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Litton Loan Servicing, L.P. v. Dennis Schubert

Summarizing by Amir Shachmurove

In re Ronald Smith

Disagreeing with two other circuits, the Sixth Circuit finds no power in the bankruptcy court to avoid dismissing a chapter 13 case even if the debtor filed repeatedly in bad faith to avoid foreclosure.

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Case Type:
Case Status:
Reversed and Remanded
20-3150 (6th Circuit, Jun 09,2021) Published
The Court of Appeals reversed the order vacating the dismissal of the debtor's Chapter 13 case and remanded to the Bankruptcy Court with instructions to dismiss the case. The Court based its ruling on the mandatory/permissive distinction in the language of Code Sections 1307(b) and (c) and the Supreme Court's ruling in Law v. Siegel proscribing the use of Code Section 105(a) to disregard specific Bankruptcy Code provisions.
Procedural context:
Pro se Debtor Smith appealed a bankruptcy court order granting a lenders Rule 9024 motion, vacating the voluntary dismissal of his Chapter 13 case and lifting the automatic stay for a period of two years. Smith also sought a stay of the order from the District Court, which was denied. However, the District Court certified the question of whether the reinstatement of Smith's case was contrary to law to the Sixth Circuit Court of Appeals, The Court of Appeals accepted the issue as an interlocutory appeal and reversed the Bankruptcy Court.
Smith obtained a loan for $528,500 in 2004 to purchase a home in Canfield, Ohio. He defaulted and the lender sued to foreclose. Four days before the sale scheduled for August 7, 2007 Smith filed a Chapter 13 bankruptcy to stop the sale. He then filed a motion to dismiss, which the bankruptcy court granted. Fast forward a decade to 2017 when the same chain of events repeated itself. In 2019, after U.S. Bank acquired the mortgage, another sale was scheduled for February 19, 2019. Smith filed another Chapter 13 on the day of sale, stopping the sale. Six days later he moved to dismiss his case, which the bankruptcy court granted. Sometime thereafter, U.S. Bank filed a Rule 9024 motion asking the bankruptcy court to set aside the dismissal and enter an order lifting the stay for a period of two years. The bankruptcy court granted that motion in June, 2019, resulting in Smith's appeal.
Gibbons, Kethledge and Murphy; Opinion by Kethledge

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