In re Vitt

Decision Date31 May 2000
Docket NumberBankruptcy No. 98-10335-SBB. Adversary No. 99-1468-SBB.
Citation250 BR 711
PartiesIn re Taina Lee VITT, d/b/a Esteem Fitness Wear, Debtor. Providian National Bank, Plaintiff, v. Taina Lee Vitt and Julie Manion, Defendants.
CourtU.S. Bankruptcy Court — District of Colorado

COPYRIGHT MATERIAL OMITTED

Barton S. Balis, Boulder, CO, for Taina Lee Vitt.

Mark F. Bell, Denver, CO, Steven Navaro, Englewood, CO, for Julie Manion.

Harvey Sender, Denver, CO, for Providian National Bank.

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

SYDNEY B. BROOKS, Bankruptcy Judge.

THIS MATTER comes before the Court on Providian National Bank's ("Plaintiff") Motion for Summary Judgment against Defendants Taina Lee Vitt ("Debtor") and Julie Manion ("Manion") (together Manion and Debtor shall be referred to herein as "Defendants") and the Response thereto filed herein by Manion. Debtor did not respond or otherwise plead. The Court, having reviewed the respective pleadings, the file and being advised in the premises, enters the following order.

For the reasons set forth herein, this Court concludes that the Plaintiff's Motion for Summary Judgment should be GRANTED and judgment entered against Manion and in favor of Plaintiff on the First through Third Claims for Relief. In addition, the Court concludes that Summary Judgment on Plaintiff's Fourth Claim for Relief should be DENIED, without prejudice, at this time.

I. JURISDICTION

This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 157(b)(2)(H) and 28 U.S.C. § 1334.

II. UNDISPUTED FACTS

Based upon the allegations raised in the Plaintiff's Complaint and the Answers filed herein by Defendants — together with the pending Motion for Summary Judgment and Manion's Response thereto — it does not appear that there are any genuine issues as to any material facts.1

A. Pre-Bankruptcy Events

Debtor and her former husband, Martin B. Vitt ("Mr.Vitt") executed a promissory note ("First Note") and a deed of trust in favor of Sycamore Financial Group, Inc. ("Sycamore") in the principal amount of $80,455.00 ("First Deed of Trust"). The First Deed of Trust was subsequently recorded on March 3, 1994 at Film 1947, Reception No. 0140419, in the Office of the Clerk and Recorder, Boulder County, State of Colorado. Sycamore thereafter assigned the First Deed of Trust to Norwest Mortgage, Ltd. ("Norwest").

On or about April 19, 1995, Debtor and Mr. Vitt executed a promissory note ("Second Note") and deed of trust ("Second Deed of Trust") for the benefit of First Deposit National Bank ("First Deposit") in the principal amount of $40,100.00. The Second Deed of Trust was recorded on April 20, 1995, at Film 2047, Reception No. 01511024, in the Office of the Clerk and Recorder, Boulder County, State of Colorado. Plaintiff is the servicing agent for First Deposit.2

The First Deed of Trust and the Second Deed of Trust encumbered the following real property:

Lot 13, Block 4 Churchill Pointe Subdivision Filing No. 1 County of Boulder, State of Colorado

and has the common address of 1125 Nottingham Street, Lafayette, Colorado 80026 ("Property").3

Debtor and Mr. Vitt defaulted under the terms of the First Note and First Deed of Trust. As a result, Norwest filed a notice of election and demand on November 19, 1997, at Reception No. 01748754, in the Office of the Clerk and Recorder, Boulder County, State of Colorado.

B. The Chapter 13 Bankruptcy, the Foreclosure, Transfer and Redemption of the Property

On January 12, 1998, Debtor filed for relief under Chapter 13 of the Bankruptcy Code. On April 22, 1998, Norwest was granted relief from the automatic stay to permit it to continue foreclosure proceedings on the property.

On May 20, 1998, the Boulder County Public Trustee sold the property to Plaintiff for $92,257.70 as the highest bidder at the foreclosure sale. The Boulder County Public Trustee issued a Certificate of Purchase to Plaintiff on May 20, 1998, which Certificate was recorded on May 27, 1998, at Reception No. 01805744, in the Office of the Clerk and Recorder, Boulder County, State of Colorado.

On May 21, 1998, the Debtor's amended Chapter 13 plan ("Amended Chapter 13 Plan") was confirmed. The Amended Chapter 13 Plan expressly provided, in part, that the Debtor would surrender the Property which secured the liens of Norwest, Plaintiff and Sears.4 The Amended Chapter 13 Plan also provided that "property of the estate shall vest in the debtor at the time of confirmation of this Plan . . ."

Two months after confirmation of the Amended Chapter 13 Plan — on July 31, 1998 — Debtor executed three separate deeds of trust for the benefit of Manion ("Manion Deeds of Trust"). Mr. Vitt did not execute the Manion Deeds of Trust. Each of the Manion Deeds of Trust secured a separate promissory note in the principal amount of $100.00 and provided for a balloon payment in December 1999, with interest accruing at the rate of 36% per annum. The Manion Deeds of Trust were recorded at Reception Nos. 01830390, 0183091, and 01830392, in the Office of the Clerk and Recorder, Boulder County, State of Colorado. The Manion Deeds of Trust purported to encumber the property. The Debtor never attempted to amend her plan to reflect that the Property would not be surrendered.

The redemption period of 75-days, pursuant to Colo.Rev.Stat. § 38-38-302 was set to expire August 3, 1998. On August 3, 1998, Manion filed with the Boulder County Public Trustee three notices of intent to redeem and an affidavit of the amount owed. This filing extended the redemption period through and until August 24, 1998.

On August 19, 1998, Manion executed a warranty deed granting her purported interest in the property to John Dilday ("Dilday") for $120,000.00. The warranty deed was recorded on August 27, 1998, in the Office of the Clerk and Recorder, Boulder County, State of Colorado.

On August 20, 1998, Manion tendered redemption funds to the Boulder County Public Trustee. On August 28, 1998, the Boulder County Public Trustee issued a Public Trustee's Deed in favor of Manion.

On May 14, 1999, Debtor filed her request to convert this case to Chapter 7. On May 18, 1999, the Order for Conversion was entered.

III. ISSUES PRESENTED

Plaintiff, by its Complaint and the pending Motion for Summary Judgment, presents four interrelated issues for this Court to determine. First, Plaintiff, on its First Claim for Relief, seeks a declaratory judgment from this Court holding that the Manion Deeds of Trust are void, that the Plaintiff is the valid holder of a Certificate of Purchase on the Property and that a judgment for damages be entered against Manion.

Second, Plaintiff, by its Second Claim for Relief, seeks an Order pursuant to 11 U.S.C. § 105 enforcing the terms of the confirmed Amended Chapter 13 Plan and holding that the Manion Deeds of Trust are void for the reason that (1) the execution thereof violated the "surrender" provisions of the Amended Chapter 13 Plan and (2) the Property was not property that belonged to the Debtor. Plaintiff also seeks a determination, under 11 U.S.C. § 105, that the Plaintiff is the valid holder of a Certificate of Purchase on the Property. Furthermore, Plaintiff prays for damages against Manion.

Third, Plaintiff's Third Claim for Relief seeks entry of a judgment against Manion finding that the Manion Deeds of Trust are void as post-petition transfers pursuant to 11 U.S.C. § 549(a) and that damages should be awarded for such post-petition transfers. Thus, this Court must determine whether (1) the Property was property of the estate; (2) the transfer occurred after the commencement of the bankruptcy case; and (3) the transfer was authorized under Title 11 of the United States Code or by this Court.

Fourth, Plaintiff's Fourth Claim for Relief seeks contempt sanctions against the Debtor for her failure to abide by the provisions of the Amended Chapter 13 Plan.

IV. DISCUSSION
A. Standard for Summary Judgment

Summary judgment is to be granted if the pleadings, depositions, answers to interrogatories, admissions, or affidavits show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Bankr.P. 7056 which applies Fed. R.Civ.P. 56. A party seeking summary judgment bears the initial responsibility of informing the court of the basis for its motion and identifying those portions of the pleadings, depositions, interrogatories and admissions on file together with affidavits, if any, that it believes demonstrate the absence of genuine issues for trial. Thalos v. Dillon Companies, Inc., 86 F.Supp.2d 1079, 1082 (D.Colo.2000). The non-moving party has the burden of showing that there are issues of material fact to be determined. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The opposing party(ies) may not rest merely on the allegations contained in the answers, but must respond with specific facts showing the existence of a genuine factual issue to be tried. Thalos, 86 F.Supp.2d at 1082. This Court will review the evidence and draw reasonable inferences therefrom in the light most favorable to the nonmoving party — here Manion and the Debtor. Koch v. Koch Industries, 203 F.3d 1202, 1212 (10th Cir.2000). The material facts herein are not disputed. This dispute is essentially and decisively a question of law. The Court concludes that, for the reasons discussed below, as a matter of law, Plaintiff is entitled to summary judgment in its favor.

B. Plaintiff's First Claim for Relief (Declaratory Judgment Holding that Manion Deeds of Trust are Void)
1. The Estate's and Debtor's Rights in and to Property Following the Foreclosure Sale

It is quite significant that the foreclosure sale took place one day prior to confirmation of the Debtor's Amended Chapter 13 Plan. The lack of opposition by the Debtor to the granting of relief from the automatic stay to Norwest which enabled Norwest to proceed...

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