- Case Type:
- Case Status:
- 20-1199 (10th Circuit, Apr 01,2021) Not Published
- Reviewing the decision of the U.S. Bankruptcy Court for the District of Colorado (BC), the U.S. Court of Appeals for the Tenth Circuit (Circuit) affirmed its dismissal of a debtor’s adversary complaint, as an offshoot of a reopened chapter 7 case, against a bank for formally seeking attorneys’ fees related to its post-discharge foreclosure of the encumbered home, expenses never attempted or intended to collect, due to the presence of “fair ground for doubt” as to whether the bank violated the discharge injunction by imposing these fees as a “personal judgment.”
- Procedural context:
- Years after she had received her chapter 7 discharge, Ms. Holly MacIntyre (DR), the debtor here, reopened her case for one reason: so as to file an adversary complaint against JP Morgan Chase Bank, N.A (Chase) for seeking appellate the attorneys’ fees and costs incurred in its attempts to foreclose a non-discharged lien on the Property in violation of the discharge injunction, a request first mentioned in appellate answer brief. The BC dismissed the DR’s contempt action under Federal Rule of Bankruptcy Procedure 7012 and Federal Rule of Civil Procedure 12. As that court explained, “fair ground of doubt” as to whether the creditor’s conduct violated the discharge injunction, the novel standard concocted in Taggart v. Lorenzen, existed, as the factual allegations in the complaint left much unknown about whether Chase had sought an award of attorneys’ fees “as a personal judgment” of the DR. Having failed to dispel reasonable doubt as to this dispositive issue, the DR had failed to state a claim. The Bankruptcy Appellate Panel for the Tenth Circuit affirmed, and the Circuit, consistent with its prevailing rules, focused solely on the BC’s ruling.
- In 2003, the DR executed a $100,000 promissory note (Note), secured by a deed of trust, on the Property, which lay within Jefferson County, Colorado. In 2010, the DR filed a voluntary petition for relief pursuant to chapter 7 of the Code. During that case, the estate abandoned its interest in the Property. In 2011, the BC granted the DR a discharge and closed her case. As to any secured claim, the DR’s in personam liability thereby terminated, even as the non-debtor’s in rem rights remained unaffected. In 2014, Chase, the Note holder, sought a foreclosure judgment in in a Colorado state court (SC). While the DR fought this action, the SC rejected her every claim and issued a judgment of judicial foreclosure. The DR appealed to the Colorado Court of Appeals (CCA) and filed three unsuccessful stay motions as this appellate tribunal pondered. In its answer brief, Chase sought attorneys’ fees incurred in that appeal’s prosecution. After this brief’s docketing, but before the CCA ruled, the Property was sold. Thereafter, the CCA affirmed the judgment, awarded attorneys’ fees to Chase, and remanded the determination as to the amount of fees to the SC. While the CCA failed to specify whether the fees should be classified as a personal obligation of the DR, Chase informed the SC that it would not seek recovery of any appellate attorneys’ fees on remand.
- Jerome A. Holmes; Carolyn B. McHugh; and Nancy L. Moritz
In re: TIMOTHY RUSSELL HOFFMAN
Summarizing by Amir Shachmurove
3358 in the system
2 Being Processed