Hampton v. County of Ontario, New York ( 2022 )

20-3868
Hampton v. County of Ontario, New York
1 UNITED STATES COURT OF APPEALS
2 FOR THE SECOND CIRCUIT
3
4 SUMMARY ORDER
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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,
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25 v. No. 20-3868-bk
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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
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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).
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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
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