Tag: res judicata

Bankr. E.D.N.C.: Burgess v. Citimortgage, Inc. – Rooker-Feldman Doctrine & Collateral Estoppel Effect of Foreclosure

Summary:

Mr. Burgess, who had previously been the president of the mortgage lender that originated the loan at question in this case, sought to avoid the mortgage, challenging the chain of assignments, on the basis that an unauthorized party endorsed the note, that eventually lead to Citimortgage foreclosing on his residence and asserting claims in his Chapter 11 case.

In ruling on the Motion to Dismiss filed by Citimortgage, the bankruptcy court first addressed questions of whether the Rooker-Feldman doctrine deprived it of jurisdiction, particularly in light of recent opinions by the North Carolina Supreme Court in In re Lucks, — N.C.… Read More

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Bankr. M.D.N.C.: Daniel v. Jones Family Holdings – § 548 Avoidance of Foreclosure for Less than Reasonably Equivalent Value

Summary:

Mr. Daniel, together with the Chapter 13 Trustee subsequently added as a necessary Plaintiff, sought to avoid a pre-petition foreclosure by his homeowner’s association of his residence (in which the upset period had elapsed prior to filing of the bankruptcy) pursuant to 11 U.S.C. § 548(a)(1), as it had occurred within two years prior to the filing of the bankruptcy, had made the Debtor insolvent and provided less than “reasonably equivalent value” in exchange for the transfer. Jones Family Holdings (“JFH”), the highest bidder and purchaser of the property, moved to dismiss for failing to adequately state a claim, as it is a good faith, third party purchaser protected by state law, and that the Rooker-Feldman doctrine, res judicata, and collateral estoppel prevent the Daniel from bringing a claim.… Read More

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Bankr. E.D.N.C.: In re Phillips- Conversion from Chapter 13 to Chapter 7 does not Preclude Second Avoidance of Judgment Lien

Summary:

The Phillips filed a Chapter 13 bankruptcy and successfully avoided the judgment lien held by McInnis. The Order allowing the avoidance provided that:

3. The Judgment lien of the McInnises is declared to be void and shall be removed of record upon the completion of the Chapter 13 Plan of the Debtors and entry of the discharge in this case pursuant to Section 506 of the Bankruptcy Code.
4. In the event the Debtors fail to complete their Chapter 13 Plan and receive their discharge, the McInnises’ lien shall remain unaffected as to Section 506(a) and (d) of the Bankruptcy Code by this order.… Read More

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N.C. Court of Appeals: Mazzone v. Bank of America- Res Judicata Effect of Foreclosure Hearing

Summary:

The Court of Appeals held that the finding by the Mecklenburg Clerk of Court at the foreclosure hearing that Bank of America was the holder of the mortgage note was res judicata and precluded the Mazzones from making an impermissible collateral attack on this question in a subsequent action to quiet title.

Commentary:

The Court of Appeals here relied completely on Phil Mechanic Const. Co., Inc. v. Haywood, 72 N.C. App. 318, 322, 325 S.E.2d 1, 3 (1985) which held that “when a mortgagee or trustee elects to proceed under G.S. 45-21.1 et seq., issues decided thereunder as to the validity of the debt and the trustee’s right to foreclose are res judicata and cannot be relitigated”.… Read More

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Bankr. M.D.N.C.: In re Martin- Confirmation Vacated Pursuant to Rule 60(b) due to Mistake

Summary:

Debtor’s Chapter 13 plan was confirmed cramming down the claim of Greater Piedmont Credit Union against mobile home and land, prior to the filing of the Proof of Claim by GPCU showing that title to the mobile home had been cancelled, affixing it to the real property. Within thirty days of confirmation and before the passing of the bar date for filing claims, GPCU filed a Motion pursuant to Rule 60(b) for relief from the Confirmation Order based on mistake.

The bankruptcy court held that to obtain relief under Rule 60(b)(1), GPCU was required to show:

(1) That the underlying motion was filed within one year of the date the Confirmation Order;
(2) That GFCU had a meritorious defense;
(3) That the Debtor would not be unfairly prejudiced by having the judgment set aside; and
(4) The existence of mistake, inadvertence, surprise, or excusable neglect as a ground for relief.… Read More

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N.C. Ct. of App.: Iris Enterprises v. Five Wins- Foreclosure Trustee Bound by Judicial Determination of Claim Balance

Summary:

Following failed Chapter 11 bankruptcy, Five Wins obtained a declaratory judgment against Iris finding that Iris owed $894,711.24 to redeem real property from foreclosure. After Five Wins bid $875,000.00 for the properties, WA Ventures made a successful upset bid at the subsequent foreclosure in the amount of $918,750.00 and then assigned the bid to Five Wins. (It would be guessed that Five Wins bought the assignment of he bid rather than making another higher bid for the property at foreclosure.) The Trustee disbursed $856,286.33 to Five Wins for the remaining redemption amount and the remainder to Five Wins as part of the “secured obligation.” The trial court, on rehearing of the original declaratory judgment, awarded the remaining funds to Iris and Five Wins appealed.… Read More

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N.C. Ct. of Appeal: Petri v. Bank of America- Res Judicata and Collateral Estoppel from Foreclosure Proceeding

Summary:

Petri originally had a mortgage with Luxury Mortgage Corp., but subsequently Bank of America (“BOA”) commenced foreclosure proceedings. Appealing the order allowing foreclosure, Petri argued that BOA was not the true holder of the note authorized to foreclose. The Superior Court found that the original note had been transferred to BOA and further held that it was a valid debt, that Petri was in default, that BOA had a right to foreclose under the note, and that all proper parties had received notice, thereby meeting the requirements of N.C.G.S. § 45-21.16 and allowing the foreclosure to proceed. Petri then filed a separate complaint seeking to enjoin the foreclosure and asserting, among other causes of action, various UDTPA violations by BOA in failing to comply with a federal consent judgment.… Read More

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Bankr. W.D.N.C.: In re Hatten- Res Judicata Affect of Confirmation Order as to Creditor Standing

Summary:

Following a Motion for Relief from Stay filed by ASC, the Debtor argued that ASC was not a a “party in interest” and lacked standing as there was neither an endorsement on the note nor an allonge affixed and presented in support of the Motion. \

Avoiding this issue, the Bankruptcy Court held “that a confirmed Chapter 13 plan, which represents a new contractual agreement between debtors and their creditors, is res judicata on the issue of a creditor’s rights as a party in interest with standing to seek relief from the stay.” In re Jeter, No. 08-07872-HB, 2011 WL 6014173, at *3 (Bankr.… Read More

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Bankr. M.D.N.C.: In re DeCoro USA, Limited- Res Judicata Effect of Confirmation Order only Extends to Actually Determined Matters

Summary:

The Debtor was a North Carolina corporation, wholly owned by DeCoro Limited (“Ltd.”), a Hong Kong limited liability company, which shipped furniture manufactured in China to the United States. The the furniture sales in the United States were procured by the Debtor. In 2008 or 2009, the IRS began an examination to determine whether the Debtor or Ltd. were liable for taxes in the United States. The determination hinged on whether the Debtor was a “dependent agent” of Ltd., in which case Ltd. would be liable for the taxes, or if the Debtor was an “independent distributor”, in which case the Debtor would be liable for the taxes.… Read More

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Bankr. E.D.N.C.: In re McClam- Consent Order In Prior Case is Not Res Judicata in Subsequent Bankruptcy

Summary:

In the Debtor’s first Chapter 13 case, the Debtor and his homeowner’s association entered into a consent order denying the homeowner’s motion for relief, subject to the Debtor complying with specific conditions. Failure to comply would result in the lifting of the automatic stay. The Debtor’s bankruptcy was shortly thereafter dismissed and the Debtor refiled. The homeowner’s association contended that the consent order in the previous case was res judicata and it was thereby entitled to relief from the automatic stay in the second case. The bankruptcy court, however, found that the consent order in the previous case was not a final adjudication in the present case, as “[t]he property of the estate and automatic stay in this case are distinct from the debtor’s previous case and not merely a revival of the prior proceedings.”

For a copy of the opinion, please see:

McClam- Consent Order In Prior Case is Not Res Judicata in Subsequent Bankruptcy.pdf Read More

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