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Bradley J. Young v. 1200 Buena Vista Condominiums

August 27, 2012


The opinion of the court was delivered by: Arthur J. Schwab United States District Judge


Memorandum Opinion re: Appeal from Bankruptcy Court (Doc. No. 1)

I. Introduction

Bradley J. Young ("Young") appeals from a Final Order of the United States Bankruptcy Court for the Western District of Pennsylvania dismissing his adversarial proceeding against 1200 Buena Vista Condominiums, et al ("Buena Vista").*fn1 Doc. Nos. 1 and 1-7.*fn2 The Bankruptcy Court held that the lien held by Buena Vista was a security interest, and not a statutory lien, within the meaning of the Bankruptcy Code. In re Young ("Young II"), 467 B.R. 792, 800-05 (Bankr. W.D. Pa. 2012). Young originally filed for Chapter 13 bankruptcy in 2009 ("2009 bankruptcy proceeding"). Doc. No. 6, 23. The Bankruptcy Court dismissed the case without prejudice in July, 2011. Id., 24. Young then filed for Chapter 13 bankruptcy in November, 2011 ("underlying bankruptcy proceeding"). Doc. No. 7, 10-11. That same month, Young filed an adversarial proceeding in the Bankruptcy Court, which attempted to partially avoid the lien held by Buena Vista,*fn3 or in the alternative sought relief under 11 U.S.C. § 522(f). Id. at 27. The Bankruptcy Court dismissed the adversarial proceeding. Doc. No. 1-7; Young II, 467 B.R. 792. Young appealed arguing that the Bankruptcy Court erred in characterizing the lien held by Buena Vista as a security interest rather than a statutory lien. For the reasons that follow, the Court agrees with Young and therefore, the decision of the Bankruptcy Court will be REVERSED.

II. Jurisdiction and Standard of Review

The Bankruptcy Court had jurisdiction pursuant to 28 U.S.C. § 157.*fn4 Young sought certification from the Bankruptcy Court to file a direct appeal to the United States Court of Appeals for the Third Circuit pursuant to 28 U.S.C. § 158(d)(2)(A). Doc. No. 1-10. The Bankruptcy Court denied the request. Doc. No. 1-12. This Court has jurisdiction pursuant to 28 U.S.C. § 158(a)(1).

The standard of review is the same for the District Court and for the Court of Appeals, both of which review findings of fact for clear error and exercise plenary review over questions of law. In re Mintze, 434 F.3d 222, 227-28 (3d Cir. 2006); In re Schick, 418 F.3d 321, 323 (3d Cir. 2005). When considering a mixed question of fact and law, the issue must be broken down into its component parts, with underlying questions of fact being reviewed for clear error and underlying questions of law being reviewed de novo. Hornick v. I.R.S., 252 B.R. 897, 899 (W.D. Pa. 2000) (Lee, J.) (citing In re Brown, 951 F.2d 564 (3d Cir. 1991)).

III. Factual Background

There are no disputes with respect to the facts of this case. Young and his ex-wife jointly conveyed to Young, individually, the deed for the condominium as issued on November 1, 1991.*fn5 Doc. No. 8, 19. The deed provided that it was, "[t]ogether with and subject to those rights, duties and obligations as set forth in the aforementioned Declaration of Condominium and as set forth in the By--Laws of the1200 Buena Vista Condominium." Id.

The Declaration of Condominium provides, in relevant part:

Assessment of Charges. All sums assessed by resolutions duly adopted by the Association against any Unit for the share of Common Expenses chargeable to that Unit shall constitute a lien against the affected Unit in accordance with the Act[*fn6 ] and also shall be the personal liability of the Owner of the Unit so assessed and shall, until fully paid, constitute a lien against such Unit which shall be enforceable as provided in the Act or as otherwise permitted by law.

All present and future Unit Owners and Residents of Units shall be subject to and shall comply with the provisions of this Declaration and the By--Laws as they may be amended from time to time. The acceptance of a Deed or execution of a lease or contract conveying an interest in, or the occupancy of, any Unit shall constitute such agreement.

Id., 17; Bankr. W.D. Pa. No. 11-26777, Doc. No. 37-3, 15. The By-Laws provide, in relevant part:

Lien for Assessment- The Association shall have a lien on a Unit for any Assessment levied against that Unit from the time the Assessment becomes due together with any interest payable pursuant hereto. The Association's lien may be foreclosed in like manner as a mortgage on real estate. If an Assessment is payable in installments, the full amount of the Assessment becomes effective as a lien from the time the first installment thereof becomes due. In accordance with the provisions of Section 3315 of the Act, such lien shall be prior to all other liens and encumbrances of a Unit except [certain exceptions relating to mortgages and taxes.]

Id., 18. Sometime during the year 2000, Young stopped paying his assessment, and on February 27, 2009, Buena Vista obtained a judgment against Young in the amount of $14,900. Young II, 467 B.R. at 795-96 (citing In re Young ("Young I"), 2011 WL 7110250, *1 (Bankr. W.D. Pa. March 4, 2011)). The judgment, however, remained unpaid. During the 2009 bankruptcy proceeding, Young filed an objection to the lien of Buena Vista which was denied by the Bankruptcy Court.*fn7 Young I, 2011 WL 7110250, *3.

In the underlying bankruptcy proceeding, Young admitted that the feasibility of his Chapter 13 plan was contingent on a large percentage of Buena Vista's lien being avoidable.*fn8 Young II, 467 B.R. at 799 (citing recording of oral argument before the Bankruptcy Court). This case presents the issue of whether the condominium lien that Young is trying to partially avoid is a statutory lien or security interest under the Bankruptcy Code. While Young, the appellant, argues that the Bankruptcy Court erred in concluding that the condominium lien was a security interest and ...

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