In re Chabot, Bankruptcy No. 05-62798-7.

• Decision Date: 10 May 2007
• Docket Number: Adversary No. 05-00128.,Bankruptcy No. 05-62798-7.
• Citation: 369 B.R. 1
• Parties: In re Theresa A. CHABOT, Debtor. Theresa A. Chabot, Plaintiff. v. Washington Mutual Bank, Defendant.
• Court: U.S. Bankruptcy Court — District of Montana

Page 1

369 B.R. 1

In re Theresa A. CHABOT, Debtor Theresa A. Chabot, Plaintiff. v. Washington Mutual Bank, Defendant.

Bankruptcy No. 05-62798-7.

Adversary No. 05-00128.

United States Bankruptcy Court, D. Montana.

May 10, 2007.

COPYRIGHT MATERIAL OMITTED

Clifton R. Caughron, Helena, MT, for Plaintiff.

Charles Edward Hansberry, Garlington Lohn & Robinson, Kevin A. Twidwell, Missoula, MT, Charles J. Peterson, Mackoff Kellogg Law Firm, Matthew R. Kolling, Mackoff Kellogg, Dickinson, ND, for Defendant.

MEMORANDUM OF DECISION & PROPOSED FINDINGS AND CONCLUSIONS

RALPH B. KIRSCHER, Bankruptcy Judge.

Pending in this adversary proceeding is the Defendant Washington Mutual Bank's ("WaMu") motion for summary judgment, filed on February 5, 2007, and Plaintiff/Debtor Theresa A. Chabot's ("Chabot") objection. Also pending is WaMu's amended motion for relief from the automatic stay and for in rem relief filed in the above-captioned Chapter 7 case on October 24, 2005, and Chabot's objection thereto, which were consolidated with this adversary proceeding. The parties have filed briefs on WaMu's motion for summary judgment which have been reviewed by the Court, together with the record and applicable law. This matter is ready for submission. For the reasons set forth below WaMu's motion for summary judgment is granted in part and the Court will submit proposed findings of fact and conclusion of law to the district court recommending that Counts Two, Three, Four, Five, Six, Seven, Eight, and Nine of Chabot's complaint be dismissed with prejudice and that Count One of the complaint be dismissed without prejudice. WaMu's motion for relief from the automatic stay will be granted in part as the stay is terminated, and the hearing will proceed as scheduled commencing on May 30, 2007, on WaMu's motion for in rem relief.

JURISDICTION

Plaintiff allege and Defendant do not dispute that this Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. § 157 and 1334. The pending matters include both non-core proceedings, and core proceedings involving motions to terminate or modify the automatic stay under 28 U.S.C. § 157(b)(2)(G). At issue is: (1) Whether WaMu waived statutes of limitations affirmative defenses by failing to include them in its answer but raised them in its motion for summary judgment; (2) whether Chabot's adversary claims for relief are barred by applicable statutes of limitation or statute of repose; and (3) whether the automatic stay has been terminated, and whether WaMu's foreclosure should otherwise be enjoined. With respect to the non-core proceedings, this Memorandum of Decision includes proposed findings of fact and conclusions of law for submission to the district court pursuant to FED. R. BANKR.P. 9033, 11 U.S.C. § 157(b)(4) and FED. R. BANKR.P. 7052 (applying Fed.R.Civ.P. 52 in adversary proceedings).

Pursuant to FED. R. BANKR.P. 9033 and after the bankruptcy court files these proposed findings and conclusions, the clerk of court shall serve copies of these proposed findings and conclusions on all parties by mail and note the date of mailing on the docket. Within 10 days after being served with a copy of the proposed findings and conclusions, a party may serve and file with the clerk of bankruptcy court written objections which identify the specific proposed findings or conclusions objected to and state the grounds for such objection. A party may respond to another party's objection within 10 days after being served with a copy thereof. An objecting party shall arrange promptly for the transcription of the record, or such portions of it as all parties may agree upon or the bankruptcy judge deems sufficient, unless the district judge otherwise directs. The time for filing objections may be extended by the bankruptcy judge for a period not exceeding 20 days from the expiration of the time otherwise prescribed. Any request for extension should be filed prior to the expiration of the objection period. After the expiration of the above time period, the clerk shall transmit this Memorandum and Proposed Findings and Conclusions together with any filed objections to the district judge, with notice to the parties of such transmission. The district judge shall make a de novo review upon the record or, after additional evidence, of any portion of the bankruptcy judge's findings of fact or conclusions of law to which specific written objection has been made. The district judge may accept, reject, or modify the proposed findings of fact or conclusions of law, receive further evidence, or recommit the matter to the bankruptcy judge with instructions.

PROCEDURAL HISTORY

The Debtor Theresa Chabot filed a Chapter 13 petition, Schedules and Statements on August 22, 2005, listing her homestead at 125 Lidstrom Rd in Whitefish, Montana, on Schedule A, with a current market value of $375,000.00 and encumbered by a secured claim stated in the amount of $425,228.07. Initially Debtor was represented in her case by attorney M. Penny Leatzow ("Leatzow"). Schedule D identifies WaMu as the creditor with a claim marked "Disputed" in the amount of $425,448.07 secured by a deed of trust dated 3/25/2002. WaMu filed Proof of Claim No. 1 on September 16, 2005, asserted a secured claim in the amount of $430,715.88, with attached copies of a deed of trust and fixed/adjustable rate note. No objection to WaMu's Proof of Claim has been filed, but Chabot filed an amended Schedule D on November 13, 2005, checking the box stating debtor "has no creditors holding secured claims"¹. WaMu filed a motion for relief from the stay and for in rem relief on October 4, 2005. Debtor moved to convert her case to Chapter 7 on October 6, 2005, which was granted by Order entered on October 7, 2005.

WaMu amended its motion for relief from stay and for in rem relief on October 24, 2005 (Docket No. 26), to which the Debtor filed an objection on November 8, 2005. In its motion for relief from the stay WaMu allege that Debtor is in default of two (2) post-petition installments. Debtor's objections do not specifically deny the default, but generally deny all of WaMu's allegations and further incorporates all nine Counts of her adversary complaint. The Trustee filed a consent to WaMu's motion to modify stay on November 9, 2005.

On November 16, 2005, the United States Trustee filed a Stipulation with Chabot and her attorney providing for waiver of Debtor's discharge. The Court approved the Stipulation to Waive Discharge by Order entered on. November 17, 2005, which provided in part: "Debtor's discharge is denied pursuant to 11 U.S.C. § 727(a)(8)"².

On November 7, 2005, the Debtor filed her complaint in her Chapter 7 case, and initiated this adversary proceeding by refiling her complaint against WaMu on November 9, 2005. The complaint includes nine (9) counts alleging violations of various state and federal statutes, fraud, unconscionable contract and usury, and in addition sets forth an answer and affirmative defenses to WaMu's motion for relief from stay and in rem relief. In the prayer of her complaint Chabot requests statutory damages, compensatory damages, exemplary damages, that the Court rescind the loan transaction "without obligation to pay for the loan," award her attorney fees and costs, that the automatic stay remain in place and that WaMu be permanently enjoined from its foreclosure-related remedies.

WaMu filed an answer denying the material allegations of the complaint, and lists affirmative defenses including but not limited to fraud by the Plaintiff, estoppel, laches, and "the statute of frauds, or any of them." And at paragraph 48 WaMu "reserves the right to claim additional affirmative defenses as further discovery or information may warrant." The prayer of WaMu's answer includes a request that the complaint be dismissed and that its motion to modify stay be granted.

WaMu filed a motion to compel discovery, which was resolved by the parties. On February 5, 2007, WaMu filed its motion for summary judgment, with a statement of uncontroverted facts and supporting brief, moving for summary judgment on all of Plaintiff's claims on the basis the complaint was untimely filed. WaMu also filed a motion in limine on the same date. Chabot filed a substitution of herself for her attorney Leatzow, which the Court set for hearing on March 8, 2007. Leatzow filed a motion to withdraw as Plaintiff's counsel, which the Court granted by Order entered in this adversary proceeding on March 5, 2007, which allowed Chabot to proceed pro se. Leatzow's motion to withdraw as Debtor's attorney in the Chapter 7 case was granted by Order entered on March 14, 2007.

On March 8, 2007, after a hearing the Court granted WaMu's motion in limine (Docket No. 54). Based on Chabot's failure to comply with the Court's Scheduling Order requiring disclosure of experts, and failure to request an extension, the Court precluded Chabot from offering any expert testimony on any issue at trial in this matter. The original trial date was extended and reset for May 30, 2007, at Missoula.

Caughron filed an appearance as Plaintiff s attorney in the instant adversary proceeding, and filed responses to WaMu's motion for summary judgment and Statement of Uncontroverted Facts on April 6, 2007.

The Court has reviewed the pleadings, WaMu's motion for summary judgment, the statement of uncontroverted facts and exhibits, Chabot's statement of disputed issues, the parties' memoranda, and WaMu's reply. The Court is now ready to issue decisions in this proceeding.

I. UNCONTROVERTED FACTS

Montana Local Bankruptcy Rule ("Mont. LBR") BR 7056-1(a)(1) requires the moving party to submit a statement of uncontroverted facts. Defendant filed a 7-page Statement of Uncontroverted Facts setting forth the following:

1. In late February 2002, Chabot searched the internet for loans to refinance her home and to pay off some debts incurred by the now-defunct business Big Mountain Woodworks,...