Court Opinion

ID: 6936536
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:36:09.011302+00
Date Added: 2024-06-11T16:07:30.036373
License: Public Domain

HANSEN, Circuit Judge,
dissenting in part.
I respectfully dissent only from Part 11(B)(3) of the court’s opinion and only as to the properties involved in the January 22, 1991, transaction. I do not concur in the view that when the Shermans received the transferred properties, the properties were unencumbered. When the transaction occurred on January 22, 1991, the properties were still encumbered by the debtors’ preexisting deeds of trust to the bank. See Jt. App. 186 (11. 2-7). As far as I can determine from the record, those preexisting deeds of trust were not released of record until all of the papers (including the deed of transfer to the parents) were filed for record the next day. No banker worth his salt would release an existing mortgage until his new mortgage was on file. Thus, at the time of the transfer, the properties were still heavily encumbered.
*1059In my view, the trustee receives a double dip when the trustee is allowed both to recover the transferred properties and to avoid the' bank’s lien, contrary to 11 U.S.C. § 550(e). The bankruptcy estate is placed in a far better position than the heavily mortgaged bankrupts were in before the transfers occurred; it has the properties back free and clear of any encumbrance, all in a case where the bankruptcy court was willing to assume that no unsecured creditor was harmed by the transfers. In my judgment, that adds up to more than the single satisfaction § 550(c) permits the trustee to have and is not equitable. See In Re Skywalkers, Inc., 49 F.3d 546, 549 (9th Cir.1995) (“The avoidance and recovery provisions simply allow a trustee to return a [debtor] to its condition before the preferential transfers.”)
Because I can find nothing in the bankruptcy court’s memorandum opinion or in the district court’s affirming opinion discussing the applicability of § 550(c) in this case, I would remand this issue to the district court for remand to the bankruptcy court for further consideration.