Billy and Candace Schoppe v. Deutsche Bank National Trust Company

Opinion

Order entered November 5, 2013

In The Court of Appeals Fifth District of Texas at Dallas No. 05-12-00595-CV

BILLY SCHOPPE AND CANDACE SCHOPPE, Appellants

V.

DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE FOR MORGAN STANLEY LOAN TRUST 2005-7 AND WELLS FARGO BANK, N.A., Appellees

On Appeal from the 192nd Judicial District Court Dallas County, Texas Trial Court Cause No. DC-09-10731

ORDER Before the Court is appellants Billy Schoppe and Candance Schoppe’s October 9, 2013

document entitled “Appellants’ Filing of Order Confirming Chapter 13 Plan” (appellants’ filing),

Billy Schoppe’s October 17, 2013 notice of bankruptcy filing, and appellees’ Deutsche Bank

National Trust Company as Trustee for Morgan Stanley Loan Trust 2005-7 and Wells Fargo

Bank, N.A., October 25, 2013 response to the Schoppes’ filing of the order confirming a Chapter

13 plan.

The record reflects the final judgment was signed by the trial judge on April 26, 2012.

The notice of appeal was filed on May 4, 2012. The clerk’s record was filed on June 26, 2012.

The Schoppes’ brief was filed on July 26, 2012. Wells Fargo filed its brief on September 26,

1 2012 and Deutsche Bank filed its brief on November 1, 2012. In addition, the parties have filed

motions seeking extensions of time, on which this Court ruled, and a supplemental clerk’s record

was filed.

This Court heard oral argument of this appeal on October 8, 2013. During rebuttal at the

oral argument, counsel for the Schoppes represented to and advised this Court, for the first time,

that Billy Schoppe had filed for Chapter 13 bankruptcy after the final judgment in this case was

signed. Counsel for the Schoppes also represented that a Chapter 13 plan was confirmed while

this appeal was pending, the plan addressed the status of this case, including the Schoppes

obligations to Deutsche Bank and Wells Fargo, and the confirmed plan granted relief from the

automatic stay permitting this appeal to proceed. In response to inquiry by this Court, counsel

for the Schoppes represented there had been no notice of the bankruptcy sent to this Court prior

to this statement at oral submission. In addition, counsel for Deutsche Bank and Wells Fargo

stated they had no personal knowledge of the bankruptcy proceedings.

On October 9, 2013, the Schoppes filed appellants’ filing. Attached to appellants’ filing

was a certified copy of the order confirming the Chapter 13 plan. The Schoppes directed this

Court to the following language in the certified plan to support their claim that this appeal may

proceed:

The Debtor is currently in litigation with the lender secured by his home. Notwithstanding any other provision of this plan, and because of this dispute, this plan does not propose that the Debtor make monthly direct payments to Deutsche Bank/Americas Servicing during the pendency of the litigation.

The Schoppes also argued in appellants’ filing, in the alternative, that the automatic stay does not

apply to this appeal because it does not reach causes of action prosecuted by a borrower pursuant

to In re U.S. Abatement, 39 F.3d 563, 568 (5th Cir. 1994).

2 On October 16, 2013, this Court noted that appellants’ filing and the attached confirmed

plan did not satisfy the notice requirement of Texas Rule of Appellate Procedure 8.1 and the

quoted language in the confirmed plan did not contain a clear statement indicating that “the

bankruptcy court has lifted or terminated the stay.” See TEX. R. APP. P. 8.1, 8.3. As a result, this

Court ordered the Schoppes to file a notice of bankruptcy in compliance with Texas Rule of

Appellate Procedure 8.1. Also, this Court ordered Deutsche Bank and Wells Fargo to file a

response to appellants’ filing.

On October 17, 2013, in compliance with this Court’s order, Billy Schoppe filed his

notice of bankruptcy. The bankruptcy proceeding is styled “In re Billy Wayland Schoppe, ” case

no. 12-41768, and is before the United States Bankruptcy Court for the Eastern District of Texas,

Sherman Division. Billy Schoppe’s petition for Chapter 13 bankruptcy was filed on July 2,

2012. Only the notice of appeal, docketing statement, and clerk’s record were filed before Billy

Schoppe filed his petition for Chapter 13 bankruptcy.

On October 25, 2013, Deutsche Bank and Wells Fargo filed their response to appellants’

filing of the order confirming the Chapter 13 plan. In that response, they argue the automatic

stay is measured by the posture of the parties at trial and applies to this case because Billy

Schoppe has appealed Deutsche Bank’s judgment on its counterclaim. They request this Court

to require Billy Schoppe to obtain relief from the automatic bankruptcy stay before this appeal

proceeds further.

This Court is concerned that counsel for the Schoppes, long after the notice of appeal was

filed, notified this Court for the first time at oral submission that a bankruptcy proceeding had

been filed by Billy Schoppe. The failure of counsel for the Schoppes to timely notify this Court

of the bankruptcy proceeding has resulted in the waste of valuable time of the litigants and this

3 Court. At this time, this Court RESERVES consideration of counsel for the Schoppes’ action in

failing to follow the law and rules as to timely notification of the bankruptcy and the effect on

the parties, this case, and this Court.

This Court REMOVES this case from submission.

Pursuant to 11 U.S.C. § 362, further action in this cause is automatically stayed. See

TEX. R. APP. P. 8.2. Accordingly, for administrative purposes, this cause is ABATED and will

be treated as a closed case. It may be reinstated on prompt motion by any party showing that the

stay has been lifted and specifying what further action, if any, is required from this Court. See

TEX. R. APP. P. 8.3.

/s/ DOUGLAS S. LANG JUSTICE