In re Lapeyre
544 B.R. 719
Bankr. S.D. Florida2016Background
- Debtors executed a mortgage and note on Marco Property (1120 San Marco Rd., Marco Island) and defaulted; Nationstar services the loan.
- In their confirmed Chapter 13 Plan (Fourth and later Fifth Modified Plan), Debtors expressly "surrender[ed] their interest" in the Marco Property and the plan granted Bank of America in rem stay relief to pursue the collateral.
- After plan confirmation, Nationstar filed a state-court foreclosure; Debtors retained counsel and filed an Answer, multiple affirmative defenses, and a counterclaim alleging lack of standing, TILA violations, fraud, unjust enrichment, etc.
- Nationstar moved in bankruptcy court to compel surrender and for sanctions; the bankruptcy court held hearings and received briefing.
- Court concluded Debtors’ affirmative defenses and counterclaim breach the confirmed plan’s surrender provision and ordered Debtors, within 14 days, to withdraw those defenses and move to dismiss the counterclaim; sanctions were denied without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does a Chapter 13 plan provision "surrendering" property allow the debtor to actively defend a state-court foreclosure? | Nationstar: "Surrender" precludes debtor from contesting foreclosure; defenses violate plan. | Debtors: may assert defenses/counterclaims despite surrender; ambiguity about meaning. | Court: "surrender" bars overt acts to prevent foreclosure; asserting defenses/counterclaims breaches the confirmed plan. |
| Can the bankruptcy court order debtors to withdraw defenses/dismiss counterclaim in state-court foreclosure? | Nationstar: bankruptcy court can enforce its Confirmation Order and compel compliance. | Debtors: bankruptcy court lacks jurisdiction to interfere with state-court litigation; estoppel arguments belong in state forum. | Court: it has jurisdiction to order the Debtors to cease actions that violate the Confirmation Order and to withdraw defenses/dismiss the counterclaim. |
| Are sanctions appropriate for violating the surrender provision? | Nationstar: seeks sanctions for interest, taxes, insurance and litig. expenses. | Debtors: law unsettled in Eleventh Circuit; conduct not egregious. | Court: denies sanctions (not egregious; Eleventh Circuit unsettled) but leaves door open if Debtors fail to comply. |
Key Cases Cited
- In re Calzadilla, 534 B.R. 216 (Bankr. S.D. Fla. 2015) ("surrender" means more than stay relief and precludes defending foreclosure)
- In re Metzler, 530 B.R. 894 (Bankr. M.D. Fla. 2015) (surrender = no overt acts to prevent foreclosure)
- In re Failla, 529 B.R. 786 (Bankr. S.D. Fla. 2014) (debtors who state intent to surrender may not defend foreclosure)
- In re Kourogenis, 539 B.R. 625 (Bankr. S.D. Fla. 2015) (limits on post-confirmation relief and considerations of laches/jurisdiction when seeking surrender enforcement)