In re Latasha Denell Mitchell

Case Type:
Case Status:
EC-21-1010-LBT (9th Circuit, Aug 03,2021) Not Published
The Ninth Circuit Bankruptcy Appellate Panel affirmed the bankruptcy court's ruling against the debtor regarding alleged violations of the stay and discharge injunction against the loan servicer. Although the bankruptcy court erred in finding that there was no stay violation, the error was harmless because no compensatory damages were requested or resulted from the specific conduct at issue. The servicer did not violate the discharge injunction because, though the Debtor's personal liability was discharged, the lien survived the discharge and the servicer was allowed to collect payments.
Procedural context:
Debtor received a discharge in a chapter 7 bankruptcy in 2010. In 2018, Debtor filed a lawsuit against its loan servicer in state court for claims relating to alleged denial of eligibility for the Keep Your Home California program. After the state court granted summary judgment in favor of the servicer, the debtor removed the state court action to the bankruptcy court and filed a motion for contempt against the servicer for violating the automatic stay and the discharge injunction. The bankruptcy court denied the motion and remanded the case to state court.
In Debtor's 2010 chapter 7 bankruptcy she had filed a statement of intention that she was going to surrender the real property at issue. On October 26, 2010, the bankruptcy court granted stay relief to the servicer orally and subsequently entered the stay relief order on November 9, 2010. After stay relief was granted orally but before the order was entered, the servicer allegedly coerced a payment of $3,100 from the Debtor on a telephone call. Debtor continued to make payments through 2014. In January 2018, Debtor filed a lawsuit in state court asserting multiple claims relating to the denial of a loan modification through the Keep Your Home California (KYHC) program due to the servicer allegedly inaccurately informing KYHC that Debtor had an interest-only loan and that her loan was in active litigation.

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