United States District Court, D. Montana, Billings Division
FAITH MCLAIN, CHRISTEEN MCLAIN, JOHN MCLAIN, MOLLY MCLAIN, MIRA MCLAIN, AND MATTHEW MCLAIN, AS BENEFICIARIES OF THE ESTATE OF BERNARD MCLAIN, AND MARY MCLAIN, INDIVIDUALLY AS BENEFICIARY OF THE ESTATE OF BERNARD MCLAIN AND AS TRUSTEE OF THE E-3 RANCH TRUST, Plaintiffs,
FRANCIS MCLAIN, INDIVIDUALLY AND AS CO-MANAGER OF TERA BANI RETREAT MINISTRIES, CAROLINE MCLAIN, INDIVIDUALLY AND AS MANAGING DIRECTOR OF TERA BANI RETREAT MINISTRIES, ALAKHI JOY MCLAIN, SOHNJA MAY MCLAIN, AND DANE SEHAJ MCLAIN, AS PURPORTED CERTIFICATE HOLDERS OF THE E-3 RANCH TRUST, Defendants. THE UNITED STATES OF AMERICA, Intervenor Defendant and Counter/Cross- Claimant,
FAITH MCLAIN, CHRISTEEN MCLAIN, JOHN MCLAIN, MOLLY MCLAIN, MIRA MCLAIN, AND MATTHEW MCLAIN, as Beneficiaries of THE ESTATE OF BERNARD MCLAIN; and MARY MCLAIN, as Beneficiary of the ESTATE OF BERNARD MCLAIN, and as Trustee of the E-3 RANCH TRUST, Counterclaim Defendants and FRANCIS MCLAIN, individually, and as Co-Manager of TERA BANI RETREAT MINISTRIES; CAROLINE MCLAIN, individually, and as Managing Director of TERA BANI RETREAT MINISTRIES; and ALAKHI JOY MCLAIN, SOHNJA MAY MCLAIN, AND DANE SEHAJ MCLAIN, as Beneficiaries of the E-3 RANCH TRUST, Crossclaim Defendants and AMERICAN BANK OF MONTANA and BRAD D. HALL Additional Defendants on United States' claims.
ORDER DENYING FRANCIS MCLAIN'S MOTION TO SEVER
TIMOTHY J. CAVAN UNITED STATES MAGISTRATE JUDGE.
United States has filed an intervenor claim to foreclose
federal tax liens against Defendant Francis
(“Frank”) McLain's interest in a ranch
located in the Paradise Valley, known as the E-3 Ranch. (Doc.
20.) The E-3 Ranch is also the subject of an ownership
dispute between two factions of the McLain
family. In response, Frank filed a Counterclaim
against the United States seeking a tax refund. (Doc. 79.)
The United States moved to dismiss the counterclaim; and on
March 6, 2018, United States District Judge Susan P. Watters
adopted this Court's Findings and Recommendations and
dismissed Frank's counterclaim with prejudice. (Doc.
Watters has referred this case to the undersigned under 28
U.S.C. § 636(b)(1)(B). (Doc. 80.) Presently before the
Court is Frank's Motion to Sever the Counterclaim. (Doc.
133.) The motion is fully briefed and ripe for the
Court's review. (Docs.135, 139.)
considered the parties' submissions, the Court finds
Frank's Motion to Sever Counterclaim should be
DENIED, as set forth below.
November of 2008, Frank was convicted of nine counts of
Failure to Account for and Pay Over Employment Taxes, in
violation of 26 U.S.C. § 7202, in United States v.
Francis L. McLain, 08-CR-10-PJS-FLN, U.S. Dist. Court,
District of Minnesota. (Doc. 79 at ¶ 11; Doc. 94-3;
94-4.) In May 2014, the United States assessed civil
penalties against Frank under 26 U.S.C. § 6672, for
willful failure to collect, truthfully account for, and pay
over the taxes that were at issue in his criminal case. (Doc.
79 at ¶ 39; Doc. 20 at ¶ 12.)
2014, Faith McLain, Christeen McLain, John McLain, Mary
McLain, Molly McLain, Mira McLain, and Matthew McLain (the
“McLain Plaintiffs”) brought an action for
declaratory judgement concerning the ownership of the E-3
Ranch against Frank, Caroline McLain, Alakhi Joy McLain,
Sohnja May McLain, and Dane Sehaj McLain (the “McLain
Defendants”). The case was originally filed in the
Montana state court. (Doc. 1.) On March 11, 2016, the state
court granted the United States' motion to intervene.
(Doc. 1-3.) The United States seeks to foreclose federal tax
liens arising from the civil tax penalties assessed against
Frank through a sale of the E-3 Ranch. (Doc. 20.)
April 8, 2016, the United States removed, invoking the
Court's jurisdiction under 28 U.S.C. § 1441. (Doc.
1.) On March 15, 2017, the McLain Defendants answered the
Intervenor Complaint, and Frank filed a counterclaim against
the United States. (Doc. 79.) In the counterclaim, Frank
asserted a claim for tax refund under 26 U.S.C. § 7244
relating to the § 6672 assessments levied against him.
March 6, 2018, Frank's counterclaim was dismissed with
prejudice. (Doc. 131.) Frank now moves to sever the
counterclaim so that he may appeal the Court's order
dismissing the counterclaim to the Ninth Circuit. (Doc. 133.)
The United States opposes, arguing the counterclaim is not
discrete and separate from the United States' claim to
foreclose on the E-3 Ranch, and thus severance is not
Rule of Civil Procedure 21 provides that “the court may
at any time, on just terms . . . sever any claim against a
party.” Fed.R.Civ.P. 21. The district court has broad
discretion regarding severance. Coleman v. Quaker Oats
Co., 232 F.3d 1271, 1297 (9th Cir. 2000). Courts may
sever claims that are “discrete and separate, ”
but Courts should not “attempt to separate an
essentially unitary problem.” Anticancer, Inc. v.
Pfizer Inc., 2012 WL 1019796, *1 (S.D. Cal. Mar. 26,
2012). In determining whether to sever a claim, courts
consider the following factors:
(1) whether the claims arise out of the same transaction or
(2) whether the claims present some common questions of law
(3) whether settlement of the claims or judicial economy