TITLE MAX v. NORTHINGTON

Filing 7

ORDER affirming bankruptcy court re Bankruptcy Appeals filed by Title Max (1 in 4:16-cv-00172-CDL and 1 in 4:16-cv-00174-CDL). Ordered by US DISTRICT JUDGE CLAY D LAND on 10/27/2016. (CCL)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
TITLE MAX,

*

Appellant,

*

vs.

*

JONATHAN NORTHINGTON,

*

Appellee.

CASE NO. 4:16-CV-172 (CDL)

*

TITLE MAX,

*

Appellant,

*

vs.

*

GUSTAVIUS A. WILBER,

*

Appellee.

CASE NO. 4:16-CV-174 (CDL)

*
O R D E R

In these bankruptcy appeals, Appellant Title Max appeals
the bankruptcy court’s orders denying Title Max’s motions for
relief from stay.

For the reasons set forth below, the Court

affirms the bankruptcy court.
STANDARD OF REVIEW
“The district court in a bankruptcy appeal functions as an
appellate court in reviewing the bankruptcy court’s decision.”
Williams v. EMC Mortg. Corp. (In re Williams), 216 F.3d 1295,
1296 (11th Cir. 2000) (per curiam).
bankruptcy

court’s

factual

findings

The Court must “review the
for

clear

error

and

its

legal conclusions de novo.”

Fla. Agency for Health Care Admin.

v. Bayou Shores SNF, LLC, (In re Bayou Shores SNF, LLC), 828
F.3d 1297, 1304 (11th Cir. 2016).
FACTUAL BACKGROUND
I.

Jonathan Northington
Northington entered a vehicle title pawn transaction with

Title Max on August 27, 2015.

Northington Mem. Op. 2, ECF No. 4

at 96-106 in 4:16-cv-172 or ECF No. 24 in Bankr. M.D. Ga. 1540877.

The transaction was a “pawn transaction” within the

meaning

of

O.C.G.A. §

44-12-130(3).

Id.

Under

the

pawn

transaction, Northington delivered the certificate of title on
his 2006 Toyota Avalon to Title Max in exchange for a cash
advance

of

$5,253.

Id.

September 26, 2015.

Id.

The

pawn

transaction

matured

on

Under Georgia law, Northington had

thirty days from that date—until October 26, 2015—to redeem the
vehicle

by

paying

the

remaining

interest, and pawnshop charges.
the

grace

bankruptcy

period

expired,

protection

balance

Id.

the

principal,

On October 2, 2015, before

Northington

under

of

Chapter

filed

a

13.

petition
Id.

for

Under

11 U.S.C. § 108(b), Northington had sixty days from the petition
date—until December 1, 2015—to redeem the vehicle.
Northington did not do so.
of the vehicle.

Id. at 3.

Id.

2

Id. at 2-3.

He is still in possession

Northington filed a Chapter 13 plan on October 2, 2015.
Id.

On

his

Schedule

D,

Northington

listed

Title

creditor holding a secured claim in his vehicle.

Max

as

Id. at 6.

a

The

bankruptcy court confirmed the plan at a confirmation hearing
held on December 21, 2015 and entered a confirmation order on
January 22, 2016.
Title

Max

as

Id. at 3.

fully

secured

The confirmed plan proposed to pay
with

five

percent

payments of $160 per month on the $5,825 debt.

interest
Id.

and

Title Max

filed a Proof of Claim on February 8, 2015 claiming a secured
claim in the amount of $5,846.95 with an annual interest rate of
five percent, with the collateral being the vehicle.
On

January

8,

2016,

after

the

confirmation

Id.
hearing

but

before the confirmation order was entered, Title Max filed a
motion for relief from the bankruptcy stay, arguing that the
vehicle

was

not

part

of

the

bankruptcy

estate

because

Northington did not redeem the vehicle within the grace period.
The bankruptcy court held a hearing on Title Max’s motion and
considered the parties’ briefing on the issue.
court

entered

an

order

and

memorandum

Max’s motion for relief from the stay.

opinion

The bankruptcy
denying

Title

Title Max now appeals

this ruling.
II.

Gustavius Wilber
Wilber entered a vehicle title pawn transaction with Title

Max on September 2, 2015.

Wilber Mem. Op. 2, ECF No. 4 at 99-

3

109 in 4:16-cv-174 or ECF No. 23 in Bankr. M.D. Ga. 15-40962.
The transaction was a “pawn transaction” within the meaning of
O.C.G.A. §

44-12-130(3).

Id.

Under

the

pawn

transaction,

Wilber delivered the certificate of title on his 2006

Dodge

Charger to Title Max in exchange for a cash advance of $4,400.
Id.

The pawn transaction matured on October 2, 2015.

Id.

Under Georgia law, Wilber had thirty days from that date—until
November 2, 2015—to redeem the vehicle by paying the remaining
balance of the principal, interest, and pawnshop charges.

Id.

On October 30, 2015, before the grace period expired, Wilber
filed a petition for bankruptcy protection under Chapter 13.
Id.

Under 11 U.S.C. § 108(b), Wilber had sixty days from the

petition

date—until

Id. at 2-3.

December

29,

2015—to

Wilber did not do so.

possession of the vehicle.

redeem

Id. at 3.

the

vehicle.

He is still in

Id.

Wilber filed a Chapter 13 plan on October 30, 2015.

Id.

On his Schedule D, Wilber listed Title Max as a creditor holding
a secured claim in his vehicle.

Id. at 6.

Title Max filed a

proof of claim on December 10, 2015 and amended it on January 4,
2016 claiming to have a secured claim in the amount of $5,477.44
with

an

annual

interest

rate

collateral being the vehicle.

of

five

Id. at 3.

percent,

with

the

The bankruptcy court

confirmed the plan at a confirmation hearing held on January 21,
2015 and entered a confirmation order on February 9, 2016.

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Id.

The confirmed plan proposed to pay Title Max as fully secured
with five percent interest with payments of $175 per month on
the $5,036 debt.

Id.

On January 8, 2016, Title Max filed a motion for relief
from the bankruptcy stay, arguing that the vehicle was not part
of

the

bankruptcy

vehicle

within

temporarily
issue.

The

estate

the

denied

because

grace

the

bankruptcy

Wilber

period.

did

The

not

redeem

bankruptcy

motion

but

scheduled

court

held

a

briefing

hearing

on

the

court
on

Title

the

Max’s

motion and considered the parties’ briefing on the issue.

The

bankruptcy court entered an order and memorandum opinion denying
Title Max’s motion for relief from the stay.

Title Max now

appeals this ruling.
DISCUSSION
The

bankruptcy

court

concluded

that

the

vehicles

were

property of the debtors’ bankruptcy estates, that Title Max held
secured claims to the vehicles that could be modified by each
debtor

through

his

Chapter

13

plan,

that

Title

Max

did

not

timely object to confirmation of the plans, and that Title Max
is bound by the terms of the confirmed plans.

Title Max argues,

as it did before the bankruptcy court, that the vehicles were
not part of the debtors’ bankruptcy estates because the grace
period for redeeming the vehicles expired before the debtors’

5

plans

were

confirmed.1

The

bankruptcy

court

rejected

this

argument and found that because the vehicles were part of the
debtors’

estates

when

the

debtors

filed

their

Chapter

13

petitions, Title Max held secured claims in the vehicles that
could

be

modified

under

11 U.S.C. § 1322(b)(2).

The

Court

agrees with the bankruptcy court’s conclusion.
When

Northington

and

Wilber

filed

their

Chapter

13

petitions and their proposed Chapter 13 plans, each debtor still
had

title

to

his

vehicle,

subject

to

Title

Max’s

lien

and

subject to losing the title if he did not redeem it within the
redemption period.

See O.C.G.A. § 44-14-403(a) (“A pawnbroker

shall have a lien on the pledged goods pawned for the money
advanced, interest, and pawnshop charge owed but not for other
debts due to him.

He may retain possession of the pledged goods

until his lien is satisfied and may have a right of action
1

Title Max did not cite any binding precedent that squarely supports
its position.
In its reply brief, Title Max did cite Commercial
Federal Mortgage Corp. v. Smith (In re Smith), 85 F.3d 1555 (11th Cir.
1996). In Smith, the debtor defaulted on his home loan payments and
the bank foreclosed.
Id. at 1557.
After the foreclosure sale, the
debtor filed for Chapter 13 protection.
Id.
Under Alabama law, he
had a statutory right of redemption at the time of his petition. Id.
The Eleventh Circuit noted that after a foreclosure sale occurs, there
is no claim and no default to cure or waive under the bankruptcy code.
So while the debtor did retain his statutory right of redemption after
filing a Chapter 13 petition and could cure the default by making a
lump sum payment, he could not “modify that right of redemption under
a Chapter 13 plan that is filed after a foreclosure sale.”
Id. at
1560. A critical factor in Smith was that the debtor’s claim to title
was extinguished by the foreclosure sale that occurred before he filed
for Chapter 13 protection. As discussed below, that is not the case
here, where the debtors still owned their vehicles when they filed
their Chapter 13 petitions. Smith thus does not apply.

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against anyone interfering therewith.”).

Under Georgia law, if

pledged goods are “not redeemed within the grace period,” they
“shall be automatically forfeited to the pawnbroker by operation
of this Code section, and any ownership interest of the pledgor
or seller shall automatically be extinguished as regards the
pledged

item.”

language,

the

O.C.G.A. § 44-14-403(b)(3).
Court

concludes

that

a

Based

on

pledgor’s

this

ownership

interest in the pledged item is not extinguished until after the
grace period expires.
petition

before

the

Here, each debtor filed his Chapter 13
grace

period

expired.

Thus,

neither

debtor’s interest in his vehicle was forfeited or extinguished
before his petition date, so each debtor’s vehicle belonged to
the bankruptcy estate because the debtor still had an ownership
interest.

See

11 U.S.C.

§

541(a)(1)

(stating

that

the

bankruptcy estate “is comprised of . . . all legal or equitable
interests of the debtor in property as of the commencement of
the case”).
As of each debtor’s petition date, Title Max had the right
to be repaid pursuant to the title pawn agreements or to obtain
full title to the vehicle if the required payments were not
made.

Thus, Title Max was a “creditor” with a “claim” against

each debtor within the meaning of the bankruptcy code because
Title Max held a lien on each debtor’s vehicle “for the money
advanced, interest, and pawnshop charge owed.”

7

O.C.G.A. § 44-

14-403(a);

see

“right

payment,

to

11 U.S.C. §
whether

101(5)(A)
or

not

(defining

such

“claim”

right

is

as

reduced

a
to

judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured”); 11 U.S.C. § 101(10)(A) (defining “creditor” as an
“entity that has a claim against the debtor that arose at the
time of or before the order for relief concerning the debtor”);
11 U.S.C. § 102(2)

(defining

“claim

against

the

debtor”

as

including a “claim against property of the debtor”).
In sum, when the debtors filed their Chapter 13 petitions,
the vehicles were part of their bankruptcy estates and Title Max
held

secured

claims.

The

bankruptcy

code

provides

that

a

Chapter 13 plan may “modify the rights of holders of secured
claims.”

11 U.S.C. § 1322(b)(2).

Therefore,

the

bankruptcy

court was authorized to modify Title Max’s claims as it did,
requiring each debtor to pay nearly the entire amount claimed by
Title Max in its Proofs of Claim, and Title Max is bound by the
terms of each debtor’s confirmed Chapter 13 plan.

Accordingly,

the bankruptcy judge’s denials of Title Max’s motions for relief
from stay are affirmed.
IT IS SO ORDERED, this 27th day of October, 2016.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA

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