Lamar Jabbar Staton and Wanita Renea Staton

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE:
LAMAR JABBAR STATON
WANITA RENEA STATON
DEBTORS
CASE NO.
05-02602-5-ATS
ORDER ALLOWING OBJECTION TO CLAIM
The matter before the court is the debtors’ objection to the claim
filed by Ford Motor Credit Company ("FMC"). A hearing took place in
Raleigh, North Carolina on September 6, 2005.
Lamar Jabbar Staton and Wanita Renea Staton filed a petition for
relief under chapter 13 of the Bankruptcy Code on June 21, 2005. The
Statons objected to the proof of claim filed by FMC on July 7, 2005,
contending that FMC is unsecured. The title submitted by FMC
reflecting its lien on a 2002 Ford Focus is dated August 16, 2002, but
the debtors have in their possession a title issued June 8, 2005, that
reflects no lienholders.
FMC admits that it mistakenly released its lien and sent the title
to the Statons in January 2005, though a balance of $7,500 remained.
Ms. Staton called FMC on January 20, 2005, to advise that she received
the title, and she was advised that it was sent in error. According to
FMC, Ms. Staton agreed to return the title to FMC the following day,
but she did not. Instead, several months later, the debtors took the
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title to the North Carolina Division of Motor Vehicles and had a new
title issued within days of filing their bankruptcy petition. FMC
contends that the Statons were fully aware that a balance remained on
their account; indeed, the Statons continued making their monthly
payments through May 2005. Under these circumstances, FMC contends, it
would be inequitable to allow the debtors to receive "clear" title to
the vehicle.
In In re Guyder, Case No. 99-00065-5-ATS (Bankr. E.D.N.C. Aug. 4,
1999), this court held that a creditor that released a lien and
returned the title to the debtor could not undo that release merely by
applying for a duplicate title. In this case, the fact that Ms. Staton
misled FMC might have created an equitable exception to the Guyder
rule, but FMC failed to take any steps to remedy its error until after
the debtors filed bankruptcy five months after the error was
discovered. FMC simply waited too long, and the court will not allow
any equitable relief.
Based on the foregoing, the debtors’ objection to the claim of FMC
is ALLOWED. FMC’s claim shall be treated as unsecured.
SO ORDERED.
DATED: September 20,
2005
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