Serra v. The Bank of New York Mellon

Filing 16

Order Reversing Bankruptcy Court Orders and Remanding Case to Bankruptcy Court with Notice of Entry 8024 Closing Case. Signed by Judge Marcia G. Cooke on 3/28/2018. (tm) NOTICE: If there are sealed documents in this case, they may be unsealed after 1 year or as directed by Court Order, unless they have been designated to be permanently sealed. See Local Rule 5.4 and Administrative Order 2014-69.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 17-Civ-22224-COOKE
BKC CASE NO. 17-10533-LMI
IN RE:
MAXIMA SERRA,
Debtor.
___________________________________________/
MAXIMA SERRA,
Appellant,
vs.
THE BANK OF NEW YORK MELLON, and
NANCY K. NEIDICH, Standing Chapter 13
Trustee,
Appellees.
___________________________________________/
ORDER REVERSING BANKRUPTCY COURT ORDERS AND REMANDING
CASE
This case is a consolidated appeal1 arising out of a pro se bankruptcy petition filed by
Appellant Maxima Serra (“Ms. Serra”). Ms. Serra appeals two bankruptcy court orders
issued in the underlying bankruptcy proceeding, Order Granting the Bank of New York
Mellon’s Motion for Relief from the Automatic Stay, see ECF No. 1, and Order Denying
Confirmation and Dismissing Chapter 13 Case, see C2 ECF No. 1. For the reasons stated
below, I reverse the rulings of the bankruptcy court.

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Because the issues on appeal are based on essentially the same underlying facts, I
consolidated the instant case with Case No. 17-cv-22413-MGC. I shall refer to documents
filed in Case No. 17-cv-22413-MGC with the notation “C2.”
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I.

BACKGROUND

On December 6, 2013, a final judgement of foreclosure was entered against Maria
Serra and in favor of Appellee, The Bank of New York Mellon (“Bank of NYM”), related to
a property located in Hialeah, Florida. ECF No. 5-2, 32–33. Ms. Maxima Serra was listed
as a tenant on the judgment. Id. at 32. The foreclosed property was eventually sold and a
certificate of title to the property was issued to Bank of NYM on October 13, 2015. Id. at 38.
Ms. Serra filed a Chapter 13 bankruptcy petition on January 17, 2017. ECF No. 9, 4;
ECF No. 5-2, 6–14. Bank of NYM was the only creditor listed to be noticed on her
bankruptcy petition. ECF No. 5-2, 1–14. While Ms. Serra lived at the foreclosed property,
she does not appear to have ever had a legal interest in the property. See Deed, C2 ECF No.
10-1, 3. In fact, it was Ms. Serra’s daughter who owned the property from 2002 until it was
foreclosed on and sold to Bank of NYM in 2015. Id.; ECF No. 5-2, 32–33. At the time Ms.
Serra filed her bankruptcy petition, a writ of possession was pending in the foreclosure
proceeding. Trustee’s Br., 3; C2 ECF No. 10-1, 9–10.
On February 1, 2017, the bankruptcy court issued a notice that the meeting of
creditors was scheduled for March 2, 2017, but Ms. Serra filed a motion to excuse her
appearance because she was elderly. Trustee’s Br., 4; C2 ECF No. 6-1, 3–4. Appellee Nancy
N. Neidich, the appointed Trustee (“Trustee”), objected, and a hearing was held on Ms.
Serra’s motion on April 4, 2017. Id. At the hearing, the bankruptcy court took testimony
from Ms. Serra and ruled that Ms. Serra must appear at the meeting of creditors. Trustee’s
Br., 4. On May 12, 2017, the bankruptcy court scheduled the confirmation hearing for the
afternoon of June 6, 2017. Id.; C2 ECF No. 10-1, 9–10. Shortly thereafter, Bank of NYM
filed a Motion for Relief from Automatic Stay to Enforce Final Judgment of Foreclosure
with Certificate of Title Already Issued. ECF No. 5-2, 28–31. Bank of NYM argued its
interest in the foreclosed property was not adequately protected while Ms. Serra occupied
the property without making payments on the final judgment or Chapter 13 plan, that Ms.
Serra had no equity in the property, and that the property was not necessary for an effective
reorganization. Id. at 29. According to Bank of NYM, it was therefore entitled to relief from
the automatic bankruptcy stay pursuant to 11 U.S.C. §§ 362(d)(2)(A) and (B). Id. A hearing
on Bank of NYM’s motion was scheduled for the morning of June 6, 2017. ECF No. 5-2,
40. Ms. Serra never filed a response to Bank of NYM’s motion. Bank’s Br., 8.

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In her briefs, Ms. Serra states that she fell a week prior to the June 6, 2017 hearings
and injured her hip, causing her to be bedridden and unable to attend either of the June 6,
2017 hearings. Serra’s Br., 4. Ms. Serra alleges that her daughter sent documents to the
Trustee and to the bankruptcy court, alerting both that Ms. Serra was unable to go to the
courthouse for the scheduled hearing. Id.; Serra’s Br., ECF No. 9, 9. She does not allege that
she notified Bank of NYM and Bank of NYM denies receiving any notice that Ms. Serra
was unable to attend the meeting. Bank’s Br., 3. The Trustee does not deny that she received
notice that Ms. Serra could not attend the hearing. See generally, Trustee’s Br. The hearing
on Bank of NYM’s Motion for Relief from the Automatic Stay took place on June 6, 2017
and the motion was granted. ECF No. 1, 3–5. According to the Trustee, during the hearing
on the motion for relief from stay, the bankruptcy court considered the record and the
testimony given by Ms. Serra at the April 4, 2017 hearing. Trustee’s Br., 4–5. The
bankruptcy court then directed the Trustee to request a dismissal of the Bankruptcy Case
because bankruptcy could not afford Ms. Serra relief from the writ of possession. Id. at 5–6.
However, there is no transcript from the June 6, 2017 hearing in the record.
It does not appear that the confirmation hearing scheduled for the afternoon of June
6, 2017 took place, as the bankruptcy docket shows a Notice of Continued Confirmation
Hearing was entered on June 9, 2017, which continued the confirmation hearing to July 11,
2017. On June 7, 2017, the bankruptcy court issued its Order Granting The Bank of New
York Mellon’s Motion for Relief from the Automatic Stay. ECF No. 1, 3–5. On June 19,
2017, the bankruptcy court issued its Order Denying Confirmation and Dismissing Chapter
13 Case. C2 ECF No. 1, 4–5.
Ms. Serra appealed both Orders timely and I have consolidated both appeals into the
instant case. Ms. Serra claims that the bankruptcy court violated her right to due process
and abused its discretion by holding the June 6, 2017 hearing on Bank of NYM’s motion
knowing she was confined to her bed and could not attend the hearing.2 ECF No. 9, 10–11.
She makes the same arguments as to the bankruptcy court’s dismissal of her case, and
2

Ms. Serra makes two arguments as to why the bankruptcy court erred in granting the
motion without holding a hearing. Upon close review, they are essentially the same
argument: her due process rights were violated when the hearing was held without her. “In
general, we show a leniency to pro se litigants not enjoyed by those with the benefit of a legal
education.” Christiansen v. McRay, 380 F. App’x 862 (11th Cir. 2010) (citation omitted).
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makes the additional legal argument that the bankruptcy court abused its discretion in
dismissing her case without a hearing in violation of Bankruptcy Rule 9014(a).
II.

LEGAL STANDARD

“When entertaining an appeal from a bankruptcy court, district courts are entitled to
‘affirm, modify, or reverse a bankruptcy court’s . . . order’ and will accept its findings of fact
unless those findings are clearly erroneous. In re Boykin, 313 B.R. 516, 519 (M.D. Ga. 2004)
(Fed. Bankr. R. 8013). “A bankruptcy court’s legal conclusions and application of the law to
the facts of a given case are reviewed de novo . . . .” HDR Architecture, P.C. v. Maguire Grp.
Holdings, 523 B.R. 879, 885 (S.D. Fla. 2014) (citing Carrier Corp. v. Buckley (In re Globe Mfg.
Corp.), 567 F.3d 1291, 1296 (11th Cir. 2009)).
III.

DISCUSSION

A. Dismissal of Bankruptcy Case
Ms. Serra argues she was entitled to a hearing prior to the dismissal of her
bankruptcy case. The Trustee argues that the case was properly dismissed because there was
no good faith reason to keep the case open. Trustee does not engage with or specifically
address Ms. Serra’s argument that she was entitled to a hearing; she simply argues the
bankruptcy case could not provide Ms. Serra with any relief as to the writ of possession on a
property that was not a part of the bankruptcy estate.
The U.S. Bankruptcy Code discusses dismissals of Chapter 13 cases. “[O]n request of
a party in interest or the United States trustee and after notice and a hearing, the court may . . .
dismiss a case under this chapter,” if it “is in the best interests of creditors and the estate, for
cause.” 11 U.S.C. § 1307(c) (emphasis added). “After notice and hearing” is specifically
defined in the Bankruptcy Code.
“[A]fter notice and a hearing,” or a similar phrase—
(A) means after such notice as is appropriate in the particular circumstances,
and such opportunity for a hearing as is appropriate in the particular
circumstances; but
(B) authorizes an act without an actual hearing if such notice is given properly
and if—
(i) such a hearing is not requested timely by a party in interest; or
(ii) there is insufficient time for a hearing to be commenced before such act
must be done, and the court authorizes such act[.]

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11 U.S.C. § 102(1). A bankruptcy court also has discretion to dismiss sua sponte “collusive,
sham, or frivolous suits,” including suits “with demonstrably frivolous purposes absent any
economic reality.” In re Moog, 774 F.2d 1073, 1076 (11th Cir. 1985) (quoting Furness v.
Lillienfield, 35 B.R. 1006, 1011 (Bkrtcy. D.C. 1983)); see also In re D’Elia, 2011 WL 1326819,
at *6 (M.D. Fla. Apr. 6, 2011) (“While a Bankruptcy Court has inherent authority” distinct
from its statutory contempt authority under 11 U.S.C. § 105(a), “it does not have the
authority to sua sponte dismiss the Chapter 13 case and deny confirmation without a proper
reason . . . .”).
While a bankruptcy court may dismiss a case on its own motion, Trustee has cited to
no law indicating a case can be dismissed without notice to the debtor and an opportunity
for her to be heard. It does not appear that Ms. Serra received any notice that her case was
going to be dismissed, nor did the bankruptcy court state it was dismissing Ms. Serra’s case
because it was a “collusive, sham, or frivolous” suit absent any economic reality. In
addition, according to the docket sheet, it appears a Notice of Continued Confirmation
Hearing was filed a few days after the June 6, 2017 hearing was to have taken place,
resetting the confirmation hearing to July 11, 2017. While the Trustee’s Request for Entry of
Order Dismissing Case Upon Denial of Confirmation Plan was filed on June 15, 2017 and
presumably served on Ms. Serra, the case was dismissed four days later on June 19, 2017.
Even assuming Ms. Serra received notice on June 15, 2017, that is not sufficient notice
when Ms. Serra may have reasonably believed she could address any concerns at the July
11, 2017 hearing. I therefore reverse the Order Denying Confirmation and Dismissing
Chapter 13 Case and remand to the bankruptcy court for proper notice and a hearing.
B. Granting Relief From Automatic Stay
Ms. Serra contends the bankruptcy court also violated her right to due process by
holding a hearing on Bank of NYM’s Motion for Relief from Stay knowing that she was
unable to attend. Bank of NYM argues that these particular claims are moot because the
bankruptcy petition has since been dismissed, meaning the stay that automatically went into
effect by operation of law pursuant to 11 U.S.C. § 362(a) has already dissolved pursuant to
11 U.S.C. § 362(c)(2)(B). Because I have reversed the bankruptcy court’s order dismissing
Ms. Serra’s bankruptcy petition, this argument no longer holds sway. I shall therefore turn
to Bank of NYM’s remaining arguments.

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Bank of NYM contends Ms. Serra’s argument that the bankruptcy court violated her
right to due process is premised on the idea that the bankruptcy court and Bank of NYM
knew that she was unable to attend the hearing. According to Bank of NYM, because the
bankruptcy court did not know she was bedridden, there can be no violation of due process,
especially where Ms. Serra never filed a motion for reconsideration to bring the issue before
the bankruptcy court. However, the record is not clear on whether the bankruptcy court
knew of Ms. Serra’s injury. Bank of NYM points out there is nothing in the record to
support Ms. Serra’s contention that her daughter notified either the bankruptcy court or the
Bank of NYM that she could not attend the hearing. However, while Bank of NYM
specifically denies receiving any notice that Ms. Serra was bedridden, the Trustee does not
dispute that she received Ms. Serra’s notice and appears to have attended the hearing on
Bank of NYM’s motion. It is quite possible the parties were aware of Ms. Serra’s injury at
the time of the hearing.
Bank of NYM also notes that Ms. Serra never responded to its motion, and therefore
the bankruptcy court properly treated it as an unopposed motion. However, “a
motion for relief from the automatic stay is a contested matter pursuant to Bankruptcy Rule
9014.” In re Vital Breathing Prod., Inc., 98 B.R. 97, 99 (Bankr. N.D. Ga. 1988). Rule 9014
provides that contested matters do not require a response and that a reasonable notice and
opportunity for hearing be afforded the party against whom relief is sought. As such, the fact
that Ms. Serra did not respond to the matter does not mean the motion was uncontested or
that she waived her right to a hearing.
Because the record is unclear as to who had knowledge of Ms. Serra’s inability to
attend the hearing, I cannot unequivocally say her procedural due process right, given to her
by the Federal Rules of Bankruptcy Procedure, was not violated. While Ms. Serra could
have filed a motion for reconsideration to bring these facts to the attention of the bankruptcy
court instead of filing an appeal, there is no requirement that she do so. Accordingly, I
reverse the Order Granting the Bank of New York Mellon’s Motion for Relief from the
Automatic Stay and remand to the bankruptcy court for a hearing.
IV.

CONCLUSION

For the foregoing reasons, the Order Granting the Bank of New York Mellon’s
Motion for Relief from the Automatic Stay and Order Denying Confirmation and

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Dismissing Chapter 13 Case are REVERSED and the case is REMANDED to the
bankruptcy court. All pending motions, if any, are DENIED as moot. The Clerk is directed
to TRANSMIT notice of this Order to the bankruptcy court in accordance with all relevant
rules and procedures and is further directed to CLOSE this case.
DONE and ORDERED in Chambers at Miami, Florida, this 28th day of March
2018.

Copies furnished to:
Maxima Serra, pro se
Counsel of record

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