United States v. Komron Allahyari

                FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


UNITED STATES OF AMERICA,              No. 18-35956
                 Plaintiff-Appellee,
                                          D.C. No.
                 v.                    2:17-cv-00668-
                                            TSZ
KOMRON M. ALLAHYARI,
                         Defendant,

                and

SHAUN ALLAHYARI,
            Defendant-Appellant.


UNITED STATES OF AMERICA,              No. 18-36076
               Plaintiff-Appellant,
                                          D.C. No.
                 v.                    2:17-cv-00668-
                                            TSZ
KOMRON M. ALLAHYARI; SHAUN
ALLAHYARI,
           Defendants-Appellees.         OPINION
2                UNITED STATES V. ALLAHYARI

          Appeal from the United States District Court
            for the Western District of Washington
           Thomas S. Zilly, District Judge, Presiding

            Argued and Submitted February 7, 2020
                     Seattle, Washington

                    Filed November 13, 2020

    Before: Milan D. Smith, Jr. and N. Randy Smith, Circuit
      Judges, and John R. Tunheim, * Chief District Judge.

           Opinion by Chief District Judge Tunheim


                          SUMMARY **


                                 Tax

    The panel reversed the district court’s determination that
Shaun Allahyari’s alleged security interest in property
owned by his son, Komron Allahyari, a tax delinquent, was
not entitled to priority over later-recorded federal tax liens;
and remanded to the district court for reconsideration.

   At issue in the case was real property owned by Komron
Allahyari and two related instruments: (1) the 2005 Deed of
Trust; and (2) a deed of trust that secured a $400,000 loan

      *
      The Honorable John R. Tunheim, United States Chief District
Judge for the District of Minnesota, sitting by designation.
    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
               UNITED STATES V. ALLAHYARI                     3

Komron took out from the Boeing Employees’ Credit Union
(“BECU”) to refinance the real property in 2003. In order to
avoid foreclosure, Shaun paid off and took assignment of the
2003 BECU loan and loan security. The Internal Revenue
Service determined that Komron owed unpaid taxes,
penalties, and interest. The United States filed this civil
action to enforce the tax liens. Komron and Shaun argued
that the 2005 Deed of Trust and Shaun’s interest in the
BECU loan should be senior to the tax liens.

    The panel held that the district court erred: 1) by holding
that the deed of trust between father and son was not entitled
to priority over the later-recorded federal tax liens under
local law; and 2) by failing to consider whether past
consideration was sufficient to support an agreement giving
rise to a security interest under Washington law. The panel
concluded that the district court applied an incorrect standard
of proof under Washington’s Fraudulent Transfer Act. In
addition, the panel concluded that, because 26 U.S.C.
§ 7403(a) authorized the United States to subject any
property or interest of the delinquent to the payment of such
tax or liability, the United States could assert any affirmative
defenses that would be available to the delinquent –
including that the statute of limitations has run on payments
due to senior liens.

    The panel remanded for reconsideration of whether
Shaun Allahyari had parted “with money or money’s worth”
when acquiring the 2005 Deed of Trust, and for application
of the correct standard of proof and for recalculation of the
value of the senior lien, taking into account any statute of
limitations defense raised by the United States regarding
Washington’s applicable six-year statute of limitations.
4              UNITED STATES V. ALLAHYARI

                         COUNSEL

Avi J. Lipman (argued), Gregory J. Hollon, and Curtis C.
Isacke, McNaul Ebel Nawrot & Helgren PLLC, Seattle,
Washington, for Defendant-Appellant/Cross-Appellee.

Komron R. Allahyari, Mercer Island, Washington, pro se
Defendant/Cross-Appellee.

Karen G. Gregory (argued) and Deborah K. Snyder,
Attorneys; Richard E. Zuckerman, Principal Deputy
Assistant Attorney General; Tax Division, United States
Department of Justice; for Plaintiff-Appellee/Cross-
Appellant.


                          OPINION

TUNHEIM, Chief District Judge:

    Shaun Allahyari (“Shaun”) appeals the district court’s
determination that his alleged security interest in property
owned by his son, Komron Allahyari (“Komron”), a tax
delinquent, was not entitled to priority over later-recorded
federal tax liens. He argues that the district court erred when
it found that the alleged security interest was fraudulent
under Washington’s Fraudulent Transfer Act, Wash. Rev.
Code. § 19.40.041(a)(1). The United States cross-appeals
the district court’s conclusion that it could not, under
26 U.S.C. § 7403, assert a state-law statute-of-limitations
defense to the court’s valuation of a security interest that was
found to be senior to federal tax liens.

   We first conclude that the district court erred: (1) by
holding that the deed of trust between Shaun and Komron
               UNITED STATES V. ALLAHYARI                      5

recorded on July 26, 2005 (“2005 Deed of Trust”) was not
entitled to priority over the later-recorded federal tax liens
under local law; the 2005 Deed of Trust is protected under
Washington law; and (2) by failing to consider whether past
consideration is sufficient to support an agreement giving
rise to a security interest under Washington law. Second, we
conclude that the district court applied the incorrect standard
of proof to its finding under the Fraudulent Transfer Act.
Lastly, we conclude that, because § 7403(a) authorizes the
United States to “subject any property, of whatever nature,
of the delinquent, or in which [the delinquent] has any right,
title, or interest, to the payment of such tax or liability,” the
United States may assert any affirmative defenses that would
be available to the delinquent—including that the statute of
limitations has run on payments due to senior liens.

    Accordingly, we reverse and remand to the district court
for reconsideration of whether Shaun had parted “with
money or money’s worth” when acquiring the 2005 Deed of
Trust, and for application of the correct standard of proof and
for recalculation of the value of the senior lien, taking into
account any statute of limitations defense raised by the
United States regarding Washington’s six-year statute of
limitations.

  FACTUAL AND PROCEDURAL BACKGROUND

    At issue in this case are property owned by Komron on
Mercer Island and two related instruments: (1) the 2005
Deed of Trust; and (2) a deed of trust (“BECU Deed of
Trust”) that secured a $400,000 loan Komron took out from
the Boeing Employees’ Credit Union (“BECU”) to refinance
the Mercer Island property in 2003.
6              UNITED STATES V. ALLAHYARI

I. Mercer Island Property Transactions

    Komron and Shaun have a long history of financial
transactions and entanglements relating to the Mercer Island
property. On March 29, 1991, Komron executed a
promissory note (“1991 Promissory Note”) to his parents, in
which Komron promised to pay $50,000 in satisfaction of a
loan his parents had given him to purchase the Mercer Island
property. On April 22, 1991, Komron and his parents
acquired the property. During the years following the 1991
Promissory Note, Shaun regularly requested payment on the
note, and Komron failed to make payments until he repaid a
significant part of the loan in 1998. Afterwards, Komron’s
parents transferred their joint interest in the Mercer Island
property to Komron, who solely owned it from September
1999 onward.

    In 2003, Komron took out a $400,000 loan from BECU,
which was secured by the BECU Deed of Trust on the
Mercer Island property. In 2010, Shaun learned that
Komron was at risk of losing the Mercer Island property
because he had defaulted on the BECU loan. In order to
prevent foreclosure, Shaun paid off and took an assignment
of the 2003 BECU loan and loan security.

    After years of failing to file federal income-tax returns,
Komron filed for tax years 1999–2002 and 2004 in April of
2005. The IRS subsequently determined that Komron owed
unpaid income taxes, trust-fund recovery penalties, and
interest. Komron failed to make payment in full on these
assessments and, at the time of the district court decision in
September 2019, owed the United States $3.9 million.

    Initially, Komron hid these debts from Shaun. When
Komron eventually told Shaun about the outstanding tax
liabilities, Shaun became concerned that the United States
               UNITED STATES V. ALLAHYARI                    7

would be able to record tax liens against the Mercer Island
property and then force the sale of the property to satisfy the
liens. Shaun and Komron then executed the 2005 Deed of
Trust on the Mercer Island property, which purported to
secure payment of $471,322 at 12% interest. This amount
apparently represented the preexisting debts owed by
Komron to Shaun, because Shaun stated (both in his
deposition and at trial) that he did not loan Komron any
additional money at the time the 2005 Deed of Trust was
executed.

   The 2005 Deed of Trust was recorded on July 26, 2005.
The first notice of federal tax liens was recorded against
Komron on October 4, 2005.

    When the United States filed a civil action to enforce the
tax liens in April 2017, Komron and Shaun argued that the
2005 Deed of Trust and Shaun’s interest in the BECU loan
should be senior to the tax liens. The United States argued
that the 2005 Deed of Trust was not a security interest under
the Internal Revenue Code because it was a fraudulent
conveyance under Washington law. It also argued that some
scheduled payments under the BECU Deed of Trust were
time barred by Washington’s six-year statute of limitations
and therefore should not be included in the value of any
senior claim under the BECU Deed of Trust.

II. Proceedings in the District Court

    After a bench trial, the district court found that the
United States had valid federal tax liens on the Mercer Island
property and was therefore entitled to foreclose those liens
and sell the property. The district court also found that
Shaun had priority position over the federal tax liens based
on the BECU Deed of Trust but not the 2005 Deed of Trust.
8              UNITED STATES V. ALLAHYARI

    The district court reasoned that Shaun did not have
priority based on the 2005 Deed of Trust because it was not
a security interest under 26 U.S.C. § 6323(a) and because the
2005 Deed of Trust was a fraudulent conveyance under state
law. First, the district court determined that the 2005 Deed
of Trust did not entitle Shaun to priority position because
Shaun had either actual or constructive knowledge of
Komron’s tax liabilities prior to recording the 2005 Deed of
Trust. It also determined that, because there had been no
exchange of money or money’s worth when the 2005 Deed
of Trust was granted or recorded, it was not a security
interest under federal law. Finally, the district court found
that the 2005 Deed of Trust was invalid under Washington’s
Uniform Fraudulent Transfer Act. Therefore, Shaun did not
qualify as a holder of a security interest based on the 2005
Deed of Trust and the United States’ tax liens had priority.

    However, the district court did conclude that Shaun was
entitled to priority over the United States’ federal tax liens
with respect to the BECU Deed of Trust. Shaun “stepped
into BECU’s ‘shoes’ when he purchased the BECU loan,”
so the assignment was a bona fide debt. The district court
determined that Shaun is entitled to the same priority
position as BECU would have had based on the original
loan.

    The district court ordered the Mercer Island property to
be sold and, after deducting the costs of sale and any amount
owing in back taxes to King County, found that Shaun was
entitled to the next $510,766.26 of the proceeds, based on
the principal and interest owing on the BECU Deed of Trust.
The district court then held that the United States was
entitled to the remainder of the proceeds of the sale until its
tax liens were satisfied.
                UNITED STATES V. ALLAHYARI                       9

    Plaintiffs timely appealed and the United States timely
cross-appealed.

   JURISDICTION AND STANDARD OF REVIEW

    We have jurisdiction pursuant to 28 U.S.C. § 1291. We
review factual findings by the district court for clear error
and review its conclusions of law de novo. Magnuson v.
Video Yesteryear, 85 F.3d 1424, 1427 (9th Cir. 1996) (citing
Fed. R. Civ. P. 52(a).

                          ANALYSIS

    When a person is “liable to pay any [federal] tax” but,
“after demand,” neglects or refuses to pay, a lien equal to the
amount past due—plus penalties, costs, and interest—
attaches to “all property and rights to property, whether real
or personal, belonging to such person.” 26 U.S.C. § 6321.
A tax lien created under § 6321 “shall not be valid as against
any . . . holder of a security interest . . . until notice thereof”
is given. Id. § 6323(a). The putative holder of such a
security interest bears the burden of showing that they
qualify for the protection of § 6323(a). See, e.g., MacKenzie
v. United States, 109 F.2d 540, 542 (9th Cir. 1940) (holding
that, under the predecessor of § 6323(a), “in order to be
protected, the claimant must show” that they are within one
of the protected third-party classes).

    The district court found that Shaun had failed to meet his
burden. United States v. Allahyari, No. C17-668, 2018 WL
4357487, at *7 (W.D. Wash. Sept. 13, 2018). It held that the
2005 Deed of Trust was not a “security interest” for the
purposes of § 6323 because it failed to meet the definition of
that term as provided in § 6323(h). Id.
10               UNITED STATES V. ALLAHYARI

I. Security Interest

    Section 6323 defines a security interest as “any interest
in property acquired by contract for the purpose of securing
payment or performance of any obligation or indemnifying
against loss or liability.” 26 U.S.C. § 6323(h)(1). The
statute also requires that (A) “the interest has become
protected under local law against a subsequent judgment lien
arising out of an unsecured obligation” and (B) “at such
time, the holder has parted with money or money’s worth.”
Id.

    The district court determined that Shaun failed on both
the protected-by-local-law and money-or-money’s-worth
prongs. The 2005 Deed of Trust was not protected by local
law “because Shaun had actual and/or constructive notice of
Komron’s tax liabilities prior to recording the 2005 Deed of
Trust.” Allahyari, 2018 WL 4357487, at *6. The district
court also held that Shaun failed to “contemporaneously”
part with money or money’s worth. Id. at *7. We will
address each conclusion in turn.

     A. Notice

    The district court determined that § 6323 would afford
priority to a security interest, but only if that interest “has
become protected under local law,” which thereby
implicated Washington’s race-notice recording statute. Id.
at *6 (quoting 26 U.S.C. § 6323(h)(1)). 1 With this, we agree.

     1
      The district court cited Kim v. Lee, 31 P.3d 665, 668, as amended
(Dec. 12, 2001), opinion corrected, 43 P.3d 1222 (Wash. 2001), when
reaching its conclusion. The citation to Kim—a case that revolved
primarily around questions of equitable subrogation and was not a model
of clarity—has created some confusion among the parties. We find that
another case, interpreting Washington’s recording statute to confer
                  UNITED STATES V. ALLAHYARI                            11

The district court then reasoned that, because Shaun had
either actual or constructive notice of the federal tax liens,
his security interest was not entitled to priority under § 6323.
Id. at *6. We disagree.

    First, “we must keep in mind that ‘[a] federal tax lien is
wholly a creature of federal statute,’” TKB Int’l, Inc. v.
United States, 995 F.2d 1460, 1463 (9th Cir. 1993) (quoting
Kivel v. United States, 878 F.2d 301, 303 (9th Cir. 1989)),
and that federal law governs the priority of competing liens,
Aquilino v. United States, 363 U.S. 509, 513–15 (1960). As
we noted in MacKenzie, before 1913, “no third person was
protected under any circumstances from an unrecorded
federal tax lien.” 109 F.2d at 542. At that time, however,
Congress amended the federal tax lien statute to protect
mortgagees, purchasers, and judgment creditors against
unrecorded federal tax liens, id., and, in 1966, extended the
same protection to holders of a security interest, Federal Tax
Lien Act of 1966, Pub. L. 89-719, 80 Stat. 1125, 1125. 2 The
relevant provision, § 6232(a), now reads: “The lien imposed
by section 6321 shall not be valid as against any purchaser,
holder of a security interest, mechanic’s lienor, or judgment
lien creditor until notice thereof which meets the
requirements of subsection (f) has been filed by the
Secretary.” 26 U.S.C. § 6323(a).

    In short, federal tax liens are invalid against the interests
held by these specific classes until the United States properly

superior status only to one who acquires a property interest with “no
actual or constructive notice” of another’s prior interest, is more apt. See
Tomlinson v. Clarke, 825 P.2d 706, 712 (Wash. 1992).
    2
      For all other third parties, the common-law principle, “the first in
time is the first in right,” remains the rule. United States v. McDermott,
507 U.S. 447, 449 (1993).
12                UNITED STATES V. ALLAHYARI

records notice of the liens. TKB, 995 F.2d at 1466; see also
United States v. Vohland, 675 F.2d 1071, 1074–75 (9th Cir.
1982). Further, because “‘we must deem the United States’
lien to have commenced no sooner than the filing of notice,”’
it is “unimportant” whether a party protected under
§ 6323(a) had notice of any prior-existing but not-yet
recorded federal tax liens. TKB, 995 F.2d at 1464–65
(quoting United States v. McDermott, 507 U.S. 447, 449
(1993)). In fact, as we noted in TKB, Congress explicitly
rejected an attempt to preclude protection under §6323(a) for
those who acquired an interest in property with actual
knowledge of federal tax liens. 3 See id. at 1466 n.4.

     Therefore, we extend our holding in TKB, which
involved a subsequent purchaser, to holders of security
interests, because both classes share the same level of
protection under § 6323(a). 4 We thus conclude that
§ 6323(a) protects security interests acquired with or without
knowledge of unfiled or later filed tax liens. Accord In re
Haas, 31 F.3d 1081, 1088 (11th Cir. 1994) (“Actual
knowledge by a secured creditor of the IRS’s lien prior to
filing does not enhance the IRS’s position vis-a-vis that
creditor[.]”). Accordingly, Shaun’s actual knowledge of the
federal tax liens, at least three of which had already attached
to Komron’s property when he recorded his 2005 Deed of

     3
       This rejection occurred before the 1966 amendment of § 6323(a),
which added security interests to the protected list, but this does not alter
our analysis, for Congress specifically added security interests to the list
of interests protected by § 6323(a), whereas other interests protected
under other provisions of § 6323 are protected by differing means.
     4
       We note that TKB similarly drew upon McDermott, which
involved a judgment creditor, to inform its analysis of § 6323(a), as,
again, both interests are provided for under § 6323(a), whereas other
protected interests are covered separately.
                  UNITED STATES V. ALLAHYARI                            13

Trust, did not destroy the priority status of his security
interest, for notice of these liens was only recorded after his
deed was. The district court erred by relying on Washington
law and reaching the opposite conclusion.

    However, this is not to say that the state law referenced
by § 6323 in relation to security interests is wholly
unimportant to our analysis. Instead, while federal law
determines priority between competing interests, state law
helps determine whether Shaun’s 2005 Deed of Trust is a
qualifying “security interest” under § 6323, as the first
requirement of the statute is that a security interest “has
become protected under local law against a subsequent
judgment lien[.]” 28 U.S.C. § 6323(h)(1).

    Therefore, for Shaun’s security interest to qualify for
priority, it must have become protected under local law
before the United States filed notice of its tax liens. Under
Washington law, a security interest must be perfected to be
protected against a subsequent judgment lien. Wash. Rev.
Code §§ 62A.9A-102(a)(52)(A), 62A.9A-317(a)(2)(A).
When a security interest is created by deed of trust, an
individual must record the deed in the county where the
property is located to perfect the security interest. Wash.
Rev. Code §§ 61.24.020, 62A.9A.308(e), 65.08.060,
65.08.070. 5 Accordingly, under Washington state law,

    5
      The district court read the significance of § 65.08.070 backwards
in time; that is, it assessed whether Shaun’s security interest would have
been protected against an already perfected judgment lien creditor.
Allahyari, 2018 WL 4357487, at *6. Section 6323(h)(1), however,
clearly states that the relevant inquiry is whether the security interest is
protected against “subsequent” judgment liens. That is, § 6323(h)(1)
describes the legal status a security interest must obtain to have priority
over interests perfected later in time. This is further indicated by
Congress’s use of the present perfect, “has become,” which signifies an
14                UNITED STATES V. ALLAHYARI

Shaun’s security interest would have been subject to
destruction by a subsequent judgment lien only until he
recorded the 2005 Deed of Trust. 6

    By recording the 2005 Deed of Trust on July 26, 2005,
Shaun perfected his security interest under Washington state
law and protected it from that day forward. Because he
perfected the 2005 Deed of Trust before the United States
filed notice of its tax liens, we hold that Shaun’s security
interest has priority over the federal tax liens, see
McDermott, 507 U.S. at 450, at least as far as the first prong
of § 6323(h)(1) is concerned.

     B. Money or Money’s Worth

    The district court concluded that Shaun failed to satisfy
the money-or-money’s-worth prong of § 6323(h)(1) because
there was no contemporaneous exchange. Although the term



action that began in the past and extends into the present, or until the
United States files notice of its tax lien. See, e.g., In re Restivo Auto
Body, Inc., 772 F.3d 168, 174–75 (4th Cir. 2014).
     6
       We note that Washington state law allows a potential judgment
lien creditor to file a lis pendens, which provides notice in much the same
way as recording notice of a federal tax lien does. See Wash. Rev. Code.
§ 4.28.320. We also note that sister circuits have interpreted the phrase
“protected under local law against a subsequent judgment lien” to be
equivalent to being protected against a “lien creditor” as defined by the
Uniform Commercial Code, see In re Haas, 31 F. 3d at 1087; Dragstrem
v. Obermeyer, 549 F.2d 20, 25 (7th Cir. 1977), which Washington state
law mirrors, compare U.C.C. § 9-317(a)(2) (formerly § 9-301), with
Wash. Rev. Code § 62A.9A-317(a)(2). Moreover, the U.C.C. considers
knowledge, actual or otherwise, to be irrelevant when determining the
priority between competing security interests. See, e.g., U.C.C. § 9-322
cmt. n.4.
                 UNITED STATES V. ALLAHYARI                         15

is not defined in § 6323, the regulation interpreting the
statute defines “money or money’s worth” as:

        tangible or intangible property, services, and
        other consideration reducible to a money
        value. Money or money’s worth also includes
        any consideration which otherwise would
        constitute money or money’s worth under the
        preceding sentence which was parted with
        before the security interest would otherwise
        exist if, under local law, past consideration is
        sufficient to support an agreement giving rise
        to a security interest . . . .

Treas. Reg. § 301.6323(h)-1(a)(3) (as amended in 2011). 7
The Treasury Regulation does not itself require a
“contemporaneous” exchange.             Instead, it requires
determination of whether state law allows past consideration
to give rise to a security interest. The district court did not
address this question under Washington law—instead citing
to a Fourth Circuit case, the facts of which did not necessitate
a past-consideration analysis—and erred by assuming
contemporaneous exchange was necessary. On remand, to
determine whether Shaun “parted with money or money’s
worth,” the district court must determine “whether past
consideration is sufficient to support an agreement giving
rise to the security interest” under Washington law.



    7
       The 2011 amendment added the requirement that, even if past
consideration was allowable under local law, “the grant of the security
interest is not a fraudulent transfer under local law or 28 U.S.C.
§ 3304(a)(2).” 76 Fed. Reg. 18384, 18388 (Apr. 4, 2011). However,
this amendment only applies after April 4, 2011 and therefore is
immaterial here.
16             UNITED STATES V. ALLAHYARI

II. Fraudulent Transfer

    In addition to concluding that the 2005 Deed of Trust
was not a security interest under § 6323, the district court
also held that the 2005 Deed of Trust was a fraudulent
transfer in violation of state law “because Komron intended
to ‘hinder, delay, or defraud’ the United States.” Allahyari,
2018 WL 4357487, at *7 (quoting Wash. Rev. Code
§ 19.40.041(a)(1) (2004) (“A transfer made . . . by a debtor
is fraudulent . . . if the debtor made the transfer . . . [w]ith
actual intent to hinder, delay, or defraud[.]”)). The district
court based this conclusion on its determination that the
United States “ha[d] established the elements of a fraudulent
transfer by a preponderance of the evidence.” Id. at *8.

    Washington has long required clear and satisfactory
proof to find a fraudulent transfer under the “hinder, delay,
or defraud” prong of section 19.40.041.            See, e.g.,
Clearwater v. Skyline Const. Co., Inc., 835 P.2d 257, 266
(Wash. Ct. App. 1992) (applying the clear-and-satisfactory-
proof standard to Wash. Rev. Code § 19.40.041); Sparkman
& McLean Co. v. Derber, 481 P.2d 585, 591 (Wash. Ct. App.
1971) (applying the clear-and-satisfactory-proof standard to
Washington’s previous fraudulent-transfer statute (citing
Rohrer v. Snyder, 69 P. 748, 750 (Wash. 1902) (“Where the
good faith of a conveyance is assailed, it is not enough that
the evidence may cause a suspicion as to its good faith. The
evidence must be clear and satisfactory, and such as
convinces the mind that the conveyance is in reality
fraudulent.”))).
                 UNITED STATES V. ALLAHYARI                          17

    The United States argues otherwise, 8 relying on a 2013
decision from the bankruptcy court of the Western District
of Washington, which stated that “[t]he Trustee, as plaintiff,
has the burden of proving the elements of a fraudulent
conveyance under federal and state law by a preponderance
of the evidence.” In re Consol. Meridian Funds, 487 B.R.
263, 267 (Bankr. W.D. Wash. 2013). However, that decision
cites no authority and appears simply to misstate the law.
The United States also relies on a comment from the
Uniform Voidable Transactions Act (“UVTA”) which states
“proof of intent to ‘hinder, delay, or defraud’ a creditor . . .
is sufficient if made by a preponderance of the evidence.”
Unif. Voidable Transactions Act § 4, cmt. 10 (Unif. Law
Comm’n 2014). The comment reflects the addition in 2014
of a subsection (c), which specifically adopts a
preponderance-of-the-evidence standard of proof. Id. § 4(c).
Washington did not adopt the UVTA until 2017, 2017 Wash.
Sess. Laws 238, 245, and it applies only to transfers made
after July 23, 2017. Id. at ii. Therefore, both authorities on
which the United States relies are inapposite. Because the
transfer at issue in this case took place more than a decade
before Washington adopted the UVTA, the clear-and-
substantial-proof standard applies to whether the 2005 Deed
of Trust is a fraudulent transfer under the then-applicable
version of Wash. Rev. Code § 19.40.41(a)(1) (2004).


     8
       In his opening brief, Shaun noted that the standard of proof for
intent to hinder, delay, or defraud is clear and satisfactory proof.
Although Shaun did not argue further regarding the standard of proof,
the United States argued in its response that the district court had
correctly weighed the evidence of fraud using the preponderance-of-the-
evidence standard. Shaun then extensively argued the standard-of-proof
issue in his response brief. Because Shaun cited the correct standard in
his opening brief and the United States provided contrary argument in its
response, we conclude Shaun has not forfeited the argument.
18                UNITED STATES V. ALLAHYARI

    Because the district court used the incorrect legal
standard in making its determinations, we remand for the
district court to reweigh the evidence using the clear-and-
satisfactory-proof standard of proof. 9

III.     The United States’ Cross Appeal

    The United States may bring a civil action to enforce a
tax lien in a district court and “to subject any property, of
whatever nature, of the delinquent, or in which [the
delinquent] has any right, title, or interest, to the payment of
such tax or liability.” 26 U.S.C. § 7403(a). The district court
must then “adjudicate all matters involved therein and finally
determine the merits of all claims to and liens upon the
property” and, if the court concludes the United States has a
“claim or interest,” it will generally be obliged to “decree a
sale of such property.” Id. § 7403(c); see also United States
v. Rodgers, 461 U.S. 677, 706–11 (1983)) (acknowledging
that Congress amended § 7403(c) to read that district courts
“may decree a sale” in 1936 but holding that district courts
do not have “unbridled discretion” to decline to do so).

   The United States argued in the district court that,
whatever the value of Shaun’s senior lien from the BECU
Deed of Trust, it must not include the value of payments for
which the six-year statute of limitations had run. The district

     9
       In its response, the United States argues for the first time that the
2005 Deed of Trust could also be found to be a fraudulent transfer under
Wash. Rev. Code § 19.40.051(b) (2004), presumably because that
subsection requires a lower standard of proof than section 19.40.41(a)(1)
(2004). However, because the United States did not raise this issue
before the district court, we will not consider it. See In re Mercury
Interactive Corp. Sec. Litig., 618 F.3d 988, 992 (9th Cir. 2010) (“An
issue will generally be deemed waived on appeal if the argument was not
raised sufficiently for the trial court to rule on it.” (cleaned up)).
                  UNITED STATES V. ALLAHYARI                           19

court did not address this argument directly; instead it simply
concluded that “Shaun is entitled to the same priority
position for the interest accrued on the BECU Loan” and
calculated the interest as $127,721.52. Allahyari, 2018 WL
4357487, at *9.

     Washington has a six-year statute of limitations for any
“liability express or implied arising out of a written
agreement.” Wash. Rev. Code § 4.16.040(1). This statute
of limitations applies to monthly installment payments under
a deed of trust, as was the case with the BECU Deed of Trust.
See Edmundson v. Bank of Am., 378 P.3d 272, 277–78
(Wash. Ct. App. 2016) (holding that the six-year statute of
limitations begins to run “for each installment [payment]
from the time it became due”). The United States argues that
the district court erred by failing to calculate and exclude
from its valuation of Shaun’s BECU Deed of Trust any
payments that would be subject to the relevant statute of
limitations.

    When “subject[ing] any property . . . in which [the tax
delinquent] has any right, title or interest”—that is, when
identifying assets to be sold in order to satisfy the lien—the
United States “steps into the taxpayer’s shoes” and “acquires
whatever rights the taxpayer himself possesses.” United
States v. Nat’l Bank of Commerce, 472 U.S. 713, 725 (1985)
(internal quotation marks omitted). 10 Among the rights that
Komron possessed vis-à-vis the BECU Deed of Trust was
the ability to assert the defense that some past-due payments
    10
        Although National Bank of Commerce concerned the ability of
the United States to reach funds from a bank account in which the tax
delinquent had a shared contractual right to withdraw and was based on
a tax levy rather than a lien action, the Supreme Court’s statement that
the United States “steps into the taxpayer’s shoes” cited to the section of
Rodgers relating to § 7403. 472 U.S. at 725.
20             UNITED STATES V. ALLAHYARI

are barred by the six-year statute of limitations. Once the
United States stepped into Komron’s shoes, via a § 7403
action, there became no reason why it could not assert that
defense.

    Shaun argues, as he did below, that the United States
cannot assert the statute-of-limitations defense because it
lacks standing to do so, citing cases relating to third-party
enforcement of contracts. This argument is unavailing. The
United States is no longer a stranger to the contract between
Shaun and Komron. Because the district court determined
that the United States has a “claim or interest” in the
property, the United States is now standing in Komron’s
place relative to any encumbrances upon the property.
Although Komron might have chosen not to assert such a
defense against his father, there is no legal basis to deny that
ability to the United States once it has exercised its rights
under § 7403.

    Because the district court did not consider the effect of
the six-year statute of limitations when calculating the value
of Shaun’s senior lien under the BECU Deed of Trust, we
remand for the district court to properly recalculate the
value.

                      CONCLUSION

    For the foregoing reasons, we reverse the district court
and remand for the district court to apply the correct standard
of proof and to recalculate the value of the senior lien, taking
into account any statute of limitations defense raised by the
United States regarding Washington’s six-year statute of
limitations.

     REVERSED and REMANDED.