Court Opinion

ID: 4090096
Source: CourtListenerOpinion
Date Created: 2016-10-17 21:01:28.731238+00
Date Added: 2024-06-11T14:35:16.267478
License: Public Domain

FILED
                            NOT FOR PUBLICATION
                                                                           OCT 17 2016
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,              )      No. 15-55078
                                       )
      Plaintiff-Appellee,              )      D.C. No. 2:14-cv-02647-R-AS
                                       )
      v.                               )      MEMORANDUM*
                                       )
EILEEN MCGREW,                         )
                                       )
      Defendant-Appellant,             )
                                       )
      and                              )
                                       )
STATE OF CALIFORNIA                    )
FRANCHISE TAX BOARD; PHH               )
MORTGAGE CORPORATION,                  )
                                       )
      Defendants.                      )
                                       )

                    Appeal from the United States District Court
                       for the Central District of California
                     Manuel L. Real, District Judge, Presiding

                      Argued and Submitted October 3, 2016
                              Pasadena, California

      Before: REINHARDT, FERNANDEZ, and OWENS, Circuit Judges.

      *
       This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      Eileen McGrew (“McGrew”), appeals the grant of judgment and order of

sale to the United States in its action to foreclose federal tax liens on property (“the

residence”) now owned by McGrew. We affirm.

      While McGrew was married to Kenneth McGrew (“Kenneth”), Kenneth

incurred debts to the United States because he failed to pay federal income taxes

when they became due and owing, that is on the dates that the returns were due.

See 26 U.S.C. §§ 6072(a), 6151; United States v. Voorhies, 658 F.2d 710, 714 (9th

Cir. 1981); Pan Am. Van Lines v. United States, 607 F.2d 1299, 1302–03 (9th Cir.

1979).

      (1)    McGrew asserts that the liens which the United States seeks to

foreclose do not cover the residence at this time. We disagree. The residence was

the community property of McGrew and Kenneth, although it is now hers alone.

In general, the whole of “the community estate is liable for a debt incurred by

either spouse before or during marriage.” Cal. Fam. Code § 910(a); see also

Lezine v. Sec. Pac. Fin. Servs., Inc., 14 Cal. 4th 56, 63–64, 925 P.2d 1002, 1006,

58 Cal. Rptr. 2d 76, 80 (1996). That means that the community estate is liable for

debts incurred by either spouse for the period preceding their separation. See Cal.

Fam. Code § 910(b); McIntyre v. United States (In re McIntyre), 222 F.3d 655, 658

(9th Cir. 2000); Babb v. Schmidt, 496 F.2d 957, 959–60 (9th Cir. 1974).

                                           2
      McGrew and Kenneth separated on February 15, 2002, although their

marriage was not dissolved until September 14, 2006, and the community property

was not divided until September 28, 2009. Thus, Kenneth’s income tax debt for

the tax year 2000 was a debt owed by the community estate. His debts for the tax

years 2001 through 2005 were debts owed by himself alone, and covered his half

interest in the community estate only. All of the debts became liens on the

residence once income tax was assessed for the years 2000 through 2005. See 26

U.S.C. §§ 6321, 6322; United States v. State of Vermont, 377 U.S. 351, 353, 84 S.

Ct. 1267, 1268, 12 L. Ed. 2d 370 (1964); see also Drye v. United States, 528 U.S.

49, 56, 120 S. Ct. 474, 480, 145 L. Ed. 2d 466 (1999). That occurred before the

community estate was divided.1 Division of the community estate (including the

residence) did not eliminate or otherwise affect the tax liens,2 and, indeed, could

not do so.3 As a result, the lien for tax year 2000 did and does encumber both

      1
      Notice of the liens was duly recorded. See 26 U.S.C. § 6323. That, also,
was before the community estate was divided.
      2
       See Cal. Fam. Code § 916(a)(2) (upon division of the property “the liability
of property for the satisfaction of a lien on the property” is not affected).
      3
       See Aquilino v. United States, 363 U.S. 509, 513–14, 80 S. Ct. 1277, 1280,
4 L. Ed. 2d 1365 (1960); United States v. Bess, 357 U.S. 51, 56–57, 78 S. Ct. 1054,
1058, 2 L. Ed. 2d 1135 (1958); United States v. Donahue Indus., Inc., 905 F.2d
1325, 1330–31 (9th Cir. 1990).

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interests in the residence, and the liens for tax years 2001 through 2005 did and do

encumber what was Kenneth’s half interest in the residence, even though McGrew

now holds that half also. The United States was entitled to foreclose upon and sell

the residence for the purpose of satisfying those liens. See 26 U.S.C. § 7403(c).

      (2)    McGrew then asserts that the district court abused its discretion when

it did not exercise its discretion to prevent the United States from foreclosing its

liens upon the residence. See United States v. Rodgers, 461 U.S. 677, 103 S. Ct.

2132, 76 L. Ed. 2d 236 (1983). Here too we disagree. We recognize that even

when the United States is otherwise entitled to foreclose upon its liens, the district

court may in the exercise “of common sense and consideration of special

circumstances,” decline to order a foreclosure and sale. Id. at 711, 103 S. Ct. at

2152. However, the district court’s discretion to preclude foreclosure “should be

exercised rigorously and sparingly.” Id. We have carefully reviewed the record

and the district court’s explanation of its reasons for denying McGrew’s request for

relief. Having done so, we cannot say that under the circumstances of this case the

district court abused its discretion. See id. at 710–11, 103 S. Ct. at 2151–52;

United States v. Gibson, 817 F.2d 1406, 1407 (9th Cir. 1987); see also United

                                           4
States v. Hinkson, 585 F.3d 1247, 1261–63 (9th Cir. 2009) (en banc).4

      AFFIRMED.

      4
        McGrew’s allusion to “innocent spouse relief” under 26 U.S.C. § 6015 is
insufficiently briefed and is, in any event, ineffectual. See Christensen v. C.I.R.,
523 F.3d 957, 962 (9th Cir. 2008).

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