Tripp v. Middle Branch Marina, Inc.

IN THE UNITED STATE BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Baltimore
IN RE: *
Willie Tripp * Case No. 05-26579-SD
Chapter 13
Debtor *
* * * * * * *
Willie Tripp *
Movant *
v. * Adversary No. 05-1868-SD
Middle Branch Marina, Inc. *
Respondent *
************************************************************************
MEMORANDUM GRANTING PLAINTIFF’S EMERGENCY
MOTION TO ENFORCE ORDER FOR TURNOVER
OF 1986 24' IMPERIAL BOAT AND MANDATING PLAINTIFF
TO SURRENDER TITLE OF SAID BOAT TO THE DEFENDANT
BACKGROUND
The matter before the court is Plaintiff’s Emergency Motion Commanding the
United States Marshall to Enforce the Order Granting the Motion Directing Turnover of
Debtor’s 1986 24' Imperial Boat (the “Motion”). On July 22, 2005, Willie Tripp, the
Date signed March 30, 2006
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Debtor, filed for relief under Chapter 13 of the Bankruptcy Code. The Debtor owns a
1986 24' Imperial Boat (hereinafter, the “Boat”). The Debtor houses the boat at a slip
maintained by the Middle Branch Marina, Inc. The Debtor, at the time the petition was
filed, owed the Marina approximately $830 in unpaid slip fees, said debt has been duly
scheduled in Debtor’s Schedule F. On August 16, 2005, the Debtor attempted to remove
his boat from the Marina, but the Debtor’s exit was blocked by employees of the Marina.
In response, the Debtor filed an adversary complaint against the Marina seeking,
inter alia, turnover of estate property, namely, the boat. Contemporaneously with his
Complaint, the Debtor filed an emergency request for turnover of the Boat. On
September 19, 2005, a hearing was held on the emergency request. At the hearing, the
Debtor, via Counsel, acknowledged that the Marina held a garagement’s lien on the boat.
Because a garagement’s lien is a possessory lien, the Debtor proposed, upon turnover of
the boat, the Court grant a "statutory lien" for the benefit of the Marina in order to
provide for adequate protection. Debtor's request was denied, however, because he failed
to show irreparable harm that would occur if preliminary relief was not granted, since
the Marina could not sell the boat without court approval. The court did note that slip
fees may continue to accrue in the interim, as provided for by agreement or state law,
until the problem was resolved. Finally, the court instructed a Mr. Cao, the apparent
owner of the Marina, to obtain the assistance of counsel in order to resolve this matter
expeditiously. The Marina failed to answer Debtor's complaint. As a result, on October
25, 2005, the Debtor filed a Motion for default judgment directing turnover of the Boat.
The Motion was granted by Order Granting Motion for Entry of Judgment by Default and
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Order Directing Turnover of Debtor’s 1986 24' Imperial Boat entered on January 19,
2006 (the “Order”). The Order states in pertinent part:
ORDERED, that the Motion for Entry of Judgment by Default and
Order Directing Turnover of Debtor’s 1986 24' Imperial Boat is hereby
GRANTED, and it is further
ORDERED, that Middle Branch Marina, Inc., is to immediately
release to the Debtor his 1986 24' Imperial Boat, and it is further
ORDERED, that Middle Branch Marina shall retain a statutory
lien upon the Debtor’s 1986 24' Imperial Boat for storage fees owed by
the Plaintiff, Willie Tripp, as reflected in Middle Branch Marina’s proof
of claim.
According to the uncontested allegations of the Motion, on January 26, 2006, the
Plaintiff, with Order in hand, attempted to retrieve the Boat from Middle Branch Marina,
but the on-site manager refused to allow the Plaintiff to recover his boat. Subsequently,
the Plaintiff filed this Motion. On February 13, 2006, in the main bankruptcy case, the
court entered an order confirming the Debtor's Amended Chapter 13 plan wherein the
Debtor scheduled the Respondent as a priority creditor for payment in full under his Plan.
DISCUSSION
In Tidewater Fin. Co. v. Moffett (In re Moffett), 356 F.3d 518, 523 (4th Cir.
2004), the Fourth Circuit held that the right to redeem property that is in the possession
of a secured creditor at the time the petition is filed, remains property of the estate. In
that case, shortly after a secured creditor lawfully repossessed Debtor's car, the debtor
filed a petition under Chapter 13 and demanded possession of the car. The creditor
sought relief, but the bankruptcy court ordered the creditor to return the car to the debtor.
On appeal, the Fourth Circuit found that the repossession did not terminate the debtor's
equitable interests in the car and that the repayment plan adequately protected the
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creditor's security interest. Under 11 U.S.C.S. § 362, the debtor's bankruptcy estate
included all of her legal and equitable interest in property, namely, the Debtor's right of
redemption, which was sufficient to subject the creditor to the automatic stay and
turnover provisions. More critically, the Court found that the creditor was adequately
protected because the Chapter 13 plan provided a one hundred percent payoff to the
creditor in order to cure the delinquency with payments made over the course of the plan.
While the reorganization plan did not provide for a lump sum payment, 11 U.S.C. §
1322(b) permitted the debtor to modify the right of the secured creditor and to cure the
default. Therefore, the Court affirmed the Bankruptcy Court's order for turnover and
allowed the Debtor to take possession of the vehicle.
The case sub judice offers similar operative facts as those present in Moffett. In
both cases the secured creditor was in possession of the collateral at the time the
bankruptcy case was filed and both Debtor's proposed to cure the arrearages through
their respective chapter 13 plans.
However, a key difference exists between Moffett and the current case. In Moffett
the debt was secured by a purchase money Security Agreement. Consequently, the
creditor enjoyed a self-perfecting lien that was not impaired upon turnover of the
collateral to the Debtor. By contrast, in the instant case, the creditor only holds a
possessory lien upon the collateral, namely, a garagement’s lien. As a result, any
protection the creditor may enjoy prior to the turnover of the collateral will evaporate
upon the surrendering of the property. While it is true that the initial order for turnover
purported to create a statutory lien for the benefit of the creditor, such a lien would be
unperfected. More importantly, if the Debtor was to exercise his right to dismiss the
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Chapter 13 case under 11 U.S.C. § 1307(b), the creditor will be saddled with a non-
perfected non-possessory lien that is a far cry from the possessory lien he currently
enjoys. Accordingly, in order to provide adequate protection that mirrors the protection
provided for the creditor in Moffett, the Debtor, in exchange for the boat, will surrender
title to the boat over to the creditor until the slip fees are paid in full. After the Debtor
repays all slip fees to the creditor the creditor, shall return the title of the boat to the
Debtor.
Finally, the outstanding amount of the slip fees remains to be determined. As
discussed at the earlier hearing, the slip fees continued to accrue post-petition pending
the resolution of the case. The entry of an Order for Default Judgment and an Order for
Turnover of the boat by the Court on January 19, 2006, was a final resolution of this case.
Accordingly, the Marina is only entitled to recover post-petition slip fees through that
date. The Marina, as the wrongdoer, should not benefit from disobeying the court’s
Order.
CONCLUSION
For the reasons set forth above, the Debtor is entitled to possession of the boat.
Because the Debtor has made uncontested allegations in his Emergency Motion to
Enforce Turnover Order that the creditor has failed to comply with the turnover order, the
Debtor's motion to enforce the turnover order will be granted. Additionally, in order to
provide adequate protection to the Marina, the Debtor will be required to surrender title
to the boat until the satisfaction of the slip fees that accrued through January 19, 2006.
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cc: Middle Branch Marina, Inc.
3101 Waterview Ave.
Baltimore, MD 21230
Resident Agent for Middle Branch Marina, Inc.
Xianting Cao
12504 Fellowship Ct.
Reisterstown, MD 21136
Antonio Aquia, Esquire
220 North Liberty Street
Baltimore, MD 21201
Willie B. Tripp
c/o Antonio Aquia, Esquire
220 North Liberty Street
Baltimore, MD 21201
Gerard R. Vetter, Trustee
7310 Ritchie Highway
Empire Towers, Suite 715
Glen Burnie, Maryland 21061
Office of the U.S. Trustee
2625 U.S. Courthouse
101 West Lombard Street
Baltimore, Maryland 21201
END OPINION
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