Silverman v. Ankari (In re Oyster Bay Cove)

Silverman v. Ankari (In re Oyster Bay Cove)

Opinion

 [*253] MEMORANDUM AND ORDER

PLATT, District Judge.

Appellant appeals from an order of the Bankruptcy Court, Eisenberg, B.J., authorizing the Trustee in bankruptcy to retain Appellant's $ 250,000.00 deposit after Appellant defaulted on his winning bid following a court approved auction of the Debtor's land. For the reasons stated herein, the decision of the Bankruptcy court is affirmed.

BACKGROUND

Oyster Bay Cove, Ltd. (the "Debtor") filed a voluntary petition for bankruptcy pursuant to Chapter 7 of the Bankruptcy Code on November 21, 1990. Appellee, Kenneth P. Silverman (the "Trustee"), was appointed to serve as trustee. A Bankruptcy Court order dated June 6, 1991, approved the Trustee's application to sell by public auction approximately thirty acres of vacant, partially improved land belonging to the Debtor. The order detailed that the land was to be sold "free and clear of liens, claims, and encumbrances."

 [**2]  Appellant, Chaim Ankari ("Ankari"), was the winning bidder at the public auction held pursuant to the judicial order. Ankari's winning bid was to purchase the entire parcel of land for $ 2,600,000.00. Pursuant to the "Terms and Conditions of Sale," which were approved by the Bankruptcy Court, any bidder wishing to bid upon the entire parcel was required to give a $ 250,000.00 deposit to the Trustee. Accordingly, Ankari gave the Trustee the required deposit before submitting his bid. Following the auction. the Trustee and Ankari entered into a contract by signing the "Terms and Conditions of Sale." Under the "Terms and Conditions of Sale," the deposit would be forfeited as liquidated damages if Ankari breached the contract. Further, the "Terms and Conditions of Sale" indicated that the property was being sold "as is" and "subject to (a) such facts as an accurate survey may show; (b) any covenants, restrictions and easements of record; (c) any state of facts a physical inspection may show." The "Terms and Conditions of Sale" were attached to the Bankruptcy Court order and incorporated into the order by references.

The property, although sold in bulk, consisted of twelve individual [**3]  lots. These lots included a dedicated road and a storm basin. Both of these were clearly marked on a map of the property and a "Declaration of Covenants and Restrictions," which was filed with the local authorities and recorded on May 3, 1989.

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