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United States v. Wolflick

United States District Court, C.D. California

February 11, 2014

United States of America, Plaintiff,
v.
Gregory Wolflick, et al., Defendants.

ANDRÉ BIROTTE JR., United States Attorney, SANDRA R. BROWN, Assistant United States Attorney Chief, Tax Division, GAVIN L. GREENE (Cal. Bar No. 230807), Assistant United States Attorney, Los Angeles, California, Attorneys for the United States of America.

JAMES R. FELTON, Greenberg & Bass LLP, Attorneys for Gregory and Rachel Wolflick.

AMENDED JUDGMENT MODIFYING THE FORECLOSURE PROCEDURE

PERCY ANDERSON, District Judge.

Based on the Judgment Resolving All Claims for Relief in Favor of the United States entered August 18, 2012 (document number 28), and Stipulation Requesting the Court Enter an Amended Judgment Modifying Foreclosure Procedure, the Court orders as follows:

A. Tax liabilities

As of October 31, 2011, Gregory Wolflick had a balance due to the United States of $1, 056, 465.25 for unpaid individual income taxes, penalties, interest, fees and collection costs, for tax years 1998 through 2004.

As of October 31, 2011, Gregory and Rachel Wolflick had a balance due to the United States of $257, 254.54 for unpaid joint income taxes, penalties, interest, fees and collection costs, for tax years 2006, 2008, and 2009. Gregory and Rachel are jointly and severally liable for these liabilities.

Interest on the liabilities will run in accordance with the laws of the United States.

B. Cloudcrest property

Gregory and Rachel Wolflick own the real property located at 3107 Cloudcrest Road, La Crescenta, California (subject property), APN XXXX-XXX-XXX, and is legally described as follows:

PARCEL A:
Parcel(s) 1 of Parcel Map No. 20255, in the County of Los Angeles, State of California, as per map recorded in Book 243 Page(s) 39 to 41 inclusive of Parcel Maps, in the office of the County Recorder of said County, and as amended by a Certificate of Correction recorded February 20, 1992 as Instrument No. 92-282618, of Official Records.
PARCEL B:
An easement for ingress and egress, sanitary sewers, water line and utility purposes over Parcels 2 and 3 of Parcel Map No. 20255 shown and depicted as "Reciprocal Variable Width Easements."

The United States has federal tax liens on all the property and rights to property owned by Gregory Wolflick for the amount of his unpaid individual balance due.

The United States has federal tax liens on all the property and rights to property owned by Gregory and Rachel Wolflick for the amount of their unpaid joint balance due.

The tax liens described above attach to the subject property.

The United States has the right to judicial foreclosure of its Federal tax liens against the subject property.

C. Foreclosure Procedure

The subject property will be sold according to the following procedure for foreclosure:

1. The Court now ORDERS that the real property described above be sold by the Area Director of the Internal Revenue Service, Los Angeles, California Area (hereinafter "Area Director"), or his delegate, the Internal Revenue Service Property Appraisal and Liquidation Specialist ("PALS") in accordance with the provisions of Title 28, United States Code, Sections 2001 and 2002.

2. Any party to this proceeding or any person claiming an interest in the subject property may move the Court, pursuant to Title 28, United States Code, Section 2001(b), for an order for a private sale of the subject property. Any such motion shall be filed within twenty (20) days of the date of this Judgment and shall set forth with particularity (a) the nature of the moving party's interest in the subject property, (b) the reasons why the moving party believes that a private sale would be in the best interests of the United States of America and any other claimant involved herein, (c) the names of three proposed appraisers and a short statement of their qualifications, and (d) a proposed form of order stating the terms and conditions of the private sale. Any such motion shall comply with Rule 7 of the Local Rules of the District Court for the Central District of California.

3. The Area Director, or the PALS, is ordered to sell the subject property if it does not become the subject of a motion pursuant to the preceding paragraph, in accordance with Title 28, United States Code, Sections 2001(a) and 2002. The property shall be sold at a public sale to be held at the Los Angeles County Courthouse, 111 North Hill Street, Los Angeles, California as follows:

a. The PALS shall announce the date and time for sale.
b. Notice of the sale shall be published once a week for at least fourr (4) consecutive weeks prior to the sale in at least one newspaper regularly issued and of general circulation in Los Angeles County, California. Said notice shall describe the subject property by both its street address and its legal description, and shall contain the terms and conditions of sale as set out herein.
c. The terms and conditions of sale shall be as follows:
i. A minimum bid determined by reference to the current fair market value shall be required. The minimum bid shall be 75% of the current fair market value as determined by an appraisal of the subject property by the PALS. The terms of sale as to all persons or parties bidding shall be by money order or by certified or cashier's check.
ii. The PALS shall set the minimum bid. If the minimum bid is not met or exceeded, the PALS may, without further permission of this Court, and under the terms and conditions in this order of sale, hold a new public sale, if necessary, and reduce the minimum bid.
iv. The successful bidder shall remit the remainder of the purchase price to the IRS PALS on or before 5:00 p.m., within three (3) business days of the date of sale, by money order or by certified or cashier's check payable to "Clerk, U.S. District Court."
v. The IRS PALS, directly or through counsel for the United States, promptly following receipt of such payment, will deposit the funds with the Clerk of this Court.
vi. Should the successful bidder fail to comply with the terms of the sale, such bidder shall be liable to the United States for twenty percent (20%) of the value of the property as a penalty. The Clerk shall distribute the 20% penalty as directed by the PALS by check made to the "United States Treasury" to be applied toward payment of said penalty. Payment of said penalty shall not be a credit on the judgment of the United States. The subject property shall again be offered for sale under the terms and conditions of this order for sale or, in the alternative, sold to the second highest bidder.

4. The Clerk of the District Court is directed to accept the proceeds of the sale and deposit it into the Court's registry for distribution pursuant to a further order.

5. Upon selling the subject property, the United States of America shall prepare and file with this Court an Application by the United States of America Confirming Sale and Directing Distribution of Sale Proceeds, which will set forth an accounting and report of sale for the subject property. The sale of the subject property shall be subject to confirmation by this Court. The Application by the United States of America Confirming Sale and Directing Distribution of Sale Proceeds shall be filed within thirty (30) days from the date of such sale. If no objections have been filed in writing in this cause with the Clerk of the Court within fifteen (15) days of the date of sale, the sale shall be confirmed by the Court without necessity of motion. On confirmation of the sale, the Court will direct the Internal Revenue Service to execute and deliver its deed conveying the subject property to the purchaser. On confirmation of the sale, all interests in, liens against, or claims to the subject property that are held or asserted by all parties to this action are discharged and extinguished.

6. Possession of the subject property which is sold shall be yielded to the purchaser upon the production of the Certificate and Sale of Deed; and if there is refusal to so yield, a Writ of Assistance may, without further notice, be issued by the Clerk of this Court to compel delivery of the subject property sold to the purchaser.

7. Until the subject property is sold, defendants Gregory and Rachel Wolflick:

a. Shall take all reasonable steps necessary to preserve the subject property (including all buildings, improvements, fixtures and appurtenances on the property) in its current condition including, without limitation, maintaining a fire and casualty insurance policy on the subject property;
b. Shall timely pay all real property taxes, mortgage payments, homeowners association dues (if any), and homeowner insurance premiums;
d. Shall neither do anything that tends to reduce the value or marketability of the subject property nor cause nor permit anyone else to do so; and
e. Shall not record any instruments, publish any notice, or take any other action (such as running newspaper advertisements, posting signs, or making internet postings) that may directly or indirectly tend to adversely affect the value of the subject property or that may tend to deter or discourage potential bidders from participating in the public auction, nor cause nor permit anyone else to do so.

8. After the Court confirms the sale, and by Order on the application made by the United States of America as to the specific amounts at issue, the sale proceeds deposited with the Clerk of this court shall be applied to the following items, in the order specified:

a. First, to the United States of America, for the expenses of the sale of the subject property;
b. Second, to the Los Angeles County Assessor, or other local taxing authority, for any real property taxes and other local assessments due and owing;
c. Third, to Provident Funding Associates, L.P.;
d. Fourth, to the United States;

9. The Court hereby retains jurisdiction of this action for the purpose of making proper distributions of the proceeds of the sale, and resolving any dispute, if any, pursuant to the Application by the United States of America Confirming Sale and Directing Distribution of Sale Proceeds, and Order of this Court upon said Application.

IT IS SO ORDERED.


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