40235 Washington St. Corp. v. WC LUSARDI

CORRECTED ORDER GRANTING WASHINGTON STREET’S MOTION FOR DECLARATORY RELIEF AND TO QUIET TITLE; AND DENYING LUSARDI’S MOTION FOR REIMBURSEMENT UNDER CALIFORNIA REVENUE & TAXATION CODE § 3728

I. Overview

Since 1990, Washington Street and Lu-sardi have litigated title to an apartment complex in Riverside County, California. They are before the Court on two motions: (1) Washington Street’s motion to dismiss, as a matter of law, Lusardi’s claim to be a good faith purchaser under 11 U.S.C. § 549 (c); (2) Lusardi’s motion for reimbursement under California Revenue and Taxation Code § 3728. For the reasons stated below, the Court grants Washington Street’s motion to dismiss and denies Lu-sardi’s motion for reimbursement.

II. Background

Washington Street was created on February 20, 1990. Eight days later, it purchased an apartment complex (the Sun Dunnes) located on tax-defaulted property. At that time, the Sun Dunnes had two liens on it: a $447,000 tax lien along with a $277,000 first mortgage. The following day, Washington Street filed a Chapter 11 bankruptcy petition. Despite receiving a faxed copy of the bankruptcy petition, a week later, the Riverside County tax collector sold the…