Jenkins v. Select Portfolio Servicing, Inc as agent for U.S. Bank, N.A. et al
MEMORANDUM Opinion and Order written by the Honorable Matthew F. Kennelly on 1/9/2018: As stated in memorandum, the Court directs the Clerk to enter judgment in this cases affirming the decision of the bankruptcy court. Mailed notice. (pjg, )
THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
SELECT PORTFOLIO SERVICING, INC.
AS AGENT FOR U.S. BANK, N.A., et al.,
Case Nos. 16 C 11685
and 17 C 1120
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
By October 2016, when she filed a bankruptcy petition under Chapter 11,
Lindsay Jenkins had been in default on two mortgages for years. The Bankruptcy Code
provides that, upon filing a petition, all proceedings to collect from the debtor are
automatically stayed. 11 U.S.C. § 362(a). Two entities—Elizon Master Participation
Trust I, U.S. Bank Trust National Association, as Owner-Trustee (Elizon), and Select
Portfolio Servicing, Inc. as servicing agent for U.S. Bank NA, successor trustee to Bank
of America, NA, successor to LaSalle Bank NA, as trustee, for the WaMu Mortgage
Pass-Through Certificates, Series 2006-AR2 (SPS)—each of which serviced one of the
mortgages, separately moved to lift the automatic stay so they could proceed with
foreclosure. The bankruptcy court granted both motions. The U.S. Trustee—the
Department of Justice administrator who oversees bankruptcy cases in the Northern
District of Illinois—then moved to dismiss Jenkins's bankruptcy case. The bankruptcy
court granted the motion. Jenkins has appealed these decisions and alleges she has
experienced additional wrongs at the hands of the judge, court staff, and other parties.
Jenkins owns one property in Illinois, which is not at issue in this appeal, and two
in New York. Both of the New York properties are at issue; one is a rental property that
provides Jenkins with her sole source of income. Jenkins, with assistance from
counsel, filed a petition for bankruptcy under Chapter 11 on October 27, 2016. The
filing of a bankruptcy petition automatically stays any action to recover from the debtor.
11 U.S.C. § 362(a). At the time she filed the petition, Jenkins had been in default for 74
months and owed $472,145.16 in outstanding loan payments on the first property. On
the second property, Jenkins had been in default for 81 months and owed $213,389. In
her bankruptcy petition, Jenkins stated that she had monthly expenses of $5,920 and
income of $6,440, for a net monthly income of $520.
Elizon and SPS moved to modify the automatic stay. The bankruptcy court
granted both motions. Jenkins filed a notice of appeal on December 28, 2016, which
became Case No. 16 C 11685 in this court.
The U.S. Trustee moved to dismiss Jenkins's bankruptcy petition on December
28, 2016, arguing that she had failed to provide the monthly updates required by the
Bankruptcy Code and that there was no likely means by which Jenkins could
rehabilitate. The bankruptcy court granted this motion on February 2, 2017. Jenkins
This case was originally assigned to another judge and was transferred to the
undersigned judge's docket on October 16, 2017.
filed a notice of appeal on February 10, 2017, which became Case No. 17 C 1120 in
this court. In the interim, on January 13, 2017, Jenkins's counsel Ted Smith moved to
withdraw as her attorney. The bankruptcy court granted Smith's motion on January 19,
Jenkins has appealed two of the bankruptcy court's orders and has raised
numerous other issues. The first two issues in this appeal are whether the bankruptcy
court abused its discretion by granting the SPS and Elizon motions for relief from the
automatic stay or dismissing Jenkins's bankruptcy petition. The final issue is whether
any of Jenkins's other allegations against the judge, Trustee, and opposing party have
In this Opinion, the Court cites to four parts of the record, all filed as part of Case
No. 16 C 11685. The first is the set of exhibits associated with docket entry 9; the
second is the "Appendix," filed as docket entry 20; the third is the "Supplemental
Appendix," filed as docket entry 21; and the fourth is the set of materials filed as docket
entry 24. The Court cites to the first source as "Ex. 9-xx," with "xx" indicating the
number of the specific exhibit; the second source as "App."; the third source as "Supp.
App."; and the fourth source as "Ex. 24-xx."
Orders granting SPS and Elizon's motions to modify the automatic stay
The bankruptcy judge granted SPS and Elizon's motions to modify the automatic
stay under Section 362(d)(2). Ex. 24-9 at 12-13 (Order Modifying Stay; Order of
The abusive tone that Jenkins employs toward the other parties in her filings in this
appeal is nothing new. See Jenkins v. Eaton, No. 08 C 0713, 2010 WL 5071995, *1
(E.D.N.Y. Dec. 7, 2010) (imposing a filing injunction on Jenkins for her "extensive
history of vexatious and baseless lawsuits.").
Correction Pursuant to Fed. R. Civ. P. 60). This Court reviews a bankruptcy court's
determination of whether there is cause to modify the automatic stay for abuse of
discretion. Matter of Williams, 144 F.3d 544, 546 (7th Cir. 1998).
After a bankruptcy petition is filed, the debtor is entitled to an automatic stay of
any proceedings in which creditors seek to recover from the debtor. 11 U.S.C. § 362(a).
A creditor may obtain relief through modification of the stay if it can demonstrate
"cause," which includes "the lack of adequate protection" of the creditor's interest. Id. §
362(d)(1). There is no "exact science" to determining whether a creditor's interest is
adequately protected, but factors include the level of unpaid debt, the debtor's ability to
repay, and the hardships to each party. See, e.g., In re Spencer, 541 B.R. 208, 214
(W.D. Wis. 2015) (citation omitted) (holding that the interest of a mortgagee was
inadequately protected, as the debtor had accrued over $30,000 in unpaid tax and
insurance payments, failed to pay the mortgage since 2008, and continued to burden
the creditor with litigation costs).
The bankruptcy court did not abuse its discretion by modifying the automatic stay
for SPS after finding that Jenkins lacked adequate protection. SPS sought to proceed
on foreclosure proceedings against Jenkins. Ex. 24-8 at 49-53 (Motion to Modify the
Automatic Stay and Required Attachment). Jenkins had been in default for 81 months
and owed in excess of $200,000. Id. at 53. With a self-reported net monthly income of
$520, it would have taken Jenkins over 30 years to catch up on the deficiency if every
bit of that money went toward this particular loan.
Although Elizon moved to modify the stay on a different basis, Ex. 24-6 at 74-76
(Motion for Relief from Automatic Stay), the Court also holds that the bankruptcy court
did not abuse its discretion by modifying the stay for Elizon. Jenkins could not show
that she would adequately protect Elizon's interest in the property, given the period it
would require for her to cure the deficiency. "We may affirm the bankruptcy court's
decision on an alternative ground, but that ground must have been adequately
presented in the bankruptcy court." Capital Factors, Inc. v. Kmart Corp., 291 B.R. 818,
824 (N.D. Ill. 2003) (citing Anderson U.S.F. Logistics (IMC), Inc., 274 F.3d 470, 478 (7th
Cir. 2001)). Jenkins had been in default for 74 months and owed approximately
$470,000. Id. at 77. With the $520 monthly net income Jenkins reported to the
bankruptcy court, it would take her approximately 75 years to cure the deficiency if all of
that were allocated to this debt.
Order dismissing Jenkins's case
The bankruptcy judge granted the Trustee's motion to dismiss Jenkins's case
under 11 U.S.C. 1112(b). Ex. 24-29 at 1 (Order Dismissing Chapter 11 Case and
Shortening Notice). The Court reviews the bankruptcy court's dismissal of a debtor's
petition for abuse of discretion. In re Hall, 304 F.3d 743, 746 (7th Cir. 2002). The
bankruptcy court abuses its discretion if it "act[s] contrary to the law or reache[s] an
unreasonable result." In re Sokolik, 635 F.3d 261, 269 (7th Cir. 2011) (citation omitted).
The bankruptcy court did not abuse its discretion by dismissing Jenkins's petition,
as Jenkins had failed to file any of the monthly operating reports and had not shown a
reasonable likelihood of rehabilitating her estate.
First, Jenkins failed to timely file the monthly operating reports required in
Chapter 11 cases. A bankruptcy court may dismiss a case for the "unexcused failure to
satisfy timely any filing or reporting requirement." 11 U.S.C. § 1112(b)(4)(F). Jenkins
concedes that she failed to file the operating reports in a timely manner. Reply to
Trustee's Br. at 5. Indeed, Jenkins does not contend that she ever filed so much as a
single operating report during the pendency of her bankruptcy case. This is a sufficient
basis to affirm the bankruptcy court's dismissal.
There is also a separate basis to affirm the dismissal of Jenkins's petition. It was
abundantly clear that there was no reasonable likelihood of rehabilitation of Jenkins's
estate. A bankruptcy court may dismiss a petition in which the estate is experiencing
"continuing loss" and there is no "reasonable likelihood of rehabilitation." 11 U.S.C. §
1112(b)(4)(A). As the Trustee noted, once the creditors were permitted to foreclose
upon Jenkins's rent-generating property, she lacked any source of income with which to
make payments on her mortgages. App. at 51-52 (transcript of Feb. 2, 2017
proceedings). Thus, at the time of dismissal, Jenkins was slipping further behind on her
mortgages, even as she already faced a steep uphill climb to meet her obligations. On
one property, Jenkins had been in default for 74 months and owed $472,145.16 in
outstanding payments. Ex. 24-6 at 77. On the other, Jenkins had been in default for 81
months and owed $213,389. Ex. 24-8 at 53. Even if she had been able to continue
collecting rental payments, she could only devote a monthly net income of $520 to
rehabilitation. Ex. 24-6 at 43. The bankruptcy court did not abuse its discretion by
dismissing Jenkins's case, as her estate was experiencing continuing loss and there
was no reasonable likelihood of rehabilitation.
The Court affirms the dismissal of Jenkins's case.
Finally, the Court reviews the kaleidoscopic accusations of bias, error, and bad
faith Jenkins has made against the bankruptcy judge, court staff, and other parties.
None of these allegations have any merit.
First, Jenkins contends that the judge and court employees "disappeared" her
filings. Initial Br. at 18. To the contrary, the record suggests it was not a conspiracy of
judicial officers that kept her submissions from being filed, but Jenkins's noncompliance
with filing rules. For instance, Jenkins states that in her submissions to the bankruptcy
court, she would include a copy of her filings for the U.S. Trustee. Id. at 9. The rules of
the bankruptcy court, however, do not permit serving a motion upon the opposing party
by including an extra copy of the motion with the material submitted to the bankruptcy
court clerk for filing. Bankr. L.R. 9013-1(D). And, "[i]f a motion fails to comply with the
provisions of this Rule in any respect, the court may, in its discretion, deny the motion."
Id. (G). This is just one example; the record suggests that Jenkins generally failed to
comply with filing rules. See App. at 56 (Transcript of Feb. 16, 2017 Proceedings)
(Judge Hollis: "[A]s I have explained repeatedly, I don't look at things if they're e-mailed
to somebody and they're not filed with the Court . . . they're not noticed up for a
"[P]ro se litigants are not entitled to a general dispensation from the rules of
procedure or court imposed deadlines." Jones v. Phipps, 39 F.3d 158, 163 (7th Cir.
1994) (citation omitted). The record demonstrates that Jenkins failed to comply with the
bankruptcy court's rules for filings. For this reason, the Court is also unpersuaded by
Jenkin's allegation that Gretchen Silver, counsel for the U.S. Trustee, lied about what
Jenkins had filed. Initial Br. at 32. It is far more likely that Silver was genuinely
confused about the status of filings than she was misstating what Jenkins had filed.
See U.S. Trustee Resp. Br. at 20-21. Jenkins is not entitled to relief on either issue.
Next, Jenkins claims the bankruptcy judge deprived her of counsel by "[a]ttacking
the competence of [her] lawyer" and "imposing unpublished conditions on the attorney."
Initial Br. at 20. But Jenkins's attorney, Ted Smith, was not removed by the bankruptcy
court—he affirmatively moved to withdraw as counsel, Ex. 9-2 at 5 (Dkt. No. 48), and
the bankruptcy judge granted his motion. Id. at 6 (Dkt. No. 59). At the hearing on
Smith's motion, a representative for Smith stated that he was withdrawing in part
because of filings on Jenkins's behalf that were made without Smith's knowledge. App.
at 43 (Transcript of Jan. 12, 2017 Proceedings). Jenkins is not entitled to relief on this
Next, Jenkins argues she was prejudiced by the bankruptcy judge's "bizarre state
of mind." Initial Br. at 21. As evidence, Jenkins offers (1) the judge's discussion of
filings being slipped under her door, (2) an alleged misstatement that Jenkins had not
paid filing fees, and (3) an alleged assertion that Jenkins had not requested to appear
via telephone at the hearing on the Trustee's motion to dismiss. Id. at 21-24. Upon
review, none of these allegations reflects a "total denial of due process," id. at 24, but
rather a judge working in good faith to accommodate a difficult litigant.
First, the judge very well might have been receiving filings under her door, given
the already-documented errors in Jenkins's filings. Second, contrary to Jenkins's
assertion, the record suggests that Jenkins did not properly pay her filing fees, at least
for some period of the proceedings. See Supp. App. at 52 ("Notice of Deficiency").
Third, Jenkins accuses the judge of acting as though she had not requested to appear
at the hearing for her motion to dismiss via telephone. The record, however, shows that
the clerk of court called Jenkins before the hearing—and Jenkins never answered.
App. at 48 (Transcript of January 12, 2017 Proceedings). Jenkins is "entitled to an
opportunity to be heard, not to a particular type of hearing." In re Bartle, 560 F.3d 724,
729 (7th Cir. 2009). The bankruptcy court's efforts to provide Jenkins with a hearing
were sufficient. Nothing in the record shows that the bankruptcy judge's state of mind
was in the least bit abnormal, and Jenkins is not entitled to relief based upon these
Next, Jenkins challenges SPS and Elizon's standing, though she does not pin
down what exactly what she contends they lacked standing to do. Initial Br. at 24.
Jenkins also contends that the bankruptcy judge's unwillingness to consider her
"RESPA demand" or to review her briefing on standing was prejudicial. Jenkins's
arguments here miss the mark: in determining whether to modify the automatic stay,
the question is only "whether there is a colorable claim of a lien on property of the
estate." Matter of Vitreous Steel Prods. Co., 911 F.2d 1223, 1234 (7th Cir. 1990) ("[A]
hearing on a motion to lift the automatic stay under § 362(d) is limited in scope.
Questions of the validity of liens are not generally at issue in a § 362 hearing"). Given
that Jenkins listed both SPS and Elizon as creditors in her Schedule D submission, Ex.
24-6 at 32-33, her contention that they lacked standing is misplaced. Based upon
Jenkins's representations alone, it was reasonable to treat SPS and Elizon as creditors
with colorable claims. Jenkins is not entitled to relief on this issue.
Finally, Jenkins contends, in a two-paragraph argument devoid of legal authority,
that the statute creating the office of the U.S. Trustee is unconstitutional. Reply to U.S.
Trustee Br. at 2. "[P]erfunctory and undeveloped arguments, and arguments that are
unsupported by pertinent authority, are waived (even where those arguments raise
constitutional issues)." United States v. Berkowitz, 927 F.2d 1376, 1384 (7th Cir. 1991).
The Court treats Jenkins's argument on this issue as waived.
The Court directs the Clerk to enter judgment in each of these cases affirming
the decision of the bankruptcy court.
MATTHEW F. KENNELLY
United States District Judge
Date: January 9, 2018
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