ORDER GRANTING IN PART MOTION TO COMPEL SURRENDER
The Debtors in this chapter 13 case confirmed a plan that provided for the surrender of their interest in one of their properties. After confirmation of the plan, the Debtors filed affirmative defenses and a counterclaim in a foreclosure action filed by the lender who holds a mortgage on the surrendered property. Because the confirmed plan provides for the surrender of the property, the Court finds that the assertion of affirmative defenses and a counterclaim in the foreclosure case violates the Debtor’s confirmed plan. The issue is presented in Nationstar Mortgage LLC.’s (“Nationstar”) Motion to Compel Surrender of Property and for Sanctions (the “Motion to Compel Surrender”) [DE # 193].
Factual and Procedural Background
On September 29, 2006, the Debtors executed a $2,560,000 note (the “Note”) in favor of Countrywide Bank, N.A. secured by a mortgage (the “Mortgage”) on property located at 1120 San Marco Rd., Marco Island, Florida 34145 (the “Marco Property”). The Debtors defaulted on the Note and Mortgage by failing to make the August 1, 2008 installment, and all installment payments thereafter. On March 28, 2013 the Debtors filed this chapter 13 case. They listed the Mortgage on Schedule D and identified Bank of America N.A. (“Bank of America”) as the creditor. Nationstar is the servicer of the Note and Mortgage. The Debtors’ Schedule D did not list the Mortgage on the Marco Property as contingent, unliquidated, or disputed. The Debtors also did not schedule or describe any contingent claims against Bank of America.
The Debtors filed their Fourth Amended Chapter 13 Plan (the “Plan”) on August 23, 2013 [DE # 103]. The Plan contains the following language as to the Marco Property: “Debtors surrender their interest in the property located at: 1120 San Marco Rd., Marco Island, Florida 34145, Bank of America Acct No. 150518742 is granted in rem stay relief to pursue its collateral.” The Court confirmed the Plan on January 16, 2014 [DE # 139] (the “Confirmation Order”). The Debtors’ Plan was modified several times and the plan currently in effect is the Fifth Modified Plan
After confirmation, on December 22, 2014, Nationstar filed a foreclosure action in Collier County against the Debtors (Case No. 11-2014-002771-0001-XX) (the “Foreclosure Case”). On July 7, 2015 the Debtors retained state court counsel and actively began defending the Foreclosure Case. Specifically, on September 23, 2015, the Debtors filed Homeowners’ Answer, Affirmative Defenses and Counterclaim [DE # 193, pp. 41-67]. The affirmative defenses and counts in the Debtors’ counterclaim include, among other things, allegations that the Note and Mortgage are unenforceable and that Nationstar lacks standing to enforce the Note and Mortgage, as well as allegations of fraud in the inducement, violations of the Federal Truth in Lending Act, and unjust enrichment.
In response to the Debtors’ vigorous defense of the Foreclosure Case, Nations-tar filed its Motion to Compel Surrender. The Court conducted a preliminary hearing on December 8, 2015, and, after determining that further briefing and argument was required, entered its Order Setting Briefing Schedule and Further Hearing on Motion to Compel Surrender [DE # 202], which scheduled a further hearing on January 14, 2016. On December 30, 2015 the Debtors filed their response and memoranda objecting to the Motion to Compel Surrender [DE #204], and, on January 8, 2016, Nationstar filed its reply in support of the Motion to Compel Surrender [DE # 206], The Court heard oral argument at the January 14, 2016 hearing.
Discussion
This is not the Court’s first look at the meaning of “surrender” in a chapter 13 plan. Last year, the Court issued its opinion in In re Calzadilla,
The debtors in Calzadilla amended their plan to provide for stay relief to the lender, but did not use the term surrender. The lender objected and the Court had to determine whether stay relief was the equivalent of surrender. The Court held that surrender means something more than simply stay relief. Rather, surrender precludes a debtor from contesting the lender’s right to complete its foreclosure.
The Court’s Calzadilla decision adopted the holding and reasoning of Bankruptcy Judge Williamson in In re Metzler,
As noted in Calzadilla, Chief Judge Hyman of this district has interpreted the meaning of surrender in a chapter 7 statement of intentions pursuant to 11 U.S.C. § 521(a)(2)(A). In re Failla,
This Court followed Metzler in Calzadilla and none of the arguments presented by the Debtors in this case have convinced the Court to reconsider its conclusion. Therefore, the Court finds that the Debtors’ assertion of affirmative defenses and the prosecution of a counterclaim in the Foreclosure Case is inconsistent with the Plan provision “surrendering” the Marco Property, constitutes a breach of the Debtors’ obligations under the Plan, and is a violation of the Confirmation Order.
The Appropriate Remedy
Nationstar seeks broad relief in the Motion to Compel Surrender, including injunctive relief requiring the Debtors to withdraw their affirmative defenses and counterclaim in the Foreclosure Case. Nationstar also requests sanctions “equal to the accrued interest and litigation tax and insurance expenses resulting from Debtors’ failure to surrender.” Motion to Compel Surrender, p. 11.
The request for sanctions is denied. The meaning of “surrender” in chapter 13 plans is not yet settled in the Eleventh Circuit.
The request for injunctive relief is a closer question. In In re Kourogenis,
This Court agrees that if the requested relief is grounded in judicial estoppel, the relief must be sought in the subsequent forum and, in fact, that principle was articulated in this Court’s decision in In re Marty,
The request for injunctive relief here is different. It is not merely an argument for judicial estoppel. Nationstar is arguing that the Debtors are acting in
For the foregoing reasons, it is — ■
ORDERED as follows:
1. The Motion to Compel Surrender is granted in part.
2. By filing affirmative defenses and a counterclaim in the Foreclosure Case, the Debtors have breached their Plan obligation to surrender their rights in the Marco Property and are in violation of the Confirmation Order.
3. The Debtors are given fourteen (14) days from the date of the entry of this Order to comply with the surrender provision in their Plan by withdrawing their affirmative defenses and moving to dismiss their counterclaim in the Foreclosure Case.
4. Nationstar’s request for sanctions is denied without prejudice to Nationstar seeking further relief in this Court if the Debtors fail to comply with this Order.
Notes
. Effective July 9, 2015, this Court’s Mortgage Modification Mediation Program Procedures were modified. Under the amended procedures, if mediation is unsuccessful, the debtor no longer has to provide for surrender. The Debtor now has the option of filing an amended plan that provides that the property will be treated outside the plan and that the lender will be entitled to in rem stay relief to pursue its state court remedies.
. On December 5, 2013, Judge Williamson entered an Order on Wells Fargo Bank, N.A.’s Motion to Revoke Plan Confirmation [DE# 52 in 8:12—bk—16792]. That Order gave the debtor 14 days to comply with her plan by advising the state court that “she consents to and has no opposition to the foreclosure.’’
. As noted earlier, the Failla decision is presently on appeal to the Eleventh Circuit. Perhaps the law in this circuit will be settled if the Eleventh Circuit issues a published opinion in that case.