In re Sellers
| Decision Date | 03 August 2016 |
| Docket Number | Bky. No. 15–14723 ELF |
| Citation | 555 B.R. 479 |
| Parties | In re: Joyce M. Sellers, Debtor. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
Devon E. Sanders, Community Legal Services, Inc., Philadelphia, PA, for Debtor.
In a bench opinion delivered on June 2, 2016, I sustained in part and denied in part the objection to the proof of claim of Nationstar Mortgage, LLC (“Nationstar”) filed by Debtor Joyce M. Sellers (“the Debtor”). In that opinion, I held:
Presently before the court is the Debtor's Motion for Reconsideration of the denial of the request for an award of attorney's fees under 41 P.S. § 503 and the court's decision not to determine the amount of Nationstar's total allowed secured claim (“the Motion”).
For the reasons set forth below, the Motion will be denied.
On July 2, 2015, Debtor Joyce M. Sellers (“the Debtor”) filed a voluntary chapter 13 bankruptcy petition. Debtor filed her chapter 13 plan and schedules on July 28, 2015. (Doc. # 's 17, 19).
The Debtor's chapter 13 plan (“the Plan”) proposed to cure the Debtor's prepetition arrears and maintain the monthly mortgage payments on Nationstar's secured claim. The Plan estimated the arrears claim to be approximately $3,000.00. Nationstar eventually filed an amended proof listing a cure amount of $13,003.04.
On February 26, 2016, the Debtor filed an objection to Nationstar's amended proof of claim (“the Objection”). (Doc. # 40). A hearing on the Objection was held and concluded on March 22, 2016. The parties submitted memoranda in support of their positions, the last of which was filed on April 29, 2016.
The court issued an oral decision on the merits of the Objection on June 2, 2016. The Debtor was largely successful in challenging the cure amount in Nationstar's proof of claim. The proof of claim for arrears was allowed in the amount of $4,811.44. The oral ruling was memorialized by a written order, docketed the same day (“the Order”). (Doc. # 56).
Two (2) aspects of the ruling on the Objection are relevant to the pending Motion.
First, although I sustained the Debtor's objection to $2,653.73 in attorney's fees and costs that were assessed in connection with a prepetition state court foreclosure action due to noncompliance with Act 6, 41 P.S. § 403, I denied the Debtor's request for attorney's fees under 41 P.S. § 503. I based this ruling on the Pennsylvania Superior Court decision in Generation Mortgage Co. v. Nguyen, 138 A.3d 646, 651–52(Pa.Super.Ct. 2016).
Second, the Debtor requested that I fix the total allowed secured claim of Nationstar. I denied this request, limiting my ruling to a determination of the amount of prepetition arrears.
On June 16, 2016, the Debtor filed the Motion, seeking reconsideration of the Order. (Doc. # 59). The parties waived argument on the Motion, relying instead on their written submissions. Briefing on the Motion was complete on July 12, 2016.
Federal Rule 59(e), made applicable to this proceeding by Bankruptcy Rule 9023, allows a judgment to be altered or amended only if the moving party shows at least one (1) of the following grounds:
Blystone v. Horn, 664 F.3d 397, 415 (3d Cir.2011) (emphasis removed); accord Max's Seafood Café ex rel. Lou–Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir.1999) ; Intermec Tech. Corp. v. Palm, Inc., 830 F.Supp.2d 1, 3–4 (D.Del.2011) (citing Max's Seafood).
The movant must overcome a high burden in meeting this standard. ABS Brokerage Servs., LLC v. Penson Fin. Servs., Inc., 2010 WL 3257992, at *5 (D.N.J. Aug. 16, 2010) ; see also Blystone, 664 F.3d at 415 (); Fanelli v. Continental Cas. Co., 2006 WL 3387187, at *2 (M.D.Pa. Nov. 21, 2006) () (citation omitted).
Further, a Rule 59(e) motion is not a vehicle to relitigate matters that have already been considered by the court. In re Scotto–DiClemente, 463 B.R. 308, 310 (Bankr.D.N.J.2012) (“[a] motion for reconsideration is not to be used as a means to reargue matters already argued and disposed of or as an attempt to relitigate a point of disagreement between the Court and the litigant” (quoting Ogden v. Keystone Residence, 226 F.Supp.2d 588, 606 (M.D.Pa.2002) ); Conway v. A.I. duPont Hosp. for Children, 2009 WL 1492178, at *2 () (internal citations and quotations omitted).
The main thrust of the Motion is that I committed an error of law in interpreting Act 6, 41 P.S. § 503(a) with respect to her request for attorneys fees—an issue yet to be ruled on by the Pennsylvania Supreme Court. In this case, after determining that Nationstar failed to comply with the pre-foreclosure notice requirements of Act 6, 41 P.S. § 403, and awarding the Debtor relief by sustaining, in part, her objection to Nationstar's proof of claim, I denied her request for attorney's fees under 41 P.S. § 503. In doing so, I relied upon and followed Nguyen, a recent decision of the Pennsylvania Superior Court.
In the absence of controlling state court precedent, I must predict how the Pennsylvania Supreme Court would resolve the issue by examining the decisional law of the Pennsylvania intermediate courts and decisions of federal courts and other jurisdictions that discuss the issue. See, e.g., Klein v. Weidner, 729 F.3d 280, 283 (3d Cir.2013) (citing Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1373 n. 15 (3d Cir.1996) ).
Based on existing Pennsylvania appellate case law, the Debtor argues that Nguyen was decided incorrectly and that I committed a clear error of law in following that decision. I disagree.
Nguyen originated as a mortgage foreclosure action against the debtor/homeowner in the Court of Common Pleas (“the CP Court”). As one of her defenses, Nguyen pled that the action was filed in violation of Act 6.2 After the CP Court denied motions for summary judgment, the plaintiff, Generation Mortgage, filed a praecipe to discontinue and end the matter without prejudice. Nguyen then filed a motion for counsel fees under 41 P.S. § 503, arguing that she was the prevailing party because of the discontinuance and she was entitled to attorney's fees. The CP Court denied the motion and Nguyen appealed.3
On appeal, Nguyen argued that she was entitled to fees because Generation Mortgage did not send the proper notice under Act 6. Nguyen asserted that 41 P.S. § 503 gives her a cause of action because she was adversely affected by a violation of the Act. Thus, according to Nguyen, she was the prevailing party because she achieved the result she sought in the litigation—its dismissal—and, as the prevailing party, she was entitled to attorney's fees under 41 P.S. § 503.
The Superior Court observed initially that a homeowner's assertion that a lender's failure to comply with the pre-foreclosure notice requirements of Act 6 is usually raised as a defense in a mortgage foreclosure action instituted by the mortgagee. See 138 A.3d at 650–51. The defense, if successful, permits the homeowner to defeat a creditor's claim for foreclosure against the residential real estate or collection of an impermissible fee. Id. (citing Spivak, 104 A.3d at 12 ). The court then concluded that Nguyen was not entitled to counsel fees.
The Nguyen court reasoned that, even if Nguyen were considered to have prevailed based on the plaintiff's discontinuance of the action, her success occurred in a mortgage foreclosure action, which “is separate from” and “does not arise under” Act 6.138 A.3d at 651–52. Nguyen instructs that in order to invoke 41 P.S. § 503, a mortgagor must present an affirmative claim under Act 6 rather than using the statutory rights afforded to defeat an adversary's claim for relief arising under some other source of law.4
Nguyen is a decision explicitly grounded in the plain language of the 41 P.S. § 503, specifically, the phrase “prevails in an action arising under [Act 6].” I find the Nguyen court's reasoning persuasive and I predict that the Pennsylvania Supreme Court would reach the same result if presented with the issue.
The procedural posture in this contested matter is analogous to that in Nguyen. By filing her objection to Nationstar's proof of claim, the Debtor raised Act 6 as a defense to the allowance of the claim. I disallowed the attorney's fees and costs component of Nationstar's claim because the Debtor successfully established a violation of Act 6's pre-foreclosure notice requirement. But, the Debtor did not bring an affirmative action under Act 6. She responded to the filing of a proof of claim and merely raised a defense to...
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