Milledge v. Carolina Acceptance (In re Milledge)

Decision Date07 April 2022
Docket NumberC/A No. 21-02968-JW,Adv. Pro. No. 22-80001-JW
Citation639 B.R. 334
Parties IN RE: Jaquana Tanecia MILLEDGE, Debtor. Jaquana Tanecia Milledge, Plaintiff, v. Carolina Acceptance, Defendant.
CourtU.S. Bankruptcy Court — District of South Carolina

Jason T. Moss, Moss & Associates, Attorneys, P.A., Columbia, SC, for Debtor Jaquana Tanecia Milledge, Plaintiff Jaquana Tanecia Milledge.

Jane H. Downey, Moore Bradley Myers Law Firm, P.A., West Columbia, SC, for Defendant.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS AND ORDER TO MAKE MORE DEFINITE STATEMENT

John E. Waites, US Bankruptcy Judge

This matter comes before the Court upon a Motion to Dismiss ("Motion") filed by the Defendant Carolina Acceptance ("Creditor") in response to a Second Amended Complaint ("Complaint") filed by Plaintiff Jaquana Tanecia Milledge ("Debtor"). Creditor filed its Motion pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim, which applies to this adversary proceeding under Rule 7012(b) of the Federal Rules of Bankruptcy Procedure. This Court has jurisdiction over this proceeding pursuant to 28 U.S.C. §§ 1334 and 157.

INTRODUCTION

According to the allegations of the pleadings, the circumstances discussed in this matter are unusual. Debtor purchased a 2016 Dodge Charger SXT ("Vehicle") from Creditor and defaulted on a $500 portion of the initial down payment prepetition. Debtor then filed a bankruptcy case while possessing and using the Vehicle, which became property of Debtor's bankruptcy estate. Debtor also proposed a plan to pay Creditor's claim in full pursuant to provisions of the Bankruptcy Code. Creditor objected to Debtor's initial reorganization plan and requested the confirmation be denied. In this case, the automatic stay did not go into effect on the petition date pursuant to 11 U.S.C. § 362(c)(4). During this same period Creditor repossessed the Vehicle post-petition without advising Debtor's counsel based on Debtor's prepetition payment default for the remainder of the down payment. Ultimately, despite attempts by Debtor to make payments to Creditor as advised by her counsel, Creditor sold the Vehicle post-petition at a private sale on January 4, 2022, which was 49 days after Debtor filed her bankruptcy petition and a day after Debtor filed an adversary proceeding complaint seeking turnover of the Vehicle as property of the estate.

Debtor's Complaint seeks turnover under 11 U.S.C. § 542 of the fair market value of the Vehicle, a remedy under 11 U.S.C. § 105 for Creditor's breach of agreement reached regarding bankruptcy plan treatment and relief associated with 11 U.S.C. § 108(b), which provides certain extensions of time to Debtor to cure default, redeem or perform under nonbankruptcy law or agreements. As relief, Debtor seeks a finding of contempt, the fair market value of the Vehicle, attorney's fees, actual damages, and punitive damages

The pleadings highlight the complications arising when a creditor through counsel addresses Debtor's Chapter 13 plan while simultaneously directly pursuing nonbankruptcy collection action against a debtor, which are not subject to the automatic stay under the circumstances of this particular case.

PLEADINGS

A review of the Complaint and Motion to Dismiss indicate that the parties do not dispute the basic facts, sequence of events or relevant documents that are central to this proceeding. In fact, the relevant documents, being mutually identified and authenticated in the pleadings, were also previously admitted into the record of this proceeding in connection with an early turnover motion.

The essence of the Complaint seeks turnover of the fair market value of the Vehicle owned by Debtor on the date of the bankruptcy petition, which Debtor alleges was improperly sold after a post-petition repossession and sale during the bankruptcy case.

The Complaint's allegations assert that the Vehicle was property of the bankruptcy estate and that Creditor's claim was being paid in full with interest pursuant to a Chapter 13 plan filed with the bankruptcy petition. Furthermore, Debtor alleges that due to the filing of the bankruptcy case, she had a finite period to cure or redeem the Vehicle and that an agreement was entered by the parties through counsel to return the Vehicle after repossession upon Debtor making certain payments to avoid its sale. The Complaint asserts three causes of action, which incorporate and reallege all prior allegations and request relief in a finding of contempt, turnover of fair market value, an award of actual damages, reasonable attorney's fees and costs and punitive damages as well as "such other and further relief as is just and proper." The Complaint bases relief on the following specific Bankruptcy Code sections: 541(a), 542, 1306, 1322(b)(3), 108(b), and 105. Creditor challenges the sufficiency of the allegations in the Complaint for a failure to state a claim pursuant to Rule 12(b)(6) and asserts that no automatic stay went into effect as provided by 11 U.S.C. § 362(c)(4)(a), which therefore allowed its actions.1

STANDARD FOR DECISION

Federal Rule of Civil Procedure 8(a)(2), which applies here under Rule 7008 of the Federal Rules of Bankruptcy Procedure, requires only a short and plain statement of the claim showing that the plaintiff is entitled to relief and a demand for relief, to give the defendant fair notice of what the claim is and the grounds upon which it rests. McCleary-Evans v. Maryland Dep't of Transp. , 780 F.3d 582, 585 (4th Cir. 2015) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ), see also In re Barnhardt , C/A No. 16-06561-JW, Adv. Pro. No. 17-80038-JW, 2018 WL 1226070, at *7 (Bankr. D.S.C. Jan. 10, 2018) (citing Charles Alan Wright and Arthur R. Miller, et al. , 5 FED. PRAC. & PROC. CIV. § 1215 (3d ed.) ). "A complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). "A complaint meets the plausibility standard when it articulates facts, when accepted as true, that show that the plaintiff has stated a claim entitling him to relief, i.e., the plausibility of entitlement to relief." Francis v. Giacomelli , 588 F.3d 186, 193 (4th Cir. 2009) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 )). "In reviewing claims for failure to state a claim, a court must construe the allegations in light of the light most favorable to the plaintiff." In re Jones , 618 B.R. 757, 762-63 (Bankr. D.S.C. 2020) (citing Haynsworth Sinkler Boyd, P.A. v. Holmes (In re Holmes) , 610 B.R. 541, 546 (Bankr. D.S.C. 2020) ).

When resolving a Rule 12(b)(6) motion, a court may consider documents beyond the complaint without converting the motion to dismiss to one for summary judgment under narrow circumstances. Goldfarb v. Mayor and City Council of Baltimore , 791 F.3d 500, 508 (4th Cir. 2015). In particular, a court may consider documents that are explicitly incorporated into the complaint by reference and those attached to the complaint as exhibits. Goines v. Valley Community Services Bd. , 822 F.3d 159, 166 (4th Cir. 2016) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd. , 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) ). Documents submitted by the party seeking dismissal that were not attached to or expressly incorporated in a complaint, may also be considered so long as the document was integral to the complaint and there is no dispute about the document's authenticity. Id. (citing Sec'y of State for Defence v. Trimble Nav. Ltd. , 484 F.3d 700, 705 (4th Cir. 2007). To be integral, a document must be one that by its very existence and the mere information it contains, give rise to the legal rights asserted. Chesapeake Bay Found., Inc. v. Severstal Sparrows Point, LLC , 794 F. Supp 2d 602, 611 (D. Md. 2011) ). Courts may also properly take judicial notice of matters of public record. See Hall v. Virginia , 385 F.3d 421, 424 (4th Cir. 2004).

In this case, the Complaint and Motion specifically identify as authentic and do not dispute the documents that control the parties’ relationship. Further, during the hearing on Debtor's Motion for Immediate Turnover, Debtor's counsel and Creditor's counsel stipulated to the entry of the same six documents into the Court record as evidence: (1) Motor Vehicle Retail Installment Contract with additional down payment terms; (2) Notice of Right to Cure with mailing slip; (3) Notice of Disposition of Collateral with mailing slip; and (4) Sale Records from Rawls Auto Auction. These materials have been extensively referenced in the Complaint and the Motion to Dismiss and serve as integral parts of the pleadings. Because the parties stipulated to the entry of these materials into the Court's records, neither Debtor not Creditor challenges the authenticity of these documents. Therefore, consideration of these documents in the context of the allegations in the Complaint is appropriate.

SUMMARY OF ALLEGATIONS

On October 21, 2021, Debtor purchased a Vehicle with financing provided by Creditor through a retail installment sales contract. The contract required Debtor to make a down payment of $5,050.00 to fund her purchase and secure financing from Creditor in the principal amount of $20,139.00 with simple interest accruing at the rate of 19.88% per annum. Debtor remitted $4,550.00 of the down payment in cash, and Debtor and Creditor agreed that Debtor would pay the remaining $500 of the down payment by November 4, 2021. The installment sales contract thereafter required 51 monthly payments of $592.87 per month beginning on December 5, 2021, for repayment of principal balance with interest.2 In the event of Debtor's default under any terms of the retail installment sales contract, the contract limited Creditor's ability to repossess the Vehicle by stating that...

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    ...exempt under 11 U.S.C. § 522, and (4) that such property is not of inconsequential value or benefit to the estate. In re Milledge, 639 B.R. 334, 343-44 (Bankr. D.S.C. 2022). The Court finds that these elements for turnover are satisfied because Debtor has a pending bankruptcy case, there is......
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    ...(Bankr. D.N.H. March 15, 2010) (quoting 5 Collier on Bankruptcy ¶ 542.02[2] (15th ed. 2009)).17 See Milledge v. Carolina Acceptance (In re Milledge) , 639 B.R. 334, 345 (Bankr. D.S.C. 2022) ("Transportation to and from employment and for household tasks, such [as] transporting children to s......

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