United States District Court, W.D. Virginia, Abingdon Division
Caroline D. Ciraolo, Principal Deputy Attorney General, and
Nelson Wagner, Trial Attorney, Tax Division, U.S. Department
of Justice, Washington, D.C., for United States.
Kenneth R. Russell, Jr., and Mary F. Russell, Russell Law
Firm, Bristol, Virginia, for Defendants.
OPINION AND ORDER
P. Jones United States District Judge.
United States instituted this action against defendants Joe
Watson and his wife Betty Watson to collect federal payroll
tax assessments. I previously entered summary judgment in
favor of the United States on Count I of the Complaint,
reducing to judgment the tax assessments made against Joe
Watson. United States v. Watson, No. 1:15CV00052,
2016 WL 5922317 (W.D. Va. Oct. 11, 2016). The United States
now moves for summary judgment on Count II, which seeks to
foreclose federal tax liens against real property owned by
Watson and his wife. For the reasons that follow, I will
grant the Motion for Summary Judgment.
facts underlying the tax assessment are summarized in my
earlier opinion, and I will not repeat them here. Joe and
Betty Watson own two commercial properties as tenants by the
entirety. The first property is located at 205-209 Piedmont
Avenue, Bristol, Virginia, and the second property is located
at 1385 Lee Highway, Bristol, Virginia (collectively,
"Properties"). Aside from the tax liens at issue in
this case, no other liens or judgments attach to either of
the Properties. The United States seeks to sell the
Properties at a public auction in accordance with 28 U.S.C.
§§ 2001-02, and to pay one half of the sale
proceeds to Betty Watson, retaining the other half of the
proceeds to satisfy the judgment against Joe Watson. Should
any funds remain after satisfaction of the judgment, the
remaining proceeds would be transmitted to Joe Watson.
Watson is 77 years old and has been a housewife for most of
her 59-year marriage to Joe Watson. The Watsons receive
approximately $1, 988 per month in Social Security benefits.
They own their residence. Betty Watson has declared that this
monthly Social Security income is about $1, 500 to $2, 000
less than what is needed to cover the couple's monthly
the Properties are currently rented. The Properties are
managed by the couple's son-in-law, who has in the past
used the rental profits to purchase cars for the Watsons and
otherwise provide for their needs. Betty Watson's car is
a 2003 model and will soon need to be replaced. The
Watsons' residence needs a new roof and ceiling repairs.
The garage roof is collapsing; the concrete walls of the
enclosed porch are crumbling, causing leaks; and the exterior
trim is rotting. Betty Watson estimates that the cost of
necessary repairs would be $75, 000 to $150, 000. She has not
proffered any contractor quotes or expert report to support
Watson has declared that the rental proceeds from the
Properties would be the only income available to replace the
couple's cars, repair the residence, cover their monthly
income shortfall, and address any emergency that may arise.
She does not believe a foreclosure sale would produce
adequate funds to sustain her and her husband for the
remainder of their lives. Joe Watson's health is less
than perfect, and if he predeceases his wife, she will lose
the benefit of his monthly Social Security income.
Watson has submitted a declaration of Bart Long, a real
estate agent who has worked in the Bristol, Virginia, area
for more than twenty years. According to Long, the real
estate market in the area has been slow to recover from the
2008 market downturn, and the Properties, which are not
located in growing commercial areas, have few uses. In his
experience, court-ordered sales of real estate generate
significantly lower sales prices than voluntary sales. Long
opines that the Properties are unlikely to sell for their
tax-assessed values and might not even generate half of their
tax-assessed values. The property located on Piedmont Avenue
is under a month-to-month lease, and the lack of a long-term
lease could negatively impact the sales price of that
on this evidence, Betty Watson asks the court to deny the
Motion for Summary Judgment and proceed to a trial on the
merits to determine whether a forced sale of the Properties
would pose an undue hardship to her. The Motion for Summary
Judgment has been fully briefed and is ripe for
judgment is appropriate when "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). The nonmovant "is entitled, as on a
motion for directed verdict, to have the credibility of his
evidence as forecast assumed, his version of all that is
disputed accepted, all internal conflicts in it resolved
favorably to him; the most favorable of alternative
inferences from it drawn in his behalf; and finally, to be
given the benefit of all favorable legal theories invoked by
the evidence so considered, " regardless of the
allocation of the burden of proof at trial. O'Connor
v. United States, 956 F.2d 48, 50 (4th Cir. 1992)
(internal quotation marks and citations omitted).
the United States has established a claim to a taxpayer's
property due to failure to pay a tax liability, the court
"may decree a sale of such property, by the proper
officer of the court, and a distribution of the proceeds of
such sale[ ] according to the findings of the court in
respect to ...