A Florida Court Grants a Defendant Motion to Dismiss a Debtor’s Complaint to Avoid a Foreclosure Sale as a Preference
November 10, 2021, Southern District of Florida – The case discusses Defendant Wilmington’s motion to dismiss a plaintiff’s amended complaint and Debtor Plaintiff’s response to Defendant’s motion to dismiss.
The facts of the case as found out by the Court are – Debtor Violeta Marina Nunez defaulted under a loan, which it had taken to purchase real property. Defendant filed a complaint to foreclose a mortgage encumbering the property in the state court. The state court entered a final judgment of foreclosure against Debtor for $150,164.85. The property was sold pursuant to the final judgment. Defendant was the successful bidder at the foreclosure sale with a credit bid of $69,100.00. Debtor filed an objection to the foreclosure sale. The state court denied the Debtor’s objection and ordered for issuance of a certificate of title.
Simultaneously, the Debtor filed a petition for relief under Chapter 13 of the Bankruptcy Code and initiated a complaint to avoid the foreclosure sale as preference USC § 547(b). Wilmington argues that Debtor’s amended complaint fails to state a claim upon which relief may be granted because :
1) the Debtor does not have the standing to bring this action;
2) Wilmington did not receive more from the foreclosure sale than it would have received in a chapter 7 liquidation; and
3) the interest transferred to Wilmington at the foreclosure sale was not on account of an antecedent debt.
The Court granted Defendant’s motion to dismiss and opined that while the alleged property was a property of the Debtor at the time of the foreclosure sale, issuing the certificate of title to Defendant was not done on account of an antecedent debt. The Court held that it was done on account of Defendant’s payment of the purchase price by the credit bid. The Court opined that Wilmington received the property as a result of the foreclosure sale in its capacity as a ‘purchaser’ and not as a ‘creditor’. Accordingly, the Court ruled that the foreclosure sale could not be avoided as a preferential transfer.
Nunez v. Wilmington Sav. Fund Soc’y (In re Nunez), Nos. 21-14815-LMI, 21-01157-LMI, 2021 Bankr. LEXIS 3109 (Bankr. S.D. Fla. Nov. 10, 2021)