In re Crystal Cascades Civil, LLC, (Bkrtcy.D.Nev.)

December 17, 2008: Claims - Tax lien notices that omitted part of debtor's name and misidentified its form were not effective against third parties.

Where tax lien notices filed by the Internal Revenue Service (IRS) left out one of the nontrivial words of the Chapter 11 debtor-taxpayer's name and misidentified the debtor's organizational form, that is, identified the debtor as "Crystal Cascades, LLC, a corporation," instead of its full and proper name, "Crystal Cascades Civil, LLC, a Nevada limited liability company," a reasonable computerized search of the relevant real property records would not have revealed either tax lien. Consequently, the notices were not effective against third parties, and the creditors, rather than the IRS, were entitled to the surplus proceeds from the foreclosure sale of the debtor's real property. Although use of the two-term parameter "Crystal Cascades" would have discovered the filings, a reasonable nonprofessional searcher would not have used that parameter, but would have used the name from the grant deed that vested the property in its current owner, or a reasonable truncation of that name, and such a search would not have discovered the filings. Furthermore, a reasonable searcher would not have searched the Secretary of State's records, but only those indexed and filed at the county recorder's office.