In Re Gilbert John Marino, Debtor. Gilbert John Marino v. Anthony Xuereb, and Placer Savings and Loan Association

Placer Savings and Loan Association (Placer) appeals the district court’s order affirming the bankruptcy court’s allocation of a real estate commission on the bankruptcy estate’s sale of real property. The principal question is whether a nonbank-rupt co-owner of property that exercises a right of first refusal under 11 U.S.C. § 363 (i) to purchase a bankrupt’s interest and retain the property is liable for its pro rata share of sales costs under 11 U.S.C. § 363Cf). We conclude the co-owner may be ordered to pay its pro rata share of such costs, and we affirm.

When the debtor here filed for voluntary relief under Chapter 11 of the Bankruptcy Code, he owned an undivided 18.35 percent interest in an apartment complex in Foster City, California. Appellee Leo Lugliani also owned an undivided 18.35 percent interest in the property, and Anthony and Jeannette Xuereb owned an undivided 63.3 percent interest. The debtor filed an adversary complaint seeking a judgment under 11 U.S.C. § 363 (h) authorizing him to sell 100 percent of the property, including the interests of Lugliani and the Xuerebs. Placer purchased the Xuerebs’ interest with knowledge of the pending case and intervened in…