Court Opinion

ID: 9881019
Source: CourtListenerOpinion
Date Created: 2023-09-29 15:00:31.134416+00
Date Added: 2024-06-11T13:58:52.421511
License: Public Domain

21-2917-bk
DuVall v. County of Ontario

                       United States Court of Appeals
                           for the Second Circuit
                                     August Term, 2022

              (Argued: May 15, 2023                Decided: September 29, 2023)

                                   Docket No. 21-2917-bk

                        _____________________________________

                                      CORI DUVALL,

                                      Plaintiff-Appellee,

                                              v.

                          COUNTY OF ONTARIO, NEW YORK,

                                 Defendant-Appellant. *
                        _____________________________________
Before:

                CALABRESI, LOHIER, and KAHN, Circuit Judges.

       After Ontario County, New York foreclosed on her property due to unpaid
real estate taxes, Cori DuVall filed a Chapter 13 bankruptcy petition. In her
bankruptcy schedules, DuVall disclosed that she was the beneficiary of an
annuity and claimed the annuity as exempt from the bankruptcy estate. The
County failed to object to the claimed exemption within the timeframe
prescribed by Federal Rule of Bankruptcy Procedure 4003(b). DuVall filed an
adversary proceeding against the County seeking to avoid the tax foreclosure as
a constructively fraudulent conveyance under 11 U.S.C. § 548. The United States
Bankruptcy Court for the Western District of New York found that the annuity

*   The Clerk of Court is directed to amend the caption as set forth above.
was exempt from DuVall’s bankruptcy estate by operation of Rule 4003(b) and
that DuVall was thus insolvent at the time of the foreclosure. The Bankruptcy
Court held that the foreclosure therefore amounted to a constructively
fraudulent transfer of property, and it avoided the transfer. The District Court
affirmed. The County now principally argues that it was not subject to the
deadline prescribed by Rule 4003(b). We disagree and conclude that the
Bankruptcy Court correctly applied Rule 4003(b). We also find no error in the
Bankruptcy Court’s choice of remedy. We therefore AFFIRM.

                         ZACHARY J. PIKE, The Legal Aid Society of Rochester,
                         NY, Rochester, NY, for Plaintiff-Appellee.

                         JASON S. DIPONZIO, Rochester, NY, for Defendant-
                         Appellant.

LOHIER, Circuit Judge:

      For the third time in recent years, Ontario County, New York (the

“County”) asks us to overturn a Bankruptcy Court’s decision in a proceeding

connected to a tax foreclosure of real property. See Gunsalus v. County of

Ontario, 37 F.4th 859 (2d Cir. 2022), cert. denied, 143 S. Ct. 447 (2022); Hampton

v. County of Ontario, No. 20-3868, 2022 WL 2443007 (2d Cir. July 5, 2022). As in

those prior cases, the United States Bankruptcy Court for the Western District of

New York (Warren, B.J.) in this case issued a judgment and order avoiding the

tax foreclosure as a constructively fraudulent transfer of property, see 11 U.S.C.

§ 548(a)(1), and the District Court (Larimer, J.) affirmed. The County argues that

the Bankruptcy Court misinterpreted the relevant sections of the Bankruptcy

                                         2
Code and Federal Rule of Bankruptcy Procedure 4003. By avoiding the

foreclosure rather than awarding DuVall damages, the County claims, the

Bankruptcy Court also improperly awarded DuVall a windfall. We disagree

with the County’s arguments and affirm.

                               BACKGROUND

      On December 29, 2014, Cori DuVall received a 49-acre farm and residence

(the “Property”) in West Bloomfield, New York from her mother. DuVall failed

to pay approximately $22,000 in property taxes to the County in 2015. The

County then brought an in rem tax foreclosure proceeding by filing a foreclosure

petition under New York Real Property Tax Law Article 11. When DuVall failed

to answer the foreclosure petition or redeem the Property by paying the unpaid

taxes and penalties, the Ontario County Supreme Court entered a default

judgment of foreclosure on the Property on March 7, 2017, and the Property was

transferred from DuVall to the County that day.

      DuVall sought to vacate the foreclosure in May 2017 in the Ontario County

Supreme Court. When the Supreme Court denied her application, DuVall

appealed to the Appellate Division, which affirmed. County of Ontario v.

DuVall, 93 N.Y.S.3d 497 (4th Dep’t 2019). The County, meanwhile, sold the

                                       3
Property to third parties in an auction held on May 17, 2017, but refrained from

transferring title pending resolution of the litigation against DuVall. Of the

$91,000 in sale proceeds, the County kept approximately $69,000 in surplus funds

after accounting for the roughly $22,000 tax debt, as permitted under New York

law. See Hoge v. Chautauqua County, 104 N.Y.S. 3d 813, 815 (4th Dep’t 2019);

see also New York Real Property Tax Law § 1136(3).

      On March 1, 2019, nearly two years after the foreclosure, DuVall filed a

bankruptcy petition under Chapter 13 and filed bankruptcy schedules two weeks

later. In all, DuVall claimed $295,419.22 in assets, including the Property, which

she valued at $186,000. According to the schedules, the County had foreclosed

on the Property but DuVall intended to “undo [the] transfer via [an] adversarial

proceeding pursuant to Bankruptcy Code Section 548.” Joint App’x 32. The

schedules separately identified an annuity of unknown value (the “Annuity”) of

which DuVall was the beneficiary. DuVall claimed the full value of the Annuity

(along with other property not relevant to this appeal) as exempt from the estate

under Section 522(d)(11)(E) of the Bankruptcy Code. 1 The schedules also listed

several unsecured creditors but revealed that DuVall’s only secured creditor was

1All references to a “Section” are to sections of the Bankruptcy Code as codified in Title
11 of the U.S. Code.
                                            4
the County. Lastly, the schedules provided that the Ontario County Attorney,

Ontario County Treasurer, and the County’s attorney would all receive notice of

the bankruptcy filing.

      DuVall served the County with the petition and schedules on March 14,

2019. Although a meeting of creditors as required under Section 341(a) was held

on April 15, 2019, the County did not file any objections to DuVall’s schedules at

that time or request an extension of time to object.

      DuVall commenced the adversary proceeding underlying this appeal on

April 25, 2019 and served the County on May 3, 2019. DuVall claimed that

transferring the Property was fraudulent under 11 U.S.C. § 548(a)(1)(B), because

it gave her less than a reasonably equivalent value of the Property in exchange

and left her insolvent. DuVall asked the Bankruptcy Court to avoid the property

transfer and to allow her to satisfy the tax lien through a plan approved in the

main bankruptcy proceeding.

      In June 2020 the County moved in limine to admit evidence of the

Annuity’s value. According to the County, that evidence showed that DuVall

was not insolvent on March 7, 2017 and so refuted DuVall’s claim that the

foreclosure amounted to a constructively fraudulent transfer. The Bankruptcy

                                         5
Court denied the County’s motion in limine on the ground that property claimed

as exempt by a debtor is exempt under Section 522(l) of the Code unless a party

in interest objects to the claimed exemption “within 30 days after the meeting of

creditors held under § 341(a) is concluded.” Fed. R. Bankr. P. 4003(b)(1). The

County’s failure to object to the claimed exemption of the Annuity by May 16,

2019 (30 days after the meeting of creditors in this case and more than a year

before the County filed its motion in limine), the Bankruptcy Court explained,

meant that the Annuity was exempt, rendering evidence of its value irrelevant to

the insolvency determination.

      The case proceeded to trial without the evidence of the Annuity’s value,

following which the Bankruptcy Court issued an order and judgment avoiding

the tax foreclosure as a constructively fraudulent conveyance. The County

appealed to the District Court, which affirmed, and now appeals to us.

                                 DISCUSSION

      “We exercise plenary review over a district court's affirmance of a

bankruptcy court's decisions, reviewing de novo the bankruptcy court's

                                         6
conclusions of law, and reviewing its findings of facts for clear error.” Gasson v.

Premier Cap., LLC, 43 F.4th 37, 41 (2d Cir. 2022) (quotation marks omitted).

                                           I

      When a debtor files a Chapter 13 bankruptcy petition, all of the debtor's

assets become property of the bankruptcy estate subject to the debtor's right to

reclaim certain property as “exempt.” 11 U.S.C. § 522(l). The Bankruptcy Code

specifies the types of property debtors may exempt. Id. § 522(b). Property a

debtor claims as exempt will be excluded from the bankruptcy estate “[u]nless a

party in interest” objects. Id. § 522(l). Specifically, Section 522(l) provides that a

debtor must “file a list of property that the debtor claims as exempt,” and that,

“[u]nless a party in interest objects, the property claimed as exempt on such list is

exempt.” Under Rule 4003(b), “a party in interest may file an objection to the list

of property claimed as exempt within 30 days after the meeting of creditors held

under [11 U.S.C.] § 341(a) is concluded . . . . The court may, for cause, extend the

time for filing objections if, before the time to object expires, a party in interest

files a request for an extension.” Fed. R. Bankr. P. 4003(b). “By negative

implication, the Rule indicates that creditors may not object after 30 days ‘unless,

within such period, further time is granted by the court.’” Taylor v. Freeland &

                                           7
Kronz, 503 U.S. 638, 643 (1992) (quoting Fed. R. Bankr. P. 4003(b) (1992)). Under

Section 522(l) and Rule 4003(b), therefore, if an interested party fails to object

within the time allowed, a claimed exemption will exclude the subject property

from the estate.

      Despite that framework and the County’s failure to timely object to the

claimed exemption over the Annuity, the County argues that the Bankruptcy

Court should have granted its motion in limine because Rule 4003(b) does not

operate as a time bar that prevents the County from objecting to the inclusion of

the Annuity in DuVall’s assets as of March 7, 2017. Instead, the County claims

that it was entitled to use the Annuity’s value to demonstrate that DuVall was

not insolvent as of that date.

      DuVall sought to have the tax foreclosure avoided as a constructively

fraudulent conveyance under Section 548(a)(1)(B) of the Bankruptcy Code. A

debtor seeking avoidance of a transfer under that provision must show the

following:

             (1) the debtor had an interest in property; (2) a transfer of
             that interest occurred on or within two years of the
             bankruptcy petition; (3) the debtor was insolvent at the
             time of the transfer or became insolvent as a result of the
             transfer; and (4) the debtor received ‘less than a

                                          8
            reasonably equivalent value in exchange for such
            transfer.’

Gunsalus, 37 F.4th at 864 (quoting 11 U.S.C. § 548(a)(1)(B)(i)). The parties do not

dispute that DuVall owned the Property, lost her entire interest in a tax

foreclosure within two years of the filing of her bankruptcy petition, and did not

receive “reasonably equivalent value” in exchange for the Property because the

entire Property was seized to pay for a tax deficiency that was much smaller than

its assessed value. See id. at 865–66. Therefore, the only disputed question is

whether DuVall was insolvent at the time the Property was transferred to the

County.

      A debtor is insolvent if the sum of her debts is “greater than all of [her]

property, at a fair valuation, exclusive of . . . property that may be exempted

from property of the estate under section 522” of the Bankruptcy Code. 11 U.S.C.

§ 101(32)(A). Whether certain property is “exempted from property of the

[bankruptcy] estate under section 522” will determine if DuVall was solvent or

insolvent when the transfer of the Property occurred in May 2017. As we have

discussed, if an objection to a claim of exemption is not filed then property can be

exempted by default under Rule 4003(b), which provides that “a party in interest

may file an objection to the list of property claimed as exempt within 30 days

                                         9
after the meeting of creditors held under § 341(a) is concluded or within 30 days

after any amendment to the list or supplemental schedules is filed, whichever is

later.” Fed. R. Bankr. P. 4003(b).

      The Bankruptcy Court found that the County received notice of the filing

of DuVall’s Chapter 13 petition and was served with the summons and

complaint “well in advance of the objection deadline under Rule 4003(b)(1)” but

failed timely to object to DuVall’s claimed exemption of the Annuity from the

bankruptcy estate. Joint App’x 211. The Bankruptcy Court concluded that the

Annuity was therefore exempted from DuVall’s estate. Because there was no

reason for the County to introduce evidence regarding the value of exempt

property, the Court denied the County’s motion in limine.

      We agree with the Bankruptcy Court. “In interpreting a statute, we begin

of course by giving effect to the plain meaning of the text — and, if that text is

unambiguous, our analysis usually ends there as well.” Williams v. MTA Bus

Co., 44 F.4th 115, 127 (2d Cir. 2022) (quotation marks omitted). Applying the

language of Rule 4003(b), read together with Sections 101(32) and 522(l), makes

clear that the Annuity is exempt due to the County’s failure to timely object to

Duvall’s claimed exemption. Only “Congress may enact . . . provisions to

                                         10
address [any] difficulties” that follow from the Rule’s strict application. Taylor,

503 U.S. at 644.

      The County raises several contrary arguments. First, it suggests that it was

not required to object to DuVall’s claimed exemption before the creditor’s

meeting under Section 341(a). This argument involves a somewhat convoluted

and peculiar line of reasoning. As an initial matter, the County says, a tax

foreclosure can be a fraudulent conveyance only if the debtor was insolvent on

the date the transfer was made or if the debtor became insolvent as a result of the

transfer. The second step, the County insists, is to ask whether property could be

properly exempted at the time of the conveyance itself. The County reasons that

the absence of an objection cannot affect whether a debtor was insolvent at the

time of a pre-bankruptcy tax foreclosure because such an absence is relevant to

what property belongs in the bankruptcy estate only as of the commencement of

the bankruptcy proceeding. In the County’s view, only the substantive

provisions of Section 522 determine whether property is properly exempted at

the earlier point. Thus, the County concludes, the 30-day time limit in Rule

4003(b), a procedural provision, is inapplicable to this case, and DuVall could not

                                         11
claim the Annuity was exempt on March 7, 2017 based solely on the County’s

failure to object.

       The County’s logic conflicts with the logic and text of the statutory scheme.

The Bankruptcy Code permits a trustee to avoid a transfer that occurred within

two years of the filing of a bankruptcy petition. See 11 U.S.C. § 548(a)(1). As

relevant here, because the Property was transferred within two years of DuVall’s

bankruptcy petition, that transfer may be avoided if DuVall did not receive

reasonably equivalent value for it and was insolvent on the date of transfer or

rendered insolvent by the transfer on March 7, 2017. Id. § 548(a)(1)(B). To

determine whether DuVall was insolvent on the date of transfer or rendered

insolvent by the transfer, the Bankruptcy Court was compelled to exclude from

its calculation of DuVall’s assets “property that may be exempted from property

of the estate under section 522.” Id. § 101(32)(A)(ii). The plain text of the Code

thus contemplates that insolvency is determined based on the debts and

properties of and exemptions from the bankruptcy estate.

       The County asks us to interpret Section 101’s reference to “section 522” to

include only the substantive subsections of Section 522. In other words, the

County says, we should ignore procedural subsections like Section 522(l), which

                                         12
in conjunction with Rule 4003(b) authorizes debtors to claim property as exempt

even if the property does not satisfy the substantive criteria set forth in other

subsections of Section 522. Taylor, 503 U.S. at 642. But Section 101 plainly states

that any property that is claimed as exempt and not objected to “may be

exempted . . . under section 522,” 11 U.S.C. § 101(32)(A)(ii) – even if no good faith

basis for claiming such an exemption exists. 2

       Offering another counterargument, the County invites us to look at the

statutory purpose of the Bankruptcy Code notwithstanding the plain terms of

Section 522 and Rule 4003. Although “the Supreme Court has . . . explained in

interpreting other sections of the Bankruptcy Code that we must not be guided

by a single sentence or part of a sentence, but look to the provisions of the whole

law, and to its object and policy,” Cap. Commc’ns Fed. Credit Union v. Boodrow

(In re Boodrow), 126 F.3d 43, 49 (2d Cir. 1997) (cleaned up), we decline to look

2The County, seeking another textual hook for its argument, points to the word “may”
in the phrase “property that may be exempted from property of the estate under section
522,” id. § 101(32)(A)(ii) (emphasis added). The County contends that “may” here
“connotes the exercise of discretion” and thus “means that the court must make [the]
determination [of whether property may be exempted] as of the operative date.” Reply
Br. 2. This argument was not developed in the County’s opening brief, so we need not,
and in our discretion do not, consider it. Anilao v. Spota, 27 F.4th 855, 873 (2d Cir. 2022)
(“[A]rguments not made in an appellant's opening brief are waived even if the
appellant pursued those arguments in the district court.” (quotation marks omitted)).
                                            13
beyond the plain text of Section 522 and Rule 4003 in this case to craft exceptions

to their application based on statutory purpose, see Taylor, 503 U.S. at 644.

      The County’s remaining arguments fare no better. The County attempts to

distinguish Taylor on the ground that the bankruptcy trustee in Taylor sought

the return of property to the bankruptcy estate, whereas the County “seek[s] to

defend itself in a claim brought by [DuVall] that was wholly unrelated to

whether the Annuity should be made available for payment of creditor claims.”

Appellant’s Br. 29–30. This distinction does not matter. Taylor describes when

property is exempt from a bankruptcy estate under Section 522(l). Nothing in

Taylor, Section 522(l), or any other statutory provision at issue in this case

suggests that Taylor’s reading of Rule 4003(b) is limited to only some types of

exemptions. Accordingly, Taylor dictates the result here.

      The County also argues that Rule 4003(b)’s timely objection requirement is

either a rule of estoppel, whereby failure to object to an exemption within the 30-

day timeframe estops or precludes the creditor from challenging the exemption,

or qualifies as a statute of limitations subject to equitable tolling. But nothing in

the language of Rule 4003 or our caselaw suggests that it qualifies as an equitable

doctrine. To the contrary, Taylor tells us that the rule imposes a hard deadline

                                          14
not subject to equitable tolling, as one would expect of a statute of limitations or

an equitable doctrine such as collateral estoppel. See CBF Indústria de Gusa S/A

v. AMCI Holdings, Inc., 850 F.3d 58, 78 (2d Cir. 2017) (noting that “issue

preclusion is an equitable doctrine”).

      Straining further to support its interpretation of Rule 4003(b), the County

points to decisions in lien avoidance proceedings under Section 522(f). These

decisions are far from on point. They rest on the distinctive treatment of lien

avoidance actions under Rule 4003(d), not Rule 4003(b), or on the specific

language of Section 522(f), not Section 522(l). See In re Schoonover, 331 F.3d 575,

578 (7th Cir. 2003) (holding that Taylor does not apply to Rule 4003(d)); Morgan

v. FDIC (In re Morgan), 149 B.R. 147, 151–52 (B.A.P. 9th Cir. 1993) (stressing that

§ 522(f), by its plain terms, applies only where a debtor “would have been

entitled to [an] exemption under § 522(b)” (quotation marks omitted)); In re

Armenakis, 406 B.R. 610, 614 (Bankr. S.D.N.Y. 2009) (similar); In re Maylin, 155

B.R. 605, 612–13 (Bankr. D. Me. 1993) (relying on historical practice in Section

522(f) cases). Even a cursory reading of Rule 4003(d) and Section 522(f) shows

                                         15
that they differ in important ways from the provisions – Rule 4003(b) and Section

522(l) – at issue here. 3

       For these reasons, we find no error in the Bankruptcy Court’s decision to

deny the County’s motion in limine. 4

                                            II

       The County alternatively argues that the proper remedy for a

constructively fraudulent transfer of the Property in this case would have been to

award DuVall damages limited to either the amount of creditor claims or the

3 Some bankruptcy courts have sought to distinguish Taylor by applying the reasoning
applicable to Section 522(f) to Section 522(h). See Shawhan v. Shawhan (In re Shawhan),
No. BAP NV-08-1049, 2008 WL 8462964, at *11 (B.A.P. 9th Cir. July 7, 2008); Premier
Cap., Inc. v. DeCarolis (In re DeCarolis), 259 B.R. 467, 471 n.8 (B.A.P. 1st Cir. Mar. 15,
2001); Ryker v. Current (In re Ryker), 315 B.R. 664, 673 (Bankr. D.N.J. 2004); Maylin, 155
B.R. at 613. But we do not think that Taylor is distinguishable in this way. As can be
inferred from the Supreme Court’s reasoning in Taylor, property may be exempted
from the bankruptcy estate by default if no provision of the Bankruptcy Code prevents
Rule 4003(b) from applying to actions under Section 522(h). See Taylor, 503 U.S. at 643–
44.

4The County gestures at an argument that “[j]ust because Congress has codified a
defense,” it has not necessarily “barr[ed] all other defenses that have been permitted by
common law.” Appellant’s Br. 28. Even assuming that proposition has merit, but see
Taylor, 503 U.S. at 644, the County has failed to develop this argument and we deem it
abandoned.

                                           16
amount of the claimed exemption. 5 Specifically, the County contends that “[t]he

purpose of fraudulent conveyance actions is to prevent harm to creditors by a

transfer of property from the debtor.” Appellant’s Br. 30. Because DuVall’s

bankruptcy schedules demonstrate that she is “able to pay all creditor claims in

full,” it maintains, avoiding the tax foreclosure “would only benefit [DuVall] and

provide no benefit to her creditors.” Appellant’s Br. 33. In the County’s view,

the Bankruptcy Court’s choice to avoid the tax foreclosure altogether resulted in

an undeserved windfall in DuVall’s favor. To avoid this result, the County

claims that DuVall should have been awarded damages “either representing the

amount of creditor claims presented, or in the alternative, the value of [the]

exempt portion of the Property.” Appellant’s Br. 34. We reject the County’s

arguments.

      To start, the County’s proposal to limit DuVall’s damages to the amount of

creditor claims lacks support in the text of Section 522(h), under which DuVall

was entitled to bring this Section 548 proceeding. Section 522(h) provides that a

5DuVall argues the County did not preserve this argument below, notwithstanding that
the County raised this argument to the Bankruptcy Court in a post-trial motion. The
District Court agreed with DuVall. Because we reject the County’s argument on its
merits, we need not address DuVall’s contention that the County was required to raise
this argument as an affirmative defense in its answer. See Untied States v. Raniere, 55
F.4th 354, 362 n.10 (2d Cir. 2022).
                                          17
debtor “may avoid a transfer of property of the debtor or recover a setoff to the

extent that the debtor could have exempted such property.” 11 U.S.C. § 522(h).

Section 552(i)(1) in turn provides that if a debtor avoids a transfer of property

under Section 522(h), the debtor may recover “in the manner prescribed by”

Section 550(a). See 11 U.S.C. § 522(i)(1). 6 Section 550(a) further provides that the

“trustee may recover, for the benefit of the estate, the property transferred,

or…the value of such property.” Nothing in these provisions of the Bankruptcy

Code appears to limit the award of damages to the amount of creditor claims.

Cf. Brennan-Centrella v. Ritz-Craft Corp. of Pennsylvania, 942 F.3d 106, 111 (2d

Cir. 2019) (noting that “it would be strange for [a] statute to mention specifically

6Section 522(i)(1) provides: “If the debtor avoids a transfer or recovers a setoff under
subsection (f) or (h) of this section, the debtor may recover in the manner prescribed by,
and subject to the limitations of, section 550 of this title, the same as if the trustee had
avoided such transfer, and may exempt any property so recovered under subsection (b)
of this section.” Section 550(a), for its part, provides as follows:

              (a) Except as otherwise provided in this section, to the extent
              that a transfer is avoided under section 544, 545, 547, 548, 549,
              553(b), or 724(a) of this title, the trustee may recover, for the
              benefit of the estate, the property transferred, or, if the court
              so orders, the value of such property, from—
                      (1) the initial transferee of such transfer or the entity
                      for whose benefit such transfer was made; or
                      (2) any immediate or mediate transferee of such initial
                      transferee.
                                             18
several remedies . . . while leaving [the remedy at issue] to implication”

(quotation marks omitted)).

      We therefore turn to the Bankruptcy Court’s decision to avoid the transfer

of the Property rather than award DuVall damages in the amount of the claimed

exemption. The parties appear to agree that the Bankruptcy Court had discretion

to choose between the two remedies listed in Section 522(h), and so we take the

same approach.

      Even assuming that avoiding the transfer here resulted in a disfavored

windfall for DuVall, 7 the County’s argument ignores that we have been critical of

windfalls to creditors and debtors alike. See Gunsalus, 37 F.4th at 866. In

defense of the windfall the County would reap should we reverse the

Bankruptcy Court’s decision, the County explains that New York state law

permitted it to keep the approximately $69,000 in surplus funds from the sale of

the Property. But that defense is now unavailable in light of Tyler v. Hennepin

County, 143 S. Ct. 1369, 1380 (2023), which held that there is an unconstitutional

7Windfalls to debtors are generally disfavored. See Vintero Corp. v. Corporacion
Venezolana de Fomento (In re Vintero Corp.), 735 F.2d 740, 742 (2d Cir. 1984);
Whiteford Plastics Co. v. Chase National Bank of N.Y.C., 179 F.2d 582, 584 (2d Cir.
1950).
                                           19
taking in violation of the Takings Clause when a county keeps the surplus funds

accrued from a tax foreclosure.

      We accordingly decline to disturb the Bankruptcy Court’s decision to

avoid the transfer as the appropriate remedy.

                                   CONCLUSION

      We have considered the County’s remaining arguments 8 and conclude that

they are without merit. For the foregoing reasons, we AFFIRM the judgment of

the District Court.

8The County also argued in its opening brief that the Bankruptcy Court erred by
declining to extend the holding of BFP v. Resolution Trust, 511 U.S. 531 (1994), to tax
foreclosure proceedings under New York Real Property Tax Law Article 11. Although
we had already held in Gunsalus that BFP did not extend to Article 11 proceedings, 37
F.4th at 865–66, the County sought to preserve its argument pending the Supreme
Court’s disposition of the County’s petition for certiorari in Gunsalus. After the
Supreme Court denied the petition on November 21, 2022, see County of Ontario v.
Gunsalus, 143 S. Ct. 447 (2022), the County withdrew this argument.
                                           20