United States v. Daniel Dent
669 F. App'x 848
9th Cir.2016Background
- The IRS served a levy on 911 Management, LLC (managed by Daniel Dent) directing turnover of Thomas and Kathy Weathers’s wages, salary, and "other income." Dent was personally liable for discharging the levy.
- The levy sought future payments; Dent contends it did not reach monthly membership distributions and licensing fees owed to Kathy Weathers by 911 Management.
- Dent argued those distributions and licensing fees were property interests, not "income," and that no fixed obligation to pay future distributions existed when the levy was served.
- The government argued "income" is broad and includes distributions and fees, and that 911 Management’s operating agreement created determinable obligations for future distributions.
- The district court granted the government partial summary judgment; Dent appealed. The Ninth Circuit reviewed de novo and affirmed.
Issues
| Issue | Plaintiff's Argument (Dent) | Defendant's Argument (Government) | Held |
|---|---|---|---|
| Whether the levy covered membership distributions and licensing fees | Levy only covered "wages, salary, and other income" and distributions are property interests, not income | "Income" is broad and includes distributions and licensing fees | The levy encompassed the distributions and fees as "income" |
| Whether levy had continuing effect to reach future monthly distributions | No continuing obligation existed; Dent only had discretion to decide future distributions | Operating agreement created an obligation determinable as to amount later, so levy reaches future payments | The operating agreement fixed a determinable obligation; the levy attached to future distributions |
| Whether statutory/state-law distribution contingencies prevent federal levy attachment | State LLC statutes make distributions contingent on solvency, so rights were not fixed | Such contingencies do not defeat determinability under federal law | State solvency limits did not prevent federal-law determinability; levy still attached |
| Standard governing scope and effect of levies on non-wage payments | (implicit) Narrow construction required | Levy on obligations extends to property and obligations existing at time of levy under 26 U.S.C. § 6331(b) | Court applied federal-law determinability standard and sustained levy scope |
Key Cases Cited
- Law Offices of Jonathan A. Stein v. Cadle Co., 250 F.3d 716 (9th Cir.) (standard of de novo review for summary judgment)
- United States v. Hemmen, 51 F.3d 883 (9th Cir.) (an obligation is "determinable" if its amount can be precisely measured in the future)
- United States v. Nat'l Bank of Commerce, 472 U.S. 713 (U.S.) (scope of federal levy determined by federal law)
- United States v. Bess, 357 U.S. 51 (U.S.) (federal principles govern levy attachment to property interests)
AFFIRMED.