Jenkins v. TitleMax of Ga., Inc. (In re Jenkins)
| Decision Date | 10 June 2022 |
| Docket Number | Case No. 20-10350-AEC |
| Citation | 641 B.R. 282 |
| Parties | IN RE: Brenda Weston JENKINS, Debtor. Brenda Weston Jenkins, Debtor/Movant, v. TitleMax of Georgia, Inc., Respondent. |
| Court | U.S. Bankruptcy Court — Middle District of Georgia |
Jonathan W. DeLoach, Office of The Chapter 13 Trustee, Columbus, GA, Trustee, Pro Se.
Kenneth W. Revell, Zalkin Revell, PLLC, Albany, GA, for Debtor.
Contested Matter
Austin E. Carter, United States Bankruptcy Judge Before the Court is the Debtor's Motion for Turnover (Doc. 63), the Respondent's Response in Opposition (Doc. 66), and related Declarations and Affidavits submitted by the parties (Docs. 67, 68, 86, and 88). In her Motion, the Debtor requests turnover of a motor vehicle that was repossessed by the Respondent.2
This matter came on for an initial telephonic hearing on March 8, 2022.3 This hearing was continued to April 7, 2022, where counsel for the parties appeared in-person. At the conclusion of that hearing, the parties were given an opportunity to file briefs. Both parties submitted briefs (the last of which was filed on April 29, 2022), which have been considered by the Court (Docs. 93, 94, and 95).
On April 3, 2018, the Debtor entered into a title pawn transaction under Georgia law with Respondent, whereby the Debtor pledged her 2014 Dodge Avenger (the "Vehicle") as collateral in exchange for a loan. (See Doc. 86 at 3–8). By executing this pawn transaction, the Debtor granted Respondent a security interest in the Vehicle (Id. at 3). As pledgor, she is not personally liable under the agreement (Id .). The agreement notes in bold text that "[f]ailure to make your payments ... can result in the loss of" the Vehicle and that Respondent "can sell or keep" the Vehicle if all payments are not made by the specified maturity date (Id .). The agreement further provided that Respondent "may waive or delay enforcing [its] rights without losing them." (Id . at 5).
The length of the pawn transaction was for thirty days. At the end of the term, on May 3, 2018 (identified in the agreement as the "Maturity Date"), the Debtor was required to pay the full amount owed (Id . at 3–4). In the event the principal was not paid in full, the pawn transaction could be renewed for additional thirty-day incremental periods provided that both parties agreed and the Debtor had paid "the fees, sums, interest, charges, and other amounts" owed Respondent (Id . at 4). Upon renewal, a new Maturity Date would be set at the end of the thirty-day period (Id .). If a default in payments occurred, a thirty-day redemption grace period would begin to run from the Maturity Date then in effect (Id .). In the event the Debtor failed to redeem the Vehicle during this grace period, the Vehicle "shall be automatically forfeited to [Respondent] by operation of O.C.G.A. § 44-14-403, and any of [the Debtor's] ownership interest in the [Vehicle] shall be automatically extinguished" and "the [Vehicle] become[s] the property of [Respondent]" (Id .).
Based on the loan history provided by Respondent, the Debtor renewed the pawn transaction and extended the Maturity Date eight times (Id . at 10–12). The Debtor took no action to redeem the Vehicle, and her right of redemption terminated on January 28, 2019 (Id . at 2). Upon expiration of the redemption period, Respondent took no action to repossess the Vehicle until much later, and it remained in the Debtor's possession.
The Debtor filed her petition to commence this case on March 26, 2020 (Doc. 1). In Schedule A/B, the Debtor valued the Vehicle at $100, noting that it was "non-operable, listed as scrap value." (Id . at 11). As of the petition date, the Debtor testified that the Vehicle "was derelict ... with a ‘blown’ engine and had front end damage." (Doc. 88 at ¶ 3). In her Supplemental Declaration, the Debtor states that she "contacted TitleMax in order ... to get the vehicle out of my yard if TitleMax wanted the [Vehicle]." (Id . at ¶ 5).5
In her plan, the Debtor proposed to surrender the Vehicle to the Respondent, again noting that it was "non-operable." (Doc. 2 at ¶ 3.6). The Debtor's plan further provided that, upon confirmation, the automatic stay of § 362(a)6 would be terminated as to the Vehicle. (Id .). The plan was confirmed on August 10, 2020 (Doc. 17). After the plan was confirmed, Respondent again failed to repossess the Vehicle.
In January 2021, the Debtor "paid over $2,000.00 to repair the [Vehicle], by having the engine replaced and the front end repaired." (Doc. 67 at ¶ 4). These repairs made the Vehicle "drivable" and, as asserted by the Debtor, increased its value to $7,000.00. (Doc. 88 at ¶ 9). After the repairs were completed, the Debtor brought the car's registration current and maintained insurance on the Vehicle. (Doc. 67 at ¶ 5, 7). When the Debtor renewed the registration in January 2022, "the car was still titled in [the Debtor's] name." (Id . at ¶ 8)
Due to a miscommunication with the Chapter 13 trustee's office, the case was dismissed by Order entered November 2, 2021 for failure to make plan payments (Docs. 40, 42). On the same date, the Debtor filed a Motion to Modify Plan After Confirmation to address the payment arrearage (Doc. 41). The Debtor served this motion and proposed modified plan on Respondent (Doc. 43). In this proposed modified plan, the Debtor re-asserted her intent to surrender the Vehicle to Respondent (Id . at 6–7). The Debtor's proposed modified plan also reiterated the provision of the confirmed plan then in effect that, upon confirmation, the automatic stay of § 362(a) would be terminated as to the Vehicle (Id . at 6–7). Despite the Debtor's Declaration testimony that the repairs completed in January 2021 rendered the Vehicle drivable, the Debtor describes the Vehicle in this proposed modified plan (that she signed on November 2, 2021) as "non-operable." (Id . at 7, 9).
This motion and modified plan were subsequently withdrawn on December 8, 2021 (Doc. 47) and replaced by a second Motion to Modify Plan After Confirmation (Doc. 48), which the Debtor served on Respondent (Doc. 49). In her second motion and accompanying proposed modified plan (which the Debtor signed on December 8, 2021), the treatment of the Vehicle and Respondent (i.e., surrender and stay relief) is unchanged, and the Debtor again describes the Vehicle as "non-operable." (Id . at 6–7, 9).
The Court vacated the dismissal and reinstated the case on December 10, 2021 (Doc. 51). On December 29, 2021, the Respondent repossessed the Vehicle (Doc. 63 at 4). At the time of the repossession, the Debtor had been using the now-operable Vehicle for her own benefit for approximately eleven months.7 On the next day, the Debtor withdrew her second Motion to Modify and proposed modified plan (Doc. 55), and filed a third Motion to Modify the Plan After Confirmation (Doc. 56). In her third motion and proposed modified plan, the Debtor sought retain the Vehicle and to pay Respondent $3,683.00 at 0% interest in monthly payments (Id. at 7).8 Respondent was served with this third motion and proposed modified plan (Doc. 58)9 but failed to object, and the motion was granted on January 25, 2022, confirming the proposed modified plan (Doc. 60). Respondent remained in possession of the Vehicle at that time.
Respondent's loan history reflects a balance owed of $4,170.07 as of December 29, 2021 (Doc. 86 at 12). The last payment the Respondent received from the Debtor was on December 17, 2018 (Id . at 11). From that date until not earlier than the filing of the third proposed modified plan filed on December 30, 2021, the Debtor made no payment to Respondent nor provided for or suggested in a plan or otherwise that any payment be made to Respondent.10
Pursuant to § 542(a), an entity "in possession, custody, or control, during the case, of property that the trustee may use, sell, or lease ... shall deliver to the trustee,11 and account for such property or value of such property, unless such property is of inconsequential value or benefit to the estate." 11 U.S.C. § 542(a). To enforce turnover under § 542(a), the Debtor has the burden to "establish the following elements: (1) the property sought to be turned over is property of the estate [under §§ 541 and 1306]; (2) the party against whom turnover is sought is an ‘entity;’ (3) the entity was in possession, custody, or control of the property during the case; and (4) the [Debtor] may use or sell the property." Smith v. Meredith (In re Smith) , 637 B.R. 758, 777 (Bankr. S.D. Ga. 2022) (quoting Morris v. King (In re Rosales) , 621 B.R. 903, 916–17 (Bankr. D. Kan. 2020) ) (internal quotation marks omitted). Respondent contests only the first element; it controls the outcome in this matter.
The Debtor's initial argument is that the confirmation of the plan is res judicata on the issue of whether the Vehicle is property of the estate. She cites the Eleventh Circuit case of Northington in support of her argument. TitleMax v. Northington (In re Northington) , 876 F.3d 1302 (11th Cir. 2017).
In Northington , the Circuit, in reversing the denial of a motion for stay relief, addressed the res judicata effect of a confirmed chapter 13 plan that provided for redemption of a pawned vehicle for which the redemption period expired after the bankruptcy case was filed. The Circuit's ruling makes clear that a pawn creditor who fails to object to confirmation of a such plan can lose its rights to title of a pawned vehicle, notwithstanding the expiration of the redemption period. A key fact in Northington is that the redemption period expired after the bankruptcy case was filed, so that the bankruptcy estate included the debtor's redemption rights. Id. at 1309-10.
In our case, however, the redemption period expired long before the Debtor filed her...
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Grand Theft Auto 2.0: Bankruptcy Courts Allow Auto Title Lenders to Ride Off in Consumer Debtors' Vehicles and Rip Off the Cash Payout Owed to Unsecured Creditors.
...forfeited ownership of her car by failing to pay the amount owed to redeem her car); Jenkins v. TitleMax of Ga. Inc. (In re Jenkins), 641 B.R. 282 (Bankr. M.D. Ga. 2022) (failing to discuss or cite to any provision of the UCC and holding that debtor forfeited ownership of her car seized by ......