Gina Lee v. James Anasti

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 10-1772

In Re: GINA ANASTI LEE,

Debtor.

----------------------

GINA ANASTI LEE, on behalf of the bankruptcy estate,

Plaintiff - Appellant,

v.

JAMES ANASTI,

Defendant – Appellee,

and

WILLIAM K. STEPHENSON, JR.,

Trustee.

No. 10-1774

In Re: GINA ANASTI LEE,

Debtor.

----------------------

GINA ANASTI LEE, on behalf of the bankruptcy estate,

Plaintiff - Appellant,
 v.

JAMES ANASTI,

Defendant – Appellee,

and

WILLIAM K. STEPHENSON, JR.,

Trustee.

Appeals from the United States District Court for the District of
South Carolina, at Columbia. Joseph F. Anderson, Jr., District
Judge. (3:10-cv-00626-JFA; 3:10-cv-00196-JFA)

Submitted: October 17, 2011 Decided: January 6, 2012

Before SHEDD and DUNCAN, Circuit Judges, and William L. OSTEEN,
Jr., United States District Judge for the Middle District of
North Carolina, sitting by designation.

Affirmed in part; dismissed in part by unpublished per curiam
opinion.

Tony R. Megna, Columbia, South Carolina, for Appellant. Steven
B. Licata, LAW OFFICE OF STEVEN B. LICATA, PC, Columbia, South
Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

2
PER CURIAM:

Gina Anasti Lee (“Lee”) appeals the orders of the district

court affirming two separate orders issued by the United States

Bankruptcy Court for the District of South Carolina. Both

orders arise from the same bankruptcy case, In re Lee, Ch. 13

Case No. 09-02854 (Bankr. D.S.C. filed Apr. 16, 2009), but were

addressed by the district court in two separate appeals from the

bankruptcy court: (1) In re Lee, No. 3:10CV00196, 2010 U.S.

Dist. LEXIS 44693 (D.S.C. May 6, 2010) (hereinafter “196 Case”)

and (2) In re Lee, No. 3:10CV00626, 432 B.R. 212 (D.S.C. 2010)

(hereinafter “626 Case”). In the 196 Case, Lee appeals the

district court’s order affirming the bankruptcy court’s decision

to grant appellee, James Anasti (“Anasti”), relief from the stay

imposed by 11 U.S.C. § 362. In the 626 Case, Lee appeals the

district court’s order affirming the bankruptcy court’s

dismissal of Lee’s adversary complaint in which Anasti was named

as a defendant. These two related appeals have been

consolidated before this court. For the reasons set forth

below, we affirm the grant of relief from the stay, affirm the

dismissal of Lee’s avoidance action, and dismiss the remainder

of the appeal.

3
 I.

This appeal arises from what originally began as a real

property dispute in South Carolina state court between a sister

(Lee) and brother (Anasti) over real property located at 2325

Two Notch Road in Columbia, South Carolina (“the Property”). In

1978, the then-owner of the Property, Laura Corvi, deeded the

Property to Anasti and the parties’ father, Albert Anasti, as

tenants in common with right of survivorship. J.A. 56.

Although James Anasti held an interest in the Property by

virtue of his right of survivorship, Albert Anasti devised the

Property to Lee in his will. J.A. 62. Albert Anasti died in

1995, and, subsequently, a South Carolina probate court found

Lee to have inherited the Property in accordance with Albert

Anasti’s will. Id.

In 2000, Lee sold the Property to Lance Wilson and Willis

Goodwin 1 “by way of ‘owner financing.’” J.A. 57. A title

dispute then arose between Lee and the purchasers; Anasti was

not a party to that action. Following this dispute, and as a

result of a related condemnation proceeding (see J.A. 55),

Anasti filed a state court action in 2007 to quiet title to the

Property. See Anasti v. Wilson, 2007-CP-40-0576 (S.C. Ct.

1
Wilson and Goodwin were named as defendants in the state
court litigation, but are not parties to the adversary
proceeding in bankruptcy court described hereinafter.

4
Common Pleas Oct. 26, 2007) (the “state court action”) (order

granting partial summary judgment) (J.A. 55); J.A. 182. In this

state court action, Anasti asserted his interest to the Property

through the original deed from Corvasi, while Lee claimed to

have acquired superior title to the Property through adverse

possession under color of title. J.A. 56, 59. The state trial

court granted summary judgment in favor of Anasti on October 26,

2007, finding that Lee had not acquired title through adverse

possession and that the Property is “the exclusive real property

of [Anasti].” J.A. 64.

In January 2008, Lee appealed the trial court’s decision to

the South Carolina Court of Appeals, which remanded the case to

the trial court for a determination of whether Lee’s appeal was

timely filed. See Anasti v. Wilson, 2011 S.C. App. Unpub. LEXIS

204, at *1 (S.C. Ct. App. Apr. 28, 2011). The state trial court

conducted an evidentiary hearing and thereafter held that Lee’s

appeal was not timely filed. Id. Before the South Carolina

Court of Appeals issued its final ruling, however, Lee filed for

bankruptcy under Chapter 7. J.A. 190-91. After initially

dismissing and then reinstating the appeal, the South Carolina

Court of Appeals “issued an order holding the appeal in abeyance

pending a final decision in the bankruptcy proceedings.” J.A.

191.

5
 On June 22, 2009, the Chapter 7 trustee filed a “Report of

No Distribution” in which she found that no property was

available for distribution from the estate. J.A. 90. Lee then

converted the bankruptcy case to Chapter 13. J.A. 45-46.

Thereafter, Anasti moved the bankruptcy court pursuant to 11

U.S.C. § 362(d)(1) to lift the automatic stay to permit the

state appeals process to continue. J.A. 48. Concurrently, Lee

filed an adversary proceeding under 11 U.S.C. §§ 1303 and 1306,

seeking to recover the Property. See Compl., Lee v. Anasti, No.

09-02854 (Bankr. D.S.C. Aug. 20, 2009) (J.A. 111). The claims

set forth in Lee’s adversary complaint were similar to those

asserted in the state court action; both cases were grounded in

theories of adverse possession or related claims. See generally

Order Granting Partial Summ. J. (J.A. 55-64); Compl., Lee v.

Anasti, No. 09-02854 (Bankr. D.S.C. Aug. 20, 2009) (J.A. 124-

28). Specifically, in her adversary complaint, Lee requested

that the bankruptcy court declare that she held title to the

Property based on claims of adverse possession, laches,

estoppel, and staleness. J.A. 124-28. The complaint also

included an avoidance action brought pursuant to 11 U.S.C. §

544(a). J.A. 129.

After Anasti filed his motion seeking relief from the stay

and Lee filed her adversary complaint, the bankruptcy court

6
issued the two separate orders that are the subject of this

appeal. The first order granted Anasti’s motion for relief from

the stay (J.A. 196); that order was appealed to the district

court in the 196 case. The second order dismissed Lee’s

adversary complaint (J.A. 228); that order was appealed to the

district court in the 626 case. 2 The district court affirmed

both of the bankruptcy court’s orders. J.A. 185, 217.

After the stay was lifted, the state court appeals process

continued, and on April 28, 2011, the South Carolina Court of

Appeals dismissed Lee’s appeal as untimely. Anasti v. Wilson,

2011 S.C. App. Unpub. LEXIS 204, at *2 (S.C. Ct. App. Apr. 28,

2011). The Supreme Court of South Carolina then denied Lee’s

petition for writ of certiorari. Anasti v. Wilson, 2011 S.C.

LEXIS 338, at *1 (S.C. Oct. 5, 2011). The state court

litigation concluded while this appeal was pending; both parties

acknowledged in supplemental pleadings the final order of the

Supreme Court of South Carolina denying certiorari. See Supp.

Br. of Appellant at 2; Supp. Br. of Appellee at 1.

In this appeal, Lee argues that the district court erred in

affirming both the bankruptcy court’s decision to grant relief

from the stay and its decision to dismiss her adversary

2
The bankruptcy court also denied Lee’s motion to amend her
complaint in the adversary proceeding without prejudice to her
right to renew the motion upon conclusion of the state court
proceedings. J.A. 228 n.4.
7
complaint. We first address the issue of whether the district

court erred in affirming the bankruptcy court’s decision to

grant relief from the stay.

II.

We have jurisdiction to hear this appeal pursuant to 28

U.S.C. § 158(d), which “allows us to review ‘final decisions’ by

the district court when it acts in its bankruptcy appellate

capacity.” Safety-Kleen, Inc. v. Wyche, 274 F.3d 846, 864 n.4

(4th Cir. 2001). An order granting or denying relief from the

automatic stay is final and appealable. See id. at 864 (“[T]he

denial of relief from the automatic stay is a final, appealable

order.”); Nat’l Envtl. Waste Corp. v. City of Riverside (In re

Nat’l Envtl. Waste Corp.), 129 F.3d 1052, 1054 (9th Cir. 1997)

(“Orders granting or denying relief from the automatic stay are

deemed to be final orders.”); In re Sonnax Indus., 907 F.2d

1280, 1283 (2d Cir. 1990) (“All seem to agree that orders

lifting the automatic stay are final.”).

a.

“We review the judgment of a district court sitting in

review of a bankruptcy court de novo, applying the same

standards of review that were applied in the district court.”

Logan v. JKV Real Estate Servs. (In re Bogdan), 414 F.3d 507,

8
510 (4th Cir. 2005) (citing Devan v. Phoenix Am. Life Ins. Co.

(In re Merry-Go-Round Enters.), 400 F.3d 219, 224 (4th Cir.

2005)). “Specifically, ‘we review the bankruptcy court's factual

findings for clear error, while we review questions of law de

novo.’” Id. (quoting Loudoun Leasing Dev. Co. v. Ford Motor

Credit Co. (In re K & L Lakeland, Inc.), 128 F. 3d 203, 206 (4th

Cir. 1997)).

In this case, the district court, employing the same

reasoning as the bankruptcy court below, found that the

automatic stay was properly lifted under 11 U.S.C. § 362(d)(1).

“A decision to lift the automatic stay under section 362 of the

Code is within the discretion of the bankruptcy judge and this

decision may be overturned on appeal only for abuse of

discretion.” In re Robbins, 964 F.2d 342, 345 (4th Cir. 1992).

11 U.S.C. § 362(d)(1) provides that a court shall grant

relief from the stay “for cause, including the lack of adequate

protection of an interest in property of such party in

interest.” Because the statute does not define cause, “courts

must determine when discretionary relief is appropriate on a

case-by-case basis.” In re Robbins, 964 F.2d at 345.

The court must balance potential prejudice to the
bankruptcy debtor's estate against the hardships that
will be incurred by the person seeking relief from the
automatic stay if relief is denied . . . . The
factors that courts consider in deciding whether to
lift the automatic stay include (1) whether the issues
in the pending litigation involve only state law, so
9
 the expertise of the bankruptcy court is unnecessary;
(2) whether modifying the stay will promote judicial
economy and whether there would be greater
interference with the bankruptcy case if the stay were
not lifted because matters would have to be litigated
in bankruptcy court; and (3) whether the estate can be
protected properly by a requirement that creditors
seek enforcement of any judgment through the
bankruptcy court.

Id. (citation omitted).

In its order granting Anasti relief from the stay, the

bankruptcy court identified the standards set forth in Robbins

and concluded that cause to grant relief existed under 11 U.S.C.

§ 362(d)(1). J.A. 192-94. With regard to the first and second

factors set forth in Robbins, the bankruptcy court found that

“[t]he determination of title to the Property and the nature and

extent of [Lee’s] interest is an issue of state law that has

already been litigated in and addressed by the lower state

court.” J.A. 195. The court also found that the third factor

had been met, noting that Anasti did “not seek authority to

pursue any action or liability against [Lee] beyond a

determination of title to the Property in the state court

proceedings.” Id. The court found that allowing the state

court proceedings to continue would avoid “unnecessary

duplication of efforts” and that the debtor would not be

prejudiced by the court’s refusal to relitigate the issue. Id.

10
 In affirming the bankruptcy court’s order granting relief

from the stay, the district court also applied Robbins and held

that “the bankruptcy court rightly deferred to the courts of

South Carolina in abstaining, on grounds of comity . . . .

South Carolina courts possess particular expertise in

interpreting South Carolina property law.” J.A. 184. The court

additionally noted that, because the quiet title action involved

only the application of state law, the bankruptcy court’s

expertise would not be utilized. Id. The court concluded that

allowing Lee “to pursue identical litigation in the bankruptcy

court would be highly duplicative.” Id.

b.

Lee does not challenge the facts found by the bankruptcy

court. The findings of fact that both the bankruptcy court and

district court relied upon accurately reflect the procedural and

substantive history of the state court litigation and the

bankruptcy proceedings. Instead, Lee’s objections are directed

to the lower court’s application of 11 U.S.C. § 362(d) and

Robbins to Anasti’s motion seeking relief from the stay.

Bearing in mind that “Congress . . . has granted broad

discretion to bankruptcy courts to lift the automatic stay to

permit enforcement of rights against property of the estate”

Claughton v. Mixson, 33 F.3d 4, 5 (4th Cir. 1994), we find that

11
the bankruptcy court did not abuse its discretion in granting

Anasti=s motion to lift the stay pursuant to 11 U.S.C. §

362(d)(1). Each of the Robbins factors supports the bankruptcy

court’s exercise of discretion.

The first factor identified in Robbins, “whether the issues

in the pending litigation involve only state law, so the

expertise of the bankruptcy court is unnecessary,” clearly

supports the decision to lift the stay. The state court

litigation involved only issues of state real property law,

rendering the expertise of the bankruptcy court unnecessary.

Notably, real property law is an area in which federal courts

are especially deferential to state courts. See Dayton & M. R.

Co. v. Comm’r, 112 F.2d 627, 630 (4th Cir. 1940) (noting that

even prior to Erie R. Co. v. Tompkins, it was “well settled that

we were bound by state decisions as to rights of property and

other matters of local law”); Warburton v. White, 176 U.S. 484,

496 (1900).

The second factor identified by Robbins, “whether modifying

the stay will promote judicial economy and whether there would

be greater interference with the bankruptcy case if the stay

were not lifted because matters would have to be litigated in

bankruptcy court,” also supports lifting the stay. The state

court litigation had been ongoing for over two years and was

12
near finality in the South Carolina Court of Appeals when Lee

filed for bankruptcy under Chapter 7. Lifting the stay thus

promoted judicial economy; the bankruptcy court’s order

permitted the conclusion of an adjudication of real property

issues in the South Carolina courts in lieu of relitigation of

those same issues in bankruptcy court.

With respect to the third Robbins factor, Lee was afforded

adequate protection in the bankruptcy proceeding because of her

ability to seek subsequent relief if she were to succeed on

appeal in state court. J.A. 195. In summary, all three factors

identified by Robbins heavily weigh in favor of lifting the

stay.

Lee argues that in granting Anasti’s motion to lift the

stay, both the bankruptcy court and the district court

improperly failed to consider that the bankruptcy estate was not

a party to the state court proceeding. Lee contends that

lifting the stay deprived the bankruptcy estate of due process

because the estate has not been provided an opportunity to be

heard on the issue of ownership of the Property. See

Appellant’s Br. at 43-45. Specifically, Lee argues, “If

Appellee prevails in the state-court appeal, he has free and

clear title - and the bankruptcy estate (as opposed to the

individual Debtor) never has the opportunity to present its

13
claims to the property, and is never heard by any court.” Id.

at 45 (emphasis in original).

Lee’s arguments in this regard are not persuasive, as Lee

misinterprets her position in relation to the bankruptcy estate

and the Property. Any interest of the bankruptcy estate in the

Property is derived from Lee’s right in the Property. The

bankruptcy estate’s claim is not greater than Lee’s claim. Cf.

Old Republic Nat’l Title Ins. Co. v. Tyler (In re Dameron), 155

F.3d 718, 721 (4th Cir. 1998) (noting that a trustee may “take

no greater rights [in property] than the debtor himself had”)

(internal quotation marks omitted). Furthermore,

[p]roperty 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.

Butner v. United States, 440 U.S. 48, 55 (1979).

Lee does not offer any facts that suggest the bankruptcy

estate held a better, or different, claim to the Property than

Lee held. Nor does Lee point to any additional facts she would

have presented in the bankruptcy court had the stay remained in

effect. Instead, Lee contends that the order lifting the stay

14
deprived the bankruptcy estate of any opportunity to be heard as

to any claim it might have to the Property. The claims of Lee

and the bankruptcy estate, however, are the same for the purpose

of determining the parties’ respective rights to the Property,

and “there is no reason why such interests should be analyzed

differently simply because an interested party is involved in a

bankruptcy proceeding.” Butner, 440 U.S. at 55. Because Lee’s

interest in the Property is analyzed under the same standard

whether the bankruptcy estate is a party in interest or not,

Lee’s arguments fail to demonstrate why the bankruptcy estate’s

interest, or its rights in the Property, are not effectively

advanced by Lee individually, or more pointedly, why the

bankruptcy estate should be required to relitigate those claims

already asserted and litigated by Lee.

Regardless, even if due process did require that the estate

be given an opportunity to state a claim to the Property, the

estate has chosen not to do so after notice and an opportunity

to be heard. The Chapter 7 trustee filed a Report of No

Distribution stating that no property was available for

distribution from the estate. J.A. 182-83. Additionally, the

Chapter 13 trustee did not oppose modification of the stay to

allow the state court appeals process to continue. J.A. 191.

15
 Finally, the fact that the bankruptcy estate chooses not to

participate in, or pursue, Lee’s claim to the Property in the

pending state court action does not pose a barrier to future

enforcement of a final state court judgment as to all those in

privity with Lee. A judgment in a prior case may properly act

as a bar to relitigation in a later proceeding. See, e.g.,

First Union Commer. Corp. v. Nelson, Mullins, Riley, &

Scarborough (In re Varat Enters.), 81 F.3d 1310, 1314-17 (4th

Cir. 1996).

Accordingly, we find that the bankruptcy court and the

district court properly considered and applied the relevant

factors under Robbins and provided a reasoned basis for finding

that each factor had been met. The bankruptcy court did not

abuse its discretion in granting Anasti relief from the stay

pursuant to 11 U.S.C. § 362(d)(1). We therefore affirm the

district court’s order affirming the bankruptcy court’s decision

to grant relief from the stay.

III.

We now turn to Lee’s appeal of the district court’s order

affirming the bankruptcy court’s dismissal of the adversary

proceeding. Lee’s adversary complaint contains four causes of

action. The first cause of action is a state-law adverse

16
possession claim (J.A. 124-27); the second cause of action

asserts the state-law doctrines of laches, estoppel, and

staleness (J.A. 127-28); the third cause of action requests that

the court issue an order demanding the sale of the Property for

the benefit of the estate 3 (J.A. 129); and the fourth cause of

action is an avoidance action under 11 U.S.C. § 544(a) (J.A.

129-30). The bankruptcy court dismissed the avoidance action

brought pursuant to 11 U.S.C. § 544(a) for lack of standing and

dismissed the other state-law claims based on comity and

judicial economy. J.A. 226-27. We will first address the §

544(a) avoidance action before turning to the state-law claims.

a.

The dismissal of an adversary proceeding is a final

appealable order under 28 U.S.C. § 158(d). See In re Moody, 825

F.2d 81, 85 (5th Cir. 1987) (“[I]t is generally held that a

separate adversary proceeding within the framework of the

overall bankruptcy case is an appropriate ‘judicial unit’ for

determining finality.”). We thus have jurisdiction to review

the dismissal of Lee’s avoidance action.

“To survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, to ‘state a claim

3
Because Lee may only succeed on this claim if she succeeds on
at least one of the other claims, this cause of action must be
dismissed if the first, second, and fourth claims are all
dismissed.
17
to relief that is plausible on its face.’” Ashcroft v. Iqbal,

129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 570 (2007)). A claim is facially

plausible if the plaintiff provides enough factual content to

enable the court to reasonably infer that the defendant is

liable for the misconduct alleged. Id. A court may consider

collateral estoppel at the motion to dismiss stage of

litigation. See, e.g., Aliff v. Joy Mfg. Co., 914 F.2d 39, 44

(4th Cir. 1990) (affirming a district court’s use of collateral

estoppel in granting a motion to dismiss); see also Blue Tree

Hotels v. Starwood Hotels & Resorts, 369 F.3d 212, 217 (2d Cir.

2004) (stating that courts “may also look to public records,

including complaints filed in state court, in deciding a motion

to dismiss”).

Lee’s fourth cause of action was brought pursuant to 11

U.S.C. § 544(a). The complaint alleges that the state court

judgment in favor of Anasti was rendered unenforceable by the

automatic stay provisions of 11 U.S.C. § 362(a). J.A. 129. The

complaint also asserts in conclusory fashion that “Section

544(a) creates a legal fiction of a transfer from the debtor to

a bona fide purchaser on the date of filing, thereby clothing

the trustee in whatever legal rights a bona fide purchaser would

18
possess.” J.A. 130 (quoting In re Houston, 409 B.R. 799, 807

(Bankr. D.S.C. 2009)).

In dismissing Lee’s fourth cause of action, the bankruptcy

court held that a Chapter 13 debtor lacks standing to pursue an

avoidance action under 11 U.S.C. § 544(a). J.A. 226-27. Because

the state court judgment has become final, however, collateral

estoppel applies and Lee is now bound by that judgment. 4 We

therefore affirm the bankruptcy court’s dismissal of Lee’s

avoidance action on the basis of collateral estoppel.

After the bankruptcy court dismissed Lee’s adversary

complaint, and during the pendency of this appeal, the South

Carolina Court of Appeals dismissed Lee’s state court appeal and

the Supreme Court of South Carolina denied her writ of

certiorari. The parties filed these judgments and have addressed

their effect on this court in supplemental briefs. See Supp. Br.

of Appellant at 2-3; Supp. Br. of Appellee at 1-2. We find that

the state court judgment in favor of Anasti is now final and

binding on Lee pursuant to 28 U.S.C. § 1738.

4
Neither the bankruptcy court nor the district court had the
benefit of the final state court judgment and therefore neither
addressed this issue. However, because we “can affirm on any
basis fairly supported by the record,” Eisenberg v. Wachovia
Bank, N.A., 301 F.3d 220, 222 (4th Cir. 2002), we can affirm the
bankruptcy court’s dismissal of Lee’s avoidance action based on
the final state court judgment.

19
 “The Full Faith and Credit Act, 28 U.S.C. § 1738, requires

federal courts . . . to give state judicial proceedings ‘the same

full faith and credit . . . as they have by law or usage in the

courts of such State . . . from which they are taken.’” Parsons

Steel, Inc. v. First Alabama Bank, 474 U.S. 518, 519 (1986)

(quoting 28 U.S.C. § 1738). In determining the preclusive effect

of a state court judgment under the Act, federal courts must look

to the law of the state in which the judgment was entered. Id.

at 523; see Heckert v. Dotson (In re Heckert), 272 F.3d 253, 257

(4th Cir. 2001) (“A federal court, as a matter of full faith and

credit, under 28 U.S.C. § 1738, must give a state court judgment

the same preclusive effect ‘as the courts of such State’ would

give.”); Empire Funding Corp. v. Armor, No. 99-1529, 2000 U.S.

App. LEXIS 26405, at *5-9 (4th Cir. Oct. 20, 2000) (applying this

principle in the context of a bankruptcy proceeding filed after

the entry of a final state court judgment).

The Supreme Court of South Carolina has stated the following

with regard to collateral estoppel:

[W]hen an issue has been actually litigated and
determined by a valid and final judgment, the
determination is conclusive in a subsequent action
whether on the same or a different claim. The doctrine
may not be invoked unless the precluded party has had a
full and fair opportunity to litigate the issue in the
first action.

20
Zurcher v. Bilton, 379 S.C. 132, 135, 666 S.E.2d 224, 226 (S.C.

2008) (citations omitted).

All of the requirements under South Carolina law for the

application of collateral estoppel are met in this case. The

ownership of the Property was actually litigated and determined

in the quiet title action. The state trial court granted partial

summary judgment in favor of Anasti and held that the Property is

“Confirmed and Ordered as belonging solely to [Anasti].” J.A.

64. The judgment is final, and Lee has exhausted all of her

state court appeals. See Supp. Br. of Appellee at 3-6. Finally,

Lee had a full and fair opportunity to litigate the issue in the

state trial court and did so.

Lee argues that the bankruptcy estate will be prejudiced if

not given its own full and fair opportunity to assert Lee’s right

to the Property. 5 As discussed above, however, any interest of

the bankruptcy estate in the Property is derivative of Lee’s

interest. See In re Dameron, 155 F.3d at 721. Neither the

estate nor Lee has argued that the estate’s potential interest in

the Property was not adequately represented by Lee in the state

court action. The trustee would therefore be in privity with Lee

5
We note that both the Chapter 7 and the Chapter 13 trustees
had the opportunity to assert claims to the Property and have
chosen not to do so.

21
for the purpose of determining the collateral estoppel effect of

the state court judgment. See Richburg v. Baughman, 290 S.C.

431, 434, 351 S.E.2d 164, 166 (1986) (“One in privity is one

whose legal interests were litigated in the former proceeding.”).

All of the requirements established by the South Carolina

courts for the application of collateral estoppel have thus been

met. Accordingly, pursuant to 28 U.S.C. § 1738, this court must

grant full faith and credit to the final state court judgment. 6

We turn now to the effect that final judgment has on this

appeal. The South Carolina trial court held the Property “to be

the exclusive real property of [Anasti]” and granted Anasti title

to the Property. J.A. 64. The court’s findings of fact

supporting this judgment explain why the avoidance action must be

dismissed. The court stated:

It is undisputed that in 1978 Laura Corvi deeded the
Two Notch real property to Albert Anasti and his son
James Anasti as tenants in common with a right of
survivorship. . . . Future interest created by
tenancy in common with right of survivorship vest on
the death of the other party. Smith v. Cutler, 366
S.C. 546, 623 S.E.2d 644. Upon the death of Albert
Anasti the property passed immediately to his son,

6
Further, in affirming the bankruptcy court’s order granting
relief from the stay, we recognized the state court to be an
appropriate forum for the resolution of Lee’s state-law claims.
It would be incongruous for us to now hold that the state court
judgment, which reached finality because relief from the stay was
granted, is not binding on Lee and, resultingly, the bankruptcy
estate.

22
 Plaintiff Anasti, as tenant in common with right of
survivorship. Albert Anasti’s act of leaving the
property to his daughter did not destroy the tenancy
in common with right of survivorship. See Id.
(“Future interests created by a tenancy in common with
a right of survivorship are indestructible, i.e. not
subject to defeat by the unilateral act of one
cotenant”). Therefore, I find the Two Notch Road
property was not part of the probate estate of Albert
Anasti, but property of Plaintiff Anasti, when the
probate court made its ruling. J.A. 62.

The court went on to hold that “the probate court wrongfully

distributed property that did not belong to a decedent, and the

probate court’s ruling is void for lack of subject matter

jurisdiction.” Id. at 63. Thus, under the state court ruling,

Anasti’s sole ownership of the Property vested at the time of

Albert Anasti’s death in 1995.

Lee’s fourth cause of action was brought pursuant to 11

U.S.C. § 544(a), which provides that: “The trustee shall have . .

. the rights and powers of, or may avoid any transfer of property

of the debtor . . . that is voidable by . . . (3) a bona fide

purchaser of real property, other than fixtures, from the debtor,

against whom applicable law permits such transfer to be

perfected.” U.S.C. § 544(a). “Under section 544(a)(3) the

trustee has the right and power, as of the date of the

commencement of the case, to avoid any lien or transfer avoidable

by a hypothetical bona fide purchaser of real property of the

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debtor.” Anderson v. Conine (In re Robertson), 203 F.3d 855, 864

(5th Cir. 2000). We have previously noted that § 544 “confers on

the trustee no ‘greater rights than those accorded by the

applicable [state] law.’” Havee v. Belk, 775 F.2d 1209, 1219

(4th Cir. 1985) (citation omitted); see Anderson, 203 F.3d at 864

(“A hypothetical bona fide purchaser under section 544(a)(3) is a

purchaser who under state law could have conducted a title

search, paid value for the property and perfected his interest as

a legal title holder as of the date of the commencement of the

case.”).

Lee’s claim pursuant to § 544(a) is therefore subject to

dismissal because there was no transfer of the Property to Anasti

that Lee could seek to avoid. Instead, the state trial court

entered a judgment recognizing Anasti as the record owner and

finding that the probate court’s ruling in favor of Lee was void.

J.A. 63-64. Furthermore, the estate did not accede to any claim

to the Property as a hypothetical bona fide purchaser on the date

of the bankruptcy filing because, under state law as determined

by the South Carolina courts, Lee held no interest in the

Property on the date of filing. Id. at 62-64; see In re Houston,

409 B.R. 799, 807 (Bankr. D.S.C. 2009) (“Trustee acquired

whatever interest the Debtor possessed on the date of filing.”);

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In re Granada, Inc., 92 B.R. 501, 504 (Bankr. D. Utah 1988)

(“[T]he debtor’s interest in the property (or lack thereof) may

well limit the bona fide purchaser’s ‘rights and powers.’”).

Lee’s avoidance action thus fails to state a claim upon which

relief can be granted and must be dismissed.

b.

In dismissing the first, second, and third causes of action

in Lee’s complaint (the “state law claims”) the bankruptcy court

noted that it had “previously found in its [order granting relief

from the stay] that these issues should be conclusively

determined by the state appellate court and should not be

relitigated via this adversary proceeding.” J.A. 227. The court

cited “judicial economy” as a justification for its decision and

dismissed the complaint without prejudice, stating that “should

the state court find that [Lee] has an interest in the Property,

the automatic stay shall apply and the parties may return to this

[c]ourt.” Id.

In affirming the bankruptcy court’s order, the district

court stated that the bankruptcy court’s dismissal of the state-

law claims “appear[ed] to be based on 28 U.S.C. § 1334, which

allows a district court to abstain from hearing state-law claims

related to bankruptcy cases in the interest of justice, in the

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interest of comity, or out of respect for state law.” J.A. 216.

The district court upheld the bankruptcy court and dismissed the

case “[b]ecause state law predominates, the state-court action

has proceeded to the court of appeals, and the timing of the

bankruptcy action gives rise to an inference of forum shopping.”

J.A. 216-17. Although the district court did not specify which

subsection of § 1334 it applied, neither party disputes that it

applied § 1334(c)(1), which states: “[N]othing in this section

prevents a district court in the interest of justice, or in the

interest of comity with State courts or respect for State law,

from abstaining from hearing a particular proceeding arising

under title 11 or arising in or related to a case under title

11.”

We agree with the district court’s finding that the

bankruptcy court applied 28 U.S.C. § 1334(c). Furthermore, the

district court’s reference to the predominance of state-law, the

presence of a related proceeding in state court, and the

inference of forum shopping clearly invokes 28 U.S.C. §

1334(c)(1) and the factors courts have utilized in applying it.

See, e.g., New Eng. Power & Marine, Inc. v. Town of Tyngsborough

(In re Middlesex Power Equip. & Marine, Inc.), 292 F.3d 61, 69

(1st Cir. 2002) (noting that, in applying § 1334(c)(1), courts

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consider “the extent to which state law issues predominate over

bankruptcy issues; the presence of a related proceeding commenced

in state court or other nonbankruptcy court; and the likelihood

that the commencement of the proceeding in bankruptcy court

involves forum shopping by one of the parties”) (internal

quotation marks omitted). The ability of this court to review a

district court’s abstention decision made pursuant to 28 U.S.C. §

1334(c)(1) is limited by 28 U.S.C. § 1334(d), which provides:

Any decision to abstain or not to abstain made under
subsection (c) (other than a decision not to abstain in
a proceeding described in subsection (c)(2)) is not
reviewable by appeal or otherwise by the court of
appeals under section 158(d), 1291, or 1292 of this
title . . . or by the Supreme Court of the United
States under section 1254 of this title . . . .

28 U.S.C. § 1334(d).

“[T]he current version of section 1334(d) permits appellate

review only of refusals of mandatory abstention.” United States

(IRS) v. Paolo (In re Paolo), 619 F.3d 100, 103 n.3 (1st Cir.

2010); see also Baker v. Simpson, 613 F.3d 346, 352 (2d Cir.

2010) (“[D]ecisions on permissive abstention, which lie within

the discretion of the bankruptcy court, are not subject to review

by the court of appeals. We therefore lack jurisdiction to

decide whether the district court's decision on permissive

abstention was correct.”); Geruschat v. Ernst Young LLP (In re

Seven Fields Dev. Corp.), 505 F.3d 237, 249 (3d Cir. 2007)

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(“[A]ppeals of decisions involving permissive abstention, whether

or not the court abstains, are barred.”).

“We therefore lack jurisdiction to decide whether the

district court’s decision on permissive abstention was correct,”

Baker, 613 F.3d at 352, and dismiss Lee’s appeal to the extent it

asks us to review the district court’s decision to affirm the

bankruptcy court’s dismissal of the state-law claims based upon

18 U.S.C. § 1334(c). Accordingly, we affirm the dismissal of

Lee’s avoidance action brought pursuant to § 544(a), and we

dismiss Lee’s appeal of the district court’s order affirming the

bankruptcy court’s dismissal of the state-law claims based on

abstention under 28 U.S.C. § 1334(c)(1).

Conclusion

For the foregoing reasons, we affirm the district court’s

order affirming the bankruptcy court’s order granting relief

from the stay, we affirm the district court’s order affirming

the bankruptcy court’s dismissal of Lee’s avoidance action, and

we dismiss the appeal of the district court’s order affirming

the bankruptcy court’s decision to abstain from hearing the

state-law claims.

AFFIRMED IN PART;
DISMISSED IN PART

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