Justia Real Estate & Property Law Opinion Summaries

In 2005, U.S. Home Corporation entered into a contract to purchase two contiguous tracts of land, one of which was owned by West Pleasant-CPGT, Inc. Under the contract, West Pleasant and the other landowner were to gain certain approvals permitting development of the properties. Pursuant to the contract, U.S. Home paid advances to the landowners totaling over $1.5 million. As security for the advances, West Pleasant executed a mortgage and note on its property; the other landowner did not. When a contract dispute arose in 2006, U.S. Home sought to terminate the contract and get a return of its total advance. U.S. Home prevailed in arbitration and was awarded a judgment in the full amount of the advance, plus interest. The Appellate Division affirmed the judgment in 2009. When the judgment was not satisfied, U.S. Home commenced foreclosure actions against the properties. The foreclosure proceedings were stayed when West Pleasant and the other property owner filed for bankruptcy. In West Pleasant’s bankruptcy action, U.S. Home moved to dismiss and for relief from the automatic stay. West Pleasant and U.S. Home executed a Consent Order, in which West Pleasant dismissed its bankruptcy proceeding, waived a fair market valuation and its right to object to a sheriff’s sale of its property, and released U.S. Home from any claims in law or equity. U.S. Home never proceeded with any deficiency action against either landowner. Nonetheless, the landowners commenced the affirmative litigation that gave rise to this appeal, seeking a declaration that the arbitration award was fully satisfied, as well as compensation “in the amount of the excess fair market value of the properties obtained by defendant[] U.S. Home over the amount of its outstanding judgment.” The second property owner then assigned its rights to West Pleasant. After trial, the court valued the second property as worth almost $2.4 million and West Pleasant’s property as worth almost $2 million. The court ordered U.S. Home to pay the fair market value of the West Pleasant property, plus interest, and extinguished the arbitration award on the second property. On appeal, the Appellate Division determined that West Pleasant had waived its right to a fair market valuation on its property but that it was owed a fair market value credit for the second property. The Appellate Division remanded the matter to the trial court for recalculation of damages. The New Jersey Supreme Court reversed, finding use of fair market value credit by this debtor to obtain a money judgment against a creditor, in the absence of a deficiency claim threatened or pursued or any objection being raised at the time of the sheriff’s sales, was "inconsistent with sound foreclosure processes and, moreover, inequitable in the circumstances presented." The judgment of the Appellate Division was reversed and the matter remanded for further proceedings. View "West Pleasant-CPGT, Inc. v. U.S. Home Corporation" on Justia Law

Pentagon Federal Credit Union ("PenFed") appealed a circuit court judgment entered in favor of Susan McMahan. McMahan and her husband purchased property in Loxley, Alabama in 2005. The purchase mortgage was provided by Wells Fargo bank, and a second mortgage was granted in favor of PenFed. In pertinent part, the PenFed mortgage stated "At no time shall this mortgage, not including sums advanced to protect the security of this mortgage, exceed $55,000.00. ... [PenFed] shall be subrogated to the rights of the holder of any previous lien, security interest, or encumbrance discharged with funds advanced by [PenFed] regardless of whether these liens, security interests or other encumbrances have been released of record." In 2014, the McMahans filed for Chapter 13 bankruptcy protection, listing both the Wells Fargo and PenFed mortgages. Both Wells Fargo and PenFed ultimately foreclosed on the mortgages. The McMahans' bankruptcy case was dismissed in late 2015. The Wells Fargo debt/lien and the PenFed debt were not discharged in the bankruptcy proceedings. PenFed filed suit against Wells Fargo to quiet title as the first lien holder to the McMahan property by virtue of the PenFed mortgage, the foreclosure deed, and the erroneous legal description in the Wells Fargo mortgage. PenFed did not notify or make McMahan a party to that lawsuit. That lawsuit was never tried to conclusion but was settled, and PenFed paid Wells Fargo $91,256.54 to satisfy the [Wells Fargo] note and in exchange for a cancellation and release of the Wells Fargo mortgage. PenFed did not acquire the right to enforce the Wells Fargo note and/or mortgage. Within one year of the foreclosure, PenFed sold the property, leaving the McMahans with a deficiency balance of $14,433.41. PenFed's calculation of the post-foreclosure-sale surplus proceeds excluded the $91,256.54 that PenFed paid to Wells Fargo to satisfy the Wells Fargo note and cancel the Wells Fargo mortgage. In 2018, McMahan sued PenFed, alleging PenFed's sale of the property to third-party purchasers created excess proceeds greater than what PenFed was entitled to received under the original note. The circuit court concluded PenFed could not exclude the surplus proceeds it paid to Wells Fargo to settle the Wells Fargo mortgage. The Alabama Supreme Court concluded the circuit court erred in characterizing the doctrine of unjust enrichment as an affirmative defense. Accordingly, PenFed did not waive the defense of unjust enrichment by failing to plead it in its responsive pleadings. Instead, PenFed raised the argument to the circuit court at trial and in its trial brief; the argument was properly before the circuit court. Judgment was reversed for further consideration of the merits of PenFed's unjust-enrichment argument. View "Pentagon Federal Credit Union v. McMahan" on Justia Law

Rumsey Land Company, LLC (“Rumsey”) owned a property subject to a first deed of trust held by Pueblo Bank & Trust Company, LLC (“PBT”). In 2010, Rumsey filed for bankruptcy. Resource Land Holdings, LLC (“RLH”) offered to purchase the property, but the bankruptcy court did not approve the sale. Shortly thereafter, PBT purchased the property at a bankruptcy auction. PBT then transferred the land to RLH. In 2015, Rumsey discovered that during the bankruptcy proceedings, RLH had entered a loan purchase agreement to purchase PBT’s interest in the property. The agreement eventually led to litigation in state court between RLH and PBT, which culminated with a settlement agreement allowing RLH to purchase Rumsey’s property from PBT for $4.75 million. Rumsey believed the loan agreement, lawsuit, and settlement influenced the price at its bankruptcy auction. It initiated this adversarial proceeding in bankruptcy court against RLH and PBT (collectively “Defendants”), alleging: (1) fraudulent concealment in violation of state law; and (2) collusive bidding activities in violation of 11 U.S.C. 363(n). The case was transferred to federal district court, which granted summary judgment to defendants on both claims. The Tenth Circuit affirmed finding: (1) Rumsey forfeited its arguments about PBT’s duty to disclose its transaction with RLH and did not argue plain error on appeal; and (2) in the section 363(n) collusive bidding claim, it was time-barred by a one-year limitations period in Federal Rule of Civil Procedure 60(c)(1), and Rumsey failed to demonstrate a genuine dispute of material face as to whether Defendants intended to control the sale price at the bankruptcy auction. View "Rumsey Land Company v. Resource Land Holdings" on Justia Law

The Court of Appeals affirmed the Appellate Division's order affirming Supreme Court's dismissal of Plaintiff's action brought under N.Y. Real Prop. Acts. Law 1504(1) to discharge a mortgage on grounds that the statute of limitations on Defendant's foreclosure claim had expired, holding that Defendant's claims were not time barred.Under N.Y. C.P.L.R. 204(a), New York law tolls the statute of limitations where the "commencement of an action has been stayed by a court or by statutory prohibition." At issue was whether the bankruptcy stay of any judicial proceedings against a debtor upon the filing of a bankruptcy petition qualifies as a "statutory prohibition" under section 204(a). Defendant filed two foreclosure actions against Plaintiff, Plaintiff filed two bankruptcy petitions, and automatic bankruptcy stays were imposed. Plaintiff brought this action asserting that the statute of limitations on Defendant's foreclosure claim had expired. Defendant moved to dismiss, arguing that the statute of limitations had not expired because it was tolled while the bankruptcy stay was in effect. Supreme Court dismissed, and the Appellate Division affirmed. The Court of Appeals affirmed, holding (1) the bankruptcy stay is a "statutory prohibition" within the ambit of the New York tolling statute; and (2) Defendant's claims were not time barred when Supreme Court granted Defendant's motion to dismiss. View "Lubonty v. U.S. Bank National Ass'n" on Justia Law

In this writ of error the Supreme Court held that state courts lack jurisdiction to extend the automatic stay provision of the federal bankruptcy code, 11 U.S.C. 362(a)(1), to motions proceedings against nondebtor plaintiffs in foreclosure actions and overruled Equity One, Inc. v. Shivers, 93 A.3d 1167 (Conn. 2014), on that ground. U.S. Bank National Association brought a foreclosure action against Jacquelyn Crawford. The trial court ordered a foreclosure by sale and appointed Douglas Evans as the committee for sale. Before the sale could be completed Crawford declared bankruptcy and the foreclosure action was stayed. Evans then filed a motion seeking to recover from the bank fees and expenses he incurred in preparing for the sale. Relying exclusively on Shivers, which ruled that courts have authority to extend the application for the automatic stay to nondebtors in unusual circumstances, the trial court concluded that Evans's motion for fees and expenses was stayed. Evans then filed this writ of error. The Supreme Court granted the writ, holding (1) state courts do not have jurisdiction to change the status quo by modifying the reach of the automatic stay provision; and (2) Shivers must be overruled. View "U.S. Bank National Ass'n v. Crawford" on Justia Law

The First Circuit reversed the judgment of the district court dismissing these appeals brought by Appellant seeking to keep money owed to the Commonwealth of Massachusetts based on the fugitive disentitlement doctrine, holding that the district court dismissed the appeal prematurely and that the early dismissal was an abuse of discretion.Thomas Sheedy bought Carol Thibodeau's house and gave it to Appellant Donald Kupperstein, an attorney licensed in Massachusetts. The state court reversed the sale, but Appellant kept collecting rent. Appellant fought to keep the money, and by the time these appeals reached the First Circuit Appellant had defied seven state court orders, four arrest warrants, and numerous contempt sanctions. Appellant filed for bankruptcy in hopes that the Bankruptcy Code's automatic stay would stop the state court from enforcing its orders. The bankruptcy court subsequently lifted the stay, then Appellant "went AWOL." The district court dismissed Appellant's appeal based on the rule that a fugitive forfeits the right to appeal the judgment he's fleeing. The First Circuit held that reversal was required because the district court's inherent power to protect its own proceedings was not implicated in this case. The Court then remanded the case for the district court to decide the merits of Appellant's appeals. View "Kupperstein v. Schall" on Justia Law

Hub Partners XXVI, Ltd. filed a foreclosure action against Thomas Barnett. The district court granted Hub a money and foreclosure judgment. Barnett filed for bankruptcy. During the bankruptcy, Barnett made court-approved payments to Hub. Barnett failed to pay the debt in full, and the bankruptcy court dismissed his bankruptcy. Over a month after the dismissal, Hub issued an execution on the pre-bankruptcy judgment. Barnett objected to the execution arguing the judgment was dormant pursuant to 12 O.S. 735, since more than five years had passed and Hub had not renewed the judgment. The district court agreed and granted Barnett's motion to release the dormant judgment and vacate the execution and sale order. Hub appealed, and the Court of Civil Appeals affirmed the district court's judgment. The Oklahoma Supreme Court granted certiorari to resolve: (1) whether Hub's foreclosure judgment was dormant; and (2) whether the mortgage at issue merged with the foreclosure judgment. The Supreme Court held the 2011 foreclosure judgment was dormant, but the mortgage lien did not merge into the foreclosure judgment and continues to secure Barnett's obligation owed to Hub. View "Hub Partners XXVI, Ltd. v. Barnett" on Justia Law

In this homeowners' association (HOA) foreclosure case, the Supreme Court reversed the district court's grant of summary judgment to U.S. Bank, N.A. and remanded for entry of summary judgment for SFR Investments Pool 1, LLC, holding that the mere fact that a foreclosure sale was held in violation of a bankruptcy stay is not by itself evidence of unfairness.The homeowner filed for bankruptcy under Chapter 11, which imposed an automatic stay on actions against her real property. In violation of the stay, the HOA sold the property at a foreclosure sale. SFR, the purchaser, sought to quiet title. The bankruptcy court issued a limited order retroactively annulling the bankruptcy stay of the stay, which has the legal effect of validating the sale. The district court, however, set aside the sale and granted summary judgment for U.S. Bank finding that the HOA's foreclosure sale being conducted in violation of the bankruptcy stay was evidence of unfairness and that the sale price was inadequate. The Supreme Court reversed, holding that U.S. Bank failed to produce any evidence showing how the sale's violation of the automatic stay constituted unfairness and that SFR met its burden of showing that the HOA foreclosure sale complied with the procedures in Nev. Rev. Stat. Chapter 116. View "SFR Investments Pool 1 v. U.S. Bank, N.A." on Justia Law

Arianna Holding Company purchased a tax lien on a piece of property owned by the Hacklers and eventually obtained title to the Hacklers’ property via foreclosure proceedings. Shortly after Arianna obtained title, the Hacklers filed for Chapter 13 bankruptcy and sought to void the transfer of the title as preferential, 11 U.S.C. 547(b). The Bankruptcy Court and the district court ruled in favor of the Hacklers. The Third Circuit affirmed. The title transfer meets 547(b)’s requirements for avoidance. The transfer was made to or for the benefit of a creditor, was made for an antecedent debt, was made while the debtor was insolvent, was made on or within 90 days before filing for bankruptcy, and enabled the creditor to receive more than it would have received in a Chapter 7 liquidation proceeding. The petition and schedules listed the value of the property at $335,000, which far exceeded the value of the liens against the property; Arianna filed a proof of claim for $42,561.21 and other liens totaled no more than $89,000. The Hacklers’ Chapter 13 plan proposed to pay Arianna’s claim in full. Federalism concerns raised by Arianna cannot overcome the plain language of the Code. View "In Re: Hackler" on Justia Law

After a bankruptcy sale extinguished an easement of the Port, the Port filed an adversary proceeding against debtors, seeking to invalidate the sale and regain its easement. The district court affirmed the bankruptcy court's rejection of the Port's sovereign immunity and fraud claims.The Fifth Circuit affirmed the district court's judgment, finding no Eleventh Amendment violation or basis for a claim of fraud. In this case, the bankruptcy court approved a section 363(f) of the Bankruptcy Code sale "free and clear" of encumbrances, including the Port's easement; the bankruptcy court did not award affirmative relief nor deploy coercive judicial process against the Port and did not exercise in personam jurisdiction over the state; and any section 363(f) objection had to have been raised on direct appeal of the confirmation order and could not be raised in this collateral adversary proceeding. Furthermore, the Port failed to allege any false representation, and the district court did not abuse its discretion in denying the Port leave to amend. View "Port of Corpus Christi Authority v. Sherwin Alumina Co." on Justia Law