Sun Trust sued to collect on deficiencies following a foreclosure in North Carolina. The Debtors raised defenses challenging the validity of the debt and the default. The Court of Appeals held that the determination of a valid debt and default at the foreclosure hearing was res judicata. While the Debtors could not have raised these equitable defenses in the hearing under N.C.G.S. § 45-21.16, they could have raised such defenses in a proceeding to enjoin the foreclosure under N.C.G.S. § 45-21.34 (2006). The failure by the Debtors to do so resulted in the rights of the parties to the foreclosure becoming “fixed” and therefore barred the Debtors from raising such an equitable challenge in a later proceeding in a different court.… Read More
Canovali-Relief from Chapter 11 Confirmation Order under Rule 60(b)Summary:
The Debtors had a two mortgage against their home, initially valued in the amount of $1,068,000.00, with Bank of America, a first with a balance of $988,000.00 and second with a balance of $368,000.00.
The Debtors proposed a Chapter 11 plan that recognized that there were two notes and Deeds of Trust, but that both such claims would be paid as a single claim secured in the amount of $1,000,000.00, payable with 5% interest over 30 years. The balance on the claims would be treated as unsecured.
Bank of America voted against the proposed Plan. … Read More
The Debtor was in an automobile accident and had not maintained liability insurance. Judgment was entered in state court for negligence, but after filing Chapter 13 the Plaintiff brought a non-dischargeability action alleging that the failure to maintain liability insurance cause a willful or malicious injury.
The Debtor argued that the failure to raise either willfulness or malice in the state court action precluded later raising them in the bankruptcy.
Relying on Brown v. Felsen, 442 U.S. 127, 135, 99 S.Ct. 2205, 2211 (1979), the Bankruptcy Court rejected this, holding that “a plaintiff seeking non-dischargeability “[is] not assert[ing] a new ground for recovery, nor does he attack the validity of the prior judgement.… Read More