Caires v. JPMorgan Chase Bank, N.A. (In re Caires)

• Decision Date: 15 January 2021
• Docket Number: No. 3:20-cv-00164 (JAM),3:20-cv-00164 (JAM)
• Citation: 624 B.R. 322
• Court: U.S. District Court — District of Connecticut
• Parties: IN RE: CAIRES Richard Caires, Appellant, v. JPMorgan Chase Bank, N.A., Appellee.

624 B.R. 322

IN RE: CAIRES

Richard Caires, Appellant,

v.JPMorgan Chase Bank, N.A., Appellee.

No. 3:20-cv-00164 (JAM)

United States District Court, D. Connecticut.

Signed January 15, 2021

Richard Caires, pro se.

Brian D. Rich, Halloran & Sage, Hartford, CT, for Appellee.

ORDER AFFIRMING DECISION OF BANKRUPTCY COURT

Jeffrey Alker Meyer, United States District Judge

This bankruptcy appeal relates to state court foreclosure proceedings. The question presented is whether the Bankruptcy Court abused its discretion when it granted a motion to lift the automatic bankruptcy stay under 11 U.S.C. § 362 so that a bank could continue its prosecution of a state court foreclosure action against the debtor. Because I conclude that lifting of the stay was not an abuse of discretion, I will affirm the decision of the Bankruptcy Court.

BACKGROUND

This pro se bankruptcy appeal is the latest chapter of a long-running litigation saga involving foreclosure proceedings for a residence at 634 North Street in Greenwich, Connecticut. The pro se appellant is Richard Caires, and the appellee is JP Morgan Chase Bank (the "Bank").

The appeal arises from a decision of the United States Bankruptcy Court for the District of Connecticut that granted the Bank's motion to lift the automatic bankruptcy stay. I will summarize below the principal facts and conclusions as set forth in Chief Judge Manning's lengthy decision. See In re Caires , 611 B.R. 1 (Bankr. D. Conn. 2020).

In 2006 Caires purchased the Greenwich property for more than $5 million. At some point after the original lender was placed into government receivership, the Bank became the alleged holder and owner of Caires' loan debt and as secured by a mortgage on the property.

When Caires defaulted and stopped paying the mortgage in 2009, Caires and the Bank became embroiled in litigation that has bounced for years between multiple federal and state courts. Caires started it off by suing the Bank in the Connecticut Superior Court, claiming that the Bank had engaged in fraud and unfair trade practices and seeking to estop the Bank from foreclosing on the property. The Bank responded by removing the action to this Court and by adding a foreclosure counterclaim. Judge Bryant ended up dismissing Caires' claims in July 2012 and remanding the foreclosure action to Connecticut state court in September 2012. See Caires v. JP Morgan Chase Bank, N.A. , 880 F. Supp. 2d 288, 291 (D. Conn. 2012).

The foreclosure action then lingered for more than two years until the state court scheduled a trial date for November 5, 2014. But just two days before the trial date, Caires filed a Chapter 13 bankruptcy case. This would be the first of three bankruptcies he has filed, and of course it triggered the standard automatic bankruptcy stay under 11 U.S.C. § 362(a) to stop the Bank from further prosecuting the state court foreclosure action.

Two months later the bankruptcy case was dismissed in January 2015. As Chief Judge Manning recounts, it was dismissed on the ground that Caires' Chapter 13 plan "contained no information—the Debtor [Caires] did nothing other than sign and file the Chapter 13 Plan," and the plan "was therefore completely deficient." In re Caires , 611 B.R. at 3.

The state court foreclosure proceedings then resumed, and a firm trial date was set for April 12, 2016. But the very day before the new trial date, Caires filed a notice of removal to remove the action to the United States District Court for the Southern District of New York. The case remained in the New York federal court until it was remanded back to the Connecticut state court in January 2017.

The state court eventually set a new trial date for August 3, 2017. But once again the very day before trial, Caires filed a notice of removal to remove the case to this Court. Judge Hall promptly remanded the case back to Connecticut state court on the ground that the removal was plainly untimely and noting her concern that "Caires has engaged in a troubling pattern of filing meritless notices of removal on the eve of the state court trial that is to determine whether JPM [the Bank] is entitled to foreclose on his property." See J.P. Morgan Chase Bank, N.A. v. Caires , 2017 WL 3891663, at *3 (D. Conn. 2017).

The state court set a new trial date for January 31, 2018. But on the very day before trial, Caires filed another Chapter 13 bankruptcy case, once again triggering the automatic stay to scuttle the state court's plan to conduct a foreclosure trial. The bankruptcy was dismissed a few months later in April 2018 on numerous grounds, including Caires' failure to file required information and failure even to qualify as an individual eligible to seek relief under Chapter 13.

The Connecticut state court rescheduled the trial to May 22, 2018. But Caires did not show up for trial. The state court conducted the trial and entered a judgment of strict foreclosure, concluding in relevant part that the Bank was the holder and owner of the note as secured by the mortgage on the property, that Caires was in default, that the fair market value of the property was $6.6 million, and that the debt owed to the Bank was more than $8.3 million.

In June 2018, Caires appealed the state court's foreclosure judgment, an action which triggered an automatic appellate stay under Connecticut law. But one year later and while the appeal was pending, the Connecticut trial court entered an order in June 2019 granting the Bank's motion to terminate the appellate stay. It concluded in relevant part that Caires' "appeal was filed ‘for delay only and that due administration of justice requires the stay to be terminated.’ " In re Caires , 611 B.R. at 6 (quoting state trial court ruling).

Having secured a foreclosure judgment, the Bank filed a motion in the state court to set law days to finalize its title to the property. See Sovereign Bank v. Licata , 178 Conn. App. 82, 97-98, 172 A.3d 1263 (2017) (discussing sequence of foreclosure proceedings and setting of law days). The state court set oral argument on the motion for July 15, 2019. But just three days before the argument, Caires filed for Chapter 7 bankruptcy, thereby triggering once again an automatic bankruptcy stay.

The Bank moved under 11 U.S.C. § 362(d) to lift the bankruptcy stay. The Bankruptcy Court granted the motion. It ruled that the Bank had met its burden to show cause for relief from the stay under three different statutory provisions.

First, the Bankruptcy Court concluded that good cause existed under 11 U.S.C. § 362(d)(1), which provides in relevant part that a court "shall" grant relief "for cause, including the lack of adequate protection of an interest in property of such party in interest." In re Caires , 611 B.R. at 6 (quoting § 362(d)(1) ). It noted that Caires "has not made a mortgage payment since August 1, 2009," and that "no equity exists in the property" because the debt well exceeds the value of the property. Id. at 6, 7.

Second, the Bankruptcy Court concluded that good cause existed under 11 U.S.C. § 362(d)(2), which provides in relevant part that a court "shall" grant relief "if the debtor does not have any equity in such property and such property is not necessary to an effective reorganization." In re Caires , 611 B.R. at 7 (quoting § 362(d)(2) ). It noted that "no equity in the property exists" and that the property "is not necessary to an effective reorganization because Chapter 7 provides for liquidation of a debtor's assets, not reorganization." Id. at 7.

Third, the Bankruptcy Court concluded that good cause existed under 11 U.S.C. § 362(d)(4), which provides in relevant part that a court "shall" grant relief "if the court finds that the filing of the petition was part of a scheme to delay, hinder, or defraud creditors that involved – ... (B) multiple bankruptcy filings affecting such real property." 611 B.R. at 7 (quoting § 362(d)(4) ). It noted in part that "[t]he record establishes that the Debtor filed multiple bankruptcy cases to stay the trial in the Superior Court Foreclosure Action and to frustrate JP Morgan's right to foreclose," and "[i]t cannot be refuted that each of the Debtor's bankruptcy cases stayed a scheduled trial date or the resetting of law days in the Superior Court Foreclosure Action." Id. at 8.

The Bankruptcy Court relied as well on the conclusions of two other judges that Caires had engaged in prior litigation tactics for purpose of improper delay. Ibid. It further concluded that Caires' multiple bankruptcy cases "served no bankruptcy purpose other than to stay trial and the resetting of law days in the Superior Court Foreclosure Action." Id. at 9.

Having concluded that the Bank had met its burden to show cause for relief from the stay on each one of these three different grounds, the Bankruptcy Court addressed Caires' argument that the Bank was not the true holder of the note and therefore not entitled to enforce it. The Bankruptcy Court rejected this argument on two grounds. First, it concluded that this argument was barred by res judicata because "[w]hether the Debtor owes a debt to JP Morgan and whether JP Morgan is a party in interest entitled to relief from the automatic stay were fully and finally decided in the Superior Court Foreclosure Action." Id. at 10. Second, it concluded that this argument was jurisdictionally precluded by the Rooker-Feldman doctrine. Ibid.

Caires filed a timely notice of appeal. He also filed an emergency motion for reinstatement of the automatic stay pending adjudication of his appeal, and I denied this motion. See In re Caires , 2020 WL 772815 (D. Conn. 2020). I concluded in relevant part that Caires had not established a likelihood of success on appeal: "Chief Judge Manning's order contains a thorough and careful review of the law governing whether to lift the automatic stay and specific findings that a lifting of the stay was warranted in light of Caires' history of non-payment, his vexatious efforts to impede foreclosure proceedings by means...