In a recent ruling, the Bankruptcy Court for the Southern District of Georgia denied U.S. Bank’s Motion for Judgment on the Pleadings in an Adversarial Proceeding filed in Debtor’s Chapter 13 case. In James Edwin Hicks v. U.S. Bank (In Re: Hicks) the Bankruptcy Court ruled in favor of Debtor, James Edwin Hicks based on a number of reasons.

Brief Overview of The Bankruptcy Case Facts

Hicks filed for Chapter 13 bankruptcy on January 2, 2015. His Chapter 13 plan was confirmed on October 8, 2015. (Id. 2, 4) In his bankruptcy petition, Hicks lists his home and the attached mortgage held by Creditor and Defendant in the Adversarial Proceeding, U.S. Bank. While Hicks was serving in his capacity as a member of the U.S. armed forces, his now estranged wife was handling the household finances. During this time she allegedly fell behind on the mortgage payments to U.S. Bank. (Id. 3)

A foreclosure sale was scheduled for December 2, 2014. On that day, Debtor claims he went to the Burke County Courthouse during the hours of sale and did not observe anyone conduct a foreclosure sale for U.S. Bank. (Id.) After Hicks filed for bankruptcy, U.S. Bank contacted him indicating that the mortgage modification process both parties were working on would continue. (Id. 4)

On June 4, 2015, U.S. Bank filed a deed on the foreclosure sale of Debtor’s property. Debtor claims this was a knowing and willful violation of the Automatic Stay, and that the foreclosure sale should be null and void. U.S. Bank contends that the Bankruptcy Court lacks jurisdiction over the property because if was not part of Debtor’s bankruptcy estate because of the valid pre-petition foreclosure sale. (Id. 6)

Brief Overview of The Bankruptcy Court’s Ruling

U.S. Bank Motioned the Bankruptcy Court for Judgment on the Pleadings. A “judgment on the pleadings is appropriate when there are not material facts in dispute, and judgment may be rendered by considering the substance of the pleadings and any judicially noticed facts.” (Id. 7, citing Hawthorn v. Mac Adjustment, Inc., 140 F.3d 1367, 1370 (11th Cir. 1998)) In the case at bar, the Bankruptcy Court found a number of material facts in dispute, and therefore denied U.S. Bank’s Motion.

The Court found that Hicks’ complaint states sufficient facts to challenge the validity of the foreclosure sale. Hicks alleges that he was present at the Courthouse during the legal hours of the sale and did not witness anyone conducting the sale of the property on behalf of U.S. Bank. This allegation is sufficient to survive a motion for judgment on the pleadings.

Further, Hicks’ complaint alleges that “the foreclosure process was not duly completed when he filed his bankruptcy petition and the Chapter 13 Trustee has not sought to avoid the deed.” (Id. 12) The Court found, “At this state in the proceedings, Debtor has standing to pursue his arguments and his complaint states a plausible claim for avoidance.” (Id.)

The Bankruptcy Court also found that Hicks’ claim against U.S. Bank for violating the Automatic Stay states sufficient facts to survive a motion for judgment on the pleadings. If U.S. Bank did file a deed against Debtor’s property after he filed for bankruptcy protection, then they would be in violation of the Automatic Stay.

Finally, the Court found that Hicks’ complaint makes a “plausible claim” that U.S. Bank is bound by the terms of the confirmed plan because it failed to object to confirmation of Debtor’s Chapter 13 plan. “Once a proposed Chapter 13 plan is confirmed, the rights of creditors are fixed in accordance with the plan, and the debtor emerges with the contracts between himself and creditors having been rewritten as evidenced by his plan as confirmed.” (Id. 14)

The Bankruptcy Court denied U.S. Bank’s Motion for Judgment on the Pleadings. This Adversarial Proceeding and the questions of facts above will need to be resolved at trial.

The Takeaway

The Court has yet to rule on whether or not U.S. Bank violated foreclosure law, bankruptcy law, or the Debtor’s rights. However, this ruling demonstrates the Court’s commitment to upholding Debtor’s rights. Bankruptcy is a complicated area of law. For many, it can be an intimidating process. But, bankruptcy is also a powerful tool that can help people get a handle on their debt, including making up mortgage arrears.

If you are exploring how bankruptcy can help you get out of debt, we encourage you to seek the counsel of an experienced bankruptcy attorney.

Here at the Law Office of Barbara B. Braziel we have over 35-years of bankruptcy experience. We are the premier bankruptcy law firm in Savanna, GA and we practice exclusively in bankruptcy law.

We invite you to get to know us here and read about the clients we’ve helped here.

Call us today at (912) 351-9000 or contact us via the web to schedule a free consultation.

 

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