Mid-City Bank v. Skyline Woods Homeowners Association (In re Skyline Woods Country Club)
- Citation:
- No. 10-2618 (8th Cir. February 22, 2011).
- Tag(s):
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- Ruling:
- Affirmed. The Eighth Circuit held that denial of the purchaser’s motion to reopen the bankruptcy case for the purpose of declaring a state court order void was not an abuse of discretion. Agreeing with the B.A.P., the Eighth Circuit concluded that because the Nebraska Supreme Court had concurrent jurisdiction to interpret the sale order, the state court judgment was entitled to preclusive effect such that reopening the bankruptcy case would be futile. In particular, the court noted that, because the bankruptcy court did not have exclusive jurisdiction over the homeowners’ claims in the state court action, a bankruptcy court could only intervene subsequently to overrule the state court’s order if the state court proceedings had conflicted with the bankruptcy court’s exclusive jurisdiction. Because the matter decided in the state supreme Court’s order fell within the bankruptcy court’s nonexclusive jurisdiction, it was not subject to subsequent attack in the bankruptcy court and was entitled to preclusive effect. Accordingly, the bankruptcy court did not abuse its discretion in refusing to reopen the bankruptcy case.
- Procedural context:
- An affiliate of Liberty Building Corporation (“Liberty”) and its secured lender filed a motion seeking to reopen the bankruptcy case for the purpose of seeking an order enjoining the enforcement of the state court order and declaring it void for lack of subject matter jurisdiction. The Bankruptcy Court denied the motion, and the B.A.P. affirmed. Liberty and its secured lender appealed.
- Facts:
- In the original chapter 11 case, Skyline Woods conducted a sale of substantially all its assets, including a golf course, which was acquired by Liberty. The order approving the sale authorized the sale of the property “free and clear of all mortgages, liens, pledges, charges…security interests, interests under conditional sale, capital lease or title retention agreement[s], encumbrances, easements, options, rights of first refusal, restrictions, judgments, claims, demands, successor liability, defects or other claims, interests or liabilities of any kind or nature.” When Liberty ceased operating the golf course and altered its use of the property, local homeowners filed suit, asserting various express and implied restrictive covenants requiring the property to be operated as a golf course. Ultimately, the Supreme Court of Nebraska, affirming the trial court decision, concurred that the property was burdened by implied restrictive covenants that could not be extinguished under 11 USC 363(f).
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