477 B.R. 915
Bankr. S.D. Ga.2012Background
- Debtor purchased property in La Grange, Georgia on February 16, 2007, funded by a Liberty Mortgage loan secured by a security deed later assigned to BB&T.
- Debtor filed Chapter 13 petition on December 4, 2009; plan surrendering the property was stated as full satisfaction of BB&T's claim.
- BB&T moved for relief from stay; the court granted this relief by a consent order.
- Debtor's plan was confirmed on February 3, 2010; the property was surrendered under the plan, but BB&T did not foreclose or take possession.
- Debtor filed an adversary proceeding on November 2, 2011 alleging willful contempt of the Confirmation Order, willful stay violation, and damages under 11 U.S.C. § 362(k).
- BB&T moved to dismiss under Rule 12(b)(6); the court concluded BB&T did not violate the automatic stay or the Confirmation Order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether creditor must take affirmative steps to accept surrendered property | Brown contends surrender requires creditor action under §1325(a)(5)(C). | BB&T argues surrender is a contractual act not requiring affirmative transfer by creditor. | No affirmative action required; surrender does not violate the stay or confirmation. |
| Whether failure to foreclose after surrender violates automatic stay | Brown alleges stay violation due to inaction by BB&T post-surrender. | BB&T maintains no stay violation since creditor need not foreclose upon surrender. | No stay violation found. |
| Whether failure to foreclose violates the Confirmation Order | Brown seeks contempt for not following the Confirmation Order. | BB&T argues compliance did not require concurrent foreclosure. | No contempt; confirmation order not violated. |
Key Cases Cited
- In re Arsenault, 456 B.R. 627 (Bankr.S.D.Ga.2011) (surrender does not compel creditor to transfer title; no stay violation)
- Pratt v. Gen. Motors Acceptance Corp., 462 F.3d 14 (1st Cir.2006) (creditor not required to accept possession under §521(a)(2))
- In re Canning, 442 B.R. 165 (Bankr.D.Me.2011) (surrender deemed a contractual act with consent required)
- In re Service, 155 B.R. 512 (Bankr.E.D.Mo.1993) (surrender described as contractual act; creditor's acceptance not automatic)
- In re White, 282 B.R. 418 (Bankr.N.D.Ohio 2002) (surrender and creditor rights in interest guided by state law)
- In re Pigg, 453 B.R. 733 (Bankr.N.D.Ga.2011) (equitable remedies in surrender scenarios involving possession)
- Butner v. United States, 440 U.S. 48 (U.S. Supreme Court 1979) (affirms application of state law to property interests in bankruptcy)
- Citizens’ Bank v. Realty Sav. & Trust Co., 167 Ga. 170, 144 S.E. 893 (Ga. 1928) (grantor retains possession and redemption rights after security deed)
- Citizens’ Bank of Moultrie v. Taylor, 155 Ga. 416, 117 S.E. 247 (Ga. 1923) (security interest limitations and debtor's rights post-deed execution)