In re Guerra

544 B.R. 707, 26 Fla. L. Weekly Fed. B 107, 2016 Bankr. LEXIS 308, 2016 WL 350849
CourtUnited States Bankruptcy Court, M.D. Florida
DecidedJanuary 28, 2016
DocketCase No. 8:11-bk-15663-MGW
StatusPublished
Cited by8 cases

This text of 544 B.R. 707 (In re Guerra) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Guerra, 544 B.R. 707, 26 Fla. L. Weekly Fed. B 107, 2016 Bankr. LEXIS 308, 2016 WL 350849 (Fla. 2016).

Opinion

MEMORANDUM OPINION AND ORDER ON DEUTSCHE BANK’S MOTION TO REOPEN BANKRUPTCY CASE AND COMPEL SURRENDER

Michael G. Williamson, Chief United States Bankruptcy Judge

When the Debtor filed this case, she indicated an intent to surrender her home [708]*708to her secured creditor. Three years later, the Debtor actively defended the creditor’s foreclosure action and succeeded in getting the case dismissed. This Court must now decide whether it should reopen this case and revoke the Debtor’s discharge — or compel her to withdraw her defense of the secured creditor’s foreclosure action — based on her statement of intention.

Under the facts of this case, the Court declines to reopen this case and grant the relief the secured creditor seeks. The secured creditor is correct that the Court can revoke a debtor’s discharge or compel a debtor to withdraw her defense to a state court foreclosure for perpetrating a fraud on the Court. But given the lapse in time between the time the Debtor obtained her discharge and the time she opposed the secured creditor’s foreclosure action, the Court cannot conclude the Debtor never intended to surrender her home. The Court concludes it should be left to the state court to determine whether the Debtor, based on her contradictory positions, is judicially estopped from defending the state court foreclosure action. Accordingly, the Court will deny the secured creditor’s motion to reopen this case.

BACKGROUND

The Debtor owns real property located at 402 13th Street NE, Ruskin, Florida.1 That property was encumbered by a mortgage in favor of BAC Home Loans. When the Debtor filed for chapter 7 bankruptcy in 2011, she listed the property on Schedule A and the debt owed to BAC Home Loans on Schedule D.2 In her Statement .of Intentions, the Debtor indicated that she would be surrendering the property to BAC Home Loans.3

On December 6, 2011, the Debtor received her chapter 7 discharge.4 ' Two-and-a-half years later, Deutsche Bank (BAC Home Loans’ successor-in-interest) sued to foreclose its mortgage on the Debtor’s property.5 The Debtor opposed the foreclosure action by filing various defensive motions and was ultimately able to get it dismissed on summary judgment.6 Now the Debtor is seeking fees and costs against the Bank in the foreclosure action.7 The Bank says that the Debtor’s efforts— successful as it turns out — to oppose its foreclosure action after she has received her chapter 7 discharge is contrary to her stated intent to surrender the property.

So the Bank now asks the Court to reopen- this bankruptcy case and revoke the Debtor’s discharge.8 According to the Bank, the Court may vacate a debtor’s discharge if it was obtained through a fraud on the court.9 Here, the Bank contends the debtor’s discharge was entered based, in part, on her intent to surrender her property. By opposing the Bank’s state court foreclosure action, the Debtor, in the Bank’s view, effectively violated her oath to — and perpetrated a fraud on — this Court.

CONCLUSIONS OF LAW

This Court addressed a similar issue in In re Metzler, where the Court consolidat[709]*709ed two cases (one a chapter 7 and the other a chapter 13) to consider how a debtor surrenders real property in bank-' ruptcy.10 There, like here, the debtors contested state court foreclosure actions after indicating in their statements of intention that they would be surrendering their homes.11 This Court observed that “surrender” must mean something.12 The Court concluded that the term, in the context of §§ 521 and 1325, “means that a debtor must relinquish secured property and make it available to the secured creditor by refraining from taking any overt act that impedes a secured creditor’s ability to foreclose its interest in secured property.” 13 Because the debtors in Metzler had taken overt acts to oppose state court foreclosure actions pending at the same time the debtors were actively prosecuting their cases in this Court, the Court determined the debtors had failed to “surrender” their property within the meaning of §§ 521 and 1325. The Court required the debtors in Metzler to advise the state court they no longer opposed the foreclosure or withdraw any paper that opposed it.

At first glance, the Court’s decision in Metzler would appear to dictate the outcome here. After all, in this case and in Metzler, the debtors have taken overt acts to impede a secured creditor’s ability to foreclose its interest in property after indicating an intent to surrender it. And in Metzler, the Court granted the precise alternative relief the Bank seeks here — i.e., require the Debtor to stop opposing the state court foreclosure. The Bank’s other request for relief is for the Court to revoke the Debtor’s discharge. Metzler, however, is distinguishable from this case in one crucial respect.

In Metzler, the efforts to impede the state court foreclosure took place immediately or soon after the debtors received their chapter- 7 discharge or the Court confirmed their chapter 13 plan. In fact, foreclosure actions had been filed against both debtors in Metzler before they sought bankruptcy relief. And the efforts to oppose summary judgment took place within two months in the case of one debtor and nine months in the case of the other. What went unstated in Metzler, but was the rationale behind the Court’s decision, was that the short time between the time the debtors received the relief they sought in bankruptcy, on the one hand, and opposed foreclosure contrary to their statement of intentions, on the other hand, led the Court to infer the debtors had no intention of surrendering their property— i.e., they had misled this Court.

The same is not true here. For one thing, the Bank did not even file its foreclosure action until more than two years after the Debtor received her discharge. The record is unclear why the Bank waited so long to foreclose its mortgage. But what is clear is that it was not until nearly three years after she received her chapter 7 discharge that the Debtor first took some affirmative action to impede the Bank’s foreclosure efforts. And then the Bank waited another year before seeking to reopen this case. Judge Olson confronted similar facts in In re Kourogenis.14

In Kourogenis, the lender waited more than five years after the debtor received her discharge and her case was closed before it sought to reopen her case and [710]*710obtain an order barring the debtor from contesting its foreclosure action.15 The basis of the lender’s motion in Kourogenis was the same as the Bank’s motion here— i.e., the debtor had contested a foreclosure action after indicating an intent to surrender her property. It is unclear whether the foreclosui’e action in Kourogenis had been filed before the bankruptcy or how long it was after the debtor received her discharge before she contested the foreclosure action. In any event, Judge Olson concluded that the defense of laches barred the mortgage lender from reopening the case.16

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Cite This Page — Counsel Stack

Bluebook (online)
544 B.R. 707, 26 Fla. L. Weekly Fed. B 107, 2016 Bankr. LEXIS 308, 2016 WL 350849, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-guerra-flmb-2016.