Hakeem Lowry owned a home in Southfield, Michigan and fell behind on his property taxes. His home was forfeited and foreclosed for unpaid taxes in 2017. The city exercised its right of first refusal and bought the property for the outstanding taxes, substantially below the fair market value. Mr. Lowry filed a Chapter 13 case in 2018 and in an adversary proceeding attacking the sale argued that the tax foreclosure can be set aside as a fraudulent transfer under 11 USC 548 because the foreclosure proceeding did not result in “reasonably equivalent value.” The proceeding was dismissed under the Rooker-Feldman doctrine and Mr. Lowry appealed.
After first considering and rejecting the Rooker-Feldman doctrine as grounds for dismissal, the court held that because the tax foreclosure process focused on the amount of the taxes and not the value of the property, it may run afoult of Section 458. The court remanded to the bankruptcy court for development and consideration of additional arguments not addressed below, including whether 11 USC 1322 allows the debtor to pay the taxes through his Chapter 13 plan.