Thomas v. Goodman
Filing
11
OPINION and ORDER AFFIRMING the decision of the Bankruptcy Court. Signed by Judge William S. Duffey, Jr on 09/21/2011. (jtj) Modified on 9/21/2011 (jtj).
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
In re:
KEITH EUGENE THOMAS,
Debtor.
1:11-cv-1608-WSD
KEITH EUGENE THOMAS,
Appellant,
v.
ADAM M. GOODMAN,
Appellee.
OPINION AND ORDER
This matter is before the Court on Keith Eugene Thomas’s (“Debtor”)
Appeal from the Bankruptcy Court for the Northern District of Georgia
(“Bankruptcy Court”) of orders requiring him to deposit his monthly mortgage
payments with the Chapter 13 Trustee (“Trustee”) and dismissing his bankruptcy
case for failure to do so. (See Orders dated Mar. 25 and Apr. 6, 2011, In re
Thomas, No. 10-95887, ECF. Nos. 42, 45 (Bankr. N.D. Ga.)).
I.
BACKGROUND
On March 25, 2011, the Bankruptcy Court ordered Debtor to pay $1,100 on
the first of each month (“Mortgage Payments”) to the Standing Chapter 13 Trustee
to meet the Debtor’s payment obligation on a promissory note secured by a
residential mortgage.1 The Bankruptcy Court directed the Trustee to hold the
funds in escrow pending the resolution of an adversary proceeding between the
Debtor and Bank of America Home Loan Servicing, LP (“Bank of America”), in
which the Debtor disputed whether Bank of America was the holder of the
promissory note. In its March 25, 2011, Order the Bankruptcy Court warned the
Debtor that failure to keep his Mortgage Payments current could result in the
Debtor’s case being dismissed without further hearing.
On April 1, 2011, the Trustee notified the Bankruptcy Court that the Debtor
had failed to make the Mortgage Payments ordered by the Bankruptcy Court and
requested that the case be dismissed. On April 6, 2011, the Bankruptcy Court
dismissed the action.
The Debtor contends that requiring him to make his Mortgage Payments to
the Trustee “prejudice[d] debtors’ rights to the equal protection of laws and the due
process of laws” [sic] in his adversary proceeding against Bank of America.
1
The Bankruptcy Court had previously told the debtor at a hearing held on March
10, 2011, that the Debtor was required to keep his mortgage payments current.
2
Plaintiff admits that he owes approximately $1,100 per month but disputes whether
Bank of America can prove that the Mortgage Payments were required to be paid
to Bank of America. The Debtor also claims that the dismissal of his case without
the opportunity to respond to the March 25, 2011, Order violated the rules of the
Bankruptcy Court and his equal protection and due process rights.
II.
DISCUSSION
A.
Standard of Review
“On an appeal the district court . . . may affirm, modify, or reverse a
bankruptcy judge’s judgment, order, or decree or remand with instructions for
further proceedings. Findings of fact, whether based on oral or documentary
evidence, shall not be set aside unless clearly erroneous, and due regard shall be
given to the opportunity of the Bankruptcy Court to judge the credibility of the
witnesses.” Fed. R. Bankr. P. 8013. The burden is on the appellant to show that
the Bankruptcy Court’s factual findings are clearly erroneous. Id.; see also In re
Downtown Properties, Ltd., 794 F.2d 647 (11th Cir. 1986). The Court reviews, de
novo, the Bankruptcy Court’s conclusions of law. In re Rider, 31 F.3d 1102, 1104
(11th Cir. 1994).
3
B.
Analysis
Requiring the Mortgage Payments to be made to the Trustee did not
prejudice the Debtor’s due process or equal protection rights or any other of the
Debtor’s rights, and did not violate the Bankruptcy Court rules. The Debtor admits
that he owes the Mortgage Payments. The Bankruptcy Court simply required the
Trustee to hold the Mortgage Payments made by the Debtor until the Bankruptcy
Court considered the adversary action filed against Bank of America by the
Debtor. The requirement that the Mortgage Payments be held by the Trustee not
only maintained the status quo, but it also ensured that the Mortgage Payment
funds were available to be paid to the person the Bankruptcy Court determined was
entitled to receive the payments the Debtor was obligated to make on his mortgage.
This arrangement also ensured that the Debtor was able to meet the payment
schedule contemplated in the Debtor’s proposed Chapter 13 plan. The Debtor does
not cogently explain how the requirement that he pay the mortgage amounts due
violated his equal protection or due process rights.
Furthermore, the Bankruptcy Court was constrained not to interfere with the
rights of whoever was entitled to receive the Mortgage Payments. Under 11
U.S.C. § 1322(b)(2), a court cannot modify the rights of a holder of a “claim
secured only by a security interest in real property that is the debtor’s principal
4
residence,” except to cure a prepetition default and put the debtor’s payments back
on schedule under § 1322(b)(5). Section 1322(b)(5) provides further that a plan
may require “maintenance of payments while the case is pending” on a “secured
claim on which the last payment is due after the date on which the final payment
under the plan is due.” The Bankruptcy Court thus was not permitted to modify
Debtor’s obligation to make the Mortgage Payments, and the Debtor’s plan
required him to continue timely paying his mortgage obligations. Doing so was a
sensible way to administer the case. It tested the viability of the plan the Debtor
requested be approved and tested the Debtor’s good faith in seeking to restructure
his debt obligations.
The Court also concludes that, under the circumstances here, the Debtor is
not entitled to relief based upon his claimed inability to respond to the March 25,
2011, Order. In the Order dated March 25, 2011, the Debtor was told to stay
current on his mortgage. The Debtor was warned that his failure to make his
scheduled Mortgage Payments could result in the Debtor’s case being dismissed
without further hearing. Despite this clear warning, the Debtor failed to comply
with the Bankruptcy Court’s order. The Debtor next claims that he should have
been allowed twenty days to respond to the request for dismissal. The fact is,
however, that he had ample time to object to the March 25, 2011, Order. The
5
Debtor was advised at a hearing conducted on March 10, 2011, that his case would
be dismissed if he did not make his Mortgage Payments. That warning was
reiterated in the March 25, 2011, Order. The case was not dismissed until April 6,
2011. The Debtor did not take any action between March 10, 2011 and April 6,
2011, to challenge or otherwise respond to the Court’s requirement that he
continue to make timely mortgage payments. The Court further finds that delaying
the dismissal of the Debtor’s action so that the Debtor could assert the baseless
claims he asserts here would have unfairly extended the automatic stay to the
detriment of his creditors. See 11 U.S.C. § 1307(c) (allowing bankruptcy courts to
dismiss chapter 13 cases for cause, including “unreasonable delay by the debtor
that is prejudicial to creditors”). The Court does not find any error of law in the
Bankruptcy Court’s judgment that the case be dismissed.
Accordingly, and for the foregoing reasons,
IT IS HEREBY ORDERED that the Bankruptcy Court’s judgment is
AFFIRMED.
SO ORDERED this 21st day of September, 2011.
_________________________________________
WILLIAM S. DUFFEY, JR.
UNITED STATES DISTRICT JUDGE
6
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?