Opinion
No. 01-16805, Adversary Proceeding No. 01-1255.
April 12, 2007
MEMORANDUM
The court held a trial in this adversary proceeding, but the plaintiff's bankruptcy case was dismissed before the court entered an opinion and judgment. The court dismissed the chapter 13 bankruptcy case for failure to carry out the confirmed plan. The court intended to dismiss this adversary proceeding immediately after dismissal of the plaintiff's bankruptcy case but for some reason failed to enter an order of dismissal.
The plaintiff purchased a car from the defendant with financing provided by the defendant. The defendant filed proof of secured claim in the plaintiff's chapter 13 case. As to the financing, the complaint alleged that the defendant failed to provide notices or disclosures required by Truth in Lending law, including the advance disclosures required by the Home Owner's Equity Protection Act (HOEPA) since the defendant intended to take a mortgage on the plaintiff's residence to secure the debt for the car. The complaint asked for recovery of statutory damages and release of the mortgage if they exceeded the debt. More importantly, the complaint alleged that the defendant's failure to comply with HOEPA extended the plaintiff's time to rescind the transaction, the plaintiff had rescinded the transaction by sending notice to the defendant, and the plaintiff was entitled to the remedies flowing from rescission, including cancellation and release of the mortgage.
The amended complaint alleged that the defendant misrepresented the car as being in good condition when it had serious mechanical problems. The complaint sought a judgment for damages based on fraud, intentional misrepresentation, negligent misrepresentation, breach of warranty, or violation of the statutes dealing with unfair and deceptive trade practices.
Before dismissal of the plaintiff's bankruptcy case, the court lifted the automatic stay to allow the defendant to foreclose on the plaintiff's residence. 11 U.S.C. § 363(a), (d).
After dismissal of the plaintiff's bankruptcy case, a decision on the complaint was not relevant to any pending bankruptcy case. Still, the law did not require the court to dismiss this adversary proceeding. The plaintiff's claims continued to exist even if she was no longer the debtor in a pending bankruptcy case. The court might have retained jurisdiction on the grounds of fairness, efficiency, and judicial economy. 11 U.S.C. § 349; Porges v. Gruntal (In re Porges), 44 F.3d 159 (2d Cir. 1995); Fidelity Deposit Company of Maryland v. Morris, 950 F.2d 1531 (11th Cir. 1992); Pauley v. Bank One Colorado Corp., 205 B.R. 272 (D. Colo. 1997); Roma Group, Inc. v. Michael Anthony Jewelers, Inc. (In re Roma Group, Inc.), 137 B.R. 148 (Bankr. S. D. N. Y. 1992).
The court was of the opinion, however, that it should not deal with the questions raised by the complaint, especially the difficult questions under the Truth in Lending law, unless it was required to deal with them. In the time since dismissal of the plaintiff's bankruptcy case, the parties have taken no action in this adversary proceeding; their failure to act suggests that they viewed dismissal of the bankruptcy case as having ended the adversary proceeding. Furthermore, before dismissal of the plaintiff's bankruptcy case, the court lifted the automatic stay to allow the defendant to foreclose on the plaintiff's residence. The court does not know what happened with regard to the residence after the stay was lifted and the bankruptcy case was dismissed.
The court will enter an order dismissing this adversary proceeding.