United States District Court, E.D. North Carolina, Western Division
In re CELESTE G. BROUGHTON, Debtor.
ORDER ALLOWING SALE OF ASSETS FREE AND CLEAR OF LIENS
AND TRANSFER OF LIENS TO PROCEEDS OF SALE
REIDINGER DISTRICT JUDGE.
MATTER is before the Court on the Trustee's
Motion to Sell Assets Free and Clear of Liens and Transfer
Liens to Proceeds of Sale [DE-411] and the Debtor's
"Motion to Dismiss the Motion to Sell" [DE-419].
All parties in interest were given notice and an opportunity
to be heard regarding said Motion, and a hearing was
conducted on December 15, 2017 ("the Hearing").
G. Broughton (the "Debtor") filed a Petition for
Relief under Chapter 13 of Title 11 of the United States
Bankruptcy Code on December 15, 2014. [Bankr. Case No.
14-07268-5-JNC (the "Bankruptcy Proceeding")]. On
July 14, 2015, the case was converted to one under Chapter 7.
On July 15, 2015, Walter L. Hinson (the "Trustee")
was appointed as the Chapter 7 Trustee by order of the
Bankruptcy Court. On May 19, 2016, on his own motion, the
Honorable Terrence W. Boyle, United States District Court
Judge for the Eastern District of North Carolina, entered an
Order withdrawing the reference to the United States
Bankruptcy Court for the Eastern District of North Carolina.
[Misc. Case No. 5:16-mc-19-BO]. The United States District
Court thereafter docketed the main bankruptcy proceeding as
Civil Case No. 5:16-cv-302-BO.
estate of the Debtor owns real property located in the City
of Raleigh, Wake County, North Carolina, which is now a part
of the bankruptcy estate and subject to administration by the
Court and sale by the Trustee (hereinafter "the Real
Property"). The Real Property is described as follows:
2529 White Oak Road, Wake County, Raleigh, NC 27609, Lots
59-66 PT Lots 67-68 Anderson Heights BM1920-00235 PIN#
March 6, 2017, the Trustee filed the present motion to sell
the Real Property free and clear of all liens pursuant to 11
U.S.C. § 363. [DE-411]. In his motion, the Trustee
identifies a number of liens against the Real Property that
are documented in the public record. In each case the
respective creditor has filed a Proof of Claim in this
proceeding. Those claims are as follows:
Wake County Revenue Department:
Proof of Claim Nos. 7 and 8, for approximately $85, 000.00
plus any taxes, penalties and interest accruing as of the
petition date. The Trustee has not disputed these claims and
has not filed an objection or an adversary proceeding in
connection with such claims. The Trustee anticipates that all
appropriate ad valorem taxes and assessments will be
paid as part of the distribution at the closing of any sale
of the Real Property. The Revenue Department, through its
counsel, appeared at the Hearing on this Motion and stated
its express consent to the relief sought by the Trustee in
his Motion to Sell.
Bank of New York Mellon, f/k/a The Bank of New York, as
trustee c/o Select Portfolio Servicing:
Proof of Claim No. 4 in the amount of $348, 081.16. This
claim is based on a Deed of Trust presented and recorded in
Book 12273, Page 1799 of the Wake County Registry on November
20, 2006, in the original amount of $350, 000.00. While the
Wake County Revenue Department's claim has priority over
Bank of New York Mellon's claim, Bank of New York Mellon
has an interest superior to all other lien creditors, based
on a subordination agreement executed by Bank of America and
recorded in Book 012273, Pages 01820-01823, Wake County
Registry. While the Trustee disputes Bank of New York
Mellon's claim, the parties are engaged in negotiations
to resolve their dispute, and to date the Trustee has not
filed suit challenging the validity of this claim. Bank of
New York Mellon, through its counsel, appeared at the Hearing
and expressed its unconditional consent to the relief sought
by the Trustee.
Bank of America, N.A.:
Proof of Claim No. 2 in the amount of $240, 028.25. A Deed of
Trust was recorded in Wake County on June 19, 2006,
purporting to secure the claim against two (2) of the ten
(10) parcels that comprise the real property. As outlined
above, this claimant subordinated its senior lien position to
Bank of New York Mellon. It is a joint obligation with Justin
J. Broughton, one of the sons of the Debtor, who the Trustee
is informed and believes lives in Wilmington, North Carolina.
The Trustee filed an adversary proceeding to avoid the lien
of the claimant on December 29, 2016, in the United States
District Court for the Eastern District of North Carolina,
Civil Case No. 5:16-cv-958-RE. The parties arrived at a
compromise to settle Bank of America's claim for $20,
000. On December 13, 2017, this Court entered an Order
approving the parties' settlement of this claim pursuant
to Rule 9019 of the Federal Rules of Bankruptcy Procedure.
Pursuant to the settlement agreement between Bank of America
and the Trustee, Bank of America has unconditionally
consented to the granting of the relief sought by the Trustee
in this Motion.