Owens v. GMAC Mortgage, LLC

Filing 11

ORDER AND OPINION granting 7 Appellee's Motion for Leave, denying 10 Appellant's Motion for Temporary Restraining Order and affirming the bankruptcy court's order Denying Appellant's Motion for Reconsideration [Bankr. Co. No. 27]. Signed by Judge Julie E. Carnes on 9/24/12. (ddm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
In re:
TERRENCE OWENS,
APPELLANT,
CIVIL ACTION NO.
v.

1:11-cv-3442-JEC

GMAC MORTGAGE, LLC AS SERVICER
FOR U.S. BANK NATIONAL
ASSOCIATION AS TRUSTEE FOR RAMP
2005EFC1,

on appeal from Bankr. N.D. Ga
Ch. 13 Case No. 11-72407-CRM

Appellee.

ORDER AND OPINION
This case is before the Court on appeal from the bankruptcy
court’s Order Denying Appellant’s Motion for Reconsideration [Bankr.
Doc. No. 27].

In conjunction with the appeal, appellee has filed a

Motion for Leave to File a Brief in Opposition [7] and appellant has
filed a Motion for Temporary Restraining Order [10].

The Court has

reviewed the record and the arguments of the parties and, for the
reasons set forth below, concludes that appellee’s Motion for Leave
[7] should be GRANTED, appellant’s Motion for Temporary Restraining
Order [10] should be DENIED, and the bankruptcy court’s Order Denying
Appellant’s Motion for Reconsideration [Bankr. Doc. No. 27] should be
AFFIRMED.

AO 72A
(Rev.8/82)

BACKGROUND
Pro se appellant initiated a Chapter 13 bankruptcy proceeding on
August 1, 2011.

Approximately a week later, appellee filed a motion

to lift the automatic stay and seeking in rem relief as to property
located

at

“property”)

683
in

Gingercake
which

Road,

appellant

Fayetteville,
holds

a

Georgia

one-third

(Appellee’s Mot. for Relief [Bankr. Doc. No. 12].)

(the

interest.

Appellee is the

loan servicer for a residential mortgage loan made to purchase the
property in 2004.

(Appellee’s Br. [7] at 4.)

Following a hearing, the bankruptcy court

granted appellee’s

motion and ordered that appellee could “proceed with its state law
remedies” as to the property.

(Order [Bankr. Doc. No. 23] at 2.)

Finding that in rem relief was warranted under 11 U.S.C. § 362(d)(4),
the bankruptcy court further held that the automatic stay would not
be in effect as to appellee should any other party claiming an
interest in the property through appellant file another bankruptcy
petition.

(Id.)

Appellant filed a motion to reconsider, which the bankruptcy
court denied.

([Bankr. Doc. No. 27].)

He subsequently filed a

notice of appeal and a motion for temporary restraining order.
(Appellant’s Br. [3] and Mot. for Temporary Restraining Order [10].)
Although the bankruptcy court’s order expressly was based on the
“reasons stated on the record in open Court” at the hearing on the
2

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motion, appellant neglected to file a transcript of the hearing.
([Bankr. Doc. No. 23].)
Appellant

obtained

his

interest

in

the

property

following a series of unauthorized transactions.

in

2010,

On December 23,

2004, third party George Barnes purchased the property with the
proceeds

of

a

loan

in

the

amount

of

$200,000

from

EquiFirst.

(Security Deed, attached as Ex. A. to Appellant’s Mot. [Bankr. Doc.
No. 21].) In connection with the transaction, Barnes executed a Note
in favor of EquiFirst and a Security Deed in favor of Mortgage
Electronic

Registration

EquiFirst.

(Id.)

Systems,

Inc.

(“MERS”)

as

nominee

for

The Deed states that:

[i]f all or any part of the Property or any Interest in the
Property is sold or transferred . . . without Lender’s
prior written consent, Lender may require immediate payment
in full of all sums secured by this Security Instrument.
(Id. at ¶ 18.)
In spite of the above language, Barnes conveyed the property to
The New United Baptist COGIC, Inc. on December 30, 2004. (Appellee’s
Br. [7] at 6.) The New United Baptist COGIC transferred the property
to Brian Owens via a Quitclaim Deed executed on July 31, 2006.

(Id.)

Approximately a year later, Brian Owens executed a Warranty Deed
splitting his interest in the property between himself and Thelma
Owens.

(Id.)

On October 22, 2009, Brian Owens executed a second

Warranty Deed conveying his remaining interest in the property to

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Thelma Owens.

(Id. at 6-7.)

On November 1, 2010, Thelma Owens

executed a Warranty Deed that divided her interest in the property
equally between herself, appellant, and A Global Ministry Care, Inc.
(Id. at 7.)

There is no indication that the lender consented to any

of these transfers, as required by the original Security Deed.
In addition to the numerous unauthorized transfers, the property
has been involved in at least four bankruptcy filings in the past two
years:

(1)

on

February

16,

2010,

Barnes

filed

a

Chapter

7

proceeding, see Case No. 10-10566-WHD; (2) on July 2, 2010, Thelma
Owens filed a Chapter 13 proceeding, but her case was dismissed for
lack of funding, see Case No. 10-79232-MGD; (3) on November 1, 2010,
Thelma

Owens

again

filed

a

Chapter

13

proceeding,

which

was

dismissed for lack of funding, see Case No. 10-92864-MGD; and (4) on
May 2, 2011, appellant filed a Chapter 13 proceeding, but had his
case dismissed for failure to obtain or provide proof of credit
counseling as required by §§ 109(h) and 521(b) of Title 11, see Case
No.

11-63442-CRM.

Plaintiff

initiated

the

current

Chapter

13

proceeding within three months of the dismissal of his previous
bankruptcy. ([Bankr. Doc. No. 1].) When appellee sought to lift the
automatic stay, the property was severely underwater:

the loan

payoff amount was $330,212.38 and the property was only valued at
$161,500.00.

(Appellee’s Mot. [Bankr. Doc. No. 12] at ¶¶ 4, 6.)

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Appellee neglected to file a timely response brief in opposition
to the appeal.
appellee’s

(Appellee’s Mot. for Leave [7].)

motion

for

leave

to

submit

a

Upon its receipt of

brief

outside

of

the

applicable time limit, the Court instructed appellant to file a reply
on the merits.

(May 14, 2012 Minute Order.)

Having reviewed all of

the submissions, and in the interest of deciding the appeal on its
merits, the Court finds that appellee’s tardiness was the result of
excusable inadvertence and GRANTS appellee’s motion for leave [7].
See Belcher v. Columbia Univ., 293 B.R. 269, 270 (N.D. Ga. 2001)
(Pannell, J.)(“The Eleventh Circuit has adopted a flexible standard
with regard to the failure to file briefs . . . because the filing of
briefs on appeal is not a jurisdictional pre-requisite and does not
prejudice the parties to the same degree as a failure to file a
timely appeal”)(citing In re Beverly Mfg. Corp., 778 F.2d 666-67
(11th Cir. 1985)).

The Court will thus consider appellee’s brief in

ruling on the merits of the appeal and the motion for temporary
restraining order.
STANDARD OF REVIEW
When

reviewing

bankruptcy

proceedings,

functions as an appellate court.
(11th Cir. 2008).

the

district

court

In re Walker, 515 F.3d 1204, 1210

As such, the Court generally reviews conclusions

of law de novo and findings of fact for clear error.

In re JLJ Inc.,

988 F.2d 1112, 1116 (11th Cir. 1993). However, discretionary rulings
5

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made pursuant to the Bankruptcy Code are reviewed only for an abuse
of discretion.

In re Citation Corp., 493 F.3d 1313, 1317-18

(11th

Cir. 2007).

An abuse of discretion occurs if the bankruptcy judge

applies

incorrect

an

legal

standard,

fails

to

follow

procedures, or makes clearly erroneous findings of fact.

proper

Id.

See

also In re Hillsborough Holdings Corp., 127 F.3d 1398, 1401 (11th
Cir. 1997)(discussing the abuse of discretion standard).
DISCUSSION
I.

APPEAL OF THE BANKRUPTCY COURT’S ORDER
The bankruptcy court’s decision to lift the automatic stay is a

discretionary ruling, and may be reversed only upon a showing of
abuse of discretion.
(11th Cir. 1989).

In re Dixie Broad., Inc., 871 F.2d 1023, 1026

There is no evidence in the record to suggest that

the bankruptcy court abused its discretion in this case.

Indeed,

given that the bankruptcy court’s stay order is based on “the reasons
stated on the record in open Court” at the hearing [Bankr. Doc. No.
23], appellant’s failure to submit a transcript of the hearing is in
itself sufficient to affirm the order.

See In re Wilson, 402 B.R.

66, 69 (1st Cir. 2009)(“Where the bankruptcy court's findings or
conclusions of law were set forth on the record at a hearing, the
appellant must provide a transcript of the hearing as part of the
record on appeal.”) and Fields v. Booker, 283 Fed. App’x 400, 402
(7th Cir. 2008)(affirmance was warranted where the bankruptcy court’s
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order stated it was done “[f]or reasons stated in open court” and the
appellant failed to submit a transcript).
Moreover, the limited record before the Court supports the
bankruptcy court’s decisions both to lift the stay and to grant in
rem relief.

Although appellant’s brief is unclear and raises a

number of extraneous issues, it can essentially be condensed to the
following arguments:
over

the

“equity

bankruptcy

court

(1) the bankruptcy court lacked jurisdiction

dispute”
abused

at

its

issue

in

the

discretion.

case,
Neither

and

(2)

the

argument

is

persuasive.
A.

The Bankruptcy Court Did Not Lack Jurisdiction.

Much of appellant’s argument centers around his theory that the
bankruptcy court lacked jurisdiction to settle the “equity dispute”
between himself and appellee.

(Appellant’s Br. [3] at 4-6.)

This

argument is completely at odds with the relevant provisions of the
Bankruptcy Code. Pursuant to 11 U.S.C. § 541(a), the commencement of
a Chapter 13 bankruptcy creates an estate comprised of “all legal or
equitable interests of the debtor in property as of the commencement
of the case.”
bankruptcy

11 U.S.C. § 541 (a)(1).

petition

operates

as

a

stay

Under 11 U.S.C. § 362, a
of

“any

act

to

obtain

possession of” or to “enforce any lien against” property of the
estate.

11 U.S.C. § 362(a)(3) and (4).

However, a creditor is

entitled under § 362 to seek relief from the stay as to estate
7

AO 72A
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property that serves as collateral. 11 U.S.C. § 362(d). In applying
that

provision,

the

bankruptcy

court

is

expressly

consider the debtor’s equity in estate property.

required

to

Id.

More generally, it is well established that the bankruptcy court
sits in equity and has the equitable powers necessary and appropriate
to carry out its function.

See In re Lancaster Steel Co., 284 B.R.

152, 160 (S.D. Fla. 2002)(Hurley, J.)(“courts of bankruptcy are
essentially

courts

of

equity,

and

their

proceedings

inherently

proceedings in equity”) and In re Momentum Mfg. Corp., 25 F.3d 1132,
1136 (2nd Cir. 1994)(“It is well settled that bankruptcy courts are
courts of equity, empowered to invoke equitable principles to achieve
fairness and justice in the reorganization process.”) Appellant’s
suggestion that the bankruptcy court lacked jurisdiction to lift the
stay because it is not a “court of equity” is therefore meritless.
B.

The Bankruptcy Court Did Not Abuse Its Discretion.

In support for his contention that the bankruptcy court abused
its discretion, appellant makes numerous arguments, all of which
lack any legal or factual support.

(Appellant’s Br. [3] at 1-3, 6-

9.) As an initial matter, the Court flatly rejects appellant’s vague
suggestion that the bankruptcy court somehow violated his due process
rights under the Fifth Amendment of the United States Constitution.
(Id. at 1.) Appellant was given notice for the hearing on appellee’s
motion, attended the hearing, argued before the bankruptcy court, and
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presented evidence in support of his position.

That the outcome of

the hearing was adverse to plaintiff does not render the process
inadequate.

See In re Richards, No. 09-69716-WLH, 2012 WL 2357672,

at *4 (Bankr. N.D. Ga. June 8, 2012)(Hagenau, J.)(“the Debtor was
provided due process before the entry of the Order on Relief from
Stay.

Due

process

requires

the

party

be

given

notice

and

a

meaningful opportunity to be heard.”)(citing Lachance v. Erickson,
522 U.S. 262, 266,(1998)).
Appellant’s contention that appellee had “no invested interest”
in the property is likewise meritless. As servicer of the underlying
loan, appellee is a “real party in interest” with standing to act on
behalf of its principal in bankruptcy proceedings.
305 F.3d 1297, 1299 (11th Cir. 2002).

Greer v. O'Dell,

Moreover, the fact that

appellee failed to file a proof of claim did not prohibit the
bankruptcy

court

from

granting

its

requested

relief.

While

Bankruptcy Rule 3002 demands that an unsecured creditor file a proof
of claim, a secured creditor need not do so to protect its lien.

In

re Carlton, 437 B.R. 412, 424 (Bankr. N.D. Ala. 2010)(Robinson, J.)
(citing FED. R. BANKR. P. 3002(a) and Matter of Folendore, 862 F.2d
1537, 1539 (11th Cir. 1989)).
Contrary to appellant’s argument, a review of the record also
shows that the bankruptcy court acted well within its discretion in

9

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granting relief under § 362(d).

That section states that the

bankruptcy court “shall grant relief” from the stay:
(1)

for cause, including the lack of adequate protection
of an interest in property of such party in interest;

(2)

with respect to a stay of an act against property
under subsection (a) of this section, if-(A)

the debtor does not have an equity in such
property; and

(B)

such property is not necessary to an effective
reorganization;

11 U.S.C. § 362(d)(1)-(2).
Even now, appellant does not dispute that he lacks a security
interest in the property that is superior to that of appellee’s
principal.

Appellant contends that through certain unspecified

improvements he has created for himself an interest equal to that of
appellee’s principal.

(Appellant’s Brief [3] at 6.)

Given that the

original loan was for $200,000.00, the payoff amount is $330,212.38,
and the property is valued at only $161,500.00, appellant’s claim to
have created equity in the property is highly suspect. In any event,
appellant’s

alleged

investment

could

not

interest superior to that of a deed holder.
F.3d 1175, 1181 (11th Cir. 2008).
suggest

that

the

property

is

have

created

AO 72A
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legal

See In re Hedrick, 524

Neither is there any evidence to
necessary

for

reorganization under the second prong of § 362(d)(2).

10

a

an

effective

Finally, the record supports the bankruptcy court’s decision to
grant in rem relief.

Pursuant to § 362(d)(4), where a creditor’s

claim is secured by real property, the court may grant in rem relief:
if the court finds that the filing of the petition was part
of a scheme to delay, hinder, or defraud creditors that
involved either-(A)

transfer of all or part ownership of, or other
interest in, such real property without the
consent of the secured creditor or court
approval; or

(B)

multiple bankruptcy filings affecting such real
property.

11 U.S.C. § 362(d)(4).

Even the limited record before the Court

demonstrates that the above requirements are met with respect to the
property at issue in this case.

Since 2004, the property has been

transferred without the secured creditor’s consent or court approval
six times, and it has been involved in five bankruptcy filings in the
past two years.

Under the circumstances, the bankruptcy court was

well within its discretion to decide that the numerous transfers and
bankruptcy filings evidenced an intent to delay and hinder appellant
in its attempt to enforce its security interest.
II.

APPELLANT’S MOTION FOR A TEMPORARY RESTRAINING ORDER [10]
Appellant recently filed a motion for a temporary restraining

order to prohibit appellee from proceeding with a foreclosure of the
property currently scheduled for October 2, 2012.
for Temporary Restraining Order [10] at 2.)
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(Appellant’s Mot.

Appellant’s motion for

a restraining order is based on the same arguments submitted in
support of its appeal.

Given the Court’s ruling on the appeal,

appellant cannot show that he is likely to succeed on the merits of
his claim.

See Bloedorn v. Grube, 631 F.3d 1218, 1229 (11th Cir.

2011)(in order to obtain preliminary injunctive relief, the plaintiff
must “clearly establish . . . a substantial likelihood of success on
the merits”).

Accordingly, appellant’s motion for a temporary

restraining order [10] is DENIED.
CONCLUSION
For the foregoing reasons, the Court GRANTS appellee’s Motion
for Leave [7], DENIES appellant’s Motion for Temporary Restraining
Order

[10]

and

AFFIRMS

the

bankruptcy

court’s

Order

Denying

Appellant’s Motion for Reconsideration [Bankr. Doc. No. 27].
Clerk shall close this action.

So ORDERED this 24th day of September, 2012.

/s/ Julie E. Carnes
JULIE E. CARNES
CHIEF UNITED STATES DISTRICT JUDGE

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The