Myers v. U.S. Bank National Bank Association
Filing
27
OPINION AND ORDER affirming Order Denying Motion to Avoid Judicial Lien and Order Denying Debtor's Motion to Reconsider, Alter or Amend Order Denying Motion to Avoid Judicial Lien. The Clerk shall transmit a copy of this Opinion and Order to the Bankruptcy Court and close the appellate file. Signed by Judge John E. Steele on 9/5/2023. (RKR)
Case 2:22-cv-00498-JES Document 27 Filed 09/05/23 Page 1 of 12 PageID 929
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
IN RE:
GREGORY BRIAN MYERS
GREGORY BRIAN MYERS,
Appellant,
v.
U.S.
BANK
NATIONAL
BANK
ASSOCIATION, as Trustee for
Credit Suisse First Boston
Mortgage Acceptance Corp.,
CSFB Mortgage- Backed PassThrough Certificates, Series
2005-11,
Case No: 2:22-cv-498-JES
Bankr. No: 2:21-bk-00123-FMD
Appellee.
OPINION AND ORDER
This
matter
comes
before
the
Court
on
appeal
from
the
Bankruptcy Court's Order Denying Motion to Avoid Judicial Lien
(Doc. #2-38) 1 and Order Denying Debtor's Motion to Reconsider,
Alter or Amend Order Denying Motion to Avoid Judicial Lien (Doc.
#2-2).
Appellant filed an Initial Brief (Doc. #13), appellee
filed a responsive Initial Brief (Doc. #16), and appellant filed
a Reply Brief (Doc. #19).
The Court directed appellant to file a
jurisdictional statement and allowed appellee to file a responsive
The Court will refer to the District Court docket as “Doc.”,
the Bankruptcy case docket as “Bankr. Doc.”
1
Case 2:22-cv-00498-JES Document 27 Filed 09/05/23 Page 2 of 12 PageID 930
statement.
(Doc. #22.)
On April 10, 2023, appellant filed a
Jurisdictional Statement (Doc. #25) and on May 30, 2023, appellant
filed
a
Notice
of
Filing
Supplemental
Authority
(Doc.
#26).
Appellee did not file a response.
I.
The district courts have jurisdiction to hear appeals “from
final judgments, orders, and decrees” of the U.S. Bankruptcy Court.
28 U.S.C. § 158(a).
when
reviewing
bankruptcy
“District courts sit in an appellate capacity
bankruptcy
court's
factual
court
judgments;
findings
unless
they
they
erroneous and review legal conclusions de novo.”
accept
are
the
clearly
In re NRP Lease
Holdings, LLC, 50 F.4th 979, 982 (11th Cir. 2022) (citing In re
JLJ Inc., 988 F.2d 1112, 1116 (11th Cir. 1993)).
A finding of
fact is clearly erroneous when, “although there is evidence to
support it, the reviewing court on the entire record is left with
a definite and firm conviction that a mistake has been committed.”
Crawford v. W. Electric Co., Inc., 745 F.2d 1373, 1378 (11th Cir.
1984) (citing United States v. U.S. Gypsum Co., 333 U.S. 364, 395
(1948); Fed. R. Civ. P. 52(a)).
1204, 1212 (11th Cir. 2008).
See also In re Walker, 515 F.3d
Where a matter is committed to the
discretion of the bankruptcy court, the district court must affirm
unless it finds that the bankruptcy court abused its discretion.
Amlong & Amlong, P.A. v. Denny's, Inc., 500 F.3d 1230, 1238 (11th
Cir. 2006).
A court abuses its discretion “if it applies an
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Case 2:22-cv-00498-JES Document 27 Filed 09/05/23 Page 3 of 12 PageID 931
incorrect legal standard, follows improper procedures in making
the
determination”,
makes
findings
of
fact
that
are
clearly
erroneous, or applies the law in an unreasonable or incorrect
manner.
Collegiate Licensing Co. v. Am. Cas. Co. of Reading, Pa.,
713 F.3d 71, 77 (11th Cir. 2013).
“The abuse of discretion
standard allows a range of choices for the [bankruptcy] court, so
long as any choice made by the court does not constitute a clear
error of judgment.”
Id. (citation omitted).
An appellate court
reads briefs filed by a pro se litigant liberally.
Lorisme v.
I.N.S., 129 F.3d 1441, 1444 n.4 (11th Cir. 1997).
II.
A summary of the filings in Maryland and Florida by Mr. Myers
would be beneficial as background.
On December 17, 2009, U.S. Bank NA Trustee filed a residential
foreclosure action in Collier County Circuit Court against Barbara
Ann Kelly, Gregory B Myers, and others regarding property located
at 700 Gulf Shore Boulevard, Naples, Florida 31402.
A default was
issued as to Suntrust Bank, Fidelity & Deposit Company of Maryland,
and Navy Federal Credit Union, and other unidentified defendants
were voluntarily dismissed.
A Final Judgment of Foreclosure was
issued on September 10, 2015, and foreclosure sale was set and
reset numerous times as defendants filed appeals and several
suggestions of bankruptcy.
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First, Myers filed a Chapter 11 case on November 18, 2015, in
the District of Maryland.
case on February 22, 2017.
The case was converted to a Chapter 7
No discharge has been granted.
In re Myers, #15-26033-MCR (Bankr. D. Md. (Greenbelt)).
See
Second,
Myers filed a Chapter 13 case on February 27, 2019, in the District
of Delaware.
The case was dismissed as it was improperly brought
in the wrong venue.
See #19-10392 (Bankr. D. Del.).
Third, Myers
filed a Chapter 13 case on May 31, 2019, in the District of
Maryland.
The case was dismissed on request of the debtor and the
automatic stay terminated on September 9, 2019.
See #19-17428
(Bankr. D. Md. (Greenbelt)). Fourth, Myers filed a Chapter 13 case
on January 28, 2021, in the Middle District of Florida.
appeal stems from this fourth Florida bankruptcy filing.
This
In state
court, the foreclosure sale was cancelled again and has not been
reset as of April 20, 2023.
In the District of Maryland, #15-26033, the bankruptcy court
issued a Consent Order on Motion for Relief From Automatic Stay on
November 10, 2016, based on the agreement of U.S. Bank National
Association and debtor Gregory B. Myers.
The agreement allowed
the appeal of Mr. Myers to proceed in the Florida Second District
Court of Appeals (2D15-4521), along with his wife Barbara Ann
Kelly’s appeal (2D15-4836), and allowed for Mr. Myers or his wife
to make “adequate protection payments in the amount of $5,000.00
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per month by depositing them into the Registry of the United States
Bankruptcy Court for the District of Maryland (the “Adequate
Protection
Payments”),
beginning
on
December
1,
2016,
and
continuing on the 1st day of each month thereafter until the Myers
Appeal and the Kelly Appeal are fully resolved in favor of either
U.S. Bank or Debtor Gregory B. Myers and/or Barbara Ann Kelly.”
(#15-26033, Bankr. Doc. #197.)
The Adequate Protection Payments
were to be retained until further order, but with the understanding
that if the appeals are fully resolved in favor of U.S. Bank, U.S.
Bank would be entitled to receive the total deposit credited
against the amounts claimed against Myers and/or Kelly.
If Myers
and Kelly prevail on appeal, they will be entitled to receive the
deposits back.
U.S. Bank maintained the right to possess in the
state court proceedings upon default of any Adequate Protection
Payments, Property Tax Payments, or Insurance Premium Payments.
(Id.)
In February 2017, the bankruptcy case was converted to a
Chapter 7 case.
(Id. at Bankr. Doc. #316.)
The state appeals
concluded in favor of U.S. Bank.
On September 30, 2019, the bankruptcy court in Maryland denied
a motion to enforce consent order because “[n]o further Order of
this Court is required to permit U.S. Bank N.A. to exercise its
rights as to the subject property and the Debtor can present any
allegations of insufficient notice under the Consent Order in the
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proceedings pending in the Circuit Court in and for Collier County,
Florida.”
(Id. at Bankr. Doc. #854.)
On June 8, 2021, the
bankruptcy court denied a blanket stay of the case based on the
filing of a voluntary petition in the Middle District of Florida.
(Id. at Bankr. Doc. #959.)
On August 11, 2021, a party sought
clarity with respect to the interest of the Chapter 7 Trustee in
the Naples property since the Consent Order had issued prior to
conversion.
The bankruptcy court determined that the automatic
stay was terminated as to the Trustee as well:
[T]he Court makes the following findings: (i)
the automatic stay has already terminated as
to the Debtor’s interest in the Naples
Property pursuant to the Consent Order; (ii)
to the extent the automatic stay imposed by
Section 362(a) of the Bankruptcy Code arose as
to the Chapter 7 Trustee upon conversion of
this case to Chapter 7 and/or presently
applies to the Chapter 7 Trustee, the
automatic stay is terminated as to the Chapter
7 Trustee pursuant to the same terms as set
forth in the Consent Order; and (iii) the
relief granted herein is without prejudice to
the rights of the Debtor, the Movant, the
Chapter 7 Trustee and any other parties in
interest with respect to the Naples Property
in connection with the Florida Bankruptcy
Case.
(Id. at Bankr. Doc. #974.)
The Maryland bankruptcy court has not
concluded, and a discharge was denied.
(Id. at Bankr. Doc. #1002.)
Adequate Protection Payments remain in the registry of the Clerk
in Maryland.
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III.
In the Schedules filed in support of bankruptcy protection in
Florida, debtor Myers listed the funds in the Registry for 700
Gulf Shore Boulevard and the property itself in Schedule C as
exempt property.
(Doc. #2-6, pp. 12, 15.)
On September 28, 2021,
debtor Myers filed a Motion to Avoid Judicial Lien of U.S. Bank
National Association, as Trustee (Doc. #209).
On November 9,
2021, debtor Myers filed an Amended Verified Motion to Avoid
Judicial Lien (Doc. #2-12).
A hearing was scheduled for February
10, 2022, but it was continued to allow debtor to file an amended
plan to provide for treatment of the lien and file notice with
Maryland bankruptcy case to notify attorneys.
(Doc. #2-11.)
The
Third Amended Chapter 13 Plan (Doc. #2-36) identifies “Judicial
Lien
in
United
States
Bankruptcy
Court
for
the
District
of
Maryland, Case No. 15-26033; Doc. 197” as a lien to be avoided
under 11 U.S.C. §522.
On April 18, 2022, U.S. Bank National Association filed a
Response and Objection to Debtor’s Motion Avoid Judicial Lien (Doc.
#2-26), and on May 16, 2022, debtor Myers filed a Reply (Doc. #235).
The hearing was finally conducted on June 9, 2022.
#2-37.)
(Doc.
On June 21, 2022, the Order Denying Motion to Avoid
Judicial Lien (Doc. #2-38) was filed.
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It was counsel for Myers who first labeled the Adequate
Protection Payments as a judicial lien stating an interest in the
property and that the lien impaired debtor’s benefits of the
exemption.
At the hearing, counsel relied on In re Monroe, 282
B.R. 219, 223 (Bankr. D. Ariz. 2002) (“A lien is a ‘charge against
or interest in property to secure payment of a debt or performance
of an obligation.’ § 101(37). A judicial lien is a ‘lien obtained
by judgment, levy, sequestration, or other legal or equitable
process or proceeding.’ § 101(36)”.); and In re James, 304 B.R.
131, 136 (Bankr. D.N.J. 2004) (“[T]he definition of judicial lien
only
requires
that
the
lienor
hold
a
judgment
against
the
debtor.”), abrogated by In re Schick, 418 F.3d 321 (3d Cir. 2005).
Counsel focused on the fact that the Order was issued by the
Maryland Bankruptcy Court as part of a legal proceeding to argue
that it is a judicial lien.
U.S. Bank focused on the ‘consent’ aspect of the Order to
argue that there was no lien:
The Second DCA affirmed the Debtors, then
sought cert. from the Florida Supreme Court.
The Florida Supreme Court denied cert. At that
point, pursuant to the terms of the agreement
we had, a contract with the Debtor – and courts
construe agreements like this as contracts -we were entitled to all the money that had
been placed into the registry of the court on
that date.
The Debtor did not file until a year and a
half later. Our rights vested into those
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monies on the date that the Supreme Court
denied cert. Because pursuant to the terms of
the parties' agreement in this agreed order,
once all the Debtor's rights and appeals had
been exhausted, and how ever the Court
ultimately would decide would determine who
got those adequate protection payments, Your
Honor.
And this was the agreement between the
parties. This wasn't a court-imposed sanction
or court-imposed requirement. The parties
agreed to the terms, because we gave up
certain rights, the Debtor gave up certain
rights, the Debtor made certain rights -- made
certain promises and so did we. And we allowed
the underlying State Court action to proceed
forward, Your Honor, and our rights vested in
those adequate protection payments months
before
the
Debtor
filed
this
Florida
bankruptcy case.
(Doc. #5, pp. 19-20.)
The Bankruptcy Court concluded:
If it its a lien at all, it is a contractual
lien; it is not a judicial lien. It was not
created by a court order; it's just that the
court order provided the mechanism by which
the funds were to be held.
So for all those reasons, I am going to find
that the consent order did not constitute a
judicial lien, that the funds being on deposit
in the Maryland Bankruptcy Court are not held
pursuant to a judicial lien, and I'm not even
going to -- I don't know whether I would call
it a lien or not, but to the extent that it
arises -- to the extent that U.S. Bank's funds
arise to an -- excuse me, U.S. Bank's claim to
the funds rise to the level of a lien or sink
to the level of a lien, I'm not sure which
that would be, it's not a judicial lien and as
such it's not subject to avoidance. So I will
deny the Debtor's motion.
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(Doc. #5, p. 32.)
Judge Delano went on to note “I can't order
that the funds be released; only the Maryland Bankruptcy Court can
order that the funds be released. So if there's other issues
relating to the release of the funds, I don't know what they are.”
(Id., p. 33.)
“It’s a creative argument to say that it’s a
judicial lien that can be avoided because the funds were paid in
with tenancy-by the-entireties' funds.
But I'm finding that it's
not -- the consent order, or the circumstances under which the
funds were deposited with the Maryland Bankruptcy Court registry
– the court's registry, did not create a judicial lien. And as
such, it's not capable of being avoided.”
(Id., p. 35.)
An Order
Denying Motion to Avoid Judicial Lien (Doc. #2-38) was issued, and
thereafter debtor Myers filed a Motion to Reconsider, Alter or
Amend Order Denying Motion to Avoid Judicial Lien (Doc. #2-41).
“[A] debtor may avoid the fixing of a lien on an interest of
the debtor in property to the extent that such lien impairs an
exemption to which the debtor would have been entitled” if it is
a judicial lien.
11 U.S.C. § 522(f)(1)(A).
“The term ‘judicial
lien’ means lien obtained by judgment, levy, sequestration, or
other legal or equitable process or proceeding.”
101(36).
11 U.S.C. §
“Courts have described a judicial lien as ‘an interest
which encumbers a specific piece of property granted to a judgment
creditor who was previously free to attach any property of the
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debtor’s to satisfy his interest but who did not have an interest
in a specific piece of property before occurrence of some judicial
action.’”
In re Washington, 242 F.3d 1320, 1323 (11th Cir. 2001)
(citations omitted) (emphasis in original).
There is no dispute
that the Consent Order on Motion for Relief From Automatic Stay
was not a judgment, levy, or sequestration.
The only issue is
whether it was another legal process or proceeding.
The Consent Order was issued based on the parties’ agreement
to deposit funds into the Registry as protection payments and is
more akin to a ‘security interest’, which is a lien created by
agreement.
11 U.S.C. § 101(51).
See, e.g., In re Nichols, 265
B.R. 831, 835 (B.A.P. 10th Cir. 2001) (the origin of lien was
consensual and did not become judicial lien); In re Cunningham,
478 B.R. 346, 358 (Bankr. N.D. Ind. 2012) (“the fact that the state
court judgment later recognized the lien and empowered the Harlans
to enforce it does not change its character to a judicial lien.”)
The Court agrees that the Consent Order is not and never was a
judicial lien, but only an agreement ratified by the Court.
The
parties entered into the agreement and the Court approved the Order
to allow funds to be deposited into the registry.
Nothing more.
The appeals are over and therefore the purpose of the Consent Order
is complete and the terms fulfilled.
affirmed.
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The Bankruptcy Court is
Case 2:22-cv-00498-JES Document 27 Filed 09/05/23 Page 12 of 12 PageID 940
Accordingly, it is hereby
ORDERED:
1. The
Bankruptcy
Judicial
Lien
Court's
and
Order
Order
Denying
Denying
Motion
Debtor's
to
Avoid
Motion
to
Reconsider, Alter or Amend Order Denying Motion to Avoid
Judicial Lien are affirmed.
2. The Clerk shall transmit a copy of this Opinion and Order
to the Bankruptcy Court and close the appellate file.
DONE and ORDERED at Fort Myers, Florida, this
September 2023.
Copies:
Counsel of Record
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5th
day of
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