General Lending Corp. v. Cancio

Citation:
General Lending Corp. v. Cancio, Case No. 14-10838 (11th Cir. Aug. 21, 2014) (unpublished) (per curiam).
Tag(s):
Ruling:
The Circuit Court found that GLC could have identified the eligibility issues as early as July 2010 but failed to closely inspect the Debtor's schedules, that the Debtors had maintained their plan payments for two years, and the Debtors would suffer undue prejudice if they were denied Chapter 13 eligibility at such a late stage in the bankruptcy proceedings. Thus the Court held that the bankruptcy court abused no discretion in denying the motion to dismiss based on the doctrine of laches. With regards to the bad faith argument, the Circuit Court noted that the bankruptcy court considered the relevant factors as set forth in In re Kitchens, 702 F.2d 885 (11th Cir. 1983), the voluminous record, the testimony presented at the evidentiary hearing, and the parties' written closing arguments. The Court futher noted that the bankruptcy court addressed specifically each of GLC's arguments about the Debtors' alleged bad faith and engaged in a detailed analysis of the factual record. Based on the foregoing, the Circuit Court found that the bankruptcy court committed no clear error in overruing GLC's objections to confirmation.
Procedural context:
Appeal from the bankruptcy court and district court for the Southern District of Florida, denying motion to dismiss Chapter 13 case, overruling objections to confirmation of the Debtors' Chapter 13 plan, and confirming the Debtors' Chapter 13 plan.
Facts:
The Debtors filed for Chapter 13 relief in 2010 and sought to avoid foreclosure on their home by stripping off a wholly unsecured third mortgage held by General Lending Corporation ("GLC"). After two years of litigation and discovery, GLC for the first time sought to dismiss the Debtors' bankruptcy because their unsecured debt exceeded the limit established by 11 U.S.C. Section 109(e). GLC further objected to confirmation of the Debtor's Chapter 13 plan on the grounds that the Debtor had acted in bad faith. The bankruptcy court determined that the facts underlying GLC's eeligibility argument were apparant from the record since 2010 and that since GLC failed to challenge the Debtors' eligibility for over two years, the motion to dismiss should be denied by the doctrine of laches. The bankruptcy court further overruled the GLC's objection to confirmation, after an evidentiary hearing. The district court affirmed the bankruptcy court's rulings.
Judge(s):
Pryor, Martin and Edmondson

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