Bentley v. Onemain Fin. Grp., LLC (In re Bentley)

Decision Date08 July 2020
Docket NumberNo. 19-8026,19-8026
CourtU.S. Bankruptcy Appellate Panel, Sixth Circuit

By order of the Bankruptcy Appellate Panel, the precedential effect of this decision is limited to the case and parties pursuant to 6th Cir. BAP LBR 8024-1(b). See also 6th Cir. BAP LBR 8014-1(c).

File Name: 20b0006n.06

Appeal from the United States Bankruptcy Court for the Eastern District of Kentucky at Covington.

No. 2:18-bk-20281—Tracey N. Wise, Judge.

Before: BUCHANAN, CROOM, and PRICE SMITH, Bankruptcy Appellate Panel Judges.


ON BRIEF: Robert R. Sparks, STRAUSS TROY CO., LPA, Cincinnati, Ohio, John M. Simms, ATKINSON SIMMS & KERMODE, PLLC, Lexington, Kentucky, for Appellant. Douglas M. Foley, Stephanie J. Bentley, MCGUIREWOODS LLP, Washington, D.C., Adam R. Kegley, FROST BROWN TODD LLC, Lexington, Kentucky, for Appellee.


JIMMY L. CROOM, Bankruptcy Appellate Panel Judge. The Debtor in this case, Duane L. Bentley ("Debtor"), asserts that the bankruptcy court erred in concluding that OneMain Financial Group, LLC ("Creditor"), did not violate the 11 U.S.C. § 524(a)(2) discharge injunction when it refused to release its lien on a vehicle that Debtor surrendered during his chapter 7 case. Specifically, Debtor argues that Creditor violated the discharge injunction by refusing to release its lien when asked to do so by Debtor and by conditioning release of the lien on payment of an undetermined amount. Debtor argues that Creditor's actions were objectively coercive and sanctionable under the standard set forth by the First Circuit Court of Appeals in Pratt v. GMAC (In re Pratt), 462 F.3d 14 (1st Cir. 2006). Debtor also argues that Creditor's actions were sanctionable under Taggart v. Lorenzen, 139 S. Ct. 1795 (2019).


Debtor argues that the Bankruptcy Court erred in granting Creditor summary judgment and concluding that Creditor did not violate the discharge injunction when it failed to release its lien on Debtor's vehicle after it decided not to repossess the vehicle and thereafter attempted to coerce Debtor into paying for a lien release.


The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal. The United States District Court for the Eastern District of Kentucky has authorized appeals to the Panel and no party has timely elected to have this appeal heard by the district court. 28 U.S.C. § 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right pursuant to 28 U.S.C. § 158(a)(1). "Orders in bankruptcy cases qualify as 'final' when they definitively dispose of discrete disputes within the overarching bankruptcy case." Ritzen Grp., Inc. v. Jackson Masonry, LLC, 140 S. Ct. 582, 586 (2020) (citing Bullard v. Blue Hills Bank, 575 U.S. 496, 501, 135 S. Ct. 1686 (2015)). An order granting summary judgment to one party and denying it to another is a final order for purposes of appeal. Walls v. Amerisure Mut. Ins. Co., 343 F.3d 881, 884 (6th Cir. 2003) (quoting Hamad v. Woodcrest Condo. Ass'n, 328 F.3d 224, 235 (6th Cir.2003)); Rogan v. Fifth Third Mortg. Co. (In re Rowe), 452 B.R. 591, 593 (B.A.P. 6th Cir. 2011) (citation omitted). The bankruptcy court's denial of a debtor's motion for contempt for violation of the discharge injunction is also a final, appealable order. In re Glaspie, 410 B.R. 261, 266 (E.D. Mich. 2007).

"An order granting summary judgment is reviewed de novo." Church Joint Venture, L.P. v. Blasingame (In re Blasingame), 597 B.R. 614, 616 (B.A.P. 6th Cir. 2019) (citation omitted). An order denying summary judgment "on purely legal grounds" is also reviewed de novo. Tennessee ex rel. Wireless Income Props., LLC v. City of Chattanooga, 403 F.3d 392, 395-96 (6th Cir. 2005) (citing Walls, 343 F.3d at 884). "Under a de novo standard of review, the reviewing court decides an issue independently of, and without deference to, the trial court's determination." Menninger v. Accredited Home Lenders (In re Morgeson), 371 B.R. 798, 800 (B.A.P. 6th Cir. 2007) (citation omitted).

The court's interpretation of 11 U.S.C. § 524 is reviewed de novo. Ford Motor Credit Co. v. Morton (In re Morton), 410 B.R. 556, 559 (B.A.P. 6th Cir. 2009) (citation omitted). The bankruptcy court's determination that the creditor did not violate the discharge injunction presents a mixed question of law and fact. Id. (citing WesBanco Bank Barnesville v. Rafoth (In re Baker & Getty Fin. Servs., Inc.), 106 F.3d 1255, 1259 (6th Cir. 1997)). Accordingly, "the court's conclusions of law are reviewed de novo" and its "findings of fact are reviewed under the clearly erroneous standard." Id. (citations omitted). "[A] finding is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 573, 105 S. Ct. 1504 (1985) (quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S. Ct. 525 (1948)).


Debtor does not dispute any of the bankruptcy court's factual findings. As such, the factual findings are reproduced here, verbatim (footnotes in original):

The parties agree on the material facts. In June 2017, Debtor obtained a loan from Creditor and granted Creditor a lien on a 2001 Dodge Dakota (the "Vehicle"). Debtor filed a chapter 7 petition on March 5, 2018, and Creditor received notice of the bankruptcy filing. Debtor's Schedule D, filed with his petition, stated that Creditor had an $8,000 claim secured by the Vehicle, which Debtor valued at $150. Debtor also filed a statement of his intention to surrender the Vehicle to Creditor with his petition. Debtor did not reaffirm the debt to Creditor before entry of his discharge on June 11, 2018. Creditor's lien was not avoided or eliminated in the bankruptcy, and Creditor received notice of entry of the discharge. Debtor never paid the balance of Creditor's claim. Creditor never repossessed the Vehicle, which was stored on property owned by Debtor's ex-father-in-law, Paul Reis.
On June 29, 2018, Debtor called Creditor1 and stated that he had received his discharge, wanted "to take the lien off the title of the vehicle that was in bankruptcy that you guys have the lien on," and advised that the Vehicle "is old. It's trash. It's totaled." [ECF No. 78-1 at 6.] Creditor's representative told Debtor: "once there's a discharge you are not responsible for the balance of the loan, but creditors are allowed to keep an interest in the lien on the vehicle and they'll ask for some kind of offer to be made for a lien release." [Id.] Creditor's representative then said that it sounded as though "this is just a salvage car. It's junk value probably," and told Debtor to have a local salvage yard call Creditor to provide a "scrap value offer maybe so much on the pound" at which point Creditor would "consider accepting that to release the lien. They will sell it for some minimal consideration and get the lien released." [Id. at 7.]
Several weeks later, on August 1, 2018, Mr. Reis and Debtor called Creditor. Near the start of the call, Creditor's representative advised Debtor: "If your personal liability to this debt has been discharged in bankruptcy, any payments you make on this account are voluntary[.] [A]lthough you may not be legally obligated to repay this debt, [a lien] on or against collateral securing the account may have survived the discharge[]. If such a lien exists, [Creditor] may enforce any applicable state release [sic] to recover such collateral." [ECF No. 78-1 at 11.] The representative, speaking with Mr. Reis (at Debtor's request andwith his permission), advised that Creditor would not repossess the Vehicle because "[t]he value is too low," and then said:
So the options that we can give now are working with a salvage yard, an individual or the customer himself. If it's a customer or a third party wanting to make an offer on it against the lien, then we would require a mechanic's estimate to come along with that offer. If it's a really low offer just to support the value that you're saying the vehicle is worth. If it's a junk vehicle and doesn't run and you're wanting to just scrap it, you can contact the local salvage yard to see if they are interested in working with us. You would explain to them that we are the lienholders and they would call and make an offer on the lien and then once that is approved by management and we could work with them to get payment and release that lien to the salvage yard.
[Id. at 12.] Mr. Reis responded that he would have the Vehicle towed to the highway or to one of Creditor's locations. Creditor's representative then stated that Debtor still owned the Vehicle, that Creditor only had a lien on it, and that Debtor would be charged any fees associated with abandoning the Vehicle: "You can do whatever you want with the vehicle, that's up to him and you whatever you want to do with the vehicle itself. We just can't release the lien without some kind of satisfaction on that lien." [Id. at 15.]
Mr. Reis and Creditor's representative then discussed the options presented to Debtor. Mr. Reis stated that his "neighbor down the road has a junkyard" and "offered me $100 for it. . . ." [Id. at 15.] Mr. Reis and the representative also discussed whether Mr. Reis would buy the Vehicle himself for $100. Creditor's representative stated that Mr. Reis could submit an offer along with "a mechanic's estimate written up on a mechanic's shop's letterhead saying what's wrong with the vehicle and how much it costs to repair that," which Creditor would consider in deciding whether to accept his offer. [Id. at 12.] Although Mr. Reis first stated he did not intend "to go through a lot of hassle getting a mechanic to write it up," he later said that he knew a mechanic who could provide a written statement. [Id. at

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