Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re McCoy

United States District Court, N.D. California

March 30, 2017

IN RE WAUKEEN Q. MCCOY Br. No. 14-30381 HLB

          ORDER AFFIRMING DECISION OF BANKRUPTCY COURT RE SPECIAL DEAL FOR DEBTOR WAUKEEN MCCOY

          WILLIAM ALSUP UNITED STATES DISTRICT JUDGE.

         INTRODUCTION

         This is an appeal from the bankruptcy court's orders (1) approving a sale of the estate's interest in real property, and (2) granting in part and denying in part debtor's motion for reconsideration. The bankruptcy court's decision as to both orders is Affirmed.

         STATEMENT

         In March 2014, debtor and appellant Waukeen McCoy filed for Chapter 13 bankruptcy. At the time, he resided at and held in joint tenancy real property located on Clayton Street in San Francisco. In June 2014, McCoy successfully moved to convert his bankruptcy case to Chapter 11. In April 2015, the Trustee successfully moved to convert the case to Chapter 7.

         1. Trustee's Motion to Sell.

         In March 2016 and after “nearly six month[s] of marketing efforts, ” the Trustee moved to sell the subject property - with the co-owner's consent - to prospective purchasers for $2.2 million, free and clear of all liens and subject to overbid. Any overbid had to be at least $2.225 million. The Trustee asked Bankruptcy Judge Hannah Blumenstiel to authorize use of the sale proceeds to, among other things, pay a five percent commission, or $110, 000, to be divided equally between Mark Benson, the Trustee's broker, and Gavin Stuart, the prospective purchasers' broker. The Trustee also asked Judge Blumenstiel to require McCoy to vacate the premises by the time the sale closed.

         McCoy opposed the Trustee's motion to sell. The Trustee's reply, however, revealed that McCoy had actually participated in the overbid procedure, with some modifications. Specifically, McCoy had overbid to purchase only the estate's 50 percent interest in the subject property for $210, 500, “an amount calculated to provide the estate with the equivalent cash proceeds . . . that would have been generated if the Property was sold for the minimum overbid price of $2.25M [sic], ” and “subject to all liens and encumbrances (rather than free and clear of all liens)” (Dkt. No. 3-35 at 2). There had been no other overbids, and the prospective purchasers declined to participate in an auction to bid against McCoy's overbid. The Trustee therefore intended to seek Judge Blumenstiel's approval to instead sell the estate's 50 percent interest in the subject property to McCoy, as McCoy wished, with the prospective purchasers as backup buyers in case McCoy failed to perform.[1]

         Prior to the hearing on his overbid, McCoy had signed a draft purchase and sale agreement that provided for a purchase price of “no less than $210, 500” (Dkt. No. 3-35 at 33). That agreement remained in draft form pending the anticipated auction on McCoy's overbid, which might have raised the final purchase price (see Dkt. No. 3-50 at 21, 24). As stated, however, no auction took place because no one bid against McCoy's overbid.

         The prospective purchasers objected to McCoy's overbid. They protested that McCoy had not satisfied the overbid requirements because he did not offer at least $2.225 million to purchase the entire subject property free and clear of liens. Moreover, they criticized the plan to accept McCoy's overbid because it would not pay the creditors whose liens were tied up in the subject property. They further criticized McCoy's overbid on the basis that, while Benson (the Trustee's broker) would still be paid for his efforts no matter what, Stuart (the prospective purchasers' broker) would receive no compensation for his work if Judge Blumenstiel approved McCoy's overbid. Finally, the prospective purchasers refused to act as backup buyers in case McCoy's overbid fell through.

         At the hearing on the Trustee's motion to sell, Judge Blumenstiel asked McCoy if he was “prepared to proceed with the transaction on the terms that [were] recently proposed.” McCoy confirmed that he was (Dkt. No. 3-42 at 3:3-4:6). Judge Blumenstiel therefore indicated she would grant the Trustee's motion and approve “the overbid sale of the estate's interests to the debtor on the terms recently proposed by the trustee” (id. at 4:13-4:16). McCoy assured Judge Blumenstiel that he would be able to hold up his end of the deal but added, “I don't think I should pay for the broker's fee because there's no sale” (id. at 5:17-5:20). The Trustee (through her attorney) then confirmed her intent “to pay Mr. Benson, who is the trustee's broker, without whose efforts this overbid would never have taken place.” Judge Blumenstiel replied, “I have no problem with that either” (id. at 6:9-6:12).

         A written order issued on April 25, 2016, overruling the prospective purchasers' objection and approving the Trustee's sale of the estate's 50 percent interest in the subject property to McCoy for $210, 500, subject to all liens and encumbrances. The order observed that McCoy's overbid was “the highest and best offer presented and resulted in more consideration to the estate than [the prospective purchasers'] offer” (Dkt. No. 3-38 at 2). The order also authorized the Trustee to pay Benson $55, 000 for his broker's commission.

         2. McCoy's Motion for Reconsideration.

         McCoy paid the Trustee (see Dkt. No. 3-54 at 4:8-4:14) but also moved for reconsideration of the order approving the sale, claiming he had actually agreed to purchase the estate's 50 percent interest in the subject property for only $175, 000. He argued that Judge Blumenstiel had improperly conflated the purchase price with Benson's broker's commission of $55, 000, which McCoy contended he should not have to pay because it would be exorbitant given his accepted overbid. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.