Court Opinion

ID: 6497724
Source: CourtListenerOpinion
Date Created: 2022-07-05 16:00:19.467547+00
Date Added: 2024-06-11T08:51:26.213005
License: Public Domain

20-3868
     Hampton v. County of Ontario, New York

 1                         UNITED STATES COURT OF APPEALS
 2                             FOR THE SECOND CIRCUIT
 3
 4                                     SUMMARY ORDER
 5
 6   Rulings by summary order do not have precedential effect. Citation to a summary order
 7   filed on or after January 1, 2007 is permitted and is governed by Federal Rule of Appellate
 8   Procedure 32.1 and this court’s Local Rule 32.1.1. When citing a summary order in a
 9   document filed with this court, a party must cite either the Federal Appendix or an
10   electronic database (with the notation “summary order”). A party citing a summary order
11   must serve a copy of it on any party not represented by counsel.
12
13          At a stated term of the United States Court of Appeals for the Second Circuit,
14   held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the
15   City of New York, on the 5th day of July, two thousand twenty-two.
16
17          PRESENT:        José A. Cabranes,
18                          Barrington D. Parker,
19                          Eunice C. Lee,
20                                   Circuit Judges.
21   ____________________________________________

22   JOSEPH M. HAMPTON, BRENDA S. HAMPTON,
23                   Plaintiffs-Appellees,
24
25            v.                                                   No. 20-3868-bk
26
27   COUNTY OF ONTARIO, NEW YORK,
28                   Defendant-Appellant. ∗

     ∗The Clerk of Court is respectfully directed to amend the official caption as set forth
     above.
 1   ____________________________________________

 2
3    For Plaintiff-Appellant:                Kari A. Talbott (Mark H. Wattenberg, on the
4                                            brief), Legal Assistance of Western New
5                                            York, Inc.
6
 7   For Defendants-Appellees:               Jason S. DiPonzio, Jason S. DiPonzio, P.C.

 8         Appeal from a judgment of the United States District Court for the Western

 9   District of New York (Geraci, Jr., C.J.).

10         UPON       DUE       CONSIDERATION,            IT   IS   HEREBY    ORDERED,

11   ADJUDGED, AND DECREED that the judgment of the District Court is

12   AFFIRMED.

13         The Hamptons are a married couple who owned a home located in Ontario

14   County, New York that was free and clear of mortgages. In 2015, the couple failed

15   to pay their real estate taxes, totaling $5,201.87. Ultimately, a default judgment of

16   foreclosure was entered in Ontario County’s favor on March 2, 2017, which

17   entitled the County to possession of and all equity in the property. Two months

18   later, the Hamptons filed a Chapter 13 bankruptcy plan providing for payment of

19   their entire tax arrears. Shortly afterwards, they filed an avoidance proceeding

20   against the County, seeking to set aside the transfer of their home in tax foreclosure

                                                 2
 1   as constructively fraudulent under 11 U.S.C. § 548(a)(1)(B). Two weeks later, the

 2   County sold the home at auction for $27,000. The County notified the bidders,

 3   however, that title to the Hamptons’ home was in dispute and would not be

 4   transferred until determination of this adversary proceeding. In Bankruptcy

 5   Court, the transfer of the Hamptons’ home was set aside as constructively

 6   fraudulent because it was not in exchange for “reasonably equivalent value” under

 7   Section 548. 1 We assume the parties’ familiarity with the underlying facts, the

 8   procedural history of the case, and the issues on appeal.

 9         We first address standing. The “[Bankruptcy] Code provides that debtors

10   who are eligible for the federal homestead exemption have standing to bring

11   avoidance actions.” Gunsalus v. Cnty. of Ontario, New York, — F.4th —, No. 20-3865-

12   BK, 2022 WL 2296945, at *3 (2d Cir. June 27, 2022). The County contends that the

13   Hamptons are ineligible for the federal homestead exemption—and therefore have

14   no standing—pursuant to 11 U.S.C. § 522(c)(2)(B), which provides that:

15         Unless the case is dismissed, property exempted under this section is not

     1
       Both the Bankruptcy Court and the District Court conducted proceedings in this case
     alongside those raised by another similarly situated set of property owners, Brian L.
     Gunsalus and Gliee V. Gunsalus. The County also appealed the District Court’s judgment
     on those claims, which we have resolved. See Gunsalus v. Cnty. of Ontario, New York, —
     F.4th —, No. 20-3865-BK, 2022 WL 2296945 (2d Cir. June 27, 2022).

                                               3
 1         liable during or after the case for any debt of the debtor that arose . . . before
 2         the commencement of the case, except . . .
 3                (2) a debt secured by a lien that is—
 4                       (B) a tax lien, notice of which is properly filed.

 5         The County is wrong. Section 522(c)(2)(B) “merely requires that the

 6   [Hamptons] . . . remain liable for the unpaid taxes even if the fraudulent

7    conveyance action succeeds.” Gunsalus, — F. 4th —, 2022 WL 2296945, at *3.

8    Because the Hamptons’ “Chapter 13 plan achieves just that result[,]” id., Section

 9   522(c)(2)(B) does not render them ineligible for the federal homestead exemption.

10   We thus reject the County’s views on standing.

11         Second, we turn to the County’s contention that the Supreme Court’s ruling

12   in BFP v. Resolution Trust Corp., 511 U.S. 531 (1994), entitles the transfer of the

13   Hamptons’ home to the legal presumption of being an exchange for “reasonably

14   equivalent value” under 11 U.S.C. § 548(a)(1)(B)(i). We disagree. As we explained

15   in Gunsalus:

16         BFP itself rejects this contention. As Justice Scalia noted, BFP ‘covers only
17         mortgage foreclosures of real estate. The considerations bearing upon other
18         foreclosures and forced sales (to satisfy tax liens, for example) may be
19         different. That admonition is dispositive because . . . the strict foreclosure
20         procedures [at issue here] offer far fewer debtor protections than the
21         mortgage foreclosure procedures at issue in BFP. See In re Smith, 811 F.3d
22         228, 239 (7th Cir. 2016) (finding that a state's tax foreclosure protections
23         must compare favorably to the mortgage foreclosure protections in BFP in

                                                4
 1        order to receive a presumption of “reasonably equivalent value”); In re
 2        Hackler & Stelzel, 938 F.3d 473, 479 (3d Cir. 2019) (same).
 3
 4        — F.4th —, 2022 WL 2296945, at *5 (cleaned up). Accordingly, we reject the

 5   County’s views on BFP.

 6        We AFFIRM the judgment of the District Court.
 7
 8                                       FOR THE COURT:
 9                                       Catherine O’Hagan Wolfe, Clerk of Court
10
11
12

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