Munn v. Collins (In re Collins)

647 B.R. 425

IN RE: Esther Elizabeth COLLINS, Debtor.

Roger R. Munn, Movant,

v.Esther Elizabeth Collins, Debtor/Respondent.

Case No. 21-40436-JTL

United States Bankruptcy Court, M.D. Georgia, Columbus Division.

Signed December 20, 2022

Entered December 21, 2022

Valerie G. Long, Valerie G. Long, Attorney at Law, Columbus, GA, for Debtor.

MEMORANDUM OPINION

John T. Laney, III, United States Bankruptcy Judge

Before the Court are Movant Roger R. Munn's (1) Motion to Vacate/Set Aside Confirmation Plan (Doc. 17); (2) Letter Brief (Doc. 30); (3) Motion to Reconsider (Doc. 37); and (4) Memorandum of Law in Support of Motion to Reconsider (Doc. 47); as well as Debtor's responsive pleadings (Docs. 28, 29, 48). Movant's Motion to Reconsider was filed following this Court's entry of its Memorandum Opinion on Movant Roger Munn's Motion to Vacate (Doc. 33) and corresponding Order on Movant Roger Munn's Motion to Vacate (Doc. 34). Movant requests this Court reconsider its previous order denying his motion to set aside the chapter 13 plan confirmation order. This matter is a core proceeding, over which the court has subject matter jurisdiction. See 28 U.S.C. §§ 157(b)(2)(B) ; 1334.

The Court GRANTS the Motion as to reconsideration of the Motion to Vacate/Set Aside Confirmation Plan (Doc. 17) and DENIES the Motion as to all additional counts. Thus, the Court vacates and withdraws the Memorandum Opinion and Order entered on July 13, 2022, and substitutes the following Opinion and corresponding Order.

Based on the evidence presented and the arguments of the parties, the Court makes the following Findings of Fact and Conclusions of Law.

I. Findings of Fact

The following facts are undisputed. Debtor retained Movant to represent her in domestic proceedings in Frederick County, Maryland, sometime between 2016 and 2018 ("Domestic Matter"). Upon conclusion of the Domestic Matter, Debtor was awarded fees and expenses, including attorney's fees ("Maryland Fee Award"). To date, Debtor has neither collected on the Maryland Fee Award nor paid Movant for his representation in the Domestic Matter. On February 28, 2020, Movant obtained a judgment against Debtor for his attorney's fees and costs arising from the Domestic Matter (Claim No. 2-2).¹ Movant began collection efforts as to his judgment through garnishment on or about November 4, 2021.

Debtor filed a voluntary petition under chapter 13 of the Bankruptcy Code on November 11, 2021 (Doc. 1). Debtor scheduled an unsecured debt owed to Movant; however, Debtor incorrectly listed Movant's address in her initial filings² (See Doc. 1).

Debtor, through counsel, contacted Movant on November 12, 2021, requesting Movant dismiss his garnishment action and provided to Movant a copy of the Notice of Bankruptcy Case Filing (Doc. 29, Exh. 1). The Notice of Bankruptcy Case Filing explicitly states, "You may be a creditor of the debtor. If so, you will receive an additional notice from the court setting forth important deadlines." (Doc. 29, Exh. 1-2). Despite addressing her correspondence to Movant's correct address in November 2021, Debtor failed to amend Schedule F to correct Movant's address until January 6, 2022 (Doc. 11). The § 341 meeting of creditors was scheduled for January 3, 2022 (Doc. 6). Debtor admits, in her brief, that she "amended Creditor's address after the 341 meeting and creditor filed a proof of claim in the case" (Doc. 28). Thus, Movant, while having actual notice of the bankruptcy case, was served with neither Debtor's chapter 13 plan nor a notice of chapter 13 plan confirmation hearing (see Doc. 9).

Movant filed his proof of claim on January 7, 2022 (Claim no. 2-1). The initial proof of claim includes two copies of Official Form 410. The first, signed and dated on January 7, 2022; the second signed and dated on November 16, 2021. The forms are substantially similar, and both indicate that no part of the claim is entitled to priority under 11 U.S.C. § 507(a) (Claim no. 2-1 at Line 12).

The Chapter 13 Trustee's Office and Movant communicated via letter and email on February 24 and February 25, 2022 (Doc. 17-2, 17-3). Movant, in his letter, asked that the Chapter 13 Trustee's Office "pursue collection of the judgements [sic] for the benefit of the creditors .... Please advise if we should amend our claim to a priority claim to support your efforts" (Doc. 17-2). Neither the letter nor the email include any reference to the hearing to consider confirmation of Debtor's chapter 13 plan.

Debtor's chapter 13 confirmation hearing occurred on February 28, 2022, at which hearing Debtor's chapter 13 plan was confirmed orally. The order confirming the chapter 13 plan ("Confirmation Order") was signed on March 18, 2022 (Doc. 15). The Bankruptcy Noticing Center notified Movant by first class mail of the Confirmation Order on March 23, 2022 (See Doc. 16). Movant asserts that he first received notice of the hearing to consider confirmation of Debtor's chapter 13 plan on March 25, 2022, on which date he received a report from the Chapter 13 Trustee's Office (Doc. 17-5).

Movant filed his first motion to vacate or set aside the Confirmation Order on March 31, 2022, and this Court heard oral arguments on such motion on June 2, 2022. Both parties were given the opportunity to brief the issues.

On June 24, 2022, Movant amended his proof of claim, changing his response on Line 12 and indicating that $15,805 is entitled to priority under 11 U.S.C. § 507(a) as a domestic support obligation (Claim no. 2-2). To this amended proof of claim, Movant attached a proof of judgment in favor of Law Offices of Roger R. Munn Jr., LLC.

Five days before this Court's ruling on Movant's first motion to vacate or set aside the Confirmation Order, on July 8, 2022, Debtor filed a claim objection to Claim no. 2-2 disputing the claim's priority status (Doc. 31).

On July 13, 2022, following submission of the parties’ briefs, the Court issued its Memorandum Opinion and accompanying Order denying Movant's motion to vacate or set aside the Confirmation Order (Docs. 33 and 34). On July 25, 2022, Movant filed a motion to reconsider this Court's ruling on his motion, which was noticed and scheduled to be heard on September 26, 2022 (Doc. 38).

On August 12, 2022, the Court sustained Debtor's objection to Movant's claim by default order (Doc. 39).

The parties appeared telephonically on September 26, 2022, on which date the Court heard argument on the issues. Following the hearing, the parties each submitted supporting briefs (Docs. 47, 48).

Movant seeks reconsideration of the Memorandum Opinion and Order denying his motion to vacate or set aside the Confirmation Order. Movant requests this Court (1) reconsider its decision to deny vacating the Confirmation Order; (2) find the Movant's claim nondischargeable; (3) hold a hearing on Debtor's objection to Movant's priority claim; (4) determine whether Movant may continue collection efforts including garnishment against the Debtor; and (5) order the Chapter 13 Trustee "pursue/collect all judgments entered in favor of the Debtor that are priority claims for her benefit for distribution to Creditors" (Doc. 37).

To support his request for reconsideration, Movant avers he was denied due process and states that in a letter to Chapter 13 Trustee Jonathan DeLoach, he asserted fraud. Movant, in his letter, alleged that Debtor's chapter 13 petition was filed "to evade his garnishment" (Doc. 41). Movant further alleged that Debtor's pre-petition conduct proves that her case "was meant solely to avoid, in bad faith, paying her judgment to [Movant], which is fraud" (Id .).

Additionally, Movant attempts to revive his argument that his claim is entitled to priority status. Movant argues that his judgment against Debtor qualifies as a nondischargeable domestic support obligation (Doc. 37). Movant asserts "he will proceed with a garnishment action with his priority claim, post-bankruptcy, unless this Court holds a hearing on the Debtor's objection to his priority claim" (Id. ).

Debtor, at the September 26, 2022, hearing, cited Kupersmith v. McCutcheon (In re McCutcheon) , arguing that Movant's motion to reconsider should be procedurally barred. 598 B.R. 339 (Bankr. M.D. Ga. 2019). Debtor argued that Movant cannot attempt to relitigate the priority issue because Movant failed to respond to her Objection to Claim No. 2 . Debtor suggests that had Movant responded to the objection, he could have been heard on the issue. But, because Movant took no action, the Court held no hearing and entered an order sustaining Debtor's objection to Movant's claim.

II. Conclusions of Law

A. Movant adequately preserved his position through his motions

Debtor objected to Movant's claim on July 8, 2022, while Movant's first motion to vacate the order confirming Debtor's chapter 13 plan was pending (Doc. 31). On July 13, 2022, the Court entered its Memorandum Opinion and Order denying Movant's first motion to vacate the order confirming Debtor's chapter 13 plan (Docs. 33, 34). Following entry of the Court's Memorandum Opinion and Order, on July 25, 2022, Movant filed a motion to reconsider the Court's Memorandum Opinion and Order; requesting again that the court vacate the order confirming Debtor's chapter 13 plan (Doc. 37). Despite actively litigating the plan's treatment of his claim, Movant failed to respond to Debtor's objection and the Court entered an order sustaining the objection and modifying Movant's claim on August 12, 2022 (Doc. 39).

At the September 26, 2022, hearing, Movant argued that the Court's order sustaining Debtor's objection to his proof of claim should likewise be vacated because Movant actively preserved the claims status issue through his motion to reconsider.

The United States Court of Appeals for the Eleventh Circuit ruled on a similar issue in Titlemax v. Northington (In re Northington) , 876 F.3d 1302, 1307 (11th Cir. 2017). In Northington , while a stay relief motion was pending, a chapter 13 plan was confirmed. The...