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Opinion 431

Case Name: 

In re Mountaineer Development Corp.

Judge: 
Judge Boulden
Date: 
Oct-21-2002
Case Number(s): 
00-28590
Status: 

UNPUBLISHED

Body: 

The high bidder at a trustee's auction moved to set aside the sale of the estate's interest in a note, alleging that false or misleading information induced his bid. Following the failed sale, the chapter 7 trustee moved for authority to sell the asset to a third party. The original high bidder also objected to sale of the estate's interest in the note to a third party. The original sale was authorized by the court, made regularly and with notice. The terms of the sale were as is, where is, if is, with no warranties or representations. To set aside such a sale, a party must show fraud, accident, mistake, or some other equitable cause for avoiding a like sale between private parties. See Golfland Entertainment Centers, Inc. v. Peak Investment, Inc. ( Ir re BCD Corp. ), 119 F.3d 852, 859-60 (10th Cir. 1997) (citations omitted). The trustee had passed along some, but not all, information in her possession regarding the status of the asset to the bidder. The trustee lacked independent knowledge of the accuracy of the information in issue, and the bidder made no specific request for this information. The court denied bidder's motion, finding the evidence insufficient to show any of the required elements. The court further held that the trustee owed no heightened fiduciary duty to disclose information to a bidder at auction where the bidder is also a creditor of the estate. The trustee's duty to a bidder-creditor is the duty of due care, diligence, and skill as measured by a reasonable person standard. See United States of America v. Aldrich ( In re Rigden ), 795 F.2d 727, 731 (9th Cir. 1986). There was no evidence in this case that the trustee had failed to fulfill her duty. Relying on the factors set forth in In re Anchor Exploration Co. , 30 B.R. 802 (N.D. Okla. 1983), the court found the trustee's proposed second sale to a non-bidding third party appropriate under the terms of the original Sale Order. See In re Anchor , 30 B.R. at 808

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Opinion 431
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