Titlemax of Ga., Inc. v. Hamilton (In re Hamilton)

Citation635 B.R. 877
Decision Date13 January 2022
Docket NumberNumber 21-40446-EJC
Parties IN RE: Betty J. HAMILTON, Debtor. TitleMax of Georgia, Inc., Movant, v. Betty J. Hamilton, Respondent.
CourtUnited States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Southern District of Georgia
Contested Matter
OPINION ON MOTION FOR STAY RELIEF

Edward J. Coleman, III, Chief Judge Before the Court is the Motion for Relief from Automatic Stay (the "Motion for Stay Relief) filed by TitleMax of Georgia, Inc. ("TitleMax"). (Dckt. 17). Betty J. Hamilton, the Debtor in this case, entered into a 30-day title pawn transaction with TitleMax on July 8, 2021, whereby she extended an existing title pawn balance and outstanding charges into a new contract. Four days later, and 26 days before the title pawn transaction "matured," the Debtor filed a Chapter 13 petition on July 12, 2021. She listed the vehicle as an asset of the bankruptcy estate and scheduled TitleMax as a secured creditor. In her plan she proposed to make monthly payments to TitleMax in the amount of $125.00 at 5.25% interest.

On August 25, 2021, one day before the confirmation hearing, TitleMax filed the instant Motion for Stay Relief asserting, pursuant to the Eleventh Circuit case TitleMax v . Northington (In re Northington) , 876 F.3d 1302 (11th Cir. 2017), that the vehicle would cease to be property of the bankruptcy estate if the Debtor failed to pay the debt in full by September 10, 2021, the end of the grace period for redeeming the vehicle as extended by 11 U.S.C. § 108(b). At hearings on October 7, 2021, and November 4, 2021, the Debtor argued that the vehicle remained estate property pursuant to a recent decision by a separate panel of the Eleventh Circuit, Titlemax of Ala., Inc. v. Womack (In re Womack ), No. 21-11476, 2021 WL 3856036 (11th Cir. Aug. 30, 2021) (per curiam), and that her plan could modify TitleMax's rights pursuant to 11 U.S.C. § 1322(b)(2). This case requires the Court to decide which precedent, Northington or Womack , to follow.

I. Jurisdiction

This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1334(a), 28 U.S.C. § 157(a), and the Standing Order of Reference signed by then Chief Judge Anthony A. Alaimo on July 13, 1984. This is a "core proceeding" under 28 U.S.C. § 157(b)(2)(G). The Court makes the following findings of fact and conclusions of law pursuant to Rules 9014(c) and 7052 of the Federal Rules of Bankruptcy Procedure.

II. Findings of Fact

The facts in this case are undisputed. On December 16, 2020, the Debtor entered into a 30-day1 title pawn transaction whereby she pledged her 2010 Ford Edge to TitleMax in exchange for an initial loan in the amount of $650.00. (Dckt. 32, pp. 9, 12).2 The Debtor and TitleMax subsequently entered into renewal loans (and the advance of additional funds to the Debtor) and extended the maturity date of the loans several times. (Dckt. 32, pp. 12-14). The final extension took place on July 8, 2021. (Dckt. 17, pp. 6-14; Dckt. 32, p. 14).3 As reflected by the Pawn Transaction Disclosure Statement and Security Agreement signed by the Debtor on that date, the total amount required to redeem the vehicle was $3,817.19, consisting of $350.00 given directly to the Debtor, the prior account balance of $3,089.22, and a finance charge in the amount of $377.97; the annual percentage rate of interest was 133.71 percent. (Dckt. 17, p. 6). The loan as extended had a new maturity date of August 7, 2021. (Dckt. 17, p. 6).

The Debtor filed a Chapter 13 petition on July 12, 2021. (Dckt. 1). In her schedules, the Debtor indicated that she owned the 2010 Ford Edge, which she valued at $3,700.00, securing the claim of TitleMax pursuant to the title pawn transaction.4 (Dckt. 1, pp. 10, 17). In her plan, the Debtor classified the claim of TitleMax as fully secured and proposed to make payments in the amount of $125.00 per month at an interest rate of 5.25%. (Dckt. 4, p. 2, ¶ 4(d)). The Debtor proposed to make plan payments for a minimum of 36 months. (Dckt. 4, p. 1, ¶ 2(a)).

The confirmation hearing on the Debtor's Chapter 13 plan was scheduled for August 26, 2021, and objections to confirmation were due no later than 7 days before the confirmation hearing. (Dckt. 10, p. 2-3). TitleMax did not object to confirmation.5 Instead, on August 25, 2021, the day before the confirmation hearing, TitleMax filed the instant Motion for Stay Relief. (Dckt. 17). According to TitleMax, the Debtor failed to repay the loan by the August 7, 2021 maturity date. (Dckt. 17, p. 1). TitleMax stated that Georgia law gave the Debtor a grace period until September 7, 2021, to redeem the vehicle by paying the balance in full and that § 108(b) of the Bankruptcy Code further extended the redemption period until September 10, 2021. (Dckt. 17, pp. 1-2). Relying on the Eleventh Circuit decision TitleMax v. Northington (In re Northington) , 876 F.3d 1302 (11th Cir. 2017), TitleMax asserted that the vehicle would cease to be property of the bankruptcy estate if the Debtor failed to pay the debt in full by September 10, 2021.

TitleMax did not appear at the confirmation hearing on August 26, 2021, at which the Debtor's plan was recommended for confirmation by the Chapter 13 Trustee. (11/4/2021 Tr., pp. 3-4).6 The order confirming the Debtor's plan was not immediately entered because the Debtor had not yet paid the filing fee in full. (10/7/2021 Tr., p. 22).7 With TitleMax's Motion for Stay Relief pending, and with no confirmation order having been entered, the September 10, 2021 deadline for the Debtor to redeem the vehicle by repaying TitleMax came and went with no action by the Debtor.

Nongovernmental proofs of claims were required to be filed by September 20, 2021.8 (Dckt. 10, p. 2, ¶ 8). TitleMax did not file a proof of claim in this case.9 But on September 23, 2021, the Debtor timely filed a proof of claim on TitleMax's behalf.10 (Claim No. 4-1). The proof of claim indicated that the $3,700.00 claim was secured by the 2010 Ford Edge. (Claim No. 4-1, p. 2). The Debtor did not attach any supporting documentation to the proof of claim.

The Motion for Stay Relief came on for hearing on October 7, 2021. (Dckt. 19). At that hearing, the Court heard argument from Debtor's counsel and from counsel for TitleMax; the Court also heard from counsel for the Chapter 13 Trustee. Citing the recent decision Titlemax of Ala., Inc . v . Womack (In re Womack ), No. 21-11476, 2021 WL 3856036 (11th Cir. Aug. 30, 2021) (per curiam), Debtor's counsel asserted that the vehicle remained property of the bankruptcy estate because the Debtor filed bankruptcy before the maturity date of the title pawn contract and that she could modify the rights of TitleMax as a holder of a secured claim under § 1322(b)(2).11 (10/7/2021 Tr., pp. 7-10, 16-17). For his part, counsel for TitleMax argued that Womack , an unpublished and hence nonbinding decision, is not persuasive authority in this case. In particular, counsel observed that Womack involved Alabama's pawn statute, whereas the instant case involves Georgia's statute. Counsel argued that material differences between Georgia and Alabama pawn law render Womack inapplicable. (10/7/2021 Tr. pp. 3-6). At the conclusion of the hearing, the Court continued the matter to allow the parties to supplement the record with the full history of the Debtor's title pawn transaction, but neither party initially did so. (10/7/2021 Tr., pp. 15-16, 22).

A continued hearing was scheduled for November 4, 2021. (Dckt. 27). On November 1, 2021, the Debtor filed a brief in response to the Motion for Stay Relief. (Dckt. 29). TitleMax filed a reply brief on November 3, 2021. (Dckt. 30). At the November 4, 2021 hearing, neither party presented evidence, but based on the Debtor's consent, the Court stated that TitleMax would be permitted to supplement the record by way of affidavit. (11/4/2021 Tr., pp. 6-10). The parties agreed that beginning upon confirmation of the Debtor's plan and pending resolution of the Motion for Stay Relief, the Chapter 13 Trustee would hold in reserve the funds paid into the plan pursuant to the plan treatment of TitleMax. (11/4/2021 Tr., p. 15). The Court took under advisement TitleMax's Motion for Stay Relief. (11/4/2021 Tr., pp. 10-16).

Following that hearing, TitleMax filed its Supplement in Support of Motion for Relief from Automatic Stay on November 10, 2021. (Dckt. 32). That supplement included an affidavit of TitleMax's Senior Director of Bankruptcy Operations, copies of the certificate of title to the vehicle; the initial $650.00 check made out to the Debtor by TitleMax; a Form MV-1 Motor Vehicle Title Application signed by the Debtor on December 16, 2020; a Limited Power of Attorney signed by the Debtor, and the loan history reflecting the various loan extensions and renewals. (Dckt. 32, pp. 4-14). Following the Debtor's payment of the final installment of the filing fee, the Court entered an order confirming her Chapter 13 plan on November 17, 2021. (Dckt. 33). Transcripts of the October 7, 2021 hearing and the November 4, 2021 hearing were filed on December 27, 2021. (Dckt. 35, 37). This matter is now ripe for ruling.

III. Conclusions of Law

This case presents the latest iteration of a recurring question: how do title pawn transactions under Georgia's pawn statute fit into the federal Bankruptcy Code? "Georgia's ‘pawn’ law states that any ‘pledged’i.e. pawned—item that is not ‘redeemed’ within a statutory prescribed grace period ‘shall be automatically forfeited to the pawnbroker by operation of [law], and any ownership interest of the pledgor ... shall be automatically extinguished in the pledged item." TitleMax v. Northington (In re Northington) , 876 F.3d 1302, 1305 (11th Cir. 2017) (quoting O.C.G.A. § 44-14-403(b)(3) ).

In the case of TitleMax v. Northington (In re Northington ), 876 F.3d 1302 (11th Cir. 2017), which is binding precedent, the Eleventh Circuit held that Georgia law continues to operate even when the borrower files for Chapter 13 bankruptcy before the expiration...

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1 cases
  • Jenkins v. TitleMax of Ga., Inc. (In re Jenkins)
    • United States
    • United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Middle District of Georgia
    • June 10, 2022
    ...congressional intent for unredeemed pawned property to be excluded from the bankruptcy estate." TitleMax of Georgia, Inc. v. Hamilton (In re Hamilton) , 635 B.R. 877, 896 (Bankr. S.D. Ga. 2022) ; TitleMax of Georgia, Inc. v. Snyder (In re Snyder) , 635 B.R. 901, 920 (Bankr. S.D. Ga. 2022) ;......
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