In re Coleman, BK 01-70473-CMS-13 (Bankr. N.D. Ala. 5/24/2007)
| Decision Date | 24 May 2007 |
| Docket Number | AP 04-70049-CMS.,AP 04-70048-CMS.,BK 01-70473-CMS-13. |
| Parties | IN RE: DELMAR M. COLEMAN, DEBTOR. CONSUMER PORTFOLIO SERVICES, INC., PLAINTIFF, v. DELMAR M. COLEMAN, DEFENDANT. DELMAR M. COLEMAN, PLAINTIFF, v. CONSUMER PORTFOLIO SERVICES, INC., DEFENDANT. |
| Court | U.S. Bankruptcy Court — Northern District of Alabama |
This matter was before the court on debtor Delmar M. Coleman's (Coleman's) state lawsuit (AP 04-70049) removed to this Bankruptcy Court by creditor Consumer Portfolio Services, Inc. (CPS); and on CPS' own adversary proceeding (AP 04-70048) asking the court to enjoin Coleman from prosecuting the suit in any court. After considering the facts in the context of applicable law, the court finds that Coleman's 2001 confirmation order/2004 discharge order presents a res judicata bar to relitigation of all issues raised by Coleman in AP 04-70049.
Plaintiff Coleman's summary judgment motion in AP 04-70049 (Doc. 54) must be DENIED; and Defendant CPS' objection to that motion (Doc. 62) must be SUSTAINED. The court finds AP 04-70049 must also be DISMISSED, as precluded on the merits, under the court's sua sponte powers under11 U.S.C. § 105(a). For these reasons, as requested by CPS in AP 04-70048, an injunction will be issued barring Coleman's pursuit of this litigation before this or other courts. Therefore, Plaintiff CPS' summary judgment motion in AP 04-70048 (Doc. 17) is due to be GRANTED; and Defendant Coleman's motion (Doc. 56) is due be DENIED.
Adversary Proceeding 04-70049 was commenced by plaintiff Delmar M. Coleman (Coleman) as a state court action against defendant CPS, which the creditor removed to the Bankruptcy Court. Adversary Proceeding 04-70048 is a complaint CPS filed asking the Bankruptcy Court to enjoin Coleman, as defendant, from pursuing her claim for statutory damages under Alabama's Uniform Commercial Code in any court.
The facts leading up to these adversary proceedings are basically without dispute and are summarized as follows:
February 15, 2001 — Coleman filed her Chapter 13 bankruptcy petition which was assigned case number BK 01-70473 (BK Doc. 1). Coleman scheduled CPS as a secured creditor on Schedule D of her petition, listing a 1994 Oldsmobile Cutlass, CPS's collateral, in her Schedule B. The proposed Chapter 13 plan she filed with her petition stated: "Debtor proposes to surrender the 1994 Oldsmobile Cutlass to CPS, Inc."
April 26, 2001 — The court denied confirmation of Coleman's plan as originally proposed. (BK Doc.8/NIBS Doc. 6)1
May 1, 2001 — Coleman filed an amended plan, which again proposed "to surrender the 1994 Oldsmobile Cutlass to CPS, Inc." (BK Doc. 9/NIBS Doc. 7)
No Later Than May 10, 2001 — CPS sold Coleman's car. While the exact date is not known, prior to May 10, 2001, CPS sent Coleman a notice of intent to sell the car, which is now the basis of the underlying removed action (AP 04-70049).
June 4, 2001 — CPS filed an unsecured claim (Proof of Claim 33) for $6,586.20 in Coleman's bankruptcy. This claim was for the unsecured, deficiency balance of the indebtedness after sale of the collateral.
June 5, 2001 — The court held a hearing on confirmation of Coleman's amended plan.
June 12, 2001 — The court entered an order confirming Coleman's amended plan (BK Doc. 12, NIBS Doc. 10). The plan provided "debtor proposes to surrender collateral of 1994 Oldsmobile Cutlass to CPS, Inc., and the Court approves this proposal; CPS, Inc., is GRANTED relief from automatic stay to repossess or accept surrender and liquidate said collateral; further, said creditor is granted leave to file a deficiency claim upon liquidation of its collateral." As confirmed, the plan required Coleman to pay her unsecured creditors 12 percent of their debt, including CPS' $6,586.20 deficiency claim, over its 36-month term. The confirmation order further provided "the property of the estate shall not vest in the debtor until a discharge is granted under § 1328 or the case is dismissed."
March 10, 2004 — The Chapter 13 trustee filed a certification that Coleman had completed all payments called for under the terms of her confirmed plan (BK Doc. 41).
March 12, 2004 — Coleman's discharge order (BK Doc. 42) was entered, relieving the debtor of personal liability for the residual 88% of the prepetition unsecured debts provided for by her Chapter 13 plan.
April-May, 2004 — Claude Burns, Coleman's bankruptcy attorney, stated in a subsequent affidavit (AP 04-70049, Doc. 48), filed June 6, 2006,2 that a state court attorney contacted him in April or May of 2004 inquiring about bankruptcy cases Burns might have where CPS had filed deficiency claims. Coleman's case was in this category. She was introduced to the lawyer, who then represented her in the removed state court action. Burns, by this affidavit, and Coleman, by her affidavit (attachment to AP Doc. 54), asserted that this was the first time that she became aware that she might have a claim against CPS. CPS does not stipulate to the contents of these affidavits, or to the facts they asserted.
June 1, 2004 — Chapter 13 Trustee C. David Cottingham was discharged as trustee of Coleman's case, and bankruptcy case 01-70473 was closed administratively. (BK Doc. 45).
June 3, 2004 — Coleman, as a named plaintiff, filed a proposed class-action lawsuit in Tuscaloosa County Circuit Court alleging that the notification letter on her car's sale was deficient under Ala. Code § 7-9A-614 (). She claimed statutory damages for the deficiency under Section 7- 9A-625. The allegedly defective notice was the letter CPS sent her prior to the May 10, 2001 sale of the car.
July 2, 2004. CPS then removed the state court lawsuit (AP Doc. 1) to this Bankruptcy Court pursuant to 28 U.S. § 1452, the special removal statute by which state cases can be brought into the federal court system when no other base for federal jurisdiction exists. CPS also filed AP 04-70048 (AP Doc. 1) asking the court to enjoin Coleman from pursuing the state law cause of action in any court.
On that same day, CPS also filed a motion styled MOTION TO PERMIT FILING OF ADVERSARY PROCEEDING WITHOUT REOPENING BANKRUPTCY CASE OR, IN THE ALTERNATIVE, TO REOPEN BANKRUPTCY CASE (BK Doc. 46) in Coleman's closed bankruptcy case, BK 01-70473-CMS-13.
Coleman, has consistently opposed the reopening of her bankruptcy case, and has requested remand of her UCC claim back to state court. The bankruptcy case remains closed, with motions to reopen and oppositions pending in BK 01-70473-CMS-13.
August 13, 2004. Plaintiff CPS filed this motion for summary judgment in AP 04-70048 (Doc. 17). No hearing was set on the motion at that point.
In an order entered September 20, 2004, this court initially remanded AP 04-70049 to state court; dismissed AP 04-70048; and held that the motion to reopen BK 01-70473 (Doc. 46), was moot. The ruling was based on the conclusion that, since neither Coleman's bankruptcy case nor her bankruptcy estate still existed, the Bankruptcy Court lacked subject matter jurisdiction under either 28 U.S.C. § 1334(a) or 28 U.S.C. § 1334(b). A single order, with copies filed in all three files, covered these issues.
On September 29, 2004, CPS timely filed a notice of appeal. On March 16, 2006, the United States District Court reversed and remanded the Bankruptcy Court's decisions "in these consolidated cases". The District Court held that 11 U.S.C. § 105(a) and 28 U.S.C. § 1334(b) provided sufficient statutory bases for this court to assume subject matter jurisdiction of all disputes and proceedings.
The District Court in its memorandum specifically asked the Bankruptcy Court to determine if the June 12, 2001 confirmation order was res judicata of the UCC improper notice issue:
... If the Bankruptcy Court finds that the Removed Case (AP 04-70049) is precluded by the Confirmation Order, the Bankruptcy Court has the power to issue such an injunction under an exception to the Anti-Injunction Act. This exception allows the court to enjoin proceedings (the relief sought in AP 04-70048) in a state court to "protect or effectuate its judgments. 28 U.S.C. § 2283; 11 U.S.C. § 105; ...
In other language, the District Court stated of the removed action AP 04-70049:
All of these issues are tied to the Confirmation Order. The Bankruptcy Court, therefore, has jurisdiction over Ms. Coleman's Removed Case under 11 U.S.C. § 105(a) and 28 U.S.C. § 1334(b). ... Among the more critical questions are when did the cause arise, and if the suit is viable, to whom does it belong. These questions, among others, will determine the ultimate fate of the Removed Case.
If the Bankruptcy Court finds that the Removed Case is precluded by the Confirmation Order then no claim may be brought in any court, and the Bankruptcy Court has the jurisdiction to dismiss the Removed Case and to issue an injunction barring it being brought in state court. If, however, the Bankruptcy Court finds that the Removed Case is not precluded by the Confirmation Order then the Bankruptcy Court must deal with the issue of remand. (emphasis added)
After the District Court's remand to this court, Coleman filed her motions for summary judgment in both APs 04-70048 (Doc. 56) and 04-70049 (Doc. 54), and asked the court to dismiss AP 04-70048. CPS subsequently filed objections to both motions (AP 04-70048 Doc. 66 and AP 04-70049 Doc. 62). CPS' five adjudicatory defenses pleaded in AP 04-70048 Doc. 17, and its supporting pleadings, included res judicata, judicial estoppel, equitable estoppel, the effect of 11 U.S.C. §1327(a), and waiver. The creditor also asked the court to enjoin Coleman from pursuing the AP 04-70049 claim against it in any court.
The court held an August 30, 2006 hearing on these interrelated issues. No party offered any testimony at the hearing. After the arguments...
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