In re Pollilo, Bankruptcy No. 02-38061bf (Bankr. E.D. Pa. 1/15/2010), Bankruptcy No. 02-38061bf.

Decision Date15 January 2010
Docket NumberAdversary No. 09-0287.,Bankruptcy No. 02-38061bf.
PartiesIn re STEPHEN POLLILO, Debtor. STEPHEN POLLILO and WILLIAM C. MILLER, ESQ., Chapter 13 trustee, Interested party Plaintiff, v. HARLEYSVILLE NATIONAL BANK Defendant.
CourtUnited States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania
MEMORANDUM

BRUCE FOX, Bankruptcy Judge.

Before me is the defendant's motion to dismiss all counts of a complaint filed by debtor Stephen Polillo,1 which complaint alleges that Harleysville National Bank violated the discharge injunction, the confirmation order, Pennsylvania's unfair trade practices act, and/or sections 542 and 362(a)(3) of the Bankruptcy Code, by failing to mark its motor vehicle lien as satisfied upon the completion of the debtor's chapter 13 plan and entry of his bankruptcy discharge. Harleysville contends that since the debtor acknowledges in his complaint that the defendant satisfied its lien prior to the filing of this adversary proceeding, as the debtor had uninterrupted possession and use of his motor vehicle at all times, and as the debtor could have acted on his own to obtain a clear title to his motor vehicle upon receipt of his bankruptcy discharge, he has not stated any cause of action.

Mr. Polillo opposes dismissal of this proceeding. He disputes whether he could have acted independently of Harleysville to clear title, emphasizes that Harleysville had specifically agreed during the bankruptcy case to remove its vehicle lien and provide clear title to the debtor upon his bankruptcy discharge, and argues in his memorandum that he suffered damages by Harleysville's inaction. Thus, he maintains that he is entitled to monetary relief.

I.

Harleysville seeks to dismiss the instant complaint under Fed. R. Bankr. P 7012, which procedural rule incorporates, inter alia, Fed. R. Civ. P. 12(b)(6). Recently, the Supreme Court explained the standard for determining whether a complaint states a cause of action, thus entitling the plaintiff to proceed to discovery and possibly to trial.

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." [Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955 (2007)]. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id., at 556, 127 S. Ct. 1955. The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Ibid. Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility of `entitlement to relief.'" Id., at 557, 127 S. Ct. 1955 (brackets omitted).

Two working principles underlie our decision in Twombly. First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Id., at 555, 127 S. Ct. 1955 (Although for the purposes of a motion to dismiss we must take all of the factual allegations in the complaint as true, we "are not bound to accept as true a legal conclusion couched as a factual allegation" (internal quotation marks omitted)). Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. Id., at 556, 127 S. Ct. 1955. Determining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. [Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007.] But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not "show[n]""that the pleader is entitled to relief." Fed. Rule Civ. Proc. 8(a)(2).

In keeping with these principles a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009).

Therefore, I shall accept Mr. Polillo's factual allegations as true, as well as all reasonable inferences that may be drawn from those allegations. If, nonetheless, his complaint fails to meet the pleading standard set forth in Iqbal, dismissal is warranted, see, e.g., Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); In re Joubert, 411 F.3d 452 (3d Cir. 2005); Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir. 1988), unless leave to amend is appropriate. See, e.g., Jones v. Domalakes, 161 Fed. Appx. 216, 217 (3d Cir. 2006) (non-precedential); Chemtech Intern., Inc. v. Chemical Injection Technologies, Inc., 170 Fed. Appx. 805, 811 (3d Cir. 2006) ("[I]n this circuit, `[w]hen a plaintiff does not seek leave to amend a deficient complaint after a defendant moves to dismiss it, the court must inform the plaintiff that he has leave to amend within a set period of time, unless amendment would be inequitable or futile.'") (quoting Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002)); Griffin-El v. Beard, 2009 WL 1229599, at *6 (E.D. Pa. 2009). Where, however, repleading could not correct the defects in a party's claim, a court need not grant leave to amend. See e.g., Alston v. Parker, 363 F.3d 229, 235 (3d Cir. 2004) ("We have held that even when a plaintiff does not seek leave to amend, if a complaint is vulnerable to 12(b)(6) dismissal, a District Court must permit a curative amendment, unless an amendment would be inequitable or futile."); Peterson v. Philadelphia Stock Exchange, 717 F. Supp. 332, 337 (E.D. Pa. 1989); see also Massarsky v. General Motors Corp., 706 F.2d 111, 125 (3d Cir. 1983); Sarfaty v. Nowak, 369 F.2d 256, 259 (7th Cir. 1966) ("Rule 15(a) does not require a court to do a futile thing.").

With these standards in mind, I accept as true the following facts from Mr. Polillo's complaint, as well as facts properly within the scope of judicial notice.2

II.
A.

Mr. Polillo filed his chapter 13 case on December 19, 2002. On February 25, 2003, he commenced an adversary proceeding against Harleysville to determine, pursuant to 11 U.S.C. § 506, the extent of the allowed secured claim held by Harleysville whose collateral was a 1999 F-350 Ford truck owned by the debtor. Complaint, ¶ 9. That proceeding was docketed as Adv. No. 03-0140. On April 7, 2003, the parties settled the litigation by stipulating that Harleysville held an allowed secured claim for the vehicle, with postpetition interest, in the total amount of $29,076. This allowed amount would be paid in full through the debtor's chapter 13 plan. The stipulation further provided that "[u]pon discharge in this chapter 13, the secured party must remove its lien and provide title to the debtor." Stipulation of April 7, 2003 (docketed as entry #8 in Adv. No. 030-140).

On November 6, 2003, Mr. Polillo's second modified chapter 13 plan was confirmed by this court without any objections. See docket entries ##30, 34 in Bankr. No. 02-38061. The confirmed plan provided for a total amount of $34,000.50 to be paid to the standing chapter 13 trustee over 60 months, with the bulk of that amount being distributed to Harleysville on account of its $29,076.00 allowed secured claim. This terse plan stated in its entirety only the following:

                                $550 X 8 months AND $556 X 1 month AND $569.50 X 51
                                MONTHS = $34,500.50 TOTAL BASE AMOUNT
                                (A) CIBIK & CATALDO          $1,430
                                Commonwealth of PA           $784.22
                                (B) Harleysville National    $29,076.00 per court approved stipulation
                
                                (C) PRO RATA
                

On May 9, 2008, the chapter 13 trustee filed his final report, showing that Harleysville Bank was paid its entire allowed secured claim as provided for by the confirmed plan. See docket entry #38. The deadline to object to the debtor's receipt of a discharge under section 1328(a) was set at June 8, 2008. Id. On July 1, 2008, there being no objection filed, this court entered an order discharging the debtor. On July 3, 2008, notice of discharge was served on Harleysville. See docket entry #41. The case was closed under section 350(a) on July 11, 2008.

The day before entry of discharge, June 30, 2008, Mr. Polillo's attorney "caused a demand for the release of the lien on the title to be sent to Harleysville care of their [sic] attorney." Complaint, ¶ 17.3

More than one year later, on July 22, 2009, Mr. Polillo filed a motion to reopen his bankruptcy case in order to file an adversary proceeding against Harleysville, because the latter had not provided him with the requested certificate of title noting the satisfaction of its lien. In support of his motion to reopen the case, the debtor argued: "At issue is the integrity of the bankruptcy process which is within the jurisdiction of this court and not a state court." Debtor's Memorandum In Support of Reopening, at 3. The debtor's motion to reopen under section 350(b) was granted by order dated September 21, 2009. On September 22, 2009, the debtor filed the above-captioned adversary proceeding.

Sometime in August 2009 (after the debtor's motion to reopen was filed but...

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