Opinion
C/A 2:23-cv-01181-RMG-MHC
12-21-2023
Gertrude Coretta Fennell Hamilton, Appellant, v. U.S. Bank National Association as Legal Title Trustee for RMTP Trust, Series 2021 BKM-TT-V, by and through its Servicers Rushmore Loan Management Services; PHH Mortgage Services; and Ocwen Loan Servicing, LLC, Appellees.
REPORT AND RECOMMENDATION
Molly H. Cherry United States Magistrate Judge
This matter is before the Court on appeal from two orders entered by United States Bankruptcy Judge Elisabetta G.M. Gasparini in Appellant's Chapter 13 bankruptcy case, In re: Gertrude Coretta Fennell Hamilton, Debtor, C/A No. 18-04955-EG (D.S.C.), in the United States Bankruptcy Court for the District of South Carolina. Appellant/Debtor Gertrude Coretta Fennell Hamilton (“Hamilton”), proceeding pro se, appeals to this Court for review of two orders of the Bankruptcy Court.
Pursuant to the provisions of Title 28, United States Code, Section 636(b)(1)(A), and Local Rule 73.02(B)(2)(e), D.S.C., all pretrial matters in cases involving pro se litigants are referred to a United States Magistrate Judge for consideration. For the reasons set forth below, the undersigned recommends that the Court affirm the two orders at issue.
BACKGROUND
I. February 16, 2023 Order Overruling Debtor's Objection
On February 16, 2023, the Bankruptcy Court entered an Order Overruling Debtor's Objection concerning the Objection to Creditors Notice to Debtor in Response to the Order Granting Motion to Incur Debt/Obtain Credit (“February Order”). See Designated Record, ECF No. 3-2 at 3-24.
According to the February Order, which the Bankruptcy Court entered after multiple hearings and related filings, the issues addressed therein arose following Hamilton's request to incur debt to refinance or reinstate her mortgage loan to Appellee/Creditor U.S. Bank National Association, not in its individual capacity but solely as Legal Title Trustee for RMTP Trust, Series 2021 BKM-TT-V, by and through its servicer, Rushmore Loan Management Services, LLC (“Creditor”). Id. at 4. After Creditor provided Hamilton “with the amount of the payoff balance owed on her mortgage, [Hamilton] began making assertions that the figures provided were not correct but rather inflated by improperly charged fees and interest.” Id. Hamilton also alleged “that Creditor and its predecessors were involved in fraudulent and discriminatory conduct and part of a civil conspiracy.” Id.
On February 2, 2022, the Bankruptcy Court held a final hearing on Hamilton's objection, which was attended by Hamilton, Creditor's counsel, and a “Legal Proceeding Specialist for the Creditor.” Id. at 6. The Specialist testified regarding Hamilton's mortgage loan and the amount of the payoff owed, and Hamilton was provided with an opportunity to present evidence and to explain what relief she was seeking and upon what statutory authority she was relying. Id. After the final hearing, the Bankruptcy Court issued the February Order in which it made the following findings of fact and conclusions of law.
A. The Bankruptcy Court's Findings of Fact
Hamilton fell behind in her payments on a mortgage loan in March 2017, and Creditor's predecessor-in-interest, Ocwen Loan Servicing, LLC (“Ocwen”), filed a foreclosure action against Hamilton, “ultimately obtaining a judgment of foreclosure and sale against [Hamilton] on July 20, 2018.” Id. at 7-8.
Hamilton filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code on September 28, 2018 (“Petition Date”), which stopped the judicial sale of her real property. Id. at 8. She filed a Chapter 13 plan providing that she would seek “loss mitigation or a consensual loan modification (LM/MM) of the mortgage loan secured by the following property: 99 Elmwood Street, Walterboro, SC 29488.” Id. Ocwen filed a proof of claim in Hamilton's bankruptcy case, asserting a secured claim in the amount of $161,891.84, which includes a pre-petition arrearage of $21,355.47 as of the Petition Date. Id. The pre-petition arrearage amount includes $4,692.93 in prepetition fees and costs. Id. Hamilton's plan was confirmed on February 6, 2019. Id.
On or about March 9, 2019, Ocwen transferred its mortgage claim to PHH Mortgage Corporation (“PHH”). Id. In April or May 2019, PHH offered Hamilton a loan modification pursuant to the confirmed plan's loss mitigation provisions, but Hamilton rejected it because it extended the repayment term an additional 11 years and required a significant balloon payment at the end of the repayment term. Id. PHH again offered Hamilton a loan modification on December 21, 2021, which Hamilton also rejected. Id.
Hamilton made multiple requests to PHH for COVID-19 forbearance relief under the CARES Act, 15 U.S.C. § 9056(b)(1), including in August 2021, November 2021, December 2021, and January 2022. Id. at 9.
On April 29, 2021, PHH filed a motion for relief from the automatic stay based on Hamilton's failure to make adequate protection payments during the bankruptcy case. Id. On August 26, 2021, the day of the hearing on the motion for relief from stay, Hamilton sent an email to PHH again requesting COVID-19 forbearance relief under the CARES Act because her son remained unemployed due to COVID-19. Id. At the hearing on the motion for relief from stay, Hamilton's counsel requested a continuance to allow Hamilton additional time to secure a refinance to pay off the mortgage loan, which the Bankruptcy Court granted. Id. At the continued hearing on October 21, 2021, which Hamilton did not attend, Hamilton's counsel again requested additional time to allow Hamilton to secure a refinance, but PHH objected to a further continuance, and the Bankruptcy Court ultimately granted relief from stay. Id.
Hamilton then filed a motion to reconsider the stay relief order. Id. at 10. On December 22, 2021, PHH offered Hamilton FHA loss mitigation relief, which Hamilton rejected, asserting that a CARES Act forbearance was necessary because it precluded the assessment of further fees. Id. After a hearing on the motion to reconsider, the Bankruptcy Court granted Hamilton's motion and vacated the stay relief order by order entered February 4, 2022, finding that PHH did not properly consider Hamilton for all available loss mitigation options, including her requests for COVID-19 forbearance relief, available under the CARES Act or the Federal Housing Authority's default servicing guidelines. Id. The Bankruptcy Court also determined that, based on the materials taken into evidence, it was unable to conclude that the motion to reconsider should be granted based on fraud in obtaining relief from stay. Id.
PHH filed a Notice of Temporary Forbearance on March 25, 2022, providing Hamilton with CARES Act forbearance relief from March 1, 2022, through May 31, 2022. On June 17, 2022, PHH filed a second Notice of Temporary Forbearance, providing Hamilton with CARES Act forbearance relief from June 1, 2022, through August 31, 2022. Id.
In late July of 2022, the mortgage loan was transferred to Creditor, and on August 26, 2022, Creditor filed a Notice of Forbearance Plan, providing Hamilton with COVID-19 forbearance relief from July 1, 2022, through September 1, 2022. Id. at 10-11. On October 14, 2022, Creditor filed a Notice of Forbearance Plan, providing Hamilton with COVID-19 forbearance relief from July 1, 2022, through December 1, 2022. Id. at 11.
Hamilton filed an objection to the October 14, 2022 Notice of Forbearance Plan, asserting that she did not request or agree to another forbearance and rejecting that forbearance. Id. In her objection, Hamilton indicated that the unrequested forbearance on her account was hampering her efforts to pursue a refinance of her mortgage. Id. Hamilton's objection was resolved by the Creditor's agreement to cancel the last forbearance, and the Bankruptcy Court entered a text order treating the matter as moot. Id. Following Hamilton's rejection of the last forbearance, Creditor filed a Notice of Post Petition Mortgage Fees, Expenses and Charges on December 29, 2022, asserting charges for attorney's fees of $650 incurred on October 11, 2022 and property inspection fees totaling $40, incurred on July 19, 2022 and December 2, 2022. Id.
Hamilton filed a motion to incur debt on September 22, 2022, seeking, among other things, court approval to incur debt and/or obtain credit to refinance the mortgage loan and pay off Creditor. Id. The motion to incur debt also included allegations of fraudulent lending, conspiracy and discrimination against Creditor. Creditor filed a response indicating that, while it did not object to Hamilton's motion to incur debt to pay off its mortgage loan, it objected to any allegations of fraud, conspiracy or discrimination. Id. The Chapter 13 Trustee filed a notice of consent to the motion to incur debt. Id. At the hearing on the motion, Hamilton raised concerns regarding Creditor's responsiveness to her requests for a payoff quote to allow her to proceed with the refinancing and Creditor's charging of unnecessary fees to her account. Id. at 11-12. The Bankruptcy Court granted Hamilton's motion and entered an order authorizing Hamilton to incur debt to refinance the mortgage loan and requiring Creditor to provide Hamilton with (1) a payoff quote, (2) specific information as to the time period for which COVID-19 forbearance was extended to Hamilton, and (3) contact information for a representative of Creditor knowledgeable about Hamilton's mortgage loan. Hamilton's remaining requests for relief, including claims based upon fraud, conspiracy, and discrimination, were denied without prejudice. Id. at 12.
In response to the Bankruptcy Court's order on Hamilton's motion to incur debt, Creditor filed a Notice, which included, inter alia, a statement regarding the time periods for COVID-19 Forbearance extended to Hamilton, including: (1) March 1, 2022 to May 31, 2022; (2) June 1, 2022 to August 31, 2022; (3) July 1, 2022 to September 1, 2022, which was then extended to include through December 1, 2022. Id. The Notice further stated that “Creditor has cancelled the Debtor's Forbearance pursuant to the terms of the Order.” Id.
In response to the Bankruptcy Court's First Continuance Order, Creditor filed another Notice (the “January Notice”), which provided, inter alia, explanations for several charges that were not due as of the filing of the January Notice, including the Recon/Recording Fee (which is charged if the loan is paid off), Fcl Fee/Cost Breakdown (charge for dismissal of foreclosure action), Bk Fee/Cost Breakdown (charge for handling of this instant bankruptcy matter), and Property Inspection Breakdown (fee for property inspection that would occur in January of 2023). Id. at 12-13. The January Notice indicated that the total amount to pay the loan in full, good through January 1, 2023, was $193,121.91. Id. at 13.
On January 27, 2023, Creditor filed the Final Notice, which provided a payment history demonstrating the principal balance on the mortgage loan and a further explanation regarding the Fcl Fee/Cost Breakdown, Bk Fee/Cost Breakdown, and Property Inspection Breakdown. Id. The Final Notice indicated that the principal balance on the loan as of January 4, 2023, was $142,007.01. Id.
B. The Bankruptcy Court's Conclusions of Law
The Bankruptcy Court found that Hamilton's Objection raised the following issues: (1) whether the payoff information provided by Creditor was accurate; (2) whether Creditor improperly charged fees to Hamilton's account during her COVID-19 forbearance period; and (3) whether Creditor engaged in fraud, discrimination, or civil conspiracy against Hamilton during her bankruptcy case. Id. at 14.
1. Accuracy of Payoff Information
The Bankruptcy Court first found that because Hamilton did not file an objection to Creditor's proof of claim or assert that the proof claim did not meet the requirements of Fed.R.Bankr.P. 3001, “Creditor's proof of claim is prima facie valid under Fed.R.Bankr.P. 3001(f) and is deemed allowed under 11 U.S.C. § 502(a).” Id. at 14.
The Bankruptcy Court then went through the specific examples, identified by Hamilton, of how the Creditor's figures were allegedly not accurate. Upon review, the Bankruptcy Court found that Hamilton had not demonstrated that Creditor's application of a pre-petition January 2018 payment was improper; that other payments made during the course of her bankruptcy case were not accurately applied; or that that the escrow balance on the payoff quote was misleading or wrong. Id. at 14-16.
2. Improperly Charged Fees during COVID-19 Forbearance
Regarding COVID-19 Forbearance, the Bankruptcy Court first explained:
The CARES Act, 15 U.S.C. § 9056(b), permits a borrower to “request forbearance on a Federally backed mortgage loan, regardless of delinquency status, by (A) submitting a request to the borrower's servicer; and (B) affirming that the borrower is experiencing a financial hardship during the COVID-19 emergency.” During the COVID-19 forbearance period, “no fees, penalties, or interest beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the terms of the mortgage contract, shall accrue on the borrower's account.” 15 U.S.C. § 9056(b)(3).ECF No. 3-2 at 16-17.
The Bankruptcy Court found that, according to the mortgage account information provided by Creditor, the only fees charged to Hamilton's account from March 2019 through the date of the hearing were a property inspection fee in the amount of $20.00 incurred on July 22, 2022; a “Bankruptcy Fee” of $650.00 incurred on October 19, 2022; and a property inspection fee incurred on December 7, 2022. Id. at 17. Creditor's representative testified that the forbearance period began on March 1, 2022, and terminated on November 4, 2022, when Hamilton rejected the final forbearance provided by Creditor in the Notice of Forbearance Plan filed on October 14, 2022. Id. The Bankruptcy Court concluded that the property inspection fee incurred on July 22, 2022, and the “Bankruptcy Fee” incurred on October 19, 2022, are nonrecoverable by the Creditor, because they were charged to Hamilton's account during the COVID-19 forbearance period in violation of 15 U.S.C. § 9056(b)(3). Id.
Hamilton also argued that her attorney's fees could have been avoided if Creditor had honored its obligations under the CARES Act. As to this issue, the Bankruptcy Court concluded that, to the extent Hamilton was referring to a $500 fee shown in a Statement of Supplemental Chapter 13 Fees filed by her counsel in May 2021, Hamilton had fourteen days from the date the Statement was filed to object to the fee, but Hamilton did not file an objection to the Statement within the applicable deadline. Id. at 17-18. The Bankruptcy Court also found that Hamilton's former counsel appeared and represented her interests at two hearings that were held regarding the stay relief motion; that the fee appears to be authorized by the retainer agreement with Hamilton's former counsel, which is signed by Hamilton; and that Hamilton did not raise this issue in connection with her counsel's motion to withdraw as attorney, filed on January 18, 2022, nor did she request relief regarding these attorney's fees in connection with her motion to reconsider relief from stay. Id. at 18. The Bankruptcy Court explained that even if it were to undertake a review of the fees under 11 U.S.C. § 329(b), it would find that the fees are in line with the customary rates charged in Chapter 13 cases for similar services and that 15 U.S.C. § 9056(b)(3) does not protect Hamilton from being charged with fees by her counsel during the COVID-19 forbearance period. Id. at 18-19. The Bankruptcy Court denied Hamilton's request for relief regarding her attorney's fees for defending the motion for relief from stay. Id. at 19.
3. Fraud, Discrimination, and Civil Conspiracy
Finally, the Bankruptcy Court addressed Hamilton's request that the Creditor's claim be “discharged” because, she claimed, the Creditor's conduct in connection with her bankruptcy case constitutes fraud, discrimination, and/or civil conspiracy. Id. at 19-23. The Bankruptcy Court first found that these claims were not properly before the court and should be denied on that basis alone. Id. at 19 (noting that Hamilton attempts to raise these claims in an objection to Notice filed by Creditor and has “neither filed an objection to Creditor's claim under 11 U.S.C. § 502 nor a complaint challenging the validity of Creditor's lien in an adversary proceeding in this Court”). Nonetheless, the Bankruptcy Court liberally construed her Objection to consider the “claims” raised therein but concluded that, based on the evidence presented, “the Court cannot make any findings of fraud, discrimination, and/or civil conspiracy.” Id.
With regard to the fraud claims, the Bankruptcy Court noted that claims of fraud are required to be alleged with particularity under Federal Rule of Bankruptcy Procedure 7009(b). Id. The Bankruptcy Court further found the following:
Debtor asserts that her counsel and PHH were aware of her request for CARES Act forbearance and had “both a motive and intent to deceive this Debtor and the bankruptcy court; greed for them to get paid.” In order to establish a claim for fraud under South Carolina law, “the following elements must be shown: (1) a representation; (2) its falsity; (3) its materiality; (4) either knowledge of its falsity or a reckless disregard of its truth or falsity; (5) intent that the representation be acted upon; (6) the hearer's ignorance of its falsity; (7) the hearer's reliance on its truth; (8) the hearer's right to rely thereon; and (9) the hearer's consequent and proximate injury.” Regions Bank v. Schmauch, 354 S.C. 648, 672, 582 S.E.2d 432, 444-45 (Ct. App. 2003). In its February 4, 2022 Order, the Court concluded that PHH did not properly consider Debtor for all available loss mitigation options, including her requests for COVID-19 forbearance relief, available under the CARES Act or the Federal Housing Authority's default servicing guidelines. For this reason, the Court vacated its order granting relief from stay and reinstituted the stay in Debtor's bankruptcy case. However, the Court specifically concluded that fraud was not a basis for its reconsideration of the stay relief order. Since that time, PHH and Creditor have complied with the Court's directives by providing Debtor with forbearance from March 1, 2022 through November 4, 2022, when she rejected any further forbearance. Moreover, other than the two charges for fees discussed above, Creditor appears to have waived all other fees and charges on the account from March of 2019 forward.
Debtor contends that the back-dating of the Notice of Forbearance Plan is evidence of a planned misleading scam to cover up fees during the forbearance. Debtor asserts that the Notice of Forbearance Plan filed on October 14, 2022 was filed to prevent Debtor from being able to obtain funds to bring the mortgage current. While there does appear to be an overlap in the dates of forbearance provided, this appears to have been likely caused by the transfer of the mortgage from PHH to Creditor in late July of 2022 during the overlapping period. The only fee charged during that time period was the $20 property inspection fee, which the Court has disallowed. Debtor requests that Creditor backdate and delete “staged” fees from April 2021 through April 2022 with extensions for the maximum amount of added time allowed for CARES Act forbearance. It does not appear that any fees were charged to her account by Creditor during this time period. Therefore, Debtor has failed to demonstrate any injury from the alleged intentional backdating or any legal authority supporting the relief she requests and therefore Debtor's request for relief on those grounds is denied.
Debtor further argues that Creditor's proof of claim is misleading or a misrepresentation of material fact because it states that the total debt is $161,891.84
and the arrearage is $21,355.47. Debtor states that the Form 1098 for 2019 confirms that the outstanding principal balance is $145,806.67.50 It appears that Debtor misunderstands the figures stated on the Creditor's proof of claim. The $161,891.84 figure is the total debt calculation, which includes the principal balance, interest due, fees, costs, and escrow deficiency for funds advanced, less the total funds on hand. The Mortgage Proof of Claim Attachment to the proof of claim states that the principal balance as of the date of the petition (September 28, 2018) is $146,417.86. The amounts stated on the proof of claim do not appear to be misleading or misrepresented. As discussed above, Debtor has not objected to Creditor's proof of claim and it is deemed prima facie valid under Fed.R.Bankr.P. 3001(f). Accordingly, the Court finds no reasonable basis to find that Debtor has stated a valid claim for fraud and denies Debtor's request for relief on this ground.ECF No. 3-2 at 20-22.
With respect to the claims for discrimination and conspiracy, the Bankruptcy Court found:
Debtor further argues that PHH's denial of Debtor's requests for forbearance prior to 2022 constitutes discrimination in violation of 11 U.S.C. § 525(d), which provides that “a person may not be denied relief under sections 4022 through 4024 of the CARES Act (15 U.S.C. [§§] 9056, 9057, 9058) because the person is or has been a debtor under this title.” 11 U.S.C. § 525(d). As discussed above, the Court previously concluded that PHH's denial of forbearance was improper and constituted grounds to vacate its stay relief order. Following the entry of the order vacating the relief from stay, PHH and Creditor provided Debtor with forbearance relief under the CARES Act, extending the periods of forbearance until Debtor rejected further extensions on November 4, 2022. As a result of the Court's order vacating the stay relief order and the Creditor's waiver of fees incurred from March 2019 forward, it appears that Debtor has, in effect, received forbearance for nearly four years. The Court is unable to discern from the record what further relief Debtor is now requesting. Accordingly, Debtor's request for relief on grounds of discrimination in violation of 11 U.S.C. § 525(d) is denied....
Debtor asserts that from May 27, 2021 through January 26, 2022, unnecessary hearings were intentionally staged to heighten attorney fees and deplete her equity. She argues this conduct constitutes a civil conspiracy. Under South Carolina law, a plaintiff asserting a civil conspiracy claim must establish (1) the combination or agreement of two or more persons, (2) to commit an unlawful act by unlawful means, (3) together with the commission of an overt act in furtherance of the agreement, and (4) damages proximately resulting to the plaintiff. Paradis v. Charleston Cnty. Sch. Dist., 861 S.E.2d 774, 780 (S.C. 2021). It is unclear from the record which entity or person Debtor asserts engaged in the alleged conspiracy with Creditor. The record reflects that no attorney fees were charged by Creditor to Debtor's mortgage account during this period. The Court finds that Debtor has presented no evidence indicating a claim for civil conspiracy exists under state law. Accordingly, the Court denies Debtor's request for relief on this ground.ECF No. 3-2 at 22-23.
Accordingly, the Bankruptcy Court overruled Hamilton's Objection to Creditor's Notice to Debtor in Response to Order Granting Motion to Incur Debt and Obtain Credit and denied all requests for relief contained therein, except that the Bankruptcy Court found that the property inspection fee of $20.00 incurred by Creditor's predecessor in interest on July 22, 2022 and the “Bankruptcy Fee” of $650.00 incurred by Creditor on October 19, 2022 are nonrecoverable fees and must be removed as charges on Hamilton's mortgage account. Id. at 23.
II. March 10, 2023 Order Denying Motion to Reconsider
Hamilton filed a pleading titled “Objections to Errors in Order Entered: Doc /ECF No. 161 filed 02/16/2023,” which the Bankruptcy Court construed as a Motion to Reconsider the February Order pursuant to Rule 59(e) of the Federal Rules of Civil Procedure. ECF No. 3-2 at 26 & n.3 (noting that Rule 59(e) is made applicable to bankruptcy cases pursuant to Fed.R.Bankr.P. 9023). On March 10, 2023, the Bankruptcy Court entered an Order Denying Motion to Reconsider the Court's Order Overruling Debtor's Objection concerning the Objection to Creditor's Notice to Debtor in Response to the Order Granting Motion to Incur Debt/Obtain Credit. (“Reconsideration Order”). ECF No. 3-2 at 25-31.
In the Reconsideration Order, the Bankruptcy Court found that because Hamilton had not asserted that there had been an intervening change in controlling law or that she had new evidence, she must establish that the February Order contained a clear error of law or that manifest injustice would result if relief were not granted. Id. at 28.
The Bankruptcy Court found that Hamilton's Motion contained a list of alleged errors, but they were simply repetitive allegations that had been addressed previously by the Bankruptcy Court in the February Order. Id. The Bankruptcy Court found that Hamilton was essentially asking it to reevaluate the basis upon which it had made its prior ruling, which is an inappropriate use of a Rule 59(e) motion. Id.
The Bankruptcy Court also found that Hamilton had failed to show that it had applied an incorrect legal standard in its review of her civil conspiracy claim. Id. at 28-29. The Bankruptcy Court further found that, to the extent Hamilton was attempting to assert new or additional claims under 11 U.S.C. §§ 362(a)(3), 501 and 525; the Consumer Financial Protection Act (12 U.S.C. §§ 5531, 5536(a)(1)(B)); the False Claims Act (31 U.S.C. §§ 3729-3733); S.C. Code Ann. § 39-510; the Real Estate Settlement Procedures Act (RESPA), 18 U.S.C. § 241; or 42 U.S.C. §§ 1985, 14141, “those claims cannot be raised in the context of a motion to reconsider an order pursuant to Fed.R.Civ.P. 59(e).” Id. at 29.
Finally, the Bankruptcy Court denied the Motion to Reconsider upon finding that Hamilton failed to identify any clear error of law or manifest injustice in the Bankruptcy Court's conclusions or any other ground for relief under Rule 59(e). Id. at 30.
III. Procedural Background of this Appeal
On March 23, 2023, Appellant filed an appeal from the February Order and the Reconsideration Order. See ECF No. 1. On March 24, 2023, the Clerk of the Court for the United States Bankruptcy Court for the District of South Carolina filed with this Court a “Transmittal of Notice of Appeal.” ECF No. 1-1.
On April 24, 2023, the Clerk of the Court for the United States Bankruptcy Court for the District of South Carolina filed with this Court the Record on Appeal, which consisted only of a copy of the Bankruptcy Docket, the February Order, and the Reconsideration Order. ECF Nos. 3, 3-1, 3-2.
On May 30, 2023, Hamilton filed her Brief with this Court. On June 29, 2023, Creditor filed a Response Brief, ECF No. 11, as well as a Motion to Dismiss Appeal and Alternative Motion to Strike, ECF No. 10. That same day, Ocwen and PHH filed a Motion to Dismiss the Appeal, ECF No. 8, and a Motion to Suspend Briefing Schedule, ECF No. 9. On July 13, Hamilton filed her Reply Brief in support of the appeal, ECF No. 12, as well as a Response in opposition to the pending motions, ECF No. 13.
JURISDICTION
Under 28 U.S.C. § 158(a), United States district courts have jurisdiction to hear appeals from final judgments, orders, and decrees of bankruptcy courts. “Orders in bankruptcy cases qualify as ‘final' when they definitively dispose of discrete disputes within the overarching bankruptcy case.” Ritzen Grp. Inc. v. Jackson Masonry, LLC, 140 S.Ct. 582, 586 (2020) (citing Bullard v. Blue Hills Bank, 575 U.S. 496, 501 (2015)); see In re Daufuskie Island Props., Inc., 441 B.R. 49, 55 (Bankr. D.S.C. 2010) (“Final orders are those that resolve the litigation, decide the merits, settle liability, establish damages, or determine the rights of the parties.”) (citing In re Looney, 823 F.2d 788, 790 (4th Cir. 1987)). The district court also has jurisdiction to hear appeals from interlocutory orders and decrees of the bankruptcy court, provided the district court grants the appellant leave to appeal. 28 U.S.C. § 158(a)(3).
This Court has jurisdiction over this appeal, as it involves an appeal from a final judgment of a United States Bankruptcy Court over which the District Court has jurisdiction.
STANDARD OF REVIEW
On appeal from the bankruptcy court, the district court acts as an appellate court and reviews the bankruptcy court's findings of fact for clear error, while it generally reviews conclusions of law de novo. In re Merry-Go-Round Enters., Inc., 400 F.3d 219, 224 (4th Cir. 2005); In re Kielisch, 258 F.3d 315, 319 (4th Cir. 2001); see 28 U.S.C. § 158(a).
A finding of fact is clearly erroneous when the entire record demonstrates convincingly to the reviewing court that “a mistake has been committed.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948); United States v. Hall, 664 F.3d 456, 462 (4th Cir. 2012). “A finding is ‘clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948). “This standard plainly does not entitle a reviewing court to reverse the finding of the trier of fact simply because it is convinced that it would have decided the case differently.” Anderson v. Bessemer City, 470 U.S. 564, 573 (1985). “When findings are based on determinations regarding the credibility of witnesses,” the reviewing court gives “even greater deference to the trial court's findings.” United States v. Hall, 664 F.3d 456, 462 (4th Cir. 2012) (quoting Anderson, 470 U.S. at 575).
DISCUSSION
In her Brief, Hamilton identifies the following issues on appeal: (1) “Whether Appellee's [sic] engaged in ‘Fraud on the Court' during the Automatic Stay against [Hamilton]”; (2) “Whether violations under S.C. Code § 16-5-10 (2020), Civil Conspiracy against Appellant Civil Rights took place by Appellees in this case”; (3) “Whether Appellee's [sic] violated Automatic Stay 11 U.S.C. § 362(k), and/or False Claims Act presuing [sic] - Foreclosure[] on Appellants (FHA) Backed Mortgage Loan”; (4) “Whether Creditor/Appellee engaged in fraud, and/or discrimination, and/or unfair foreclosure practices against Debtor during this bankruptcy case”; and (5) “Whether deceptive fraudulent practice[,] material misrepresentation, and/or Fraud with omission of facts by servicers/Appellee's [sic] gives rise to a cause of action for damages.” ECF No. 7 at 8-9.
I. Hamilton Has Not Shown Clear Error in the Bankruptcy Court's Factual Findings.
Rule 8009 of the Federal Rules of Bankruptcy Procedure requires a bankruptcy appellant, within fourteen days after filing a notice of appeal, to file a designation of the items to be included in the record. Fed.R.Civ.P. 8009(a)(1); see In re SPR Corp., 45 F.3d 70, 71 (4th Cir. 1995). In particular, the record must include “any opinion, findings of fact, and conclusions of law relating to the issues on appeal, including transcripts of all oral rulings.” Fed.R.Bankr.P. 8009(a)(4).
“If the appellant intends to argue on appeal that a finding or conclusion is unsupported by the evidence or is contrary to the evidence, the appellant must include in the record a transcript of all relevant testimony and copies of all relevant exhibits.” Fed.R.Bankr.P. 8009(b)(5). Within fourteen days after filing a notice of appeal, the appellant must “(A) order in writing from the reporter . . . a transcript of such parts of the proceedings not already on file as the appellant considers necessary for the appeal, and file a copy of the order with the bankruptcy clerk; or (B) file with the bankruptcy clerk a certificate stating that the appellant is not ordering a transcript.” Fed.R.Bankr.P. 8009(b)(1).
Where an appellant fails to file or serve a designation, such that the record before the appellate court contains only the appealed orders and the appellant's notice of appeal and lacks any official transcript of hearings held before the bankruptcy court, the appellate court is “unable to review the evidence presented to the bankruptcy court [and] cannot conclude the bankruptcy court's findings of fact are clearly erroneous.” In re Rose, 483 B.R. 540, 544 (B.A.P. 8th Cir. 2012); see In re Moffitt, 635 B.R. 836, 840-41 (M.D. Fla. 2022) (affirming order of bankruptcy court upon finding that the appellate court was unable to properly evaluate appellant's argument in light of the insufficient record on appeal, where appellant did not properly designate any items for the record pursuant to Rule 8009(a) and the limited record contained only the items transmitted by the Clerk-the Notice of Appeal, the Order on Appeal, the Judgment, and a copy of the public docket report), appeal dismissed, No. 22-10423-G, 2022 WL 1565125 (11th Cir. Mar. 10, 2022); see also Dides v. Schlossberg, No. CV TDC-22-0324, 2023 WL 155443, at *3 (D. Md. Jan. 11, 2023) (“Multiple courts have concluded that when an appellant fails to submit a transcript relevant to the issue on appellate review, the court cannot review the issue.”) (collecting cases), aff'd, No. 23-1101, 2023 WL 5524741 (4th Cir. Aug. 28, 2023).
Here, the only items in the Record on Appeal are the February Order (Bankruptcy Dkt. No. 161) and the Reconsideration Order (Bankruptcy Dkt. No. 171). See ECF No. 3 (Transmittal of Record on Appeal); ECF No. 3-2. Although the Bankruptcy Clerk of Court also transmitted a copy of the Bankruptcy docket sheet on April 24, 2023, which shows that 189 docket entries had been made as of April 19, 2023, none of these other filings were included in the Record on Appeal nor designated by Hamilton to be included. See ECF Nos. 3-1; 3-2. Additionally, no Bankruptcy Court hearing transcript is included in the Record on Appeal, nor is there any indication in the record that Hamilton ordered any transcript or filed with the bankruptcy clerk a certificate stating that she was not ordering a transcript. See generally ECF No. 3-1.
In support of her arguments on appeal, Hamilton cites to numerous documents and exhibits in the Bankruptcy case that were not designated and, therefore, are not part of the Record on Appeal. See ECF No. 7 (referring to Bankruptcy Dkt. Nos. 101, 143, 86, 87, 109, 88, 91, 92, 95, 97, 106, 110, 105, 115, 157, 87, 94, 96, 117, 161, 150, 124, 159, 158, 134, 128, 119, 141, 120, 121, and 133). The limited Record on Appeal before this Court-consisting of only the two Orders that are the subject of this appeal-simply does not permit consideration of Hamilton's arguments that call into question the Bankruptcy Court's findings of facts. Accordingly, the undersigned concludes that Hamilton has failed to show that any of the findings of fact set forth in the appealed Orders are clearly erroneous.
II. The Two Orders on Appeal Should Be Affirmed.
Upon de novo review of the conclusions of law, the undersigned finds that the Bankruptcy Court applied the proper legal principles to the facts in both Orders, such that the Orders should be affirmed in their entirety.
As an initial matter, because Hamilton did not designate any hearing transcripts or filings of the parties to be included in the Record on Appeal, there is no way for the Court to evaluate whether the Bankruptcy Court addressed all the arguments raised by Hamilton in her Objection to the Notice or in her Motion for Reconsideration. Accordingly, the undersigned concludes that Hamilton has not shown any error in that regard and, to the extent Hamilton raises issues or arguments on appeal not addressed in the appealed Orders, the undersigned finds that those issues have not been preserved and, thus, does not address them. See In re Moffitt, 635 B.R. at 841 (“Absent these critical items from the record, the Court is unable to assign any error to the bankruptcy court's evaluation of the pleadings and decision to grant judgment in favor of Appellees.”).
Upon de novo review, the undersigned finds no reversible error in the Bankruptcy Court's analysis of Plaintiff's challenge to the payoff information or to the fees charged during her COVID-19 forbearance period. The Bankruptcy Court correctly summarized 15 U.S.C. § 9056(b) and applied it to the facts it found in this case.
Similarly, the undersigned finds no error in the Bankruptcy Court's finding and conclusion that Hamilton's claims based on fraud, discrimination, and civil conspiracy were not properly before the court and, therefore, were subject to denial on that basis alone, nor to the Bankruptcy Court's analysis of each individual claim.
Regarding Hamilton's fraud claims, the Bankruptcy Court correctly observed that to establish a claim for fraud under South Carolina law, the following elements must be shown:
(1) a representation; (2) its falsity; (3) its materiality; (4) either knowledge of its falsity or a reckless disregard of its truth or falsity; (5) intent that the representation be acted upon; (6) the hearer's ignorance of its falsity; (7) the hearer's reliance on its truth; (8) the hearer's right to rely thereon; and (9) the hearer's consequent and proximate injury.Regions Bank v. Schmauch, 582 S.E.2d 432, 444-45 (S.C. Ct. App. 2003). As stated above, Hamilton has not shown any clear error in the findings of fact, and the undersigned recommends affirming the Bankruptcy Court's denial of Hamilton's request for relief based on fraud.
Regarding Hamilton's discrimination claims, the Bankruptcy Court correctly explained that 11 U.S.C. § 525(d) provided that “[a] person may not be denied relief under sections 4022 through 4024 of the CARES Act (15 U.S.C. [§§] 9056, 9057, 9058) because the person is or has been a debtor under this title.” 11 U.S.C. § 525(d), repealed by Consolidated Appropriations Act, 2021, Pub. L. 116-260, Div. FF, Title X § 1001(c)(2), 134 Stat. 3217 (Dec. 27, 2020). Moreover, the undersigned finds no clear error in the Bankruptcy Court's factual findings, including that Hamilton “has, in effect, received forbearance for nearly four years.” See ECF No. 3-2 at 22. On this record, the undersigned finds no reversible error in the Bankruptcy Court's conclusion that Hamilton's discrimination claim should be denied.
“The Consolidated Appropriations Act, 2021, contained a sunset provision providing that subsection (d) of Section 525 would be automatically repealed one year after the date of enactment-i.e., on December 27, 2021.” Springfield Hosp., Inc. v. Guzman, 28 F.4th 403, 427 (2d Cir. 2022).
Regarding Hamilton's civil conspiracy claims, the Bankruptcy Court properly relied upon Paradis for the elements of a civil conspiracy claim under South Carolina. See Paradis v. Charleston Cnty. Sch. Dist., 861 S.E.2d 774, 780 (S.C. 2021) (“[A] plaintiff asserting a civil conspiracy claim must establish (1) the combination or agreement of two or more persons, (2) to commit an unlawful act or a lawful act by unlawful means, (3) together with the commission of an overt act in furtherance of the agreement, and (4) damages proximately resulting to the plaintiff.”). Moreover, as explained above, the undersigned finds no clear error in the Bankruptcy Court's finding that Hamilton presented “no evidence indicating a claim for civil conspiracy exists under state law.” See ECF No. 3-2 at 23. Thus, the undersigned recommends that this Court affirm the Bankruptcy Court's denial of Hamilton's request for relief based on conspiracy claims. Accordingly, for all of the reasons stated above, the undersigned finds that the February Order should be affirmed.
Finally, the Bankruptcy Court applied the correct legal standard to Plaintiff's Motion for Reconsideration, and Hamilton has shown no reversible error in the Bankruptcy Court's denial of that Motion. See Fed.R.Civ.P. 59(e); Hutchinson v. Staton, 994 F.2d 1076, 1081 (4th Cir. 1993) (recognizing three grounds for amending an earlier judgment pursuant to Rule 59(e): “(1) to accommodate an intervening change in controlling law; (2) to account for new evidence not available at trial; or (3) to correct a clear error of law or prevent manifest injustice”); see U.S. ex rel. Becker v. Westinghouse Savannah River Co., 305 F.3d 284, 290 (4th Cir. 2002) (“Mere disagreement does not support a Rule 59(e) motion.”). Importantly, Hamilton did not designate her Motion for Reconsideration for inclusion in the Record on Appeal, such that this Court cannot review it to determine the grounds raised in that Motion. And, nothing in the Record on Appeal supports a finding of clear error of law or manifest injustice, nor a finding that there had been an intervening change in controlling law or the introduction of new evidence not available at trial. Accordingly, the undersigned recommends that the Reconsideration Order be affirmed.
RECOMMENDATION
For the reasons set forth above, it is RECOMMENDED that the Bankruptcy Court's February Order and Reconsideration Order be AFFIRMED. If the Court adopts this recommendation, then the pending Motions to Dismiss (ECF Nos. 8 & 10) will be MOOT.
The parties are referred to the Notice Page attached hereto.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
Post Office Box 835
Charleston, South Carolina 29402
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).