Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:Appellants, Marvin and Annette Herrington, appeal a district court judgment setting aside a tax sale of the interest of Joe Bailey Grant, one co-owner of the property, for lack of sufficient notice of the sale and as to the interest of Thomas A. Grant, the other co-owner, for violation of an automatic stay. Two brothers and their wives owned in indivision a 36-acre tract of immovable property in Richland Parish, La. Thomas A. Grant and his wife, Suzanne Brunazzi Grant Paxton, owned half of the property, and T.A’s brother, Joe Bailey Grant, and his wife, Gail Grant, owned the other half. In 1990, Suzanne declared bankruptcy after a divorce from T.A. Grant. In 1994, the bankruptcy court ruled that the interest in the property owned by Suzanne and her ex-husband was properly included in the bankruptcy estate and was owned by the bankruptcy trustee, Allen Harvey. In June 1996, J.B. and Gail Grant executed a special mortgage in favor of the Central Bank in Monroe, La., burdening 15 different properties, including their half interest in the property at issue. In December 1996, the Richland Parish sheriff’s office followed the same procedure it had followed in earlier years, and sent a single bill for all ad valorem taxes due on the property by certified mail to T.A. Grant’s law office. All of the previous bills had been paid. The 1996 bill, however, was not paid, and in May of 1997, the sheriff sent a delinquency notice to the same address by certified mail, advising of the tax delinquency and the impending tax sale if the taxes remained unpaid. The tax bill remained unpaid. During bankruptcy proceedings, T.A. Grant testified that he did not remember receiving the notices and could not find them in his records. Although the notices had been sent by certified mail, there was no evidence that T.A. Grant had signed for the notices. The bankruptcy trustee also testified that he had no record of receiving the notices, although T.A. Grant would normally have sent them to him. There was also no evidence that notices had been sent to the trustee, J.B. and Gail Grant, or to Central Bank. The sheriff did, however, publish notice of the impending tax sale in the Richland Parish newspaper. The taxes remained unpaid, and the property was sold to the Herringtons at the tax sale in May 1997. The property was estimated to be worth more than $70,000; the taxes owed were $118.19, and the Herringtons bought the property for a total of $227.63. The sheriff then sent a notice of the sale by first-class mail to T. A. Grant at the same address, stating that the property could be redeemed under state law. T.A. Grant did not respond, and no evidence was provided that T. A. Grant received this notice or that this notice was sent to the bankruptcy trustee, J.B. and Gail Grant, or to Central Bank or its successors. In 2001, T.A. Grant bought the bankruptcy trustee’s interest in the 15 parcels of land, including the property at issue. He purchased the property by a nonwarranty deed for a total of $15,000. At some point after the tax sale, Bank One, N.A., became the legal successor to Central Bank through a series of corporate mergers, thus giving it a security interest in J.B. Grant’s interest. In 2002, Bank One assigned its interest in the J.B. Grant mortgage to Coba, LLC. In March 2003, T.A. Grant filed suit in bankruptcy court against the Herringtons, seeking to annul the tax sale. He also added Coba and J.B. Grant as additional defendants. Coba filed a cross-claim against the Herringtons. Following trial, the court rendered judgment against the Herringtons and declared the tax sale null because it was held in violation of the automatic stay, and also because of inadequate notice of the sale, it violated the due process rights of J.B. Grant, Coba and T.A. Grant, as the assignee of the bankruptcy trustee. On appeal, the district court agreed with all aspects of the bankruptcy court’s ruling except it concluded that the bankruptcy trustee’s interest in the property was not recorded or otherwise reasonably identifiable to the taxing authorities; thus, publication of the sale in the parish newspaper was sufficient notice as to the trustee. The district court also found that only T.A. Grant, as the trustee’s assignee, and not J.B. Grant or Coba, had “statutory standing” to assert that the sale was null as a violation of the automatic stay. The district court then declared the sale of T.A. Grant’s interest in the property void for violation of the stay. Based on the district court’s judgment, the sale of J.B. Grant’s interest was invalid because he received insufficient notice of the tax sale. His mortgage holder, Coba, similarly retains its interest because of insufficient notice. The sale of T.A.’s interest was invalid because the tax sale violated the automatic stay. The Herringtons were therefore left without any interest in the property. HOLDING:Affirmed in part; vacated and remanded in part. Appellants first argue that the bankruptcy and district courts erred in finding that J.B. and Gail Grant were not given sufficient notice of the tax sale to satisfy the procedural due process requirements set forth in Mennonite Board of Missions v. Adams, 462 U.S. 791 (1983). Appellants contend that the district court erred in finding that Coba, as assignee of Bank One, could pursue the due process claims of its assignor. Appellants argue that COBA lacks standing because it has not proven injury. The court finds no reversible error in the district court’s and bankruptcy court’s conclusions. Appellants also argue that when T.A. Grant purchased the property from the bankruptcy trustee, this sale did not convey the trustee’s statutory authority to avoid the tax sale for violation of the automatic stay. Applying the reasoning in In Re: Pointer, 952 F.2d 82 (5th Cir.1992), the trustee’s right to avoid post-petition transfers in this case is granted by 11 U.S.C. �549. Thus, the analyses of the bankruptcy court and district court of whether the trustee’s assignee had the right under �362 to avoid the tax sale is flawed, the court determines. Whatever authority the trustee had to set aside the sale emanates from �549, and the court remands this case to the district court with instructions to remand to the bankruptcy court for that court to consider: 1. Whether �549 gave the trustee the right to set aside the tax sale to the Herringtons; 2. If so, whether that right was transferred to T.A. Grant as part of Grant’s purchase of the property from the trustee; 3. Assuming that right was transferred to T.A. Grant, whether his claim is time barred under �549. OPINION:Davis, J.; Davis, Smith and Dennis, JJ.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.