In Re: VistaCare Group, L.L.C., No. 11-2695 (3d Cir. 2012)
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A Trustee was appointed in a Chapter 7 bankruptcy. The estate included 44 lots, subdivided and zoned for mobile homes. Lot 45 contained an assisted living facility. The lots shared infrastructure and were subject to restrictions, including one prohibiting transfer of lots for construction of residences and requiring that title remain in the developer. GCL purchased Lot 45. The township solicitor agreed and the Bankruptcy Court declared the sale free of the restriction. The Trustee discovered that some residents had affixed mobile homes to the land. To resolve the matter, the Trustee agreed to sell lots to the residents. The trustee and the township entered agreement, abrogating the restriction as to the lots. CGL, not a party to that agreement, alleged that the sales damaged its property interests in Lot 45 and that the agreement deprived CGL of its property rights without notice and without due process of law. The Bankruptcy Court concluded that the claims were not frivolous and could be filed in state court. The district court and Third Circuit affirmed. The Barton doctrine, which requires a party seeking to sue a court-appointed receiver, to obtain leave of the appointing court, continues to apply to bankruptcy trustees.
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