Now Updating

Summarizing by Bradley Pearce

Wendy Adelson v. Ocwen Loan Servicing, LLC

Summarizing by Amir Shachmurove

Tracht Gut, LLC v. County of Los Angeles and Tax Collector (In re Tracht Gut, LLC)

12-20308 (MT); CC-13-1229-PaTaD (BAP 9th Cir. Jan. 3, 2014)
The bankruputcy court's rulings were AFFIRMED. The BAP held that the bankruptcy court: (i) did not err in dismissing the Debtor's complaint under Fed.R.Civ.P. 12(b)(6); (ii) did not abuse its discretion in declining to allow the Debtor to file an amended complaint; and (iii) did not abuse its discretion in denying Debtor's motion for reconsideration of the dismissal order. BAP upheld dismissal of the Debtor's complaint because "Debtor's cavalier approach to pleading a claim for relief" by utilizing a verbatim recitation of section 548 followed by a conclusory allegation failed to allege facts necessary to state an avoidance cause of action. Moreover, the remaining counts in the complaint only contained conclusory statements, not facts that were required to support a prayer for relief. In addition, with regards to the alleged stay violation, the BAP held that the postpetition recording of the tax deeds was simply a ministerial act, and the real properties never became part of the bankruptcy estate. BAP held that Debtor could not amend its complaint as a matter of right because the Debtor sat on its rights and failed to amend the complaint within the 21-day period provided for under Fed.R.Civ.P. 15(a)(1)(B). Moreover, the BAP agreed with the bankruptcy court that "any attempt to amend would be futile because a duly conducted tax sale under California law presumptively provides for reasonably equivalent value, and thus the essential condition for avoidance of the sales as fraudulent transfers, i.e., for less than reasonably equivalent value, could not be established." The BAP concluded that "based on the procedural requirements of California law, the tax-default sales of the Properties held in this case on October 22, 2012 were for reasonably equivalent value." BAP held that Debtor's failure to exercise diligence in seeking to amend its complaint justified the bankruptcy court's denial of the Debtor's reconsideration motion.
Procedural context:
Ninth Circuit Bankruptcy Appellate Panel considered the appeals by the Chapter 11 debtor of the orders (i) dismissing, without leave to amend, the Debtor's adversary proceeding and (ii) denying reconsideration of the dismissal order.
Chapter 11 corporate debtor owned two parcels of real property that were each the subject to prepetition tax sales by the County of Los Angeles Treasurer and Tax Collector. Tax sales were conducted on October 22, 2012. Debtor sought bankruptcy protection on November 27, 2012 and filed its asset schedules on December 11, 2012 asserting property interests in both parcels of real property. The tax deeds transferring title to the other named defendants was recorded by the County on December 13, 2012. On December 12, 2012, the Debtor commenced an adversary proceeding to avoid the tax sales as fraudulent transfers and obtain a finding that the automatic stay had been violated. The County filed a Rule 12(b)(6) motion to dismiss the complaint arguing that the Debtor had failed to state an adequate claim for relief. The County also argued that because the properties were sold before the bankruptcy was commenced, at a regularly scheduled tax sale with competitive bidding procedures, all in compliance with applicable state law, the purchase price represented reasonably equivalent value and the properties were not property of the estate. The bankruptcy court granted the motion to dismiss, and subsequently denied the Debtor's motion for reconsideration of its dismissal ruling.
Pappas, Taylor and Dunn

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