Schnitzel, Inc. v. Sorensen
BAP agrees with Title Max that pawned property drops out of an estate automatically when state law does not require notice.
- Rochelle Quick Take
View Rochelle Summary- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- BAP No. NC-17-1152-FBTa (9th Circuit, Jun 15,2018) Published
- Tag(s):
- Ruling:
- Pawned property becomes property of the bankruptcy estate, and the pawnbroker's state-law notice regarding the pawned personal property violated the automatic stay. The BAP did not reach the issue of whether the confirmed Chapter 13 plan was binding on the pawnbroker.
- Procedural context:
- The debtor filed a Chapter 13 plan (and an amended plan) that proposed to pay a pawnbroker the full amount of the pawn debt. After the commencement of the Chapter 13 case, the pawn broker served a 10-day notice required under California law that the debtor's right to redeem the pawned personal property (i.e., pay off the pawn loan) would expire. The debtor then filed an adversary proceeding against the pawn broker and filed an application for a temporary restraining order. The bankruptcy court ruled in favor of the debtor, and the pawn broker appealed.
- Facts:
- The debtor pawned five pieces of jewelry as collateral for five pawn loans. She then obtained replacement pawn loans that matured/terminated on November 18, 2016. Before this date, Ms. Sorenson filed a Chapter 13 petition and a plan that provided for the repayment of the pawn loans. Notwithstanding the bankruptcy, the pawnbroker issued a notice of termination, providing for a 10-day redemption right, as required by California law. Ms. Sorenson filed an amended plan that required her to make $50 monthly payments to the pawnbroker, and the pawnbroker did not object to confirmation of the amended plan. The pawnbroker also extended the termination date until March 3, 2017. Just two days shy of the pawn termination date, Ms. Sorenson filed an adversary proceeding against the pawnbroker and filed a motion for a temporary restraining order against the pawnbroker.
- Judge(s):
- FARIS, BRAND, and TAYLOR, Bankruptcy Judges
