664 B.R. 681
Bankr. D. Md.2024Background
- Arlene Delores Klemkowski (the Debtor) filed for Chapter 13 bankruptcy and had a confirmed repayment plan.
- Prior to bankruptcy, Klemkowski routinely paid her mortgage using an online portal provided by the loan servicer (CitiMortgage/Cenlar).
- Upon filing bankruptcy, the servicer unilaterally revoked her access to the online payment portal, citing policy and system limitations.
- Klemkowski argued this change made it more burdensome to fulfill her payment obligations, leading to practical hardships.
- The dispute arose over whether the servicer could deny Klemkowski access to the portal post-petition and whether her right to use it was protected by bankruptcy law.
- The case came before the bankruptcy court on the debtor’s motion to require the servicer to accept electronic payments as before.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is debtor’s online portal access a protected estate asset? | Right to use the portal is estate property. | Portal use is a revocable convenience, not a right. | Debtor’s portal access is an estate contractual right. |
| Did revoking access violate the automatic stay (§362(a)(3))? | Revocation was an unlawful act of control. | Restriction is policy-based, not stay violation. | Revocation amounted to an automatic stay violation. |
| Is the servicer’s termination justified by contract terms? | Portal access was part of prepetition agreements. | Agreement allows termination at will. | At-will termination not valid without court relief from stay. |
| Are monetary damages warranted for the stay violation? | Did not allege or prove monetary damages. | No damages, no actionable harm sustained. | No money damages, but violation is void ab initio; remedy reserved. |
Key Cases Cited
- Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365 (principal purpose of bankruptcy is fresh start for honest debtor)
- Grogan v. Garner, 498 U.S. 279 (discharge gives honest but unfortunate debtor a fresh start)
- Butner v. United States, 440 U.S. 48 (property interests in bankruptcy defined by state law)
- City of Chicago v. Fulton, 592 U.S. 154 (automatic stay halts affirmative acts altering estate property status quo)
- In re Fontainebleau Hotel Corp., 508 F.2d 1056 (right to use is a protectable estate interest in bankruptcy)
- In re 48th Street Steakhouse, Inc., 61 B.R. 182 (possessory interests like using phone numbers are estate property)
- In re Computer Communications, Inc., 824 F.2d 725 (contract termination requires stay relief in bankruptcy)