Ohai v. Delta Cmty. Credit Union (In re Ohai)

1

IN RE: EMMANUEL OHAI, Debtor.

EMMANUEL OHAI, Plaintiff, v. DELTA COMMUNITY CREDIT UNION, PNC BANK NATIONAL ASSOCIATION, INC., DEAN ENGLE & PARK TREE INVESTMENTS, LLC, PARK TREE INVESTMENTS 20, LLC, FCI LENDER SERVICES, INC., DANIEL I. SINGER & SINGER LAW GROUP, PHILLIP L. JAUREGUI D/B/A JAUREGUI & LINDSAY LLC, MICHAEL W. LINDSEY D/B/A, JAUREGUI & LINDSEY, LLC, MICROBILT CORPORATION, Defendants.

No. 12-65475-WLH

Adversary Proceeding No. 23-5041-WLH

United States Bankruptcy Court, N.D. Georgia, Atlanta Division

April 9, 2024

CHAPTER 7

ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT AS TO PARK TREE INVESTMENTS, LLC AND PARK TREE INVESTMENTS 20 LLC

Wendy L. Hagenau, United States Bankruptcy Court Judge

THIS MATTER is before the Court on cross Motions for Summary Judgment filed by Plaintiff (Docs. Nos. 100-103) and Park Tree Investments, LLC ("PTI") (Docs. Nos. 116 117, 119, & 120), and the parties' responses thereto (Docs. Nos. 146, 151, 152, & 157), as well as cross Motions for Summary Judgment filed by Plaintiff (Docs. Nos 131-134) and Park Tree Investments 20, LLC ("PTI20") (Docs. Nos. 116, 117, 119, & 120) and the parties' responses thereto (Docs. Nos. 146, 149, 151, & 157). The Court has subject matter jurisdiction over Plaintiff's claims pursuant to 28 U.S.C. § 1334(b) and 28 U.S.C. § 157(a), and the claim of violating the discharge injunction is a core proceeding under 28 U.S.C. § 157(b)(2)(A) & (O). See In re Golden, 630 B.R. 896, 920 (Bankr. E.D.N.Y. 2021) (it is axiomatic that this Court has subject matter jurisdiction to consider such core matters); In re Harlan, 402 B.R. 703, 710 (Bankr. W.D. Va. 2009).

I. SUMMARY JUDGMENT STANDARD

Motions for summary judgment are governed by Federal Rule of Civil Procedure 56, made applicable to contested matters by Federal Rules of Bankruptcy Procedure 7056 and 9014. Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law". Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Fed.R.Civ.P. 56(c); Fed.R.Bankr.P. 7056(c). "The substantive law [applicable to the case] will identify which facts are material." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party moving for summary judgment has the burden of proving there are no disputes as to any material facts. Hairston v. Gainesville Sun Pub. Co., 9 F.3d 913, 918 (11th Cir. 1993). A factual dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. The party moving for summary judgment has "the initial responsibility of informing the . . . court of [the] basis for its motion, and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits if any' which it believes demonstrate the absence of a genuine issue of material fact." U.S. v. Four Parcels of Real Prop., 941 F.2d 1428, 1437 (11th Cir. 1991) (citing Celotex Corp., 477 U.S. at 323). What is required of the moving party, however, varies depending on whether the moving party has the ultimate burden of proof on the issue at trial.

When the nonmoving party has the burden of proof at trial, the moving party is not required to "support its motion with affidavits or other similar material negating the opponent's claim" (cites omitted) in order to discharge this "initial responsibility".

Instead, the moving party simply may "show - that is, point out to the . . . court -that there is an absence of evidence to support the nonmoving party's case." (cites omitted). Alternatively, the moving party may support its motion for summary judgment with affirmative evidence demonstrating that the nonmoving party will be unable to prove its case at trial.

Id. at 1437-38 (citing Celotex, 477 U.S. at 323-31).

Once this burden is met, the nonmoving party cannot merely rely on allegations or denials in its own pleadings. Fed.R.Civ.P. 56(e). Rather, the nonmoving party must present specific facts that demonstrate there is a genuine dispute over material facts. Hairston, 9 F.3d at 918. When reviewing a motion for summary judgment, a court must examine the evidence in the light most favorable to the nonmoving party and all reasonable doubts and inferences should be resolved in favor of the nonmoving party. Id.

II. UNDISPUTED FACTS

The facts relating to this adversary proceeding are set out in the Court's Order on the Engle Defendants Motion to Dismiss (Doc. No. 37) and incorporated herein. As more fully explained in that order, Plaintiff and his now ex-wife purchased their primary residence at 2715 Tradd Court, Snellville, Georgia (the "Tradd Property") in April 2006 and executed a note and security deed in favor of Delta Community Credit Union ("Delta") (the "Tradd Mortgage Loan"). In March 2008, Plaintiff and his now ex-wife obtained a home equity loan in the amount of $46,000 from Delta, secured by a second security deed (the "Tradd HELOC"). Plaintiff and his now ex-wife defaulted on the Tradd HELOC in 2010.

On June 20, 2012, Plaintiff and his now ex-wife filed a petition under Chapter 7 of the Bankruptcy Code. Plaintiff and his ex-wife received a discharge on October 5, 2012 (Bankr. Doc. No. 14) and the bankruptcy case was closed.

Plaintiff continued to live in the Tradd Property. The Tradd HELOC was sold to Park Tree Investments 20, LLC ("PTI20") by June 22, 2017 when Plaintiff received a Borrower Welcome Letter explaining that PTI20 was the holder of the HELOC note,^[1] and that PTI was the servicing agent. The letter included a paragraph bolded and in all caps:

IMPORTANT BANKRUPTCY INFORMATION

IF YOU OR YOUR ACCOUNT ARE SUBJECT TO PENDING BANKRUPTCY PROCEEDINGS OR IF YOU RECEIVED A BANKRUPTCY DISCHARGE ON THIS DEBT, THIS STATEMENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT AN ATEMPT TO COLLECT A DEBT.

Plaintiff responded with a cease-and-desist letter, which PTI20 acknowledged by letter dated July 12, 2017 stating Plaintiff's file would be noted and he would not receive collection communications.

PTI was in the mortgage servicing business and sent mortgage statements in the ordinary course of its business. PTI, as servicer for PTI20, sent Plaintiff monthly mortgage statements dated July 31, 2017; August 31, 2017; September 30, 2017; and October 31, 2017 (the "Monthly Statements"). The Monthly Statements include an amount due and chart listing the current payment due. The Monthly Statements include a section titled "**Delinquency Notice**" that states, "You are late on your loan payments. Failure to bring your loan current may result in fees and legal action. As of [7/31/17], you are [2,117] days delinquent on your loan."^[2] The Monthly Statements included a payment coupon with instructions to "Cut here and remit this portion with your payment[,]" followed by a block stating the amount due and directions to "Make check Payable to Park Tree Investments 20[.]" The Monthly Statements did not include a disclaimer.

PTI or PTI20 requested Plaintiff's credit report on several occasions from MicroBilt Corporation.^[3] The undisputed fact is that requests were made on May 30, 2017 and January 28, 2019. The credit reports produced reflected Plaintiff's bankruptcy discharge.

PTI transferred servicing of the Tradd HELOC in May 2018 to another loan servicer, FCI Lender Services, Inc. ("FCI"). FCI, on behalf of PTI20, sent Plaintiff monthly mortgage statements from March 14, 2019 through March 30, 2021. Each included a single-sided paper identifying Plaintiff's name and address and a second double-sided sheet of paper. One side was labeled "Payment Statement," and included an amount due, explanation of payment due, and box labeled "Delinquency Notice" that stated: "You are late on your monthly mortgage payments. Failure to bring your loan current may result in fees and foreclosure - the loss of your home. As of [the date of the statement] you are [number] days delinquent on your mortgage loan. . . . You must pay this amount to keep your loan current." The statements from FCI also had a detachable payment portion stating, "PLEASE DETACH THE BOTTOM PORTION OF THIS STATEMENT, RETURN IT WITH YOUR PAYMENT AND RETAIN THE TOP PORTION FOR YOUR RECORDS." The backside of each statement included a disclaimer, in bold, capitalized text, stating:

IMPORTANT NOTICE: IF YOU OR YOUR ACCOUNT ARE SUBJECT TO PENDING BANKRUPTCY PROCEEDINGS, OR IF YOU RECEIVED A BANKRUPTCY DISCHARGE ON THIS DEBT, THIS STATEMENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT AN ATTEMPT TO COLLECT A DEBT. IF YOU ARE NOT IN BANKRUPTCY OR DISCHARGED OF THIS DEBT, BE ADVISED THAT FCI IS A DEBT COLLECTOR AND IS ATTEMPTING TO COLLECT A DEBT ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE.

Starting with the October 30, 2019 statement, FCI included a third piece of paper with the next eighteen statements labeled "Important Disclosures," with a bankruptcy disclaimer in bold, capitalized text identical to the disclaimer on the back of the Payment Statement.

The Tradd Property was ultimately foreclosed on April 6, 2021 after entry of an order of the District Court (1:20-cv-02220-SCJ-JEM Doc. No. 135). On March 29, 2023 Plaintiff filed the complaint against PTI and PTI20, as well as his former mortgage holders, certain debt collectors, and a consumer reporting agency. PTI and PTI20, together with FCI, Dean Engle, Phillip L. Jauregui d/b/a Jauregui & Lindsey and Michael W. Lindsey d/b/a Jauregui & Lindsey, LLC, filed a Motion to Dismiss (Doc. No. 6). The Court granted in part and denied in part the Motion to Dismiss (Doc. No....