Richard filed Chapter 11 bankruptcy reorganization. His assets included a vacation resort lot appraised for $76,000. Two years later, while Richard was still in bankruptcy, the county where the lot is located ordered it sold for $17,423.75 in unpaid property taxes.
At the county’s property tax sale, Sherry was the high bidder for the lot, paying the county $36,049. She was unaware of Richard’s bankruptcy filing since he did not record it in the county where the vacation lot was located.
Upon learning the lot had been sold by the county for unpaid property taxes, Richard sued Sherry and the county. He alleged the sale was in violation of federal bankruptcy laws which create an automatic stay stopping proceedings against property owners who filed bankruptcy.
But Sherry and the county argued this was a regularly conducted non-collusive tax sale and she was a bona fide purchaser without notice of the bankruptcy.
Should the tax sale be ordered cancelled and the land title returned to Richard?
The judge said yes.
Since the county and Sherry had no notice of Richard’s bankruptcy filing, the judge explained, it would be unreasonable to overturn the land sale for violation of the bankruptcy automatic stay.
However, federal Bankruptcy Code section 549(c) allows only assets of a bankrupt debtor to be sold for “present fair equivalent value,” the judge emphasized.
A sale of land worth $76,000 for only $36,049 does not meet this test, he ruled. Since Sherry did not pay present fair equivalent value for the lot, she is not protected as a bona fide purchaser and must return the land to Richard, the judge concluded.
Based on the 1993 U.S. Circuit Court Bankruptcy Appellate Panel decision In Re Shaw, 157 B.R. 151.
No negligence for roof play
Kenneth, 10, was playing with three of his friends in a three-story apartment building where one of them lived. The children climbed the back stairs of the building. At the top, they found the roof door unlocked, although it was usually padlocked.
The children played on the roof unnoticed. Their game involved jumping over a fire wall that sticks out of the roof. But Kenneth, moving toward the front of the building, did not notice a light shaft, not the roof, was on the other side of the wall. When he jumped over the wall, he fell three stories to the ground, sustaining serious, permanent injuries.
His mother sued the landlords, Bruno and Carolyn, for damages. She alleged the landlords should be liable for negligence damages for allowing the roof door to be unlocked.
But Bruno and Carolyn replied that the door was usually locked, children had never before been known to play on the roof, and injury to Kenneth was not foreseeable.
Should damages be awarded to Kenneth due to the negligence of the landlords?
The judge said no.
The issue is whether the roof was part of the apartment building premises which tenants normally were allowed to use, the judge explained.
The evidence showed the roof door was normally locked and children had never been observed playing on the roof before, he emphasized.
Since the children normally played in the front yard of the building and had never been observed playing on the locked roof, there was no negligence and hence no liability by the landlords, the judge ruled.
Based on the 1993 U.S. Court of Appeals decision in Corson vs. Kosinski, 3 Fed.3d 1146.
