Opinion
0:22-cv-1225 PJS/TNL
04-23-2024
UNITED STATES OF AMERICA, Plaintiff, v. RONALD E. BYERS, DEANNA L. BYERS, and HENNEPIN COUNTY, MINNESOTA. Defendants.
ORDER OF SALE OF THE WAYZATA PROPERTY AND APPOINTMENT OF RECEIVER TO SELL THE WAYZATA PROPERTY
PATRICK J. SCHILTZ, CHIEF JUDGE UNITED STATES DISTRICT COURT
On October 23, 2023, the Court ordered that: (1) Ronald E. Byers is liable to the United States for his outstanding federal income tax liabilities for tax years 1999, 2000, 2001, 2002, 2003, 2004, 2005, and penalties imposed under 26 U.S.C. § 6673; (2) the United States's valid and subsisting federal tax liens that attached to Byers's real property located at 16808 Prospect Place, Wayzata, Minnesota 55391 (“the Wayzata Property”) should be enforced; (3) the United States must file a proposed Order of Sale to govern the sale of the Wayzata Property; and (4) the net proceeds from the sale of the Wayzata Property shall be applied to satisfy, in part, Byers's unpaid federal tax liabilities, subject to any proven lien interest of Hennepin County, Minnesota. The United States subsequently moved for the appointment of Jen Gouette, a local real estate professional, as Receiver for the sale of the Wayzata Property. (See ECF No. 50.) Accordingly,
IT IS HEREBY ORDERED THAT:
1. Pursuant to 26 U.S.C. § 7403(d), the Court appoints Jen Gouette of Coldwell Banker Realty as Receiver for the Wayzata Property. The Receiver is directed to arrange for the sale of the Wayzata Property in a manner consistent with § 7403(d) judicial sales, free and clear of any rights, titles, claims, or interests of any of the parties to this action subject to the terms of this Order.
2. The Receiver shall have immediate and unrestricted access to the Wayzata Property at all reasonable times of day. The Receiver shall bring with her on any visits to the Wayzata Property multiple copies of this Order and shall deliver the same to anyone found to be occupying the Wayzata Property and shall orally inform such occupant(s) that they are subject to the terms of this Order.
3. The Receiver shall have all of the following rights, powers, and obligations under this Order:
a. The power to protect and preserve the value of the Wayzata Property prior to sale and to put the Wayzata Property into saleable condition;
b. The power to make reasonable expenditures in connection with the powers granted in the previous paragraph, provided the Receiver obtains prior written approval from counsel for the United States;
c. The power to enter onto the Wayzata Property and to manage the Wayzata Property, including collecting rents if applicable;
d. Once the property is vacated, the Receiver shall take immediate possession of the Wayzata Property, including all buildings,
improvements, fixtures, appurtenances, materials, and equipment thereon. Upon taking possession, the Receiver may change the locks and shall be reimbursed for that expense;
e. The power to promote and advertise the Wayzata Property for sale in accordance with accepted industry practices for realtors in the surrounding metropolitan area;
f. The power to take any other action in connection with the sale of the Wayzata Property that constitutes a commercially reasonable practice for realtors in the surrounding metropolitan area;
g. The power to set an initial listing price for the Wayzata Property so long as the Receiver informs both counsel of the United States and counsel for Ronald Byers of that initial listing price. Either party may file an objection to that initial sales price with the Court within seven days of being so informed;
h. The power to reduce the listing price as necessary in the Receiver's judgment. If the Receiver seeks to reduce the listing price of the property, she must give three days' advance notice to counsel for both parties. During that three-day period, any party that objects to the Receiver's proposed reduction may file an objection with the Court. Any non-objecting party may then file a response to the objection within three days thereafter; and
i. The Receiver shall comply with the Code of Ethics and Standards of Practice of the National Association of Realtors that is in effect when performing services under this Order.
4. Ronald Byers shall have the following obligations under this Order:
a. Ronald Byers shall pay all local property taxes associated with the Wayzata Property and insure the Wayzata Property (i.e., maintain homeowner's insurance) until the sale of the property closes;
b. Ronald Byers, and his heirs, successors, or assigns, including but not limited to any person(s) who may be in possession of the property by permission of Byers, shall cooperate fully with the Receiver and shall also take all necessary actions to enable the Receiver to convey marketable title to the Wayzata Property;
c. Ronald Byers, and anyone working in concert with him or at his direction, shall not do anything that interferes with the rights or responsibilities of the Receiver or that tends to reduce the value or marketability of the Wayzata Property or cause or permit anyone else to do so, such as causing damage to or committing waste against the Wayzata Property. Byers shall not cause or permit anyone else to record any instruments in the county land records, 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 Wayzata Property or that may tend to deter or discourage potential
purchasers from viewing or making offers to purchase the Wayzata Property or from completing any purchase;
d. Ronald Byers and any other person(s) occupying the Wayzata Property shall vacate and depart from the Wayzata Property within thirty (30) days from the date of this Order, leaving in place all fixtures, improvements, and major appliances (refrigerator, stove/oven/range, washing machine, dryer, dishwasher) without disturbance to the premises, and shall remove therefrom any personal property items other than major appliances, fixtures, or improvements. Any personal property not so removed shall be deemed abandoned and may be disposed of (or sold) as determined to be appropriate by the Receiver;
e. If Ronald Byers expects the Wayzata Property to be vacated by him and any other occupants in less than thirty (30) days, then Byers shall notify the Receiver and counsel for the United States at least 72 hours before the expected vacancy date; and f. Violation of this paragraph shall be deemed a contempt of court and punishable as such.
5. If any person fails or refuses to vacate the Wayzata Property within thirty (30) days of entry of this Order, the United States is authorized to coordinate with the United States Marshals Service to take all actions that are reasonably necessary to have those persons ejected. The United States Marshals Service is authorized and directed to take all necessary actions, including but not limited to, the use of reasonable force, to enter and remain on the Wayzata Property, which includes, but is not limited to, the land, buildings, vehicles, and any other structures located thereon, for the purpose of executing this Order. The United States Marshals Service is further authorized and directed to use reasonable force to arrest or evict from the Wayzata Property any persons who obstruct, attempt to obstruct, interfere, or attempt to interfere, in any way with the execution of this Order, including but not limited to, refusing to grant access to the Receiver, and to prevent any person from causing damage to the Wayzata Property at any time prior to the confirmation of the judicial sale, or otherwise committing waste against the Property. If the United States discovers that the Wayzata Property is being damaged in any way, the United States Marshals Service is authorized to intervene in any way they deem necessary to stop the damage or waste without further order or authorization from the Court, including by coordinating with other federal, state, or local law enforcement agencies.
6. The following terms shall apply to any sale of the Wayzata Property pursuant to this Order:
a. The Wayzata Property shall be offered for sale “as is,” with all faults and without any warranties either express or implied, and the sale shall be made without any right of redemption.
b. The Wayzata Property shall be sold free and clear of the interests of Byers, the United States, Hennepin County, and any potential buyer(s).
c. Any contingency clauses included in any purchase contract must be approved in writing by counsel for the United States and must be removed within a short (mutually agreed) time after the Receiver signs a purchase contract, except that any purchase contract may be made contingent upon the purchaser's ability to obtain conventional title insurance effective at closing.
d. The sale shall be subject to building lines, if established, all laws and governmental regulations (including building and zoning ordinances) affecting the Wayzata Property, and easements, restrictions, and reservations of record, if any.
e. The terms of any purchase contract shall include an earnest money deposit that:
i. Will be returned to the potential buyer(s) if the Court does not confirm the sale;
ii. Will be returned to the potential buyer(s) if any contingency clauses permitted under paragraph 6.c are not satisfied; and iii. Otherwise will be forfeited, deposited with the Clerk of Court in a noninterest-bearing registry, and distributed pursuant to further Order of the Court.
f. The closing shall not occur until after the terms of the proposed sale have been confirmed by further order of this Court. At closing, the purchaser(s)shall receive a Receiver's Deed to the Wayzata Property executed by the Receiver.
7. The Receiver must obtain prior written approval from counsel for the United States to make a counteroffer or sign any purchase contract. Any purchase contract for the sale of the subject real property is contingent on court confirmation of the sale prior to closing. After the purchase contract is signed and the earnest money deposit is made, counsel for the United States shall be responsible for filing a motion to confirm the sale of the Wayzata Property.
8. Pursuant to the Stipulation Between the United States and Hennepin County (ECF No. 14) adopted by the Court on June 22, 2022 (ECF No. 16), Hennepin County shall prove any lien interest in the Wayzata Property within seven days of the United States's motion to confirm the sale.
9. The Receiver shall be compensated from the proceeds of the sale of the Wayzata Property in an amount equal to six percent of the gross proceeds, which shall be shared with any real estate agent for the purchaser(s) to the extent consistent with customary local practice. In addition, the Receiver shall be reimbursed from the sale proceeds for the Receiver's reasonable and necessary expenditures that the Receiver incurred in performing services authorized by paragraph 3 and that were first approved in writing by counsel for the United States.
10. The Clerk of the District Court shall accept the proceeds of any forfeited earnest money described in paragraph 6(e)(iii) above and deposit them into the Court's noninterest-bearing registry and hold them until distribution is directed pursuant to further order of this Court.
11. The Clerk of the District Court shall accept the sales proceeds from the confirmed sale and deposit them with the Clerk of Court in a noninterest-bearing registry and hold them until distribution is directed pursuant to further order of this Court. In the alternative, at the discretion of the Receiver, the sales proceeds may be distributed directly from escrow by the title company effectuating the sale. In this case, the buyer shall be responsible for all escrow fees.
12. After the Court confirms the sale of the Wayzata Property, the sales proceeds shall be distributed in the following order of priority:
a. First, to the payment of the expenses to market and sell the property, customary closing costs, and payment of the Receiver's commission;
b. Second, to satisfy any unpaid outstanding property taxes due to Hennepin County at the time of sale; and
c. Third, to the United States, to satisfy, in part, Ronald Byers's unpaid federal tax liabilities described above.
IT IS SO ORDERED.