Falbo v. Falbo et al

Filing 36

MEMORANDUM OPINION AND ORDER granting 3 MOTION by John M. Falbo to dismiss counterclaim and to strike matter from Albert Falbo's answer; denying as moot 9 MOTION by United States of America for More Definite Statement; the tax liens he ld by the United States and the State of West Virginia are prioritized according to their agreed order of priority, as directed and set forth more fully herein; granting in part and denying in part 24 MOTION by John M. Falbo for Summary Judgme nt; granting 28 MOTION by United States of America for Partial Summary Judgment; granting 23 MOTION by Dale W. Steager for Summary Judgment; counsel and unrepresented parties to appear before the court for a status conference at 2:30 p.m. on 8/6/2018. Signed by Judge John T. Copenhaver, Jr. on 7/17/2018. (cc: counsel of record; any unrepresented parties) (taq)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
JOHN M. FALBO,
Plaintiff,
v.

Civil Action No. 2:17-cv-04046

ALBERT THOMAS FALBO; MARY
GUIFFRI; UNITED STATES OF
AMERICA; and DALE W. STEAGER,
Commissioner of the West
Virginia Tax Division of the
Department of Revenue,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending are two motions for summary judgment and one
motion for partial summary judgment.

Plaintiff John M. Falbo

and defendant Dale W. Steager, Commissioner, acting on behalf of
the State of West Virginia, each filed a motion for summary
judgment on January 10, 2018.

Defendant United States of

America filed a motion for partial summary judgment on January
17, 2018.
John Falbo’s complaint seeks partition by sale of a
number of real properties jointly owned by himself, defendant
Mary Guiffri, and defendant Albert Thomas Falbo.

He also seeks

to have Albert Falbo’s share of the proceeds applied to the
discharge of tax liens held by the United States and Steager.

Also pending is John Falbo’s motion to dismiss Albert
Falbo’s counterclaim and to strike matter from Albert Falbo’s
answer, filed September 27, 2017.

The counterclaim and answer

are contained within the same document, and they more closely
resemble a request for information than a typical counterclaim
and answer.

(See ECF #2.)

At a scheduling conference held

December 1, 2017, Albert Falbo advised the court that he had
since spoken to counsel for John Falbo, that his issues had been
resolved, and that he wanted to sell the real properties.

Thus,

John Falbo’s motion to dismiss the counterclaim and to strike
matter from the answer is granted.
In addition, pending is the United States’ motion for
a more definite statement, filed October 30, 2017.

The United

States asserted that the complaint failed to include three items
required by 28 U.S.C. § 2410(b): “1. The address of the taxpayer
whose liability created the lien; 2. [t]he identity of the
internal revenue office which filed the notice; and 3. [t]he
date and place such notice of lien was filed.”
More Definite Statement 1.)

(U.S. Mot. for

On November 7, 2017, John Falbo

filed a response to the United States’ motion, to which he
attached documents containing the requested information.
United States did not reply.

The

Accordingly, the United States’

motion is denied as moot.

2

I. Background

The facts underlying this matter are not in dispute.
John Falbo and Albert Falbo each own a one-half undivided fee
interest in the following real properties, all located in
Fayette County, West Virginia, except that the property in
paragraph D below is held by them as joint tenants with right of
survivorship and except further that the property in paragraph B
below is owned by them along with defendant Mary Giuffri in
equal one-third undivided fee interests:
A.

Address: 120 4th Avenue, Montgomery, WV
Account No. 06336841
Map and Parcel: 07-2C-0057
2017 Taxes: $719.37/half
Deed Book 431, at Page 427
Ownership: John M. Falbo and Albert T. Falbo

B.

Address: 325 4th Avenue, Montgomery, WV
Account No. 06336315
Map and Parcel: 07-1D-0247
Pt. Lot Hotel Blk 35
2017 Taxes: $1,161.62/half
Deed Book 352, at Page 641
Ownership: John M. Falbo, Albert Falbo and Mary
Guiffri

C.

Address: 106 Lee Street, Montgomery, WV
Account No. 06338643
Map and Parcel: 07-3B-0022
Lots Pt. 11-12-13 Coal Valley Inc.
2017 Taxes: $742.22/half
Deed Book 388, at Page 0115
Ownership: John Falbo and Albert Thomas Falbo

D.

Address: 202 Third Avenue, Montgomery, WV
a.

Account No. 6338661
Map and Parcel: 07-1D-0228
3

Lot R R Ave
2017 Taxes: $1,463.58/half
b.

Account No. 6337403
Map and Parcel: 07-1D-0270
Lot 15 Blk 11 3rd Ave Burger Chef
2017 Taxes: $55.64/half

c.

Account No. 6338670
Map and Parcel: 07-1D-0231
Pt. Lot 1, Blk 36 Montg 30 ft 3rd Ave.
Deed Book 331, at Page 291
Ownership: John Falbo and Albert Thomas Falbo

E.

Address: Lee Street and Fourth Avenue, Montgomery,
WV
Account No. 06336173
Map and Parcel: 07-1D-0225
Pt. Lot 36
2017 Taxes: $25.84/half
Deed Book 490, at Page 651
Ownership: John M. Falbo and Albert Thomas Falbo

F.

Address: 4th Avenue, Montgomery, WV
Account No. 6338411
Map and Parcel: 07-1D-0227
Lot 22 x 64 Blk 36 4th Avenue
2017 Taxes: $20.87/half
Deed Book 490, at Page 0649
Ownership: John M. Falbo and Albert Thomas Falbo

G.

Address: Third Avenue, Montgomery, WV
Account No. 6336208
Map and Parcel: 07-1D-0226
Pt. Lot 2 Blk 36
2017 Taxes: $635.91/half
Deed Book 369, at Page 0287
Ownership: John M. Falbo and Albert Thomas Falbo

H.

Ferry Street and Fourth Avenue, Montgomery, WV
Account No. 06337742
Map and Parcel: 07-1D-0236
Pt. Blk 36
2016 Taxes: $26.83/half
[Deed Book 488, at Page 0179]
Ownership: John M. Falbo and Albert Thomas Falbo

4

(Aff. of John Falbo ¶ 4; see also ECF #22 Attach. 1, Title
Report (“Title Report”) at 1-3.)
John Falbo commenced this action on August 30, 2017,
in the Circuit Court of Fayette County.

He seeks partition by

sale of the real properties listed above pursuant to West
Virginia Code §§ 37-4-1 et seq.
Clause.)

(See Compl. ¶¶ 8, WHEREFORE

The United States and Steager are joined in this

matter inasmuch as they claim liens on the real properties owned
by Albert Falbo in Fayette County. 1

See Farmers & Merchants

Nat’l Bank & Trust Co. v. Janney, 117 W. Va. 28, 30 (1936)
(stating that creditors have the right to share in the proceeds
of the sale of property in which they have an interest).

The

state court docket shows that Giuffri received service of
process on September 6, 2017, (See ECF #1 Attach. 5), but she
did not file an answer nor has she otherwise appeared.

1

The Title Report showed an abstract of judgment filed in
Fayette County in favor of State Electric Supply Co. (“Electric
Supply”) and against Albert Falbo. See Title Report at 62. On
June 25, 2018, the court directed the parties to join Electric
Supply in this matter. On July 5, 2018, John Falbo notified the
court that counsel for Electric Supply states that the judgment
has been paid, but that a release has not been recorded. (See
ECF #35 at 1-2.) Counsel for Electric Supply also informed
counsel for John Falbo that a release will be filed with the
Clerk of the County Commission in Fayette County. (Id.; see id.
Ex. B (copy of signed and notarized release to be filed).) In
view of this information, the court concludes that Electric
Supply need not be joined in this matter.
5

On September 27, 2017, the United States removed to
this court, invoking the court’s jurisdiction under 28 U.S.C. §§
1441(a), 1442(a), 1444, and 1446(b)(3) (2016).
3.)

(Not. Removal ¶

According to 28 U.S.C. § 2410, the United States waives its

sovereign immunity for the limited purpose to be named in, inter
alia, a civil action “to partition . . . real . . . property on
which the United States has or claims a . . . lien.”

See Hudson

Cty. Bd. of Chosen Freeholders v. Morales, 581 F.2d 379, 382-83
(3d Cir. 1978) (“[Section] 2410, while it does not of itself
confer jurisdiction on district courts, is the basis for finding
a waiver of sovereign immunity . . . .”).
At the December 1, 2017, scheduling conference, John
Falbo, Albert Falbo, the United States, and Steager informed the
court that they agreed to the facts of the case and desired a
private sale of the properties.

Thus, the court, by order

entered December 6, 2017, directed John Falbo (alongside
Guiffri, if possible); the United States; and Steager to file a
title report for the real properties; a plan of sale; and
motions for summary judgment setting forth the dollar amount of
liens, the rates of interest accruing thereon, and an agreed
lien priority.

(See ECF #17.)

The United States assessed income taxes against Albert
Falbo on three occasions: November 19, 2012, for the tax period
6

ending December 31, 2011; November 18, 2013, for the tax period
ending December 31, 2012; and January 11, 2016, for the tax
period ending December 31, 2013.

(Decl. of David W. Ross ¶ 3.)

For each assessment, the United States demanded payment from
Albert Falbo and filed with the Clerk of the County Commission
in Fayette County a notice of tax lien.

(Id. ¶¶ 3-4, 9.)

The

corresponding notices of tax lien were recorded in Fayette
County on November 12, 2013, in Federal Tax Lien Book 9, at page
453; January 24, 2014, in Federal Tax Lien Book 9, at page 463;
and May 31, 2016, in Federal Tax Lien Book 9, at page 598,
respectively.

(Id. ¶¶ 3, 9; Title Report at 4; ECF #22 Attach.

2, Federal Tax Lien Documents.) 2
taxes.

Albert Falbo has not paid those

(Decl. of David W. Ross ¶ 5.)

As of December 31, 2017,

the respective amount owed under each assessment was
$1,158,013.03; $289,230.22; and $356,985.77, totaling
$1,804,229.07.

(Id. ¶¶ 3, 6.)

Interest on that amount is

currently compounding daily at a rate of four percent per annum.

2

The Title Report and the notices of tax lien show an additional
federal tax assessment. The assessment was in the amount of
$294,585.38 for the tax period ending December 31, 2009. (Title
Report at 4; ECF #22 Attach. 2, Federal Tax Lien Documents.)
The corresponding notice of tax lien was recorded in Fayette
County on October 30, 2011, in Federal Tax Lien Book 9, at page
284. (Title Report at 4; ECF #22 Attach. 2, Federal Tax Lien
Documents.) The United States has not sought summary judgment
on this assessment.
7

(Id. ¶ 7 (citing Rev. Rul. 2017-25, 2017-52 I.R.B. 586 (Dec. 26,
2017)).)
The West Virginia State Tax Department filed with the
Clerk of the County Commission in Fayette County three notices
of tax lien against Albert Falbo for the tax periods ending
December 31 of 2011, 2012, and 2013.
Attach. 1.)

(See Steager Mot. Summ. J.

The notices were recorded on May 23, 2013, in State

Tax Lien Book 34, at page 363; April 24, 2014, in State Tax Lien
Book 35, at page 439; and May 31, 2016, in State Tax Lien Book
37, at page 568.

(Id.; see also Title Report at 4.)

The

original balances due were $170,812.01; $78,797.71; and
$65,699.40, respectively.

(Steager Mot. Summ. J. Attach. 1.)

However, Steager states that as of December 31, 2017, the
outstanding balances were $128,193.82; $64,769.00; and
$40,202.00, respectively, totaling $233,164.82.
Summ. J. 2.)

(Steager Mot.

Beginning January 1, 2018, and ending December 31,

2018, interest on that amount compounds daily at a rate of 8.75
percent per annum.

See State Tax Commissioner, Administrative

Notice 2017-26, Notice of Adjusted Interest Rates on Tax
Underpayments (Dec. 8, 2017), https://tax.wv.gov/Tax
Professionals/AdministrativeNotices/Pages/AdministrativeNotices2
017.aspx; W. Va. Code § 11-10-17a(e)(1) (stating that interest

8

on deficiencies is calculated “using the interest rate in effect
for each respective year”).
On January 10, 2018, John Falbo and Steager filed
separate motions for summary judgment.

John Falbo seeks

partition by sale of the jointly-owned real properties according
to his proposed plan, which contemplates a private sale, (see
John Falbo Mot. Summ. J. ¶ 2), and Steager seeks summary
judgment directing Albert Falbo’s share of the sale proceeds to
“be paid to West Virginia State Tax Department in accordance
with the lien priority.”

(Steager Mot. Summ. J. 5.)

Necessarily, Steager’s desired judgment would require the court
also to decide the existence and amount of the State of West
Virginia’s liens.

The United States moved for summary judgment

on January 17, 2018, requesting judgment of the existence and
amount of its liens against Albert Falbo.
Summ. J. 4-5.)

(U.S. Mot. Partial

The United States also joins in Steager’s

request for Albert Falbo’s share of the proceeds to be applied
to the tax liens.

(U.S. Resp. to Mots. Summ. J. 1.)

As earlier noted, the parties, excluding Guiffri who
has not appeared, agree to the sale of the real properties.

The

issues in dispute involve alleged contribution claims of John
Falbo, and possibly Guiffri, against Albert Falbo; the priority,

9

if any, of John Falbo’s attorneys’ fees; and the method and plan
of sale.

II. Summary Judgment Standard

Summary judgment is appropriate only “if the movant
shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a).

In reviewing a motion for summary

judgment, the court is guided by the principle that it must
“construe the evidence, and all reasonable inferences that may
be drawn from such evidence, in the light most favorable to the
nonmoving party.”

Dash v. Mayweather, 731 F.3d 303, 310 (4th

Cir. 2013) (citing PBM Prods., LLC v. Mead Johnson & Co., 639
F.3d 111, 119 (4th Cir. 2011)).
“As to materiality, . . . [o]nly disputes over facts
that might affect the outcome of the suit under the governing
law will properly preclude the entry of summary judgment.
Factual disputes that are irrelevant or unnecessary will not be
counted.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986) (citing 10A Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 2725 (2nd ed. 1983)).

10

Regarding genuineness, “summary judgment will not lie
if the dispute about a material fact is ‘genuine,’ that is, if
the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.”

Id.; see also S.B. v. Bd. of

Educ., 819 F.3d 69, 74 (4th Cir. 2016) (quoting Perini Corp. v.
Perini Constr., Inc., 915 F.2d 121, 124 (4th Cir. 1990)).

The

moving party must first “‘show[]’ - that is, point[] out to the
district court - that there is an absence of evidence to support
the nonmoving party’s case.”

Celotex Corp. v. Catrett, 477 U.S.

317, 325 (1986).
If the movant carries its burden, the non-movant must
demonstrate that “there is sufficient evidence favoring [it] for
a jury to return a verdict” in its favor.

Anderson, 477 U.S. at

249 (citation omitted); see also Dash, 731 F.3d at 311.

As

explained by our circuit court of appeals,
[a]lthough the court must draw all justifiable
inferences in favor of the nonmoving party, the
nonmoving party must rely on more than conclusory
allegations, mere speculation, the building of one
inference upon another, or the mere existence of a
scintilla of evidence. See Anderson, 477 U.S. at 252;
Stone v. Liberty Mut. Ins. Co., 105 F.3d 188, 191 (4th
Cir. 1997). Rather, “a party opposing a properly
supported motion for summary judgment . . . must ‘set
forth specific facts showing that there is a genuine
issue for trial.’” Bouchat v. Balt. Ravens Football
Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003) (quoting
Fed. R. Civ. P. 56(e) (2002) (amended 2010)).
Dash, 731 F.3d at 311 (alteration in original).

11

III. Discussion

A. Liens

The United States has established a prima facie case
of Albert Falbo’s federal tax liability.

A federal tax lien

against a person arises after an assessment and a demand for
payment have been made to the person and the person does not
pay.

See 26 U.S.C. §§ 6321, 6322; see also United States v.

Hopkins, 859 F. Supp. 208, 211 (S.D. W. Va. 1994) (Copenhaver,
Jr., J.) (quoting United States v. Nat’l Bank of Commerce, 472
U.S. 713, 719 (1985)).

As the Supreme Court of the United

States has explained, “[a]n ‘assessment’ amounts to an [Internal
Revenue Service] determination that a taxpayer owes the Federal
Government a certain amount of unpaid taxes.

It is well

established in the tax law that an assessment is entitled to a
legal presumption of correctness.”

United States v. Fior

D’Italia, 536 U.S. 238, 242 (2002).
David W. Ross, the Revenue Officer of the Internal
Revenue Office tasked with collecting Albert Falbo’s federal tax
liabilities, declares that federal income tax assessments were
made against Albert Falbo for the tax periods ending December 31
of 2011, 2012, and 2013.

(Decl. of David W. Ross ¶¶ 1-4.)

Those assessments are evidenced by the notices of tax lien filed
12

in Fayette County.
Documents.)
unpaid.

(E.g., ECF #22 Attach. 2, Federal Tax Lien

Ross further declares that those assessments remain

(Decl. of David W. Ross ¶ 5.)

Ross states that as of

December 31, 2017, Albert Falbo’s outstanding federal income tax
liabilities totaled $1,804,229.07, plus daily interest from that
date at a rate of four percent per annum.

(Id. ¶¶ 6-7 (citing

Rev. Rul. 2017-25, 2017-52 I.R.B. 586 (Dec. 6, 2017)).)

There

is no dispute regarding the existence nor amount of the federal
income tax liabilities.

Accordingly, the court finds that the

United States holds valid liens against Albert Falbo’s interest
in the above listed properties, aggregating $1,804,229.07 plus
interest at the rate of four percent per year, compounded
annually, and accruing from December 31, 2017.
Steager has also established a prima facie case of
Albert Falbo’s state tax liability.

Under W. Va. Code Ann. §

11-10-12(a) (LexisNexis 2018), the State of West Virginia
possesses “a lien upon the real and personal property of [a]
taxpayer” who owes “[a]ny tax, additions to tax, penalties or
interest due and payable.”
unpaid taxes.

The State may issue assessments for

Id. § 11-10-7.

A State tax assessment is

regarded as presumptively correct.

See Pa. & W. Va. Supply

Corp. v. Rose, 179 W. Va. 317, 322 (1988) (“When a petition for
reassessment is filed, the burden of proof is upon the taxpayer

13

to prove that the assessment is incorrect and contrary to law.
W. Va. Code § 11-10-9 (1987 Replacement Vol.).”); Taylor v.
Steager, 2018 W. Va. LEXIS 236, at *19 (2018) (memorandum
decision) (“West Virginia Code § 11-10A-10(e) provides that the
taxpayer generally has the burden of proof before the [Office of
Tax Appeals].”).
The West Virginia State Tax Department filed in
Fayette County three notices of tax lien for the tax periods
ending December 31 of 2011, 2012, and 2013.
Summ. J. Attach. 1.)

(See Steager Mot.

Steager contends that those tax

liabilities totaled $233,164.82 as of December 31, 2017.
(Steager Mot. Summ. J. 2.)

Interest on that amount accrues at a

rate of 8.75 percent per annum.

State Tax Commissioner,

Administrative Notice 2017-26, Notice of Adjusted Interest Rates
on Tax Underpayments (Dec. 8, 2017), https://tax.wv.gov/Tax
Professionals/AdministrativeNotices/Pages/AdministrativeNotices2
017.aspx; W. Va. Code § 11-10-17a(e)(1).

There is no dispute

regarding the existence nor amount of the state income tax
liabilities.

Accordingly, the court finds that Steager holds

valid liens against Albert Falbo’s interest in the above listed
properties, aggregating $233,164.82 plus interest at the rate of
8.75 percent per year and accruing from December 31, 2017.

14

John Falbo states that he and Guiffri “appear to have
a contribution claim . . . for amounts taken from the real
estate accounts approximating $67,135.00, but these claims were
not asserted in the Complaint.”

(John Falbo Mot. Summ. J. ¶ 4.)

Inasmuch as that statement is offered without either pleading a
cause of action for that relief or furnishing any supporting
evidence, summary judgment on that contribution claim is denied.
The United States and Steager have agreed to
prioritize their liens according to the principle “first in
time, first in right” based on the dates of tax assessment by
the United States and of the recording of notice of tax lien by
Steager.

(See ECF #19 at 1-2.)

The court sees no reason to

disturb that agreement, and the tax liens against Albert Falbo’s
interest in the above listed properties are hereby ORDERED to
take priority in the following order and amount:
1. In favor of the United States in the amount $1,158,013.03
as of December 31, 2017, plus interest accrued from that
date;
2. In favor of the State of West Virginia in the amount of
$128,193.82 as of December 31, 2017, plus interest accrued
from that date;

15

3. In favor of the United States in the amount of $289,230.22
as of December 31, 2017, plus interest accrued from that
date;
4. In favor of the State of West Virginia in the amount of
$64,769.00 as of December 31, 2017, plus interest accrued
from that date;
5. In favor of the United States in the amount of $356,985.77
as of December 31, 2017, plus interest accrued from that
date; and
6. In favor of the State of West Virginia in the amount of
$40,202.00 as of December 31, 2017, plus interest accrued
from that date.

B. Partition by Sale

John Falbo seeks the partition by sale of the jointlyowned real properties described above.

In West Virginia, “[t]he

common law right to compel partition has been expanded by
[article 4, chapter 37 of the West Virginia Code] to include
partition by sale.”

Syl. Pt. 2, Consol. Gas Supply Corp. v.

Riley, 161 W. Va. 782 (1978).

To compel a partition by sale,

the Supreme Court of Appeals of West Virginia requires the
following:
16

“By virtue of W. Va. Code § 37-4-3, a party desiring
to compel partition through sale is required to
demonstrate [(1)] that the property cannot be
conveniently partitioned in kind, [(2)] that the
interests of one or more of the parties will be
promoted by the sale, and [(3)] that the interests of
the other parties will not be prejudiced by the sale.”
Syl. Pt. 3, id.
Syl. Pt. 1, Ark Land Co. v. Harper, 215 W. Va. 331 (2004)
(alterations in original).

No one disputes John Falbo’s

attestation that those requirements have been met.
John Falbo ¶¶ 6-7.)

(Aff. of

Accordingly, John Falbo’s motion for

summary judgment is granted insofar as it seeks partition by
sale of the jointly-owned real properties.
The United States and Steager seek to have Albert
Falbo’s share of the proceeds from the partition sale applied to
the discharge of their liens according to the agreed order of
priority.
Summ J. 5.)

(See U.S. Resp. to Mots. Summ. J. 1; Steager Mot.
The court notes that there may be a tension between

that request and West Virginia Code § 37-4-4, which states that
“[w]hen there are liens . . . on the interest of any party to a
partition suit, the court may, on the petition of any person
holding a lien, ascertain the liens and apply the dividend of
such party in the proceeds of sale to the discharge of such
liens so far as may be necessary for that purpose.”

In Morrison

v. Holcomb, the Supreme Court of Appeals decided “that there
must be a lienor and a petition” before a court may ascertain
17

the liens on a party’s interest.

123 W. Va. 153, 160 (1941).

The high court continued: “The proceeding for the ascertainment
and enforcement of liens against a co-tenant’s share of the
proceeds being purely statutory, such requirements as the
statute sets up must be strictly followed.”

Id.

To the extent that the requirements of Section 37-4-4
are unmet here, a partition suit is nonetheless “equitable in
nature,” Murredu v. Murredu, 160 W. Va. 610, 616 (1977) (citing
Stalnaker v. Stalnaker, 139 W. Va. 658 (1954)), and West
Virginia Code § 37-4-1 allows a presiding court to “take
cognizance of all questions of law affecting the legal title[]
that may arise in any proceedings.”

Since the lienors are

present here and have a right to Albert Falbo’s share of the
proceeds, Farmers & Merchants, 117 W. Va. at 30, there is no
issue in applying those proceeds to the discharge of the United
States’ and the State of West Virginia’s liens.

Accordingly,

the United States’ and Steager’s motions for summary judgment
are granted insofar as they seek payment from Alber Falbo’s
share of the proceeds from the partition sale as set forth
above.
John Falbo requests that the court approve a private
sale of the jointly-owned real properties.

Until the motions

for summary judgment, John Falbo, Albert Falbo, the United
18

States, and Steager had agreed to such a sale.

Now, Albert

Falbo has about-faced from that position and instead prefers
that “all properties to be sold on the Court House steps.”
(Albert Falbo Summ. J. Resp.; see also Albert Falbo Rebuttal.)
In West Virginia, courts have broad discretion in
directing the manner of a judicial sale, guided by the principle
that they “must strive to obtain the best price possible for the
property sold.”

See Smith v. Rusmisell, 205 W. Va. 261, 266

(1999); see also Smith v. Smith, 180 W. Va. 203, 209 (1988)
(“Our cases do agree that a court does have rather broad
discretion in deciding whether to accept a bid to ensure that a
judicial sale is fairly conducted to bring the best possible
price.”); McNabb v. Love, 110 W. Va. 300, 302 (1931) (“The court
has control of its sales, and will not confirm unless the price
offered is fair and adequate.”); Knapneck & White v. Keltz, 50
W. Va. 331, 334 (1901) (“[A] court could sell publicly or
privately as the interests of the parties might require.”).

The

court finds that a private sale has a much greater likelihood of
yielding a higher price than a public sale.

Accordingly,

notwithstanding Albert Falbo’s objection, John Falbo’s motion
for summary judgment is granted insofar as he seeks a private
sale of the jointly-owned real properties.

19

John Falbo proposes the following plan of sale for the
properties:
1. That with the possible exception of a property
subject to a purchase offer by the current tenant, the
properties be listed for sale with a licensed and
reputable real estate agent of the parties’ selection,
and if they cannot agree, the Court, or a Commissioner
selected by the Court, shall select an agent from a
list of two proposed candidates supplied by each
party.
2. That the price at which the properties shall be
sold shall be by agreement of the parties after
determining offers recommended by the agent, and if
the parties do not agree on the amount for which a
property will be sold, a party may request that the
Court, or an appointed Commissioner or Appraisers,
determine the value of the property.
3. That all costs of sale, including, but not limited
to, deed preparation fees, payment of prorated real
estate taxes, the costs of this partition suit,
including the Plaintiff’s reasonable attorney fees, be
paid from the gross proceeds of sale, and that the tax
liens of the United States and the State of West
Virginia be paid in their order of priority from the
net sale proceeds derived from the interests of Albert
Thomas Falbo in the properties sold, with the
remaining proceeds to be paid to John M. Falbo and
Mary Guiffri as their interests may appear, and that
the tax liens be released as to the properties sold,
and if there is a dispute arising therefrom, that it
be brought to the Court or an appointed Commissioner
for resolution.
4. That any questions, issues or disputes relating to
the foregoing shall be decided by the Court, without a
jury, and the parties waive any right to a jury trial
in this Civil Action.
(John Falbo Brief Supp. Summ. J. 6.)

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The United States lodged the only objection to the
plan of sale, taking issue with the plan’s payment of John
Falbo’s attorneys’ fees before the discharge of its liens.
U.S. Resp. to Mots. for Summ. J. 2.)

(See

The United States

references two cases stating the limited holding that an
interpleading plaintiff is generally not entitled to recover its
attorneys’ fees before the discharge of a prior federal tax
lien.

See Jonathan Melnick Auctioneers, Inc. Sauder Woodworks,

Inc., 818 F.2d 861, 1987 WL 36036, at *1 (4th Cir. 1987)
(unpublished decision) (citing cases) (“[C]ourts of appeal have
consistently rejected attempts by interpleading plaintiffs to
recover attorney’s fees under . . . fee-shifting statutes . . .
.”); Cavalier Serv. Corp. v. Wise, 645 F. Supp. 31, 37 (E.D. Va.
1986) (citing cases) (“An allowance for costs or attorney’s fees
may not be allowed a stakeholder of an interpleader fund to the
extent that they are payable out of a part of the fund impressed
with a federal tax lien.”).

John Falbo did not reply.

West Virginia Code § 37-4-1 provides in part that
“[i]n all cases resulting in partition or sale the costs of suit
shall come from the proceeds of sale.”

It is not entirely clear

whether “costs of suit” include the attorneys’ fees of a
plaintiff prosecuting a partition action, and the Supreme Court
of Appeals has not had occasion to address the issue.

21

Typically, attorneys’ fees are apportioned according to the
American rule, under which “litigants pay their own attorneys’
fees” “absent statute or enforceable contract.”

Alyeska

Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 257
(1975), superseded on other grounds by statute, The Civil Rights
Attorney’s Fees Awards Act of 1976, Pub. L. No. 94-559, 90 Stat.
2641 (codified as amended at 42 U.S.C. § 1988), as recognized in
Arbor Hill Concerned Citizens Neighborhood Ass’n v. Cty. of
Albany, 493 F.3d 110, 114 (2d Cir. 2007); accord Daily Gazette
Co. v. Canady, 175 W. Va. 249, 250 (1985) (citing Nelson v. W.
Va. Pub. Emps. Ins. Bd., 171 W. Va. 445, 450 (1982)). 3
This is not an interpleader action under Federal Rule
of Civil Procedure 22, so the United States’ position is
inapposite.

Nevertheless, the court finds that “costs of suit”

under West Virginia Code § 37-4-1 do not include attorneys’
fees.

The term “costs” has a particularized connotation that is

widely considered not to include attorneys’ fees.

See generally

10 Charles Alan Wright & Arthur R. Miller, Federal Practice and

3

Judicially-crafted exceptions to the American rule also allow a
judge to shift payment of attorneys’ fees to an opposing party
or counsel when, for example, “the losing party ‘has acted in
bad faith, vexatiously, wantonly, or for oppressive reasons.’”
Alyeska Pipeline 421 U.S. at 258-59 (quoting F. D. Rich Co. v.
United States ex rel. Indus. Lumber Co., 417 U.S. 116, 129
(1967)); accord Daily Gazette, 171 W. Va. at 450 (quoting
Nelson, 171 W. Va. at 451). Such conditions are not present
here.
22

Procedure § 2666 (3d ed. 2018) (distinguishing costs, fees, and
expenses).

Moreover, the West Virginia Legislature has

explicitly provided for the shifting of attorneys’ fees in other
areas of the West Virginia Code when it saw fit to do so.

See,

e.g., W. Va. Code §§ 25-1A-8 (prisoner litigation), 29B-1-7
(freedom of information), 30-3C-4 (health care peer review),
46A-5-104 (consumer credit and protection), 48-5-504 (divorce).
Accordingly, John Falbo’s motion for summary judgment on the
proposed plan of sale is granted in part and denied in part.
The court approves the plan generally, as will more particularly
be set forth following a court conference with counsel and
unrepresented parties, except for the provision requiring
payment of John Falbo’s attorneys’ fees out of the gross
proceeds of sale before the discharge of the United States’ and
the State of West Virginia’s liens, which request for attorney
fees is denied.

IV. Conclusion

For the foregoing reasons, it is ORDERED that:
1. John Falbo’s motion to dismiss defendant Albert Falbo’s
counterclaim and to strike matter from Albert Falbo’s
answer be, and hereby is, granted;

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2. The United States’ motion for a more definite statement be,
and hereby is, denied as moot;
3. The tax liens held by the United States and the State of
West Virginia are prioritized according to their agreed
order of priority, as follows;
a. In favor of the United States in the amount
$1,158,013.03 as of December 31, 2017, plus interest
accrued from that date;
b. In favor of the State of West Virginia in the amount
of $128,193.82 as of December 31, 2017, plus interest
accrued from that date;
c. In favor of the United States in the amount of
$289,230.22 as of December 31, 2017, plus interest
accrued from that date;
d. In favor of the State of West Virginia in the amount
of $64,769.00 as of December 31, 2017, plus interest
accrued from that date;
e. In favor of the United States in the amount of
$356,985.77 as of December 31, 2017, plus interest
accrued from that date; and

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f. In favor of the State of West Virginia in the amount
of $40,202.00 as of December 31, 2017, plus interest
accrued from that date;
4. John Falbo’s motion for summary judgment be, and hereby is,
granted in part and denied in part as set forth herein;
5. The United States’ motion for partial summary judgment be,
and hereby is, granted; and
6. Steager’s motion for summary judgment be, and hereby is,
granted.
It is further ORDERED that counsel and unrepresented
parties appear before the court for a status conference at 2:30
P.M on August 6, 2018.

At that time, the court will confer with

counsel and unrepresented parties regarding a plan of sale,
including such areas as appraisals; selection of real estate
brokers; appointment of a special commissioner to manage and
coordinate sale efforts, seek court approval of sales and costs
incurred, and prepare and execute deeds to purchasers; and
informing the court of the existence and status of any current
tenants of the properties, including those tenants’ right of
first refusal, if any.

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Byrd United States Courthouse in Charleston, before
the undersigned, unless canceled. Lead counsel
directed to appear.
02/29/2016
03/08/2016

Entry of scheduling order.
The Clerk is directed to Civ. P 26(a)(1) disclosures.
Last day to serve F.R. transmit copies of this

memorandum opinionis requested to transmit this record and to any
The Clerk and order to all counsel of Order and
Notice to all counsel of record and to any unrepresented
unrepresented parties.
parties.
DATED: January 5, 2016
ENTER: July 17, 2018
John T. Copenhaver, Jr.
United States District Judge

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