1

Tagged Opinion

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF FLORIDA

MIAMI DIVISION

www.flsb.uscourts.gov

IN RE:

CASE NO.: 21-14815-LMI

VIOLETA MARINA NUNEZ,

Chapter 13

Debtor.

____________________________________

VIOLETA MARINA NUNEZ,

Plaintiff,

ADV. PRO. NO.: 21-01157-LMI

v.

WILMINGTON SAVINGS FUND SOCIETY,

Defendant.

____________________________________/

ORDER GRANTING WILMINGTON’S MOTION TO DISMISS 

PLAINTIFF’S AMENDED COMPLAINT 

Laurel M. Isicoff

Chief United States Bankruptcy Judge

___________________________________________________________________________

ORDERED in the Southern District of Florida on November 10, 2021.

Case 21-01157-LMI Doc 22 Filed 11/10/21 Page 1 of 10
2

THIS CAUSE came on before the Court for hearing on August 30, 2021, at 

2:30 p.m. (the “Hearing”), upon Defendant Wilmington’s Motion to Dismiss 

Plaintiff’s Amended Complaint (ECF #11) (the “Motion to Dismiss”) filed by

Defendant Wilmington Savings Fund Society dba Christiana Trust, not 

individually, but solely as Trustee for NYMT Loan Trust I (“Wilmington”) and 

Debtor Plaintiff’s Memorandum Response to Defendant’s Motion to Dismiss 

Plaintiff’s Amended Complaint (ECF #19) (the “Response”) filed by Plaintiff Violeta 

Marina Nunez (the “Debtor”). The Court, having reviewed the Motion to Dismiss 

and the Response, having heard the arguments of the parties, and for the 

reasons stated herein, grants Wilmington’s Motion to Dismiss. 

FACTS AND PROCEDURAL HISTORY

The facts are uncontested. On April 21, 2005, Debtor took out a loan (the 

“Loan”) to purchase real property located at 14920 SW 82nd Lane, Miami, Florida 

33193-3112 (the “Property”). Debtor defaulted under the Loan, and on August 

25, 2020, Wilmington filed a complaint to foreclose the mortgage encumbering 

the Property in the Circuit Court of the Eleventh Judicial Circuit in and for 

Miami-Dade County, Florida (the “State Court”), initiating case number 2020-

017983-CA-01 (the “Foreclosure Action”). 

On January 27, 2021, the State Court entered a final judgment of 

foreclosure against Debtor in the amount of $150,164.85 (the “Final Judgment”). 

The Property was sold pursuant to the Final Judgment on April 13, 2021 (the 

“Foreclosure Sale”). Wilmington was the successful bidder at the Foreclosure 

Sale with a credit bid of $69,100.00. On April 27, 2021, a certificate of sale was 

filed in the Foreclosure Action. 

Case 21-01157-LMI Doc 22 Filed 11/10/21 Page 2 of 10
3

On May 4, 2021, Debtor filed an objection to the Foreclosure Sale. After a 

hearing on May 18, 2021, the State Court entered an order on May 20, 2021, 

denying Debtor’s objection and ordering the clerk to issue a certificate of title. 

Also on May 18, 2021 (the “Petition Date”), Debtor filed a petition for relief 

under chapter 13 of the Bankruptcy Code in this Court. On May 19, 2021, 

Debtor filed her Complaint to Avoid a Preference Pursuant to 11 U.S.C. § 547(b) 

and Other Related Relief (ECF #1) (the “Original Complaint”), initiating this 

adversary proceeding. Thereafter, on June 25, 2021, Debtor filed the Amended 

Complaint to Avoid a Preference Pursuant to 11 U.S.C. § 547(b) and Other Related 

Relief (ECF #9) (the “Amended Complaint”). In the Amended Complaint, Debtor

asserts that the Foreclosure Sale should be vacated as a preferential transfer 

under section 547 of the Bankruptcy Code. Wilmington argues in its Motion to 

Dismiss that Debtor’s Amended Complaint fails to state a claim upon which relief 

may be granted because (1) the Debtor does not have standing to bring this 

action; (2) Wilmington did not receive more from the Foreclosure Sale than it 

would have received in a chapter 7 liquidation; and (3) the interest transferred 

to Wilmington at the Foreclosure Sale was not on account of an antecedent debt.

For the reasons described more fully herein, the Court grants the Motion 

to Dismiss because the interest transferred to Wilmington at the Foreclosure 

Sale was not on account of antecedent debt. Because the shortfall in the 

Amended Complaint cannot be corrected, the dismissal is with prejudice.

LEGAL STANDARD

The Motion to Dismiss was brought pursuant to Federal Rule of Civil 

Procedure 12(b)(6), as incorporated by Federal Rule of Bankruptcy Procedure 

Case 21-01157-LMI Doc 22 Filed 11/10/21 Page 3 of 10
4

7012, based upon Debtor’s “failure to state a claim upon which relief can be 

granted.” Fed. R. Civ. P. 12(b)(6); Fed. R. Bankr. P. 7012. “While a complaint 

attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual 

allegations, a plaintiff's obligation to provide the ‘grounds’ of his ‘entitle[ment] to 

relief’ requires more than labels and conclusions, and a formulaic recitation of 

the elements of a cause of action will not do. Factual allegations must be enough 

to raise a right to relief above the speculative level on the assumption that all the 

allegations in the complaint are true (even if doubtful in fact).” Bell Atlantic Corp. 

v. Twombly, 550 U.S. 544, 555-56 (2007) (internal citations omitted). To state a 

legally sufficient claim, “a complaint must contain sufficient factual matter, 

accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft 

v. Iqbal, 556 U.S. 662, 678 (2009) (citations omitted); accord Twombly, 550 U.S. 

at 570. “A claim has facial plausibility when the plaintiff pleads factual content 

that allows the court to draw the reasonable inference that the defendant is liable 

for the misconduct alleged.” Iqbal, 556 U.S. at 678.

ANALYSIS

Lack of Standing

Wilmington argues in its Motion to Dismiss that the Debtor lacks standing 

to bring this action, which seeks to avoid and vacate the Foreclosure Sale as a 

preferential transfer. Standing is analyzed under a two-component framework, 

consisting of a constitutional requirement and prudential 

considerations. See E.F. Hutton & Co., Inc. v. Hadley, 901 F.2d 979, 984-85 (11th 

Cir. 1990). To fulfill the constitutional requirement, “[t]he plaintiff must have 

suffered or be imminently threatened with a concrete and particularized ‘injury 

Case 21-01157-LMI Doc 22 Filed 11/10/21 Page 4 of 10
5

in fact’ that is fairly traceable to the challenged action of the defendant and likely 

to be redressed by a favorable judicial decision.” Lexmark Int'l., Inc. v. Static

Control Components, Inc., 572 U.S. 118, 125 (2014). To fulfill the prudential 

requirement the party must demonstrate that the party is asserting individual 

rights rather than third party rights, that the injury is peculiar to the litigant 

rather than a general grievance, and that the injury falls within the zone of 

interests protected by the law invoked. See In re Meridian Asset Mgmt., Inc., 296 

B.R. 243, 250 (Bankr. N.D. Fla. 2003). This Court ruled, for the reasons stated 

on the record at the Hearing, that the Debtor has standing under 11 U.S.C. 

§1303 to prosecute this adversary proceeding.

The Preference Count 

In order to recover a preference under 11 U.S.C. §547(b)1 a plaintiff must 

allege, and prove, that the transfers: 1) were of an interest of the debtor in 

property; 2) were on account of an antecedent debt; 3) were to or for the benefit 

of a creditor; 4) were made while the debtor was insolvent; 5) were made within 

ninety days prior to the commencement of this bankruptcy case; and 6) enabled 

[the defendant] to receive more than it would have received if the transfers had 

1 Section 547(b) of the Bankruptcy Code provides: 

the trustee may avoid any transfer of an interest of the debtor in property –

(1) to and for the benefit of a creditor;

(2) for or on account of an antecedent debt owed by the debtor before such 

transfer was made;

(3) made while the debtor was insolvent;

(4) made ... on or within ninety days before the date of the filing of the petition; 

...

(5) that enables such creditor to receive more than such creditor would receive if

a. the case were a case under chapter 7 of this title;

b. the transfer had not been made; and 

c. such creditor received payment of such debt to the extent provided by 

the provisions of this title.

11 U.S.C. §547(b).

Case 21-01157-LMI Doc 22 Filed 11/10/21 Page 5 of 10
6

not been made and it had asserted its claim in a chapter 7 liquidation. See In re 

Aqua Clear Techs., Inc., 361 B.R. 567, 584 (Bankr. S.D. Fla. 2007).

The transfer alleged in the Amended Complaint is the Foreclosure Sale; 

the Amended Complaint asks that the transfer be avoided and that “the 

Foreclosure Sale be vacated.” The parties do not dispute that the Property was 

property of the Debtor at the time of the sale or that the transfer of the Property 

to Wilmington as the successful bidder at the Foreclosure Sale was made while 

the Debtor was insolvent and within ninety days before the Petition Date. Thus, 

the remaining issues are whether the transfer was on account of an antecedent 

debt and whether Wilmington received more than Wilmington would have 

received “if the case were a case under chapter 7 of this title.”

The Transfer Was Not on Account of an Antecedent Debt

The Debtor argues that the transfer of the Property to Wilmington as the 

successful purchaser of the Foreclosure Sale was on account of Wilmington’s 

antecedent debt – that is, that the transfer was a consequence of Wilmington’s 

status as a creditor. The Debtor is not correct.

Some courts have held that a creditor’s purchase of a debtor’s property in 

a foreclosure sale is not a transfer on account of an antecedent debt. See In re 

Wilson, 2020 WL 5542444, at *1 (Bankr. D.D.C. 2020); In re Ehring, 900 F.2d 

184, 188-89 (9th Cir. 1990). “[A] transfer of a property to the holder of a 

perfected lien as the successful bidder at a regularly conducted foreclosure sale 

cannot be a preference: the transfer is to it as the purchaser, not in payment of 

its claim, and thus the transfer is not to it as a creditor on account of its 

antecedent claim as required by § 547(b)(2) for a preference to exist.” In re 

Case 21-01157-LMI Doc 22 Filed 11/10/21 Page 6 of 10
7

Wilson, 2020 WL 55542444, at *4 (emphasis in original; internal quotations 

omitted). Other courts have held that a creditor’s purchase of a debtor’s property 

at a foreclosure sale is on account of an antecedent debt when the creditor 

obtained the property through a full credit bid. See In re Villarreal, 413 B.R. 633, 

638 (Bankr. S.D. Tex. 2009); Whittle Dev. Inc. v. Branch Banking & Trust Co., 463 

B.R. 796, 802–03 (Bankr. N.D. Tex. 2011) (“[I]f a creditor executes on secured 

property and obtains the property for what is found to be less than what it would 

have garnered in a hypothetical liquidation, then the transfer may be avoided 

under the plain meaning of section 547(b).”). When a foreclosure sale occurs 

there are two transfers. The first transfer is a transfer of the foreclosed property 

to the successful bidder at the sale. In Florida, this is a two-part process – a 

certificate of sale is issued “promptly” following the foreclosure sale. Fla. Stat. 

§45.031(4). 

If there is no timely challenge to the sale2, or the challenge has been 

resolved against the challenger, the certificate of title is issued. See Fla. Stat. 

§45.031(5); Fla. Stat. §45.031(6). At the time of the foreclosure sale, the winning 

bidder pays (or electronically advances3) funds to the court for the purchase of 

the property. See Fla. Stat. §45.031(3). Once the certificate of title is issued, 

then the proceeds of sale are distributed to the foreclosing lienholder (less any 

sale costs) and, if applicable, any subordinate lienholders, capped at the full 

2 Under Florida law, the foreclosure sale is deemed complete at the time the certificate of sale is 

filed, and the sale can generally only be vacated upon an objection to the sale that is filed within 

10 days after the certificate of sale is filed. See Fla. Stat. §45.0315 (providing that the right of 

redemption ends at the time the certificate of sale is filed); see also In re Jaar, 186 B.R. 148, 153-

54 (Bankr. M.D. Fla. 1995) (providing that the filing of the certificate of sale is the deadline after 

which a debtor cannot cure defaults or reinstate a mortgage under chapter 13 of the Bankruptcy 

Code).

3 See Fla. Stat. §45.031(10).

Case 21-01157-LMI Doc 22 Filed 11/10/21 Page 7 of 10
8

amount of the judgment debt. See Fla. Stat. §45.031(7)(a). This payment to the 

foreclosing party is the second transfer.

If a successful third-party bidder pays cash at a foreclosure sale, these 

sale proceeds are disbursed to the foreclosing lienholder as payment on the final 

judgment of foreclosure. Any lienholder can participate as a bidder at a 

foreclosure sale. The lienholder can place a cash bid during a foreclosure sale. 

However, to avoid the obvious inefficiencies of requiring a foreclosing lienholder 

to advance cash that it will just receive back after the sale, Florida law permits 

mortgagees to credit bid at foreclosure sales. “Credit bidding is a judicially 

created right granted to the first mortgagee upon foreclosure of the mortgage.” 

Branch Banking & Tr. Co. v. Tomblin, 163 So. 3d 1229, 1230 (Fla. 5th DCA 2015). 

This is a longstanding right, as described by the Florida Supreme Court in Grable 

v. Nunez, 66 So. 2d 675, 677 (Fla. 1953) (“This Court has long recognized the 

principle that no useful purpose could be served in requiring a bondholder or a 

mortgagor to pay cash to a court officer conducting a judicial sale when he would 

be entitled to immediately have it paid back to him under the decree authorizing 

the sale.”). In sum, the transfer of property at a foreclosure sale is in 

consideration of payment of the bid amount. The transfer to a lender on account 

of its antecedent debt is the payment of the bid proceeds up to the judgment 

amount.

In this case, the right that Wilmington had as a creditor was the right to 

use a credit bid, rather than pay cash, when purchasing the Property at the 

Foreclosure Sale. The exercise of the right to credit bid was in lieu of a transfer 

by Wilmington to the Clerk of Court for ultimate transfer back to Wilmington to 

Case 21-01157-LMI Doc 22 Filed 11/10/21 Page 8 of 10
9

pay the Final Judgment. In other words, the transfer to Wilmington on account 

of the antecedent debt was the transfer of the sale proceeds (had there been sale 

proceeds) to Wilmington. The issuance of the certificate of sale to Wilmington 

was not on account of the antecedent debt, but rather on account of Wilmington’s 

payment of the purchase price, which, in this case, was done by the credit bid.

Wilmington received the Property as a result of the Foreclosure Sale in its 

capacity as a purchaser, not a creditor. See In re Wilson, 2020 WL 5542444, at 

*4 (“There would not be any preference if the Property had been bought [at a 

foreclosure sale] by someone else for a bid of $1.00 or more. No preference 

should exist on the basis that [the secured creditor], by way of bidding on its 

claim, happened to turn out to be the highest bidder.”). Because the transfer of 

the Property to Wilmington at the Foreclosure Sale was not on account of 

Wilmington’s antecedent debt, the Foreclosure Sale cannot be avoided as a 

preferential transfer. 

The Chapter 7 Test

Because the Court holds that the transfer to Wilmington was not made “on 

account of an antecedent debt”, the Court does not need to reach the issue of 

whether Wilmington received more, when it “received” the Property at the 

Foreclosure Sale, than it otherwise would have received in a chapter 7 

liquidation.

4 

4 At the Hearing, the Court announced that it adopts the reasoning and conclusions of In re 

Villarreal, 413 B.R. 633 (Bankr. S.D. Tex. 2009), agreeing with that court that BFP v. Resolution 

Trust Corporation, 511 U.S. 531, 545 (1994) does not apply to preference actions under 11 U.S.C. 

§547. However, under Florida law, which is applicable to the Foreclosure Sale, “[t]he amount of 

the bid for the property at the sale shall be conclusively presumed to be sufficient consideration 

for the sale.” Fla. Stat. §45.031(8). Thus, if this element of 547 was dispositive, the Motion to 

Dismiss would nonetheless be granted.

Case 21-01157-LMI Doc 22 Filed 11/10/21 Page 9 of 10
10

CONCLUSION

Based on the foregoing, it is hereby ORDERED and ADJUDGED that:

1. The Motion to Dismiss is GRANTED.

2. Because, as a matter of law, Debtor cannot assert any conceivable 

set of facts that would support a claim under section 547 of the Bankruptcy 

Code against Wilmington to vacate the Foreclosure Sale as a preference, the 

Amended Complaint is dismissed with prejudice.

###

Copy to:

Elizabeth R. Brusa, Esq.

Laila S. Gonzalez, Esq. 

Attorney Brusa is directed to serve a copy of this Order on interested parties 

who do not receive service by CM/ECF, and file a proof of such service within two 

(2) business days from entry of the Order.

Case 21-01157-LMI Doc 22 Filed 11/10/21 Page 10 of 10