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In Re: Skyline Woods Country Club, Debtor. v. Skyline Woods Homeowners Association, et al

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Submitted: December 15, 2010

Before LOKEN, ARNOLD, and BYE, Circuit Judges.

If so authorized, the purchaser of real property from a bankruptcy estate acquires title to the land “free and clear of any interest” identified in 11 U.S.C. § 363(f). After an affiliate of Liberty Building Corporation (“Liberty”) purchased the Skyline Woods Golf Course in Douglas County, Nebraska, from the estate of a Chapter 11 debtor, residents of the surrounding planned community sued the purchasers to enforce express and implied restrictive covenants. The Supreme Court of Nebraska held that the bankruptcy sale did not extinguish equitable interests in having the property maintained as a golf course. Skyline Woods Homeowners Ass’n, Inc. v. Broekemeier, 758 N.W.2d 376, 392-93 (Neb. 2008). Liberty and its secured lender, Mid-City Bank, now appeal the bankruptcy court’s denial of their motion to reopen the closed bankruptcy proceedings in order to declare the Supreme Court of Nebraska judgment void and to enjoin the residents from enforcing it. We conclude denial of the motion to reopen was not an abuse of discretion because, in a reopened bankruptcy proceeding, the state-court judgment would be entitled to the full faith and credit mandated by 28 U.S.C. § 1738. Accordingly, we affirm.

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