In re Plowman

Decision Date10 March 1998
Docket NumberAdversary No. 95-70650,95-70842,95-70889.,Bankruptcy No. 91-72472-TBB-13
PartiesIn re Danny Gene & Jeri Lynn PLOWMAN, Debtors. Jeri Lynn PLOWMAN, et al., Plaintiffs, v. BEDFORD FINANCIAL CORPORATION, et al., Defendants.
CourtUnited States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Alabama

Albert G. Lewis, Charles M. Coleman, Tuscaloosa, AL, for Jeri Lynn Plowman, Annette Pruitt Rodgers, Lucille Huggins Kimbrough, Albert Finch and Frances Finch.

Stephen B. Porterfield, Birmingham, AL, for Greyrock Capital Corporation.

William H. Webster, Montgomery, AL, for Greentree Financial Corporation and Greentree Financial Services.

Melody L. Hurdle, Michael L. Bell, Birmingham, AL, for American Bankers Life Assurance Company.

James A. Byram, Jr., Montgomery, AL, for American Family Home and American Modern Home Insurance Company.

Michael D. Smith, Tuscaloosa, AL, for Tom and James Deas.

Robert W. Bradford, Jr., Montgomery, AL, for Foremost Insurance Company.

J. Franklin Ozment, Birmingham, AL, for Leader Federal Savings Bank.


THOMAS B. BENNETT, Bankruptcy Judge.

I. The Script
A. Prologue
1. The Setting And Claims

Having selected the preferred location in which to challenge what they view as wrongful conduct, Jeri Lynn Plowman, Annette Pruitt Rodgers, Lucille Huggins Kimbrough, Albert Finch, and Frances Finch (hereinafter individually Named Plaintiff and collectively Named Plaintiffs), initiated a suit in the Circuit Court of Greene County, Alabama, captioned Plowman et. al., v. Bedford Financial Corp., et. al., Civil Action No. CV-95-050 (hereinafter sometimes Removed Action). The Named Plaintiffs seek to serve as the representatives of a proposed class who financed the purchase of mobile homes along with collateral protection insurance. The complaint contains seven counts: breach of contract, false representation, willful negligence, violations of certain of the consumer protection provisions of Alabama's mini code, Ala.Code §§ 5-19-1 et. seq. (1996), breach of fiduciary duty, disgorgement of excess charges, and civil conspiracy. These claims rest on allegations about the conduct of, among others, various named and unnamed (i) sellers of mobile homes and/or collateral protection insurance, (ii) persons/entities financing the purchase of mobile homes and/or collateral protection insurance, and (iii) insurance companies which issued collateral protection insurance.

A contention critical to the Named Plaintiffs' success on the merits is that collateral protection insurance in an amount greater than the value of the mobile home and/or in excess of the unpaid loan balance was either (i) sold to and financed for a plaintiff, or (ii) purchased by a defendant on default by a plaintiff in maintaining required property protection insurance for a mobile home. In both instances, it is claimed that the cost of the collateral protection insurance was added to the unpaid contract balance. By this practice, the cost of the insurance increased the unpaid balance of the debt on which a finance charge was imposed. This compounded the professed overcharging by generating finance charges on the cost of the unnecessary amounts of insurance. It is argued that the amount the plaintiffs have been overcharged when added to the other forms of damages insisted upon exceeds two hundred million dollars ($200,000,000.00).

2. The Protagonists — Bankrupt And All

Common issues of fact and Alabama law are asserted to exist with respect to the claims and causes of action of the Named Plaintiffs and the members of the proposed class of plaintiffs. They supposedly emanate from the purchase by each of a mobile home along with excessive amounts of collateral protection insurance. Notwithstanding these similarities, the Named Plaintiffs possess a distinguishing feature. Each has filed an individual or joint chapter 13 bankruptcy case in the United States Bankruptcy Court for the Northern District of Alabama, Western Division. Jeri Lynn Plowman ("Plowman") and her husband, Danny Plowman, filed a joint case. Albert and Frances Finch ("Finchs") also filed a joint case. Annette Pruitt Rodgers ("Rodgers") filed an individual case. So did Lucille Huggins Kimbrough ("Kimbrough"). An order confirming a chapter 13 plan has been entered in each case. All of the Named Plaintiffs are to pay in full their secured debts. This includes that of the respective defendants owed monies by one or more of the Named Plaintiffs. Leaving out the Finchs', each confirmed plan provides for payment of one hundred percent of the unsecured indebtedness owed to creditors. The Finchs are to pay only one percent of the amount of their unsecured debts.

As often occurs in a bankruptcy case, debtors challenge the secured status of a creditor's claim. Just such events occurred in the course of the chapter 13 cases of two of the Named Plaintiffs. In the Plowmans' and Finchs' bankruptcy cases, the secured claim filed by a defendant in the complaint was contested. Plowman filed an adversary proceeding against Goldome Acceptance Corporation ("Goldome") to determine the validity, priority, or extent of its lien or other interest in property. Also, the Plowmans' chapter 13 trustee filed an adversary proceeding against Goldome seeking to determine the extent of its lien based on contentions different from those asserted in the Removed Action. Both Plowman adversary proceedings were voluntarily dismissed under Fed.R.Civ.P. 41. The adversary proceeding filed by the Finchs' was to determine the validity, priority, or extent of the lien asserted by Leader Federal Savings & Loan Association of Memphis ("Leader Federal"). It culminated in a final judgment in favor of Leader Federal: its claim was held to be fully secured.1

Apparently by concluding that the pendency of the bankruptcy cases of the Named Plaintiffs and the treatment in bankruptcy of claims of certain of the defendants, among other factors, could support this Court's subject matter jurisdiction and the removal of this suit, some of the defendants elected to remove it under one or more of the provisions of the federal removal statute, 28 U.S.C. §§ 1441-1452. As will become known, coordination of removal efforts by and among the defendants was not achieved. What was unknown at the time of the various removal filings is the extent this failure to coordinate would usher the remand request of the Named Plaintiffs to its outcome.

3. The Antagonists — The Real And The Imaginary

The Removed Action was filed against named and various groups of unnamed, fictitious defendants. Those enumerated in the complaint are Bedford Financial Corp., American Bankers Life Assurance Co., American Modern Home Insurance Co., Foremost Insurance Co., American Security Insurance Co., American Family Home Insurance Co., American Bankers Insurance Co. of Fla., Greentree Financial Corp. dba Greentree Acceptance of Miss., Inc., Greentree Acceptance Corp., Greentree Financial Corporation of La., Nations Financial Capital Corp. (now known as Greyrock Capital Group, Inc. ("Greyrock")), First Associates Mortgage Corp. ("First Associates"), Don Graves, Don Graves Inc., Piggy Bank Homes of Tuscaloosa, Inc. factually a d/b/a/ of Manufactured Homes, Inc., Tom Deas, James Deas, Leader Federal Savings & Loan Association of Memphis and Fountain-Lowry Enterprises, Inc., Hugh Thomas Fountain, William Donald Fountain, and James McMillan Fountain doing business as Big 4 Mobile Homes (hereinafter collectively "Named Defendants"). At the time the Removed Action was filed in the state court, several of the Named Defendants were debtors in a case under the provisions of chapter 7 of the Bankruptcy Code, 11 U.S.C. § 701 et seq. Some of these bankruptcy cases have been pending before the United States Bankruptcy Court for the Southern District of Alabama, one before this Court, and another before the United States Bankruptcy Court for the Middle District of North Carolina.

Each Named Defendant allegedly either (i) sold a mobile home along with collateral protection insurance, (ii) financed such a mobile home purchase, (iii) is an assignee of the original creditor which financed the purchase of such a mobile home, (iv) sold collateral protection insurance, and/or (v) insured such a mobile home with collateral protection insurance for one of the Named Plaintiffs. Also, those holding the note, security agreement, and other documents evidencing an indebtedness of a Named Plaintiff filed a claim in the appropriate bankruptcy case. For example, Goldome filed a secured claim in the Plowmans' joint bankruptcy case and subsequently assigned it to Nations Financial Capital Corporation. Greentree Financial Corporation filed a secured claim against Kimbrough's bankruptcy estate. Leader Federal filed a secured claim in the Finchs' joint bankruptcy case. Likewise, Greentree Acceptance Corporation filed a secured claim against the Rodger's bankruptcy estate.

As for the unnamed, fictitious defendants, it is alleged that

all of . . . the fictitious parties are otherwise unknown to the Plaintiffs at this time, however, the Plaintiffs will substitute the true and correct name for the fictitious party or Defendants in a timely manner upon ascertainment of their names and identities for the purpose of being a Defendant in this lawsuit. . . .

Each of the proposed fictitious defendants is placed into a category with other defendants who or which had the same type of involvement in the transactions for the purchase and financing of the purchase of a mobile home along with collateral protection insurance. The groupings of fictitious defendants include mobile home sellers, insurance companies, insurance agents, insurance agencies, banks, financial institutions, financing companies, assignees of various persons and entities who/which financed the purchase of such mobile homes along with collateral protection insurance, and others who participated in...

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