Elam v. Nationstar Mortg., LLC (In re Elam)
- Summarized by Caleb Chaplain , U.S. Bankruptcy Court for the Western District of Virginia
- 1 year 4 months ago
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- 22-8012 (6th Circuit, Aug 29,2023) Published
- Tag(s):
-
- Ruling:
- The Bankruptcy Appellate Panel for the Sixth Circuit affirmed an order dismissing the pro se debtor’s complaint for lack of jurisdiction in her reopened bankruptcy case. The Panel agreed with the bankruptcy court’s determination that it lacked any sort of jurisdiction over the debtor’s complaint, which sought only a declaratory judgment as to the validity and/or enforceability of a mortgage lien against property, because the debtor’s property interest that had become property of the estate was abandoned at the conclusion of her case and was no longer property of the estate.
- Procedural context:
- Nine years after the debtor received a discharge and her case was closed, the pro se debtor initiated an adversary proceeding in her reopened bankruptcy case asking the bankruptcy court to determine the validity and/or enforceability of the mortgage lien against property. The bankruptcy court sua sponte questioned whether it had jurisdiction over the complaint. The defendants argued that the court lacked jurisdiction. The debtor asserted that the court did indeed have jurisdiction as a core proceeding under 28 U.S.C. § 157(b)(2)(K).
Ultimately, the bankruptcy court dismissed the case for lack of jurisdiction, concluding that there was simply no bankruptcy estate for the lien determination to affect. The debtor appealed.
- Facts:
- The debtor, Linda Elam, acquired property in 2002. Ten days later, she and Frederick Elam created the “L & F Irrevocable Trust,” naming Frederick as the trustee. Linda’s property was put into the trust. Frederick, as trustee, pledged the property as collateral for a construction loan. In subsequent years, the Elams, purportedly in their individual capacities and not as trustees of the trust, pledged the property as collateral for various other loans and even paying off the original construction loan with the new loans.
In the years that followed, both Linda and Frederick filed several bankruptcy actions which helped them avoid multiple foreclosure attempts. Of note, these cases included the 2011 chapter 7 case in which Linda would file the complaint leading to this appeal. In 2015, the Chancery Court for Fayette County (Tennessee) granted a motion for summary judgment in an action initiated by the mortgage holder. The chancery court found that the intent of the parties under the mortgage loan was for the property to serve as collateral and ordered that the deed be reformed so that the interest of the L & F Irrevocable Trust was effectively conveyed. A couple years later, the Elams filed a federal lawsuit against several entities related to the property and the mortgage loan, but the district court dismissed the case. Not one to give up, Linda then moved to reopen her 2011 case to try again with the bankruptcy court.
- Judge(s):
- Bauknight, Dales, Gustafson
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