County of Imperial Treasurer-Tax Collector v. Stadtmueller (In re RW Meridian LLC)

Ninth Circuit’s Tracht Gut opinion limited to its facts by the BAP.

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BAP No. SC-16-1227-JuFY; Bk Case No. 16-00629 MM7 (9th Circuit, Feb 03,2017) Published
Affirmed the Bankruptcy Court's ruling that the County's post-petition tax sale violated the automatic stay and was, therefore, void.
Procedural context:
County of Imperial Tax Collector appealed the order of the Bankruptcy Court denying the County's motion for a "comfort order" for stay relief in connection with the County's post-petition tax sale of the debtor's real property. The Court's order included a finding that the County's tax sale was void as a result of such sale violating the automatic stay.
Debtor defaulted on making real property tax payments to the County. About five years later, the County scheduled a tax sale for February 6, 2016, one day after the debtor's right of redemption expired. The County commenced the sale on February 6. The sale was consummated and completed on February 9, 2016. On February 8, 2017, the debtor filed its chapter 7 petition. The County filed a motion seeking a "comfort order" from the Court confirming that the County did not violate the automatic stay. The Chapter 7 trustee opposed, contending that though the debtor's right to redeem may have expired pre-petition, the debtor's legal and equitable interests in the real property remained intact as of the petition date. According, the trustee argued, the real property foreclosed upon by the County constituted property of the estate and the County's sale violated the automatic stay. The Bankruptcy Court agreed with the trustee, denied the County's motion and further ruled that the County's tax sale was void, as an act in violation of the stay, under Ninth Circuit authority. The BAP also agreed with the trustee and affirmed the ruling.

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