Weber v. SEFCU
477 B.R. 308
N.D.N.Y.2012Background
- Appellant Weber’s Ford F-250 was repossessed by SEFCU on Jan 10, 2010 for default on four loans.
- SEFCU sent two right-to-redeem letters to Weber on Jan 10 and Jan 11, 2010.
- Weber filed a Chapter 13 petition on Jan 14, 2010; SEFCU was notified of the petition.
- Weber’s counsel requested turnover of the Ford to the bankruptcy estate under 11 U.S.C. § 362; SEFCU did not immediately return it.
- Weber filed an adversary proceeding in the bankruptcy action around Jan 22, 2010; SEFCU eventually returned the Ford on Mar 5, 2010 after a hearing.
- The bankruptcy court granted summary judgment for SEFCU on Dec 22, 2010; Weber appealed Jan 3, 2011 and briefed in March 2011; sanctions were to be determined on remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether creditor must return repossessed property after bankruptcy filing | Weber: property becomes part of estate and must be returned | SEFCU: Alberto logic allows retention until turnover order | Yes; property must be turned over to the estate upon bankruptcy filing |
| Whether Whiting and §541/§542 bring repossessed property into the estate | Weber: estate includes the Ford once defendant knew of petition | SEFCU: relies on Alberto to limit turnover | Property is within the estate and turnover may be compelled under §542 |
| Whether In re Alberto governs the district court’s de novo review on appeal | Weber: Alberto conflicts with Whiting and should not control | SEFCU: Alberto aligns with current controlling law in district | No; de novo review may apply intervening controlling law and lead to reversal |
| What sanctions, if any, are appropriate for stay violation | Weber: sanctions should be assessed for stay violation | SEFCU: case should be remanded for sanctions determination under §362(k) | Remanded to determine sanctions, if any, against SEFCU |
Key Cases Cited
- United States v. Whiting Pools, Inc., 462 U.S. 198 (U.S. 1983) (estates include property made available by other bankruptcy provisions; pre-petition seizure can become estate property)
- In re Alberto, 271 B.R. 223 (N.D.N.Y. 2001) (debtor must take affirmative steps to bring property into the estate (focus on turnover))
- In re Del Mission, 98 F.3d 1147 (9th Cir. 1996) (mandatory turnover of estate property upon filing of bankruptcy)
- In re Knaus, 889 F.2d 773 (8th Cir. 1989) (duty to return property arises upon filing of petition)
- In re Yates, 332 B.R. 1 (10th Cir. BAP 2005) (refusal to turn over asset violates automatic stay)
- In re Sharon, 234 B.R. 676 (6th Cir. BAP 1999) (possession of debtor’s car is estate property from petition moment)
- Thompson v. General Motors Acceptance Corp., LLC, 566 F.3d 699 (7th Cir. 2009) (holding that passive control of asset violates stay)
- In re Pfleghaar, 215 B.R. 394 (8th Cir. BAP 1997) (de novo review may consider intervening authority)
- Chrysler Financial Co., L.L.C. v. Schlant, 243 B.R. 613 (W.D.N.Y. 2000) (reversal where district disagrees with controlling district case)