Herrington v. Grant

440 F.3d 233, 55 Collier Bankr. Cas. 2d 869, 2006 U.S. App. LEXIS 3439, 2006 WL 327374
CourtCourt of Appeals for the Fifth Circuit
DecidedFebruary 13, 2006
Docket05-30052
StatusPublished
Cited by10 cases

This text of 440 F.3d 233 (Herrington v. Grant) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Herrington v. Grant, 440 F.3d 233, 55 Collier Bankr. Cas. 2d 869, 2006 U.S. App. LEXIS 3439, 2006 WL 327374 (5th Cir. 2006).

Opinion

W. EUGENE DAVIS, Circuit Judge:

Appellants, Marvin and Annette Her-rington, appeal a district court judgment setting aside a tax sale of the interest of Joe Bailey Grant, one co-owner of the property, for lack of sufficient notice of the sale and as to the interest of Thomas A. Grant, the other co-owner, for violation of an automatic stay. We uphold the district court’s judgment setting aside the tax sale of Joe Bailey Grant’s interest for lack of sufficient notice. However, for the reasons that follow, we vacate the court’s order setting aside the sale of Thomas A. Grant’s interest for violation of the automatic stay and remand for further proceedings.

I.

Two brothers and their wives owned in indivisión a 36-acre tract of immovable property in Richland Parish, Louisiana. Thomas A. Grant (“T.A.Grant”) and his wife, Suzanne Brunazzi Grant Paxton (“Suzanne”), owned one half of the property, and T.A’s brother, Joe Bailey Grant (“J.B.Grant”) and his wife, Gail Grant, owned the other one half. In 1990, Suzanne declared bankruptcy after a divorce from T.A. Grant. In 1994, the bankruptcy court ruled that the interest in the property owned by Suzanne and her ex-husband was properly included in the bankruptcy estate and was owned by the Bankruptcy Trustee, Allen Harvey (“Bankruptcy Trustee” or “Trustee”).

In June of 1996, J.B. and Gail Grant executed a special mortgage in favor of the Central Bank in Monroe, Louisiana, burdening fifteen different properties, including their half interest in the property at issue.

In December of 1996, the Richland Parish sheriffs office followed the same procedure it had followed in earlier years, and sent a single bill for all ad valorem taxes *235 due on the property by certified mail to T.A. Grant’s law office. All of the previous bills had been paid. The 1996 bill, however, was not paid, and in May of 1997, the Sheriff sent a delinquency notice to the same address by certified mail, advising of the tax delinquency and the impending tax sale if the taxes remained unpaid. The tax bill remained unpaid.

During bankruptcy proceedings, T.A. Grant testified that he did not remember receiving the notices and could not find them in his records. Although the notices had been sent by certified mail, there was no evidence that T.A. Grant had signed for the notices. The Bankruptcy Trustee also testified that he had no record of receiving the notices, although T.A. Grant would normally have sent them to him. There was also no evidence that notices had been sent to the Trustee, J.B. and Gail Grant, or to Central Bank. The Sheriff did, however, publish notice of the impending tax sale in the Richland Parish newspaper.

The taxes remained unpaid, and the property was sold to the Herringtons at the tax sale in May 1997. The property was estimated to be worth more than $70,000; the taxes owed were $118.19, and the Herringtons bought the property for a total of $227.63. The Sheriff then sent a notice of the sale by first class mail to T.A. Grant at the same address, stating that the property could be redeemed under state law. T.A. Grant did not respond, and no evidence was provided that T.A. Grant received this notice or that this notice was sent to the Bankruptcy Trustee, J.B. and Gail Grant, or to Central Bank or its successors.

In 2001, T.A. Grant bought the Bankruptcy Trustee’s interest in the 15 parcels of land, including the property at issue. He purchased the property by a non-warranty deed for a total of $15,000.

At some point after the tax sale, Bank One, N.A. (“Bank One”) became the legal successor to Central Bank through a series of corporate mergers, thus giving it a security interest in J.B. Grant’s interest. In 2002, Bank One assigned its interest in the J.B. Grant mortgage to Coba, LLC.

In March 2003, T.A. Grant filed suit in bankruptcy court against the Herringtons, seeking to annul the tax sale. He also added Coba and J.B. Grant as additional defendants. Coba filed a cross-claim against the Herringtons. Following trial, the court rendered judgment against the Herringtons and declared the tax sale null because it was held in violation of the automatic stay, and also because of inadequate notice of the sale, it violated the due process rights of J.B. Grant, Coba, and T.A. Grant, as the assignee of the Bankruptcy Trustee.

On appeal, the district court agreed with all aspects of the bankruptcy court’s ruling except it concluded that the Bankruptcy Trustee’s interest in the property was not recorded or otherwise reasonably identifiable to the taxing authorities; thus, publication of the sale in the parish newspaper was sufficient notice as to the Trustee. The district court also found that only T.A. Grant, as the Trustee’s assignee, and not J.B. Grant or Coba, had “statutory standing” to assert that the sale was null as a violation of the automatic stay. The district court then declared the sale of T.A. Grant’s interest in the property void for violation of the stay.

Based on the district court’s judgment, the sale of J.B. Grant’s interest was invalid because he received insufficient notice of the tax sale. His mortgage holder, Coba, similarly retains its interest because of insufficient notice. The sale of T.A.’s interest was invalid because the tax sale violated the automatic stay. The Herring- *236 tons were therefore left without any interest in the property.

II.

A.

Appellants first argue that the bankruptcy and district courts erred in finding that J.B. and Gail Grant were not given sufficient notice of the tax sale to satisfy the procedural due process requirements set forth in Mennonite Board of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983). The district court found that the notice to T.A. Grant’s address “simply does not satisfy the Mennonite requirement of notice reasonably calculated to apprise a party [J.B. and Gail Grant] of a proceeding which adversely affected that party’s property interest.”

Second, appellants contend that the district court erred in finding that Coba, as assignee of Bank One, could pursue the due process claims of its assignor. The district court found that “a valid assignment confers upon the assignee standing to sue in place of the assignor.”

Third, appellants argue that COBA lacks standing because it has not proven injury. The district court held that the tax sale, if recognized, would divest Coba of its interest in the collateral, resulting in a harm that is both concrete and actual.

After reviewing the record, we are persuaded that the bankruptcy court and district court committed no reversible error in arriving at their factual findings and legal conclusions on the above issues.

B.

Appellants also argue that when T.A. Grant purchased the property from the Bankruptcy Trustee, this sale did not convey the Trustee’s statutory authority to avoid the tax sale for violation of the automatic stay. T.A. Grant, on the other hand, argues that when the Bankruptcy Trustee assigned to him the Trustee’s rights in the property, this included an assignment of the Trustee’s rights under 11 U.S.C.

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Bluebook (online)
440 F.3d 233, 55 Collier Bankr. Cas. 2d 869, 2006 U.S. App. LEXIS 3439, 2006 WL 327374, Counsel Stack Legal Research, https://law.counselstack.com/opinion/herrington-v-grant-ca5-2006.