599 B.R. 427
1st Cir. BAP2019Background
- Gregory Kirby and wife owned property subject to a mortgage held by 21st Mortgage; they filed a Chapter 7 and received discharges in December 2014 but did not reaffirm the mortgage.
- After discharge, parties engaged in nearly a year of state-court foreclosure-mediation and loss-mitigation efforts; 21st Mortgage sent multiple post-discharge communications (mortgage statements, notices, and loss-mitigation letters), most addressed to Kirby c/o his bankruptcy counsel and most including a bankruptcy disclaimer.
- Mediation failed; foreclosure judgment entered in October 2016 and property sold in February 2017. Kirby reopened his bankruptcy and sued 21st Mortgage claiming violations of the §524(a)(2) discharge injunction and the FDCPA based on post-discharge communications.
- 21st Mortgage moved for summary judgment, arguing communications were informational, sent in mediation or to comply with law, and contained disclaimers; it conceded notice of the discharge and the communications but denied coercion/harassment.
- Bankruptcy court granted summary judgment for 21st Mortgage, finding (under an objective standard) the communications were not coercive or harassing given context (sent largely to counsel, contained disclaimers, arose during mediation or were statutorily required). Kirby appealed as to the discharge claim only.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether genuine issues of material fact precluded summary judgment on discharge-injunction claim | Kirby: affidavits and servicing notes show a pattern of coercive communications and factual disputes (e.g., disclaimer prominence, number of statements, Cash-for-Keys) | 21st Mortgage: record facts about content, recipients, timing undisputed; Kirby produced no admissible evidence creating a trialworthy dispute | No — court: Kirby failed to present specific admissible facts to create genuine disputes; summary judgment appropriate |
| Whether post-discharge mortgage statements and loss-mitigation letters violated §524(a)(2) | Kirby: statements demanded payment and cumulative volume was coercive despite disclaimers | 21st Mortgage: statements were informational, sent to counsel during mediation, and included disclaimers so not attempts to collect in personam | Not a violation — objective test: context (mediation, counsel-addressed, disclaimers) showed no coercion |
| Whether post-mediation communications (Right-to-Cure, escrow/PMI notices, Cash-for-Keys, state-court pleading) violated §524(a)(2) | Kirby: these communications (including Cash-for-Keys and pleading language) pressured payment and negated disclaimers | 21st Mortgage: communications were informational, statutorily required or in rem foreclosure actions and included disclaimers or acknowledged discharge | Not a violation — Right-to-Cure and other notices were informational or in rem; Cash-for-Keys evidence incomplete; pleading not in record so claim fails |
| Whether cumulative communications amounted to coercion despite individual permissibility | Kirby: cumulative volume and some direct communications created coercive effect | 21st Mortgage: cumulative context (mediation, counsel, disclaimers) defeats inference of coercion | Not a violation — totality of circumstances did not give rise to an inference of coercion |
Key Cases Cited
- Bates v. CitiMortgage, 844 F.3d 300 (1st Cir.) (objective test for coercion and need to consider context of communications)
- Bullard v. Blue Hills Bank, 135 S. Ct. 1686 (U.S. 2015) (appeals jurisdiction and final-order discussion for summary judgment)
- In re Varrasso, 37 F.3d 760 (1st Cir. 1994) (summary judgment standards apply in bankruptcy via Rule 7056)
- In re Canning, 706 F.3d 64 (1st Cir.) (scope of discharge injunction and waiver of unbriefed appellate issues)
- In re Diamond, 346 F.3d 224 (1st Cir.) (coercion defined; context can make attorney-to-attorney statements coercive)
- In re Pratt, 462 F.3d 14 (1st Cir.) (discharge injunction purpose: fresh start and in rem vs in personam distinction)