United States of America v. Ronald E. Byers; Deanna L. Byers

United States Court of Appeals
For the Eighth Circuit
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No. 23-3751
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United States of America
lllllllllllllllllllllPlaintiff - Appellee
v.
Ronald E. Byers; Deanna L. Byers
lllllllllllllllllllllDefendants - Appellants
Hennepin County, Minnesota
lllllllllllllllllllllDefendant
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Appeal from United States District Court
for the District of Minnesota
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Submitted: October 22, 2024
Filed: April 7, 2025
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Before LOKEN, SMITH, and GRASZ, Circuit Judges.
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SMITH, Circuit Judge.

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Ronald E. Byers (Ronald) owes the United States (government) for unpaid
income taxes, interest, and penalties. The government brought suit to enforce its
federal tax liens through the judicial sale of Ronald’s home, which he alone owns but
shares with his wife, Deanna L. Byers (Deanna). All parties agreed that the
government may sell the home and apply some of the proceeds to Ronald’s tax debt.
But the Byerses argued that Deanna is entitled to half of the proceeds of the judicial
sale because the property is the marital homestead. The parties filed cross-motions for
summary judgment. The district court1 granted the government’s motion and denied
the Byerses’ motion, holding that Deanna lacked a property interest in the home and
was not entitled to any portion of the sale proceeds. On appeal, the Byerses again
argue that Deanna is entitled to half of the proceeds of the judicial sale. We affirm.
I. Background
Ronald owns property located at 16808 Prospect Place in Wayzata, Minnesota
(Wayzata Property). Ronald is the sole titleholder of the Wayzata Property. Ronald
acquired it by a personal representative’s deed in 1990; he recorded the deed in
Hennepin County on June 26, 1990. Hennepin County classifies the Wayzata
Property as a homestead. Approximately two years after acquiring the Wayzata
Property, Ronald and Deanna married.
In February 1994, Ronald and Deanna, as husband and wife, executed a new
mortgage on the Wayzata Property in the amount of $59,932, which paid off the
existing mortgage. Ronald and Deanna contributed equally to the mortgage payments
until the mortgage was fully satisfied in 2009. But, at all times, Ronald has remained
the sole titleholder to the Wayzata Property.
1The Honorable Patrick J. Schiltz, Chief Judge, United States District Court for
the District of Minnesota.
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Ronald owes the government $327,419.11 for unpaid income taxes, interest,
and penalties. The government made multiple tax assessments against Ronald. As a
result, multiple federal tax liens attached to his property interests, including in the
Wayzata Property. The government brought suit to reduce Ronald’s tax assessments
to judgment and to enforce its liens by way of a judicial sale of the property. See 26
U.S.C. § 7403. In addition to Ronald, the government named two other defendants
who may claim an interest in the Wayzata Property: Deanna and Hennepin County.
See id. § 7403(b). Hennepin County and the government stipulated that any lien
interest that Hennepin County has in the Wayzata Property as a result of unpaid
property taxes is superior to the government’s lien interest in the property as a result
of unpaid income taxes. Although the Byerses agreed that the government may sell
the Wayzata Property, they argued that Deanna is entitled to half of the sale proceeds.
The government and the Byerses filed cross-motions for summary judgment.
The government argued that it is entitled to all proceeds of the sale. The Byerses did
not argue that Deanna could block the sale or that she holds an interest in the property
as a joint tenant or as a tenant in common. See Minn. Stat. § 500.19, subd. 1. Instead,
the Byerses argued that Deanna has a property interest in the Wayzata Property as the
marital homestead, pursuant to Minn. Stat. § 507.02, and, therefore, is entitled to half
of the proceeds from the sale of the Wayzata Property.
The district court granted the government’s motion and denied the Byerses’
motion, concluding that Deanna lacks a property interest in the Wayzata Property and
thus is not entitled to any portion of the sale proceeds. The court reasoned that Minn.
Stat. § 507.02 “alter[ed] Ronald’s property interest in the homestead by forbidding
him from conveying that interest without the approval of his spouse.” United States
v. Byers, 699 F. Supp. 3d 774, 780 (D. Minn. 2023). But Deanna “does not have a
property interest that can be altered by § 507.02. And by limiting the property right
of a spouse who owns the homestead, § 507.02 does not somehow create a property
right in a spouse who does not own the homestead.” Id. According to the court, it did
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not matter “whether the property interest to which the government’s lien has attached
includes the right to unilaterally convey the property. Section 7403 gives the [c]ourt
the authority to sell the entire property and distribute the proceeds.” Id. at 782. The
court concluded that Deanna did not “hold[] an interest in the Wayzata Property that
is ‘the sort of property interest for whose loss an innocent third-party must be
compensated.’” Id. (quoting United States v. Rodgers, 461 U.S. 677, 698 (1983)).
As a result, the district court ordered that (1) Ronald is liable to the government
“in the amount of $327,491.11, plus further interest and other statutory additions”;
(2) the government has “valid and subsisting federal tax liens that attached to” the
Wayzata Property; (3) the government’s federal tax liens are enforced against the
Wayzata Property; (4) the government is authorized to sell the Wayzata Property; (5)
Deanna lacks a property interest in the Wayzata Property and is not entitled to any of
the sale proceeds; and (7) the net proceeds from the sale of the Wayzata Property
must be applied to satisfy Ronald’s unpaid federal tax liabilities, subject to Hennepin
County’s proven lien priority interest. Id. at 784.2
2After the parties submitted briefing, the district court denied the Byerses’
motion to stay proceedings pending appeal and granted the government’s motion to
appoint a receiver to sell the Wayzata Property. The court entered an order confirming
the judicial sale. This sale does not moot or otherwise affect our jurisdiction. The
district court’s summary-judgment order was a final, appealable order, which we have
jurisdiction to review. See United States v. Williams, 796 F.3d 815, 817 (7th Cir.
2015) (holding that “a judgment foreclosing a federal tax lien and specifying how the
proceeds are to be applied is appealable because it ends the litigation and leaves
nothing but execution of the court’s decision, the standard definition of ‘final’ under
§ 1291”); United States v. Robbin, 798 F. App’x 48, 49 (8th Cir. 2020) (unpublished
per curiam) (“In this action brought by the United States to reduce tax assessments
to judgment and enforce tax liens, [the defendants] appeal following the district
court’s entry of an order of sale. To the extent the [defendants] challenge the district
court’s earlier grant of summary judgment . . . , we dismiss the appeal because the
notice of appeal is untimely as to those orders.” (footnote omitted)); cf. United States
v. Fitzgerald, 109 F.3d 1339, 1342 (8th Cir. 1997) (holding court lacked jurisdiction
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II. Discussion
On appeal, the Byerses reassert their argument that Deanna has a property
interest in the Wayzata Property pursuant to Minn. Stat. § 507.02 and is therefore
entitled to half of the proceeds from the sale of the property.
A taxpayer’s failure to pay an assessed tax liability after notice of the
assessment and demand for payment results in an automatic lien in the government’s
favor on all property and rights belonging to the taxpayer. See 26 U.S.C. §§ 6303,
6321–22; see also United States v. Nat’l Bank of Com., 472 U.S. 713, 719–20 (1985).
“A federal tax lien, however, is not self-executing. Affirmative action by the IRS is
required to enforce collection of the unpaid taxes.” Nat’l Bank of Com., 472 U.S. at
720. “Section 7403 [of 26 U.S.C.] . . . is one of a number of distinct enforcement tools
available to the United States for the collection of delinquent taxes.” Rodgers, 461
U.S. at 682. It “authorizes the judicial sale of certain properties to satisfy the tax
indebtedness of delinquent taxpayers.” Id. at 680. In a suit for judicial sale, the
district court must “finally determine the merits of all claims to and liens upon the
property,” and, if the property is sold, “decree . . . a distribution of the proceeds of
such sale according to the findings of the court in respect to the interests of the parties
and of the United States.” 26 U.S.C. § 7403(c).
Thus, “[§] 7403 . . . authorizes a federal district court to order a sale of property
in which a delinquent taxpayer has an interest in order to satisfy that taxpayer’s debt
on appeal with regard to issues determined by summary-judgment order in foreclosure
proceedings, including debtors’ claims regarding purported rights to mediation and
loan preservation services, given failure of debtors and senior lienholder to file timely
notice of appeal from order); United States v. Stute, 402 F.3d 820, 823 (8th Cir. 2005)
(holding court lacked jurisdiction on appeal to review summary-judgment motion
foreclosing mortgage held by the government and ordering the property sold because
the notice of appeal was untimely).
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. . . . even though an innocent third party also has an interest in the property, so long
as the third party receives compensation.” United States v. Bierbrauer, 936 F.2d 373,
374 (8th Cir. 1991) (citing 26 U.S.C. § 7403(c); Rodgers, 461 U.S. at 693–94).
“Foreclosure and forced sale, with proceeds of the sale divided equitably between the
United States and other parties claiming an interest in the property, will normally be
the proper resolution of a § 7403 action.” United States v. Barczyk, 434 F. App’x 488,
490 (6th Cir. 2011) (unpublished per curiam) (citing Rodgers, 461 U.S. at 693–94).
The Internal Revenue Code “creates no property rights but merely attaches
consequences, federally defined, to rights created under state law.” Nat’l Bank of
Com., 472 U.S. at 722 (internal quotation marks omitted). As a result, “[w]e look to
state law to define [Deanna’s] interest in the homestead property.” O’Hagan v. United
States, 86 F.3d 776, 779 (8th Cir. 1996).
There is no dispute that Ronald is the sole title holder of the Wayzata Property,
which Hennepin County classifies as a homestead, and owns the property in fee
simple. See Appellants’ Br. at 9 (“Ronald[’s] . . . ownership of the Property is a fee
simple estate.”). He never transferred any interest in the Wayzata Property to Deanna.
Thus, the question is whether Minnesota law affords Deanna, although not an owner
of the Wayzata Property, a property interest in it and an entitlement to some of the
proceeds from its sale. The Byerses argue that “Deanna Byers holds a present, vested,
choate, and inalienable interest and property right in the Property by virtue of the
Byers[es]’ marriage and applicable Minnesota law.” Id. at 10 (citing Minn. Stat.
§ 507.02).
Minnesota law “defines the homestead as the ‘house owned and occupied by
a debtor as the debtor’s dwelling place, together with the land upon which it is
situated to the amount of area and value hereinafter limited and defined.’” Marine
Credit Union v. Detlefson-Delano, 830 N.W.2d 859, 863 (Minn. 2013) (quoting
Minn. Stat. § 510.01). The homestead is “exempt from seizure or sale . . . on account
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of any debt not lawfully charged thereon in writing.” Minn. Stat. § 510.01. “[A]
central feature of the homestead exemption is that it extends” to the debtor and the
debtor’s spouse. Aasen v. Macbride, No. A17-0592, 2017 WL 6567662, at *3 (Minn.
Ct. App. Dec. 26, 2017). The homestead exemption provides that “[i]f the debtor [is]
married[,] the homestead title may be vested in either spouse, and the exemption shall
extend to the debts of either or of both.” Minn. Stat. § 510.04.3
“In addition to the homestead exemption[], Minnesota law provides the
owner’s spouse with further protections designed to preserve the family homestead.”
United States v. Pilla, No. CV 3-76-196, 1986 WL 1498301, at *3 (D. Minn. Apr. 25,
1986), aff’d, 808 F.2d 841 (8th Cir. 1986). For example, under Minnesota law, “[i]f
the owner [of a homestead] is married, no conveyance of the homestead . . . shall be
valid without the signatures of both spouses.” Minn. Stat. § 507.02. Thus, a spouse
is prohibited, “except under circumstances not applicable here, from unilaterally
conveying the homestead. A conveyance of the homestead by a married person
without the signatures of both spouses is not merely voidable but is void.” State v.
Cummings, 2 N.W.3d 528, 534 n.5 (Minn. 2024) (internal quotation marks omitted);
see also First Fiduciary Corp. v. Blanco, 276 N.W.2d 30, 33 (Minn. 1979) (“[W]here
a deed to a homestead is not executed by one of the spouses, the transfer is wholly
void, not merely voidable, regardless of the equities of the matter.”); Pilla, 1986 WL
1498301, at *3 (“[O]ne spouse may not transfer an interest in the homestead without
the signature of the other spouse.”).
The Byerses rely primarily on Rodgers to argue that § 507.02 affords Deanna
“a legitimate property interest that must be protected in the [g]overnment’s tax lien
sale.” Appellants’ Br. at 16. “Rodgers involved § 7403 and the Texas homestead law,
which, like Minnesota’s, provides non-debtor spouses with a great deal of
protection.” United States v. Pilla, 711 F.2d 94, 96 (8th Cir. 1983). Rodgers “held
3There are, however, exceptions to the homestead exemption. See id. § 510.05.
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that when both a non-debtor and a debtor held interests in property, the property
itself, rather than merely the debtor’s interest, could be sold to satisfy the tax
obligations of the debtor.” Id. (citing Rodgers, 461 U.S. at 692–94). The Court
concluded that “the homestead law’s prohibition on foreclosure for the debts of one
spouse does not apply” because “the IRS has rights superior to those of an ‘ordinary
creditor,’ since it is . . . exercising ‘a sovereign prerogative . . . ultimately grounded
in the constitutional mandate to “lay and collect taxes.”’” Id. (second ellipsis in
original) (quoting Rodgers, 461 U.S. at 697).
But, relevant to the present case, the Court also recognized that
homestead interests of a non-debtor spouse, while not preventing a sale,
must be recognized. The Court found that § 7403’s requirement that the
court “finally determine the merits of all claims . . . on the property”
included the obligation to consider the homestead interest of a
non-debtor spouse and, when that interest rises to the level of a property
right, to compensate the spouse for that interest. 461 U.S. at [696], 103
S. Ct. at 2144. The Court further noted that some equitable discretion
was vested in the courts to deny the government’s petition to foreclose
in certain circumstances. 461 U.S. at [705–06], 103 S. Ct. at 2149.
Id. (emphasis added) (ellipsis in original).
The Court concluded that based on “the nature of the homestead estate in
Texas,” the non-debtor spouse had “the sort of property interest for whose loss an
innocent third-party must be compensated under § 7403.” Rodgers, 461 U.S. at 698.
The Texas Constitution, similar to Minn. Stat. § 507.02, provides that “the owner or
claimant of the property claimed as a homestead [may not], if married, sell or abandon
the homestead without the consent of the other spouse, given in such manner as may
be prescribed by law.” Rodgers, 461 U.S. at 684–85 (alteration in original) (quoting
Tex. Const., art. 16 § 50). “Equally important,” the Texas Constitution also states:
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On the death of the husband or wife, or both, the homestead shall
descend and vest in like manner as other real property of the deceased,
and shall be governed by the same laws of descent and distribution, but
it shall not be partitioned among the heirs of the deceased during the
lifetime of the surviving husband or wife, or so long as the survivor may
elect to use or occupy the same as a homestead, or so long as the
guardian of the minor children of the deceased may be permitted, under
the order of the proper court having the jurisdiction to use and occupy
the same.
Id. at 685 (quoting Tex. Const., art. 16 § 50). The provisions’ effect “is to give each
spouse in a marriage a separate and undivided possessory interest in the homestead,
which is only lost by death or abandonment, and which may not be compromised
either by the other spouse or by his or her heirs.” Id. Texas courts have “repeatedly
emphasized . . . that the Texas homestead right is not a mere statutory entitlement, but
a vested property right.” Id. at 686 (emphasis added). According to the Texas
Supreme Court, “a spouse ‘has a vested estate in the land of which she cannot be
divested during her life except by abandonment or a voluntary conveyance in the
manner prescribed by law.’” Id. (quoting Paddock v. Siemoneit, 218 S.W.2d 428, 436
(Tex. 1949)).
Rodgers “necessarily rested upon the determination that the Texas homestead
right was a vested property right.” Pilla, 1986 WL 1498301, at *4. But
Minnesota homestead laws . . . differ in one crucial respect from the
homestead interests arising under Texas law—Minnesota’s homestead
laws do not provide the spouse with a vested estate in the property.
Minnesota law provides only that the spouse has a contingent interest in
the homestead, during marriage, which vests upon the owner’s death.
Snortum v. Snortum, 155 Minn. 230, 233–34, 193 N. W. 304, 306
(1923). Unlike the homestead interest in Texas law which is an estate in
the property itself vesting at marriage, the homestead interest under
Minnesota law becomes a vested right in the property only upon the
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death of the owner. See Snortum v. Snortum, supra. See also Estate of
Johnson v. C.I.R., 718 F.2d 1303, 1309 (5th Cir. 1983) (emphasizing the
unique nature of the homestead interest in Texas). The contingent nature
of the homestead interest in Minnesota is further demonstrated by the
fact that divorce terminates the rights of the non-owner spouse in the
property. Kern v. Field, 68 Minn. 317, 318, 71 N.W. 393 (1897);
Gummison v. Johnson, 149 Minn. 329, 331, 183 N.W. 515 (1921).
Id.
Although “Minnesota homestead laws,” including § 507.02, afford Deanna
“extensive protection to safeguard her rights and interests in the homestead property
owned by [Ronald],” they “do not vest in [Deanna] a property interest which rises to
the level of that recognized under Texas law in United States v. Rodgers, 461 U.S.
677.” Id. As a result, Deanna’s “homestead interest in the [Wayzata Property] is not
in the nature of a property right for which the government need compensate in a
forced sale action under 26 U.S.C. § 7403.” Id.4 The district court did not err in
4In addition to Rodgers, the Byerses rely on Marshall v. Marshall, 921 F. Supp.
641 (D. Minn. 1995), reconsideration granted, opinion vacated on other grounds
(Jan. 29, 1996). Marshall, unlike the present case, involved a challenge to the
government’s attempt to enforce a lien “pursuant to the administrative procedures set
out in 26 U.S.C. § 6331.” Id. at 642–43. In a lien proceeding, the government “‘steps
into the shoes’ of the delinquent taxpayer” and “‘acquires whatever rights the
taxpayer himself possesses’ in the homestead property.” Id. at 643 (emphases added)
(quoting Nat’l Bank of Com., 472 U.S. at 724). An “important distinction [exists]
between the power of sale under § 7403 . . . and the power of administrative levy
[under § 6331].” Rodgers, 461 U.S. at 702 n.31; see also Marshall, 921 F. Supp. at
645 n.4 (“Several courts have held that the IRS may levy upon and sell a
nondelinquent spouse’s portion of the homestead, notwithstanding statutory
provisions to the contrary, using the judicial proceeding called for under 26 U.S.C.
§ 7403. The IRS did not pursue a judicial proceeding to levy on Mr. Marshall’s
property. The cases upon which it relies to justify [the] sale at issue today involve
judicial levies under § 7403, not administrative levies under § 6331.”). “That is why
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determining that Deanna lacked a present property interest in the home and granting
summary judgment to the government.
III. Conclusion
Accordingly, we affirm the judgment of the district court.
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the Marshall court focused on how § 507.02 modified the ‘shoes’ into which the
government had stepped, and why the Marshall court ultimately found that the
government had not acquired the right to convey the levied property without the
nondelinquent spouse’s consent.” Byers, 699 F. Supp. 3d at 781 (citing Marshall, 921
F. Supp. at 645–46).
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