In re: Jeffrey Mark Freeman, 608 B.R. 228

Debtor filed Chapter 13 and proposed a consensual plan that bifurcated BAC’s claim into a secured portion (paid in full with interest over the plan) and an unsecured remainder; BAC (later assigning to Nationstar) expressly agreed to the plan terms on the record and plan was confirmed.
The confirmed plan (and later Payoff Orders) reflected an agreed secured-claim payoff amount and authorized a modified lump-sum payoff; the Payoff Orders stated that Nationstar’s secured claim would be "deemed satisfied" upon payment.
Debtor paid the agreed secured balance, obtained a Chapter 13 discharge, and later reopened the case after Nationstar sent statements/notice of default and threatened foreclosure.
Debtor moved for contempt for violating the discharge injunction; Nationstar reconveyed its deed of trust after Debtor filed supporting declarations but opposed sanctions, arguing it lacked willful intent and that the plan did not itself avoid the lien.
The bankruptcy court denied contempt, relying on the Ninth Circuit’s then-applicable Taggart standard (creditor’s subjective good-faith belief insulated it); the Panel concluded payment in full voided the lien under California law and §506(d), found a discharge violation occurred, and remanded for reconsideration under the Supreme Court’s Taggart objective-standard ruling.

Issue	Plaintiff's Argument (Freeman)	Defendant's Argument (Nationstar)	Held
Whether payment under the confirmed plan extinguished Nationstar’s lien	Plan and Payoff Orders paid secured claim in full; under CA law and §506(d) lien is void when underlying secured claim is paid	Plan did not expressly avoid lien; separate lien-avoidance procedure required; creditor did not intend lien to be extinguished	Held: Payment in full under the consensual plan extinguished the lien as a matter of law; bankruptcy court erred in concluding otherwise
Whether Nationstar willfully violated the discharge injunction (contempt)	Nationstar acted post-discharge in initiating collection/foreclosure despite being paid; sanctions appropriate	Nationstar lacked willfulness: it reasonably believed the lien survived and rescinded/reconveyed on learning discharge applied	Held: A discharge violation occurred; bankruptcy court’s willfulness determination must be revisited under the Supreme Court’s Taggart objective standard; remanded
Whether the bankruptcy court applied correct legal standard for contempt	The Ninth Circuit’s subjective good-faith test was incorrect; Supreme Court requires objective inquiry	Relied on Ninth Circuit Taggart decision shielding creditors holding a good-faith belief	Held: Supreme Court changed the standard; the Panel vacated and remanded so the bankruptcy court can apply the Supreme Court’s "no objectively reasonable basis" test

Taggart v. Lorenzen, 139 S. Ct. 1795 (2019) (Supreme Court adopted an objective "no objectively reasonable basis" test for civil contempt of the discharge injunction)
Lorenzen v. Taggart (In re Taggart), 888 F.3d 438 (9th Cir. 2018) (Ninth Circuit decision adopting a subjective good-faith belief rule, later superseded by Taggart)
Johnson v. Home State Bank, 501 U.S. 78 (1991) (discharge relieves personal liability but liens may survive unless altered by the bankruptcy)
Knupfer v. Lindblade (In re Dyer), 322 F.3d 1178 (9th Cir. 2003) (abuse-of-discretion standard for reviewing contempt determinations)
HSBC Bank USA v. Blendheim (In re Blendheim), 803 F.3d 477 (9th Cir. 2015) ( §506(d) voids liens that do not secure an allowed secured claim)
All. Mortg. Co. v. Rothwell, 10 Cal.4th 1226 (Cal. 1995) (under California law, satisfaction of the underlying debt extinguishes the lien)