In re: EXPERT SOUTH TULSA, LLC, Debtor.
CORNERSTONE CREEK PARTNERS, LLC, Defendant-Appellee. STEVEN R. REBEIN, Chapter 7 Trustee for Expert South Tulsa, LLC, Plaintiff - Appellant, and RE3 DEVELOPMENT, LLC, Intervenor Plaintiff - Appellant,
from the Bankruptcy Appellate Panel (BAP No. KS-14-027)
on the briefs:[*]
R. Clark, Lentz Clark Deines PA, Overland Park, Kansas, for
Intervenor Plaintiff -Appellant.
Jonathan A. Margolies, McDowell, Rice, Smith & Buchanan,
PC, Kansas City, Missouri, for Plaintiff-Appellant.
Henry Rule, Sidney K. Swinson, Brandon C. Bickle,
GableGotwals, Tulsa, Oklahoma, and John W. McClelland,
Armstrong Teasdale, LLP, Kansas City, Missouri for
HARTZ, BACHARACH, and McHUGH, Circuit Judges.
South Tulsa (Debtor), a debtor in bankruptcy, seeks to set
aside as a fraudulent transfer its own sale of real estate
that was encumbered by a mortgage far exceeding the sale
price. It contends that it did not receive reasonably
equivalent value in exchange for the property. Perhaps it now
thinks it can sell the property at a much higher price. Or it
may be trying to assist a related party that acquired the
mortgage note after the sale. Regardless of its motive, we
reject its claim. Because Debtor received reasonably
equivalent value from the sale of the property, it cannot
prevail under Oklahoma law or the fraudulent-transfer
provision of the Bankruptcy Code. In particular, we reject
its contention that it remained liable on the mortgage note
after the sale and that the bankruptcy court therefore
miscalculated the value it received.
is a limited liability company formed to purchase and develop
property in Tulsa, Oklahoma. Part of its original funding was
a $500, 000 loan from the E.H. Hawes Revocable Trust (the
Hawes Trust), the original intervenor in this
case. The trust is for the benefit of Edwin
"Trey" Hawes III (Hawes), the manager of Debtor,
and his family.
Debtor purchased a property called Memorial Commons through a
loan secured by a mortgage on the property. By February 2009
the loan was in default and a foreclosure action commenced
that August. Debtor did not defend the foreclosure action,
opting instead to find a buyer for the property. One deal
fell through in late December. But in early January 2010,
Cornerstone Creek Partners, LLC (Cornerstone), made an offer
of $3 million. Debtor and Cornerstone agreed to a sale of the
property, contingent on delivery of free and clear title.
time of closing, Memorial Commons was encumbered by a $7,
754, 151.00 mortgage debt and other liens totaling $499,
740.29. To effect the closing, the mortgagee released the
mortgage and dismissed the foreclosure action with prejudice,
and several lienholders dismissed their claims against the
property and Debtor. No judgment was entered. Less various
fees and taxes, the purchase price was distributed as
1. $1, 742, 170.16 to the ...