607 B.R. 889
Bankr. E.D. Ky.2019Background:
- Debtor filed Chapter 7, scheduled a 2001 Dodge Dakota with value $150, and timely stated intention to surrender the vehicle; debtor received a discharge and did not reaffirm the loan.
- OneMain held a prepetition lien (claim ~$8,000) that survived bankruptcy; OneMain did not repossess the vehicle, which remained on third-party property.
- Post-discharge, Debtor and his ex–father-in-law spoke with OneMain seeking a lien release; OneMain explained the debt was discharged but that its in rem lien survived and described options (salvage-yard offer, mechanic’s estimate, nominal offers) to obtain a release.
- Parties discussed a potential $100 salvage offer and salvage-yard pickup, but no formal offer or mechanic estimate was submitted to OneMain.
- Debtor moved to reopen and filed a contempt motion alleging OneMain illegally demanded full payment before releasing the lien; OneMain released the lien ten days after the contempt motion was filed.
- The parties filed cross-motions for summary judgment; the court found no disputed material facts and decided the matter as a legal question.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether OneMain violated §524(a)(2) by refusing to release lien or repossess vehicle | Bentley: OneMain refused to release lien unless full balance paid, coercing reaffirmation and preventing surrender | OneMain: Did not demand full payment; preserved state-law in rem rights and offered reasonable options (salvage offers, mechanic estimate) for lien release | Court: No §524(a)(2) violation — conduct not objectively coercive; creditor’s in rem options lawful |
| Whether Pratt (repossess-or-release for valueless collateral) controls over Canning/Taggart standards | Bentley: Pratt governs; valueless vehicle required repossess-or-release, so refusal was coercive | OneMain: Pratt distinguishable; Canning and Taggart allow creditors to exercise state rights so long as conduct is not coercive or a demand for payment | Court: Applied Pratt/Canning balance — facts align with Canning; no coercion here; Taggart’s objective-reasonableness framework not triggered |
| Class certification of contempt claim | Bentley sought class certification to pursue broader pattern | OneMain opposed; argued claim fails on merits so class certification moot | Court: Class certification request moot/denied because individual claim lacks merit |
Key Cases Cited
- Taggart v. Lorenzen, 139 S. Ct. 1795 (2019) (establishes objective-reasonableness standard for contempt under §524)
- In re Pratt (Pratt v. GMAC), 462 F.3d 14 (1st Cir. 2006) (found creditor’s refusal to release lien coercive for valueless vehicle)
- In re Canning, 706 F.3d 64 (1st Cir. 2013) (distinguishes Pratt; no violation where creditor negotiates options and does not demand full payment)
- Johnson v. Home State Bank, 501 U.S. 78 (1991) (prepetition secured liens survive bankruptcy)
- Pertuso v. Ford Motor Credit Co., 233 F.3d 417 (6th Cir. 2000) (discusses contempt for discharge injunction violations)