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Akers v. Gregory Funding, LLC

United States District Court, M.D. Tennessee, Nashville Division

May 24, 2018

DEBORAH L. AKERS, Appellant,
v.
GREGORY FUNDING, LLC, and HENRY E. HILDEBRAND, III, CHAPTER 13 TRUSTEE, Appellees.

          Honorable Aleta A. Trauger, Jr., District Judge

          REPORT AND RECOMMENDATION

          BARBARA D. HOLMES United States Magistrate Judge

         Pending before the Court are the Motion for Preliminary Injunction and accompanying Complaint and Request for Injunction (Docket Nos. 23 and 24) filed by Appellant Deborah Akers (the “Appellant” or “Akers”). Appellee Gregory Funding LLC, as servicer for AJX Mortgage Trust II, a Delaware Trust, Wilmington Savings Fund Society, FSB, Trustee (the “Appellee” or “Gregory Funding”) filed a response in opposition. (Docket No. 25). By Order entered January 24, 2018, this case was referred to the Magistrate Judge for case management, decision on all pretrial, nondispositive motions and report and recommendation on all dispositive motions under 28 U.S.C. § 636(b)(1) and to conduct any necessary proceedings under Rule 72(b), Fed.R.Civ.P. (Docket No. 14).

         For the reasons set forth below, the undersigned Magistrate Judge respectfully recommends that Akers' motion (Docket No. 23) be DENIED.

         I. BACKGROUND

         Deborah L. Akers is a resident of 543 Richmar Drive, Nashville, Tennesse, 37211 (“Richmar Property”). Akers seeks to enjoin AJX Mortgage Trust II, Gregory Funding, LLC, and Shapiro and Ingle, LLP from carrying through with a scheduled June 6, 2018 foreclosure of the Richmar Property.

         Akers filed a voluntary bankruptcy petition pro se under Chapter 13 of Title 11 on July 10, 2017. (Docket No. 22-1 at 15-76)[1]. The petition was filed on the same day foreclosure of the Richmar Property was set to occur by the first lienholder, Gregory Funding, as servicer to AJX Mortgage Trust II. (Docket No. 22-4 at 607-609). The sworn summary, schedules, and statement filed by Akers in her chapter 13 case reflect various values for the Richmar Property. The Summary of Assets and Liabilities lists the value of the Richmar Property as $262, 809 (Docket No. 22-1 at 22). On Schedule A, the current value of the property is stated as $350, 142, with the value of Aker's fee simple interest as $262, 809 (Docket No. 22-1 at 24).[2] In her claimed exemptions, Akers again states the value of her interest as $262, 809 (Docket No. 22-1 at 34). However, it appears from the record below that Akers may have quitclaimed all of her interest in the Richmar Property to her non-filing spouse, James Akers for purposes of hindering the secured creditor's prior attempt to foreclose on the property. See Transcript of confirmation hearing (Docket No. 22-5 beginning at page 196) at 5-7 and 17-20.[3] See Tr. at 45-46, 51-52, and 54-57.

         Aker's sworn Schedule D includes MBNA America Bank, Radian Services, Inc., and AJX Mortgage Trustee II, as having claims secured by the Richmar Property, with the current value of that collateral as $262, 809 (Docket No. 22-1 at 36-37). These debts are all scheduled as unliquidated and disputed. (Id.). Schedule F lists non-priority unsecured debt totaling $5, 719.14 (Docket No. 22-1 at 41-44). Schedule I reflects that Akers (and her non-filing spouse) are both currently retired with monthly Social Security and interest income totaling $2, 342.98 (Docket No. 22-1 at 45-46). Not including any mortgage debt service payments, monthly net income is $201.58 (Docket No. 22-1 at 47-49). According to the Statement of Financial Affairs, Akers made no mortgage payments during the 90 days prior to filing her most recent chapter 13 case (Docket No. 22-1 at 51).[4]

         Akers proposed a monthly chapter 13 plan payment of $201.58 and a plan term of 36 months. (Docket No. 22-1 at 69-76). Akers further proposed a 38.22% dividend to unsecured creditors and moved to avoid the lien of MBNA America Bank. (Id.). The proposed plan requested a valuation of the security held by Gregory Funding and Dyck-O'Neal, Inc., but did not provide for any regular payments on the claims. (Id.). Akers' proposed chapter 13 plan did, however, include a secured claim purportedly owed to her non-filing spouse, James Akers, in the amount of $43, 500 (Docket No. 22-1 at 71), even though no such claim was listed in Schedule D.

         Gregory Funding objected to confirmation of the plan alleging that it was not feasible, that it was not proposed in good faith, and that it failed to cure the default and maintain payments on its secured claim. (Docket No. 22-1 at 95). Gregory Funding also filed motions for relief from the automatic stay and co-debtor stay to enforce its security interest in the Richmar Property. (Docket No. 22-1 at 162-169).

         The Chapter 13 Trustee objected to confirmation as well and requested that the Bankruptcy Court convert the case to a case under Chapter 7. (Docket No. 22-3 at 428). The Chapter 13 Trustee also asserted that Akers' proposed chapter 13 plan was neither feasible nor filed in good faith, and additionally, that it failed to provide present value on secured claims and to comply with § 1325(a)(4). (Id.). The Chapter 13 Trustee also filed an objection to Akers' claim of exemptions. (Docket No. 22-2 at 399).

         On October 18, 2017, the Bankruptcy Court held a hearing on confirmation of Aker's proposed chapter 13 plan and her objections to the proof of claim and post-petition fee notice filed by Gregory Funding, as well as the Trustee's motion to convert, the Trustee's objection to exemptions, and Gregory Funding's motions for relief from the stay and co-debtor stay. (Docket No. 22-5 at 854-916). The Bankruptcy Court entered its written order on November 3, 2017. The Bankruptcy Court held that Aker's proposed Chapter 13 plan was not feasible and that she did not file the plan in good faith. (Docket No. 1-2 at 1).

         In so holding, the Bankruptcy Court found that Akers had not made a mortgage payment on the Richmar Property since December 2016 and that she had no plan to pay her mortgage obligation. (Id.). After reviewing the original Note and Allonges with endorsements, the Bankruptcy Court further found that AJX Mortgage Trust II and Gregory Funding, LLC had standing to enforce the lien against the Richmar Property. (Id.). Finally, based on the equity in the Richmar Property and the bankruptcy estate's interest in a potential fraudulent transfer action implicated by Akers' transfer of her interest in the Richmar Property by quitclaim deed to her non- filing spouse in May of 2015, the Bankruptcy Court found that conversion to Chapter 7 was appropriate and in the best interest of the creditors. (Id. and Docket No. 22-4 at 676-7).

         On November 17, 2017, Akers filed a Notice of Appeal and elected to have the appeal heard by this Court. (Docket No. 1). The subject of Akers' original appeal was the Bankruptcy Court's Order Denying Confirmation, Converting case, and Continuing Motion for Relief from Stay and Motion for Relief from Co-Debtor Stay Filed by Gregory Funding. (Id.). After Akers' appeal of the November 2017 confirmation order, the Bankruptcy Court entered an order on February 1, 2018 granting Gregory Funding In Rem Stay Relief Upon Reconsideration of Amended Motion For Prospective Stay Relief. (Docket No. 22-5 at 960-2). As a result, Akers later amended her appeal to include that order. (Docket No. 20).

         In her present Motion for Preliminary Injunction and accompanying Complaint and Request for Injunction, Akers argues that the Court should issue a preliminary injunction under Fed.R.Civ.P. 65 prohibiting the foreclosure of the Richmar Property pending this Court's decision on her appeal.[5] In support of her motion, Akers states that a foreclosure would: result in a financial loss of over $400, 000; deprive Akers of her legal interest in the Richmar Property; affect Akers' credit rating; and, leave Akers and her spouse without financial means to obtain suitable housing, food, medical care, transportation, and other necessities.

         Gregory Funding opposes Akers' motion. In its response in opposition, Gregory Funding argues that Akers' motion and complaint do not conform to the Federal Rules of Bankruptcy Procedure, that the Bankruptcy Court has already addressed this matter and allowed the foreclosure to proceed, that Akers' does not meet the burden for any injunctive type relief, and that this Court has already denied a similar request for injunction.

         II. ANALYSIS

          A. ...


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