United States of America v. Cermak et al

Filing 103

ORDER: Granting Motion for Order of Foreclosure and Sale 101 . Ordered and Signed on 04/21/2016 by Magistrate Judge Mark D. Clarke. (rsm)

UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
MEDFORD DIVISION
UNITED STATES OF AMERICA,

Case No. 1:12-CV-00603-CL

Plaintiff,

v.
JOAN E. CERMAK, Personal
Representative of the ESTATE OF IV AN A.
CERMAK; JOANE. CERMAK;
HONOLULU INN, INC.; HONOLULU
RAIL AND DEVELOPMENT, LTD.;
SQUARE ROOT OF 25, LTD.; TIM
RICHARDSON & PAULA RICHARDSON,
as Trustees of JI FOUNDATION TRUST;
JOSEPHINE COUNTY,
Defendants.

ORDER OF FORECLOSURE AND JUDICIAL SALE
This Order of Foreclosure and Judicial Sale is entered pursuant to the provisions of 28
U.S.C. §§2001 and 2002 and 26 U.S.C. §§7402 and 7403. The Court hereby ORDERS as
follows:

1.

On October 17, 2013, the Court entered judgment in favor of the United States

and against Ivan A. Cermak and Joan E. Cermak, jointly and severally, in the total amount of
$1,252,082.73, as of February 27, 2013, plus interest continuing to accrue thereon pursuant to 26
U.S.C. §§ 6601, 6621, and 6622, and 28 U.S.C. § 196l(c) and other statutory additions.
2.

This Order pertains to two parcels of real property located at 133 Norman Road,

Selma, Oregon, 97538 (the "Subject Property"), Josephine County tax accounts R327761 and
R3277612. The parcels are more particularly described as follows:

Beginning at a point which is 1440 feet North of the Southeast corner of
Section 10, Township 38 South, Range 8 West, of the Willamette
Meridian, Josephine County, Oregon; thence South 50 feet to the center of
Clear Creek; thence along the center of Clear Creek as follows: South
76°30' West, 296 feet; South 56° West, 610 feet; South 17°30' West, 166
feet; thence South 77°45' East to a point which is the Northwest corner of
the tract of land described in Volume 96, Page 212, Josephine County
Deed Records; thence South 3°45' East, 387.2 feet; thence South 22°
West, 363.4 feet to the South line of said Section 10; thence West 165.6
feet to the Southeast corner of the West Half of the Southwest Quarter of
the Southeast Quarter of the Southeast Quarter of said Section 1O; thence
North, 1440 feet; thence East, 990 feet to the point of beginning.
EXCEPTING THEREFROM a tract of land off the South side of the
premises above described conveyed to the State of Oregon by deed
recorded in Volume 70, Page 291, Josephine County Deed Records.
ALSO EXCEPTING THEREFROM that portion conveyed to Josephine
County, a body politic in document recorded November 4, 1964, in
Volume 240, Page 523, Josephine County Deed Records.
3.

This Order is entered pursuant to the judgments entered in favor of the United

States on the Joint Stipulation for Entry of Judgment Against Joan E. Cermak, in all Capacities,
and Tim Richardson and Paula Richardson, as Trustees ofJI Foundation Trust, on the Second
and Third Claims for Relief in the Complaint and for an Order of Foreclosure and Judicial Sale
and the United States' Motion for Default Judgment Against Honolulu Inn, Inc. Honolulu Rail
and Development, Ltd. and Square Root of 25, Ltd.
4.

The United States has valid and subsisting tax liens on all property and rights to

property of Joan E. Cermak, as personal representative of the Estate oflvan A. Cermak, and Joan
E. Cermak, jointly and severally, including both parcels making up the Subject Property, arising
from the assessment described in Paragraph 13 of the United States' Complaint (Doc. 1), which
liens are effective as of the dates of those assessments. The United States further protected its
liens by filing Notices of Federal Tax Liens with the Josephine County Recorder's Office.
5.

Defendant Honolulu Inn, Inc. holds title to the Subject Property as the nominee of

Joan E. Cermak, as personal representative of the Estate oflvan A. Cermak, and Joan E. Cermak,

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individually, and the conveyances described in Paragraphs 30 through 32 of the United States'
Complaint are fraudulent conveyances and of no effect as to the lien claims of the United States,
and those conveyances are set aside.
6.

26 U.S.C. § 7403 entitles the United States to enforce its liens against the Subject

Property in order to apply the proceeds towards the joint and several tax liabilities of Joan E.
Cermak, as personal representative of the Estate oflvan A. Cermak, and Joan E. Cermak,
individually.
6.

The United States' federal tax liens against the Subject Property are hereby

foreclosed. Subject to the stay set forth in paragraph 14, below, the United States Marshal,
his/her representative, or an Internal Revenue Service Property Appraisal and Liquidation
Specialist ("PALS") representative is authorized and directed under 28 U.S.C. §§2001 and 2002
to offer for public sale and to sell Parcel 1 and Parcel 2 of the Subject Property free and clear of
the right, title, and interest of all parties to this action and any successors in interest or transferees
of those parties. The United States may choose either the United States Marshall or a PALS
representative to carry out the sale under this Order of Foreclosure and Judicial Sale and shall
make the arrangements for any sales as set forth in this Order. This Order of Foreclosure and
Judicial Sale shall act as a special writ of execution and no further orders or process from the
Court shall be required.
7.

Subject to the stay set forth in paragraph 14, below, the United States Marshal,

his/her representative, or a PALS representative is authorized to have free access to the Subject
Property and to take all actions necessary to preserve the Subject Property, including, without
limitation, retaining a locksmith or other person to change or install locks or other security
devices on any part thereof, until a deed thereto is delivered to the ultimate purchaser(s).

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8.

The terms and conditions of the sale are as follows:
a. Except as otherwise stated herein, the sale of Parcel 1 and Parcel 2 of the
Subject Property shall be by public auction to the highest bidder, free and clear
of all liens and interests. The United States may sell the parcels together or
separately.
b. The sales shall be subject to all laws, ordinances, and governmental regulations
(including building and zoning ordinances), affecting the premises, and
easements and restrictions of record, if any.
c. The sales shall be held at the United States District Court District of Oregon,
on the Subject Property's premises, or at any other place in accordance with
the provisions of 28 U.S.C. §§2001 and 2002, at a date and time announced by
the United States Marshal, his/her representative, or a PALS representative.
d. Notice of the sales shall be published once a week for at least four consecutive
weeks before the date fixed for the sales in at least one newspaper regularly
issued and of general circulation in Josephine County, Oregon, and, at the
discretion of the Marshal, his/her representative, or a PALS representative, by
any other notice that it or its representative may deem appropriate. State or
local law notice requirements for foreclosures or execution sales do not apply
to these sales under federal law, and state or local law regarding redemption
rights do not apply to these sales. The notice or notices of sale shall describe
Parcel 1 and Parcel 2 of the Subject Property, separately, and shall contain the
material terms and conditions of sale in this Order of Foreclosure and Sale.

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e. The minimum bid will be set by the Internal Revenue Service. If the minimum
bid is not met or exceeded, the Marshal, his/her representative, or a PALS
representative may, without further permission of this Court, and under the
terms and conditions in this Order of Foreclosure and Judicial Sale, hold new
public sales, if necessary, and reduce the minimum bid or sell to the highest
bidder.

f. Bidders shall be required to deposit, at the time of sale with the Marshal,
his/her representative, or a PALS representative, a minimum of 10 percent of
the bid, with the deposit to be made by a certified or cashier's check payable to
the United States District Court for the District of Oregon. Before being
permitted to bid at the sale, bidders shall display to the Marshal, his/her
representative, or a PALS representative satisfactory proof of compliance with
this requirement.
g. The balance of the purchase price of each parcel of the Subject Property, or
both parcels (depending on the circumstances) in excess of the deposit tendered
shall be paid to the Marshal or a PALS representative (whichever person is
conducting the sale) within 30 days after the date the bid is accepted, by a
certified or cashier's check payable to the United States District Court District
of Oregon. If the successful bidder or bidders fails to fulfill this requirement,
the deposit shall be forfeited and shall be applied to cover the expenses of the
sale, including commissions due under 28 U .S.C. § 1921 (c), with any amount
remaining to be applied first to the federal tax liabilities of Joan E. Cermak, as
personal representative of the Estate oflvan A. Cermak, and Joan E. Cermak,

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individually. Each parcel of the Subject Property shall be again offered for sale
under the terms and conditions of this Order of Foreclosure and Judicial Sale
or, in the alternative, sold to the second-highest bidder or bidders (if there are
multiple sales). The United States may bid as a credit against its judgment
without tender of cash.
h. The sales of Parcel 1 and Parcel 2 of the Subject Property shall not be final
until confirmed by this Court. The Marshal or a PALS representative shall file
a report of sale with the Court within 30 days from the date of receipt of the
balance of the purchase price.
1.

Upon confirmation of the sale or sales, the Marshal or PALS representative
shall promptly execute and deliver a deed of judicial sale conveying Parcel 1
and Parcel 2 of the Subject Property to the purchaser or purchasers.

J. Upon confirmation of the sale or sales, the interests of, liens against, or claims
to the residence and to the vacant lot held or asserted by the United States in
the Complaint and any other parties to this action or any successors in interest
or transferees of those parties shall be discharged and extinguished. The sale is
ordered pursuant to 28 U.S.C. §2001. Redemption rights under state or local
law shall not apply to this sale under federal law.
k. Upon confirmation of the sale or sales, the purchaser or purchasers shall have
the Recorder of Deeds of Josephine County, Oregon cause the transfer of the
Subject Property to be reflected in the Josephine County property records.
9.

Until Parcel 1 and Parcel 2 of the Subject Property are sold, Joan Cermak shall

take all reasonable steps necessary to preserve the residence and the vacant lot (including all

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buildings, improvements, fixtures, and appurtenances thereon) including, without limitation,
maintaining fire and casualty insurance policies on both parcels of the Subject Property. She
shall keep current in paying real property taxes as they are assessed by Josephine County,
Oregon. She shall not commit waste against the Subject Property, nor shall she cause or permit
anyone else to do so. She shall not do anything that tends to reduce the value or marketability of
the Subject Property, nor shall she cause or permit anyone else to do so. She shall not record any
instruments, publish any notice, or take any other action 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 sale, nor shall she cause or permit anyone else
to do so. After notice of any alleged violation of this paragraph 9, and a one month right to cure,
any continuing violation of this paragraph shall be deemed a contempt of Court and punishable
as such. The stay of this Order, described in Paragraph 14, below, shall be lifted by the Court in
the event any of the provisions of this paragraph are violated; but only after a failure to cure the
violation within one month after Notice thereof.
10.

All persons occupying the Subject Property shall leave and vacate permanently

such properties no later than the day after the stay of this Order, described in Paragraph 14,
below, expires, each taking with them his or her personal property (but leaving all
improvements, buildings, fixtures, and appurtenances) when leaving and vacating. If any person
fails or refuses to leave and vacate the residence or the vacant lot by the time specified in this
Order, the United States Marshal's Office is authorized to take whatever action it deems
appropriate to remove such person or persons from the premises, whether or not the sale of such
property or properties is being conducted by a PALS representative. If any person fails or refuses
to remove his or her personal property from the Subject Property by the time specified herein,

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the personal property remaining at the Subject Property thereafter is deemed forfeited and
abandoned, and the United States Marshal's Office or the PALS representative is authorized and
directed to remove and dispose of it in any manner they see fit, including sale, in which case the
proceeds of sale are to be applied first to the expenses of sale, and then to the tax liabilities at
issue herein.
11.

Notwithstanding the terms of the immediately preceding paragraph, if, after the

sale or sales of each parcel of the Subject Property are confirmed by this Court, either parcel of
the Subject Property remains occupied, a writ of assistance may, without further notice, be issued
by the Clerk of Court pursuant to Rule 70 of the Federal Rules of Civil Procedure to compel
delivery of possession of the Subject Property to the purchaser or purchasers thereof.
12.

If Joan Cermak, or any other person occupying the Subject Property vacates the

Subject Property prior to the deadline set forth in Paragraph 10, above, such person shall notify
counsel for the United States no later than two business days prior to vacating the property of the
date on which he or she is vacating the property. Notification shall be made by leaving a message
at the Tax Division, Western Region Front Office, [phone]. If Joan Cermak vacates the
Subject Property prior to the deadline set forth in Paragraph 10, she shall file a forwarding
address with the Court within 15 days of vacating the property and shall serve a copy of the same
upon the United States and all other parties to this litigation.
13.

The Marshal, his or her representative, or a PALS representative, shall deposit the

amount paid by the purchaser or purchasers into the registry of the Court. Upon appropriate
motion for disbursement or stipulation of the parties, the Court will disburse the funds in the
following order of preference until these expenses and liens are satisfied: first, to the IRS for
allowed costs and expenses of sale, including any commissions due under 28 U.S.C. § l 92l(c)

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and including an amount sufficient to cover the costs of any steps taken to secure or maintain the
real property at issue pending sale and confirmation by the Court; second, to Josephine County
for any Josephine County property tax liens upon the real property entitled to priority over prior
security interests; and third, to the United States of America to partially satisfy the joint and
several federal tax liabilities of Joan E. Cermak, as personal representative of the Estate oflvan
A. Cermak, and Joan E. Cermak, individually, at issue herein.
14.

This Order is stayed until thirty (30) days after the earlier of Joan Cermak's death

or the date after Joan Cermak no longer lives on the subject property for a continuous period of
one month, except for the provisions contained in Paragraphs 1, 4, and 9, above, which shall take
effect on the date on which this Order is signed. If Joan Cermak moves or otherwise no longer
lives on the subject property for a continuous period of one month, she must contact the
Department of Justice of such fact by leaving a message at the Tax Division, Western Region
Front Office, [phone].
15.

Upon entry of this Order, the Court will administratively close this case but retain

jurisdiction over the case. The United States will not need to seek further approval of the Court
in order to sell the subject property at a judicial sale once the events described in Paragraph 14,
above, occur and the stay of this Order is automatically lifted.
16.

Joan Cermak and Tim Richardson and Paula Richardson, as Trustees of the JI

Foundation Trust, are automatically dismissed from the case once the stay of the Order of
Foreclosure and Judicial Sale is automatically lifted. Joan Cermak and Tim Richardson and
Paula Richardson, as Trustees of the JI Foundation Trust, waive any right to further notice of the
judicial sale, and they waive any right to receive notice or to be heard regarding the eventual
judicial sale of the subject property or the distribution of any sale proceeds.

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Dated this

2( day of

/-d62vl I, 2016.
MARK D. CLARKE

United States Magistrate Judge

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