motion for relief from stay
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sanctions for violation of automatic stay
stay lifted to allow equitable distribution action to go forward, but not lifted so as to authorize the state court to transfer property of the estate
§707(b) (case not dismissed)
petition preparer ordered to disgorge fees, matter referred to District Court for consideration of sanctions and damages
objection to claim of property exemptions overruled
petition preparer fined and enjoined from providing further services
Lena M. James
Debtor filed an adversary proceeding seeking to recover real property sold at foreclosure prior to the petition date pursuant to § 548, and the Trustee was added as a co-plaintiff. Defendant purchaser moved to dismiss the case, claiming (a) that Plaintiffs failed to state a claim and that the Court's prior ruling on a Motion for Preliminary Injunction evidenced as much; (b) that Defendant's status as a good faith, third party purchaser protected Defendant pursuant to state law; and (c) that the Rooker Feldman doctrine, res judicata, and collateral estoppel preclude the Plaintiffs from bringing their claim. The Court ruled that Plaintiffs did sufficiently plead pursuant to Iqbal and Twombley, and that the standard used in adjudicating a Motion to Dismiss is distinct from an injunction analysis. Further, the Court dismissed Defendant's assertion that it was protected under state law as a good faith, third party purchaser as irrelevant pursuant to § 550. Finally, the Court found that the Rooker Feldman doctrine, res judicat, and collateral estoppel did not apply in this proceeding. Motion Denied.
Chapter 13 Trustee and creditor who failed to properly perfect a vehicle covered under the hanging paragraph of 1325(a) reached a settlement with the Debtor on the Trustee's 549 avoidance action. The Consent Order found the value of the avoidance was equal to the creditor's fully secured claim, and the order further directed that the equity be preserved for unsecured general claims. The Trustee brought a Motion to Modify Plan to incorporate that requirement into the Plan, and the Debtor objected, arguing that only the collateral's value need be paid into the Plan, as in addition to the claim being voidable under 549, it was also void ab initio. In ruling for the Trustee, the Court declined to answer whether the claim was void, as the Consent Order already established the lien's status as avoidable.
Prior to filing, a Debtor's residence was foreclosed upon by his homeowners association and sold via a non-judicial sale. The real property was purchased, a foreclosure deed was delivered, an order for eviction was obtained, and a Sheriff's eviction was scheduled. Prior to eviction, the Debtor filed for bankruptcy. The purchaser moved to lift the automatic stay pursuant to § 362(d)(1)-(2) to continue with eviction under state law, and the Debtor opposed the motion, arguing that as he had filed an adversary proceeding under § 548 that went to the heart of the purchaser's claimed ownership, that relief from stay should be denied. The Court found that legal title to the property had passed to the purchaser under North Carolina law, and that cause existed to modify the stay under subsection (d)(1). Further, the Court found that, as legal title had passed, the Debtor had no equity in the property, and that the Debtor made no argument as to the property's necessity for an effective reorganization such that the stay could be modified under subsection (d)(2). The Court also found that the pendency of the Debtor's adversary proceeding was no impediment to granting the purchaser's requested relief.