United States of America v. Rutherford et al

Filing 18

ORDER RE: STIPULATION FOR ENTRY OF JUDGMENT, FORECLOSURE AND JUDICIAL SALEAND STAY, AND DIRECTING ENTRY OF JUDGMENT; granting 17 Stipulation for Entry of Judgment Against Louis G. Rutherford. Signed by Senior Judge Justin L. Quackenbush. (CV, Case Administrator)

1
2
3
UNITED STATES DISTRICT COURT
4
EASTERN DISTRICT OF WASHINGTON
5
6

UNITED STATES OF AMERICA,

7

Plaintiff,

8

v.

9
10

LOUIS G. RUTHERFORD, SALLY
J. RUTHERFORD, and CHELAN
COUNTY ASSESSOR,

11

Defendants.

NO. 2:16-CV-00036-JLQ
ORDER RE: STIPULATION FOR
ENTRY OF JUDGMENT,
FORECLOSURE AND JUDICIAL SALE
AND STAY, AND DIRECTING ENTRY
OF JUDGMENT

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

On February 8, 2016, the Government initiated this action to foreclose on federal
tax liens regarding four properties in Chelan County, Washington. (ECF No. 1). On
October 5, 2016, the court issued an Order to Show Cause based on the Government’s
lack of prosecution in this case wherein the only remaining Defendant, Louis G.
Rutherford, was in default. (ECF No. 15). On October 7, 2016, the Government filed a
Stipulation for Entry of Judgment Against Louis G. Rutherford (ECF No. 17). The
Stipulation seeks entry of an Order of Foreclosure and Judicial Sale, entry of Judgment,
and an Order staying foreclosure and judicial sale so Defendant Louis Rutherford can
attempt to sell the properties that are the subject of this action at an arm’s length
transaction in lieu of a judicial sale of the properties.
In the Stipulation, the Government disclosed, for the first time, the existence of a
related case in the Western District of Washington, United States of America v. Louis G.
Rutherford, No. 2:16-CV-00187-JCC. The related case was not timely disclosed to this
court, nor did the Government explain the nature of that case. This court has reviewed the
ORDER - 1

1 pleadings in the Western District of Washington case, and it appears that matter sought to
2 reduce $313,412.46 in outstanding federal tax assessments to judgment against Louis
3 Rutherford. See U.S.A. v. Rutherford, 2:16-CV-00187-JCC (W.D. Wash.) (ECF No. 1). On
4 August 10, 2016, District Judge John Coughenour entered default judgment against
5 Rutherford in the amount of $319,618.06, plus interest and other statutory additions. See
6 (id. at ECF No. 18).
7

In the matter before this court, the Government and Defendant Rutherford have

8 entered into an agreement whereby Defendant will attempt to sell the four properties at
9 issue in this action and provide the proceeds to the Government. (ECF No. 17 at 6). Under
10 the parties’ agreement, if Defendant sells the properties or otherwise satisfies the tax liens
11 against Defendant prior to December 31, 2016, the Government will notify the court and
12 request the judicial sale be vacated. (ECF No. 17 at 6).
13

IT IS HEREBY ORDERED:

14

1.

17) is GRANTED.

15
16

2.

This Order is entered pursuant to the Stipulation of the parties, 28 U.S.C. § §
2001 and 2002, and 26 U.S.C. § § 7402 and 7403.

17
18

The Stipulation for Entry of Judgment Against Louis G. Rutherford (ECF No.

3.

The Clerk is directed to enter Judgment in favor of the Government and

19

against Louis G. Rutherford foreclosing the federal tax liens against the four

20

properties set forth in the Complaint (ECF No. 1) and as described herein.

21

Those properties shall be sold at a judicial sale and the proceeds distributed in

22

accordance with this Order. The United States has perfected lien interests in

23

all property and all rights to property belonging to Louis G. Rutherford,

24

including the four properties identified in the Complaint (ECF No. 1), as of

25

the date of each tax assessment described in the Complaint (ECF No. 1), or

26
ORDER - 2

1

acquired thereafter. Judgment shall be without costs or attorneys’ fees to any

2

party.

3

4.

Pursuant to this Order, Judgment will be entered in favor of the United States

4

and against Louis G. Rutherford, recognizing the Amended Judgment entered

5

against Louis G. Rutherford in the Western District of Washington in U.S.A.

6

v. Louis G. Rutherford, No. 2:16-CV-187-JCC (ECF No. 18), and referenced

7

in Paragraph 9 of the Stipulation for Entry of Judgment (ECF No. 17) in this

8

matter, attaches to the Four Properties.

9

5.

The United States filed this action to foreclose federal tax liens against four

10

separate parcels of real property located in Chelan County, Washington

11

(“Four Properties”).

12

6.

The Four Properties are legally described as:
That portion of the Northwest Quarter of the Northeast Quarter of
Section 14, Township 24 North, Range 19 East, W.M., Chelan County,
Washington, further described as follows:
Commencing at the Northwest corner of said Northwest Quarter of the
Northeast Quarter; thence Southeast 89o07’47” along the Northerly
boundary line of said subdivision for 370.60 feet to the Northeast
corner of Lot 1 of Chelan County Short Plat No. 1088 as filed under
Auditor’s File No. 8404260025 and the TRUE POINT OF
BEGINNING; thence from said Point of Beginning continuing along
said Northerly boundary line Southeast 89o07’47” for 966.68 feet to
the Northeast corner of said subdivision, a found aluminum capped
monument; thence leaving said Northerly boundary line Southwest
04o31’40” for 849.57 feet; thence Northwest 76o15’24” for 318.96
feet; thence Southwest 40o18’13” for 287.66 feet; thence Northwest
54o21’52” for 25.69 feet; thence Northwest 25o43’41” for 228.13 feet;
thence Southwest 66o17’36” for 257.87 feet to the Easterly right of
way line of the Nahahum Canyon County Road, thence along said
Easterly right of way line Northwest 23o01’39” for 713.37 feet; thence
along a curve to the right having a delta angle of 09o31’56” a radius of
339.81 feet for a length of 56.53 feet, thence Northwest 13o29’18” for
34.43 feet to the Southwest corner of said lot 1 of Chelan County Short
Plat No. 1088, thence leaving said right of way line Southeast
89o07’47” along the Southerly boundary line of said lot 1 for 293.01
feet to the Southeast corner of said Lot 1; thence northwest 13o29’43”
along the Easterly boundary line of said Lot 1 for 153.45 feet to the
Point of Beginning.
These four parcels of real property are also referred to as “Lot 1,” “Lot 2,”

13
14
15
16
17
18
19
20
21
22
23
24
25
26
ORDER - 3

“Lot 3,” and “Lot 4,” and are each described below.

1
2

7.

Lot 1 is a parcel of real property with a street address of 9035 Nahahum

3

Canyon Road, Cashmere, Washington, 98815, and is Chelan County

4

Assessor’s Parcel No. 241914120075.

5

8.

Lot 2 is a parcel of real property with a street address of 9065 Nahahum

6

Canyon Road, Cashmere, Washington, 98815, and is Chelan County

7

Assessor’s Parcel No. 241914120080.

8

9.

Canyon Road, Cashmere, Washington, 98815, and is Chelan County

9

Assessor’s Parcel No. 241914120085.

10
11

Lot 3 is a parcel of real property with a street address of 9025 Nahahum

10.

Lot 4 is a parcel of real property with a street address of 9015 Nahahum

12

Canyon Road, Cashmere, Washington, 98815, and is Chelan County

13

Assessor’s Parcel No. 241914120090.

14

11.

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

15

Four Properties in order to apply the proceeds towards the tax liabilities of

16

Louis G. Rutherford.

17

12.

the Four Properties.

18
19

Louis G. Rutherford consented to the foreclosure of the federal tax liens upon

13.

The United States’ federal tax liens against the Four Properties are hereby

20

FORECLOSED. The United States Marshal for the Eastern District of

21

Washington, his representative, or an Internal Revenue Service Property

22

Appraisal and Liquidation Specialist (“PALS”) is authorized and directed

23

under 28 U.S.C. §§ 2001 and 2002 to offer for public sale and to sell the Four

24

Properties free and clear of the right, title, and interest of all parties to this

25

action and any successors in interest or transferees of those parties. The

26

United States may choose either the United States Marshal or a PALS

ORDER - 4

1

representative to carry out the sale under this Order and shall make the

2

arrangements for any sale as set forth in this Order.

3

14.

The United States Marshal for the Eastern District of Washington, his

4

representative, or a PALS representative is authorized to have free access to

5

the Four Properties and to take all actions necessary to preserve the Four

6

Properties, including, but not limited to, retaining a locksmith or other person

7

to change or install locks or other security devices on any part of the Four

8

Properties, until the deed to the Four Properties is delivered to the ultimate

9

purchaser.

10

15.

The terms and conditions of the sale shall be:
a.

11

Except as otherwise stated herein, the sale of the Four Properties shall

12

be by public auction to the highest bidder, free and clear of all liens

13

and interests;
b.

14

The sale shall be subject to all laws, ordinances, and governmental

15

regulations (including building and zoning ordinances), affecting the

16

premises, and easements and restrictions of record, if any;
c.

17

The sale shall be held at the courthouse of the borough or city in which

18

the Four Properties are located, on the Four Properties’ premises, or at

19

any other place in accordance with the provisions of 28 U.S.C. §§ 2001

20

and 2002.
d.

21

Notice of the sale shall be published once a week for at least four

22

consecutive weeks before the sale in at least one newspaper regularly

23

issued and of general circulation in Chelan County, Washington, and,

24

at the discretion of the U.S. Marshal, his representative, or a PALS

25

representative, by any other notice deemed appropriate. State law

26

notice requirements for foreclosures or execution sales do not apply to

ORDER - 5

1

this sale under federal law. The notice shall contain a description of the

2

Four Properties and shall contain the material terms and conditions of

3

sale in this Order.
e.

4

The minimum bid will be set by the Internal Revenue Service for the

5

Four Properties. If the minimum bid is not met or exceeded, the U.S.

6

Marshal, his representative, or a PALS representative may, without

7

further permission of this court, and under the terms and conditions in

8

this order of sale, hold a new public sale, if necessary, and reduce the

9

minimum bid or sell to the highest bidder.
f.

10

The successful bidder for the Four Properties shall be required to

11

deposit at the time of the sale with the U.S. Marshal, his representative,

12

or a PALS representative a minimum of ten percent of the bid, with the

13

deposit to be made by certified or cashier’s check or cash payable to

14

the United States District Court for the Eastern District of Washington.

15

Before being permitted to bid at the sale, bidders shall display to the

16

U.S. Marshal, their representative, or a PALS proof that they are able

17

to comply with this requirement. No bids will be received from any

18

person(s) who have not presented proof that, if they are the successful

19

bidders(s), they can make the deposit required by this order of sale.
g.

20

The balance of the purchase price for the Four Properties is to be paid

21

to the U.S. Marshal, his representative, or a PALS representative

22

(whichever person is conducting the sale) within 30 days after the date

23

the bid is accepted, by a certified or cashier’s check payable to the

24

United States District Court for the Eastern District of Washington. If

25

the successful bidder fails to fulfill this requirement, the deposit shall

26

be forfeited and shall be applied to cover the expenses of the sale,

ORDER - 6

1

including commissions due under 28 U.S.C. § 1921(c), with any

2

amount remaining to be applied to the tax liens against Louis G.

3

Rutherford at issue herein. The Four Properties shall be again offered

4

for sale under the terms and conditions of this order of sale, or, in the

5

alternative, sold to the second highest bidder. The United States may

6

bid as a credit against its judgment without tender of cash.
h.

7

The sale of the Four Properties shall be subject to confirmation by this

8

Court. The U.S. Marshal or a PALS representative shall file a report of

9

sale with the court, together with a proposed order of confirmation of

10

sale, within 30 days from the date of receipt of the balance of the

11

purchase price.
i.

12

Upon confirmation of the sale, the U.S. Marshal or PALS

13

representative shall promptly execute and deliver a deed of judicial sale

14

conveying the Four Properties to the purchaser(s).
j.

15

Upon confirmation of the sale, all interests in, liens against, or claims

16

to, the Four Properties that are held or asserted by all parties to this

17

action or any successors in interest or transferees of those parties shall

18

be are discharged and extinguished. The sale is ordered pursuant to 28

19

U.S.C. § 2001. Redemption rights under state law shall not apply to

20

this sale under federal law.
k.

21

Upon confirmation of the sale, the purchaser(s) shall have the Chelan

22

County Clerk and Recorder record the transfer of the Four Properties

23

upon that District’s register of title.
l.

24

Until the Four Properties are sold, Louis G. Rutherford shall take all

25

reasonable steps necessary to preserve the Four Properties (including

26

all buildings, improvements, fixtures and appurtenances on the

ORDER - 7

1

properties) in its current condition including, without limitation,

2

maintaining a fire and casualty insurance policy. He shall neither

3

commit waste against the Four Properties, nor cause nor permit anyone

4

else to do so. He shall neither do anything that tends to reduce the

5

value or marketability of the Four Properties, nor cause or permit

6

anyone else to do so. He shall not record any instruments, publish any

7

notice, or take any other action (such as running newspaper

8

advertisements or posting signs) that may directly or indirectly tend to

9

adversely affect the value of the Four Properties, or that may tend to

10

deter or discourage potential bidders from participating in the public

11

auction, nor shall he cause or permit anyone else to do so. Violation of

12

this paragraph shall be deemed a contempt of court and punishable as

13

such.
m.

14

All persons occupying the Four Properties shall leave and vacate the

15

Four Properties permanently within 30 days of this Order, each taking

16

with them his or her personal property (but leaving all improvements,

17

buildings, fixtures, and appurtenances to the Four Properties). If any

18

person fails or refuses to leave and vacate the Four Properties by the

19

time specified in this Order, the United States Marshal’s Office, alone,

20

is authorized to take whatever action it deems appropriate to remove

21

such person from the premises, whether or not the sale of the Four

22

Properties is being conducted by a PALS representative. Specifically,

23

the U.S. Marshal is authorized and directed to take all actions

24

necessary to enter the Four Properties at any time of the day or night

25

and evict and eject all unauthorized persons located there, including

26

Louis G. Rutherford, and any occupants. To accomplish this and to

ORDER - 8

1

otherwise enforce this Order, the U.S. Marshal is authorized to enter

2

the Four Properties and any and all structures and vehicles located

3

thereon, and to use force as necessary. When the U.S. Marshal

4

concludes that all unauthorized persons have vacated, or been evicted

5

from the Four Properties, they shall relinquish possession and custody

6

of the Four Properties to the Internal Revenue Service, or its designee.

7

No person shall be permitted to return to the Four Properties and/or

8

remain thereon without the express written authorization by the United

9

States Marshal and/or the Internal Revenue Service, and/or the United

10

States Department of Justice, or their respective representatives and/or

11

designees. Unauthorized persons who re-enter the Four Properties

12

during the time this Order is in effect may be ejected by the United

13

States Marshal without further order of the court.
n.

14

If any person fails or refuses to remove his or her personal property

15

from the Four Properties by the time specified herein, the personal

16

property remaining on the Four Properties thereafter is deemed

17

forfeited and abandoned, and the United States Marshal’s Office is

18

authorized to remove it and to dispose of it in any manner it deems

19

appropriate, including sale, in which case the proceeds of the sale are

20

to be applied first to the expenses of sale and the balance to be paid

21

into the court for further distribution.
o.

22

The U.S. Marshal, his representative, or a PALS representative shall

23

deposit the amount paid by the purchaser into the registry of the court.

24

Upon appropriate motion for disbursement or stipulation of the parties,

25

the court will disburse the funds in the following partial order of

26

preference until these expenses and liens are satisfied:

ORDER - 9

1

(i)

First to the Internal Revenue Service, for allowed costs

2

and expenses of sale, including any commissions due

3

under 28 U.S.C. § 1921(c) and including an amount

4

sufficient to cover the costs of any steps taken to secure or

5

maintain the Four Properties pending sale and

6

confirmation by the court;

7

(ii)

Second, to Chelan County Assessor, for any and all liens

8

it may have on the Four Properties for unpaid real

9

property taxes or special assessments at the time of the

10

sale;

11

(iii)

Third, to the United States, for the amount of the

12

remaining proceeds after the first and second priorities are

13

paid, up to the amount of the outstanding balance of the

14

Amended Judgment entered on August 10, 2016, against

15

Louis G. Rutherford in U.S.A. v. Louis G. Rutherford, No.

16

2:16-CV-187-JCC (W.D. Wash.) (ECF No. 18).

17

(iv)

18
19

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

16.

The foregoing provisions concerning the foreclosure and judicial sale of the

20

Four Properties is hereby STAYED until December 31, 2016, at which point

21

this stay will automatically expire.

22

17.

If Louis G. Rutherford successfully sells the Four Properties through a

23

private sale or otherwise fully satisfies the Untied States’ federal tax liens at

24

issue in this action prior to December 31, 2016, the Government shall notify

25

the court forthwith.

26

18.

Until the ultimate disposition of the Four Properties, Louis G. Rutherford

ORDER - 10

1

shall take all reasonable steps necessary to preserve the Four Properties,

2

including all buildings, improvements, fixtures, and appurtenances to the

3

Four Properties, in their current condition, including without limitation,

4

maintaining a fire and casualty insurance policy. He shall neither commit

5

waste against the Four Properties nor permit anyone else to do so.

6

19.

Until the ultimate disposition of the Four Properties, Louis G. Rutherford

7

shall neither do anything that tends to reduce the value or marketability of the

8

Four Properties nor cause or permit anyone else to do so. He shall not record

9

any instruments, publish any notice, or take any other action (such as running

10

newspaper advertisements or posting signs) that may directly or indirectly

11

tend to adversely affect the value of the Four Properties or tend to deter or

12

discourage potential bidders from participating in a public auction, should

13

one ultimately become necessary, nor shall he cause or permit anyone else to

14

do so.

15

20.

Until the expiration of this Stay, and within any extension of time granted by

16

the United States to facilitate an orderly sale, Louis G. Rutherford shall use

17

good faith efforts to sell the Four Properties at their fair market value to a

18

bona fide purchaser for value, or otherwise satisfy the United States’ federal

19

tax assessments at issue in this action.

20

IT IS SO ORDERED. The Clerk is hereby directed to enter this Order and

21 Judgment and furnish copies to counsel.
22

Dated October 12, 2016.

23

s/ Justin L. Quackenbush
JUSTIN L. QUACKENBUSH
SENIOR UNITED STATES DISTRICT JUDGE

24
25
26
ORDER - 11