Opinion
Case No. 05-03978-B.
July 18, 2005
ORDER
This matter comes before the Court upon the debtor's motion to sell real property free and clear of liens. The Chapter 13 Trustee, James M. Wyman, and BBT of South Carolina (BBT) filed objections to the proposed sale. Because of this Court's decision regarding the objection of BBT as follows, it is unnecessary to address the trustee's objection.
Under Section 363(f) of the Bankruptcy Code, the debtor may sell property free and clear of the interest of a third party only if:
(1) applicable nonbankruptcy law permits sale of such property free and clear of such interest;
(2) such entity consents;
(3) such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property;
(4) such interest is in bona fide dispute; or
(5) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest.
11 U.S.C. § 363(f). BBT claims a lien on the subject property by virtue of a judgment in the amount of $31,673.10 entered in the Court of Common Pleas for South Carolina, Charleston County, on August 4, 2004 (the Judgment). The debtor's motion to sell indicates that "BBT may allege two judicial liens against the subject property" but it fails to provide for payment of such liens. The debtor apparently relies on a later form order dated September 21, 2004, which purports to rescind the Judgment (the Order) in arguing that BBT does not have a valid lien on the subject property.
The issue for this Court to determine is whether BBT has a valid lien on the subject property by virtue of the Judgment. If so, the debtor's motion to sell must be denied in that the debtor cannot meet any of the requirements of Section 363(f). This Court must look to the law of South Carolina in determining the validity of the Judgment.
The Order was dated no less than forty-eight (48) days after the Judgment. It is apparent that the Order was issued sua sponte in that no party had, prior to the date of the Order, filed a motion to reconsider or a notice of appeal according to the South Carolina Rules of Civil Procedure (SCRCP). The power to modify orders sua sponte is limited under state law. In Ness v. Eckerd Corp. 350 S.C. 399, 566 S.E.2d 193 (Ct.App. 2002), the South Carolina Court of Appeals held that a state court lacked jurisdiction to set aside its own ruling after ten (10) days. In that case, on December 4, 1997, the Defendant was served. On January 6, 1998, default was entered. Unlike the present situation, the Ness Defendant took immediate and proper steps to set aside default. The motion was denied on May 28, 1998. A timely motion to reconsider was filed pursuant to Rule 59(e), SCRCP. Shortly thereafter, on July 13, 1998, the court vacated the order entered on May 28, 1998, on the basis of discovery of a conflict.
The Ness court held that the court could not vacate its own order more than ten days after it was issued. The court stated:
Although trial judges retain jurisdiction to alter judgments on their own initiative for ten days if a Rule 59(e), SCRCP, motion is filed, after ten days that jurisdiction is lost. ( Citations omitted). In this case, . . ., the trial judge modified an order not as requested in a Rule 59(e) motion, but rather on his own initiative and after more than ten days had passed. He therefore lacked jurisdiction to vacate the original order.
Ness, 566 S.E.2d at 195. The same principle holds true in this case. The Order was issued well after the jurisdiction of the state court had expired and, in fact, no Rule 59(e) motion had been filed. The sua sponte Order was therefore void ab initio, leaving the Judgment in full force and effect. Because the Judgment is valid under state law, BBT therefore holds a valid lien secured by the debtor's real property located in Charleston County. The debtor cannot satisfy any of the requirements of Section 363(f) in its motion to sell free and clear of liens and accordingly it must be denied.
IT IS THEREFORE ORDERED that the debtor's motion to sell real property free and clear of liens is denied.
AND IT IS SO ORDERED.