Nationstar Mortgage, LLC v. Robert Alexander Iliceto
706 F. App'x 636
| 11th Cir. | 2017Background
- Debtor Robert Iliceto filed Chapter 13 (Mar. 25, 2013) listing a mortgage and identifying Bank of America and U.S. Bank; U.S. Bank filed a proof of claim and listed the Consuegra Law Office for service.
- Nationstar filed a Transfer of Claim from U.S. Bank (Jan. 9, 2014) and provided two preferred addresses (Irving PO Box and a Lewisville street address); BNC notices were sent to those addresses.
- Iliceto objected (via Rule 3007 procedure) to U.S. Bank’s claim and later filed a proof of claim in Nationstar’s name and an objection to that claim; Nationstar was not served with every filing but received actual notice of the April 28, 2014 order disallowing Nationstar’s secured claim and treating it as unsecured.
- Nationstar received subsequent filings (motion to modify plan, motion to strike notices, discharge order) but did not timely move for reconsideration or appeal the April 28, 2014 order; plan was confirmed and debtor received discharge.
- Debtor moved to have Nationstar’s mortgage extinguished on public records; bankruptcy and district courts granted relief, finding Nationstar had adequate notice under due process and waived challenges by failing to act promptly.
Issues
| Issue | Plaintiff's Argument (Iliceto) | Defendant's Argument (Nationstar) | Held |
|---|---|---|---|
| Whether Nationstar was denied due process when the court invalidated its mortgage lien | Debtor: Notices and prior orders put Nationstar on notice that its secured status was contested; Nationstar had opportunity to contest but did not | Nationstar: It lacked proper service of certain objections and was not given an adversary summons/complaint; thus lacked constitutionally adequate notice | Court: Nationstar had actual notice of controlling orders and filings; notice was reasonably calculated under the circumstances, so no due process violation |
| Whether the debtor’s challenge to Nationstar’s secured status required an adversary proceeding | Debtor: Motion enforced prior orders and did not initiate new determination of lien validity requiring an adversary | Nationstar: Determination of lien validity/extent requires an adversary proceeding under Rule 7001(2) and service of summons/complaint | Court: Argument waived/timely challenge available earlier; enforcement of prior final order did not require an adversary proceeding at that stage |
| Whether failure to strictly follow Rule 3007(a) (service on claimant) rendered orders void | Debtor: Procedural irregularity did not rise to constitutional defect where creditor had actual notice | Nationstar: Violation of Rule 3007(a) and §502 deprived it of procedural and constitutional protections | Court: Rule violation occurred but, under Espinosa and Mullane, actual notice satisfied due process and creditor’s remedy was timely appeal/reconsideration it failed to pursue |
| Whether Nationstar’s inaction constituted waiver of secured rights after plan confirmation | Debtor: Confirmation and final orders bound Nationstar once it had notice and failed to act | Nationstar: April 28 order was foundational and should have been challenged later; extinguishment was improper | Court: Nationstar’s failure to timely move for reconsideration or appeal constituted waiver; confirmed plan bound Nationstar |
Key Cases Cited
- United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (2009) (actual notice of plan contents can satisfy due process despite failure to use specific adversary-service procedures)
- Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306 (1950) (due process requires notice reasonably calculated under the circumstances)
- Jones v. Flowers, 547 U.S. 220 (2006) (due process does not always require actual notice; standard is reasonably calculated notice)
- Foremost Fin. Servs. Corp. v. White (In re White), 908 F.2d 691 (11th Cir. 1990) (sua sponte disallowance of secured claim without notice is error where creditor had no opportunity to be heard)
- Gissendaner v. Comm’r, Ga. Dep’t of Corrs., 794 F.3d 1327 (11th Cir. 2015) (due process’s core requirements are notice and opportunity to be heard)