Opinion
Case No. 10-32274 Adv. No. 14-3100
03-11-2015
In re: BETTY G. YOUNG, Debtor BETTY G. YOUNG, Plaintiff v. CHASE HOME FINANCE, LLC, Defendant
Copies to: Wayne P. Novick, electronically served (Counsel for the Plaintiff) Amelia A. Bower, electronically served (Counsel for the Defendant) Kenneth C. Johnson, electronically served (Counsel for the Defendant)
Judge Humphrey
Chapter 13
Decision Granting Defendant's Motion for Summary Judgment on Count Two of the Plaintiff's Complaint
On April 14, 2010 the debtor, Betty G. Young, filed a petition under Chapter 13 of the Bankruptcy Code (estate doc. 1). The proposed plan (estate doc. 2), which was confirmed (estate doc. 21), provided that the claim of "Chase" would be paid according to Class 7 by Young's son. (estate doc. 2, ¶ 19.c.). Class 7 provides for "[s]cheduled claims which are to be paid by a non-debtor and are not to be paid by the Trustee or the Debtor." (estate doc. 2, p. 6). Chase was listed in the plan as a lien holder on a parcel of property located at 9050 Haines Road, Waynesville, Ohio (the "Property"). Young did not indicate she intended to pursue any other course of action as to Chase's claim. Chase has not filed a proof of claim.
The correct and complete name of the defendant appears to be JP Morgan Chase Bank, N.A. as successor to Chase Home Finance LLC. The parties have not raised any issue as to the proper defendant. --------
On July 31, 2014 Young filed a complaint against Chase Home Finance LLC, which was amended on October 8, 2014. docs. 1 and 15. The amendment added the Chapter 13 Trustee as a plaintiff. The plaintiffs allege as follows: Young was a one-half owner of the Property on the petition date. Chase was granted a mortgage on the Property in July 2007 for $168,000. At that time, Young was the sole owner of the Property. Although the Property is in Warren County, Ohio, Chase recorded the mortgage in Butler County. Not until post-petition, specifically March 24, 2014, did Chase record the mortgage in Warren County.
Based on these factual allegations, Young pursued three separate counts against Chase. Those counts sought 1) a declaration that the Mortgage is "invalid" under Ohio law because it was recorded in the wrong county; 2) damages for violation of the automatic stay on account of Chase's re-recording of the mortgage post-petition and 3) damages for the "unlawful taking" of property of the estate through the collection of mortgage payments.
Chase initially moved to dismiss counts one and three of the complaint (doc. 17). The court granted the motion and dismissed counts one and three for failure to state a claim (docs. 25 and 26). Chase filed a separate motion to dismiss count two (doc. 20). The court ordered this motion to be treated as a motion for summary judgment and subsequently took the matter under advisement (doc. 27). See Fed. R. Civ. P. 12(d) (applicable by Fed. R. Bankr. P. 7012(b)).
Jurisdiction
This court has jurisdiction over this proceeding pursuant to 28 U.S.C. § 1334(b) and this case has been referred to this court through 28 U.S.C. § 157(a) and General Order 05-02 of the United States District Court for the Southern District of Ohio. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (E), (K) and (O).
Summary Judgment Standard
The standard to address a summary judgment motion is contained in Federal Rule of Civil Procedure 56 and is applicable to contested matters through Bankruptcy Rules 7056 and 9014 and states, in part, that a court must grant summary judgment to the moving party "if the movant shows there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). In order to prevail, the moving party, if bearing the burden of persuasion at trial, must establish all elements of its claim. Celotex Corp. v. Catrett, 477 U.S. 317, 331 (1986). If the burden is on the non-moving party at trial, the movant must: 1) submit affirmative evidence that negates an essential element of the nonmoving party's claim or 2) demonstrate to the court that the nonmoving party's evidence is insufficient to establish an essential element of the nonmoving party's claim. Id. at 331-32. Thereafter, the opposing party "must come forward with 'specific facts showing that there is a genuine issue for trial.' " Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citations omitted); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-51 (1986). All inferences drawn from the underlying facts must be viewed in a light most favorable to the party opposing the motion. Matsushita, 475 U.S. at 586-88.
Analysis
Count 2 of the complaint seeks damages for Chase violating the automatic stay by re-recording the mortgage post-petition. Specifically, Young argues that Chase violated § 362(a)(3) and (4). Section 362(a)(3) stays "any act to obtain possession of property of the estate or to exercise control over property of the estate." 11 U.S.C. § 362(a)(3). Section 362(a)(4) stays "any act to create, perfect, or enforce any lien against property of the estate." 11 U.S.C. § 362(a)(4). In its motion to dismiss, Chase argued, among other things, that Young, without court permission, transferred the property in question post-petition to a separate trust. Chase attached relevant documents to its motion. In order to give both parties a full and fair opportunity to address this issue, the court treated the motion to dismiss count two as a motion for summary judgment and provided the parties with the option to file supplemental filings on the matter. Chase filed a supplemental memorandum (doc. 34) but Young did not.
The undisputed record reveals Young had an undivided ½ interest in the property upon the petition date, with the other half being held by Wayne Houck. On September 25, 2012, two transfers occurred without court authorization. First, Houck quitclaimed his ½ interest to Young (doc. 20; Exhibit A). Second, Young transferred her entire interest to Betty Young, Trustee under the Betty Young Trust (doc. 20; Exhibit B).
The court finds summary judgment must be granted to Chase. First, as mentioned in the prior decision, the post-petition re-recording of the lien had no effect on Young's chapter 13 plan or the estate, and on the date she commenced this adversary proceeding, it was already too late for the mortgage to be avoided. See 11 U.S.C. § 546(a). Damages are not warranted because the re-recording had no tangible effect on the estate, Young or her plan. Moreover, the court is unwilling to award any damages when the party pursuing it herself apparently violated the stay by transferring estate property without court authority.
Perhaps an even more fundamental problem is that the record shows the Property is held by the Betty G. Young Trust. Neither Young nor the Chapter 13 Trustee have provided any explanation about the nature of this trust and the only evidence shows the Property is no longer held by the debtor and was transferred away from the estate. Without any explanation and legal authority establishing why the Property continued to be property of the estate after it was transferred to the trust, the court has no basis upon which to conclude that the re-recording of the mortgage was an act to obtain possession of property of the estate or to create, perfect, or enforce a lien against property of the estate. Further, it appears the Property cannot be returned to the estate under § 549 because the statute of limitation for avoiding a post-petition unauthorized transfer has run. 11 U.S.C. § 549(a) and (d).
Conclusion
For all these reasons, Chase is granted summary judgment on Count 2 of the Plaintiff's complaint. The court will enter an order consistent with this decision.
This document has been electronically entered in the records of the United States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
/s/ _________
Guy R. Humphrey
United States Bankruptcy Judge Dated: March 11, 2015 Copies to: Wayne P. Novick, electronically served
(Counsel for the Plaintiff) Amelia A. Bower, electronically served
(Counsel for the Defendant) Kenneth C. Johnson, electronically served
(Counsel for the Defendant)