Opinion
2:21-cv-6334 JFW(PDx)
02-02-2022
UNITED STATES OF AMERICA, Plaintiff, v. EUGENIO COVARRUBIAS, MARIA COVARRUBIAS, SAMBA GROUP, INC., LOS ANGELES COUNTY TAX COLLECTOR, AND STATE OF CALIFORNIA FRANCHISE TAX BOARD, Defendants.
JUDGMENT
JOHN F. WALTER, UNITED STATES DISTRICT JUDGE.
Based on the United States of America's motion for default judgment and for good cause shown:
1. Judgment is entered in favor of the United States and against Eugenio Covarrubias in the amount of $278,405.85 as of November 17, 2021, plus all subsequent statutory accruals, including interest and penalties, plus costs and expenses.
2. The federal tax liens at issue in this case are foreclosed. These liens attach to the property commonly referred to as 405 Isabel Street, Los Angeles, California 90065, with a parcel number of 5452-010-007, and is legally described as:
Lot 6 of the Amabel Hill Tract as per map recorded in book 10, page 17, of maps in the Office of the County Recorder of Los Angeles County, State of California.
3. The property is ordered to be sold as set forth below.
4. The property is to be sold by the Area Director of the Internal Revenue Service of the district that includes Los Angeles County, or his delegate, the Internal Revenue Service Property Appraisal and Liquidation Specialty (PALS), in accordance with the provisions of the Title 28, United States Code, Sections 2001 and 2002.
5. Any party to this proceeding or any person claiming an interest in the subject real property may request that the Court order a private sale of the subject real property pursuant to Title 28, United States Code, Section 2001(b). Any such motion shall be filed within 20 days after entry of this judgment. Any motion under Section 2001(b) shall set forth with particularity (a) the nature of the moving party's interest in the subject real property, (b) the reasons why the moving party believes that a private sale would be in the best interests of the United States of America and any other claimant involved herein, (c) the names of three proposed appraisers and a short statement of their qualifications, and (d) a proposed order stating the terms and conditions of the private sale. Any such motion shall comply with Rule 7 of the Local Rules of the District Court for the Central District of California.
6. The Area Director, or the PALS, is ordered to sell the subject real property if it does not become the subject of a motion pursuant to the preceding paragraph, in accordance with Title 28, United States Code, Section 2001(a) and 2002. The subject real property shall be sold at a public sale to be held at the Los Angeles County Courthouse as follows:
a. The PALS shall announce the date and time of the sale.
b. Notice of the sale shall be published once a week for at least four consecutive weeks prior to the sale in at least one newspaper regularly issued and of general circulation in Los Angeles County, California. The notice shall describe the property by its street address and legal description and shall contain the terms and conditions of sale as set out herein.
c. The terms and conditions of sale shall be as follows:
i. A minimum bid determined by reference to the current fair market value shall be required. The minimum bid shall be 75% of the current fair market value as determined by an appraisal of the subject property by the PALS. The terms of sale as to all persons or parties bidding shall be by money order or by certified or cashier's check
ii. The PALS shall set the minimum bid. If the minimum bid is not met or exceeded, the PALS may, without further permission of this Court, and under the terms and conditions in this order of sale, hold a new public sale, if necessary, and reduce the minimum bid.
iii. At the time of the sale, the successful bidder shall be required to deposit with the PALS, by money order or by certified or cashier's check payable to the United States District Court for the Central District of California, a deposit equal to twenty percent (20%) of the bidder's total bid immediately upon the property being struck off and awarded to such bidder as the highest and best bidder.
iv. The successful bidder shall remit the remaining eighty percent (80%) of said purchase price to be paid on or before 5:00 p.m., within three (3) business days of the date of sale by money order or by certified or cashier's check payable to the United States District Court for the Central District of California.
v. The money order or certified or cashier's check payable to the United States District Court for the Central District of California shall be given by the successful bidder to the PALS who will deposit the funds with the Clerk of this Court.
vi. Should the successful bidder fail to comply with the terms of the sale, such bidder shall be liable to the United States for twenty percent (20%) of the value of the property as a penalty. The Clerk shall distribute the 20% penalty as directed by the PALS by check made to the “United States Treasury” to be applied toward payment of said penalty. Payment of said penalty shall not be a credit on the judgment of the United States. The subject property shall again be offered for sale under the terms and conditions of this order for sale or, in the alternative, sold to the second highest bidder.
d. The Clerk of the District Court is directed to accept the proceeds of the sale and deposit it into the Court's registry for distribution pursuant to further order of the Court.
e. Upon selling the subject property, the United States of America shall prepare and file with this Court an application to confirm sale and direct distribution of sale proceeds, which will set forth an accounting and report of sale for the subject property. The sale of the subject property shall be subject to confirmation by this Court. The application to confirm sale and direct distribution of sale proceeds shall be filed within thirty (30) days from the date of such sale. If no objections have been filed in writing in this cause with the Clerk of the Court within fifteen (15) days of the date of sale, the sale shall be confirmed by the Court without necessity of motion. On confirmation of the sale, the Court will direct the Internal Revenue Service to execute and deliver its deed conveying the subject property to the purchaser. On confirmation of the sale, all interests in, liens against, or claims to the subject property that are held or asserted by all parties to this action are discharged and extinguished.
7. Possession of the property sold shall be yielded to the purchaser upon the production of the certificate of sale and deed; and if there is a refusal to so yield, a writ of assistance may, without further notice, be issued by the Clerk of this Court to compel delivery of the property sold to the purchaser.
8. Until possession of the subject property is yielded to the purchaser of the property, Eugenio Covarrubias and Maria Covarrubias:
a. Shall take all reasonable steps necessary to preserve the subject property (including all buildings, improvements, fixtures, and appurtenances on the property) in its current condition including maintaining a fire-and-casualty insurance policy on the subject property;
b. Shall timely pay all real property taxes, mortgage payments, homeowners association dues (if any), and insurance premiums;
c. Shall neither commit waste against the property nor allow or cause anyone else to do so; and d. Shall neither do anything that tends to reduce the value or marketability of the property nor allow or cause anyone else to do so.
9. After the Court confirms the sale, and by Order on the application made by the United States of America as to the specific amounts at issue, the sale proceeds deposited with the Clerk of this Court shall be applied to the following items in the order specified:
a. First, to the United States for the costs of the sale;
b. Second, to the Los Angeles County Tax Collector toward satisfaction of any outstanding real property tax liens;
c. Third, one half of the remainder after payment as set forth in paragraphs 9(a) and 9(b), to Maria Covarrubias;
c. Fourth, the other half of the remainder after payment as set forth in paragraphs 9(a) and 9(b), in the following order of priority toward satisfaction of the outstanding lien interests against Eugenio Covarrubias's interest in the property:
Taxing Authority
Tax Year
Date of Assessment
Date Notice of Tax Lien Was Filed.
FTB
2008
April 9, 2009
Oct. 23, 2009 (lien extension filed July 31, 2019)
FTB
2011
April 13, 2012
May 15, 2013
IRS
2011
May 28, 2012
Sept. 26, 2013
LA County Tax Collector
2013
n/a
Nov. 13, 2013
FTB
2012
May 1, 2013
April 10, 2014
IRS
2012
June 3, 2013
Sept. 26, 2013
IRS
2013
Feb. 22, 2016
April 22, 2016
IRS
2014
June 8, 2015
July 27, 2015
FTB
2015
April 11, 2016
Nov. 30, 2016
IRS
2015
June 6, 2016
July 15, 2016
IRS
2016
June 5, 2017
July 17, 2017
IRS
2014 (additional assessment)
November 14, 2016
Dec. 12, 2020
10. The remainder after distribution as set forth in paragraph 9, if any, shall be paid to Eugenio Covarrubias.
11. Any sale by the Area Director pursuant to this judgment shall be free and clear of any liens and encumbrances held by any party to this action including Eugenio Covarrubias; Maria Covarrubias; the United States of America; Samba Group, Inc.; the Los Angeles County Tax Collector; and the State of California Franchise Tax Board.
12. The Court hereby retains jurisdiction of this action for the purpose of making proper distributions of the proceeds of the sale and resolving any disputes concerning the application to confirm sale and direct distribution of sale proceeds.
IT IS SO ORDERED.