IN RE GIBSON, (Bankr.W.D.Tenn. 2002)

G. HARVEY BOSWELL, United States Bankruptcy Judge.

The Court conducted a hearing on Bank One's Motion for Relief from Stay on February 28, 2002. FED. R. BANKR. P. 9014. The parties stipulated to the facts as set forth herein Pursuant to 28 U.S.C. § 157(b)(2), this is a core proceeding. After reviewing the testimony from the hearing and the record as a whole, the Court makes the following findings of facts and conclusions of law. FED. R. BANKR. P. 7052.

I. FINDINGS OF FACT

On May 11, 2000, the debtor Van Gibson executed a promissory note in favor of Bank One. Such note was secured by a recorded deed of trust on property located at 600 North Royal Street in Jackson, Tennessee. After defaulting on the note, Bank One exercised its foreclosure rights as set forth in the Deed of Trust and conducted a non-judicial foreclosure sale on August 28, 2001. Bank One purchased the property at the sale for $34,448.00. Pursuant to the affidavit of Arnold M. Weiss, the Substitute Trustee, the Substitute Trustee's Deed, ("Deed"), was prepared and notarized on August 28, 2001. The Deed clearly describes the transaction in great detail and explicitly recites the specifics of the foreclosure sale including, but not limited to, the Deed of Trust executed by the Debtor, the real property secured by the Deed of Trust, and the consideration received in exchange for the Substitute Trustee's Deed. The Deed was recorded in the register's Office of Madison County, Tennessee, on October 3, 2001.

In exchange for the Deed, Bank One's bid/purchase price was to be reflected as a credit to the outstanding balance on the Debtor's note. The Substitute Trustee's Deed specifically recites "Credit on Note . . . $34,448.00." The balance on Gibson's promissory note was reduced by the amount of the foreclosure bid.

The debtor filed for chapter 13 bankruptcy relief on September 13, 2001. Bank One filed its Motion for Relief from the Stay on January 30, 2002. Bank One alleges that the foreclosure sale of the debtor's property was complete at the time the debtor filed his chapter 13 petition. The Debtor, alleging that the sale was not complete, is seeking cure the pre-petition default on his home mortgage and include the monthly mortgage payments in his chapter 13 plan pursuant to 11 U.S.C. § 1322.

II. CONCLUSIONS OF LAW

The issue for this Court to decide is whether or not the foreclosure on the debtor's property was complete at the time Gibson filed his chapter 13 petition. If it was, Bank One is entitled to relief from the automatic stay and to have the foreclosure confirmed because the real property was not property of the estate on the date of filing. If, on the other hand, the sale was not final at the time the debtor filed his petition, the real property is property of the estate and Bank One must carry its burden of proving the facts necessary to establish that it is entitled to relief from the automatic stay.

"Property of the estate" is broadly defined by § 541(a) of the Bankruptcy Code to include "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1). In Butner v. United States, 440 U.S. 48, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979), the Supreme Court held:

Property interests are created and defined by state law. Unless some federal interest requires a different result, there is no reason why such interests should be analyzed differently simply because an interested party is involved in a bankruptcy proceeding. Uniform treatment of property interests by both state and federal courts within a State serves to reduce uncertainty, to discourage forum shopping, and to prevent a party from receiving a "windfall merely by reason of the happenstance of bankruptcy." Lewis v. Manufacturers Nat'l. Bank, 364 U.S. 603, 609 (1961).

Butner, 440 U.S. at 55. Based on this holding, the determination of whether or not a property interest was created on August 28, 2001, and thus whether or not the debtor's property was property of the estate at the time of filing, is wholly dependent upon Tennessee state law.

In the case of In re Johnson, 213 B.R. 134 (Bankr.W.D.Tenn. 1997), modified after reh'g, 215 B.R. 988 (Bankr.W.D.Tenn. 1997), this Court has previously held that a non-judicial foreclosure sale is not final in Tennessee until at least two events occur:

1. The statute of frauds must be satisfied pursuant to T.C.A. § 29-2-101; and

2. Consideration must be exchanged.

Id. at 136. As it relates to the first requirement, "[s]hould the parties choose to rely on a deed to meet the statute of frauds writing requirement, such deed must be executed before the statute may be deemed satisfied." Id. Additionally, the deed must be signed by the"party to be charged," (i.e., the substitute trustee as seller), and "must contain the essential terms of the contract expressed with such certainty that they may be understood from the memorandum itself or some other writing to which it refers or with which it is connected without resort to parol evidence." In re Bland, 252 B.R. 133, 136 (Bankr.W.D.Tenn. 2000) (citations omitted).

Based upon the proof that was submitted to the Court, both of the finality requirements for a non-judicial foreclosure sale were satisfied in this case. The Substitute Trustee's Deed was executed on August 28, 2001, contained the essential terms of the contract and was signed by the Substitute Trustee. Additionally, consideration was exchanged when Gibson received a credit of $34,448.00 on his note. As a result of this finding, the Court grants Bank One's Motion for Relief from the Automatic Stay.

III. ORDER

It is therefore ORDERED that Bank One's Motion for Relief from the Stay is GRANTED.

It is so ordered.