USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 1 of 8
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT ________________________
No. 20-11641 Non-Argument Calendar ________________________
D.C. Docket No. 2:19-cv-00073-LGW Bkcy. No. 2:19-bkc-20244-AJK
In re: MARVIN B. SMITH, III, SHARON H. SMITH,
Debtors.
__________________________________________________________________
MARVIN B. SMITH, III, SHARON H. SMITH,
Plaintiffs-Appellants,
HSBC BANK USA, HSBC BANK USA, N.A., HSBC BANK USA, NATIONAL ASSOCIATION, as Trustee for the Holders of BCAP LLC Trust 2006-AA2, PATRICK J. BURKE, Pres./CEO of HSBC Bank USA, N.A., USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 2 of 8
GEREMY GREGORY, Agent for Balch & Bingham LLP, et al.,
Defendants-Appellees.
________________________
Appeal from the United States District Court for the Southern District of Georgia ________________________
(March 18, 2021)
Before JILL PRYOR, LUCK, and EDMONDSON, Circuit Judges.
PER CURIAM:
Marvin and Sharon Smith, proceeding pro se, 1 appeal the district court’s
order affirming the bankruptcy court’s order denying the Smiths’ motion to enforce
a bankruptcy discharge injunction and to hold in contempt certain parties involved
in the foreclosure proceedings on the Smiths’ home. The Smiths sought a
contempt order against (1) HSBC Bank USA, HSBC Bank USA, N.A., and HSBC
Bank USA, National Association as Trustee for the Holders of BCAP LLC Trust
2006-AA2 (collectively “HSBC”); (2) an HSBC corporate officer; and (3) several
1 We construe liberally pro se pleadings. See Tannenbaum v. United States, 148 F.3d 1262, 1263 (11th Cir. 1998). 2 USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 3 of 8
lawyers, law firms, a realtor, and a realty company. No reversible error has been
shown; we affirm.
I. Background
Briefly stated, the Smiths seek to challenge the foreclosure and
dispossessory proceedings on their home in St. Simons Island, Georgia (the
“Property”). Given the complicated and lengthy procedural history underlying this
appeal, we will summarize the facts and proceedings only as necessary to provide
context for our decision.2
In 2007, the Smiths filed for bankruptcy seeking to discharge over $ 2
million in mortgage debt on the Property. On their bankruptcy petition, the Smiths
listed Countrywide Home Loans (“Countrywide”) as holding two secured claims
against the Property.
In 2008, Countrywide -- as servicing agent for HSBC -- moved for relief
from the automatic stay under 11 U.S.C. § 362(a). The bankruptcy court denied
the motion but entered a Consent Order modifying the automatic stay to allow the
bankruptcy trustee to market the Property for sale. If the Property remained unsold
2 A more thorough description of the underlying factual and procedural history is set forth in the district court’s decision. See Smith v. HSBC Bank, N.A., 616 B.R. 438 (S.D. Ga. 2020). 3 USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 4 of 8
as of 4 May 2009, the automatic stay would terminate without further hearing or
order and foreclosure proceedings could commence.
In July 2009, the bankruptcy court denied the Smiths’ motion to vacate the
Consent Order and stated that foreclosure on the Property could proceed. The
district court affirmed; we dismissed the Smiths’ appeal as frivolous.
In April 2012, the bankruptcy trustee abandoned the bankruptcy estate’s
interest in the Property. In January 2013, the bankruptcy trustee objected to a
proof of claim filed earlier by Countrywide (“Claim No. 10”) on grounds that the
mortgage loan on the Property was “secured by property either abandoned or not
administered by the Trustee and, therefore, [Countrywide] should look to its
collateral for satisfaction of the debt.” The bankruptcy court sustained the
objection and disallowed Claim No. 10.
HSBC foreclosed on the Property in May 2015. On 1 June 2016, the
bankruptcy court entered an order discharging the Smiths’ debt under Chapter 7.
The Smiths were evicted from the Property in August 2017.
In August 2018, the Smiths filed the motion at issue in this appeal: a motion
titled “Emergency Motion to Enforce Discharge Injunction and Motion for
Issuance of an Order to Respondents to Show Cause why they should not be Held
in Contempt” (“Contempt Motion”). The Smiths contended that -- by enforcing
4 USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 5 of 8
the lien and foreclosing on the Property -- HSBC and the lawyers, law firms, and
realtors involved in the foreclosure proceedings violated the bankruptcy court’s
discharge injunction under 11 U.S.C. § 524 and the bankruptcy court’s order
disallowing Claim No. 10.
The bankruptcy court denied the Contempt Motion. The bankruptcy court
concluded that the Chapter 7 discharge had no effect on the lien on the Property
and, thus, the foreclosure proceedings “had nothing to do with the Smiths or their
discharge.” The bankruptcy court also found no violation of the order disallowing
Claim No. 10. The district court affirmed.
II. Discussion3
We review de novo legal conclusions of both the bankruptcy court and the
district court. See Finova Cap. Corp. v. Larson Pharmacy, Inc. (In re Optical
Techs., Inc.), 425 F.3d 1294, 1299-1300 (11th Cir. 2005). We review for clear
error the bankruptcy court’s factual findings. See id. at 1300.
3 In their appellate brief, the Smiths reiterate arguments they have raised in other related civil actions about HSBC’s alleged violations of the automatic stay. Because these arguments were not raised below in connection with the Smiths’ Contempt Motion, the arguments are not properly before us in this appeal. 5 USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 6 of 8
A. Discharge Injunction
A Chapter 7 discharge “operates as an injunction against the commencement
or continuation of an action, the employment of process, or an act, to collect,
recover or offset any such debt as a personal liability of the debtor.” 11 U.S.C.
§ 524(a)(2). The Supreme Court has said that -- while a Chapter 7 discharge
extinguishes the personal liability of the debtor -- it does not extinguish a creditor’s
right to foreclose on a valid mortgage on the debtor’s property. See Johnson v.
Home State Bank, 501 U.S. 78, 83 (1991). Instead, “a creditor’s right to foreclose
on the mortgage survives or passes through the bankruptcy.” Id.
Under the Bankruptcy Code, the Smiths’ Chapter 7 discharge had no impact
on the validity or enforceability of HSBC’s lien against the Property. HSBC thus
retained the right to foreclose. The bankruptcy court concluded correctly that the
complained-of acts taken by HSBC and others to foreclose, evict, or to sell the
Property constituted no violation of the Smiths’ Chapter 7 discharge injunction.
6 USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 7 of 8
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USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 1 of 8
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT ________________________
No. 20-11641 Non-Argument Calendar ________________________
D.C. Docket No. 2:19-cv-00073-LGW Bkcy. No. 2:19-bkc-20244-AJK
In re: MARVIN B. SMITH, III, SHARON H. SMITH,
Debtors.
__________________________________________________________________
MARVIN B. SMITH, III, SHARON H. SMITH,
Plaintiffs-Appellants,
HSBC BANK USA, HSBC BANK USA, N.A., HSBC BANK USA, NATIONAL ASSOCIATION, as Trustee for the Holders of BCAP LLC Trust 2006-AA2, PATRICK J. BURKE, Pres./CEO of HSBC Bank USA, N.A., USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 2 of 8
GEREMY GREGORY, Agent for Balch & Bingham LLP, et al.,
Defendants-Appellees.
________________________
Appeal from the United States District Court for the Southern District of Georgia ________________________
(March 18, 2021)
Before JILL PRYOR, LUCK, and EDMONDSON, Circuit Judges.
PER CURIAM:
Marvin and Sharon Smith, proceeding pro se, 1 appeal the district court’s
order affirming the bankruptcy court’s order denying the Smiths’ motion to enforce
a bankruptcy discharge injunction and to hold in contempt certain parties involved
in the foreclosure proceedings on the Smiths’ home. The Smiths sought a
contempt order against (1) HSBC Bank USA, HSBC Bank USA, N.A., and HSBC
Bank USA, National Association as Trustee for the Holders of BCAP LLC Trust
2006-AA2 (collectively “HSBC”); (2) an HSBC corporate officer; and (3) several
1 We construe liberally pro se pleadings. See Tannenbaum v. United States, 148 F.3d 1262, 1263 (11th Cir. 1998). 2 USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 3 of 8
lawyers, law firms, a realtor, and a realty company. No reversible error has been
shown; we affirm.
I. Background
Briefly stated, the Smiths seek to challenge the foreclosure and
dispossessory proceedings on their home in St. Simons Island, Georgia (the
“Property”). Given the complicated and lengthy procedural history underlying this
appeal, we will summarize the facts and proceedings only as necessary to provide
context for our decision.2
In 2007, the Smiths filed for bankruptcy seeking to discharge over $ 2
million in mortgage debt on the Property. On their bankruptcy petition, the Smiths
listed Countrywide Home Loans (“Countrywide”) as holding two secured claims
against the Property.
In 2008, Countrywide -- as servicing agent for HSBC -- moved for relief
from the automatic stay under 11 U.S.C. § 362(a). The bankruptcy court denied
the motion but entered a Consent Order modifying the automatic stay to allow the
bankruptcy trustee to market the Property for sale. If the Property remained unsold
2 A more thorough description of the underlying factual and procedural history is set forth in the district court’s decision. See Smith v. HSBC Bank, N.A., 616 B.R. 438 (S.D. Ga. 2020). 3 USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 4 of 8
as of 4 May 2009, the automatic stay would terminate without further hearing or
order and foreclosure proceedings could commence.
In July 2009, the bankruptcy court denied the Smiths’ motion to vacate the
Consent Order and stated that foreclosure on the Property could proceed. The
district court affirmed; we dismissed the Smiths’ appeal as frivolous.
In April 2012, the bankruptcy trustee abandoned the bankruptcy estate’s
interest in the Property. In January 2013, the bankruptcy trustee objected to a
proof of claim filed earlier by Countrywide (“Claim No. 10”) on grounds that the
mortgage loan on the Property was “secured by property either abandoned or not
administered by the Trustee and, therefore, [Countrywide] should look to its
collateral for satisfaction of the debt.” The bankruptcy court sustained the
objection and disallowed Claim No. 10.
HSBC foreclosed on the Property in May 2015. On 1 June 2016, the
bankruptcy court entered an order discharging the Smiths’ debt under Chapter 7.
The Smiths were evicted from the Property in August 2017.
In August 2018, the Smiths filed the motion at issue in this appeal: a motion
titled “Emergency Motion to Enforce Discharge Injunction and Motion for
Issuance of an Order to Respondents to Show Cause why they should not be Held
in Contempt” (“Contempt Motion”). The Smiths contended that -- by enforcing
4 USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 5 of 8
the lien and foreclosing on the Property -- HSBC and the lawyers, law firms, and
realtors involved in the foreclosure proceedings violated the bankruptcy court’s
discharge injunction under 11 U.S.C. § 524 and the bankruptcy court’s order
disallowing Claim No. 10.
The bankruptcy court denied the Contempt Motion. The bankruptcy court
concluded that the Chapter 7 discharge had no effect on the lien on the Property
and, thus, the foreclosure proceedings “had nothing to do with the Smiths or their
discharge.” The bankruptcy court also found no violation of the order disallowing
Claim No. 10. The district court affirmed.
II. Discussion3
We review de novo legal conclusions of both the bankruptcy court and the
district court. See Finova Cap. Corp. v. Larson Pharmacy, Inc. (In re Optical
Techs., Inc.), 425 F.3d 1294, 1299-1300 (11th Cir. 2005). We review for clear
error the bankruptcy court’s factual findings. See id. at 1300.
3 In their appellate brief, the Smiths reiterate arguments they have raised in other related civil actions about HSBC’s alleged violations of the automatic stay. Because these arguments were not raised below in connection with the Smiths’ Contempt Motion, the arguments are not properly before us in this appeal. 5 USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 6 of 8
A. Discharge Injunction
A Chapter 7 discharge “operates as an injunction against the commencement
or continuation of an action, the employment of process, or an act, to collect,
recover or offset any such debt as a personal liability of the debtor.” 11 U.S.C.
§ 524(a)(2). The Supreme Court has said that -- while a Chapter 7 discharge
extinguishes the personal liability of the debtor -- it does not extinguish a creditor’s
right to foreclose on a valid mortgage on the debtor’s property. See Johnson v.
Home State Bank, 501 U.S. 78, 83 (1991). Instead, “a creditor’s right to foreclose
on the mortgage survives or passes through the bankruptcy.” Id.
Under the Bankruptcy Code, the Smiths’ Chapter 7 discharge had no impact
on the validity or enforceability of HSBC’s lien against the Property. HSBC thus
retained the right to foreclose. The bankruptcy court concluded correctly that the
complained-of acts taken by HSBC and others to foreclose, evict, or to sell the
Property constituted no violation of the Smiths’ Chapter 7 discharge injunction.
6 USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 7 of 8
B. Disallowance of Claim No. 10
The bankruptcy court also concluded correctly that the validity of HSBC’s
lien against the Property was unaffected by the disallowance of Claim No. 10. The
record demonstrates that the bankruptcy trustee sought to disallow Claim No. 10
because the trustee had earlier abandoned the Property and the Property was thus
no longer part of the bankruptcy estate. Never did the bankruptcy trustee challenge
the validity or enforceability of the lien on the Property. To the contrary, the
bankruptcy trustee said expressly that HSBC “should look to its collateral for
satisfaction of the debt.” By sustaining the trustee’s objection and disallowing
Claim No. 10, the bankruptcy court disallowed only HSBC’s claim to an interest in
the bankruptcy estate. The bankruptcy court made no merits determination about
the validity or enforceability of HSBC’s lien on the Property.
We reject the Smiths’ contention that the disallowance of a claim under the
circumstances presented in this case operates to void automatically an otherwise
valid lien under 11 U.S.C. § 506(d). We cannot conclude that the bankruptcy court
erred in finding no violation of the disallowance order.
7 USCA11 Case: 20-11641 Date Filed: 03/18/2021 Page: 8 of 8
C. Constitutional Due Process
On appeal, the Smiths contend they were denied their due process rights
when the bankruptcy court ruled on their Contempt Motion without an evidentiary
hearing. This argument is without merit. Generally speaking, due process rights
are attributed to the party against whom contempt sanctions are sought. See
Mercer v. Mitchell, 908 F.2d 763, 766-67 (11th Cir. 1990). We have found no
binding precedent requiring these same due process protections for the party
seeking the issuance of a contempt order.
The Smiths also contend that adverse rulings by the bankruptcy court and
the district court denied the Smiths their due process right to object to the real party
in interest. We reject these conclusory arguments. That Plaintiffs are dissatisfied
with the outcome of the proceedings establishes no constitutional violation.
AFFIRMED.