In re Siciliano
| Citation | 167 BR 999 |
| Decision Date | 05 May 1994 |
| Docket Number | Bankruptcy No. 91-16378DAS,93-12752DAS. |
| Parties | In re Leonard J. SICILIANO, Debtor (Two Cases). |
| Court | United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania |
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Leonard J. Siciliano, pro se.
Jerome R. Balka, Philadelphia, PA, for Prudential Sav. Bank.
Edward Sparkman, Philadelphia, PA, Standing Chapter 13 Trustee.
Frederic Baker, Asst. U.S. Trustee, Philadelphia, PA (U.S. Trustee).
In an appeal of our Order, affirmed by the District Court, denying Prudential Savings Bank ("Prudential") retroactive relief from the automatic stay in Bankr. No. 91-16378DAS, the second Chapter 13 bankruptcy case ("the 2d Case") filed by LEONARD J. SICILIANO ("the Debtor"), the Third Circuit Court of Appeals ("the Court"), in a decision reported as In re Siciliano, 13 F.3d 748 (3rd Cir.1994) ("Siciliano I"), reversed and remanded the matter to reconsider whether the automatic stay should be annulled as to Prudential, expressing particular concern with whether Prudential could prove that it was entitled to relief pursuant to 11 U.S.C. § 362(d)(2). As a result, we have before us Prudential's request for relief pursuant to the remand in the 2d Case ("Prudential's Motion I").
However, apparently unknown to the Court, this court presently had before it at the time of its decision in Siciliano I, and continues to have before it, the fourth Chapter 13 bankruptcy case ("the 4th Case") filed by the Debtor, in which the Debtor achieved confirmation of a plan. Also, we have before us (1) the Debtor's "Motion for My Request for a Hearing to Prove All Illegal Acts performed by Prudential's Bank and Their sic Attorney Jerome Balka" ("the Debtor's Motion"); and (2) the Motion of Prudential Savings Bank, PaSA to Dismiss Debtor's Fourth Bankruptcy Petition (No. 93-12752) for Cause Pursuant to Bankruptcy Code Section 109(g) and/or for Failure to Comply with Bankruptcy Rule 9011 and to Bar Debtor from Filing Future Bankruptcy Petitions for 180 Days Without Court Approval or in the Alternative for Relief from Automatic Stay ("Prudential's Motion II"). These three matters were heard together and our task is to provide a global resolution of these matters.
We conclude, as to Prudential's Motion I, that Prudential has failed to meet its burdens of proof under either § 362(d)(2)(A) or § 362(d)(2)(B), and therefore we must again deny it the relief of stay annulment which it sought in the 2d Case. Furthermore, because Prudential has failed to meet its heavy burden of proving fraud on the part of the Debtor in achieving confirmation of a plan in the 4th Case, we will neither dismiss the 4th Case nor revoke our Order confirming the Debtor's plan in that case. Because Prudential has no claim nor apparent role in the 4th Case at present and the Debtor was unable to prove any actionable conduct on the part of Prudential or its attorney, we will deny the Debtor's Motion. However, acting upon requests implicit within, but not clearly articulated in, Prudential's Motion II and in order to prevent further inevitable and (very likely) misdirected litigation between these parties in this court, we will provide a blueprint for a potential final resolution of this controversy. Prudential shall be directed to set aside the conveyance to it; the Debtor shall be directed to file an amended plan including treatment of Prudential's claim thereafter; and if the Debtor is unable or unwilling to do so, the 4th Case will be dismissed with prejudice.
The Debtor and Prudential have been engaged in protracted litigation which has spanned the Court of Appeals, this court, and the state courts for over five years and four bankruptcies. Although the procedural history of this litigation is extensive, the underlying facts which the parties apparently believe are crucial and that they continually both regurgitate in their pleadings occurred in 1989 and are not seriously in dispute.
On September 4, 1984, Prudential extended a $17,000 loan to the Debtor secured by his home located at 2027 South 24th Street, Philadelphia, Pennsylvania ("the Property"). As a result of an injury which caused an interruption to his employment as a steamfitter, the Debtor fell behind on his mortgage payments. On January 19, 1989, Prudential sent a Notice of Intention to Foreclose, pursuant to 41 P.S. § 403, to the Debtor ("the Notice"), advising that payment of a $694.43 delinquency within thirty (30) days was required to avoid foreclosure. Apparently not having received a satisfactory response to the Notice, Prudential, on May 31, 1989, filed a mortgage foreclosure complaint against the Debtor in reference to the Property in the Philadelphia Court of Common Pleas ("the State Court"). In an apparent self-help attempt at a resolution, the Debtor negotiated directly with a high-ranking employee of Prudential in July, 1989. He claims that this employee told him that he would have to pay $1,600 to avoid foreclosure at that point. He paid $1,000 and promised to return with the $600 balance in "five or six weeks." However, when he returned with $600, apparently within that timeframe, he was now told by the same employee that, in addition to the $600, he would be obliged to pay $1,200 towards fees (and possibly costs incurred) by Prudential's attorney, Jerome R. Balka, Esquire ("Balka"), in the State Court foreclosure case. The Debtor pretty much ends his story of "illegal acts" at this point, apparently believing that his point of subjection to extortion at the hands of Prudential or Balka has been made out. We infer that the $1,200 and probably also the $600 were not paid to Prudential. To observe that the Debtor took the actions of Balka, who continues to represent Prudential, personally is an understatement.
At this juncture, we observe that the Pennsylvania legislature has addressed the issue of preventing excessive demands of attorney's fees and costs to serve as a barrier to cures of residential mortgages in 41 P.S. §§ 403-06. Specifically, per 41 P.S. § 406(3), attorneys' fees demanded must be reasonable and actually incurred and are limited to $50 within thirty days after dispatch of a notice pursuant to 41 P.S. § 403. However, the Debtor apparently failed to plead any defenses, including violations of the foregoing laws, in his defense in the State Court. A judgment was therefore entered in favor of Prudential on September 5, 1989, in the amount of $19,838.99. A sheriff's sale of the Property in execution upon this judgment was initially scheduled for December 4, 1989.
On Friday, December 1, 1989, the Debtor filed his first Chapter 13 bankruptcy case. As a result of the automatic stay which was effected upon the filing of that bankruptcy petition, the sheriff's sale was stayed. After the Debtor failed to make several post-petition mortgage payments, Prudential filed a motion for relief from the automatic stay in that case on February 19, 1991. The parties settled the relief motion by entering into a stipulation, which was approved by our Order dated April 4, 1991. Pursuant to the stipulation, Prudential was entitled to request that it be given relief from the automatic stay after five days notice of default and certification to this court if the Debtor defaulted one more time on his mortgage obligation. The Debtor subsequently missed a mortgage payment and, after proper notice and certification, we granted Prudential relief from the stay on June 20, 1991, permitting it to continue its State Court foreclosure proceeding.
The sale of the Property was again scheduled by the sheriff pursuant to the foreclosure judgment, this time for December 2, 1991. Meanwhile, the Debtor's first bankruptcy had been dismissed on November 7, 1991, because of his failure to also make payments to the Chapter 13 Trustee. Again, three days before the scheduled sheriff's sale, the Debtor filed the 2d Case. However, because proper notice of the 2d Case filing was not provided to Prudential or the sheriff's office prior to December 2, 1991, the sheriff's sale of the Property was conducted as scheduled on that day and the Property was sold to Prudential. Prudential learned of the 2d Case when Balka noted its listing in The Legal Intelligencer on December 4, 1991. The sheriff's department received notice from the Debtor one day later. Neither the sheriff's department nor Prudential took any steps to invalidate the sale once they learned of the pendency of the 2d Case.
On December 23, 1991, Prudential filed a motion for relief from the automatic stay in the 2d Case. Before Prudential's relief motion could be heard, however, the 2d Case was dismissed by our Order dated January 6, 1992, because of a rather technical but nevertheless significant deficiency, i.e., the Debtor failed to file a proper mailing matrix of creditors. The Debtor then filed a "Request for Opportunity to File Chapter 7" in the 2d Case, which we treated as a motion to reconsider the dismissal ("the Reconsideration Motion"). A hearing was scheduled on March 3, 1992, on the Reconsideration Motion, and notice of the hearing was sent to all parties by the bankruptcy clerk's office. Only the Debtor and the Chapter 13 Trustee attended the hearing. Prudential later denied that it had received notice of the hearing from the clerk. By Order dated March 4, 1992, we denied the Reconsideration Motion. We noted, in that Order, that the Debtor could refile any bankruptcy case he wished and that any sale of the Property on December 2, 1991, was void because the automatic stay from the 2d Case was then in place.
On March 13, 1992, Prudential's Motion I was originally filed, seeking the reconsideration of our dismissal Order and retroactive relief from, or annulment of, the automatic Stay. The Debtor filed a response on April 1, 1992, and a hearing was conducted on April 9, 1992. Prudential brought several...
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