Houston’s Federal Bankruptcy Court Scandal Escalates with Another ClerkGate Revelation in 2024

TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE JEFFREY P. NORMAN AND ALL INTERESTED PARTIES:

“Jurisdiction is the power to say what the law is… And to act without jurisdiction “is, by very definition, for a court to act ultra vires.”” – United States v. Willis, 76 F.4th 467, 479 (5th Cir. 2023).

Pursuant to Fed. R. Civ. P. 59(e), applicable to this proceeding by Fed. R. Bankr. P. 9023, Joanna Burke, Plaintiff in the above-referenced adversary proceeding and in the above-referenced bankruptcy case (the “Plaintiff”) timely presents this motion for reconsideration of the Court’s final order of dismissal as signed and docketed in this case on June 4, 2024, and for the reasoning detailed in the incorporated brief presented herein, it is a nullity in law.

This adversary case was necessary to recover damages for the willful violations of the automatic bankruptcy stay, as detailed in Plaintiff’s complaint, Doc. 1, Apr. 29, 2024.

INCORPORATED BRIEF OF PLAINTIFF

Throughout these proceedings and related cases, Defendants have persistently engaged in falsehoods, deceit, harassment, and defamation against Plaintiff. By way of example, you can read PHH’s Motion for Withdrawal of Reference (Doc. 3), where they state on p.4, no. 9:

“Plaintiff’s complaint in this adversary proceeding incorporates her Second Amended Complaint (the complaint on file at the time of removal) in the pending Federal Suit.” (emphasis added).

This is a deliberate falsehood. Plaintiff assumes this pertains to Shelley Hopkins May 30, 2024 “communication”[1] with Judge Welein’s Case Manager regarding providing the district court with the state case removal documents, which Plaintiff retains for comparison, if necessary.

In short, a review of PHH’s snap-removal contradicts Defendant’s statement, see;

Case 4:24-cv-00897 Document 1, Filed on 03/12/24 Exhibit A, p.5, B. Federal Question Jurisdiction, 12, in relevant part:

“See, Plaintiff’s Third Amended Complaint, at pp. 13, 18.”;

Document 1-3,  p.3, “3/4/2024, Third Amended Original Petition”.

JudgeGate & ClerkGate (2024):

Let the record show, this is at least the third[2] time pro se Plaintiff’s USPS Priority Mail has been intentionally withheld from the docket in relation to the latest case(s) involving Plaintiff in S.D. Texas, in addition to mail being purposefully docketed and retained on another court case before US District Judge Alfred H. Bennett (Samuels v. PHH Mortgage Corporation (4:23-cv-04687) District Court, S.D. Texas).

As this motion will clearly show, the judicial machinery itself including the officers of the court, namely  Clerk Mario Rios, Case Manager to assigned Bankruptcy Judge Jeffrey P. Norman, are irrefutably working in tandem to circumvent the Plaintiff’s legal and constitutional rights. In short, they are acting beyond the allowed duties of an officer of the court.

This is not a novel allegation. For example, see Reuters article:

“Emboldened by Impunity (Part II) With ‘Judges Judging Judges,’ Rogues on the Bench have little to Fear”, and which includes former Judge Curtis Delapp who was caught on video with his clerk backdating and manipulating legal court documents. Article last visited Jun. 17, 2024 – https://2dobermans.com/woof/8q.

Immunity does not apply to either the Judge or the Clerk based on these ultra vires acts.

See; Burke v. PHH Mortgage Corporation (0:23-cv-01119) District Court, D. Minnesota, (Doc. 1, Complaint; Apr. 19, 2023, Count 1.8, p. 88-89)(“The MN Complaint”).

The US Post and Federal Paper Trail: How the Docket Was Manipulated by the Court

As this motion will detail, the Court has already sided with the Defendants in this case by their own actions.

Plaintiff proves beyond a reasonable doubt that if her Motion for Default Judgment with Declaration and Proposed Order had been entered by the Court when it actually arrived, then a Default Judgment would have been entered against the Defendants.

Instead, by manipulating the docket, and working in collusion with counsel for Defendants, Mark and Shelley Hopkins, this allowed for a late answer by PHH to file the motion to “Withdraw the Reference”, which was entered merely one day before the Order of Dismissal.

However, this would potentially only release one of the Defendants, with the others remaining non-responsive, e.g. Deutsche Bank/Codilis and AVT/Mackie Wolf.

In light of this problem for the Defendants, the Court decided to get creative. Absent all jurisdiction, assigned Bankruptcy Judge Jeffrey P. Norman signed  a void order of dismissal on Apr. 4, 2024 to “expedite” the fraud on Plaintiff at the behest of Defendants.

See Doc. 3, p.7 at 15, in part;

“Withdrawing the reference will eliminate at least one level of likely appeal – from the bankruptcy court to the district court – whereby, saving judicial resources and speeding up final resolution.”

It is clear and obvious the Court is manipulating rules and laws to favor the Defendants. In conclusion, this Court does not function as an impartial adjudicator; instead, it brazenly aligns itself with the Defendants as a collaborator, as the documentary evidence confirms.

ClerkGate:

The acts witnessed, including the dishonest denials made in writing by bankruptcy court Clerk Mario Rios (See Exhibit 1) is labeled “ClerkGate (2024)” by Plaintiff.

It is a continuation of the judicial machinery violating the rule of law, and Plaintiff’s protections and rights under the Fourth, Fifth and Fourteenth Amendments of the US Constitution from “ClerkGate (2021)”, where the Fifth Circuit Clerk Christina Gardner impersonated the Burkes’ on appeal by unconstitutionally and fraudulently seizing and modifying their pleading to the colossal detriment of their case.

See, The MN Complaint generally and which incorporates legal authority;

“Clerks serve to file cases as they arrive, not to participate as adversaries in those disputes.” Courthouse News Serv. v. Gilmer, No. 21-2632 at *5 (8th Cir. Sep. 19, 2022).

The Timeline of Events

The timeline of event lends support to Plaintiff’s complaint.

On Monday, May 27, 2024, a federal holiday, the Plaintiff prepared her motion for default judgment against all Defendants and which was posted the next morning, Tuesday, at 0605 hrs by USPS Priority Mail in Kingwood.

The USPS website stated the mail would arrive on Thursday, May 30, 2024[3].

According to the USPS website, the mail did not arrive on that date, nor the next day, Friday, May 31.

The USPS website would eventually record delivery confirmation at some time during the early hours of Thursday, June 6.

The USPS website claims the delayed mail was delivered on Monday, June 3 at 1321 hrs.[4]

It was during this period that disquieting events occurred, resulting in the Order of dismissal of Plaintiff’s Adversary proceedings, without a show cause order[5], and/or without notice, and/or without a hearing, and where it would cause prejudice to Plaintiff.[6]

The Main Bankruptcy Case (24-30885)

Main case: docket and timeline (key events); Ch. 13 Voluntary Petition filed (Mar. 1, 2024, Doc. 1); Notice of Appearance by DBNTCO (Mar. 8, Doc. 13); Notice of Emergency Motion to Remand (Mar. 19, Doc. 21); Motion to Abate with request for hearing (Mar. 29, Doc. 23); Adversary case backdated on docket (Mar. 29, Doc. 28); Order Dismissing case (Apr. 1, Doc. 24); Order mooting Motion to Abate (Apr. 1, Doc. 25); Order Dismissing Adversary Case (Jun. 4, Doc. 29).

The Adversary Case (24-03056)

Adversary case: docket and timeline (key events); Adversary case backdated on docket (Mar. 29, Doc. 1); Summons Issued (Apr. 10, Doc. 2); PHH’s Motion for Withdrawal of Reference (Jun. 3, Doc. 3); Order Dismissing Adversary Case (Jun. 4, Doc. 4); Plaintiff’s Motion for Default Judgment (Jun. 4, Doc. 6); Plaintiff’s Declaration (Jun. 4, Doc. 7); Order Denying Motion for Default (Jun. 7, Doc. 8).

The Order Dismissing the Adversary Case is Untimely and Void

The Order of June 4, 2024 was more than 30 days after dismissal of the related bankruptcy case on April 1, 2024, which is procedurally untimely, and void.

The Adversary case should have been dismissed at the time of dismissal of the Bankruptcy case on Apr. 1.

See; Rule 7041-1 Dismissal of Adversary Proceedings:

“Whenever a case under the Bankruptcy Code is dismissed by order of the court, any adversary  proceeding pending in the case will be dismissed without prejudice and without further order of the court.”

https://www.prb.uscourts.gov/sites/default/files/local_rules/LBR-7041-1.pdf, (last visited, Jun. 14, 2024)[7].

As admitted by its own actions, this court did not dismiss the case after the bankruptcy case was dismissed, either by implication or order.

The record confirms quite the contrary, and that the court agreed the Adversary Proceedings warranted continuation of the case by issuing the summons nearly two weeks after (May 10, 2024) the docketed filing of the complaint on April 29, 2024.

Withdrawal of Reference

In support, PHH’s argument sought “Withdraw of the Reference”, and in doing so asserted this court’s jurisdiction to decide the motion (Doc. 3, June 3, 2024).

That pleading alone is sufficient to support Plaintiff’s assertion the court decided to retain jurisdiction in the absence of all jurisdiction when relying on the bankruptcy code itself.

Mandatory and/or Permissive Withdrawal

However, the type of withdrawal warrants further discussion.

Mandatory withdrawal of the reference must be granted when there is a motion such as PHH’s before the clerk and court:

as discussed in Professional Fee Matters Concerning the Jackson Walker LLP (23-00645),

United States Bankruptcy Court, S.D. Texas, (“In re JW”) Report and Recommendation, Doc. 44, p. 6.

Instead, PHH relied solely upon permissive withdrawal of the reference.

See In Re JW, Doc. 44, p. 7.

In Plaintiff’s adversary proceedings, mandatory withdrawal over this court’s order of dismissal would control – based on PHH’s documented assertions and combined with the fact this case involves a national bank  (Deutsche Bank) and non-bank (PHH), and where these financial institutions operate across multiple states, affecting customers, investors, and regulatory bodies across state lines (Interstate Commerce).

In summary, this court’s order entered the day after PHH’s motion dismissing the case is erroneous, in law.

This court – by its own actions – asserted jurisdiction to decide PHH’s motion currently before it.

In taking that position, it should have ensured proper briefing and a hearing to formulate and present a formal Report and Recommendation to the District Court.[8]

In this scenario, Plaintiff maintains what the court could not do is dismiss the adversary proceedings more than 30 days after dismissal of the underlying bankruptcy case, long after the court had allowed the adversary case to proceed, issued the summons 13 days after the Plaintiff’s complaint was received, and where there were pleadings presented on the docket which the Court was mandated to review.

A Willful Violation of the Automatic Bankruptcy Stay

Additionally, and/or in the alternative, a willful violation of the automatic bankruptcy stay does not warrant dismissal[9], and two willful violations most certainly do not warrant dismissal.

That stated, the question remains as to whether this court retained subject matter jurisdiction[10] over the objections of Plaintiff to decide the case, or if an Article III United States District Court Judge was necessary.

This court never directly addressed or answered that specific question, which it is required to do before issuing any Order(s) on the merits (including consideration of the withdrawal of reference and default judgment motions), and in light of the state removed and related case before US District Judge Ewing Werlein, Jr., (Burke v. PHH Mortgage Corporation (4:24-cv-00897) District Court, S.D. Texas) which was snap removed in willful violation of the bankruptcy stay by Defendants in this adversary case.

The Plaintiff’s Adversary Complaint

By this court’s own admission, the Plaintiff’s Adversary Petition would be docketed (and back-dated to Mar. 29, 2024) by the court after dismissal of the underlying bankruptcy case (Apr. 1, 2024).

Again, this supports the Plaintiff’s case that the Court’s Order of Dismissal and reasoning provided;

“”A bankruptcy court should generally dismiss related proceedings after the bankruptcy case has been closed”, citing to In re Querner, 7 F.3d 1199 (5th Cir. 1993).”

Notably, it was only after Plaintiff advised the Court and Clerk that she had a timestamped copy of the Petition returned to her by USPS mail on Apr. 29 2024, that the Court filed the same on the docket, recording it as shown on Joanna Burke’s copy from the Court.

Intentional Misfiling and Retention of Plaintiff’s Pleadings on Wrong Case Docket

For specific details, read the Motion to Reinstate dated Feb. 7, addressed to Bankruptcy Judge Jeffrey P. Norman regarding the Bankruptcy case, yet which was erroneously entered by the court onto the case styled;

Samuels v. PHH Mortgage Corporation (4:23-cv-04687) District Court, S.D. Texas (Doc. 12, Feb. 9, 2024).

The same would occur on Apr. 10, with the court docketing Plaintiff’s [second] Motion to Reinstate case dated Apr. 7, 2024 in the Samuels case, despite a cover letter with the bankruptcy court case number (24-30885) clearly distinct and visible, as well as the motion itself referring to bankruptcy Judge Jeffrey P. Norman.[11]

This was in response to the court’s Apr. 1, 2024 Order Mooting the Plaintiff’s Motion to Abate in the bankruptcy case, Doc. 25.

Electronic Filing Denied to Pro Se Plaintiff’s in Houston Federal Courts

All of this could be avoided if the Southern District Courts’ allowed for electronic filing by pro se litigants.

However, it is clear and obvious that by demanding pro se litigants to file by post rather than electronically has served as an additional sword in the judiciary’s armory in these proceedings to commit fraud by the court, circumvent due process, access to courts, the right to notice and a hearing, as commanded in law.

Whilst the S.D. Texas Courts have, from time to time granted electronic filing, these are selective, and in Plaintiff’s own experience, premeditated.

The orders which do grant ECF filing permissions are issued when the civil litigation has been fully briefed, and in anticipation of a final court order.

See; Judge Alfred H. Bennett’s ORDER (Doc. 47) granting Doc. 5; Motion to File Electronically (Entered: 03/26/2022), Burke v. Ocwen Loan Servicing, LLC (4:21-cv-02591), District Court, S.D. Texas.

VERIFICATION

In closing, I, Joanna Burke, as Plaintiff with due authority and competency, resident of Kingwood in the livable forest of Harris County, Texas, born on November 25, 1938 (85 years old), in Kirkintilloch, Scotland, United Kingdom, and currently holding U.S. Citizenship, a valid State of Texas Driver License (last 3 digits are 738), and a Social Security Card (last 3 digits are 874), do solemnly declare under penalty of perjury that the foregoing statements are true and correct.

This verified declaration, made under Chapter 132, Civil Practice and Remedies Code, holds significant weight in legal precedent, as evident in ACI Design Build Contractors Inc. v. Loadholt, 605 S.W.3d 515, 518 (Tex. App. 2020), McMahan v. Izen, No. 01-20-00233-CV, at *15-17 (Tex. App. Sep. 2, 2021), and In re Whitfield, No. 03-21-00170-CR, at *1 n.1 (Tex. App. Nov. 10, 2021).

CONCLUSION

The Court’s June 4, 2024 Order of Dismissal is Void, a Nullity in Law

“As this court has often said: “Where a court has jurisdiction, it has a right to decide every question which occurs in the cause; But if it act without authority, its judgments and orders are regarded as nullities. They are not voidable, but simply void.”” – In re Sawyer, 124 U.S. 200, 220 (1888)

Subject matter jurisdiction is tested as of the date an adversary proceeding begins and was present at the time the original complaint was filed on Apr. 29, 2024, see; Gomez v. Lone Star Nat’l Bank (In re Saenz), CASE NO: 13-70423, at *3-4 (Bankr. S.D. Tex. Mar. 6, 2015).

As the aforementioned incorporated brief details, this court would accept subject matter jurisdiction at the beginning of these proceedings but contrary to the bankruptcy code, did not dismiss this adversary case after the dismissal of the underlying main bankruptcy case.

By the time of entry of the order of dismissal, the Court’s own actions were both fraudulent and to the legal detriment of Plaintiff, in violence to the Constitution and rule of law. See; The MN Complaint.

Thus, any acts thereafter, including this Court’s order of dismissal is void, a nullity.

The Plaintiff’s timely Verified Motion for Reconsideration with Incorporated Brief should be GRANTED.

RESPECTFULLY submitted this 17th day of June, 2024.

[1] This “communication” is detailed in a later footnote.

[2] First time: USPS Express Mail posted on Mar. 27, 2024, delivered on March 29, 2024 and which included (i) Cover letter dated Mar. 27, (ii) First Motion to Abate with Proposed Order docketed as Mar. 29, 2024, entered on Mar. 29, 2024 (iv) Adversary Complaint; docketed as Mar. 29, 2024, entered on Apr. 4, 2024 in Bankruptcy Case 24-30885 (Doc. 28), and Adv. Case 24-03056 (Doc. 1).  See USPS Tracking on Website; https://2dobermans.com/woof/8p

Dishonest Clerk: You will note the delay in filing one of the 4 documents/pleadings included in the Express Mail envelope – the Adv. Complaint, which Clerk Rios denied existed via email, but he would change his untenable and untruthful position after Plaintiff advised she had a date and timestamped physical copy, sent to her from this Court.

Plaintiff emailed Mario Rios on Monday, Apr.1, 9.09 am discussing the missing Adv. Complaint from the docket and also attaching an earlier email (Feb. 22, 2024) complaining to both Rios and copying the known District Court’s Operations email (where Plaintiff has communicated previously) about other instances of missing pleadings sent via USPS. (See Exhibit 1)

Rios replied stating; 1. Your case was dismissed for non-compliance of Order signed on March 14, 2024. The Court had granted your motion for extension and gave you until March 29 to get the documents on file. They were not. 2. The Motion to Abate was Denied as Moot. 3. We (the Court) does not have an Adversary Case on file. (emphasis added).

Second time: USPS Priority Mail posted on Apr. 30, 2024, delivered on May 15, 2024, docketed as May 16, 2024, entered on May 20, 2024., in Snap-Removed State Case before Judge Werlein, Motion to Strike and Motion for Extension of Time, Docs. 13-14.  See USPS Tracking on Website; https://2dobermans.com/woof/8n

Compare with: USPS Priority Mail posted on Apr. 8, 2024, delivered on Apr. 10, 2024, docketed as May 10, 2024, entered on May 10, 2024, in Snap-Removed State Case before Judge Werlein, Reply to Remand and Reply to PHH’s Motion to Clarify, Docs. 9-10.  See USPS Tracking on Website; https://2dobermans.com/woof/8o

Third time: USPS Priority Mail posted on May 28, 2024, delivered on Jun 3, 2024, docketed as Jun 4, 2024, entered on Jun 7, 2024 in Adv. Case, Motion for Default Judgment and Declaration Docs. 6-7. See USPS Tracking on Website; https://2dobermans.com/woof/8m

[3] Importantly, at 1513 hrs on Thursday, May 30, 2024, Plaintiff received an email from counsel for PHH concerning Judge Ewing Werlein, Jr.’s case manager (Clerk), who was holding a remote conversation and email thread with counsel for PHH, purportedly asking for a copy of the “removed” State case.

Counsel for PHH, Shelley Hopkins disclosed this via email, however, she refused to provide a copy of the documents she submitted at the District Court’s request, electing only to send the cover letter for the attention of Judge Ewing Werlein, Jr., signed “Best Regards, Shelley Hopkins”, dated May 30, 2024.

As this Court is aware, the Plaintiff’s adversary complaint is premised on the timing of this removal, which Plaintiff asserts is a willful violation of the Automatic Bankruptcy Stay.

[4] Compare the delivery timeline and extensive delays discussed with the latest USPS Priority Mail posted by Plaintiff to the assigned PO Box for S.D. Texas court filings intended for the Houston Division. The Plaintiff’s mail was posted on June 11, 2024 and arrived the very next day on June 12, at 13.31 hrs: https://2dobermans.com/woof/8l

[5] See; Robinson v. Wilburton Vill. Apartments (In re Robinson), No. 21-80455, at *2 (Bankr. E.D. Okla. Feb. 28, 2022) (“Having dismissed Debtor’s chapter 13 bankruptcy case on January 12, 2022, this Court entered an Order to Show Cause why this adversary proceeding should not be dismissed.”).

[6] See; Jefferson v. Cmty. Bank (In re Jefferson), 477 B.R. 645, 648 (Bankr. S.D. Miss. 2012) (“…the bankruptcy court may consider where dismissal would cause prejudice to one of the parties.”).

[7] S.D. Texas Bankruptcy Court local rules do not incorporate this specific rule, but the reference to bankruptcy code is controlling.

[8] On the contrary, PHH’s narrative is rather confusing.

They keep repeating; “A district court has discretion to withdraw a case referred to the bankruptcy court “on timely motion of any party, for cause shown.” 28 U.S.C. § 157(d).”

However, despite their own assertions, this motion has been brought before the bankruptcy court, not the district court – see;

Lacey v. Bac Home Loans Servicing, LP (In re Lacey), No. 10-19903-JNF, at *17 (Bankr. D. Mass. Oct. 27, 2011)

(“This Court does not consider the distinction between core and non-core matters to be dispositive of whether it has authority to withdraw the reference. The decision to do so is within the purview of the district court. The Defendants may file a motion to withdraw the reference with this court for transmittal to the district court which may assess its timeliness.”).

[9] “Notwithstanding, an action under § 362(h) for damages for willful violation of the automatic stay, survives the dismissal of the bankruptcy case.” –  Jones v. Boston Gas Company, 369 B.R. 745, 748 (B.A.P. 1st Cir. 2007); 40235 Washington St. Corp. v. Lusardi, 329 F.3d 1076, 1080 (9th Cir. 2003); In re Morris, 950 F.2d 1531 (11th Cir.1992); In re Carrahar, 971 F.2d 327 (9th Cir.1992); Porges v. Gruntal & Co. (In re Porges), 44 F.3d 159, 162 (2nd Cir.1995).

[10] The bankruptcy case within which this adversary proceeding began has been dismissed. However, subject matter jurisdiction is tested as of the date an adversary proceeding begins, and the dismissal of the main case does not automatically strip the court of subject matter jurisdiction – Brooks v. Rosebar (20-10018) United States Bankruptcy Court, District of Columbia, Doc. 5, Aug. 10, 2020 (citing In re Querner, amongst many cases).

[11] By way of comparison, see; Keita v. Nerdrez (and PHH Mortgage Corporation), 23-CV-2103 (LTS) (S.D.N.Y. Apr. 5, 2023), where the Chief Judge accidentally “mislabeled” the case number in her initial transfer order (Doc. 3, Mar. 21, 2023), which was corrected by the court in her subsequent order (Doc. 4, Apr. 5, 2023).

U.S. District Court
SOUTHERN DISTRICT OF TEXAS (Houston)
CIVIL DOCKET FOR CASE #: 4:24-cv-00897

RECAP Actions

Date Filed	#	Docket Text
03/12/2024	1	NOTICE OF REMOVAL from 11th Judicial District Court of Harris County, Texas, case number 2023-86973 (Filing fee $ 405 receipt number ATXSDC-31316463) filed by PHH Mortgage Corporation. (Attachments: # 1 Exhibit A, # 2 Civil Cover Sheet B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F)(Hopkins, Mark) (Entered: 03/12/2024)
03/13/2024	2	ORDER for Initial Pretrial and Scheduling Conference and Order to Disclose Interested Persons. Initial Conference set for 7/12/2024 at 02:30 PM in Room 11521 before Judge Ewing Werlein, Jr. (Signed by Judge Ewing Werlein, Jr) Parties notified.(DanielBerger, 4) (Entered: 03/13/2024)
03/13/2024	3	NOTICE to Pro Se Litigant of Case Opening. Party notified, filed. (DanielBerger, 4) (Entered: 03/13/2024)
03/14/2024	4	NOTICE of Appearance by Shelley L. Hopkins on behalf of PHH Mortgage Corporation, filed. (Hopkins, Shelley) (Entered: 03/14/2024)
03/19/2024	5	Emergency MOTION to Remand integrating memorandum and brief in support by Joanna Burke, filed. Motion Docket Date 4/9/2024. (Attachments: # 1 Proposed Order) (AaronJackson, 4) (Entered: 03/19/2024)
03/27/2024	6	CORPORATE DISCLOSURE STATEMENT by PHH Mortgage Corporation identifying Ocwen Financial Corporation as Corporate Parent, filed. (Hopkins, Shelley) (Entered: 03/27/2024)
03/29/2024	7	Opposed MOTION for Clarification by PHH Mortgage Corporation, filed. Motion Docket Date 4/19/2024. (Attachments: # 1 Proposed Order) (Hopkins, Shelley) (Entered: 03/29/2024)
04/05/2024	8	RESPONSE in Opposition to 5 MOTION to Remand, filed by PHH Mortgage Corporation. (Hopkins, Mark) (Entered: 04/05/2024)
04/10/2024	9	REPLY to Response to 5 MOTION to Remand, filed by Joanna Burke. (dah4) (Entered: 04/10/2024)
04/10/2024	10	RESPONSE to 7 Opposed MOTION for Clarification filed by Joanna Burke. (dah4) (Entered: 04/10/2024)
04/12/2024	11	MOTION Declare Plaintiff as a Vexatious Litigant by PHH Mortgage Corporation, filed. Motion Docket Date 5/3/2024. (Attachments: # 1 Proposed Order) (Hopkins, Mark) (Entered: 04/12/2024)
05/15/2024	12	NOTICE of Non-Response by Plaintiff re: 11 MOTION Declare Plaintiff as a Vexatious Litigant by PHH Mortgage Corporation, filed. (Hopkins, Mark) (Entered: 05/15/2024)
05/16/2024	13	MOTION for Extension of Time to respond to PHH Mortgage Corporation’s motion to declare plaintiff Joanna Burke as a vexatious litigant by Joanna Burke, filed. Motion Docket Date 6/6/2024. (Attachments: # 1 Proposed Order) (acj4) (Entered: 05/20/2024)
05/16/2024	14	MOTION to Strike PHH Mortgage Corporation’s 11 MOTION Declare Plaintiff Joanna Burke as a Vexatious Litigant by Joanna Burke, filed. Motion Docket Date 6/6/2024. (Attachments: # 1 Proposed Order) (acj4) (Entered: 05/20/2024)
06/05/2024	15	RESPONSE in Opposition to 14 MOTION to Strike 11 MOTION Declare Plaintiff as a Vexatious Litigant, 13 MOTION for Extension of Time to respnd to PHH Mortgage Corporation’s moton to declare plaintiff Joanna Burke as a vexatious litigant, filed by PHH Mortgage Corporation. (Hopkins, Mark) (Entered: 06/05/2024)
06/12/2024	16	Opposed MOTION for Continuance of Initial Pretrial & Scheduling Conference by PHH Mortgage Corporation, filed. Motion Docket Date 7/3/2024. (Attachments: # 1 Proposed Order) (Hopkins, Shelley) (Entered: 06/12/2024)
06/13/2024	17	REPLY to 11 MOTION Declare Plaintiff as a Vexatious Litigant, 14 MOTION to Strike 11 MOTION Declare Plaintiff as a Vexatious Litigant, and motion for extension of time, filed by Joanna Burke. (acj4) (Entered: 06/14/2024)

Defendant PHH Mortgage Corporation (“PHH”) respectfully moves to withdraw the Reference pursuant to 28 U.S.C. §157(d) and Rule 5011 of the Federal Rules of Bankruptcy Procedure…

In bankruptcy proceedings, a “motion for the withdrawal of the reference” typically refers to a legal request made by a party involved in a bankruptcy case to transfer certain matters from the jurisdiction of the bankruptcy court to a district court.

Bankruptcy courts are specialized federal courts that handle bankruptcy cases exclusively. However, certain matters within a bankruptcy case may involve issues that fall outside the traditional scope of bankruptcy law or require adjudication in a district court for various reasons, such as complex legal issues, disputes involving non-bankruptcy laws, or the need for a jury trial.

When a party files a motion for the withdrawal of the reference, they are essentially asking the bankruptcy court to “withdraw” or transfer specific matters or proceedings within the bankruptcy case to a district court for resolution. This motion is typically filed with the bankruptcy court and must state the reasons why the withdrawal is necessary or appropriate.

The bankruptcy court will then consider the motion and may grant it if it determines that withdrawal is warranted based on the circumstances of the case. If the motion is granted, the matters specified in the motion will be transferred to the district court for further proceedings, while the rest of the bankruptcy case continues to be handled by the bankruptcy court.

“Mrs. Burke –

Please see attached copy of correspondence sent to the Court today per their request below.

Please note I have copied the Court on this email.”

The copy email from Shelley Hopkins does not provide a copy of what documents she provided the court with.

Priority Mail®

4207720810109405830109355099747600

Scheduled Delivery date: 05/30/2024

Shipped To:

NATHAN OCHSNER
CLERK OF COURT
PO BOX 61010
HOUSTON TX 77208-1010 US

Case Manager to Judge Jeffrey P. Norman
Bob Casey United States Courthouse
515 Rusk, Room 403
Houston, Texas 77002

Date: May 27, 2024

Re: Burke v. Deutsche Bank National Trust Company, 24-03056, (Bankr. S.D. Tex.)

Dear Sir or Madam,

JOANNA BURKE’S FILINGS IN THIS CASE

Please find enclosed the following documents:-

1.    PLAINTIFF’S REQUEST FOR CLERK’S ENTRY OF DEFAULT AGAINST DEFENDANTS

2.    PLAINTIFF’S DECLARATION IN SUPPORT OF  REQUEST FOR DEFAULT JUDGMENT AGAINST DEFENDANTS

3.    CLERK’S ENTRY OF DEFAULT

Due to the recent unexplained delays in USPS Priority Mail arriving at this court, I would kindly ask that you provide a hearing date on the above pleadings.

If you have any questions, please contact me at the information below.

Thank you.

Sincerely,

Joanna Burke

46 Kingwood Greens Dr.,
Kingwood, TX, 77339
Email: joanna@2dobermans.com
Tel: (832) 466-9015
Fax: +1 (866) 705-0576

Encls.

LIT: Trial Reset by Court to December 2024

UNOPPOSED VERIFIED MOTION FOR CONTINUANCE

TO THE HONORABLE JUDGE OF SAID COURT:

COMES NOW First American National, LLC (“First American”) and files this Unopposed Verified Motion for Continuance of trial, requesting the Court continue the trial setting from May 6, 2024.

In support thereof, First American would respectfully show the Court:

1.                  This case is current set for trial for the two week period beginning May 6, 2024.

2.                  This is continuance from trial is sought due to a family emergency. Counsel for First American has a family emergency regarding a terminally ill brother that requires counsel’s immediate presence in Dallas, Texas for the foreseeable future.

3.                  Counsel for Plaintiff Byronica Conley and Counsel for Defendant All About Homes both indicated that they are not opposed to this motion for continuance.

4.                  This request for continuance is not for delay only, but so that justice may be done.

Therefore, Defendant First American respectfully requests the Court grant the request for a continuance of the trial setting.

Respectfully submitted,

By:      /s/ Mark D.. Hopkins

Mark D. Hopkins

State Bar No. 00793975

HOPKINS LAW, PLLC
2802 Flintrock Trace, Suite B103
Austin, Texas 78738
(512) 600-4320
mark@hopkinslawtexas.com

Shelley L. Hopkins
State Bar No. 24036497
BARRETT DAFFIN FRAPPIER
TURNER & ENGEL, LLP – Of Counsel
2802 Flintrock Trace, Suite B103
Austin, Texas 78738
(512) 600-4320

ShelleyH@bdfgroup.com
shelley@hopkinslawtexas.com

Robert D. Forster, II
State Bar No. 24048470

BARRETT DAFFIN FRAPPIER TURNER & ENGEL, LLP
4004 Belt Line Road, Ste. 100
Addison, Texas 75001
(972) 386-5040
RobertFO@bdfgroup.com

Attorneys for Defendant First American National, LLC

CERTIFICATE OF CONFERENCE

I certify that on this the 6th day of May 2024, I conferred with counsel for Plaintiff Byronica Conley and counsel for co-defendant All About Homes, both of whom advised by email that they are unopposed to First American’s request for continuance.

/s/ Mark D. Hopkins
Mark D. Hopkins

TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE JEFFREY P. NORMAN AND ALL INTERESTED PARTIES:

On April 1, 2024, this court entered the following order;

“This matter is before the Court on the First Verified Motion to Abate Proceedings (ECF No. 23) filed by the debtor, pro se.

This case was dismissed on April 1, 2024, due to the debtor’s failure to abide by the Court’s order requiring all bankruptcy statements schedules, and the credit counseling certificate to be filed by March 29, 2024 (ECF No. 17).

ACCORDINGLY, IT IS ORDERED that the First Verified Motion to Abate Proceedings is denied as moot. Dated: 04/01/2024”

– Doc 25.

This order discounted the Joanna Burke’s adversary proceeding, which this court denied existed.

As background: Plaintiff filed an adversary petition (regarding violations of automatic stay) and posted it along with a Motion to Abate, which was date and time-stamped and docketed on March 29, 2024.

The adversary complaint, however, was denied as received by the bankruptcy court, and they refused to docket it.

This only appeared on the docket after the court was made aware  on April 4 that Plaintiff had a date and time-stamped copy returned to her by the court.

Only then did this court add the Plaintiff’s petition to the docket (backdating it to March 29, 2024,  Doc. 28) and create an Adversary case; Burke v. Deutsche Bank National Trust Company (24-03056), U.S. Bankruptcy Court, S.D. Texas.

The district court case is currently being briefed by the parties related to the Plaintiff’s Emergency Motion to Remand.

Today, Plaintiff replied to the Response by PHH Hopkins in those proceedings, a copy of which is attached as EXHIBIT “Reply to PHH Hopkins (Remand)” and should be read in conjunction with this motion.

In light of ongoing related cases, Plaintiff avers this court’s dismissal was both premature and erroneous and respectfully requests the court: (i) reinstate the case, and (ii) grants the relief requested in the motion to abate.

RESPECTFULLY submitted this 7th day of April, 2024.

__________________

Joanna Burke, Harris County

Prevented from filing electronically, Joanna Burke sent her pleadings via USPS Express Mail on Wed. 27 March 2024. It was delivered the next morning around 10am.

However, the Houston Clerk(s) responsible have boldly refused to file an adversary proceeding on the date it was received – or in this case, at all – in order to legally abuse and frustrate the elder litigant, and in the process thwarting Joanna Burke’s attempts to receive a fair and impartial judge and tribunal.

This is more pointed when taking into account the Clerks’ filed another motion which was included in the same express mailed envelope, but yet refuse to acknowledge or file the adversary complaint – despite the datestamped cover letter referring to the same.

This is in keeping with the many scandals that continue to haunt this federal building.

A more in-depth LIT commentary will follow this breaking-news update pertaining to the ongoing and very scandalous litigation involving Joanna Burke, an 85-year old widow who is deemed a non-prisoner, pro se litigant. This court labeling means the judiciary, judges, clerks and officers of the court are free to abuse her every minute of every day, 365-days a year.

BDF Hopkins Fraudulent Removal to SDTX Federal Court

Generally, the dismissal of the underlying bankruptcy case results in the dismissal of related adversary proceedings because federal jurisdiction is “premised upon the nexus between the underlying bankruptcy case and the related proceedings.” But, there are exceptions.

One such exception is for proceedings to enforce sanctions and contempt for violation of the automatic stay. A Bankruptcy Court will retain jurisdiction “for the purpose of vindicating the court’s own authority and to enforce its own orders.”

See In re Bankston, 1:12-BK-14022-SDR, 2015 WL 6126440, at *2 (Bankr. E.D. Tenn. Oct. 15, 2015)

Basically, the reasoning goes, an action for contempt of court resulting from a party’s blatant disregard of the Bankruptcy Code and the authority of the Bankruptcy Court is something that the Bankruptcy Court takes very seriously and will enforce, independent of whether the underlying case still exists.

In In re Johnson, the Tenth Circuit Court of Appeals noted that bankruptcy courts retain jurisdiction over adversary proceedings after dismissal or closing of the underlying bankruptcy case.

Johnson dealt with an adversary proceeding for willful violation of the automatic stay-a core proceeding over which the bankruptcy court retained jurisdiction.

MEMORANDUM OPINION

Marvin Isgur, United States Bankruptcy Judge

Gustavo Giles-Flores alleges that Braeburn Plaza, Inc. violated the automatic stay by foreclosing on his home.

Mr. Giles-Flores exempted his home under the Texas homestead exemption.

Braeburn moved to dismiss this adversary proceeding because the home was not property of the bankruptcy estate at the time of foreclosure. Because the home was “arguably” estate property, Braeburn should have obtained relief from the stay before foreclosure.

See Brown v. Chesnut (In re Chesnut) , 422 F.3d 298, 304 (5th Cir. 2005).

The motion to dismiss is denied.

BACKGROUND

Mr. Giles-Flores purchased his home on April 24, 2015.

(ECF No. 1 at 1).

That home is subject to fees imposed by the Braeburn Plaza, Inc. Homeowners’ Association.

(ECF No. 1 at 2).

On October 3, 2016, Mr. Giles-Flores filed a chapter 13 bankruptcy petition.

(Case No. 16-34941, ECF No. 1).

He did not include any payments to Braeburn in his original schedules.

(Case No. 16-34941, ECF No. 13).

On October 3, 2016, Mr. Giles-Flores filed a plan providing for the total debt claim on the home.

(Case No. 16-34941, ECF No. 2 at 3).

The plan also provides that

“[t]he Debtor(s) will be granted a discharge in accordance with § 1328. Property of the estate shall vest in the Debtor(s) upon entry of the discharge order.”

(Case No. 16-34941, ECF No. 2 at 8).

On October 17, 2016, Mr. Giles-Flores exempted his homestead pursuant to Texas Property Code § 41.001 as made applicable by 11 U.S.C. § 522(b)(3).

(Case No. 16-34941, ECF No. 13 at 10).

None of Mr. Giles-Flores’ creditors objected.

(ECF No. 11 at 12; Case No. 16-34941, ECF No. 26).

If no timely objections are filed, a claimed exemption is allowed 30 days after the later of

(i) the conclusion of the § 341 creditors’ meeting;

or

(ii) the date that the exemption was claimed.

See FED. R. BANKR . P. 4003(b)(1).

The meeting of creditors concluded on November 18, 2016.

(Case No. 16-34941, ECF No. 26).

30 days later, on December 18, 2016, the exemption was allowed.

Mr. Giles-Flores amended his plan on December 12, 2016, and the Court confirmed the amended plan on December 15, 2016.

(Case No. 16-34941, ECF Nos. 31; 36).

Mr. Giles Flores was required to pay, but did not pay, homeowners’ fees arising after he filed his bankruptcy petition.

On December 3, 2019, Braeburn’s attorney wrote to Mr. Giles-Flores demanding $2,841.54 within 30 days for post-petition homeowners’ association dues.

(ECF No. 1 at 24–25).

Braeburn then filed the foreclosure lawsuit in Harris County District Court on February 20, 2020.

(ECF No. 1 at 13).

The Harris County District Court permitted Braeburn to foreclose on September 27, 2021.

(ECF No. 1 at 14).

Braeburn appointed Carl Quezada as Trustee to foreclose on the home.

(ECF No. 1 at 72–73).

Mr. Quezada recorded a notice of his sale of the home on October 6, 2021.

(ECF No. 1 at 75).

Mr. Giles-Flores’ attorney warned Braeburn’s attorney of Mr. Giles-Flores’ bankruptcy proceedings shortly thereafter.

(ECF No. 1 at 78).

Mr. Giles-Flores filed an amended modification of his plan on October 14, 2021 proposing to add the post-petition homeowners’ association assessments.

(Case No. 16-34941, ECF No. 85 at 1, 4, 17).

Nonetheless, on November 2, 2021, Mr. Quezada foreclosed on the home and sold it to a third party.

(ECF No. 1 at 16).

Braeburn’s attorney informed Mr. Giles-Flores of the sale a week later.

(ECF No. 1 at 16–17).

Mr. Giles-Flores filed this adversary proceeding on November 22, 2021.

(ECF No. 1).

He maintains that the home was property of the bankruptcy estate at the time of the foreclosure.

(ECF No. 1 at 17).

The complaint alleges that Braeburn willfully violated the automatic stay by foreclosing on and selling the home.

(ECF No. 1 at 18).

In its motion to dismiss filed on November 30, 2021, Braeburn argues that the home was not estate property at the time of the foreclosure.

(ECF No. 6 at 2).

The Court heard oral argument on January 6, 2022 and took the matter under advisement following supplemental briefing.

JURISDICTION

The Court has subject matter jurisdiction over this adversary proceeding under 28 U.S.C. § 1334.

This matter is a core proceeding under 28 U.S.C. § 157(b)(2)(A).

Venue is proper in this District consistent with 28 U.S.C. §§ 1408 and 1409.

LEGAL STANDARD

A court may dismiss a complaint for “failure to state a claim upon which relief can be granted.”

FED. R. CIV. P. 12(b)(6).

Federal Rule of Bankruptcy Procedure 7012 incorporates Federal Rule of Civil Procedure 12(b) in adversary proceedings.

FED. R. BANKR . P. 7012.

In evaluating a complaint under Rule 12(b)(6), a court must examine whether the pleading “state[s] a claim to relief that is plausible on its face.”

Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ).

A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”

Powers v. Northside Indep. Sch. Dist. , 951 F.3d 298, 305 (5th Cir. 2020) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ).

“Although a district court must assume the veracity of well-pleaded facts, a complaint that fail[s] to show more than mere conclusory allegations is properly met with dismissal for failure to state a claim.”

Smith v. Dep’t of Health & Hosps. La. , 581 F. App’x 319, 321 (5th Cir. 2014) (quoting City of Clinton v. Pilgrim’s Pride Corp. , 632 F.3d 148, 155 (5th. Cir. 2010) (internal quotation marks omitted)).

Rule 12(b)(6) “authorizes a court to dismiss a claim on the basis of a dispositive issue of law.”

Turner v. AmericaHomeKey Inc. , 514 F. App’x 513, 516 (5th Cir. 2013) (quoting Neitzke v. Williams , 490 U.S. 319, 326, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) ).  DISCUSSION

Braeburn moved to dismiss this adversary proceeding because

(i) the foreclosure did not violate the automatic stay when the estate had no interest in Mr. Giles-Flores’ home;

(ii) if Braeburn violated the automatic stay, it was not willful;

and

(iii) Mr. Giles-Flores was not injured.

(ECF No. 6 at 6).

Bankruptcy courts in this Circuit disagree whether the estate retains legal title to property exempted under an “in-kind” exemption statute.

Given the chronology of events, the Court need not weigh in. Because the home was arguably estate property on the foreclosure date, the automatic stay applied.

See Chesnut , 422 F.3d at 304.

Because Braeburn had knowledge of the bankruptcy, Braeburn should have petitioned this Court before proceeding with the foreclosure.

Braeburn’s actions were willful, and Mr. Giles-Flores plausibly alleges injury.

I. BRAEBURN SHOULD HAVE PETITIONED THE COURT BEFORE FORECLOSING

The commencement of Mr. Giles-Flores’ bankruptcy created a bankruptcy estate.

The bankruptcy estate includes “all legal or equitable interests of the debtor in property as of the commencement of the case.”

11 U.S.C. § 541(a)(1).

Debtors may exempt certain property from the estate.

11 U.S.C. § 522(b).

“An exemption is an interest withdrawn from the estate … for the benefit of the debtor.”

Owen v. Owen , 500 U.S. 305, 308, 111 S.Ct. 1833, 114 L.Ed.2d 350 (1991) ; Schwab v. Reilly , 560 U.S. 770, 785, 130 S.Ct. 2652, 177 L.Ed.2d 234 (2010)

(“[E]xemptions represent the debtor’s attempt to reclaim those assets, or more often, certain interests in those assets, to the creditors’ detriment.”).

The parties agree that Mr. Giles-Flores properly exempted his home under the Texas homestead statute.

Exemptions may be categorized as either “in-kind” or an exemption of an interest in property.

In re Luckham , 464 B.R. 67, 72 (Bankr. D. Mass. 2012).

In-kind exemptions allow a debtor to “exempt certain property … in full regardless of value.”

Schwab , 560 U.S. at 784, 130 S.Ct. 2652 ; see, e.g. , 11 U.S.C. §§ 522(d)(9)(professionally prescribed health aids), 522(d)(10)(C) (disability benefits), 522(d)(7)(unmatured life insurance contracts).

Relevant to this matter is whether both beneficial and legal title left the bankruptcy estate when Mr. Giles-Flores exempted his home under the Texas homestead exemption.

Under § 541 of the Bankruptcy Code, the estate was initially vested with both legal and equitable title to the home as of the commencement of the case.

Legal title is “a title that evidences apparent ownership.”

Longoria v. Lasater , 292 S.W.3d 156, 165 (Tex. App.-San Antonio 2009, pet. denied ).

Equitable title is “a title that indicates a beneficial interest in property.” Id.

A. Texas Homestead Exemption

Under § 522(b)(2), a debtor must choose between federal and state homestead exemptions under § 522(d).

NCNB Tex. Nat’l Bank v. Volpe (In re Volpe) , 943 F.2d 1451, 1452 (5th Cir. 1991).

Section 522(d)(1) provides the federal homestead exemption: as of April 1, 2022, a debtor may exempt “[t]he debtor’s aggregate interest, not to exceed $27,900 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence….”

Alternatively, Texas Property Code § 41.001 provides that “[a] homestead … [is] exempt from seizure for the claims of creditors….”

The Texas homestead exemption exempts the home itself, not the debtor’s interest in the home.

See  Hawk v. Engelhart (In re Hawk) , 871 F.3d 287, 294 (5th Cir. 2017)

(“[T]he land itself—not its monetary value––[was] protected under Texas law and ‘exempted under [ § 522 ].’ ”

(citing Viegelahn v. Frost (In re Frost) , 744 F.3d 384, 391 (5th Cir. 2014) )); In re Parsons , 530 B.R. 411, 417 (Bankr. W.D. Tex. 2014)

(“There is no dollar limit to the exemption because it is the homestead itself, rather than the debtor’s equity, that Texas law protects.”);

In re Moore , 442 B.R. 865, 867 (Bankr. N.D. Tex. 2010)

(“[T]he Texas exemption statutes refer not to interests in property but rather to the property itself….”).

Mr. Giles-Flores exempted his home under the Texas homestead statute.

Although Mr. Giles-Flores exempted the home itself, the question remains whether Mr. Giles-Flores obtained legal title to the home or whether legal title remained in the bankruptcy estate.

Some bankruptcy courts in the Fifth Circuit have held that legal title exits the estate:

As the Texas [personal property exemption] statute refers to property rather than an interest in property, it can be argued that the Schwab analysis is not applicable.

If Schwab is not applicable, then assuming an exemption claim is made and not timely objected to, the property in kind then passes to the debtor.

The issue of whether title passes appears resolved in the debtor’s favor given the exemption claim is to property and not to a component part of “property.”

In re Salazar , 449 B.R. 890, 901 (Bankr. N.D. Tex. 2011) (internal citation omitted); see In re Zamora , No. BR 11-52138C, 2012 WL 4501680, at *2 (Bankr. W.D. Tex. Sept. 28, 2012)

(“[T]he [homeowner’s] Association does not need relief from the automatic stay to pursue a state lawsuit to collect post-petition assessments, prosecute that suit to judgment and to enforce that judgment against property that is not property of the estate (such as exempt property).”).

Other bankruptcy courts in the Fifth Circuit disagree:

“Frost’s exempted homestead, while proper, remained property of the estate until the exempted homestead fully vested back in Frost upon discharge.”

Romo v. Montemayor (In re Montemayor) , 547 B.R. 684, 708 (Bankr. S.D. Tex. 2016) (discussing Frost , 744 F.3d 384,

in which a chapter 13 debtor (i) exempted his home under the Texas homestead statute; (ii) subsequently sold the home post-petition but pre-discharge; and (iii) failed to reinvest the proceeds into a new homestead within six months as required by Texas law.);

id. at 710

(“[T]he homestead never truly left the chapter 13 estate, because it was exempt but would not vest in the debtor until the resolution of either an order granting plan confirmation or , as provided for by the Western District of Texas’ chapter 13 plan, as a modification of § 1327(b), completion of all plan payments under the plan and the entry of an order of discharge.”);

id. at 712

(“In this Court’s opinion, the more persuasive argument is that Frost’s distributed proceeds were exempted, but, pursuant to the chapter 13 plan, remained property of the estate, having not fully revested in the debtor, until the point at which the temporal exemption expired.”);

see also In re Garcia , 499 B.R. 506, 514 (Bankr. N.D. Tex. 2013), aff’d sub nom. Garcia v. Bassel , 507 B.R. 907 (N.D. Tex. 2014)

(“[O]ne must conclude that exempt property is not withdrawn from the estate, but remains property of the estate insulated from the claims of creditors for as long as the asset enjoys exempt status under state law.”).

Courts in this circuit do not agree what happens to legal title to property exempted under the Texas homestead statute when, as here, the debtor’s plan overrides 11 U.S.C. § 1327(b) and provides for the vesting of estate property  at discharge.

(Case No. 16-34941, ECF No. 31 at 8).

The issue is even more complex in this case.

The exemptions were allowed after both the date that the proposed plan was filed and the date on which it was confirmed.

Does the vesting provision of the plan—”[p]roperty of the estate shall vest in the Debtor(s) upon entry of the discharge order”—apply to property as of the petition date, property as of the date the plan was proposed, property as of the date that the plan was confirmed, or property that remained in the estate on the date of entry of the discharge?

The Court is unable to locate definitive authority on this question.

One can reasonably argue that a plan has retroactive effect.

The payments proposed in a plan must commence 30 days after the petition date.

11 U.S.C. § 1326(a)(1).

The Trustee retains the payments pending confirmation, and then applies the payments “in accordance with the plan.”

11 U.S.C. § 1326(a)(2).

The plan provides for distributions commencing on a date prior to the plan’s approval by the Court.

(Case No. 16-34941, ECF No. 2 at 1).

If the plan is given retroactive effect, then the vesting provision would leave legal title with the Debtor.

The vesting provision, even if in tension with the statute, would control.

See United Student Aid Funds, Inc. v. Espinosa , 559 U.S. 260, 275, 130 S.Ct. 1367, 176 L.Ed.2d 158 (2010) (holding that a confirmed plan will not be overturned for legal error when a party has notice of the error and does not object or timely appeal).
B. Arguable Property of the Estate
It is axiomatic that the automatic stay applies to property that is property of the estate. In this Circuit, the automatic stay also applies to property “to which the debtor has only an arguable claim of right….” Chesnut , 422 F.3d at 300.

Braeburn was required to obtain leave from this Court before seizing arguable property of the estate.

See id. at 304

(“[B]ankruptcy law demands some process prior to the seizure of arguable property….”).

Arguable property of the estate is “an asset to which the debtor has only an arguable claim of right.”

Id. at 300.

In Chesnut, a creditor foreclosed on property that the debtor claimed was community property under the protection of the automatic stay.

Id. at 300–301.

The Fifth Circuit found that the classification of the property as separate or community property was a non-frivolous dispute at the time of the creditor’s foreclosure:

“The … property was not clearly part of [the] bankruptcy estate at the time of the foreclosure, but neither was it clearly not part of [the] estate.”

Id. at 303.

A creditor may not defend a foreclosure by claiming that the stay did not apply “[w]here seized property is arguable property.”

Id. at 304.

A discharge violation may be contemptible if there is “no fair ground of doubt as to whether the [discharge] order barred the creditor’s conduct.”

Taggart v. Lorenzen , ––– U.S. ––––, 139 S. Ct. 1795, 1799, 204 L.Ed.2d 129 (2019).

Stated differently, “civil contempt [for violating a discharge order] may be appropriate if there is no objectively reasonable basis for concluding that the creditor’s conduct might be lawful.”

Id.

The Supreme Court distinguished this discharge violation standard with that of a violation of the automatic stay:

Taggart also notes that lower courts often have used a standard akin to strict liability to remedy violations of automatic stays.

An automatic stay is entered at the outset of a bankruptcy proceeding.

The statutory provision that addresses the remedies for violations of automatic stays says that “an individual injured by any willful violation” of an automatic stay “shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.”

11 U.S.C. § 362(k)(1).

This language, however, differs from the more general language in section 105(a).

The purposes of automatic stays and discharge orders also differ:

A stay aims to prevent damaging disruptions to the administration of a bankruptcy case in the short run, whereas a discharge is entered at the end of the case and seeks to bind creditors over a much longer period.

These differences in language and purpose sufficiently undermine Taggart’s proposal [for creditors to seek advance determinations before arguable discharge violations] to warrant its rejection.

Id. at 1803–04 (citations omitted).

Taggart determines the legal standard for holding a creditor in civil contempt for a discharge violation. Id. at 1801.

Because the question before the Court is whether to dismiss Mr. Giles-Flores’ stay violation claim, Taggart is relevant, but not directly on point.

This Court is bound by Fifth Circuit precedent.

See Lopez v. City of Hous. , No. CIV. A. H-09-0420, 2009 WL 1456487, at *15 (S.D. Tex. May 22, 2009), aff’d , 617 F.3d 336 (5th Cir. 2010)

(“[A] federal district court must generally apply an interpretation of law articulated by its circuit court of appeals.”).

Fifth Circuit precedent is binding “absent an intervening change in law, such as by a statutory amendment, or the Supreme Court, or [the] en banc court.”

Vaughan v. Anderson Reg’l Med. Ctr. , 849 F.3d 588, 591 (5th Cir. 2017) (quoting Spong v. Fidelity Nat’l Property & Cas. Ins. Co. , 787 F.3d 296, 305 (5th Cir. 2015) ).

“For a Supreme Court decision to override a Fifth Circuit case, the decision must unequivocally overrule prior precedent; mere illumination of a case is insufficient.”

Gahagan v. U.S. Citizenship & Immigration Services , 911 F.3d 298, 302 (5th Cir. 2018) (quoting United States v. Petras , 879 F.3d 155, 164 (5th Cir. 2018) ).

Where Taggart discusses stay violations, the Supreme Court identifies the differences between the automatic stay and a discharge injunction.

Id. at 1803–04.

Taggart does not “unequivocally overrule” Chesnut, and this Court is bound by Fifth Circuit precedent.

The Court makes no findings regarding Taggart’s applicability to stay violations of a corporate debtor.

As set forth above, substantial authority supports Mr. Giles-Flores’ claim that legal title remained property of the estate.

Just as in Chesnut, it is not clear that legal title to the home is estate property, but it is also not clear that legal title to the home is not estate property.

This question can “only be answered with finality through the judicial process….”

Chesnut , 422 F.3d at 303.

Braeburn may not now defend its failure to petition the Court by claiming that the stay did not apply to arguable property.

Had Braeburn petitioned the Court before foreclosing, the Court would likely need to decide the main question the parties dispute:

Did Mr. Giles-Flores obtain legal title when he exempted the home under the Texas homestead exemption?

Because Braeburn proceeded against arguable estate property, the Court was not presented with the opportunity to answer that question.

Braeburn foreclosed on arguable estate property without coming to the Court first.

It violated the automatic stay.

II. BRAEBURN’S ACTIONS WERE WILLFUL

Braeburn argues that it did not believe that the automatic stay applied when it foreclosed on Mr. Giles-Flores’ home.

(ECF No. 6 at 5).

A willful violation of the automatic stay requires knowledge of the stay and an intentional act, not an intent to violate the automatic stay.

Id. at 302 (citing Tsafaroff v. Taylor (In re Taylor) , 884 F.2d 478, 482 (9th Cir. 1989) ).

“Whether the party believes in good faith  that it had a right to the property is not relevant to whether the act was ‘willful’ …”

Id.

Braeburn knew of Mr. Giles-Flores’ pending bankruptcy as early as December 21, 2020 when Mr. Giles-Flores filed a pro se response to Braeburn’s Motion for Entry of Default in Harris County District Court.

(ECF No. 1 at 13).

Mr. Giles-Flores also alleges that he informed Braeburn of his bankruptcy again in the September 27, 2021 hearing in Harris County District Court.

(ECF No. 1 at 13).

Between October 8 and October 12, 2021, Mr. Giles-Flores’ attorney and Braeburn’s attorney exchanged emails in which Mr. Giles-Flores’ attorney reaffirmed the pendency of Mr. Giles-Flores’ bankruptcy and her position that the foreclosure could not proceed without lifting the stay.

(ECF No. 1 at 14–16).

Despite knowledge of the bankruptcy, Braeburn intentionally foreclosed on November 2, 2021 without petitioning this Court.

(ECF No. 1 at 16).

III. MR. GILES-FLORES PLAUSIBLY ALLEGES INJURY

Braeburn argues that because it rescinded the foreclosure and would support Mr. Giles-Flores’ proposed plan modification to cure the post-petition homeowners’ association dues within the plan, Mr. Giles-Flores is not injured.

(ECF No. 6 at 6).

Mr. Giles-Flores alleges that he “suffered frustration, anxiety and mental anguish or distress that is more than fleeting and inconsequential.”

(ECF No. 1 at 17).

Additionally, he allegedly suffers from:

[H]eadaches; loss of sleep; anxiety; shock of conscience; impaired enjoyment of life; a sense of dread; a sense of failure; a lack or diminution of self-worth; a significant amount of stress; the feeling of harassment or fright; marked irritability; distraction; low self-esteem; fear of loss of his homestead; and/or sense of embarrassment and discomfort that is greater than the general level of embarrassment and discomfort felt in filing bankruptcy or for the inability to pay a debt or bill.

(ECF No. 1 at 17).

His unproven allegations are not so unreasonable that they should not be assumed as true for the purposes of deciding a motion to dismiss.

See Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (holding that at the motion to dismiss stage, the Court will deny the motion if the plaintiff states “a claim that is plausible on its face.”

(quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 )).

When Braeburn foreclosed on Mr. Giles-Flores’ home and sold it to a third-party, Mr. Giles-Flores lost ownership of his home.

Even if rescission of the foreclosure means that Mr. Giles-Flores again owns his home, he may reasonably have believed that he has lost ownership for some period of time.

It is plausible that Braeburn injured Mr. Giles-Flores by foreclosing in violation of the automatic stay.

Whether this is provable awaits trial.

The motion to dismiss is denied.

CONCLUSION

A separate order will be entered.

Date Debtor Dismissed: July 21, 2021

Date Adversary Case Filed by Plaintiff Behrooz P. Vida: Apr. 27, 2022

ORDER REQUIRING DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE – C/O CODILIS & MOODY, P.C. TO APPEAR THROUGH COUNSEL AT A STATUS CONFERENCE ON 04/11/2024

The Administrative Office of the United States Courts has advised the Court that DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE – C/O CODILIS & MOODY, P.C. has been designated as a high-volume paper-notice recipient of bankruptcy notices under Federal Rule of Bankruptcy Procedure 9036.

A high-volume paper-notice recipient is currently defined as an entity that has been mailed 25 or more notices in any calendar month by the Bankruptcy Noticing Center. Federal Rule of Bankruptcy Procedure 9036 mandates that high volume recipients (with limited exceptions) must receive electronic notices.

The Administrative Office of the United States Courts has advised the Court that DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE – C/O CODILIS & MOODY, P.C. has failed to register to receive electronic bankruptcy notices.

On 04/11/2024 at 11:00 AM at Courtroom 404, 515 Rusk, Houston, TX 77002, the Court will conduct a status conference to determine what action should be taken to compel (if necessary) DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE – C/O CODILIS & MOODY, P.C. to comply with Federal Rule of Bankruptcy Procedure 9036.

DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE – C/O CODILIS & MOODY, P.C. is ordered to appear at the status conference through counsel. Counsel should be prepared to advise the Court on the steps that DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE – C/O CODILIS & MOODY, P.C. is taking to assure comprehensive compliance with Federal Rule of Bankruptcy Procedure 9036.1

Parties and counsel may appear in person, or via videoconference and telephone. Audio access will be at (832) 917-1510, conference room number 954554. Video access will be at www.goto.com/meeting/join#, meeting room “judgeisgur”.

1 In addition to any appropriate sanctions, failure to comply with this Order or register for electronic noticing will result in the cessation of paper noticing from the U.S. Bankruptcy Courts and the creation of an electronic account for you by the Bankruptcy Noticing Center, as set forth in Exhibit B.

In lieu of attendance at the scheduled status conference, DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE – C/O CODILIS & MOODY, P.C. may complete and file Exhibit A, confirming that it has completed its registration for electronic noticing and will receive court notices at an email address chosen by the entity.2

Alternatively, DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE – C/O CODILIS & MOODY, P.C. may complete and file Exhibit B, confirming that it wishes to receive its court notices at an electronic account created for the entity by the Bankruptcy Noticing Center.

Any completed exhibit and accompanying materials must be filed with the Court not less than 72 hours prior to the commencement of the scheduled status conference.

The Clerk will serve this on DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE – C/O CODILIS & MOODY, P.C. by United States Mail and file a Certificate of Service.

Signed: 3/13/24

Marvin Isgur
United States Bankruptcy Judge