In re Willner

• Decision Date: 19 February 2020
• Docket Number: Case No. 19-13661-BFK
• Court: U.S. Bankruptcy Court — Eastern District of Virginia
• Parties: In re: MICHAEL AMICHAY WILLNER, Debtor.

In re: MICHAEL AMICHAY WILLNER, Debtor.

Case No. 19-13661-BFK

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF VIRGINIA Alexandria Division

Entered: February 20, 2020

February 19, 2020

Chapter 13

MEMORANDUM OPINION AND ORDER GRANTING TRUSTEE'S MOTION TO DISMISS

This matter is before the Court on the Chapter 13Trustee's Motion to Dismiss this bankruptcy case pursuant to Bankruptcy Code Section 109(e).DocketNo. 16.The Debtor, who is appearing pro se, filed an Opposition to the Trustee's Motion.DocketNo. 17.The Court heard the parties' arguments on January 9, 2020.Shortly after the hearing, the Debtor filed a Clarification of his position, which the Court has considered.DocketNo. 20.For the reasons stated below, the Court will grant the Trustee's Motion.

Findings of Fact

The following facts are not disputed.

A.The Debtor'sChapter 11 Case.

1.The Debtor, Michael Willner, is an individual residing in Lorton, Virginia.He and his wife, Marguerite Evans Willner, own a home at 11521 Potomac Road, Lorton, Virginia 22079.The property, situated on an 11-acre lot overlooking the Potomac River, consists of five bedrooms, six and a half baths and over 15,000 square feet of living area.¹

2.On December 13, 2012, the Debtor filed a Voluntary Petition under Chapter 11 in this Court.In re Michael Amichay Willner, No. 12-17322-BFK(Bankr. E.D. Va.Nov. 22, 2016).The Debtor was represented by counsel throughout the case.

3.The Debtor listed the Potomac Road property in his Schedules with a value of $6,100,000.00.Id., Docket No. 12, Schedule A, p. 3.He listed U.S. Bank, Trustee of a WaMu securitized mortgage trust, with a "disputed" claim secured by a Deed of Trust against the property in the amount of $3,435,287.00.Id., Schedule D, p. 9.

4. U.S. Bank filed a Proof of Claim in the amount of $3,441,397.01, as a secured claim.Id., Proof of Claim No. 7-1.At that time (February 2013), U.S. Bank asserted that arrearages on the loan were in the amount of $382,571.23.Id.

5. U.S. Bank filed a Motion for Relief from the Automatic Stay, which the Debtor opposed.Id., Docket Nos. 59, 64.

6.On October 9, 2014, the Debtor filed an Application to Employ a realtor to list and sell the property, which the Court granted.Id., Docket Nos. 68, 79.

7.The Debtor filed a Plan and Disclosure Statement in November 2014.Id., Docket Nos. 72, 73.The Plan, as originally proposed, called for the sale of the property within 18 months.Id., Docket No. 72, Article IV.If the property was not sold within 18 months, then the Debtor would have been required to engage an auctioneer to conduct an auction of the property.Id.In either event, the proceeds of the sale were to be paid to U.S. Bank as a Class B creditor.Id.

8. U.S. Bank objected to this treatment, on the ground that it did not adequately protect its interest in the property, particularly because the Debtor was not proposing to make any adequate protection payments during the 18-month marketing period, as well as on theground that the Plan sought to modify the U.S. Bank mortgage against the Debtor's principal residence in violation of Bankruptcy Code Section 1123(b)(5).Id., DocketNo. 81.

9.On April 1, 2015, the Court sustained U.S. Bank's objections and denied confirmation of the Plan.Id., Docket No. 123.

10.Further, the Court entered an Order granting U.S. Bank relief from the automatic stay, but staying the relief on the condition that the Debtor obtain a fully ratified contract for the sale of the property by September 30, 2015.Id., Docket No. 124.

11.The Debtor filed an Amended Plan and Amended Disclosure Statement on January 4, 2016.Id., Docket Nos. 156, 157.This time, the Plan deleted the previous sale and auction provisions, and simply provided that U.S. Bank "shall be entitled to exercise all non-bankruptcy rights and remedies, which it may have as to the collateral securing the claim, and its claim shall be paid in full therefrom to the extent allowed."Id., Docket No. 156, Article III, p. 6.

12.The Court entered an Order on March 21, 2016, confirming that U.S. Bank was entitled to relief from the automatic stay because the Debtor had not obtained a ratified contract by the September 30, 2015, deadline.Id., Docket No. 176.This Order was amended on April 22, 2016, at the Debtor's request to provide that nothing in the Order "shall constitute or be deemed or held out to be a determination in any respect as to the validity, ownership, or amount due on any note or deed of trust or right to foreclose or take any other action with respect to the property."Id., Docket No. 189, p. 2.

13.The Court confirmed the Debtor's Amended Plan on May 6, 2016.Id., Docket No. 195.

14.The Debtor received a discharge on November 17, 2016, and the case was closed.Id., Docket Nos. 211, 212, 217.²

15.The Debtor never objected to U.S. Bank's Proof of Claim in this case.

B.The Eastern District of Virginia Lawsuit.

16.On December 12, 2014, while the Debtor's Chapter 11 bankruptcy case was pending, the Debtor and his wife (both acting pro se) filed a Complaint against JPMorgan Chase Bank, U.S. Bank, and others, in the Eastern District of Virginia.Willner v. Dimon, No. 1:14-cv-01708-AJT-MSN.

17.On May 11, 2015, District Judge Trenga granted the Defendants' Motions to Dismiss the Complaint.Id., Docket No. 53.In his Order, Judge Trenga explained that the loan originated with Washington Mutual Bank ("WaMu"), which later was taken over by the FDIC.JPMorgan Chase purchased the assets of WaMu, including the loan against the Debtor's property.The Debtor and his wife sought relief under the HAMP program, but they were advised that they did not qualify for such relief.The loan later was sold to U.S. Bank as Trustee for a securitized trust.

18.Judge Trenga noted that certain of the Plaintiffs' claims arose out of conduct alleged against WaMu.Other claims were asserted directly against JPMorgan Chase and U.S. Bank for their alleged conduct (the "direct" claims).

19.Judge Trenga held that: (a)the Plaintiffs' claims arising from WaMu's conduct were barred by the Financial Institutions Reform, Recovery and Enforcement Act of 1989's (FIRREA's) administrative exhaustion requirements; and (b)the Plaintiffs' direct claims againstJPMorgan Chase and U.S. Bank failed to state claims under Rules 12(b)(6)and9(b)(imposing a more exacting pleading standard for fraud claims) of the Federal Rules of Civil Procedure.

20.The Willners appealed to the Fourth Circuit.On February 16, 2017, the Fourth Circuit affirmed Judge Trenga's decision in a published Opinion.Willner v. Dimon, 849 F.3d 93(4th Cir.2017).The Fourth Circuit noted that the "bar date" to file claims with the FDIC was December 30, 2008, and the Willners did not file their claims until after the District Court issued its decision in 2015.Id. at 102 n.2.The Court held that FIRREA's exhaustion requirements were "by design, severe."Id. at 112.

21.Of relevance here, the Fourth Circuit also held:

We also reject Mr. Willner's related argument that U.S. Bank's filing a proof of claim in bankruptcy court created subject matter jurisdiction over his claims in the district court.Here, Mr. Willner appears to invoke an exception to FIRREA's exhaustion requirement that exists within the bankruptcy system for a debtor who has a proof of claim filed against him by a creditor and then is allowed to bring a claim against the creditor in bankruptcy court outside of FIRREA's administrative process.See, e.g., In re Best Prod. Co., Inc., No. 93 CIV. 1115 (CSH), 1994 WL 141970, at *3(S.D.N.Y.Apr. 20, 1994)("[I]f [the FDIC] had not submitted a claim against the bankruptcy estate ... it also would not have waived its right to demand that [debtor] pursue administrative remedies within FIRREA prior to bringing its claim against [the FDIC] in the bankruptcy court.").That exception is inapplicable though, because Mr. Willner is not in bankruptcy court.

Id. at 111.³

22.Finally, the Fourth Circuit affirmed the dismissal of the Willners' direct claims against JPMorgan Chase and U.S. Bank, holding that the Complaint failed to state any legally cognizable direct claims against these entities.Id. at 114.

C.The District of Columbia Lawsuit.

23.On October 29, 2015(about five months after Judge Trenga's decision, but while that decision was on appeal to the Fourth Circuit), the Debtor and his wife, again acting pro se, filed a Complaint against JPMorgan Chase, U.S. Bank, the FDIC and others in the U.S. District Court for the District of Columbia.Willner v. Dimon, No. 1:15-cv-01840.

24.On January 4, 2018, District Judge Cooper granted the Defendants' Motion to Dismiss.Id., Docket No. 34.

25.In his Opinion, Judge Cooper held that all of the Willners' claims were barred by res judicata as a result of the Fourth Circuit's decision affirming Judge Trenga's Order dismissing their claims.Id.

26.The Willners appealed.On March 1, 2019, the U.S. Court of Appeals for the D.C. Circuit affirmed, holding that the Fourth Circuit's decision was res judicata of the Willners' claims.USCACase No. 18-5107.Further, the Court held that the Willners' newly-stated constitutional claims against the FDIC were time-barred.Id. at 6.

27.The Willners filed a Petition for Certiorari with the U.S. Supreme Court.The Supreme Court denied the Petition on October 17, 2019.

D.The Debtor Files for Relief Under Chapter 13.

28.On November 5, 2019(less than a month after the Supreme Court denied the Petition for Certiorari), the Debtor filed a Voluntary Petition under Chapter 13 with this Court.Case No. 19-13661-BFK.

29.In his Schedules the Debtor listed the Lorton property with a value of $4,970,000.00.Docket No. 14, Schedule A/B, p. 3.He listed U.S. Bank with a "disputed" claim in the amount of $4,325,000.00.Id., Schedule D, p. 15.He did not list any affirmative claimsagainst U.S. Bank or any other party(other than a claim against AlphaGrip in the amount of...