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In re Genrette

United States District Court, D. Delaware

September 27, 2019


         Chapter 13




         Presently before the Court is a petition for rehearing en banc and/or panel rehearing under Rules 35 and 40 of the Federal Rules of Appellate Procedure (D.I. 42) (“Petition for Rehearing”) filed by Chapter 13 debtor Andrea Genrette (“Appellant”) with respect to her appeal from a Bankruptcy Court Order (Bankr. D.I. 90)[1] (“the Lift Stay Order”) which (i) granted relief from the automatic stay to appellee, Bank of New York Mellon Trust Company, National Association as Trustee for Residential Asset Mortgage Products, Inc., Mortgage Asset-Backed Pass-Through Certificates Series 2004-RS8 by and through its attorney in fact Ocwen Loan Servicing, LLC (“Bank of New York”), and (ii) denied Appellant’s motion to reinstate the automatic stay (Bankr. D.I. 87). On February 7, 2019, this Court issued a Memorandum Order affirming the Lift Stay Order. (D.I. 41). On February 22, 2019, Appellant filed the Petition. For the reasons set forth herein, the Petition is denied.


         A. Chapter 13 Case and Lift Stay Order

         Appellant is the owner of real property located at 4 Westbury Drive, New Castle, Delaware 19720 (“the Property”). Appellant has a mortgage on the Property owed to Bank of New York. On August 19, 2015, Appellant commenced a Chapter 13 case (Bankr. D.I. 1). On October 26, 2015, the Bankruptcy Court entered an order confirming Appellant’s Chapter 13 plan. (See Bankr. D.I. 30, 34). On June 29, 2017, Bank of New York filed a Motion for Relief from Stay (Bankr. D.I. 52) (“Stay Relief Motion”) based on Appellant’s failure to make the required post-petition payments under the Chapter 13 plan, including 12 post-petition payments for the months of July 2016 through June 2017. (Id. ¶ 1).

         To avoid litigation, determination of the Stay Relief Motion was stayed by agreement of the parties per a signed stipulation (Bankr. D.I. 59) (“Stipulation”). Under the terms of the Stipulation, Appellant acknowledged Bank of New York’s calculation of post-petition arrearages and costs and agreed to file, within 30 days, a modified Chapter 13 plan to provide a cure for the post-petition delinquency of payment of arrearages and costs, then totaling $14, 197.58 (id. ¶¶ 10-12) and additionally to continue to make regular monthly payments in the amount of $1, 242.52 as due beginning with the September 1, 2017 payment (id. ¶ 13). Under the Stipulation, events of default included: Appellant’s failure to file the modified Chapter 13 plan, failure to pay the post-petition arrearages, and failure to make any of the monthly payments. (Id. ¶ 14). Upon occurrence of an event of default, 10 days’ notice to Appellant, and Appellant’s failure to cure, the Stipulation provided that the Stay Relief Motion would be granted without further hearing. (Id. ¶ 15). On October 3, 2017, the Bankruptcy Court approved the Stipulation (Bankr. D.I. 60) (“Stipulated Order”).

         On January 11, 2018, Bank of New York filed a notice of non-compliance. (Bankr. D.I. 65). The notice indicates, and the docket reflects, that Appellant failed to file a modified Chapter 13 plan as required by the Stipulated Order. The notice of non-compliance also stated that Appellant was in default for a total amount of $3, 707.08, which included three regular mortgage payments required on November 2017, December 2017, and January 2018. (Id. at 2).

         On January 16, 2018, Appellant filed the proposed modified Chapter 13 plan, which was approved by the Bankruptcy Court. (Bankr. D.I. 66, 72). On February 1, 2018, Bank of New York filed a notice of default under the Stipulated Order (Bankr. D.I. 71). The notice of default acknowledged that Appellant had filed, albeit late, a modified Chapter 13 plan, but the post-petition arrears for November 2017 through February 2018 remained unpaid. Appellant filed an objection to the notice of default alleging that Bank of New York was not entitled to stay relief because there was an improper allocation of post-petition payments, erroneous fees were charged during the bankruptcy, and the amount owed was incorrect. (Bankr. D.I. 74). Appellant also filed an objection to Bank of New York’s proof of claim. (Bankr. D.I. 77).

         On April 24, 2018, the Bankruptcy Court held a hearing on pending matters and took them under advisement. (See Bankr. D.I. 98, 4/24/18 Hr’g Tr.). On April 25, 2018, Bank of New York filed a supplemental letter brief with the Bankruptcy Court, which included correspondence from Ocwen, the loan servicer, to Appellant with an account reconciliation in response to questions raised by Appellant. (Bankr. D.I. 84). On April 30, 2018, Appellant filed a response to the supplemental letter brief claiming that Ocwen collected payment and other charges before the loan was assigned to it. (Bankr. D.I. 85). On May 8, 2018, Appellant filed a motion to reinstate the automatic stay. (Bankr. D.I. 87).

         On June 7, 2018, the Bankruptcy Court entered the Lift Stay Order, which (i) denied Appellant’s motion to reinstate the automatic stay, and (ii) granted Bank of New York relief from the automatic stay on the basis that Appellant failed to make the required post-petition payments under the Stipulated Order. (Bankr. D.I. 90 ¶ 2). The Bankruptcy Court further determined:

In subsequent proceedings, including a hearing held on April 24, 2018, [Appellant] has raised challenges to, among other things, [Bank of New York’s] pre-bankruptcy conduct, the amounts due to [Bank of New York] and the contents of [Bank of New York’s] proof of claim. The terms of the Stipulation are clear, and the record supports a finding that a payment default has occurred. The issues raised by [Appellant], particularly those relating to events that occurred years ago, do not change the fact that [Appellant] failed to make payments in compliance with the Stipulation.

(Id. ¶ 3). On June 21, 2018, Appellant timely appealed the Lift Stay Order (Bankr. D.I. 93).

         While this appeal was pending, Appellant was approved by Ocwen for a three-month trial loan modification, which required Appellant to make timely monthly payments for May 1, 1018 through July 1, 2018. (Bankr. D.I. 84). It further provided that, “after successful completion of the Trial Period Plan, the account will be reviewed for a permanent modification.” (Id.). Appellant accepted the trial loan modification and made payments on the loan modification from August 31, 2018 through November 29, 2018 (“August 2018 Loan Modification”). When Bank of New York filed a motion with the Bankruptcy Court to approve the trial loan modification as a permanent modification, however, Appellant opposed the motion as an impermissible “new debt” under Chapter 13 and on the basis of the pending appeal. (Bankr. D.I. 109). “[T]he record reflecting that the Debtor objects to the relief set forth in the motion[, ] and the Court having noted that it would not approve a mortgage modification over the Debtor’s objection, ” the Bankruptcy Court entered an order denying the motion to approve the loan modification. (See Bankr. D.I. 118 (“Loan Modification Order”)). Appellant has filed a separate appeal of the Loan Modification Order.[2]

         After the Bankruptcy Court denied the loan modification, Bank of New York was required to reverse the loan modification, which reverted the mortgage loan back to default status. For this reason, Bank of New York advised that it no longer would accept payments from Appellant. On November 20, 2018, Appellant filed a motion seeking an expedited hearing or consideration of the appeal (D.I. 26), which the Court denied (D.I. 29). On December 6, 2018, Appellant filed an emergency motion seeking a temporary injunction with respect to Bank of New York’s refusal to accept additional loan payments. (D.I. 31). On December 20, 2018, the Court issued a Memorandum Order denying the injunction. (D.I. 35).

         B. Memorandum Order

         Following briefing of the appeal (D.I. 17, 21, 22, 23, 24, 25), [3] the Court issued the Memorandum Order affirming the Lift Stay Order. (D.I. 41). The Court reviewed the granting of stay relief for abuse of discretion[4] and found none. The Court agreed cause to lift the stay existed because Appellant admitted to withholding the post-petition payments necessary for the stay to remain in place under the terms of the Stipulated Order, and the record supported the conclusion that a payment default occurred:

In the Stipulated Order, the parties agreed to stay litigation of Bank of New York’s Stay Relief Motion in order to give Appellant a chance to bring her arrearages under the Chapter 13 plan current. Appellant conceded in the Stipulated Order that she had not made certain post-petition payments and agreed to remit monthly payments of $852.22 commencing again August 1, 2018. Appellant further agreed in the Stipulated Order that: “Upon the occurrence of an Event of Default and ten (10) days’ notice thereof to Debtor, her counsel, and Co-Debtor as set forth in paragraph 14 above and Debtor’s failure to cure said event of default within 10 days of receipt of said Notice of Non-Compliance, Relief from Stay and Co-Debtor relief will be hereby lifted without further hearing upon the filing of a Notice of Default . . . .”

(D.I. 41 at 7) (internal citations omitted). The Court noted that Appellant failed to remit the monthly payments due for November 1, 2017 through April 1, 2018, and admitted to ...

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