United States of America v. O'Callaghan et al

Filing 112

ORDER granting 107 --motion for order of sale, etc. See order for particulars; directing the Clerk to TERMINATE any pending motion and CLOSE the case. Signed by Judge Steven D. Merryday on 6/27/2011. (BK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

UNITED STATES OF AMERICA,
Plaintiff,
v.

CASE NO.: 8:09-cv-384-T-23-TGW

WILLIAM O’CALLAGHAN, et al.,
Defendants.
/

ORDER
The United States sues to foreclose a federal tax lien on the defendants’ property
and to sell the property in order to use the proceeds to defray the federal income tax
liability of the defendant William O’Callaghan (in section I., “O’Callaghan”). A June 3,
2011, order (Doc. 105) adopts a report and recommendation (Doc. 91) and directs both
foreclosure of the federal tax lien on the defendants’ property and a consequent sale.
The order directs that the United States receive the first distribution of the proceeds of
the sale and apply those proceeds to William O’Callaghan’s foreclosed federal income
tax liability for 1981, 1982, and 1983.
The United States moves (Doc. 107) for an order of sale and submits (Doc. 107,
Ex. 1) a proposed order of sale. The defendants respond (Doc. 111) in opposition.
I.
The defendants present fifteen objections the United States’ motion and proposed
order of sale. Each objection is meritless.

Several of the defendants’ objections attempt to re-litigate the United States’
motion for summary judgment. By claiming that “the tax liability purportedly supporting
the tax liens was completely discharged in bankruptcy,” (Doc. 111 at 7) the defendants
pretend no report and recommendation exists. See (Doc. 91 at 5) (“O’Callaghan’s
personal liability for the 1981, 1982, and 1983 tax years was . . . discharged in [a]
chapter 7 bankruptcy . . . . However, as the bankruptcy court confirmed , . . . the prepetition tax lien on [the property] remains.”). The defendants’ assertion that “[t]here is
no specified monetary amount of the federal tax lien” (Doc. 111 at 6) similarly ignores
the report and recommendation. See (Doc. 91 at 6) (“[a]s of September 30, 2010, the
outstanding income taxes, penalties, and interest for the 1981, 1982, and 1983 tax
assessments totaled $2,023,049.10”). In addition, the defendants attempt to re-litigate
whether “further proceedings . . . to determine whether third parties are entitled to a
share in” a remainder shall occur after the sale of the property. (Doc. 91 at 37)
However, the defendants cite no authority and fail to address why settling the
distribution of a hypothetical remainder is necessary when “the lien encumbers one
hundred percent of the property,” (Doc. 91 at 33) and “the sale of the property
indisputably will not satisfy the federal tax lien for the 1981-83 tax years.” (Doc. 91 at
35)
The defendants’ unsupported assertion that the order of sale cannot require each
resident to avoid waste upon the property and to vacate the property within thirty days is
also an attempt to re-litigate the merits of the action. Because the United States
succeeded on the merits, allowing an individual to damage, or to remain on, the

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property after the tax lien is ordered foreclosed is allowing an individual to damage or to
remain on the United States’ property.
Other objections challenge provisions of the order of sale that are discretionary
under 28 U.S.C. § 2001, which authorizes the sale of real property “upon such terms
and conditions as the court directs.” Thus, the defendants’ complaint that the proposed
order of sale “includes an enumerated list of multiple items and issues that must be
litigated and . . . supported in the record of this case or in statute or law” (Doc. 111 at 5)
is misguided because the conditions enumerated in the proposed order of sale are
“supported in . . . [a] statute.” The defendants’ assertions that the IRS may not or
should not conduct the sale and that a minimum bid requirement is invalid is likewise an
attempt to dictate matters that 28 U.S.C. § 2001 leaves to a court’s discretion.
The defendants object also that the order granting summary judgment is a final
judgment and that the United States’ motion for an order of sale therefore violates the
temporary stay of a judgment required by Federal Rules of Civil Procedure, Rule 62(a).
A “judgment” under Rule 62(a), however, is “a decree and any order from which an
appeal lies.” 11 Wright & A. Miller, Federal Practice & Procedure § 2901 n.3 (2d ed.)
(quoting FED.R.CIV.P. 54(a)). The order granting summary judgment is not a “judgment”
under Rule 62(a). The Eleventh Circuit ruled that a nearly identical order is not final:
[t]he [order] stated that the government could foreclose the [defendants’] house to
satisfy the tax assessments, but it did not order the foreclosure or sale of the
property . . . . The [defendants] filed a notice of appeal, but we dismissed their
appeal for lack of jurisdiction, finding that the district court’s order was neither final
nor immediately appealable.

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U.S. v. Lena, 370 Fed.Appx. 65, 68 (11th Cir. 2010); see also United States v. Simons,
2011 WL 1313954 (10th Cir. 2011).1 Consequently, Rule 62(a) is not applicable to the
United States’ motion for an order of sale.
On the other hand, the defendants object that the order granting summary
judgment is not a foreclosure judgment and that no order of sale may issue before a
foreclosure judgment. This argument fails because “the issuance of an order for sale is
[not] merely a matter of executing the judgment. An order directing the sale of property
is part and parcel of the relief sought in an action under [26 U.S.C.] § 7403.” Simons,
2011 WL 1313954 at *3. An order that both forecloses a lien and orders a sale validly
awards a complete remedy.
The defendants’ remaining objections are “a hodgepodge of unsupported
assertions . . . and legalistic gibberish.” U.S. v. Reid, 295 Fed. Appx. 662, 663 (5th Cir.
2008) (quotation omitted). For instance, renewing another argument from the
objections to the report and recommendation, the defendants insist that an order of
foreclosure violates the Tenth Amendment because the federal statute authorizing the
foreclosure, 26 U.S.C. § 7403, conflicts with Florida law. (Doc. 111 at 3); see also (Doc.
95 at 5-7) (“[O’Callaghan’s] real property [is] protected under the Homestead Exemption
of the Florida Constitution[, and] 26 U.S.C. § 7403 . . . violates the Florida Homestead

1
In Simons, the district court “granted the United States’ summary-judgment motion and entered a
money judgment in favor of the government for the amounts of the [defendants’] unpaid tax assessments.”
2011 WL 1313954 at *1. Simons concludes the district court’s order is not final. 2011 WL 1313954 at *3
(quoting Grant v. Phoenix Mut. Life Ins. Co., 106 U.S. 429, 431 (1882) (“a decree of sale in a foreclosure
suit, which settles all the rights of the parties and leaves nothing to be done but make the sale and pay out
the proceeds, is a final decree for the purposes of an appeal”)).

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Exemption.”). Of course, this untenable logic leaves a state free to flout the Supremacy
Clause, U.S. CONST. art. VI, cl. 2, by shielding a resident from federal tax law.2
Another frivolous objection is that the defendants are entitled to a jury trial
because the United States’ claim is legal rather than equitable. A suit at law is not
presented to a jury if, as in this action, a plaintiff succeeds on a motion for summary
judgment. Cf. Pernell v. Southall Realty, 416 U.S. 363, 384 (1974) (“the trial court’s
power to grant summary judgment where no genuine issues of fact are in dispute
provides a substantial bulwark against any possibility that a defendant will demand a
jury trial simply as a means of delaying an eviction”).
Finally, the defendants brazenly assert that because the order granting the
United States’ motion for summary judgment does not order the United States to comply
with 28 U.S.C. § 2002 when selling the property, the entire order should be “reversed.”
Section 2002 requires notice of a sale in a local newspaper “once a week for at least
four weeks prior to the sale.” The United States’ proposed order and the order of sale
include this requirement3 – as each must. The United States may not violate the law
while selling the property regardless of the content of the order granting summary
judgment. In other words, the United States is not authorized to ignore
28 U.S.C. § 2002 merely because the order granting summary judgment omits to
mention 28 U.S.C. § 2002; nor may the United States ignore the First Amendment

2

The defendants’ claim that Florida law mandates that the order of sale authorize a right of
redemption and include a precise time and place of sale fail on the same ground.
3

The defendants state that the proposed order of sale does not mention 28 U.S.C. § 2002. (Doc.
111 at 9) Not for the first time, the defendants overtly contradict the truth. See (Doc. 107, Ex. 1 at 1) (“the
real property . . . [shall] be sold under title 28, United States Code, §§ 2001 and 2002”).

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merely because the order granting summary judgment omits to mention the First
Amendment.
II.
The United States’ motion (Doc. 107) for order of sale is GRANTED.
Accordingly, it is ORDERED that:
1.

The federal tax liens for 1981, 1982, and 1983 on the real property located
at 738 Mandalay Avenue, Clearwater, Florida 34630 (“the property”), which
is described as:
Lot 13, Block 12, Mandalay Subdivision, according to plat thereof
recorded in Plat Book, 14, Page 32-35 of the Public Records of
Pinellas County, Florida,
are foreclosed. The property shall be sold pursuant to U.S.C. §§ 2001 and
2002 to satisfy the United States’ liens.

2.

The Internal Revenue Service (“IRS”) Property Appraisal and Liquidation
Specialist (“PALS”) is authorized to offer the property for public sale.

3.

The following terms and conditions govern the sale of the property.
a.

The sale of the Property shall be free and clear of the interests of
William O’Callaghan, Anna Marques, Private Funding Services
Group, Inc., and J.P. Morgan Chase Bank N.A.

b.

The sale is subject to any law, ordinance, or governmental regulation
(including building and zoning ordinances) affecting the premises and
any easement or restriction of record.

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c.

A sale by public auction shall be held either at the Clearwater
Courthouse or on the property’s premises, in accord with the
provisions of 28 U.S.C. §§ 2001 and 2002.

d.

The PALS shall advertise the date and time of sale by publishing a
Notice of Sale once a week for at least four consecutive weeks
before the date fixed for sale. The advertisement shall appear in at
least one newspaper regularly issued and of general circulation in
Pinellas County, Florida. The notice shall describe the property and
each term and condition of sale set forth in this order.

e.

The PALS shall establish the minimum bid. If no bidder meets or
exceeds the minimum bid, the PALS may, without further order of this
court and under the terms and conditions in this order, again offer the
property for public sale and if necessary reduce the minimum bid.

f.

On the date of sale, any successful bidder shall deposit with the
PALS between five (5) and twenty (20) percent of the bid as specified
by the PALS in the Notice of Sale. The deposit shall be paid by cash
or a cashier’s check payable to the United States District Court for
the Middle District of Florida. Before bidding at the sale, a potential
bidder must show the PALS proof of the bidder’s ability to comply
with this requirement.

g.

Any successful bidder shall pay by cashier’s check payable to the
United States District Court for the Middle District of Florida the

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balance of the purchase price to the Clerk of this court no later than
thirty (30) days after the date of sale. If the bidder fails to fulfill this
requirement, the bidder shall forfeit the deposit and the deposit shall
be applied to cover any expense of sale. If any amount of the deposit
remains after payment of the expenses of sale, the amount remaining
shall be applied to the federal tax liabilities of William

O’Callaghan

for tax years 1981, 1982, and 1983. The PALS shall again offer the
property for sale under the terms and conditions of this order of sale
or sell the property to the second highest bidder. The United States
may bid as a credit against the United States’s judgment without
tender of cash.
h.

The sale is subject to confirmation by this court. On confirmation of
the sale, the PALS shall execute and deliver the deed conveying the
property to the purchaser. On confirmation of the sale, if any party to
this action holds or asserts an interest in, lien against, or claim to, the
property, the interest, lien, or claim is discharged and extinguished.

i.

The successful bidder shall pay, in addition to the amount of the bid,
any documentary stamp or registry fee associated with recording the
transfer of title in the county’s registry of title.

4.

Until the property is sold, William O’Callaghan shall preserve the property
(including any building, improvement, fixture, or appurtenance on the
property) and shall neither commit waste nor permit anyone else to commit

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waste against the property. William O’Callaghan shall not (1) seek to
reduce the value or marketability of the property or (2) engage in conduct
that either adversely affects the value of the property or deters a potential
bidder from participating in the public auction.
5.

Any person occupying the property shall vacate the property permanently
no later than thirty (30) days after entry of this order and shall remove all
personal property. If any person fails or refuses to vacate the property by
the date specified in this order, the PALS may coordinate with the United
States Marshal to eject that person. Any personal property remaining on
the property thirty (30) days after entry of this order is forfeited. The PALS
may by sale dispose of any forfeited personal property. The PALS shall
apply the proceeds of sale to any expense of sale and pay the balance into
the court for further distribution.

6.

No later than two (2) business days after vacating the property pursuant to
the deadline in this order, William O’Callaghan and Anna Marques shall
notify counsel for the United States of a forwarding address by contacting
Marion Goyette at [phone].

7.

Pending sale of the property and until the deed to the property is delivered
to the successful bidder, the IRS may access the premises in order to
preserve the property.

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8.

After the court confirms the sale, the sale proceeds shall be paid to the
Clerk of this court and applied to each of the following items in the following
order.
a.

To the United States Treasury for any expense of sale, including any
expense incurred to secure or maintain the property pending sale
and confirmation by the court.

b.

To any tax unpaid and matured that is owed to Pinellas County for
any real property tax on the property.

c.

To the liability of William O’Callaghan for federal income taxes for the
1981, 1982, and 1983 tax years.

d.

Any balance remaining after the above payments have been made
shall be held by the Clerk until further order of the court.

The Clerk is directed to (1) terminate any pending motion and (2) close the case.
ORDERED in Tampa, Florida, on June 27, 2011.

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