Nealy v. Ivy Holdings, LLC (In re Nealy), Case No. 20-19-33672 (MBK)

623 B.R. 278

IN RE: Fertima C. NEALY, Debtor.

Fertima C. Nealy. Plaintiff,

v.Ivy Holdings, LLC, Defendant.

Case No. 20-19-33672 (MBK)

Adv. No. 20-1038 (MBK)

United States Bankruptcy Court, D. New Jersey.

Signed January 7, 2021

Hearing Date: December 11, 2020

R. Cameron Legg, Esq., Oliver & Legg, LLC, 2240 Route 33, Suite 112, Neptune, NJ 07753, Attorney for Plaintiff/Debtor

Albert Russo, Esq., CN 4853, Trenton, NJ 08650, Standing Chapter 13 Trustee

Anthony L. Velazquez, Esq., 1609 Route 88, Suite 330, P.O. Box 1030, Brick, NJ 08723, Attorney for Defendant

MEMORANDUM OPINION DENYING SUMMARY JUDGMENT

Michael B. Kaplan, Chief Judge U.S. Bankruptcy Court District of New Jersey This matter comes before the Court on a motion (ECF No. 9) filed by the Plaintiff/Debtor, Fertima C. Nealy ("Debtor"), in the above-captioned adversary proceeding, seeking summary judgment to void the transfer of real property located at 203 Deal Avenue in Neptune, New Jersey ("Property") to Defendant, Ivy Holdings, LLC ("Defendant"), as a result of a final judgment of foreclosure, and to re-vest title with Debtor. Defendant filed opposition (ECF No. 10). On November 6, 2020, the Court requested supplemental briefing from the parties to address 1) Debtor's standing to pursue an avoidance action when considering the limitations set forth by 11 U.S.C. § 522(h) ; and 2) Debtor's ability to establish a prima facie claim in light of the Third Circuit's holding in In re Majestic Star Casino , LLC , 716 F.3d 736 (3d Cir. 2013), in which the Third Circuit queries the propriety of the debtor bringing an avoidance action that offers no benefit to creditors. Debtor filed two additional certifications (ECF Nos. 13 and 15), and Defendant filed one response (ECF No. 14). The Court has considered the original pleadings and the supplemental certifications provided by the parties. For the following reasons, Debtor's motion for summary judgment will be DENIED, without prejudice to refiling as discussed below.

I. Background

The facts of this case are well known to the parties and the Court, and therefore need not be repeated in great detail here. The Property at issue in this matter was owned by Debtor's grandparents as a tenancy by the entirety. After both grandparents died, the property was deeded to their five children, leaving the property split into fifths. Debtor's mother had one of these shares who she passed on to her two children, Debtor and Debtor's brother, after she died. Debtor was left with a one-tenth interest in the property (1/10), representing half of her mother's one-fifth (1/5) interest. (ECF No. 9, Debtor's Certification) Defendant argues that Debtor's partial ownership stake of 10% has never been established.

On March 14, 2013, Rosehhill Fund 1, LLC purchased a tax sale certificate against the Property as a result of $5,121.32 in unpaid taxes, and this tax sale certificate was assigned to Tower Fund Services. On July 1, 2015, Tower Fund Services filed a foreclosure complaint in the Superior Court of New Jersey. On September 19, 2019, Tower Fund Services was substituted for Ivy Holdings, LLC as the plaintiff in the foreclosure proceedings due to an assignment in interest of the tax sale certificate. Defendant was granted the right to title of the Property in a final judgment dated September 23, 2019. At that point on, the amount necessary to redeem was $29,356.12.

Debtor filed a voluntary petition for relief under chapter 13 of the United States Bankruptcy Code on December 23, 2019, and listed the Property as valued at $227,500 (Case No. 19- 33672). Defendant filed a proof of claim for $70,883 and listed the Property value as $195,332. A market analysis performed for the Debtor by Pittenger Realty determined the value to be $185,777. Defendant's proof of claim includes the $33,885.72 for the certificate and all tax/utility payments made prior to the bankruptcy filing, plus an additional $18,970.02 for accrued interest and other charges prior to the plan, and the balance of approximately $19,028 representing 18% interest over Debtor's five-year chapter 13 plan.

The complaint in this adversary proceeding was filed on January 23, 2020 (ECF No. 1), and Defendant filed an answer on February 14, 2020 (ECF No. 4). Debtor's objective with the adversary proceeding was to avoid a tax foreclosure sale that allegedly constituted a fraudulent transfer and/or preferential transfer pursuant to 11 U.S.C. §§ 547, 548, 550 and 551. Debtor argued in her first count that the transfer of the Property to Defendant is avoidable pursuant to § 548 and should therefore be set aside because she received less than the reasonably equivalent value for the transfer and she either was insolvent at the time the Property was transferred, or the transfer rendered the Debtor insolvent. Debtor's second count asserts the transfer is voidable under § 547(b) because her interest in the Property was transferred to Defendant on or within 90 days before the date of the filing of the bankruptcy petition, Debtor was insolvent at the time of the transfer, and Defendant received more than it would have received if (a) Debtor was in a chapter 7 bankruptcy, (b) the transfer had not been made, or (c) Defendant received payment of such debt to the extent provided by the provisions of title 11 because the value of the property exceeded Defendant's claim.

II. Debtor's Motion for Summary Judgment

Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). As the Supreme Court has indicated, "[s]ummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather an integral part of the Federal Rules as a whole, which are designed ‘to secure the just, speedy, and inexpensive determination of every action.’ " Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S. Ct. 2548, 91 L.Ed.2d 265 (1986) (citing FED. R. CIV. P. 1 ). "In deciding a motion for summary judgment, the judge's function is to determine if there is a genuine issue for trial." Josey v. John R. Hollingsworth Corp., 996 F.2d 632, 637 (3d Cir. 1993).

The moving party bears the initial burden of demonstrating the absence of a genuine dispute of material fact. Huang v. BP Amoco Corp., 271 F.3d 560, 564 (3d Cir. 2001) (citing Celotex Corp., 477 U.S. at 323, 106 S. Ct. 2548 ). In determining whether a factual dispute warranting trial exists, the court must view the record evidence and the summary judgment submissions in the light most favorable to the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L.Ed.2d 202 (1986). Disputed material facts are those "that might affect the outcome of the suit under the governing law." Id. at 248, 106 S. Ct. 2505. A dispute is genuine when it is "triable," that is, when reasonable minds could disagree on the result. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L.Ed.2d 538 (1986) (citations omitted).

"Once the moving party establishes the absence of a genuine dispute of material fact, however, the burden shifts to the non-moving party to ‘do more than simply show that there is some metaphysical doubt as to the material facts.’ " In re Moran-Hernandez , 544 B.R. 796, 800 (Bankr. D.N.J. 2016) (quoting Matsushita, 475 U.S. at 586, 106 S. Ct. 1348 ). A party may not defeat a motion for summary judgment unless it sets forth specific facts, in a form that "would be admissible in evidence," establishing the existence of a genuine dispute of material fact for trial. FED. R. CIV. P. 56(e) (providing that in response to a summary judgment motion the "adverse party may not rest upon the mere allegations or denials of [its] pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine [dispute] for trial"); see also Fireman's Ins. Co. of Newark, N.J. v. DuFresne, 676 F.2d 965, 969 (3d Cir. 1982) ; Olympic Junior, Inc. v. David Crystal, Inc., 463 F.2d 1141, 1146 (3d Cir. 1972). If the nonmoving party's evidence is a mere scintilla or is not "significantly probative," the court may grant summary judgment. Liberty Lobby, Inc. , 477 U.S. at 249–250, 106 S.Ct. 2505. "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.’ " Matsushita, 475 U.S. at 587, 106 S.Ct. 1348.

III. Material Issues of Fact

As an initial matter, there are issues of fact that remain unresolved and lead this Court to find that summary judgment cannot be granted at this time. Specifically, the value of the property is unclear. Debtor's initial moving papers include a market analysis performed by a real estate company who values the property at $185,777 (See Exhibit B to the Motion for Summary Judgment, ECF No. 9). Defendant's Proof of Claim lists a value of $195,332. Finally, in the Debtor's Supplemental Certification, the Debtor claims that the property has a "professional, undisputed valuation of $227,500."

A second issue of fact that remains is the extent of Debtor's interest in the property. The Debtor claims that "since the filing of the Petition, the Debtor has proven that she has a 10% interest in the property." Indeed, the Defendant does not appear to dispute this percentage of ownership. However, given the various figures tossed around in prior submissions, the uncertainty at the time of the last hearing, and the absence of any concrete submission in the record which conclusively establishes the 10% ownership interest, the Court does not consider this matter to be resolved for purposes of summary judgment.

Finally, it is unclear whether Defendant filed a lis pendens on the Property. This information determines the survival or failure of Debtor's claim under 11 U.S.C. § 547, which seeks to avoid the transfer as a preference....