Opinion
Case No: 8:20-bk-975-CPM Case No: 8:20-cv-1266-T-35
2021-07-14
IN RE: Dawn C. OHLSSON, Debtor. Dawn C. Ohlsson, Appellant, v. U.S. Bank National Association, as trustee for Structured Asset Securities Corporation Mortgage Pass-Through Certificates, Series 2006-BC1, Appellee.
Dawn C. Ohlsson, Sarasota, FL, Pro Se. Heather L. Ries, Fox Rothschild, LLP, West Palm Beach, FL, Scott Charles Lewis, Albertelli Law, Tampa, FL, for Appellee.
Dawn C. Ohlsson, Sarasota, FL, Pro Se.
Heather L. Ries, Fox Rothschild, LLP, West Palm Beach, FL, Scott Charles Lewis, Albertelli Law, Tampa, FL, for Appellee.
ORDER
MARY S. SCRIVEN, UNITED STATES DISTRICT JUDGE
THIS CAUSE comes before the Court for consideration of Appellant Dawn C. Ohlsson's appeal of the bankruptcy court's Order Granting Motion for In Rem Relief from Automatic Stay. (Dkt. 1) Upon consideration of all relevant filings, the entire bankruptcy record, the Parties’ briefs, and being otherwise fully advised, the Court AFFIRMS the bankruptcy court's rulings.
I. BACKGROUND
In this appeal, pro se Appellant Dawn C. Ohlsson challenges the bankruptcy court's Order granting a Motion for In Rem Relief from Automatic Stay ("Motion for Stay Relief") filed by U.S. Bank National Association, as trustee for Structured Asset Securities Corporation Mortgage Pass-Through Certificates, Series 2006-BC1 ("U.S. Bank"). (Dkt. 4-2) On September 20, 2018, the Circuit Court of the 12th Judicial Circuit in and for Sarasota County, Florida entered an Agreed Uniform Final Judgment of Mortgage Foreclosure ("Agreed Foreclosure Judgment") in favor of U.S. Bank and against Ohlsson in the amount of $316,414.48 related to certain real property located in Sarasota, Florida (the "Real Property"). (Dkt. 4-9 at 6–10) Ohlsson filed for Chapter 7 bankruptcy in February of 2020. (Dkt. 4-7) Ohlsson claimed the full amount of the Real Property as exempt on her Schedule C. (Dkt. 4-8 at 11) On March 25, 2020, the Chapter 7 Trustee filed her Report of No Distribution, which states "that there is no property available for distribution from the estate over and above that exempted by law." (Dkt. 4-6 at 3–4) As such, Ohlsson's Chapter 7 was a "no asset" case. The Report also states: "Claims Asserted: Not Applicable." (Id. at 4) On March 11, 2020, U.S. Bank filed a Motion for In Rem Relief from Automatic Stay ("Motion for Stay Relief"), requesting that the Court (1) terminate the automatic stay, in rem , (2) permit it to take "any and all steps necessary to exercise any and all rights it may have" in the Real Property, (3) allow it to gain possession of the Real Property, and (4) waive the 14-day stay under Fed. R. Bankr. P. 4001(a)(3). (Dkt. 4-9) U.S. Bank attached to the Motion for Stay Relief (1) a copy of the Agreed Foreclosure Judgment, (2) a copy of a property appraisal issued by the Sarasota County Property Appraiser listing the "Just" value of the Real Property as $192,300 in 2019 and the "Assessed" value of the Real Property at $87,149 in 2019, and (3) an affidavit in support of its request, in which the affiant attests that Ohlsson is in default under the terms of the mortgage, with a balance due in the amount of $331,990.81 as of February 21, 2020, and that escrow has been advanced for advanced for taxes and hazard insurance in the amount of $27,606.75. (Dkt. 4-9 at 6–15) Based on this evidence, U.S. Bank contended that the value of the collateral was insufficient to provide adequate protection to it and that it would be inequitable to permit Ohlsson to retain the collateral, as she has no equity in it and it was not necessary for effective reorganization. (Dkt. 4-9 at 2)
On March 31, 2020, Ohlsson filed an "Opposition to the Motion to Confirm Termination of the Automatic Stay, Motion to Strike Claim, Motion to Deem Mortgage Void, Motion for Satisfaction of Mortgage." (Dkt. 4-10) Therein, Ohlsson opposed the Motion for Stay Relief, contending that the Agreed Foreclosure Judgment was void "for want of jurisdiction and standing" and due to alleged fraud on the state court. (Id. ) Ohlsson also contended that Force Majeure excused her performance and voided the mortgage based on the COVID-19 pandemic. (Id. ) Ohlsson requested that the bankruptcy court "strike" U.S. Bank's claim, deem the mortgage held by U.S. Bank void, and deem the mortgage held by U.S. Bank to be satisfied. (Id. ) On April 3, 2020, the bankruptcy court set a hearing on the Motion for Stay Relief and Ohlsson's opposition but struck Ohlsson's embedded requests for affirmative relief for being improperly included in her opposition. (Dkt. 4-11)
On April 14, 2020, Ohlsson separately filed an "Opposition to Confirm Termination of the Automatic Stay," and an "Objection to Creditor's Claim," both of which reasserted the arguments made in her prior filing. (Dkts. 4-12, 4-13) U.S. Bank filed a response to Ohlsson's "Objection to Creditor's Claim" addressing Ohlsson's various arguments that the Agreed Foreclosure Judgment was void. (Dkt. 4-14)
On May 7, 2020, the bankruptcy court held a hearing on the Motion for Stay Relief and Ohlsson's Objection to Creditor's Claim. (Dkt. 9) The court determined that Ohlsson's Objection to Creditor's Claim was moot because there was no "claim" filed by U.S. Bank in the bankruptcy proceeding and no requirement that a claim be filed by U.S. Bank. (Id. at 7:16–9:17) The bankruptcy court explained to Ohlsson that U.S. Bank had not filed any claim because Ohlsson's bankruptcy was a "no asset" Chapter 7 proceeding. (Id. ) The court also advised Ohlsson that her arguments contesting the foreclosure proceedings and the validity of the Agreed Foreclosure Judgment were arguments to be made before the state court, not the bankruptcy court. (Id. at 4:3–5:9; 9:18–20) Thus, the bankruptcy court entered a written Order Overruling Objection to Claim as Moot. (Dkt. 4-15)
The bankruptcy court also entered an Order Granting Motion for In Rem Relief from Automatic Stay, terminating the automatic stay as to U.S. Bank's interest in the Real Property for the sole purpose of allowing U.S. Bank complete in rem relief to take any and all steps necessary to exercise any and all rights it may have in the collateral, to gain possession of said collateral, and to have such other and further in rem relief that is just but not to obtain in personam relief against Ohlsson. (Dkt. 4-2) The Order waived the 14-day stay imposed by Fed. R. Bankr. P. 4001(a)(3). (Id. )
Ohlsson appeals the bankruptcy court's Order Granting Motion for In Rem Relief from Automatic Stay, contending primarily that U.S. Bank was not entitled to relief from the automatic stay because it did not file a "required" proof of claim and because it failed to adequately establish its interest in the Real Property. (Dkt. 13 at 5, 11–14) She also contends that relief from the stay was not warranted under 11 U.S.C. § 362(d)(4), which provides grounds for granting relief from the stay upon a finding that the filing of the petition was part of a scheme to delay, hinder, or defraud creditors. (Id. at 14–24) Finally, Ohlsson argues that U.S. Bank is equitably estopped from obtaining relief from the stay because it failed to file a reply. (Id. at 9–10)
II. STANDARD OF REVIEW
In reviewing bankruptcy court judgments, a district court functions as an appellate court. See In re Coady, 588 F.3d 1312, 1315 (11th Cir. 2009). It reviews the bankruptcy court's legal conclusions de novo but must accept the bankruptcy court's factual findings unless they are clearly erroneous. In re Chira, 567 F.3d 1307, 1310–11 (11th Cir. 2009). "[A] finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948). The district court also reviews de novo the bankruptcy court's determinations as to the legal significance accorded to the facts. In re Sunshine-Jr. Stores, Inc., 198 B.R. 823, 825 (M.D. Fla. 1996). "A decision to lift the stay is discretionary with the bankruptcy judge, and may be reversed only upon a showing of abuse of discretion." In re Dixie Broad., Inc., 871 F.2d 1023, 1026 (11th Cir. 1989). "An abuse of discretion occurs when a court uses an incorrect legal standard, applies the law in an unreasonable or incorrect manner, misconstrues its proper role, follows improper procedures in making a determination, or makes clearly erroneous findings of fact." In re Bagwell, 741 F. App'x 755, 758 (11th Cir. 2018). In hearing a bankruptcy appeal, the district court may reverse, affirm, or modify only on issues actually presented to the trial judge. In re Gardner, 455 F. Supp. 327 (N.D. Ala. 1978).
The Court notes that "[a]lthough an unpublished opinion is not binding on this court, it is persuasive authority. See 11th Cir. R. 36-2." United States v. Futrell, 209 F.3d 1286, 1289 (11th Cir. 2000).
III. DISCUSSION
The bankruptcy court did not abuse its discretion by granting the Motion for Stay Relief. Accordingly, this Court affirms.
When a debtor files a bankruptcy petition, an automatic stay applies to "the enforcement, against the debtor or against property of the estate, of a judgment obtained before" the bankruptcy petition was filed. 11 U.S.C. § 362(a)(2). However, § 362(d) sets forth various means by which a party in interest can request relief from the automatic stay. 11 U.S.C. § 362(a)(2). Section 362(d) states, in pertinent part:
On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay--
(1) for cause, including the lack of adequate protection of an interest in property of such party in interest;
(2) with respect to a stay of an act against property under subsection (a) of this section, if--
(A) the debtor does not have an equity in such property; and
(B) such property is not necessary to an effective reorganization;
...
(4) with respect to a stay of an act against real property under subsection (a), by a creditor whose claim is secured by an interest in such real property, if the court finds that the filing of the petition was part of a scheme to delay, hinder, or defraud creditors that involved either--
(A) transfer of all or part ownership of, or other interest in, such real property without the consent of the secured creditor or court approval; or
(B) multiple bankruptcy filings affecting such real property.
11 U.S.C. § 362(d)(1), (2), (4) (emphasis added).
Ohlsson appears to challenge U.S. Bank's standing to seek relief from the automatic stay. (Dkt. 13 at 12) Applying de novo review to the legal question of standing, the Court concludes that U.S. Bank is a party in interest insofar as the stay could have impacted its rights; and therefore, it had standing to seek relief from the automatic stay. Basson v. Fed. Nat'l Mortg. Ass'n, 713 F. App'x 987, 988 (11th Cir. 2018) (to have statutory standing in a bankruptcy case, a party must be a "party in interest"). A "party in interest" includes a "creditor," which is defined in the bankruptcy code as an "entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor." 11 U.S.C. § 101(10)(A). A "claim" is defined as a "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured." Id. § 101(5)(A). "[A] party seeking stay relief need only establish that it has a colorable claim to enforce a right against property of the estate." In re HRN Grp., LLC, No. 1:19-CV-05011-SDG, 2020 WL 6712238, at *6 (N.D. Ga. Nov. 13, 2020) (quoting Everbank v. Hayden, No. 13-57281-MGD, 2013 WL 3776296, at *1 (Bankr. N.D. Ga. June 25, 2013) ).
There was sufficient evidence in the record from which the bankruptcy court could determine that U.S. Bank was a party in interest entitled to relief from the stay. The Agreed Foreclosure Judgment attached to U.S. Bank's Motion for Stay Relief granted judgment in favor of U.S. Bank and against Ohlsson in the amount of $316,414.48, determined that U.S. Bank holds a first mortgage lien for the total sum on the Real Property, and ordered the sale of the Real Property if the judgment was not paid. (Dkt. 4-9 at 6–10) Because the evidence was sufficient to establish that U.S. Bank had a colorable right to payment, there is no clear error in the bankruptcy court's implicit determination that U.S. Bank had standing to seek relief from the stay. See Basson, 713 F. App'x at 988 (concluding Fannie Mae had a "claim" against the debtor, which made it a "creditor" based on copies of a note, deed, and assignments in the record).
Ohlsson contests U.S. Bank's right to payment under the Agreed Foreclosure Judgment, suggesting that it is void or should be set aside for a myriad of reasons. The bankruptcy judge properly declined to address Ohlsson arguments, because they were barred by either the Rooker-Feldman doctrine or claim preclusion and were issues for the state court to decide.
Nor did the bankruptcy court abuse its discretion in granting U.S. Bank's Motion for Stay Relief. U.S. Bank requested relief from the stay either under § 362(d)(1) —based on its contention that there was inadequate protection of its interest in the Real Property—or, alternatively, under § 362(d)(2) —because Ohlsson did not have equity in the Real Property and the Property was not necessary to an effective reorganization. (Dkt. 4-9) With respect to the first basis, U.S. Bank proved that its interest in the Real Property was not adequately protected. Without the foreclosure, it would not have a possessory interest in the collateral, and Ohlsson was not providing the needed protection because she was not making payments on the debt. Under § 362(g), the burden is upon the party seeking relief from the stay on the issue of the debtor's equity in the property, and the burden is upon the party opposing the relief as to all other issues. 11 U.S.C. § 362(g). Ohlsson offered no proof that the asset was adequately protected. See In re Powell, 223 B.R. 225, 234 (Bankr. N.D. Ala. 1998) (explaining that a debtor can establish adequate protection of a creditor's interest in collateral by, inter alia, providing proof of periodic payments to the creditor, providing proof of an enforceable insurance policy on the collateral, and/or providing proof of proper maintenance of the property). The lack of protection is alone sufficient to support the court's decision to lift the automatic stay under § 362(d)(1). 11 U.S.C. § 362(d)(1).
With respect to the second basis, U.S. Bank offered evidence that the "Just" value of the Real Property was $192,300 in 2019 and the "Assessed" value of the Real Property was $87,149 in 2019. (Dkt. 4-9) While Ohlsson did not contest this valuation at the hearing, she admitted that the Real Property on her Schedule C, executed under penalty of perjury, was valued at $219,000. (Dkt. 4-8 at 11) See In re George, 315 B.R. 624, 627 (Bankr. S.D. Ga. 2004) (treating statement of value on a bankruptcy schedule as a judicial admission). U.S. Bank offered unrebutted evidence that the property was encumbered by a lien securing indebtedness of over $300,000. (Dkt. 4-9) Thus under any of the three assertions of value, Ohlsson lacked equity in the Real Property. Additionally, satisfying the second prong, Ohlsson was proceeding under Chapter 7 of the Bankruptcy Code. Thus, a reorganization was not contemplated. See In re Houser, 463 B.R. 580, 583 (Bankr. N.D. Ga. 2011) ("In a Chapter 7 case, if there is no equity in the property, relief is appropriate because there is no reorganization in prospect.") (citing 11 U.S.C. § 721 ). Ohlsson has not set forth any argument—to the bankruptcy court or in her briefing in this Appeal—that either element of § 362(d)(2) was not adequately asserted and proven. Accordingly, the alternate, second basis for lifting the stay was also satisfied.
Instead, Ohlsson contends that relief from the stay was not warranted under § 362(d)(4), which provides grounds for granting relief from the stay upon a finding that the filing of the petition was part of a scheme to delay, hinder, or defraud creditors. However, § 362(d)(4) was not a basis for U.S. Bank's request for relief from the stay, and, as discussed above, there was sufficient, unrebutted evidence to support U.S. Bank's requested stay relief under either 11 U.S.C. § 362(d)(1) or (d)(2).
The bankruptcy court also did not err in overruling Ohlsson's Objection to Claim as moot. As accurately explained by the bankruptcy court at the hearing, U.S. Bank did not file a proof of claim, had no duty to file a proof of claim, and to do so would be futile in a no asset Chapter 7 case, since the point of filing a proof of claim is to obtain a distributive share in the assets of the proceeding. (Dkt. 9 at 3:21–4:2) See also Ziino v. Baker (In re Ziino), 613 F.3d 1326, 1328 (11th Cir. 2010) ("An allowed claim ... permits the claimant to participate in the distribution of the bankruptcy estate."); 4 Collier on Bankruptcy ¶ 501.01[3][b] (16th 2021) ("In no-asset chapter 7 liquidation cases, the filing of a proof of claim serves no practical purpose since there will be no distribution from the estate in which to participate."). Thus, to the extent that Ohlsson contends that the bankruptcy court abused its discretion in granting relief from the stay due to U.S. Bank's failure to file a "required" proof of claim, this argument is without merit.
Finally, Ohlsson argues that U.S. Bank is equitably estopped from obtaining relief from the stay because it acquiesced in her opposition to the Motion for Stay Relief by failing to file a reply. (Id. at 9–10) In response, U.S. Bank contends that this argument was not presented to the Bankruptcy Court and, therefore, it has not been preserved for appeal. (Dkt. 15 at 7–8) An appellate court does not normally give consideration to issues not raised in the court below. Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1331 (11th Cir. 2004). Alternatively, U.S. Bank argues that Ohlsson's estoppel argument is meritless. (Id. at 8–9)
The Eleventh Circuit has permitted issues to be raised for the first time on appeal under five special circumstances, none of which are present here:
First, an appellate court will consider an issue not raised in the district court if it involves a pure question of law, and if refusal to consider it would result in a miscarriage of justice. Second, the rule may be relaxed where the appellant raises an objection to an order which he had no opportunity to raise at the district court level. Third, the rule does not bar consideration by the appellate court in the first instance where the interest of substantial justice is at stake. Fourth, a federal appellate court is justified in resolving an issue not passed on below ... where the proper resolution is beyond any doubt. Finally, it may be appropriate to consider an issue first raised on appeal if that issue presents significant questions of general impact or of great public concern.
Id. at 1332 (quoting Wright v. Hanna Steel Corp., 270 F.3d 1336, 1342 (11th Cir. 2001) ).
The Court is not inclined to consider Ohlsson's estoppel argument, which was not presented to the bankruptcy court. Moreover, even if the Court were to consider it, the argument is entirely without merit. Ohlsson contends that U.S. Bank "never filed a reply to Ohlsson's opposition," and by this failure exhibited "intentional acquiescence" to the statements and facts therein. (Dkt. 14 at 9–10) Under Florida law, equitable estoppel "consists of words or conduct which causes another person to believe a certain state of things exists, and to consequently change his or her position in an adverse way." Whetstone Candy Co. v. Kraft Foods, Inc., 351 F.3d 1067, 1076 (11th Cir. 2003) (quoting Se. Grove Mgmt. Inc. v. McKiness, 578 So. 2d 883, 886 (Fla. 1st DCA 1991) ). While the doctrine of equitable estoppel can sometimes apply based on a party's silence or inaction, it only applies "when the other party is misled to his or her injury." Id. That is, the party claiming estoppel by silence or inaction must prove that it detrimentally changed its position in reliance on that silence or inaction, and must also prove that its reliance was intended or reasonably anticipated by the party to be estopped. Keys v. Bert Bell/Pete Rozelle NFL Player Ret. Plan, 387 F. Supp. 3d 1372, 1382 (M.D. Fla. 2019).
U.S. Bank was not required to file a reply to Ohlsson's opposition to its Motion for Stay Relief, and at no time did it affirmatively withdraw its Motion. To the contrary, it attended a hearing on the Motion for Stay Relief where it continued to request relief from the stay. (Dkt. 9) Ohlsson did not contend at any point during the hearing that she believed U.S. Bank had abandoned its position or acquiesced in hers, and she does not claim that the lack of reply misled her. As such, Ohlsson's equitable estoppel argument fails procedurally and substantively.
IV. CONCLUSION
Accordingly, for the reasons stated above and upon consideration of all relevant filings, the Court hereby ORDERS as follows:
1. The bankruptcy court's Order Granting Motion for In Rem Relief from Automatic Stay is AFFIRMED .
2. The Clerk is directed to CLOSE this case.
DONE and ORDERED in Tampa, Florida this 14th day of July 2021.