Gillman v. Preston Family Inv. Co. (In re Richardson), 23 B.R. 434 (Bankr.D.Utah)
PUBLISHED
Chapter 7 trustee sought to avoid a foreclosure sale of debtors' home that took place one day before debtors filed their petition. On trustee's motion for summary judgment, which was denied, the court considered whether 11 U.S.C. § 544(a)(3), § 544(b), or § 548(a)(2) would allow trustee to avoid the sale, ruling that: (1) § 544(a)(3) does not shield trustee from constructive notice and, therefore, where there is constructive notice of foreclosure, trustee's status as a bona fide purchaser without knowledge will be unavailing; (2) § 544(b) relies on state law that had not yet been interpreted in Utah and, therefore, the court should exercise its discretion and decline to determine trustee's § 544(b) claim based on a motion for summary judgment; and (3) trustee was entitled to partial summary judgment on his § 548(a)(2) claim, to the extent that the following elements had been established: (a) the sale effected a transfer of debtors' interest in the property, (b) within one year of the filing of their petition, and (c) the sale took place either when debtors were insolvent or were made insolvent by the sale. The court further ruled that, should trustee succeed in avoiding the sale at trial, purchaser would be entitled to a lien on the property in the amount of the purchase price and interest on seller's debt from the sale date, but not including purchaser's attorney's fees, as those would not confer a benefit on debtors.