Friday, November 21, 2014

Use Of Quiet Title & Slander Of Title In Undoing Real Estate Equity Ripoff, Voiding Deeds & Mortgages

(This post was originally published on July 6, 2011.)

The successful use of a quiet title and slander of title lawsuit in an effort to undo a real estate equity scam perpetrated on an elderly property owner by his nephew and a gang of others was the focus of a December, 2009 ruling of an Illinois appeals court.

The fact pattern involved, among other things, a purported sale leaseback, coupled with a repurchase option, of property and the recording of forged land documents.

For those in Illinois (and possibly elsewhere) in the business of undoing and unwinding these ripoffs on behalf of the victims, there may be some points of interest, including the following:

  • action to quiet title,

  • requirements for adequately proving slander of title,

  • essential elements of a forgery,

  • cloud on title ("is the semblance of title" which is "unfounded" or "which it would be inequitable to enforce"),

  • authority of an agent (may be actual or apparent and, if actual, may be express or implied),

  • ratification of agent's unauthorized acts,

  • failed attempt by the bank that financed the ripoff to reinstate its mortgage lien that had been voided by the trial court (unsuccessfully argued judicial estoppel and unclean hands),

  • imposition of punitive damages in a slander of title case,

  • availability of an attorney fee award for the victim in a slander of title case,(1)

  • factors in determining an appropriate award for attorneys fees for the victimized property owner (liability for which is imposed on the scammers),

  • applicability of a contingency fee risk multiplier in calculating the award for attorneys fees(2) (court approved use of a multiplier of 3 to determine the total fee award of $595,574 for the contingent portion of the fee).
For the ruling, see Gambino v. Boulevard Mortg. Corp., 398 Ill. App. 3d 21, 922 NE 2d 380 (Ill. App. 1st Dist., 6th Div. 2009) (Appeal denied by Gambino v. Blvd. Mortg. Corp. (W.W. Funding, L.L.C.), 2010 Ill. LEXIS 909 (Ill., May 26, 2010)).

(1) With respect to the appropriateness of awarding attorneys fees in a slander of title action, the Illinois appeals court made this observation:
  • Contrary to the Wolf defendants' argument, there is authority in Illinois providing that recovery for slander of title actions permit recovery of those costs and attorney fees which directly flow from the wrongful disparagement. Home Investments Fund v. Robertson, 10 Ill. App.3d 840, 844, 295 N.E.2d 85 (1973).

    Further, plaintiffs were entitled to recover those costs and attorney fees directly related to the quieting of title and to those damages directly related to a slander of title, i.e., loss of vendibility, etc. 
    Robertson, 10 Ill.App.3d at 844, 295 N.E.2d 85.
(2) For more on the use of risk multipliers in calculating prevailing party attorney fees in pro bono and contingency fee cases, see:

Wednesday, November 19, 2014

Void vs. Voidable Deeds - Actions to Undo A Deed Scam; OK To Plead Inconsistent Facts - No Need To "Gamble On A Single Formulation Of [A] Claim", Says California Appeals Court

(This post was originally published on November 7, 2010.)

In a 2010 ruling addressing various issues raised in a lawsuit filed by apparent victims of an alleged deed ripoff (whether conveyances were void vs. voidable, effects on a bona fide purchaser, etc.),(1) a California appeals court said, among other things, that there was nothing disqualifying, as one Defendant asserted, for the Plaintiffs to plead alternative facts in an attempt to undo both the deed ripoff itself, and the mortgage that was placed on the subject properties subsequent thereto. (This appeal involved a reversal of a trial court's judgment of dismissal after sustaining one defendant's demurrer. The ruling, although unpublished, may nevertheless be instructive for those in the legal profession looking to unwind or undo a wide variety of deed ripoffs, particularly, as in this case, one of the defendants attempts to have the plaintiff's complaint the attorney dismissed on procedural/pleading technicalities.)

In addressing what the court referred to as one defendant's mischaracterization of the rules of pleading, the court stated that "where the exact nature of the facts is in doubt, or where the exact legal nature of plaintiff's right and defendant's liability depend on facts not well known to the plaintiff, the pleading may properly set forth alternative theories in varied and inconsistent counts." It went on to make this observation (all citations, internal quotations, etc. omitted for ease of reading, bold text is my emphasis, not in the original text):

  • In such situations, the facts are inconsistently alleged because the plaintiff does not know which of the alternatives is true or can be established by the evidence. Tolerance for such pleading rests on the principle that uncertainty as to factual details or their legal significance should not force a pleader to gamble on a single formulation of his claim if the facts ultimately found by the court, though diverging from those the pleader might have considered most likely, still entitle him to relief.
  • At this early stage of the proceedings, Plaintiffs cannot be faulted for failing to know exactly what occurred in this case.
In addition to the foregoing point, the balance of the ruling may contain some valuable insight to anyone (primarily those in the legal profession or real estate business) seeking a starting point in commencing the arduous process of undoing or unwinding a deed ripoff (ie. whether it be through forged deeds & other land documents, forged or improper use of powers of attorney, sale leaseback foreclosure rescue scams, or the otherwise duping of a property owner into signing over deeds and other land documents), including the voiding of any mortgage or other encumbrance placed on the property simultaneously with, or subsequent to, the deed ripoff.(2)

For the ruling, see Casonhua v. Wash. Mut. Bank, B218606, B218608, 2010 Cal. App. Unpub. LEXIS 8486 (Cal. App. 2nd Dist. Div. 7, October 26, 2010) (if link expires, TRY HERE).

(1) Some of the court's discussion of void vs. voidable conveyances follows:
  • Although a bona fide encumbrancer is entitled to rely on a deed that is voidable, it will not retain title if the deed is found to be void. (Schiavon v. Arnaudo Brothers (2000) 84 Cal.App.4th 374, 378 (Schiavon); Wutzke v. Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36, 41 (Wutzke); Firato v. Tuttle (1957) 48 Cal.2d 136, 139 (Firato).) More specifically, our courts have explained that "[i]f [a] reconveyance [i]s voidable, . . . it may be subject to cancellation and rescission as against [the grantee], but could be relied upon by a subsequent bona fide [encumbrancer]. . . ." (Schiavon, supra, 84 Cal.App.4th at p. 378.) In contrast, "[i]nstruments which are wholly void cannot ordinarily provide the foundation for good title even in the hands of an innocent purchaser." (Firato, supra, 48 Cal.2d at p. 139.) Therefore, the Plaintiffs may only assert superior title against Washington Mutual if Berry's deed is found to be wholly void, but not if it is voidable.[6]

    Generally, "[a] deed is void if the grantor's signature is forged or if the grantor is unaware of the nature of what he or she is signing. [Citation.] A voidable deed, on the other hand, is one where the grantor is aware of what he or she is executing, but has been induced to do so through fraudulent misrepresentations. [Citation.]. The same rules apply to the reconveyance of the property interest under a deed of trust as to the conveyance of property by grant deed." (Schiavon, supra, 84 Cal.App.4th at p. 378.)

    Numerous holdings illustrate this legal distinction. For example, in Wutzke v. Bill Reid Painting Service, Inc., supra, 151 Cal.App.3d 36, the court held that "a forged document is void ab initio and constitutes a nullity; as such it cannot provide the basis for a superior title as against the original grantor." (Id. at p. 43.) Wutzke further explained that "[s]ince a trust deed obtained by means of forgery is void, it follows that any claim of title flowing from such a deed is void . . . [which includes] the title of a subsequent purchaser or encumbrancer." (Id. at p. 44.) Similarly, in Erickson v. Bohne (1955) 130 Cal.App.2d 553 (Bohne), the court ruled that a deed conveyed by an individual who alleged to be "mentally ill and wholly incapable of transacting business" was void and could not provide good title to a subsequent good faith purchaser. Other cases have recognized that documents procured through "`fraud in the factum-that is, the sort of fraud that procures a party's signature to an instrument without knowledge of its true nature or contents . . . render [an] instrument entirely void.'" (Wurzl v. Holloway (1996) 46 Cal.App.4th 1740, 1751; see also Bohne, supra, 130 Cal.App.2d at p. 556 ["`An illustration of a void transaction is afforded where one . . . is induced to sign a deed when in fact, he believes, because of fraudulent misrepresentations, that he is merely signing a letter addressed to a third person'"].)

    In contrast, a deed is voidable, rather than void, when "the agreement was induced by fraudulent misrepresentation or concealments which in no degree make the instrument anything other than it purports to be." (Bohne, supra, 130 Cal.App.2d at p. 556.) For example, in Fallon v. Triangle Management Service, Inc. (1985) 169 Cal.App.3d 1103, the plaintiff sought to void a deed that he had signed while under duress. (Id. at p. 1106.) The court ruled that because the plaintiff was aware that the instrument he executed was a deed, the deed was merely voidable and could be relied on by a bona fide purchaser. Likewise, in Schiavon v. Arnaudo Brothers, supra, 84 Cal.App.4th 374, the court concluded that a reconveyance that was initiated after the trustee received a forged request for reconveyance was voidable, rather than void. The court explained that although the request for reconveyance had been forged, the actual reconveyance was signed by the trustee, who was entitled to convey the property and understood the nature of the instrument that he had executed. The court differentiated decisions in which the deed itself had been forged, explaining that, in the case before it, "the reconveyance was executed by the designated trustee . . . who was aware of the consequences of the act but was [induced by fraudulent misrepresentation]." (Schiavon, supra, 84 Cal.App.4th at p. 381.)

(2) The portion of the court's ruling on a Plaintiff's entitlement to plead alternative facts follows (omitting the court's footnote 7; bold text is my emphasis, not in the original text):
  • 2. The Plaintiffs Were Entitled to Plead Alternative Facts

    Washington Mutual argues that, even if the trial court's ruling was erroneous, the demurrers should be sustained on the ground that the Plaintiffs' verified complaints contain inconsistent factual assertions that preclude them from alleging that Berry procured her deed through fraud. Specifically, Washington Mutual contends that because the fourth cause of action in the Florence Sims Complaint (which is pleaded against Berry only) alleges that Berry induced Florence to sign the grant deed through undue influence, Plaintiffs may not allege in the alternative that the deed was forged or that Florence lacked the mental capacity to sign the deed.7 Stated more simply, Washington Mutual argues that because Plaintiffs assert in one claim that the deed was procured through undue influence, which would render the deed voidable, we must ignore Plaintiffs' alternative claim that the deed was procured through fraud, which would render the deed wholly void.

    Washington Mutual's argument mischaracterizes the rules of pleading. The traditional rule is that "[w]here the exact nature of the facts is in doubt, or where the exact legal nature of plaintiff's right and defendant's liability depend on facts not well known to the plaintiff, the pleading may properly set forth alternative theories in varied and inconsistent counts." (Rader Co. v. Stone (1986) 178 Cal.App.3d 10, 29.) In such situations, "[t]he facts are inconsistently alleged because the plaintiff does not know which of the alternatives is true or can be established by the evidence." (4 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 364, p. 467.) "Tolerance for such pleading rests on the principle that uncertainty as to factual details or their legal significance should not force a pleader to gamble on a single formulation of his claim if the facts ultimately found by the court, though diverging from those the pleader might have considered most likely, still entitle him to relief." (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 886.)

    In this case, the complaints plainly acknowledge that Plaintiffs pleaded alternative factual theories because they were not present when Berry's grant deed was executed, and, as a result, are uncertain what occurred. The Plaintiffs' first claim alleges that Berry forged the deed and describes circumstantial evidence that, in Plaintiffs' view, support their contention.Plaintiffs' additional claims, which allege that Berry procured the deed through other fraudulent means or undue influence, were pleaded "in the event the Court determines that Florence signed the [grant deeds."]. At this early stage of the proceedings, Plaintiffs cannot be faulted for failing to know exactly what occurred in this case. It would therefore be improper to limit Plaintiffs' factual allegations in the manner Washington Mutual proposes.

    Washington Mutual correctly asserts that if a party verifies a specific factual allegation in a complaint, it cannot simultaneously plead an inconsistent fact in the same pleading. (Alfaro v. Community Housing Imp. System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1381 (Alfaro) ["[a] plaintiff may plead inconsistent counts or causes of action in a verified complaint, but this rule does not entitle a party to describe the same transaction as including contradictory or antagonistic facts"]; see also Beatty v. Pacific States S. & L. Co. (1935) 4 Cal.App.2d 692, 697 (Beatty).) The rules of pleading do "not permit the pleader to blow both hot and cold in the same complaint on the subject of facts of which he purports to speak with knowledge under oath." (Beatty, supra, 4 Cal.App.2d at p. 697; see also Manti v. Gunari (1970) 5 Cal.App.3d 442, 449["[t]o verify inconsistent facts alleged in a complaint indicates perjury in the matter"].) In this case, however, the operative complaints are verified only on information and belief. Therefore, although the Plaintiffs have verified that they believe the alleged information to be true, they have not claimed personal knowledge of the truth of the matters asserted. (See Black's Law Dictionary 795 (8th ed. 2004) [defining information and belief allegations as being "based on secondhand information that the declarant believes to be true"].) Moreover, as discussed above, the complaints repeatedly emphasize that because the Plaintiffs are unsure exactly what occurred when the deed was executed, they have pleaded alternative facts to encompass all possible theories of liability. As a result, the rule barring plaintiffs from pleading inconsistent facts that are based personal knowledge is inapplicable here.
footnote 8: The complaints contend that there is "strong circumstantial evidence" indicating that Berry forged the deeds, including the fact that: (1) Berry recorded the deeds two years after Florence purportedly signed them and seven months after Florence died; (2) the notary's journal does not contain Florence's thumbprint, as required under California law; (3) the notary's journal has an entry dated January 2, 2002, for a "Power of Attorney for Decedent," which is crossed out and interlineated with "Grant Deed" in a different type of ink; (4) during deposition testimony, the notary stated that he notarized a power of attorney and the two grant deeds on January 2, 2002, but his journal only shows that one document was notarized on that date.
Go here for more on void and voidable deedsDeedVoidVoidable

Monday, November 17, 2014

Lien Priority Battle: Federal Appeals Court Says Bank's Later-Created, Unrecorded $1 Million Security Interest In Real Estate Trumps IRS' Earlier-Created, Recorded $60K Tax Lien

A case that was recently addressed by a federal appeals court provides an intriguing example of a situation where, in applying Maryland state law (ie. Maryland's doctrine of equitable conversion), an earlier-created, recorded lien on real estate was found to be inferior in priority to a later-created, unrecorded security interest. It is interesting to note that:

  • the recorded lien found to be inferior was an IRS tax lien, and
  • there was an absence of any bad faith on the IRS' part (bad faith being a typical factor disqualifying a party in a real estate transaction seeking the protection of the recording statutes),
  • while the bank's security interest, unrecorded at the time the IRS recorded its tax lien, was ultimately recorded, the court stated that the bank's said security interest would have been protected anyway, regardless of its compliance with the recording statutes,
  • the key in this case is that the bank's security interest, while not recorded until after the IRS recorded its lien, was created prior to the IRS' lien recordation (by six days).
The basic facts of the case, abstracted from the appeals court ruling, follow:
  1. Restivo Auto Body failed to pay certain employment taxes relating to the calendar years 2002 and 2003, and the first and second quarters of 2004,
  2. The IRS issued notice and demand for payment of these deficiencies on or before September 20, 2004, giving rise to a tax lien on all property owned by Restivo Auto Body at that point (See 26 U.S. Code § 6322, stating that this type of lien "shall arise at the time the assessment is made and shall continue until the liability for the amount so assessed (or a judgment against the taxpayer arising out of such liability) is satisfied or becomes unenforceable by reason of lapse of time.").
  3. On January 10, 2005 [after dragging its feet in recording its tax lien for almost four (4) months], the IRS filed notice of its federal tax lien for the relevant quarters in the appropriate county land records.
  4. On January 4, 2005, six days before the IRS filed notice of its federal tax lien, Restivo Auto Body borrowed $1 million from Susquehanna Bank, giving the Bank a note and a deed of trust on two adjacent parcels of real property to secure repayment of the loan.
  5. The deed of trust, however, was not recorded until February 11, 2005, more than a month after the IRS filed notice of its tax lien.
  6. In April, 2011, Restivo Auto Body filed for Chapter 11 bankruptcy protection and, in connection therewith, the IRS filed a proof of claim, stating that Restivo Auto Body owed it $62,438.99 in taxes, interest, and penalties (the lien was originally for $147,392.84, according to the lower court ruling) for the relevant quarters.
  7. Susquehanna Bank thereupon commenced an adversary proceeding against the IRS, seeking a declaratory judgment as to the relative priorities of the parties' secured interests.
The bankruptcy court ruled in favor of Susquehanna Bank, saying its lien, despite being unrecorded at the time the IRS recorded its lien, had priority over the IRS lien. On initial appeal to the U.S. District Court affirmed the bankruptcy court ruling. The district court's affirmance was based on its appluication of the existing statute, and as an alternative basis for affirmance, it applied Maryland's doctrine of equitable conversion, stating that Susquehanna Bank's security interest would have taken priority under Maryland law even if the lien had never been recorded.

The appeals court, despite rejecting the reasoning of the district court based on the reading of the applicable statute, nevertheless affirmed the lower court's ruling, accepting its alternative basis for affirmance in applying Maryland's doctrine of equitable conversion.

In this regard, the court stated:
  • Apart from its application of Md. Code Ann., Real Prop. § 3-201, the district court also concluded that Susquehanna Bank had a prior security interest under § 6323(h)(1)(A), based on the Maryland doctrine of equitable conversion. The court explained that under Maryland law, "the holder of an equitable title or interest in property, by virtue of an unrecorded contract of sale, has a claim superior to that of a creditor obtaining a judgment subsequent to the execution of the contract." Susquehanna Bank, 2013 WL 4067624, at *7 (quoting Stebbins-Anderson Co. v. Bolton, 117 A.2d 908, 910 (Md. 1955)) (internal quotation marks omitted). And it pointed out that the doctrine applies to lenders whose interests are secured by mortgages or deeds of trust. Construing § 6323(h)(1)(A), the court concluded that "an IRS tax lien is entitled only to the protection due under state law to `a subsequent judgment lien arising out of an unsecured obligation'" id. (quoting § 6323(h)(1)(A)), and that, under Maryland law, as made applicable by § 6323(h)(1)(A), judgment liens are "subject to prior, undisclosed equities," id. (quoting Wash. Mut. Bank v. Homan, 974 A.2d 376, 389 (Md. Ct. Spec. App. 2009)) (internal quotation marks omitted).

    We agree with the district court that § 6323(h)(1)(A) incorporates Maryland law insofar as it protects equitable security interests against subsequent judgment-creditor liens.

    The Maryland doctrine of equitable conversion "emanates from the maxim that `equity treats that as being done which should be done.'" Noor v. Centreville Bank, 996 A.2d 928, 932 (Md. Ct. Spec. App. 2010) (quoting Himmighoefer v. Medallion Indus., Inc., 487 A.2d 282, 286 (Md. 1985)).

    Pursuant to that doctrine, upon contracting to buy land, "in equity the vendee becomes the owner of the land, the vendor of the purchase money." Id. (quoting Himmighoefer, 487 A.2d at 286). Although the seller retains legal title during the executory period, he has "no beneficial interest in the property" apart from his "right to the balance of the purchase money." Watson v. Watson, 497 A.2d 794, 800 (Md. 1985). Rather, he holds his legal title "in trust for the purchaser." Wolf Org., Inc. v. Oles, 705 A.2d 40, 45 (Md. Ct. Spec. App. 1998).

    By contrast, a holder of equitable title "retains a significant interest in the enforcement of a land sales contract." Wash. Mut. Bank, 974 A.2d at 388. Consistent with these principles, Maryland courts have repeatedly held that a land purchaser's equitable title is superior to any judgment lien subsequently obtained against the seller. See, e.g., Watson, 497 A.2d at 800; Wolf Org., 705 A.2d at 46-47. As Maryland's Court of Appeals explained in Himmighoefer:

    It is a general rule that the holder of an equitable title or interest in property, by virtue of an unrecorded contract of sale, has a claim superior to that of a creditor obtaining judgment subsequent to the execution of the contract. . . . The right of the vendee to have the title conveyed upon full compliance with the contract of purchase is not impaired by the fact that the vendor, subsequently to the execution of the contract, incurred a debt upon which judgment was recovered. A judgment creditor stands in the place of his debtor, and he can only take the property of his debtor subject to the equitable charges to which it is liable in the hands of the debtor at the time of the rendition of the judgment. 

    487 A.2d at 287 (quoting Stebbins-Anderson Co., 117 A.2d at 910) (internal quotation marks and citations omitted). A judgment creditor's lien cannot attach to a seller's bare legal title in the property after the seller has conveyed equitable title, because the seller's legal title is a mere "technicality." Wolf Org., 705 A.2d at 46. Nor can the judgment creditor's lien attach to the seller's equitable interest in the property, because that interest has already become "vested in another." Id.

    Moreover, the Maryland doctrine of equitable conversion protects the security interest of a purchaser regardless of the purchaser's compliance with the recordation statutes. The recordation statutes protect only bona fide purchasers. See Lewis v. Rippons, 383 A.2d 676, 680 (Md. 1978) (holding that because a party was not a bona fide purchaser, "the recording statute avail[ed] him not"); see also Greenpoint Mortg. Funding, Inc. v. Schlossberg, 888 A.2d 297, 308 (Md. 2005); In re Careful Laundry, 104 A.2d 813, 818 (Md. 1954).

    And Maryland law is clear that "a judgment creditor is not in the position of a bona fide purchaser." Kolker v. Gorn, 67 A.2d 258, 261 (Md. 1949); see also, e.g., Himmighoefer, 487 A.2d at 287; Stebbins-Anderson Co., 117 A.2d at 910; Chi. Title Ins., 988 A.2d at 1050; Wash. Mut. Bank, 974 A.2d at 389; Chambers v. Cardinal, 935 A.2d 502, 511 (Md. Ct. Spec. App. 2007). Thus, a judgment creditor's claim "is subject to prior, undisclosed equities" and "must stand or fall by the real, and not the apparent rights of the defendant in the judgment." Kolker, 67 A.2d at 261 (quoting Ahern v. White, 39 Md. 409, 421 (1874)) (internal quotation marks omitted).

    This traditional scheme of real property law and equity does not render Md. Code Ann., Real Prop. § 3-201's recordation requirement a nullity, as the district court recognized. Bona fide purchasers remain incentivized to record their interests to achieve priority against other bona fide purchasers. See Md. Code Ann., Real Prop. § 3-203.

    While Susquehanna Bank did not sign a contract to purchase Restivo Auto Body's real property, it did receive a conditional deed to secure repayment of its loan. And Maryland principles in equity "treat lenders who secure their interests with a mortgage or deed of trust as entitled to the protections available to bona fide purchasers for value," so long as those lenders act in good faith. Wash. Mut. Bank, 974 A.2d at 396; see also Silver v. Benson, 177 A.2d 898, 902 (Md. 1962) ("It is well settled that in circumstances where a deed is set aside for fraud, a mortgagee not a party to the fraud is entitled to the protection afforded a bona fide purchaser by a court of equity, to the extent of his interest"). Consequently, a lender's equitable interest in secured property is superior to the interest of subsequent judgment lienholders. Taylor Elec. Co., Inc. v. First Mariner Bank, 992 A.2d 490, 502 (Md. Ct. Spec. App. 2010) ("The overwhelming weight of authority is that once a bona fide purchaser or lender for value acquires title by way of execution of a contract for sale or valid mortgage, the purchaser or mortgagee takes title free and clear of any subsequent lien" (emphasis added and omitted)).

    These principles are not unique to Maryland, which applies traditional equitable principles to traditional real property law. See Hellmann v. Circle C Props. I, Ltd., No. 04-03-00217-CV, 2003 WL 22897220, at *2-3 (Tex. Ct. App. Dec. 10, 2003) (holding that a lender who held a deed of trust had priority over a debtor's subsequent judgment creditor); Suffolk Cnty. Fed. Sav. & Loan Ass'n v. Geiger, 57 Misc. 2d 184, 186 (N.Y. Sup. Ct. 1968) (holding that a mortgagee had priority over a subsequent judgment lienholder).

    Applying these principles in this case, Susquehanna Bank took equitable title to Lots 17 and 39 when Restivo Auto Body executed a deed of trust and delivered it to the Bank on January 4, 2005. That equitable title gave Susquehanna Bank priority over all of Restivo Auto Body's subsequent judgment-creditor lienholders. And because federal tax law subordinates a federal tax lien to a deed of trust that has become protected "against a subsequent judgment lien arising out of an unsecured obligation," 26 U.S.C. § 6323(h)(1)(A), Susquehanna Bank's equitable security interest, which had become protected on January 4, 2005, had priority over the IRS's lien under § 6323(a).[*]
For the ruling, see In re Restivo Auto Body (Susquehanna Bank v. U.S.)  No. 13-2249 (4th Cir. October 31, 2014).

See also, In Re: Restivo Auto Body, Inc.: 4th Circuit Rules Executed But Unrecorded Security Interest Has Priority Over IRS Tax Lien.