In re Perry, Bankruptcy No. 02-30912.

• Decision Date: 02 May 2008
• Docket Number: Bankruptcy No. 02-30912.,Adversary No. 08-3002.
• Citation: 388 B.R. 330
• Parties: In re Teresa Ann PERRY a/k/a Teresa Ann Zimmerman, Debtor. Teresa Ann Perry, Plaintiff, v. EMC Mortgage Corporation, Defendant.
• Court: U.S. Bankruptcy Court — Eastern District of Tennessee

388 B.R. 330

In re Teresa Ann PERRY a/k/a Teresa Ann Zimmerman, Debtor Teresa Ann Perry, Plaintiff, v. EMC Mortgage Corporation, Defendant.

Bankruptcy No. 02-30912.

Adversary No. 08-3002.

United States Bankruptcy Court, E.D. Tennessee.

May 2, 2008.

COPYRIGHT MATERIAL OMITTED

Cynthia T. Lawson, Bond, Botes & Lawson, P.C., Knoxville, TN, for Debtor/Plaintiff.

Thomas H. Forrester, Gullett, Sandford, Robinson & Martin, PLLC, Nashville, TN, for Defendant.

MEMORANDUM ON MOTION TO DISMISS, OR IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT

RICHARD STAIR, JR., Bankruptcy Judge.

This adversary proceeding is before the court upon the Complaint filed by the Debtor on January 4, 2008, asking the court to enter an Order (1) finding the Defendant, EMC Mortgage Corporation, in contempt for violating the discharge injunction of 11 U.S.C.A. § 524(a) (West 2004); and (2) finding the Defendant in contempt for violating the November 16, 2007 Order entered by the court declaring the Debtor's mortgage current through April 2007. On March 13, 2008, the Defendant filed a Motion to Dismiss, or in the Alternative, for Summary Judgment (Motion to Dismiss), arguing that the court does not have subject matter jurisdiction over this dispute. Contemporaneously therewith, the Defendant filed a Memorandum in support of the Motion to Dismiss attached to which were two exhibits: (1) a letter dated April 5, 2007, addressed to the Debtor from Gwendolyn M. Kerney, Chapter 13 Trustee, advising that she had successfully completed her plan; and (2) the Affidavit of Scott Hunter, a bankruptcy analyst with the Defendant. The Debtor filed a Response to the Motion to Dismiss on April 1, 2008, along with a Brief in support thereof and three exhibits: (1) the Affidavit of Chapter 13 Trustee, Gwendolyn M. Kerney; (2) the Affidavit of the Debtor; and (3) a letter dated March 27, 2008, from the Debtor's attorney to the Defendant's attorney.

This is a core proceeding. 28 U.S.C.A. § 157(b)(2)(A), (O) (West 2005).

I

The Debtor filed the Voluntary Petition commencing her Chapter 13 bankruptcy case on February 21, 2002. The Defendant is a creditor of the Debtor, by virtue of a Note dated November 26, 1997, secured by a lien on the Debtor's residence located at 1734 Harris Road, Knoxville, Tennessee. On April 29, 2002, the court, without objection, confirmed the Debtor's Chapter 13 Plan pursuant to an Order Confirming Chapter 13 Plan. The Plan provided for the Debtor to make bi-weekly payments to the Chapter 13 Trustee of $325.00 for sixty months, plus all tax refunds in excess of $1,500.00, resulting in a dividend of 20-70% to nonpriority unsecured creditors. With respect to the Defendant, the Plan provided for the ongoing long-term monthly maintenance payments in the amount of $418.00 to be paid by the Chapter 13 Trustee commencing April 2002, with the loan balance and lien to survive the Plan, and for a prepetition arrearage of approximately $3,700.00 to be fully paid over the life of the Plan through monthly installments of $63.00. The Order Confirming Chapter 13 Plan additionally provided that "[e]xcept as otherwise provided ..., property of the estate does not vest in the debtor until completion of the plan[.]" On September 18, 2002, the Defendant filed a proof of claim in the amount of $29,990.23, including pre- and post-petition arrearage of $7,185.37 through July 2002.

On May 10, 2007, the Trustee filed the Preliminary Trustee's Final Report and Certificate of Final Payment, which evidenced, inter alia, that the Debtor had fulfilled her obligations under the Plan and the Trustee had paid a total of $32,964.87 to the Defendant over the life of the Plan. Thereafter, on May 14, 2007, the court entered a Discharge of Debtor After Completion of Chapter 13 Plan (Discharge Order), granting the Debtor a discharge under 11 U.S.C.A. § 1328(a) (West 2004). The Discharge Order provides, inter alia, that "[d]ebts provided for under section 1322(b)(5) of the Bankruptcy Code and on which the last payment is due after the date on which the final payment under the plan was due" are not discharged and "a creditor may have the right to enforce a valid lien, such as a mortgage or security interest, against the debtor's property after the bankruptcy, if that lien was not avoided or eliminated in the bankruptcy case." The Trustee's Final Report was filed on July 18, 2007.

On October 25, 2007, the Debtor filed a Notice of Hearing and Motion for Order Declaring Mortgage Loan Current, asking the court to enter an order providing that the Debtor's mortgage obligation to the Defendant was current as of the date of the Debtor's discharge and that all fees, charges, or expenses added to the Debtor's account not in accordance with the Plan or approved by an order of the court be cancelled and discharged. The Defendant did not file a response in opposition to this motion nor did it appear at the hearing held on November 14, 2007. On November 16, 2007, the court entered an Order finding that the Debtor had made all post-petition maintenance payments required under the Plan, that she had paid all pre-petition arrearages in full in accordance with the Plan, and that the Debtor's mortgage obligation to the Defendant was deemed current as of the date of the entry of discharge, May 14, 2007.

On January 4, 2008, the Debtor filed the Complaint initiating this adversary proceeding, alleging that the Defendant began refusing the Debtor's maintenance payments in October 2007, pursuant to its assessment that the Debtor was past due for September 2007 in the amount of $484.92, and asked the court to enter a contempt order for the Defendant's violation of the discharge injunction. The Defendant filed the Motion to Dismiss on March 13, 2008, stating that the Debtor had failed to state a claim upon which relief could be granted and that the bankruptcy court lacks subject matter jurisdiction over this post-discharge dispute between the parties.

II

A defendant may move to dismiss a complaint for "failure to state a claim upon which relief can be granted." FED.R.CIV.P. 12(b)(6) (applicable in adversary proceedings by virtue of Rule 7012(b) of the Federal Rules of Bankruptcy Procedure). When contemplating a motion to dismiss under Rule 12(b)(6), the court should "construe the complaint in the light most favorable to the plaintiff, accept all the factual allegations as true, and determine whether the plaintiff can prove a set of facts in support of its claims that would entitle it to relief." Bovee v. Coopers & Lybrand, C.P.A., 272 F.3d 356, 360 (6th Cir.2001).

Although all factual allegations are accepted as true, the court is not required to accept legal conclusions or unwarranted factual inferences as true. Mich. Paytel Joint Venture v. City of Detroit, 287 F.3d 527, 533 (6th Cir.2002). Instead, the focus should be upon "whether the plaintiff has pleaded a cognizable claim[,]" Marks v. Newcourt Credit Group, Inc., 342 F.3d 444, 452 (6th Cir.2003), and the complaint contains "either direct or inferential allegations respecting all the material elements to sustain recovery under some viable legal theory." League of Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir.2007) (quoting Bell All. Corp. v. Twombly, ___ U.S. ___, ___, 127 S.Ct. 1955, 1969, 167 L.Ed.2d 929 (2007)).

When considering a motion under Rule 12(b)(6), the court should not rely upon any documents other than the pleadings. Stangel v. I.R.S. (In re Stangel), 222 B.R. 289, 291 (Bankr.N.D.Tex.1998). "Under certain circumstances, however, a document that is not formally incorporated by reference or attached to a complaint may still be considered part of the pleadings[...] when `a document is referred to in the complaint and is central to the plaintiffs claim.'" Greenberg v. Life Ins. Co. of Va., 177 F.3d 507, 514 (6th Cir.1999) (quoting 11 JAMES WM. MOORE ET AL., MOORE'S FEDERAL PRACTICE ¶ 56.30[4] (3d ed.1998)). The court may also rely upon public records or other documents appropriately encompassed by judicial notice set forth in Federal Rule of Evidence 201.¹ New England Health Care Employees Pension Fund v. Ernst & Young, LLP, 336 F.3d 495, 501 (6th Cir.2003).

Nevertheless, Rule 12(b) also states, in material part:

If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.

FED.R.CIV.P. 12(b), Accordingly, a motion to dismiss under Rule 12(b)(6) will be "converted" to a motion for summary judgment governed by Rule 56 when the parties submit material beyond the pleadings that the court considers in its determination. Higgason v. Stephens, 288 F.3d 868, 874 (6th Cir.2002); Mich. Paytel Joint Venture v. City of Detroit, 287 F.3d 527, 533 (6th Cir.2002) (citing Soper v. Hoben, 195 F.3d 845, 850 (6th Cir.1999)). "Material outside the pleadings includes affidavits, affirmative defenses, and judicial notice of the record or transcripts from prior court proceedings." Fernandez v. GE Capital Mortgage Servs., Inc. (In re Fernandez), 227 B.R. 174, 180 (9th Cir. BAP 1998); see also 50 Pine Co., LLC v. CapitalSource Fin., LLC (In re 50 Pine Co., LLC), 317 B.R. 276, 281 (Bankr.S.D.N.Y.2004) ("[W]hen a party attaches to its motion to dismiss documents which are extrinsic to the complaint, the court must either exclude such documents from consideration or convert the motion to a motion for summary judgment under Rule 56.").

Both parties filed additional documents outside the scope of the pleadings in support of their respective positions; however, the court did not consider these documents because, based upon the undisputed material facts of record in the...