In re Frascatore
| Decision Date | 13 April 1989 |
| Docket Number | Adv. No. 88-2185S,88-2243S.,Bankruptcy No. 86-01495S |
| Citation | 98 BR 710 |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
| Parties | In re Nicholas FRASCATORE a/k/a Nicholas J. Frascatore and Laura Frascatore, Debtors. Nicholas FRASCATORE and Laura Frascatore, Plaintiffs, v. SECRETARY OF HOUSING AND URBAN DEVELOPMENT, Defendant. Nicholas FRASCATORE and Laura Frascatore, Plaintiffs, v. LOMAS MORTGAGE USA, INC., f/k/a The Lomas & Nettleton Company, Defendant. |
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Irwin Trauss, Community Legal Services, Inc., Philadelphia, Pa., for debtors.
Virginia R. Powel, Philadelphia, Pa., for HUD.
David Comroe, Philadelphia, Pa., for Lomas and HUD.
Edward Sparkman, Philadelphia, Pa., standing Chapter 13 co-trustee.
The matters presently before us all appear to be manifestations of a herculean effort by the Debtors to avoid the loss of their home as the result of a mortgage foreclosure proceeding commenced on October 22, 1982, which resulted in a sheriff's sale of the home on November 5, 1984. The output of this effort has produced three bankruptcies prior to the instant Chapter 13 bankruptcy case, which itself has been pending over three years without confirmation of a Plan. Not only do we have before us a contested motion for relief from the automatic stay, pursuant to 11 U.S.C. § 362(d)(1), filed by the purchaser at the sheriff's sale, THE SECRETARY OF THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (hereinafter referred to as "HUD"), but we also have simultaneously at issue two separate adversary proceedings, the most significant of which seeks to avoid the sheriff's sale under 11 U.S.C. § 544(b) and the Pennsylvania Uniform Fraudulent Conveyances Act, 39 P.S. § 351, et seq. (hereinafter "UFCA"). Like the grand finale of a fireworks display, this proliferation of litigation has resulted in submission of no less than eight separate Briefs over a period of less than a month, most of them filed late and hence giving rise to previously-threatened sanctions.
We reject the centerpiece of the Debtors' present efforts, the attempt to avoid the sheriff's sale on the basis of the UFCA, because it has not been established that this transaction was effected without "fair consideration" being given therein to the Debtors for the Premises. We also doubt that the two-year limitation on the invocation of avoidance powers under 11 U.S.C. § 544, far exceeded by this filing, can be waived. Consequently, the sheriff's sale of the property cannot be undone, and HUD is entitled to relief from the stay.
However, the efforts of the Debtors are not for naught, because they do succeed in obtaining a $2,000 recovery from their previous mortgagee, LOMAS MORTGAGE U.S.A. (hereinafter "Lomas"), in light of Lomas' violation of the federal Truth-in-Lending Act, 15 U.S.C. § 1601, et seq. (hereinafter "TILA"). Concerned as we are for the plight of the Debtors and their family and noting the apparent and perhaps humane hesitancy of HUD to press for the eviction of the Debtors, we shall continue the stay in place for 90 days after Lomas liquidates its $2,000 monetary obligation to the Debtors. We shall also strike any claims of HUD or Lomas against the Debtors in their Chapter 13 case hereafter.
The instant Chapter 13 bankruptcy case was filed on April 1, 1986. It was preceded by the November 11, 1982, filing of the Chapter 13 case of the Debtors, Bankr. No. 82-05505G, which was dismissed on May 30, 1984; a Chapter 7 case filed by the Husband-Debtor only, Bankr. No. 84-00728K, filed March 5, 1984, and dismissed on May 15, 1984; and a Chapter 7 filing of the Husband-Debtor only, Bankr. No. 84-01774K, filed May 31, 1984, which resulted in a discharge on April 10, 1985. The present case was delayed at its outset because required documents were not filed, the meeting of creditors pursuant to 11 U.S.C. § 341 was not scheduled until November 6, 1986, and the aforesaid meeting was not held until November 25, 1986. The confirmation hearing was scheduled on February 19, 1987, but alas, through oversight, was not listed before the court and consequently was not conducted at that time.
Neither the Debtors nor HUD nor the Trustee called the failure of the court to list the confirmation hearing to our attention and the case languished until HUD filed its motion pursuant to § 362(d)(1) on September 22, 1988. Then, on November 8, 1988, a continued hearing on that motion, confirmation, a motion to dismiss filed by the Trustee, and the Debtor's motion to abate payment arrears was scheduled. On that date, we were advised that Adversary No. 88-2185, involving the Debtors' attempt to set aside the sheriff's sale on the basis of the UFCA, was filed, and, that same day, Lomas had filed a proof of claim to which the Debtors wished to object. On that date, we therefore ordered any objection to Lomas' claim, ultimately manifested by Adversary No. 88-2243, and all of the matters in the main case and Adversary No. 88-2185, to be heard together on November 28, 1988.
On November 28, 1988, the parties came before us and we memorialized an agreement articulated at that time in an Order of that date. This agreement required the parties to file and serve a Stipulation of Facts which would constitute the record of the § 362(d) motion and the two adversary proceedings by December 21, 1988; and Briefs to be filed by January 20, 1989 (Debtors' Opening), February 10, 1989 (HUD and/or Lomas), and March 1, 1989 (Debtors' Reply). The confirmation hearing was rescheduled on March 21, 1989.
Unfortunately, both parties totally disregarded the November 28, 1988, order. Only after requests for extensions, which were in turn not kept, did any Stipulation of Facts appear—and then unexpectedly three separate and somewhat repetitious Stipulations of Fact were filed on February 22, 1989. Attempts at further extensions mutually agreed to between the parties led to our ultimate disapproval of the last request and a direction, in an Order of February 24, 1989, that the Briefs must be filed by March 3, 1989 (Debtors' Opening), March 24, 1989 (Lomas and/or HUD); and March 31, 1989 (Debtors' Reply), or the parties' counsel would be subjected to monetary sanctions. The Confirmation Hearing was put off until April 18, 1989. Nevertheless, eight Briefs arrived in the following sequence:
Brief of Debtors in
Adv. No. 88-2243 — March 10, 1989
Brief of Debtors in
Adv. No. 88-2185 — March 14, 1989
Brief of Lomas in Adv
No. 88-2243 and
Brief of HUD on
§ 362 motion in main
case — March 27, 1989
Brief of HUD in Adv
No. 88-2185 — March 29, 1989
Reply Briefs of Debtors
in both Adv
Cases — April 4, 1989
Brief of Debtors in opposition
to § 362 motion — April 6, 1989
Finally, we should mention that, in the midst of this prolific briefing, HUD filed two motions to amend its pleadings, claiming that it committed the following "typographical errors:" (1) In its Answer in Adv. No. 88-2243, admitting rather than denying that it failed to give the Debtors a disclosure statement pursuant to the TILA; and (2) Designating its proof of claim filed on November 8, 1988, as on behalf of Lomas when it should have been designated as filed on behalf of HUD. At a hearing on March 28, 1989, we granted the motion requesting permission to effect the first amendment noted above, but reserved resolution on the motion relating to the second amendment until we rendered our final decision in all of the outstanding matters.
Because both counsel have unnecessarily proliferated and prolonged these matters and failed to heed the warning in our Order of February 24, 1989, we shall impose sanctions of $50 on counsel for the Debtors and $25 on counsel for Lomas and HUD.
Since the matters were submitted on not one, but three Stipulations, we need make no Findings of Fact. We shall therefore prepare this Opinion in narrative form, beginning with a recitation of the pertinent portions of the Stipulations.
1. NICHOLAS FRASCATORE and LAURA FRASCATORE, the Debtors, reside with their family, apparently including two dependent children, at 1436 Lycoming Street, Philadelphia, Pennsylvania (hereinafter "the Premises").
2. On February 25, 1980, in connection with the purchase of the Premises, the Debtors executed a mortgage secured thereby in the amount of $23,850.
3. If called to testify, the Debtors would state that Lomas failed to give either Debtor a TILA disclosure statement in connection with the transaction of February 25, 1980. After a search of its files, Lomas was unable to locate a TILA disclosure statement in connection with the transaction, although, per the amendment to its Answer, it does not admit that none was given.
4. On or about April 1, 1982, and thereafter, the Debtors defaulted on their mortgage payments. On October 22, 1982, Lomas filed a mortgage foreclosure action in state court against the Debtors which ultimately resulted, after delays caused by stays arising from the Debtors' various bankruptcy filings, in a default judgment. Damages were ultimately reassessed against the Debtors in that action in the amount of $32,323.26 on October 3, 1984.
5. On November 5, 1984, at a sheriff's sale in execution on the foreclosure judgment, quoting the parties' Stipulations, the Premises "was purchased by the attorney on the writ for Lomas for a bid of $1,975.00, the upset price, and that bid was assigned to HUD."
6. On November 19, 1984, settlement occurred between the sheriff and HUD as a result of the sale and, on December 6, 1984, a sheriff's deed conveying the Premises to HUD "for and in consideration of the sum of ONE THOUSAND NINE HUNDRED FIFTY DOLLARS ($1,950.00)" was filed.
7. At the time of the transfer of the...
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