Menchise v. Steffen (In re Steffen)

109 A.F.T.R.2d 2012-522

23 Fla. L. Weekly Fed. B 238

464 B.R. 450

In re Terri L. STEFFEN, Debtor.Douglas N. Menchise, Chapter 7 Trustee, Plaintiff,

v.Terri L. Steffen, Paul Bilzerian, Overseas Holding Limited Partnership, Guerrini Family Limited Partnership, Guerrini Corporation, Guerrini Family Corporation, Keyapaha Family Trust, Keyapaha Company, Daer Holdings, LLC, Deborah Meshulam, as Receiver, and the U.S. Securities and Exchange Commission, Defendants.

Bankruptcy No. 8:01–bk–09988–MGW.

Adversary No. 09–ap–00093–MGW.

United States Bankruptcy Court, M.D. Florida,Tampa Division.

Jan. 4, 2012.

Michael Markham, Esq., Johnson Pope Boor, Ruppel & Burns, LLP, Clearwater, FL, for the Trustee.

Mary Apostolakos Hervey, Esq., United States Department of Justice, Washington, DC, for the United States.

Darren Farfante, Esq., Fowler White Boggs, P.A., Tampa, FL, for Daer Holdings, LLC.John D. Emmanuel, Esq., Fowler White Boggs, P.A., John J. Lamoureux, Esq., Carlton Fields, P.A., Tampa, FL, for Iberiabank.

MEMORANDUM OPINION ON CROSS–MOTIONS FOR SUMMARY JUDGMENT

MICHAEL G. WILLIAMSON, Bankruptcy Judge.

The Trustee and the Internal Revenue Service seek a declaration that property previously owned by the Debtor remains property of the estate as a matter of law even though it has been transferred twice—first to Guerrini Family Limited Partnership (“GFLP”) and later to Daer Holdings, LLC (“Daer”)—as part of two court-approved sales in two different bankruptcy cases. They claim both transfers were ineffective because the property was transferred to the Debtor's nominees: GFLP and Daer. The IRS, which has a federal tax lien on the property, also seeks a declaration that Iberiabank's mortgage lien—the only other lien on the property—is void as matter of law because Iberiabank's predecessor-in-interest recorded the mortgage lien in violation of the automatic stay and had knowledge—either actual or constructive—that the property securing its mortgage was property of the estate.

Daer and Iberiabank, of course, dispute that GFLP and Daer are the Debtor's nominees. But in any event, Daer and Iberiabank claim the IRS is barred by the doctrines of res judicata and collateral estoppel from undoing the Court's prior sale orders. Iberiabank also claims that the automatic stay did not preclude its predecessor from recording its mortgage lien and that its valid mortgage lien is superior to the IRS's federal tax lien under the Internal Revenue Code.

All of the parties are bound by the Court's prior sale orders regardless of whether they were a party to—or had notice of—the sale proceeding. That is because bankruptcy sales are final as to the entire world. Nevertheless, the property at issue remains property of the estate subject to administration by the Trustee notwithstanding the transfers because Daer is the Debtor's nominee, and the Debtor's estate retains an equitable interest in property held by a debtor's nominee. The property, however, is subject to Iberiabank's mortgage lien, which is superior to the IRS's federal tax lien under Internal Revenue Code § 6323. The IRS's federal tax lien, in turn, is entitled to be paid under the priority established in Bankruptcy Code § 724(b).

Factual Background

The Consent Judgment

The Debtor and her husband (Paul Bilzerian) previously owned a mansion located at 16229 Villareal de Avila, Tampa, Florida. In March 1997, the Debtor and her husband transferred the Villareal mansion to Overseas Holding Limited Partnership (“OHLP”) (the Debtor owned a 100% beneficial interest in OHLP). Nearly four years later, a federal district court in Washington, D.C. appointed a receiver over Bilzerian's assets to execute on a final judgment the Securities and Exchange Commission had previously obtained against Bilzerian requiring him to disgorge $60 million in illegal profits and accrued interest. ¹ The receiver claimed that the Villareal mansion was part of Bilzerian's receivership estate.

The Debtor and OHLP intervened in the D.C. district court action to preserve their alleged interest in the Villareal mansion. Shortly after intervening in that action, the Debtor filed her bankruptcy case in this Court. In order to continue participating in the D.C. district court action, the Debtor was required to, and in fact did, obtain interim stay relief from this Court. ² The parties in the D.C. district court action eventually agreed to a resolution of the dispute over their respective ownership interests in the Villareal mansion.

That agreement provided that (i) the Debtor (or OHLP) and the Bilzerian receivership each owned a 50% interest in the Villareal mansion; and (ii) the Villareal mansion would be sold, with the Debtor (or OHLP) receiving 50% of the sales proceeds and Bilzerian's receivership estate receiving the remaining 50% of the sales proceeds. The parties entered into a consent agreement memorializing those terms.³ The D.C. district court ultimately entered a final judgment incorporating the terms of the parties' Consent Agreement. ⁴

On January 25, 2002, this Court entered a final stay relief order. That order specifically provided that the “automatic stay, to the extent applicable, is expressly lifted and annulled to permit the entry of [the Consent Judgment] and the implementation thereof.” ⁵ The IRS received notice of the parties' joint motion for stay relief,⁶ the Consent Judgment,⁷ and the final stay relief order (which incorporated the Consent Judgment).⁸ The IRS also participated in the D.C. district court action. At no point, however, did the IRS object to the entry of the final stay relief order incorporating the Consent Judgment.

GFLP and the GFLP Sales Contract

For more than a year after entry of the Consent Judgment, the marketing of the Villareal mansion was under the supervision and control of the SEC receiver. Then, on March 31, 2004, the Debtor (as president and general partner of OHLP), with the consent of the SEC receiver, contracted with GFLP to sell the Villareal mansion to GFLP for $2.25 million. GFLP apparently was formed to acquire the Villareal mansion. Its general partner was the Guerrini Corporation, which was controlled by Mary Haire (the Debtor's next-door neighbor). The Guerrini Corporation owned a 1% interest in GFLP. The remaining 99% interest was owned by the Guerrini Family Corporation, which was controlled by the Debtor's parents. The Guerrini Family Corporation later purportedly transferred its 99% interest in GFLP to the Keyapaha Family Trust, another entity controlled by the Debtor's parents.

The Sale Notice

Once the SEC receiver approved the sales contract, the Debtor filed a notice of sale in her bankruptcy case on April 14, 2004.⁹ The notice of sale, which was served on the IRS, attached a copy of the contract between OHLP and GFLP; however, GFLP's name was redacted from the contract. The notice also failed to include any date for objecting to the proposed sale. Instead, the notice specifically provided that it was “given for informational purposes” only since the sale of the Villareal mansion was controlled by the Consent Judgment and this Court's final stay relief order incorporating the Consent Judgment.¹⁰

The Sale to GFLP

In any event, no objections to the sale notice were filed. So the property was sold to GFLP on May 10, 2004. GFLP financed the purchase of the Villareal mansion through SouthTrust Mortgage Corporation. SouthTrust later assigned the mortgage to Wachovia Bank. Mary Haire personally guaranteed the $2.25 million mortgage loan.

The Involuntary Bankruptcy

GFLP originally purchased the Villareal mansion with the intention of selling it after one year. But GFLP claims that the Debtor and Bilzerian interfered with any proposed sale so that they could continue residing at the mansion. Unable to come to any agreement with the Debtor and Bilzerian over the marketing or sale of the mansion, GFLP demanded that they vacate the property. In response, the Keyapaha Family Trust and the Guerrini Family Corporation filed a state court action seeking dissolution of GFLP and sale of the Villareal mansion. The Keyapaha Family Trust requested that the state court appoint Michael Peters as a receiver for the mansion.

The state court declined, instead appointing Maynard Luetgert as receiver. Luetgert held an auction on April 27, 2006, and the successful bidder was Daer. That sale was unable to close, however, because of title insurance issues. Daer later sued to recover its deposit. The state court ultimately entered an order ejecting the Debtor and Bilzerian from the Villareal mansion. One week later, the Keyapaha Company (as trustee for the Keyapaha Family Trust) initiated an involuntary petition against GFLP in this Court.¹¹ GFLP consented to the involuntary petition.¹²

Daer and the Sale Auction

At the time of the involuntary bankruptcy, GFLP's primary asset was the Villareal mansion. Consequently, three weeks after the involuntary petition was filed, GFLP sought Court approval of proposed bid procedures for the sale of the Villareal mansion.¹³ On November 22, 2006, the Court entered an order preliminarily approving a “stalking horse contract” and scheduling the sale of the Villareal mansion for December 11, 2006.¹⁴ The Court's November 22 order also established procedures for marketing and auctioning the Villareal mansion. Among those procedures was a requirement that any initial bid for the Villareal mansion exceed the “stalking horse contract” by $200,000.

The sale auction was held on December 11, 2006. And the highest bid—$5.5 million—was submitted by Daer. Daer had been formed over a year earlier by David Slavinsky for the purpose of buying real estate. At the time Daer was formed, Slavinsky was its sole member. Slavinsky later sold his membership interest in Daer to his father-in-law, Michael Peters. Daer was originally managed by Peters and Slavinsky. Then, in mid–2010, Scott Rohleder replaced Slavinsky as a managing member. Peters eventually...