Harker v. PNC Mortgage Company (In re Oakes)

(6th Cir. B.A.P. Feb. 6, 2018)

The Sixth Circuit B.A.P. affirms the bankruptcy court’s order denying the mortgage holder’s motion for judgment on the pleading in this mortgage avoidance action. The creditor argued that recently-enacted Ohio statutes provide that the bankruptcy trustee, as a hypothetical judicial lien creditor, cannot avoid the mortgage, which was improperly executed and recorded. The B.A.P. holds that, pursuant to Ohio law at the time the case was filed, the trustee takes priority over the creditor’s defective mortgage. Opinion below.

Judge: Opperman

Attorneys for Trustee: Donald F. Harker, III; Rieser & Marx, Dianne F. Marx, John Paul Rieser

Attorneys for Creditor: Plunkett Cooney, Amelia A. Bower

2018-02-06 – in re oakes

Author: Matt Lindblom

In re Pace

(B.A.P. 6th Cir. June 20, 2017)

The Sixth Circuit B.A.P. holds that 11 U.S.C. § 522(f)(2)(C) does not preclude avoidance of mortgage deficiency judgment liens. Rather, based on the plain meaning of the statute, that section simply makes clear that entry of a judgment in a foreclosure action does not convert the underlying mortgage agreement into a judicial lien that may be avoided. Here, the bankruptcy court denied the debtor’s motion to avoid a deficiency judgment lien following a real property foreclosure action, stating that § 522(f)(2)(C) bars avoidance of a foreclosure deficiency judgment lien. The B.A.P. analyzes conflicting case law from multiple jurisdictions and reverses the bankruptcy court.

Judge: Wise

Attorney for Debtor: T. Robert Bricker

Author: Matt Lindblom

2017-06-20 – in re pace

Security Seed and Chemical, Inc. v. French (In re French)

(Bankr. W.D. Ky. Dec. 1, 2016)

Following trial, the bankruptcy court excepts from discharge a debt arising from a loan, but holds the plaintiff failed to meet its burden with respect to other debts. The court also finds that a lien was not created where there was no proof of an actual levy, but a seperate judgment lien is held valid. The court denies the debtor’s motion to avoid the lien. Opinion below.

Judge: Stout

Attorneys for Plaintiff: Thomas, Arvin & Adams, James G. Adams, III, David E. Arvin

Attorneys for Defendant: King, Deep & Branaman, Harry L. Mathison

2016-12-01-in-re-french

Author: Matt Lindblom

Nelson v. Fifth Third Bank (In re Brunsman)

(6th Cir. B.A.P. June 1, 2016)

The Sixth Circuit B.A.P. reverses the bankruptcy court’s sua sponte granting of summary judgment in favor of the trustee. The trustee brought the action to avoid the appellants’  liens in the debtor’s aircraft. The bankruptcy court abused its discretion in granting summary judgment because its decision was not based on undisputed facts. Instead, the bankruptcy court based its decision on assumptions derived from the appellants’ inability to produce sufficient documentation. Opinion below.

Judge: Harrison

Attorneys for Appellee: Cohen, Todd, Kite & Stanford, Donald W. Mallory, Richard Dunbar Nelson

Attorneys for Appellants: Staatman, Harris, & Eyrich, William Brokate Fecher, Alan Joel Statman; Eileen Kay Field, Albert T. Brown, Jr.

2016-06-01 – in re brunsman

Author: Matt Lindblom

First National Bank of Manchester v. Elza

(E.D. Ky. Aug. 21, 2015)

The district court affirms the bankruptcy court’s order avoiding the mortgage foreclosure deficiency judgment liens on the debtor’s residence. The creditor had obtained a deficiency judgment following foreclosure of its mortgage lien and filed a judgment lien for the deficiency, which encumbered the debtors’ residence. The debtors moved to avoid the lien under 11 U.S.C. § 522(f) and the bankruptcy court granted the motion. The creditor appealed, arguing that § 522(f)(2)(C), which provides that judgments arising out of mortgage foreclosures are not avoidable, applied to the deficiency judgment lien. The court recognizes the split in authority on the issue, but ultimately concludes that § 522(f)(2)(C) merely provides that judgments in foreclosure actions (i.e. sale orders enforcing the mortgage lien) cannot be avoided such that the mortgage lien is avoided. The section does not apply to deficiency judgment liens. Opinion below.

2015-08-21 – first national bank v elza

Author: Matt Lindblom

Jernigan v. Household Finance Corporation II (In re Jernigan)

(Bankr. W.D. Ky. July 22, 2015)

The bankruptcy court grants summary judgment in favor of the mortgage holder. The debtor commenced the adversary complaint seeking to avoid the creditor’s mortgage lien. The debtor argued that, because the note and mortgage had been assigned, the note and mortgage had been separated and thus the mortgage was no longer valid. The court reviewed the evidence and concludes otherwise. Opinion below.

2015-07-22 – in re jernigan

Author: Matt Lindblom

Bank of America, N.A. v. Caulkett

(U.S. Sup. Ct. June 1, 2015)

The Supreme Court holds that a Chapter 7 debtor may not void a junior mortgage lien when the senior lien exceeds the value of the collateral. The Court recognizes that 11 U.S.C. § 506(a)(1) provides that an allowed claim is only a secured claim to the extent of the value of such creditor’s interest in the collateral. Section 506(d) provides that to the extent a lien secures a claim that is not an allowed secured claim, it is void. The Court suggests that the Code could be interpreted such that § 506(d) would allow the voiding of the junior mortgage lien, if not for the Court’s prior decision in Dewsnup v. Timm, 502 U.S. 410 (1992). There, the Court held that for purposes of § 506(d) a claim is a secured claim regardless of whether the collateral value is less than the lien amount. Thus, Dewsnup controls here and the debtors are not permitted to void the junior mortgages. Opinion below.

2015-06-01 – bank of america v caulkett

Author: Matt Lindblom

Rogan v. JPMorgan Chase Bank, N.A. (In re Engle)

(Bankr. E.D. Ky. Jan. 14, 2015)

The bankruptcy court grants summary judgment in favor of the mortgagees in this avoidance action. The debtor had executed a special power of attorney, with the intent of giving another individual the authority to purchase and grant mortgages on real property. The power of attorney was recorded and contained ambiguous language as to the extent of authority granted. The mortgages were properly recorded. The trustee sought to avoid the mortgages, arguing that the power of attorney did not grant the authority necessary to execute the mortgages. The court rejects the trustee’s argument. Because the mortgages were properly recorded, they provided the requisite notice. A non-party cannot raise the question of authority of an attorney-in-fact when the parties relying on the power have not made authority an issue. Opinion below.

2015-01-14 – rogan v chase

Author: Matt Lindblom

Robinson v. Manufactured Housing Contract Senior/Subordinate Pass Through Certificate Trust 1999-5 (In re Robinson)

(Bankr. W.D. Ky. Dec. 17, 2014)

The bankruptcy court dismisses the lien avoidance action for lack of jurisdiction. The defendant obtained an order abandoning the trustee’s interest in and granting stay relief with respect to the debtors’ manufactured home on which the defendant claimed a lien. The debtors then filed the adversary proceeding, seeking to avoid the lien for failure to properly perfect the lien, and filed a motion to reconsider the court’s order granting stay relief. The court granted the motion to reconsider, leaving the stay in place pending further orders of the court. The defendant moved to dismiss the adversary proceeding, arguing the debtors did not have standing to pursue the avoidance action. The court granted the motion, but did so on the basis that it had ordered the trustee’s interest in the property abandoned. Thus, because the property was abandoned and no longer property of the estate, the court had no jurisdiction over it. Opinion below.

2014-12-17 – robinson v manufactured housing contract

Johnson v. Santander Consumer USA, Inc. (In re Bryant)

(Bankr. W.D. Ky. Dec. 8, 2014)

The bankruptcy court grants summary judgment in favor of the secured lender in this lien avoidance action. The lender’s lien was properly notated on the original vehicle title. The debtor then applied for a duplicate title, which listed “Santander Consumer,” rather than the lender’s full name, as a second lienholder. The new title incorrectly listed a bank as a first lienholder (there was no other lienholder). The original title was surrendered and then destroyed. The trustee sought to avoid the lien based on failure to perfect the lien. The court holds that the erroneous listing of the first lienholder only means that the lender’s lien was deemed the first lien. Further, the court holds that the shortened name was not seriously misleading, as the address and other information were accurate and would have led to the correct lienholder. Opinion below.

2014-12-08 – johnson v santander consumer