Casner v. Chase Manhattan Mortgage Corp. (In Re Casner)

302 B.R. 695, 2003 Bankr. LEXIS 1693
CourtUnited States Bankruptcy Court, E.D. California
DecidedDecember 16, 2003
Docket19-20600
StatusPublished
Cited by1 cases

This text of 302 B.R. 695 (Casner v. Chase Manhattan Mortgage Corp. (In Re Casner)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Casner v. Chase Manhattan Mortgage Corp. (In Re Casner), 302 B.R. 695, 2003 Bankr. LEXIS 1693 (Cal. 2003).

Opinion

MEMORANDUM DECISION

THOMAS C. HOLMAN, Bankruptcy Judge.

In this adversary proceeding, plaintiffs Donald and Regina Casner (the “Casners”) *696 seek a temporary injunction under 11 U.S.C. § 105(a) to prevent Defendant Chase Manhattan Mortgage Corporation (“Chase”) from foreclosing on their residence. Chase previously obtained an order modifying the automatic stay to allow the foreclosure. The Casners now want additional time to attempt to complete a refinancing that will pay Chase in full and also provide funds sufficient to pay in full all allowed claims in their Chapter 18 case.

Presently before the court is the Cas-ners’ motion for a preliminary injunction to restrain Chase’s foreclosure pending a determination on the merits of the complaint in this adversary proceeding. For the reasons stated in the balance of this Memorandum Decision, the court grants a preliminary injunction prohibiting foreclosure pending entry of judgment after trial on the complaint.

PROCEDURAL BACKGROUND

On June 19, 2008, the court entered an Order Granting Relief From Automatic Stay (the “Order Granting Relief From Stay”) in favor of Chase. The events leading up to that order are explained in the factual background below. Chase scheduled a foreclosure sale for August 8, 2003.

On July 25, 2003, the Casners filed an unverified “COMPLAINT FOR INJUNC-TIVE RELIEF, OR IN THE ALTERNATIVE REINSTATEMENT OF THE AUTOMATIC STAY” (the “Complaint”). The Complaint alleges, inter alia, that Chase is the holder of the first deed of trust on the Casners’ residence (the “Real Property”), that on May 21, 2003, the Cas-ners submitted an application to a mortgage broker, Equity Funding Co. (“EFC”), for a refinancing of the debts secured by the Real Property, that on June 19, 2003 the court entered an order granting Chase relief from the automatic stay to foreclose on the Real Property, that on or about June 24, 2003 EFC gave the Casners a “pre-approval” for a loan on the Real Property in the amount of $175,000, that on June 24, 2003 an escrow was opened at a title company for the refinancing, that on July 9, 2003 Chase submitted to escrow a payoff demand stating that the payoff balance on its loan was $148,260.94 through July 31, 2003, that the amount necessary to pay all allowed unsecured claims in the Casners’ Chapter 13 case in full is $13,711.00, that on July 18, 2003, Chase posted the Real Property with a Notice of Trustee’s Sale setting a sale date and time of August 8, 2003 at 2:00 p.m. and that EFC has obtained an opinion of value as part of the proposed refinancing indicating that the current fair market value of the Real Property is $240,000.00. 1 The Complaint prays for an injunction prohibiting Chase from foreclosing on the Real Property “for a reasonable period of time to allow the debtors to close the refinancing escrow and modify their Chapter 13 plan to pay off the obligation owed to CHASE in full, to provide for a 100% distribution to allowed unsecured claims and receive a discharge in bankruptcy,” or in the alternative, for an order reinstating the automatic stay.

On July 25, 2003, the Casners also filed an APPLICATION FOR TEMPORARY RESTRAINING ORDER AND MOTION FOR PRELIMINARY INJUNCTION (the “Application”). The Application recited facts similar to those in the Complaint. It requested a temporary restraining order until a hearing could be held on the motion for a preliminary injunction, a pre *697 liminary injunction “until trial may be had on the debtors’ complaint,” or in the alternative, a reinstatement of the automatic stay. The Application was accompanied by the declarations of Carl W. Collins, the Casners’ counsel (regarding his communications with counsel for Chase), Ron Find-lay, a Senior Loan Officer at EFC (regarding the refinancing application, the value of the Real Property and his expectation that the refinancing would close in approximately thirty days) and Regina E. Casner, one of the debtors (regarding the other facts alleged in the Complaint and Application).

On July 28, 2003 the court entered an order (the “Order Shortening Time”) denying the temporary restraining order (because no injury would occur prior to August 8, 2003) and setting a hearing on the preliminary injunction on August 6, 2003.

On August 4, 2003, Chase timely filed opposition to the request for preliminary injunction according to the terms of the Order Shortening Time. Chase argued that the request was improper because the Casners had not appealed the Order Granting Relief From Stay. It also argued that the preliminary injunction should be denied because the refinancing described in the Application was speculative.

After the hearing on August 6, 2003, in order to allow time for further consideration, the court issued a temporary restraining order, expiring at 5:01 p.m. on August 15, 2003. 2

FACTUAL BACKGROUND

The Casners’ request for injunctive relief arises in the bankruptcy case that they commenced by filing a petition under Chapter 13 of the Bankruptcy Code on January 22, 2001. At the time of the filing, Mr. Casner was a material handler/forklift operator employed for the previous twenty years by the Defense Logistic Agency of the United States Department of Defense in Tracy, California. Mrs. Cas-ner was a material handler/forklift operator employed for the previous fourteen years by the Defense Logistic Agency of the United States Department of Defense in French Camp, California. They had two dependent children, a sixteen year-old daughter and a twelve year-old son. They had combined monthly take-home pay of $4,274.54 and monthly living expenses of $3,974.56, including the then-existing monthly payment to Chase of $1,493.00.

The Casners timely filed a Chapter 13 plan. They subsequently filed an amended plan to cure the objection of a secured creditor other than Chase; the objection was withdrawn, no other objections were filed and the amended plan was confirmed by order entered May 24, 2001.

At the time of the bankruptcy filing, the Chase claim was at least eight months delinquent. 3 The confirmed plan required *698 the Casners to make all post-petition payments directly to Chase as they came due. Pre-petition arrearages were to be paid by the Chapter 13 trustee through the plan.

On April 14, 2001, Chrysler Financial Company, LLC (“Chrysler”) filed a motion for relief from automatic stay. Chrysler was the holder of a secured claim that was not in default when the case was filed. The confirmed plan required the Casners to make all post-petition payments directly to Chrysler as they came due. Chrysler’s motion for relief from automatic stay alleged that the Casners had defaulted under the confirmed plan by failing to make the March and April, 2001 post-petition direct payments to Chrysler. The Chrysler motion for relief from automatic stay was resolved by court-approved stipulation. The Casners agreed to make all future post-petition payments to Chrysler in a timely fashion and to pay an additional sum each month to cure the post-petition delinquency.

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302 B.R. 695, 2003 Bankr. LEXIS 1693, Counsel Stack Legal Research, https://law.counselstack.com/opinion/casner-v-chase-manhattan-mortgage-corp-in-re-casner-caeb-2003.