Opinion
Case No. 18-53765
01-22-2021
IN RE: Stacy Marie MILBURN, Debtor.
Jon J. Lieberman, Sotile & Barile, Attorneys at Law, Loveland, Ohio, Attorney for Harley-Davidson Credit Corp. and Eaglemark Savings Bank
Jon J. Lieberman, Sotile & Barile, Attorneys at Law, Loveland, Ohio, Attorney for Harley-Davidson Credit Corp. and Eaglemark Savings Bank
SUA SPONTE ORDER VACATING THE APRIL 9, 2020 ORDER TO COMPEL TURNOVER (DOCKET # 72), AS HAVING BEEN ENTERED IN ERROR
Thomas J. Tucker, United States Bankruptcy Judge
This case came before the Court on the motion filed by Eaglemark Savings Bank (the "Movant"), entitled "Motion to Compel Turnover of 2015 Harley-Davidson FLRT Free Wheeler -VIN 1HD1MCM16FB860851" (Docket # 70 the "Motion to Compel Turnover"). The Motion to Compel Turnover stated, with regard to the 2015 Harley-Davidson FLRT Free Wheeler -VIN 1HD1MCM16FB860851 (the "Vehicle"), that the Debtor "did execute and deliver to [the Movant] a certain lease in the amount of $26,324.53" and that the Movant perfected an interest in the Vehicle. Further, the Movant stated:
Docket # 70 at pdf p. 1 ¶¶ 2-3.
Debtor listed the [the Vehicle] in the second amended chapter 13 plan as "surrender", and the stay lifted at confirmation. The plan was confirmed on June 13, 2019.
Debtor has subsequently refused to cooperate in the surrender of [the Vehicle] and Movant has been unable to obtain possession of it. Movant respectfully requests that this Court compel Debtor to surrender [the Vehicle] to Movant.
Id. at ¶¶ 4-5.
After no timely response was filed to the Motion, on April 9, 2020, the Court granted the Motion to Compel Turnover.
"Order Granting Motion to Compel Turnover of 2015 Harley-Davidson FLRT Free Wheeler - VIN 1HD1MCM16FB860851" (Docket # 72).
Eight months later, on December 14, 2020, Harley-Davidson Credit Corporation filed a motion entitled "Motion for Contempt for Failure to Comply with the April 09, 2020 Order Granting Motion to Compel Turnover of 2015 Harley-Davidson FLRT Free Wheeler, Vin: 1HD1MCM16FB860851" (Docket # 76, the "Motion for Contempt"). The Motion for Contempt alleges that the Debtor has not turned over the vehicle, and "has been uncooperative in assisting the Creditor with its many attempts to retrieve the vehicle, and has actually obstructed the Creditor from obtaining the vehicle." No timely response to this motion was filed, and a certification of no response was filed on January 4, 2021.
The Motion for Contempt filed by Harley-Davison Credit Corporation states that "the Debtor herein did execute and deliver to the original lender a certain note in the amount of $26,324.53" (Docket # 76 at pdf p. 1 ¶ 2). The reference to "the original lender" apparently is a reference to Eaglemark Savings Bank, the party that brought the Motion to Compel Turnover.
Docket # 76 at pdf p. 1 ¶ 8.
Docket # 77.
In considering the Motion for Contempt, this Court has determined that the April 9, 2020 Order to Compel Turnover (Docket # 72) was entered in error, and should be vacated, for the following reasons.
The Order to Compel Turnover was entered based on the fact that the Vehicle was "surrendered" in the Debtor's confirmed Chapter 13 plan. However, that is an insufficient basis for ordering turnover.
The Debtor's Second Amended Chapter 13 Plan (Docket # 49 the "Plan") was confirmed on June 13, 2019 (Docket # 65). The secured claim of the Movant is treated in Class 5.5 of the Plan. (Docket # 49 at pdf pp. 6-7). Under Class 5.5, the Debtor "surrenders" the Vehicle.
As this Court recently stated:
"Surrender" is a procedural device which permits the secured creditor to pursue its state law remedies with regard to the property surrendered. "Surrender" does not, in and of itself, affect the substantive rights of a debtor in the property surrendered.
In re Loucks , 619 B.R. 908, 909 (Bankr.E.D.Mich. 2020).
"Surrender" in the context of this case, and under the Debtor's confirmed Chapter 13 plan, only means that the automatic stay is lifted to permit the secured creditor to seek and obtain whatever state law remedies are available under nonbankruptcy law with respect to the Vehicle. See In re Loucks , 619 B.R. at 909-910. The Debtor's confirmed Chapter 13 Plan is consistent with this interpretation. Section V, Paragraph P of the Plan states the consequences of surrender as follows:
Upon confirmation, the Automatic Stay and co-debtor Stay is lifted as to the collateral and any creditor holding a lien on the collateral and the collateral shall
no longer constitute property of the estate. No disbursements shall be made by the Trustee to any creditor whose claim is secured by the collateral being surrendered unless the holder of such claim files a Proof of Claim (or Amended Proof of Claim) after the Effective Date of the Plan setting forth the amount of any deficiency remaining after disposition of the collateral. Any allowed deficiency claim shall be paid as a general unsecured claim in Class 9 of the Plan. ...
Docket # 49 at pdf p. 15.
Based on the foregoing, the Court concludes that "surrender" under the Plan did not, in and of itself, create any duty on the Debtor's part to deliver the Vehicle to the creditor, and could not be the basis to order turnover of the Vehicle. As a result, the Court finds that it entered the April 9, 2020 Order (Docket # 72) in error, and that such error should now be corrected. See Fed. R. Civ. P. 60(a).
Fed. R. Civ. P. 60 is made applicable to this case by Fed. R. Bankr. P. 9024, and permits the Court to "correct a clerical mistake or a mistake arising from oversight or omission whenever one is found in a judgment, order, or other part of the record." The Court may make such corrections "on motion or on its own, with or without notice."
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This will not leave the Movant without a remedy. If the Movant needs help in the form of judicial action to obtain possession of the Vehicle, Movant may seek such help in the state court system. Movant is free to do so, because the Debtor's confirmed plan lifted the automatic stay with respect to the "surrendered" Vehicle.
For these reasons,
IT IS ORDERED that the April 9, 2020 Order at Docket # 72 is vacated.