In re Sharpe

Decision Date29 May 2008
Docket NumberBankruptcy No. 03-04644-BGC-13.,Adversary No. 04-00250.
Citation391 B.R. 117
PartiesIn re Roderick SHARPE, Debtor. Roderick D. Sharpe and Linda Sharpe, Plaintiffs, v. Wells Fargo Home Mortgage; and GE Mortgage Services, LLC; fka GE Capital Mortgages Services, Inc., Defendants.
CourtU.S. Bankruptcy Court — Northern District of Alabama

Lee Wendell Loder, Loder Law Firm, Paula C. Greenway, Greenway Law, LLC, Birmingham, AL, for Plaintiffs.

Diane C. Murray, Stephen B. Porterfield, Susannah R. Walker, Robert Moss, Sirote & Permutt, P.C., Birmingham, AL, for Defendants.

MEMORANDUM OPINION Of Findings of Fact and Conclusions of Law

BENJAMIN COHEN, Bankruptcy Judge.

The defendant foreclosed the plaintiffs' mortgage on August 30, 2004. The plaintiffs sued for breach of contract, wrongful foreclosure, conversion, trespass, violation of the automatic stay, estoppel, fraud, unjust enrichment, and breach of fiduciary duty. A trial was held on October 11, 2007.1

I. BACKGROUND
A. The Parties' Mortgage Contract

The plaintiffs executed a note with Southern Atlantic Financial Services, Inc. on May 15, 1998, for a loan of $51,300. Pla. Ex. 41. In exchange, they gave Southern a security interest in their home at 2617 Avenue H, Birmingham, Alabama. Pla. Ex. 42. Southern Atlantic transferred its interest in the property and the note to GE Capital Mortgage Services, Inc (later known as GE Mortgage Services, LLC) on June 3, 1998. Pla. Ex. 41. On September 30, 2000, Wells Fargo Home Mortgage started servicing this loan for GE. Affidavit of Dixie Teagle attached to First Amendment to Motion to Dismiss Defendant GE Mortgage Services, filed December 18, 2007. Proceeding No. 152. Wells Fargo acquired the loan from. GE on December 1, 2004. Id.

B. The Plaintiffs' Bankruptcies2

Since entering into the mortgage contract with the defendant's predecessor, the plaintiffs have filed three bankruptcy cases in this Court.

1. Case No. 01-04442-BGC-13

Mr. Sharpe filed case number 01-04442 on June 22, 2001. Proceeding No. I.3 At that time, the plaintiffs were severely in default on their mortgage to GE. According to the proposed Chapter 13 plan Mr. Sharpe filed with his petition, the plaintiffs were in arrears for $4,800. Proceeding No. I.4 GE filed claim number 5 on August 21, 2001, for $5,908.30, representing the plaintiffs' prepetition mortgage arrears on this loan.

After this case was filed, the plaintiffs again became delinquent on their mortgage payments. In response, Wells Fargo filed its first Motion for Relief from Automatic Stay on February 25, 2002, seeking permission to foreclose its mortgage. Proceeding No. 19. That motion was resolved when the parties entered into an agreement regarding the plaintiffs' future mortgage payments. That agreement was incorporated into an order entered by this Court on April 12, 2002. Proceeding No. 25. That order allowed the defendant relief from the stay (after certain notice to the plaintiffs) if the plaintiffs failed to make any future mortgage payment beginning with the April 2002 payment.

GE filed claim number 8 on May 20, 2002, for $2,578.75, representing the post-petition arrears accumulated during this case.5 The plaintiffs did not contest that claim. The case was dismissed on July 9, 2002, and closed on August 16, 2002.

2. Case No. 02-07768-BGC-13

Mr. and Mrs. Sharpe filed case number 02-07768 on October 2, 2002, at 11:44 a.m. Proceeding No. I.6 According to the Statement of Financial Affairs they filed on October 9, 2002, a foreclosure sale was scheduled by GE for October 2, 2002.

According to the proposed Chapter 13 plan they filed on October 11, 2002, the plaintiffs were $8,600 in arrears on their mortgage to GE.7

This case was converted from Chapter 13 to Chapter 7 on April 4, 2003. Proceeding No. 20.

The plaintiffs again failed to make all of their postpetition mortgage payments. On May 6, 2003, Wells Fargo filed its second Motion for Relief from Automatic Stay, again seeking to foreclose. Proceeding No. 27. On June 5, 2003, this Court entered an order granting the defendant's motion for relief, with the consent of the plaintiffs.

Wells Fargo filed claim number 2 on January 2, 2003, for $9,336.8

The plaintiffs' Chapter 7 discharge was granted on October 6, 2003, and the case was closed that day.

3. Case No. 03-04644-BGC-13 (The Current Case)

The current case was filed by Mr. Sharpe on May 28, 2003, during the pendency of the 2002 Chapter 7 case.9 Proceeding No. 1. Consequently it was filed before the Court entered its June 5, 2003, consent order granting the defendant relief from the stay in the Chapter 7 case.

The effect of the May 28, 2003 filing was of course, at least as to Mr. Sharpe, to nullify the Court's June 5, 2003, order. That result is quite significant, for at that time, the plaintiffs were again severely in default on their mortgage. According to the proposed Chapter 13 plan filed with the petition, the plaintiffs were in arrears for $9,500. Proceeding No. 1. They were contractually due for their September 2001 mortgage payment. T. 26-27.10

After filing this case, the plaintiffs became more delinquent on their mortgage payments. On August 28, 2003, the defendant filed its third Motion for Relief from Stay and Motion for Relief from Co-Debtor Stay again seeking permission to foreclose its mortgage. Proceeding No. 10. That motion was resolved when the parties entered into an agreement regarding the plaintiffs' future mortgage payments. That agreement was incorporated into an order entered by this Court on November 19, 2003. Proceeding No. 21. The pertinent parts of that order are:

1. The Debtors shall resume making the regular monthly mortgage payment unto the Creditor, presently in the amount of $531.95, beginning OCTOBER 20, 2003.

2. The Creditor shall file a post-petition arrearage claim for the mortgage payments, contractual fees and costs including the associated bankruptcy attorney fees and costs. Said claim appears to be as follows:

                   2 payment of $531.95 each for August
                   and September 2003                        $1,063.90
                   4 late charges of $23.85 each for
                   June — September, 2003                $   95.40
                   Bankruptcy Attorney fees and costs
                   RE Motion for Relief                      $  575.00
                   Partial Payment in Suspense:             [$  483.00]
                                                            ___________
                   Total post-petition arrearage through
                   October 19, 2003                          $1,251.30
                

3. The automatic stay of Section 362(a) is hereby MODIFIED to provide future relief unto the Creditor as follows: should the Debtors default under the terms of this order, or the terms of the mortgage contract, by the failure to make a payment which is received by the Creditor within thirty (30) days from the date that it becomes due beginning on or before OCTOBER 20, 2003, then the automatic stay of Section 362 terminates as to the Creditor without further notice or order. The waiver of any default occurring under this order shall not constitute a waiver as toward any subsequent default occurring under this order.

Order on, Motion for Relief from Automatic Stay entered November 19, 2003, Proceeding No. 21 (emphasis added).

Contending that the plaintiffs did not make all payments after entering into the above agreement, and therefore that the stay lifted, in July 2004 the defendant began foreclosure proceedings against the plaintiffs. Def. Ex. 8 at 296604; Pla. Ex. 11. That process ended with a foreclosure sale on August 30, 2004. Pla. Ex. 10. All of the causes of actions alleged by the plaintiffs in the pending adversary proceeding emanate from the. defendant's actions leading up to and including that foreclosure.

4. Summary of the Plaintiffs' Bankruptcies

Mr. Sharpe filed his first Chapter 13 case on June 22, 2001. At that time, the plaintiffs admitted to being in arrears on their mortgage with GE for at least $4,800. The plaintiffs then failed to make all of their postpetition mortgage payments. With the agreement of the plaintiffs, the Court entered its first order granting GE relief from the stay.

The plaintiffs filed a joint Chapter 13 case on October 2, 2002. At that time, the plaintiffs admitted to being in arrears on their mortgage with GE for at least $8,600. The plaintiffs converted the case to Chapter 7 on April 4, 2003. Again, the plaintiffs failed to make all of their postpetition mortgage payments.

Before the Chapter 7 case was completed, Mr. Sharpe filed the current Chapter 13 on May 28, 2003. Shortly thereafter, this Court entered its second order granting the defendant relief "from the stay.

When Mr. Sharpe filed his third case, the plaintiffs admitted to being in arrears on their mortgage with GE for at least $9,500. The plaintiffs again failed to make all of their postpetition mortgage payments. On November 19, 2003, the Court entered its third order granting GE relief from the stay. It is this November 19, 2003, order that is at the heart of all of the matters addressed by this opinion.

II. CONTENTIONS
A. The Plaintiffs' Contentions

The plaintiffs contend they made all of the mortgage payments required by the November 19, 2003, order. As such, they conclude the stay did not lift and therefore the foreclosure was wrongful and in violation of the stay. In the alternative, the plaintiffs contend that even if they did not make all of their post-November 19, 2003, payments, the defendants failed to give the notices required by statute and by the parties' mortgage.

The plaintiffs argue that without those notices, the foreclosure is void and that they are entitled to damages.11 Based on that argument, the plaintiffs conclude that the foreclosure was wrongful and gave rise to numerous causes of actions. Those include: breach of...

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27 cases
  • IN RE SHARPE
    • United States
    • U.S. Bankruptcy Court — Northern District of Alabama
    • January 26, 2010
    ...30, 2004, and ended on May 29, 2008, with this Court's ruling on certain liability issues raised by the complaint. See In re Sharpe, 391 B.R. 117 (Bankr. N.D.Ala.2008). The pertinent events are summarized Contending that the August 30, 2004, foreclosure was wrongful, the plaintiffs filed th......
  • In re Sandlin, Case No. 06-03792-TOM-13 (Bankr. N.D. Ala. 4/8/2010)
    • United States
    • U.S. Bankruptcy Court — Northern District of Alabama
    • April 8, 2010
    ...unjust enrichment ... is only available `when as a matter of fact there is no legal contract.'" Sharpe v. Wells Fargo Home Mortgage (In re Sharpe), 391 B.R. 117, 169 (Bankr. N.D. Ala. 2008)(quoting Reg'l Pacesetters, Inc. v. Halpern Enters., Inc., 165 Ga. App. 777, 300 S.E.2d 180, 185 (1983......
  • In re Davenport
    • United States
    • United States Bankruptcy Courts – District of Columbia Circuit
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    ...as in Redman v. Federal Home Mortgage Corp. , 765 So.2d 630 (Ala. 1999).38 See Dysart , 729 F. App'x at 726–27 ; In re Sharpe , 391 B.R. 117, 147 (Bankr. N.D. Ala. 2008). In short, Djourabchi and Welt did not effect a proper acceleration of the debt prior to Davenport's tendering the $60,98......
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    ...equitable action rising from the trust relationship between a mortgagor and a mortgagee." Sharpe v. Wells Fargo Home Mortg. (In re Sharpe), 391 B.R. 117, 152 (Bankr. N.D. Ala. 2008). "A mortgagor has a wrongfulforeclosure action whenever a mortgagee uses the power of sale given under a mort......
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