Opinion
Case No. 04-39257-DOT.
February 11, 2005
Melvin R. Zimm, Traci G. Corcoran, Glasser and Glasser, P.L.C. Norfolk, Virginia, Attorneys for Midfirst Bank.
ORDER
THIS DAY CAME the Debtor, Donna Sedgewick Lee, by counsel, and Midfirst Bank, by counsel, on the Debtor's Motion to Stay previously filed herein and was argued by counsel.
UPON CONSIDERATION WHEREOF, it appearing to the Court from the evidence presented in support of said Motion to Stay, the memoranda and/or legal authorities submitted by counsel for the Debtor and counsel for Midfirst Bank pursuant to the Court's request at the hearings held by this Court on November 17, 2004 and from the arguments of counsel made on December 15, 2004; FINDS that there is no dispute between the parties that at the time of the Debtor's individual Chapter 13 bankruptcy filing herein on October 4, 2004, the real property which is the subject matter of said Motion to Stay was titled in the name of Excellent Care, LTD, a corporate entity in which the Debtor claimed she was the sole officer, director and shareholder; that said corporate entity had been terminated by operation of law for failure to file annual reports with the Commonwealth of Virginia State Corporation Commission in 1999; that no winding up of the corporation occurred prior to the filing of this case; that Midfirst Bank, prior to the filing of this case held a valid lien in said property which secured repayment of an indebtedness due it solely by Excellent Care, LTD; that the Trustees of Midfirst Bank scheduled a foreclosure sale of said property on October 13, 2004 and completed said sale as a matter of Virginia Law by knocking the property down to the highest bidder and by means of the execution of a Memorandum of Bid to said bidder no later than 11:40 a.m. on said date; that shortly prior to the time of the sale, a Deed purporting to convey the interest of Excellent Commercial Care, LTD in said property to the Debtor was claimed by the Debtor to have been executed by her in her corporate capacity and was subsequently delivered to the Debtor however, such Deed was not recorded until 12:07 p.m. on October 13, 2004, subsequent to completion of the foreclosure sale and was subsequently re-recorded after correction on November 18, 2004; that, accordingly, the Court further FINDS from said facts that pursuant to Virginia common law and the provisions of Section 55-96(A)(1), of the Code of Virginia 1950, as amended, although a Deed purporting to transfer title from Excellent Commercial Care, LTD to the Debtor may have been delivered to the Debtor prior to the aforesaid completed foreclosure sale, said Deed was not valid as to Midfirst Bank, its Trustees and the purchaser of the aforesaid property to whom sale thereof was knocked down as a matter of law because that Deed was not recorded until after the time of completion of said foreclosure sale; that accordingly, the foreclosure sale of the aforesaid property was complete prior to the transfer of any interest of Excellent Commercial Care, LTD in same to the Debtor; that the Court further FINDS that the Debtor had no interest in the aforesaid property prior to the completion of the aforesaid foreclosure sale as a matter of law; that, accordingly, said property was not property of the Debtor's estate herein at any time prior to the completion of the aforesaid foreclosure sale; that, accordingly, the foreclosure sale completed on October 13, 2004 relative to the said property was not held in violation of the automatic stay of 11 U.S.C. Section 362(a); that the Court further FINDS that had the Deed been recorded prior to the completion of the aforesaid foreclosure sale, such Deed would have been a nullity as a matter of Virginia Law in any event because the Debtor, under the admitted facts hereinabove set forth, attempted to transfer the aforesaid property to herself in violation of her fiduciary duty to Excellent Commercial Care, LTD to turn over corporately owned property to creditors prior to any corporate wind up; that, accordingly, notwithstanding delivery and/or recordation of such Deed, same did not vest the Debtor with an interest in said property such that same had become property of the Debtor's estate herein, at any time, that was subject to the automatic stay of 11 U.S.C. Section 362(a); it is therefore
ORDERED that the Motion to Stay filed herein by the Debtor, be and hereby is, denied; it is further
ORDERED that the aforesaid property and/or any lien thereon shall not be subject to treatment under any Chapter 13 plan that has been or may be filed in this case; it is further
ORDERED that a copy of this Order be forwarded to Melvin R. Zimm, attorney for Plaintiff, at Crown Center, Suite 600, 580 East Main Street, Norfolk, Virginia 23510-3320; to Brett Alexander Zwerdling, Attorney for Debtor, at 5020 Monument Avenue, Richmond, Virginia 23230; and to Carl M. Bates, Trustee, at Post Office ox 1819, Richmond, Virginia 23218.