MARGUERITE POTTER and KEVIN POTTER
- Summarized by Stephen Falanga , Walsh Pizzi O'Reilly Falanga LLP
- 6 months 1 week ago
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- 23-2625 (3rd Circuit, Jun 26,2024) Published
- Tag(s):
-
- Ruling:
- In this non-precedential ruling, the Third Circuit affirmed the decisions of the District and Bankruptcy Courts annulling the automatic stay and dismissing the pro se debtors’ civil action seeking damages for willful violations of the automatic stay pursuant to 11 U.S.C. § 362(k) and other state law theories.
- Procedural context:
- On remand from the Third Circuit to address the independent nature of a claim under 11 U.S.C. 362(k) the District Court addressed the various defendants’ motions to dismiss and determined that, to the extent that the Potters alleged that defendants violated the automatic stay by seizing the New Jersey property their claim was foreclosed by the Florida Bankruptcy Court’s orders annulling the automatic stay. The state defendants had filed a motion to annul the automatic stay pursuant to 11 U.S.C. § 362(d) which was referred by the District Court to the Bankruptcy Court. Thereafter, the Bankruptcy Court sua sponte reopened Ms. Potter’s bankruptcy proceedings, and, after a hearing on the § 362(d) motion, entered an order retroactively annulling the automatic stay.
The District Court subsequently entered a text order dismissing the civil complaint. This appeal followed.
- Facts:
- In 2007, Kevin Potter (“Debtor’) filed a Chapter 7 bankruptcy petition in the Bankruptcy Court for the Middle District of Florida in which he claimed that he had no assets and that “his former residence,” real property located at 13104 West Buckshutem Road, Millville, New Jersey (“the New Jersey property”), had been “deed[ed] to” Delmarva Enterprises.
In March 2010, the Florida Bankruptcy Court entered an order setting aside the transfer of the property as fraudulent finding that the property was part of the bankruptcy estate and that the persons the Debtor transferred the property to - Marguerite Potter and Delmarva Enterprises - had no interest in, or lien claim on, the property. In an order entered July 11, 2011, the Florida Bankruptcy Court granted the bankruptcy trustee’s motion to compel the Debtor and his family to vacate the New Jersey property and directed that the order “shall be enforced through the courts of the state of New Jersey.” The Potters failed to vacate the property, and, in August 2011, the bankruptcy trustee filed an ejectment action in the Superior Court of New Jersey.
On October 19, 2011, the day before the scheduled eviction, Marguerite Potter filed a Chapter 13 bankruptcy petition in the United States Bankruptcy Court for the District of New Jersey. The Potters were evicted from the property on October 20, 2011.
Six years later, the Potters brought this action in the District Court alleging that the New Jersey property was part of Marguerite Potter’s Chapter 13 bankruptcy estate and that the defendants violated an automatic bankruptcy stay issued pursuant to 11 U.S.C. § 362(a)(1) and conspired to “conduct an armed home/business invasion and seizure of [their] entire estates.” The complaint named over 60 defendants and also included state law claims for conversion, trespass, tortious interference with contractual relationships, unlawful interference with prospective economic advantage, malicious prosecution and breach of contract. As a basis for their action, the Potters asserted jurisdiction pursuant to 28 U.S.C. §§ 1331, 1334, 1337, and supplemental jurisdiction pursuant to 28 U.S.C. § 1367.
The District Court dismissed the civil complaint after determining that it lacked subject matter jurisdiction over the Potters’ claim, brought pursuant to 11 U.S.C. § 362(k), for a willful violation of the automatic bankruptcy stay, and declining to exercise supplemental jurisdiction over the remaining state law claims.
The Third Circuit vacated that decision, noting that the District Court did not have the benefit of its then-recent decision holding that an action under § 362(k) is an independent private cause of action which need not be litigated as part of the bankruptcy proceeding.
On remand, the District Court addressed the various defendants’ motions to dismiss and determined that, to the extent that the Potters alleged that defendants violated the automatic stay by seizing the New Jersey property their claim was foreclosed by the Florida Bankruptcy Court’s orders annulling the automatic stay. The state defendants had filed a motion to annul the automatic stay pursuant to 11 U.S.C. § 362(d) which was referred by the District Court to the Bankruptcy Court. Thereafter, the Bankruptcy Court sua sponte reopened Ms. Potter’s bankruptcy proceedings, and, after a hearing on the § 362(d) motion, entered an order retroactively annulling the automatic stay.
The District Court subsequently entered a text order dismissing the civil complaint. This appeal followed.
- Judge(s):
- JORDAN, PHILLPS and NYGAARD, Circuit Judges
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