Opinions:

 

The NCMB offers a database of opinions for the years 2000 onward, listed by year and judge. For a more detailed search, enter the keyword or case number in the search box above.

Carnegie v. Nationstar Mortgage, LLC d/b/a Mr. Cooper (Adv. Pro. No. 20-09001) 09/29/2020
(Judge: Lena M. James)

          The Defendant mortgage creditor moved to dismiss the Plaintiff-Debtor’s complaint for violations of the discharge injunction and automatic stay. The Defendant’s secured mortgage claim was treated as a short-term secured debt in the Plaintiff’s confirmed chapter 13 plan. The Plaintiff made all payments required under her plan and received a discharge on June 18, 2019. The chapter 13 trustee's final report stated the Defendant's $34,158 secured claim was paid in full with interest.  Following discharge, the Defendant sent a series of informational statements to the Plaintiff claiming it had not received all mortgage payments since the bankruptcy filing and asserting the Plaintiff owed thousands of dollars in principal balance on the mortgage. The Plaintiff moved to reopen her bankruptcy case and then filed a complaint against the Defendant alleging that its actions violated the automatic stay and the discharge injunction under 11 U.S.C. § 524(i) by willfully failing to credit payments it received in accordance with the confirmed plan.

          The Court granted the Defendant’s motion to dismiss the Plaintiff’s claim that it violated the automatic stay because the complaint did not assert the Defendant took any action to collect the claim during the case. The only alleged attempts to collect the claim occurred post-petition and after the termination of the automatic stay.

          The Court also found that the Defendant’s actions could not violate Section 524(i) due to the nature of the Defendant’s claim and its treatment under the confirmed plan. The Court found that a reading of § 524(i) that is limited in application to long-term debts that are not discharged at the successful conclusion of a confirmed plan clearly aligns with the plain text of the provision, is contextually consistent with the surrounding paragraphs of § 524, including those contemporaneously added through BAPCPA, and most accords with Congressional purpose behind enacting § 524(i). Because the Defendant’s short-term, partially secured debt was not encompassed by § 524(i), the Court found the Plaintiff failed to plausibly plead a claim for relief under subparagraph (i).

          While the alleged notices sent by the Defendant could not violate Section 524(i), the Court nevertheless found that the Plaintiff could pursue the traditional remedy for a violation of the discharge injunction, which lies in a contempt proceeding for a creditor's breach of one of the protective provisions described in Section 524(a). The Court found the Plaintiff met the plausibility standard in pleading, under the standard established by the Supreme Court in Taggart v. Lorenzen, 139 S. Ct. 1795 (2019), that there is no fair ground of doubt that the Defendant understood the effect of the discharge order and continued to attempt collection on its discharge debt. Therefore, the Court denied the Defendant’s motion to dismiss as to the Plaintiff’s claim for violation of the discharge injunction.

Discharge/Dischargeability, Published Yes
Larry Gene Demery (Case No. 19-80948) 09/03/2020
(Judge: Lena M. James)

 

The Court sustained the Creditor’s objection to confirmation of the Debtor’s chapter 13 plan. The Creditor asserted a claim of $69,043.75 secured by a lien on the Debtor’s land and mobile home. The Creditor disputed the Debtor’s valuation of the property at $24,800, asserting instead that the fair market value was approximately $45,000. The Creditor presented an appraisal of the property, as well as testimony from the appraiser, at the evidentiary hearing held on the objection. The Debtor relied on his own testimony for the value of the property, which he supported through tax valuation and the NADA value of the mobile home. The Court found the valuation of $45,000 provided by the Creditor’s appraiser to be the most credible and persuasive. The Creditor presented extensive testimony and a written appraisal from an experienced state-certified real estate appraiser, while the Debtor’s testimony was inconsistent and speculative as to both the value of the property and the costs for needed repairs. Accordingly, the Court sustained the Creditor’s objection and denied confirmation of the Debtor’s chapter 13 plan.

Chapter 13 Plans, Published Yes
In re North Carolina Tobacco International, LLC 08/10/2020
(Judge: Benjamin A. Kahn)

Chapter 7 trustee filed a motion to determine that the estate was not liable for North Carolina income taxes, but rather the taxes would pass-through to nonresident LLC members.  The Court found that to the extent North Carolina tax law requires the LLC to pay nonresident member taxes, it is preempted by the Internal Revenue Code and 11 U.S.C. § 346.  The Court granted trustee’s motion and found the estate has no liability for the taxes.

Tax, Published Yes
In re Robert B. Alley (Case No. 19-50716) 06/26/2020
(Judge: Lena M. James)

The Debtor moved to modify his confirmed plan and extend the plan length from sixty to eighty-four months, pursuant to the CARES Act amendment to 11 U.S.C. § 1329(d), which allows such an extension to debtors experiencing material financial hardship due, directly or indirectly, to the COVID-19 pandemic. Modification under the “material financial hardship” standard still requires sufficient notice to affected creditors of the proposed changes to the plan. While the Debtor represented that he suffered a reduction in hours and income from the pandemic, he did not provide any estimate of the modified plan payment amount, nor any estimates for the amounts by which payments to individual secured creditors would decrease. For that reason, the Court denied the Debtor’s motion without prejudice to his right to refile a similar motion that provides adequate notice to affected creditors of the proposed plan modifications.

Chapter 13 Plans, Published No
The Heag Pain Management Center, PA v. Davis (Adv. Pro. No. 20-02007) 06/25/2020
(Judge: Benjamin A. Kahn)

The plaintiff commenced an adversary proceeding against the defendant, requesting that the Court determine that the debt owed by the defendant to the plaintiff is nondischargeable under § 523(a)(2)(A).  After the Court dismissed the defendant’s underlying chapter 13 bankruptcy case and barred the defendant from refiling a petition under any chapter of title 11 for 180 days, the Court considered sua sponte whether it retained subject matter jurisdiction over the adversary proceeding.  The Court determined that the dischargeability action was no longer ripe for adjudication, given the dismissal of the defendant’s underlying bankruptcy case and the 180-day bar to refiling.  Therefore, the Court dismissed the adversary proceeding without prejudice.

Discharge/Dischargeability, Published Yes
In re Wright (Case No. 19-51333) 06/15/2020
(Judge: Lena M. James)

Debtor claimed a vacant lot adjacent to her residence as part of her homestead exemption pursuant to N.C. Gen. Stat. § 1C-1601(a)(1). The most significant factors courts look to in determining the appropriateness of an exemption claim are not present in this case.  There are no garages, storage sheds, barns, or other structures on the adjacent lot which support the residence.  There is no segment of the driveway, nor any utility line or easement, which crosses through the adjacent lot.  The Debtor purchased the adjacent lot separately, and at a later date than the residence, and receives two separate tax bills for the parcels, factors which further favor a finding against the Debtor's exemption claim in the adjacent lot.  The Trustee's objection to the Debtor's claim for exemption is sustained, and the Debtor's homestead exemption is denied.

Exemptions, Published Yes
In re Lipscomb (Case No. 18-80784) 06/02/2020
(Judge: Lena M. James)

Federal Rule of Bankruptcy Procedure 3002.1(b)(1) requires mortgage creditors to file a notice of any change in the mortgage payment amount no later than 21 days before a payment in the new amount is due. Rather than filing an objection to a notice of mortgage payment change, a party in interest opposing a proposed mortgage payment change must use the procedure provided in Rule 3002.1(b)(2). In this case, the proper procedure under Rule 3002.1(b)(2) for determining the correct treatment of a $3,869.30 escrow shortage in the Debtor's residential mortgage escrow account was to file a "motion to determine whether the change is required to maintain payments in accordance with § 1322(b)(5)." Counsel seeking similar relief should also utilitze the appropriate event code on CM/ECF for filing a motion to determine under Rule 3002.1(b)(2).

Claims, Published No
Bruton v. High Speed Capital (In re Cirino Construction) (Adv. Pro. No. 20-06077) 05/22/2020
(Judge: Catharine R. Aron)

Plaintiff, Chapter 7 Trustee, brought this adversary proceeding to avoid prepetition transfers to Defendant pursuant to 11 U.S.C. § 547(b) and seeking a monetary judgment against Defendant pursuant to 11 U.S.C. § 550(a) in the amount of the preferential transfers. Defendant moved to dismiss the complaint under Fed. R. Civ. P. 12(b)(3) due to improper venue under 28 U.S.C. § 1409(b), as the Plaintiff sought a recovery of less than the $25,000 monetary threshold set forth in § 1409(b). The Court denied the motion to dismiss as preference actions under 11 U.S.C. § 547(b) are not subject to the venue limitations provided for in 28 U.S.C. § 1409(b).

Preferences, Published No
In re Shore (Case No. 17-50459) 05/19/2020
(Judge: Lena M. James)

The Court reconsidered the decision in this case sustaining the Objections of the Debtor to claims 6 and 7 of Carolina Farm Credit ("CFC"), entered February 6, 2018 ("Claim Objection Order"). The Claim Objection Order did not award attorney fees of 15% of the principal and interest balance of the indebtedness owed CFC on the petition date, rejecting CFC's contention that a mandated 15% of the indebtedness owed should be the allowed attorney fees pursuant to N.C. Gen. Stat. § 6-21.2(2). Instead, the court ordered CFC to file its application for attorney fees within 14 days. CFC appealed the Claim Objection Order, and in June 2019 the District Court dismissed CFC's appeal, finding the order was interlocutory and not a final order under 28 U.S.C. § 158(a)(1).
CFC requested reconsideration of the Claim Objection Order following the recent decision of the Fourth Circuit Court of Appeals in SummitBridge National Investments III, LLC v. Faison, 915 F.3d 288 (4th Cir. 2019). The Court found narrow reconsideration of the Claim Objection Order was appropriate due to the impact of SummitBridge and the changed circumstances of the bankruptcy case. Upon reconsideration, the Court approved the Fee Application of Counsel for CFC in the amount of $181,682.51, or 15% of the principal and interest balance of the indebtedness owed CFC on the petition date. While the Court does not agree with CFC's reading of N.C. Gen. Stat. § 6-21.2(2) as a mandate of 15% of the indebtedness as attorney fees, the Court finds that CFC has submitted sufficient documentation, when combined with the additional pleadings and the subsequent activity within the bankruptcy case, for the $181,682.51 that CFC requests in attorneys' fees to be reasonable under both North Carolina law and 11 U.S.C. § 506(b).

Fees/Compensation, Published No
Biesecker, Tripp, Sink, & Fritts, LLP v. Wilson (In re Wilson) (Adv. Pro. No. 19-06035) 04/14/2020
(Judge: Catharine R. Aron)

Plaintiff, law firm Biesecker, Tripp, Sink, & Fritts, LLP, brought this adversary proceeding seeking to determine the non-dischargeability of a debt pursuant to 11 U.S.C. § 523(a)(2)(A). Defendant filed a motion to dismiss the complaint pursuant to 12(b)(6), which was granted by the Court and Plaintiff was granted leave to amend their complaint. Following the amendment of the complaint, Defendant again moved to dismiss pursuant to 12(b)(6), which was again granted by the Court.

Discharge/Dischargeability, Published No

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