Luke Adam; Chandra Marie Adam v. United States of America; Internal Revenue Service

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LUKE ADAM; CHANDRA MARIE
ADAM,
Plaintiffs - Appellants,
v.
UNITED STATES OF AMERICA;
INTERNAL REVENUE SERVICE,
Defendants - Appellees.
No. 12-55201
D.C. No. 8:05-cv-00987-ODW-
RNB
MEMORANDUM*
Appeal from the United States District Court
for the Central District of California
Otis D. Wright, District Judge, Presiding
Argued and Submitted April 12, 2013
Pasadena, California
Before: MILAN D. SMITH, JR. and MARY H. MURGUIA, Circuit Judges, and
JACK ZOUHARY, District Judge.**
FILED
JUL 02 2013
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
** The Honorable Jack Zouhary, United States District Judge for the
Northern District of Ohio, sitting by designation.

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Plaintiffs–Appellants Luke and Chandra Marie Adam (the Adams) hold
legal title to a piece of real property in Yorba Linda, California (the Property),
upon which the Internal Revenue Service (IRS) placed liens to satisfy the tax
obligations of the Adams’ parents, Dino and Trina Adam (the taxpayers). The IRS
executed the liens under the theory that the Adams own the Property as the
nominees of the taxpayers.
The Adams brought suit under 28 U.S.C. § 2410 to quiet title in the
Property. The district court concluded that the Adams hold legal title to the
Property as nominees of the taxpayers under California law, and dismissed the
Adams’ complaint for lack of standing. On appeal, the Adams argue that the
district court erred in concluding that they hold title to the Property as nominees of
the taxpayers, and in further holding that they lack standing to challenge the
procedural validity of the tax assessment giving rise to the liens on the Property.
Because the parties are familiar with the factual and procedural history of this case,
we repeat only those facts necessary to resolve the issues raised on appeal.
The district court accurately concluded that the Adams hold title to the
Property as nominees of the taxpayers under California law. As we recently held
in a published opinion: “California law recognizes a nominee theory of property
ownership,” and “if the California Supreme Court had occasion to evaluate the
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factors relevant to determining nominee ownership under California law, it would
adopt the uniform set of factors generally recognized by federal courts.” Fourth
Investment LP v. United States, No. 11-56997, slip op. at 20–21 (9th Cir. 2013).
The district court properly evaluated each of the relevant factors and reasonably
determined that the substantial weight of the evidence supports a finding that the
Adams hold legal title to the Property as the taxpayers’ nominees. For instance,
the district court properly noted that multiple grant deeds attest that the Adams
paid no consideration for the Property, and that the taxpayers continue to live there.
The district court erred, however, where it found that the Adams do not have
standing to challenge the procedural validity of the IRS liens solely because they
hold title as nominees. In order to demonstrate Article III standing, the party
invoking the federal court’s jurisdiction must demonstrate an injury-in-fact that is
traceable to the challenged conduct, and that is within the court’s power to redress.
Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138, 1147 (2013). The record shows
that the Adams have borrowed against the Property, and done so in their own
names. In light of this borrowing, we agree with the Adams that, at a minimum,
the IRS liens are likely to damage their credit ratings—an injury-in-fact. See, e.g.,
Lambert v. Hartman, 517 F.3d 433, 437 (6th Cir. 2008) (finding damage to one’s
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“financial security and credit rating” a sufficient injury to confer Article III
standing). We further agree that any such injury would be traceable to the IRS as
the party who asserted the liens, and that were the district court to find some
procedural flaw in the imposition of the liens, the Adams’ injury could be
redressed if the liens were discharged via § 2410. Thus, the Adams meet the
standing requirements of Article III. We are also convinced that the Adams have
prudential standing to sue to remove a cloud from their own credit histories.
Consequently, we reverse the district court’s order of dismissal and remand for
consideration of the merits.
Each party should be responsible for its own costs on appeal.
AFFIRMED IN PART, REVERSED IN PART, and REMANDED.
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