex. 6 at 1-6.) The SCDOR recorded notices of its liens in the public records of Florence County, South Carolina. Id. In June 2011, the SCDOR served a levy attempting to collect Weaver Engineering’s outstanding state tax liabilities. Id. at 6; see also ECF No. 1-2 at 1-2.

BWS has not honored either the United States’ levies or SCDOR’s levies and, on September 13, 2013, brought this interpleader action. (See generally ECF No. 1.)

APPLICABLE LAW

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 a judgment as a matter of law.” Fed.R.Civ.P. 56(a). The movant bears the initial burden of demonstrating that summary judgment is appropriate; if the movant carries its burden, then the burden shifts to the non-movant to set forth specific facts showing that there is a genuine issue for trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). If a movant asserts that a fact cannot be disputed, it must support that assertion either by “citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials;” or “showing . . . that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1).

Accordingly, to prevail on a motion for summary judgment, the movant must demonstrate that: (1) there is no genuine issue as to any material fact; and (2) that he is entitled to judgment as a matter of law. As to the first of these determinations, a fact is deemed “material” if proof of its existence or non-existence would affect disposition of the case under applicable law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue of material fact is “genuine” if the evidence offered is such that a reasonable jury might return a verdict for the non-movant. Id. at 257. In determining whether a genuine issue has been raised, the court must construe all inferences and ambiguities against the movant and in favor of the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).

Under this standard, the existence of a mere scintilla of evidence in support of the plaintiff’s position is insufficient to withstand the summary judgment motion. Anderson, 477 U.S. at 252. Likewise, conclusory allegations or denials, without more, are insufficient to preclude the granting of the summary judgment motion. Ross v. Communications Satellite Corp., 759 F.2d 355, 365 (4th Cir. 1985). “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude ...


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