In re Fisher
| Decision Date | 27 April 2018 |
| Docket Number | CASE NUMBER 17–40457 |
| Parties | IN RE: Arthur L. FISHER, Sr. and Pamela L. Fisher, Debtors. |
| Court | United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Northern District of Ohio |
Philip D. Zuzolo, Zuzolo Law Offices, LLC, Niles, OH, for Debtor.
The Court is asked to determine whether Proof of Claim No. 14–1 ("Claim 14") filed by The Bank of New York Mellon Trust Company, National Association fka The Bank of New York Trust Company, N.A. as successor to JPMorgan Chase Bank, as Trustee for Residential Asset Securities Corporation, Home Equity Mortgage Asset–Backed Pass Through Certificates Series 2002–KS6 ("BONY")1 should be disallowed because the underlying claim is barred by the six-year statute of limitations in Ohio Revised Code ("O.R.C.") § 1303.16(A).2 On March 8, 2018, Debtors Arthur L. Fisher, Sr. and Pamela L. Fisher filed Debtors' Motion for Summary Judgment on Objection to Proof of Claim No. 14–1 ("Motion for Summary Judgment") (Doc. 62). On March 22, 2018, BONY filed Opposition of Bank of New York Company as Trustee to Debtor's [sic] Motion for Summary Judgment on Objection to Proof of Claim No. 14–1 ("Response") (Doc. 67). On March 29, 2018, the Debtors filed Reply in Support of Debtors' Motion for Summary Judgment on Objection to Proof of Claim No. 14–1 ("Reply") (Doc. 72). The Debtors and BONY filed Joint Stipulations of the Parties ("Joint Stipulations") (Doc. 63) on March 8, 2018, which consists of 25 numbered paragraphs.
For the reasons set forth herein, the Court will grant the Motion for Summary Judgment, in part, and deny the Motion for Summary Judgment, in part.
This Court has jurisdiction pursuant to 28 U.S.C. § 1334 and General Order No. 2012–7 entered in this district pursuant to 28 U.S.C. § 157(a). Venue in this Court is proper pursuant to 28 U.S.C. §§ 1391(b), 1408, and 1409. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(B). The following constitutes the Court's findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052.
On August 7, 2002, the Debtors executed the Note and Mortgage.3 (Jt. Stips. ¶ 1.)
The Debtors defaulted on their monthly payments on the Note. (Id. ¶ 2.) After the Debtors defaulted on the Note, BONY accelerated the Note and initiated a foreclosure action on December 20, 2006 ("2006 Foreclosure Action") in the Trumbull County, Ohio Court of Common Pleas ("State Court"). (Id. )
The current bankruptcy case is the second chapter 13 case filed by the Debtors. They previously filed a chapter 13 bankruptcy petition on April 30, 2007, which was denominated Case No. 07–40993 ("2007 Case").
The chapter 13 plan in the 2007 Case (2007 Case, Doc. 2) provided for the Debtors to make regular payments directly to Homecomings Financial Network on the Note and Mortgage on their Residence.4 BONY filed a proof of claim in the 2007 Case, which was denominated Claim No. 6–1 in the total secured amount of $80,241.54 with $8,709.06 listed as the pre-petition arrearage. (Id. ¶ 6.) Claim No. 6–1 was based on the Note and Mortgage. Notices relating to Claim No. 6–1 were to be sent to Homecomings Financial, LLC.
The Debtors' plan in the 2007 Case was confirmed on January 7, 2008 (2007 Case, Doc. 29). On August 13, 2012, the Chapter 13 Trustee filed Notice of Final Cure Payment on Residential Mortgage regarding Claim No. 6–1 (2007 Case, Doc. 72). The Debtors received a discharge in the 2007 Case on September 12, 2012 (2007 Case, Doc. 75).
Approximately two months after the Debtors received their discharge in the 2007 Case, BONY filed Motion to Vacate Bankruptcy Stay in the 2006 Foreclosure Action to "reinstate this case to the active docket and grant leave to continue with the prosecution of this case." (Jt. Stips. ¶ 11; Mot. for S.J., Ex. B at 1.) The State Court granted BONY's motion and reinstated the 2006 Foreclosure Action. During the pendency of the Debtors' 2007 Case, on June 25, 2007, the State Court issued a judgment of foreclosure ("Foreclosure Judgment") in the 2006 Foreclosure Action.5 (Jt. Stips. ¶ 7.) On December 21, 2012, BONY requested the State Court to issue an order of sale upon decree of foreclosure.6 On February 4, 2013, the State Court vacated the Praecipe For Order of Sale. (Jt. Stips. ¶ 14.)
On May 15, 2013, BONY moved to vacate the Foreclosure Judgment and dismiss the 2006 Foreclosure Action. (Mot. for S.J., Ex. E.) Five days later, the 2006 Foreclosure Action was dismissed without prejudice. (Jt. Stips. ¶ 17.)
On April 9, 2015, BONY filed a foreclosure action in the State Court ("2015 Foreclosure Action"), which sought to collect on the Note an unpaid principal balance of $67,508.91, but which reflected that the Debtors did not have any personal liability on the Note due to their bankruptcy discharge in the 2007 Case. On December 15, 2015, the Debtors made their third and last payment in the amount of $614.06 to BONY on a trial modification; the parties did not enter into a permanent loan modification. (Id. ¶ 22.)
The Debtors filed a voluntary petition pursuant to chapter 13 of Title 11 on March 15, 2017 ("Petition Date"), which commenced the case that is currently before the Court. (Id. ¶ 23.) On July 26, 2017, BONY filed Claim 14 based on the Note and Mortgage, showing a principal balance of $67,207.03. (Id. ¶ 24.) Specialized Loan Servicing LLC ("SLS") is listed on Claim 14 as the party to which notices and payments should be sent. Claim 14 was filed as a secured claim and lists $46,062.47 as the amount necessary to cure any default as of the Petition Date.
On September 15, 2017, the Debtors filed Objection to Claim Filed by The Bank of New York Mellon Trust Company, N.A. ("Claim Objection") (Doc. 40).7 Among the reasons the Debtors seek disallowance of Claim 14 is that Claim 14 is barred by the applicable statute of limitations, which is the only issue before this Court on summary judgment.
On February 13, 2018, the Debtors, SLS, and BONY filed Joint Motion to Set an Evidentiary Hearing for Debtors [sic] Objection to Claim Number 14–1 ("Joint Motion") (Doc. 53), in which the parties requested the Court to set (i) a discovery deadline of March 19, 2018; and (ii) a date for an evidentiary hearing. The Court held hearings on the Claim Objection and Joint Motion on February 15, 2018, at which the Court granted the oral motion of counsel for the Debtors for leave to file a motion for summary judgment on the statute of limitations issue. Following those hearings, the court entered Amended Order Setting (i) Discovery Completion Date; and (ii) Evidentiary Hearing (Doc. 58), which set March 26, 2018 and April 16, 2018, respectively, as those dates. The Court also entered Order Setting Briefing Schedule (Doc. 59) regarding the Debtors' proposed motion for summary judgment. In accordance with that briefing schedule, the parties' respective motion and briefs are currently before the Court.
Federal Rule of Civil Procedure 56(a), made applicable to this proceeding by Federal Rule of Bankruptcy Procedure 9014, states, in pertinent part:
The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.
FED. R. CIV. P. 56(a) (2018). Material facts are those "that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue of material fact exists "if a reasonable person could return a verdict for the non-moving party." Jacob v. Twp. of W. Bloomfield , 531 F.3d 385, 389 (6th Cir. 2008) (citing Anderson , 477 U.S. at 248, 106 S.Ct. 2505 ).
"The moving party bears the burden of proving the absence of genuine issues of material fact and its entitlement to judgment as a matter of law." Longaberger Co. v. Kolt , 586 F.3d 459, 465 (6th Cir. 2009) (citing Celotex Corp. v. Catrett , 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). The burden then shifts to the nonmoving party to present specific facts demonstrating the existence of a genuine dispute. Pucci v. Nineteenth Dist. Court , 628 F.3d 752, 759–60 (6th Cir. 2010) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ). In evaluating a motion for summary judgment, "the court must view the factual evidence and draw all reasonable inferences in favor of the nonmoving party." Banks v. Wolfe County Bd. of Educ. , 330 F.3d 888, 892 (6th Cir. 2003) (citing Matsushita , 475 U.S. at 587, 106 S.Ct. 1348 ).
The Debtors argue that BONY cannot enforce the Note because the statute of limitations in O.R.C. § 1303.16(A) has expired.
BONY accelerated the Note after the Debtors defaulted. BONY filed the 2006 Foreclosure Action on December 20, 2006, alleging that the Note was in default as of August 1, 2006. Because acceleration is a condition precedent to filing a foreclosure action, the Debtors contend that the Note was accelerated, at the latest, as of December 20, 2006—i.e. , the date BONY filed the 2006 Foreclosure Action. The Debtors argue that the statute of limitations is six years, as set forth in O.R.C. § 1303.16(A), which provides:
[A]n action to enforce the obligation of a party to pay a note payable at a definite time shall be brought within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date.
O.R.C....
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