Port of Corpus Christi Auth v. Sherwin Alumina Company L.L.C.

Case Type:
Case Status:
18-40557 (5th Circuit, Aug 06,2019) Published
The doctrine of sovereign immunity does not preclude a sale of real property under § 363(f) free and clear of an easement across such property that existed in favor of a political subdivision of the State of Texas.
Procedural context:
Following entry of a confirmation order authorizing the proposed “free and clear” sale, Sherwin Alumina filed an adversary proceeding claiming the sale was barred by the state’s sovereign immunity. Separately, the Authority claimed the order was procured by fraud based on allegations that it had not received proper notice. The bankruptcy court dismissed both claims, and the district court affirmed.
The Port of Corpus Christi Authority held an easement granting nonexclusive access across certain real property owned by Sherwin Alumina, which subsequently filed for chapter 11 relief. The debtor proposed a plan in which the real property would be sold free and clear of all encumbrances, including easements. During the bid process, the Authority unsuccessfully bid for part of the real estate, specifically conditioning its bid on retention of an access easement. The final confirmation order approving the sale to the successful bidder specified that the sale would be free and clear of all encumbrances, including easements. In dismissing the Authority’s sovereign immunity claim, the Fifth Circuit observed that the “free and clear” sale represented an exercise of the bankruptcy court’s in rem jurisdiction, and that the proceeding neither awarded affirmative relief against the State nor submitted the State to coercive judicial process.
Higginbotham, Smith, and Higginson

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