Robinson v. Olin Federal Credit Union

48 B.R. 732, 1984 U.S. Dist. LEXIS 22955
CourtDistrict Court, D. Connecticut
DecidedOctober 5, 1984
DocketMisc. Civ. B-83-90
StatusPublished
Cited by5 cases

This text of 48 B.R. 732 (Robinson v. Olin Federal Credit Union) is published on Counsel Stack Legal Research, covering District Court, D. Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Robinson v. Olin Federal Credit Union, 48 B.R. 732, 1984 U.S. Dist. LEXIS 22955 (D. Conn. 1984).

Opinion

RULING ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

ELLEN B. BURNS, District Judge.

This case is an adversary proceeding stemming from the Chapter 13 bankruptcy petition of plaintiff Carolyn Robinson (“Robinson”). Robinson filed an objection to defendant, Olin Federal Credit Union’s (“Olin”) proof of secured claim on February 17, 1983. This objection was referred to Bankruptcy Judge Alan Shiff of this district pursuant to sections (c)(1) and (h) of the Emergency Resolution for the Administration of the Bankruptcy System in the District of Connecticut, dated December 22, *735 1982 (the “Emergency Resolution”). Robinson then moved this court to withdraw the reference of this matter pursuant to section (c)(2) of the Emergency Resolution. On November 29, 1983, Robinson's motion to withdraw reference was granted and this proceeding was entered and docketed in the district court.

Robinson basically makes two claims in her objection to Olin’s proof of secured claim. She first asserts that Olin’s secured claim was disallowed in an earlier bankruptcy proceeding and its lien is therefore void under § 506(d) of the Bankruptcy Code, 11 U.S.C. § 506(d). She also asserts that Olin committed violations of the Connecticut Truth-In-Lending Act, Conn.Gen. Stat. § 36-393 et seq., (“Connecticut TIL”) and the federal Truth-In-Lending Act, 15 U.S.C. § 1601 et seq., (“Federal TIL”) Robinson claims that Olin’s alleged violations of the Connecticut and Federal TILs give rise to a setoff against any claim asserted by Olin in the Chapter 13 case and an affirmative right to attorney’s fees. Robinson has moved for summary judgment on her objection to Olin’s secured claim.

FACTS:

On October 20, 1978, Robinson borrowed $7,939.00 from Olin at an annual interest rate of 9%, to be repaid in 48 equal installments. This loan was evidenced by a promissory note, a copy of which is appended to Robinson’s Motion for Summary Judgment as Exhibit A. As collateral for this loan, Robinson executed a security agreement with Olin, pledging her 1979 Buick Regal as collateral (attached as Exhibit B of Robinson’s Motion for Summary Judgment). On February 7, 1981, Robinson filed a Chapter 7 bankruptcy petition with the Bankruptcy Court in Bridgeport, Connecticut. The debt to Olin was scheduled as a secured claim and the Buick Regal was claimed as exempt property up to the $1,200 permitted by 11 U.S.C. § 522(d)(2).

On March 5, 1981, Olin filed a complaint to reclaim property in the Chapter 7 case in an attempt to obtain possession of the Buick Regal. (Adv.Pro. 5-81-0084) On March 18, Robinson filed a motion to dismiss Olin’s complaint. On April 29, Olin filed a new complaint for relief from automatic stay requesting that the stay under 11 U.S.C. § 362(a) be lifted and seeking an order directing Robinson to surrender the automobile to Olin. (Adv.Pro. 5-81-0155). Robinson counterclaimed, requesting that a determination of the amount of Olin’s allowed secured claim be made pursuant to 11 U.S.C. § 506.

On April 30, 1981, Daniel Meister, the trustee in bankruptcy, sent a letter to the Bankruptcy Court expressing his opinion that the debtor’s estate had no equity in the Buick Regal in light of Olin’s security interest and Robinson’s claim of exemption. He stated that he had no objection to judgment being entered for Olin.

Shortly before her discharge in bankruptcy, Robinson moved for a continuation of the automatic stay pending resolution of Olin’s claim and Robinson’s counterclaim. The Bankruptcy Court denied Robinson’s motion and discharged Robinson under 11 U.S.C. § 727 on either May 14 or May 18, 1981. 1

On July 21, 1981, Bankruptcy Judge Shiff, referring to a hearing scheduled for June 15, 1981, signed an order dismissing Olin’s complaint to reclaim property (Adv. Pro. 5-81-0084) as moot. On July 30,1981, referring to a hearing scheduled for May 18, 1981, Judge Shiff dismissed Olin’s complaint for relief from stay, with prejudice for failure to prosecute and abstained from hearing Robinson’s counterclaims. Following her discharge in the Chapter 7 proceeding Robinson commenced the Chapter 13 *736 proceeding which gave rise to this adversary proceeding.

DISCUSSION:

1. ROBINSON’S CLAIM THAT OLIN’S LIEN IS VOID AS A RESULT OF HER DISCHARGE IN BANKRUPTCY.

It has been frequently recognized that one of the primary purposes of the bankruptcy law is to give the debtor a fresh start, “unhampered by the pressure and discouragement of pre-existing debt.” Perez v. Campbell, 402 U.S. 637, 648, 91 S.Ct. 1704, 1711, 29 L.Ed.2d 233 (1971). At the same time the Bankruptcy Code protects those creditors who have obtained security for the credit that they have extended. In re Weathers, 15 B.R. 945 (Bkcy.Kan.1981). Cf 11 U.S.C. § 506(d) (liens only voided if secured claim is not allowed); 11 U.S.C. § 522(c)(2) (exempt property remains subject to unvoided lien).

Although Robinson claims that alleged violations of Connecticut and Federal TILs invalidate Olin’s security interest in the Buick Regal, for the purposes of evaluating her claim that the lien was voided in the bankruptcy proceeding the security interest will be treated as effective and valid to establish a lien enforceable under state law. Robinson suggests three reasons why the lien was voided in bankruptcy: first, that application of 11 U.S.C. § 506(d) voids the lien because the claim was not an allowed secured claim; second, that the dismissal of Olin’s complaint in the Chapter 7 case is res judicata and bars Olin’s claim in this Chapter 13 case; and finally, that Olin’s failure to object to Robinson’s claiming the Buick Regal as exempt property prevents it from enforcing the lien after discharge.

A. Allowance of Olin’s Secured Claim.

Section 506(d) of the Bankruptcy Code, 11 U.S.C. § 506(d), states that a lien securing a claim that is not an allowed secured claim is void, with certain exceptions not germane to this case. Section 502(a) provides that a claim, proof of which is properly filed, is deemed allowed unless a party in interest objects.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Sovereign Bank v. Sturgis
863 F. Supp. 2d 75 (D. Massachusetts, 2012)
Uptown Federal Savings Loan v. Define, No. 30 13 28 (Feb. 10, 1993)
1993 Conn. Super. Ct. 1528 (Connecticut Superior Court, 1993)
In Re Montgomery
80 B.R. 385 (W.D. Texas, 1987)
In Re Mitchell
80 B.R. 372 (W.D. Texas, 1987)

Cite This Page — Counsel Stack

Bluebook (online)
48 B.R. 732, 1984 U.S. Dist. LEXIS 22955, Counsel Stack Legal Research, https://law.counselstack.com/opinion/robinson-v-olin-federal-credit-union-ctd-1984.