Infirst Bank v. Jager (In re Jager)

CourtUnited States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Western District of Pennsylvania
Citation597 B.R. 796
Docket NumberBankruptcy No. 18-70541-JAD
Parties IN RE: Robert W. JAGER, Margaret M. Jager, Debtors. InFirst Bank, Movant, v. Robert W. Jager, Margaret M. Jager, and Norma Hildenbrand, Respondents.
Decision Date13 February 2019

Gary William Short, Pittsburgh, PA, for Debtors

MEMORANDUM OPINION
The Honorable Jeffery A. Deller, United States Bankruptcy Judge

The matter before the Court is the Motion to Amend Findings of Fact, Amend Judgment, for Relief from Judgment and/or for New Trial (ECF No. 89) (the "Motion to Amend") filed by the Debtors, Robert W. Jager and Margaret M. Jager (the "Debtors").1 By their Motion to Amend,2 the Debtors seek relief from this Court's Order dated November 20, 2018 (ECF No. 79) granting InFirst Bank f/k/a Indiana First Bank ("InFirst Bank") relief from the automatic stay as to certain real property owned by the Debtors in Clearfield County, Pennsylvania.

For the reasons set forth below, the Court finds that the Debtors have failed to show that they are entitled to relief under Rules 59 and 60 of the Federal Rules of Civil Procedure (as incorporated into bankruptcy matters by operation of Rules 9023 and 9024 of the Federal Rules of Bankruptcy Procedure ). Accordingly, the Motion to Amend is denied.

I.Factual & Procedural History

On January 31, 2012, Debtor Margaret M. Jager f/k/a Margaret M. Verhagen executed a commercial promissory note whereby InFirst Bank agreed to lend to Ms. Jager the sum of $ 300,000 for the purchase of real property. See InFirst Bank Loan Documents Trial Exhibits ("InFirst Bank Ex."), ECF No. 73-14, Ex. O, pp. 7-9. To secure the loan, Mrs. Jager granted to InFirst Bank a mortgage on certain real property and improvements described more fully below (collectively, the "Collateral"). See Mortgage, InFirst Bank Ex. O, ECF No. 73-14, pp. 10-19 (the "Mortgage").

The Collateral is an approximately 55-acre tract of land comprised of two separate tax parcels (Clearfield County Tax Map Parcel Nos. 106-M07-000-00074 and 106-M07-000-00060). See Mortgage at 18-19. The Collateral is improved by several buildings, including a two-story farm house (the "Farm House"), a two-bedroom ranch-style house (the "Small House" or "Rental House"), and a barn. The barn also contains an apartment (the "Apartment").

It is uncontested that the Collateral is the subject of an action brought by the Commonwealth of Pennsylvania, Department of Environmental Protection (the "PA DEP") against the Debtors. Pursuant to the PA DEP action, the Debtors are under court order to remediate certain environmental issues. See e.g., InFirst Bank Ex. Z-EE, ECF No. 73.

Specifically, the PA DEP issued a Field Order on September 1, 2015, which required that action be taken with respect to approximately 400 tons of manure located on the Collateral. See InFirst Bank Ex. Z, pp. 16-18. Since then, additional orders dated July 27, 2016 and February 1, 2017 were entered by the Commonwealth Court of Pennsylvania directing that remediation occur, with the February 1, 2017 order finding that the Debtors were in contempt of their court-ordered responsibilities. See InFirst Bank Ex. AA & BB.

On June 26, 2015, and after Mrs. Jager fell behind on payments on her loan, InFirst Bank confessed judgment against Mrs. Jager. See InFirst Bank Ex. N, ECF No. 73-14. Subsequently, on November 3, 2016, Mrs. Jager married Mr. Jager and on November 18, 2016 Mrs. Jager transferred the Collateral to herself and Mr. Jager as tenants by the entireties. InFirst Bank has suggested that these events were designed to frustrate InFirst Bank's collection efforts.

InFirst Bank sought to execute on its judgment by scheduling a sheriff's sale of the Collateral which was enjoined by Mrs. Jager's filing of a chapter 7 bankruptcy case in the United States Bankruptcy Court for the Eastern District of New York. This bankruptcy case was docketed at case no. 8-17-72035 (the "New York Bankruptcy Case"). In those proceedings, Mrs. Jager twice unsuccessfully sought to enter the New York Bankruptcy Court's loss mitigation program relative to the InFirst Bank loan.

InFirst Bank sought, and on May 25, 2018 was granted, relief from the automatic stay as to the Collateral by the New York Bankruptcy Court. A sheriff's sale was scheduled for August 2, 2018.

On July 30, 2018, the Debtors commenced the above-captioned bankruptcy proceeding by filing a small business case under chapter 11 of the Bankruptcy Code. When this case was commenced, Mrs. Jager's New York Bankruptcy Case remained open (although she had received a discharge) and it was uncontested that the PA DEP environmental issues remained un-remedied. Also, as of case filing, InFirst Bank had not received payment on the loan since June 2016 (i.e., for over 2 years).

The Motion for Relief from Stay

On August 1, 2018, InFirst Bank filed its Motion for Relief from the Automatic Stay (the "Motion for Relief")(ECF No. 13), whereby InFirst Bank sought relief from the automatic stay as to the Collateral pursuant to 11 U.S.C. § 362(d)(1) and/or (2).

The Debtors contested the Motion for Relief. In litigating the Motion for Relief, the Debtors did not dispute that they owe a debt to InFirst Bank, that they have no equity in the Collateral, and that real estate taxes were delinquent and accruing. The crux of the Debtors' defense to the Motion for Relief was that the Collateral was allegedly essential to the Debtors' successful reorganization.

At the evidentiary hearing on the Motion for Relief held November 14, 2018 (the "November 14th hearing"), the Debtors presented two alternative plans for reorganization. Under the first alternative ("Plan 1"), the Debtors would retain all of the Collateral and under the second ("Plan 2") the Debtors would only retain a portion of the Collateral—the Farm House and a few surrounding acres. See Debtors' Trial Exhibit List ("Debtors' Ex."), ECF No. 70, Ex. 2, pp. 10-18. Testimony at the evidentiary hearing was given by each of the Debtors, and Mr. Elliot Heggenstaller, a Water Quality Specialist at the PA DEP.

A subsequent hearing was held on November 20, 2018 (the "November 20th hearing"), at which time the Court gave its findings on the record and found in favor of InFirst Bank.3 A separate Order granting relief from stay to InFirst Bank was entered on the docket that same day.

In short, the Court found that neither Plan 1 nor Plan 2 were in prospect and were speculative at best.4 See November 20th Hr'g Tr. 17:19-17:22. As to Plan 1, the Court found significant issues with the proposed funding of the plan as the Debtors' averred income was overstated and failed to account for the loss of horse stall rental income. The Court was also not convinced because the Debtors could not show that the proposed rental of the Apartment was anything more than speculative, and rental income from the Small House was unreliable. As to Plan 2, the Court found that the Debtors failed to demonstrate that they have the necessary funding or have taken any steps towards gaining the necessary approvals to subdivide the Collateral—which is essential to the plan. Finally, the Court found that both plans were impeded by the Debtors' failure to remediate the PA DEP issues for which the Debtors offered no credible plan of resolving in a reasonable amount of time.

The Motion to Amend

On December 4, 2018, the Debtors filed their Motion to Amend. Along with the Motion to Amend, the Debtors also filed contemporaneously therewith several exhibits docketed as a "Supplement/Addendum" to the Motion to Amend ("Supplement") (ECF No. 90).

The Motion to Amend alleges that in granting relief from the automatic stay to InFirst Bank, the Court: (i) failed to appreciate the feasibility of the Debtors' plan to comply with the PA DEP orders by relocating the manure to the barn;5 (ii) improperly found that the two alternative plans presented at the November 14th hearing were not "in prospect" and that they would allegedly be "financially (and environmentally) feasible in a reasonable period of time[;]" (iii) presents a new proposed plan, styled as "Plan 3", which the Debtors allege would be feasible; and (iv) avers that the Court erred in granting relief from stay as the timing of the motion prevented the Debtors from obtaining a "breathing spell" in which to formulate a plan of reorganization.

In conjunction with the filing of the Motion to Amend, on December 4, 2018, the Debtors also filed amendments to their Summary of Schedules6 as well as their bankruptcy schedules A/B (property), D (secured creditors), F (unsecured, nonpriority creditors), I (income), & J (expenses). See ECF Nos. 85 & 87.

InFirst Bank filed its response to the Motion to Amend on December 31, 2018 (ECF No. 97), and a hearing was held on January 11, 2019 (the "January 11th hearing"). At the conclusion of the January 11th hearing, the Court took the matter under advisement.

II.Analysis

As an initial note, in filing their Motion to Amend the Debtors do not cite to any specific rule or legal authority which forms the basis of the relief they request. However, at the January 11th hearing, the Debtors stated on the record that the Motion to Amend was brought pursuant to Fed.R.Civ.P. 59 and 60.

Although the legal source of their request for relief is now clarified (to some extent), the Court is no less frustrated by the lack of citation in the Motion to Amend itself. Motions filed without citation to the specific legal authorities which would support the granting of the relief requested are particularly troublesome. In filing a motion without support, movants attempt (whether intentionally or not) to shift the burden of identifying relevant legal authority and applying such authority to the facts of the case to either this Court or the respondent. This is troublesome because it is not the responsibility of the Court to make the case for the parties before it. See Chaney v. Grigg (In re Grigg), 568 B.R. 498, 521 (Bankr. W.D. Pa. 2017)as corrected (...

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6 cases
  • Jager v. InFirst Bank (In re Jager)
    • United States
    • United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Western District of Pennsylvania
    • November 25, 2019
    ...Order, are not overly complicated and are set forth in this Court's prior Memorandum Opinion found at InFirst Bank v. Jager (In re Jager), 597 B.R. 796 (Bankr. W.D. Pa. 2019), as well as the memorandum orders entered by this Court at ECF Nos. 144, 166, and 187. The findings and conclusions ......
  • Bernadin v. U.S. Bank Nat'l Ass'n (In re Bernadin)
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    • December 20, 2019
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    ...reconsideration filed within 14 days of the entry of judgment may be analyzed under either Rule 59(e) or Rule 60(b). In re Jager, 597 B.R. 796, 806 (Bankr. W.D. Pa. 2019) citing Rankin v. Heckler, 761 F.2d 936, 942 (3d Cir. 1985). The Motion was filed within 14 days of the entry of judgment......
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