536 B.R. 218
Bankr. N.D. Ill.2015Background
- Debtor filed 11 U.S.C. Chapter 13 petition on July 30, 2012 and listed the property at 1223 E. 85th St, Chicago, IL with a $64,000 mortgage not in debtor’s name and a $10,000 secured claim; the plan anticipated selling the property by March 20, 2013 to fund the plan but the sale never occurred and the debtor vacated the property.
- Gothic Investment, Ltd. acquired the 2008 real estate tax debt from the Cook County taxing authority and sought a tax deed; redemption date was set for July 2, 2013, and no redemption occurred by either the debtor or CitiBank.
- Gothic filed a request for relief annulment of stay nunc pro tunc to the filing date; Goliath later joined seeking retroactive stay relief and validation of tax deed transfers to Gothic, then to Goliath; CitiBank sought a declaration that the tax deed was void and relief from the stay; Harris sought intervention.
- State court proceedings culminated in a tax deed issued August 21, 2013 directing issuance of the deed and the deed was recorded on September 4, 2013, followed by transfers to Goliath (2014) and Harris (2014).
- The bankruptcy court granted Gothic and Goliath retroactive stay relief, denied CitiBank’s request to void the deed, granted CitiBank prospective relief, and denied Harris’s intervention as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether retroactive stay relief is appropriate | Gothic/Goliath: no knowledge of the stay; prejudice without relief | CitiBank: relief should be prospective; stay voids deed | Retroactive relief granted for Gothic and Goliath |
| Whether the tax deed should be void or entitled to protection | CitiBank: deed void; stay violation voids transfers | Court should validate tax deed; equity favors retroactive annulment | Tax deed validity upheld; CitiBank’s voiding motion denied with prospective relief granted to pursue state-law rights. |
| Impact on Harris and need for further intervention | Harris intervenor unnecessary after retroactive relief | Harris status moot post-relief | Harris's motion/intervention denied as moot. |
Key Cases Cited
- In re Lipuma, 167 B.R. 522 (N.D. Ill. 1994) (equitable factors for retroactive stay relief; unfair prejudice considerations)
- In re Confidential Investigative Consultants, Inc., 178 B.R. 739 (N.D. Ill. 1995) (non-exhaustive factor test for retroactive annulment of stay)
- In re Bates, 270 B.R. 455 (N.D. Ill. 2001) (tax purchaser cannot seek deed issuance during stay; some steps permissible to maintain property interest)
- Matthews v. Rosene, 739 F.2d 249 (7th Cir. 1984) (stays purposes; void ab initio when violated unless relief granted)
- In re Benalcazar, 283 B.R. 514 (N.D. Ill. 2002) (bankruptcy stay relief considerations)
- In re Halas, 194 B.R. 605 (N.D. Ill. 1996) (stay relief and property interests)
- In re Tucson Estates, 912 F.2d 1162 (9th Cir. 1990) (case law on timely stay relief and equity)
- Matter of Fernstrom Storage and Van Co., 938 F.2d 731 (7th Cir. 1991) (definition of “cause” for stay relief)