Opinion
Case No. 01-51921, Adv. Pro. No. 01-02360
May 13, 2003
ORDER ON MOTION OF DEFENDANT TO COMPEL SALE OF ONE-HALF INTEREST
This matter came before the Court upon the Motion of Defendant to Compel Sale of One-Half Interest ("Motion") and the Memorandum of Sara J. Daneman, Trustee, Opposing Motion of Defendant, William F. Eden, to Compel Sale of OneHalf Interest ("Memo Contra")
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and the General Order of Reference entered in this district. This is a core proceeding under 28 U.S.C. § 157(b)(2)(O).
A. Procedural History
On February 27, 2001, Debtor, Dena L. Eden, filed her Chapter 7 bankruptcy petition. In Schedule A, Debtor listed an undivided one-half interest in real estate known as 13828 Fridley Road, Ashville, Ohio. In Schedule C, Debtor listed William F. Eden as a co-debtor on the Debtor's house and car. (Case No. 01-51921, pleading no. 1).
On October 30, 2001, Trustee filed this adversary proceeding. In the adversary proceeding complaint, Trustee sought an order from the Court allowing her to sell the real estate jointly owned by the Debtor and Defendant, William F. Eden. The Trustee based her complaint upon 11 U.S.C. § 363(h). Defendant answered the adversary proceeding complaint on November 28, 2001. In his answer, Defendant affirmatively stated that "the detriment to Defendant outweighs the benefit to the estate considering Defendant's life expectancy, his contribution to the purchase price and mortgage payments, tax exemptions, prospect of obtaining a new home, the physical problems of Dena Eden, the psychological, emotional, and financial detriments that would result from the sale." (Answer, adversary pleading no. 4)
On August 30, 2002, Trustee filed a motion for summary judgment. In the motion for summary judgment, Trustee argued that the requisite conditions had been established for the Court to authorize her to sell the real property co-owned by Debtor and Defendant pursuant to 11 U.S.C. § 363(h). Defendant filed no opposition to the motion for summary judgment. The Court reviewed the motion for summary judgment, as well as the adversary proceeding and bankruptcy proceeding files. Based upon that review, the Court concluded that Trustee's motion should be granted. The Court entered its Order on Motion of Sara J. Daneman for Summary Judgment on October 21, 2002.
The Order entered on October 21, 2002, concluded that the Trustee had established the requisite conditions for the Court to authorize her to sell the co-owned real property pursuant to 11 U.S.C. § 363(h). It did not authorize nor approve the sale of the real property to a particular purchaser at a particular price.
On November 27, 2002, Defendant filed a motion for relief from judgment. Within the motion for relief from judgment, the Defendant included certain arguments labeled: (1) William's Dower, (2) Accounting for William's Dower, (3) Unconstitutional Taking, (4) Homestead, (5) Set-off for Repairs, and (6) Detriment of Co-Owners Outweighs Benefit to the Estate. The Trustee opposed that motion. Based upon its review of the motion for relief from judgment, the memorandum contra, and the adversary proceeding and bankruptcy proceeding files, the Court concluded that the motion should be denied. The Court entered its Order on Motion for Relief from Judgment on February 10, 2003.
On November 27, 2002, Defendant also filed a motion for leave to amend answer, because he had to make emergency repairs to the basement. The Defendant argued for leave to file the amended answer. The Trustee also opposed that motion. Based upon a review of the motion for leave, the memorandum contra, as well as the adversary proceeding and bankruptcy proceeding files, the Court found that the proposed amendment would "substantially prejudice the Trustee, unduly delay the proceedings . . . ." (Order, adversary pleading no. 22). The Court entered an Order denying the motion for leave to amend answer on February 10, 2003.
The adversary proceeding case was set for closure since no timely appeal was taken by either of the parties.
On March 18, 2003, Defendant filed his Motion moving the Court to order the Trustee to sell him the one-half interest of the Debtor. Within the Motion, the Defendant included certain arguments labeled: (1) What is the Purchase Price, (2) Is Defendant entitled to Credits against the Purchase Price, (3) Accounting for William's Dower, (4) Unconsitutional Taking, (5) Homestead, (6) Set-off for Repairs, (7) The Amount William Thinks He Owes, and (8) No Realtor's Fees. Defendant also moved the Court to determine the purchase price that Defendant must pay for the one-half interest. Trustee responded and argued that Defendant's Motion should be denied because there appears to be no authority under the Bankruptcy Code or case law to support the Motion. In addition, Trustee argued that res judicata and collateral estoppel preclude the Motion from being granted.
B. Legal Analysis
Defendant seeks an order requiring the Trustee to sell to him the one-half interest of the Debtor in the real property. Pursuant to the Order on Motion of Sara J. Daneman for Summary Judgment, the Court granted Trustee's unopposed motion for summary judgment and authorized her to sell the co-owned real property pursuant to 11 U.S.C. § 363(h). Pursuant to 11 U.S.C. § 363(i), the Trustee must:
[b]efore the consummation of a sale of property to which subsection (g) or (h) of this section applies, or of property of the estate that was community property of the debtor and the debtor's spouse immediately before the commencement of the case, the debtor's spouse or a co-owner of such property, as the case may be, may purchase such property at the price at which such sale is to be consummated.
This subsection gives protection for co-owners and spouses with dower rights. It gives a right of first refusal to the co-owner or spouse at the price at which the sale is to be consummated. (H.R. REP. No. 595, 95th Cong., 1st Sess. 346 (1977); S. REP. No. 989, 95th Cong.2d Sess. 57 (1978)). However, this subsection only gives a right of first refusal, not an automatic right to purchase the one-half interest at any time as suggested in Defendant's Motion.
In reviewing the pleadings pending before the Court, Defendant's Motion must be denied. At the time that Defendant's Motion was filed, no motion to sell had been filed by the Trustee. Nothing had been done to invoke 11 U.S.C. § 363(i). The Court finds and concludes that no basis existed and that no basis currently exists to grant an order requiring the Trustee to sell to Defendant the one-half interest in the real property. The Court further finds and concludes that no basis exists to determine the purchase price for Defendant because the right of first refusal has not been invoked pursuant to 11 U.S.C. § 363(i).
The Court notes that the Trustee filed her Motion to Sell 12828 Fridley Road, Ashville, Ohio Free and Clear of Liens at Public Auction on April 24, 2003 in the main bankruptcy case, being Case No. 01-2360. Said motion seeks authority to sell the real property by public auction to the highest bidder and provides that the co-owner shall make an election, pursuant to 11 U.S.C. § 363(i), at the conclusion of auction to purchase for the highest bid. (Case No. 01-51921, pleading no. 23). Defendant filed an Objection on May 12, 2003. The Court will set that matter for hearing.
C. Conclusion
For the foregoing reasons, it is hereby ORDERED that the Motion of Defendant to Compel Sale of One-Half Interest is DENIED.