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Lnv Corporation v. Hook

United States District Court, D. Colorado

August 26, 2014

M. JULIA HOOK, an individual; THE PRUDENTIAL HOME MORTGAGE, INC.; UNITED STATES OF AMERICA; SAINT LUKES LOFTS HOMEOWNER ASSOC., INC.; DEBRA JOHNSON, in her official capacity as the Public Trustee of the City and County of Denver, Colorado; and DAVID L. SMITH, and individual. Defendants.


RAYMOND P. MOORE, District Judge.

THIS MATTER is before the Court on Defendant M. Julia Hook's "Verified Emergency Motion for a Temporary Restraining Order and/or a Preliminary Injunction, and Request for an Evidentiary Hearing" ("Motion") (ECF No. 57), requesting this Court to issue a Temporary Restraining Order: (1) restraining Defendant/Crossclaim Defendant United States[1] from continuing levies on the social security payments of Defendant/Crossclaim Plaintiff Hook and Defendant David Smith; and (2) ordering the United States to immediately repay all social security payments levied on/confiscated from Hook and/or Smith. In addition, Hook seeks a hearing and preliminary injunction, requesting substantial additional relief. The United States has filed an Opposition to Hook's Motion. (ECF No. 58.)

The Court has considered the Motion; relevant filings in this case; relevant documents in Civil Action No. 13-cv-01156-RM-KLM (hereafter "Hook/Smith Action"); and the applicable statutes, rules and case law. Upon consideration of the foregoing, and being otherwise fully advised, the Motion is DENIED for the reasons stated herein.


In this case, Plaintiff LNV Corporation seeks a determination of the parties' respective interests in certain real estate located in Denver, Colorado ("Property"), and the judicial foreclosure of a Deed of Trust on such Property. Plaintiff alleges that defendant Hook may claim an interest in the Property as the owner, and that defendant United States has filed numerous notices of federal tax liens on the Property. At the time Hook filed her Motion, Smith was not a party in the action. Since then, Plaintiff has amended its complaint ("Second Amended Complaint") to add Smith as a party and alleged, among other things, that Hook fraudulently transferred an interest in the Property to Smith. (ECF No. 70.) Smith is Hook's husband, but he has not been served or appeared in this action.

In response to Plaintiff's original Complaint, Hook filed crossclaims[2] against the United States by incorporating the Verified Supplemental/Amended Complaint and Jury Demand ("Verified Complaint") filed in the Hook/Smith Action. (ECF No. 37.) Essentially, Hook alleges the United States assessed and/or collected taxes, penalties, and other sums from her and Smith wrongfully under various provisions of the internal revenue laws. In "sections" of the Verified Complaint, she seeks: (1) a refund and/or credit for overpayment of tax and related deficiencies (Section II); (2) the release of federal tax liens (Section III); (3) the return of levied/seized property (Section IV); (4) the release of the continuing levy on Smith's social security payments (Section V); (5) a refund for amounts paid/overpaid (Section VI); (6) a refund/credit for penalties and interest, and request for their abatement (Section VII); and (7) to quiet title to real and personal property (Section VIII). As relief, Hook seeks, among other things, a credit or refund of amounts she and Smith paid in taxes, penalties, and interest, and the release of continuing levies on her and Smith's social security payments.

Currently before the Court is Hook's Motion seeking an order to restrain tax levies on her and Smith's social security payments as violative of the "15% rule" in 26 U.S.C. § 6331(h)(1), and to return all payments previously levied or confiscated since 2007 (as to Smith) and 2013 (as to Hook). Hook further requests that the Court hold an evidentiary hearing and grant preliminary injunctive relief by awarding almost all relief requested in the crossclaims. The Motion does not specify what, if any, additional evidence would be submitted for the Court's consideration at a hearing.


A. Requirements for a TRO or Injunctive Relief.

Where an opposing party actually receives notice of the application for a restraining order, the procedure that is followed is essentially the same as that on an application for preliminary injunction. See 11A Charles A. Wright et al., Federal Practice and Procedure § 2951 (3d ed. 2014). Before a preliminary injunction may be issued, the moving party must establish: "(1) a substantial likelihood of success on the merits; (2) irreparable injury will result if the injunction does not issue; (3) the threatened injury to the movant outweighs any damage the injunction may cause the opposing party; and (4) issuance of the injunction would not be adverse to the public interest." Northern Natural Gas Co. v. L.D. Drilling, Inc. , 697 F.3d 1259, 1266 (10th Cir. 2012) (internal quotation marks omitted). "Generally, where the three latter harm factors weigh in favor of the movant, the probability of success factor is relaxed." Id. (internal alterations and quotation marks omitted). That is not the case, however, where the requested injunction is one of three disfavored types of preliminary injunctions, i.e. , those that alter the status quo, "mandatory" preliminary injunctions, and those granting the moving party all the relief it could achieve at trial. See id. ; Flood v. ClearOne Commc'ns, Inc. , 618 F.3d 1110, 1117 n.1 (10th Cir. 2010). With disfavored injunctions, the movant must satisfy a heightened standard and make a "strong showing" as to the likelihood of success on the merits and that the balance of harms favors issuing the requested injunction. Northern Natural Gas Co. , 697 F.3d at 1266; ClearOne Commc'ns, Inc. , 618 F.3d at 1117 n.1.

In this case, the Court need not decide whether a heightened standard applies as Hook cannot sustain her burden even under the "traditional" standard required for the granting of injunctive relief. The Court also finds that, based on the record, no hearing is necessary in order to determine the merits of the Motion. Carbajal v. Warner , 561 Fed.Appx. 759, 764 (10th Cir. 2014) (unpublished) (district court with discretion to decide whether to hold an evidentiary hearing).

B. Request for Relief for Smith.

Hook's Motion seeks relief for not only herself but also Smith. Smith, however, was not a party to this action at the time the Motion was filed, and is now a party but has not entered an appearance in this case. More importantly, having not yet appeared, Smith has no claims pending against the United States in this action. As such, Hook cannot meet her burden of establishing this Court can or should grant relief as to Smith.[3] Even, assuming, arguendo , relief for Smith may be considered, for ...

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