Canning v. Beneficial Maine, Inc. (In re Canning)
- Summarized by David Baker , Law Office of David G. Baker
- 11 years 11 months ago
- Citation:
- In re Canning, --- F.3d ----, 2013 WL 388060 (1st Cir., Feb. 1, 2013)
- Tag(s):
-
- Ruling:
- The bankruptcy court was affirmed.
- Procedural context:
- Chapter 7 debtors commenced an adversary proceeding, claiming essentially that Beneficial Maine (and other related entities) violated the discharge injunction by refusing to foreclose or release the mortgage lien.
- Facts:
- Pre-petition, the debtors defaulted on their mortgage, leading to the commencement of foreclosure proceedings. They filed a chapter 7 bankruptcy case and indicated an intention to surrender the property, which was their residence. Beneficial terminated state-court foreclosure proceedings, post-petition, and then sent the debtors a letter saying that it would not reinstate foreclosure and that the debtors would continue to be solely responsible for post-petition costs, such as insurance and maintenance. The debtors sent Beneficial a letter demanding that Beneficial either foreclose or release its lien, relying on the First Circuit's decision in Pratt v. GMAC, 462 F.3d 14 (2006). Beneficial declined. The debtors initiated the adversary proceeding, and on a stipulated record, the bankruptcy court ruled against the debtors. The BAP affirmed. The First Circuit also affirmed, essentially distinguishing the facts of this case from Pratt by the fact that it was real estate at issue, which, unlike the motor vehicle in Pratt, was not essentially worthless and in fact could be expected to increase in value. In addition, Beneficial was willing to release its lien in exchange for a settlement offer or a short sale, neither of which the debtors were willing to offer. Thus the First Circuit found nothing "objectively coercive" about Beneficial's position, and affirmed
- Judge(s):
- Torruella, Ripple and Howard.
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