Annette Vindum

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
FAYETTEVILLE DIVISION
IN RE:
ANNETTE VINDUM
DEBTOR
CASE NO.
05-08201-8-ATS
ORDER DENYING MOTION FOR RELIEF FROM STAY
The matter before the court is the motion for relief from the
automatic stay filed by Deutsche Bank National Trust Company. A
hearing took place in Raleigh, North Carolina on February 1, 2006.
Annette Vindum filed a petition for relief under chapter 13 of the
Bankruptcy Code on October 4, 2005. Ms. Vindum is the co-owner of real
property located at 5440 Granger Place, Fayetteville, North Carolina.
The other co-owner, William J. Hagler, has filed three bankruptcy
petitions in this court, the most recent one on January 6, 2005. On
June 28, 2005, an order was entered dismissing Mr. Hagler's most recent
case with prejudice and granting Long Beach Mortgage Company, Deutsche
Bank's predecessor in interest, in rem relief from the automatic stay.
Deutsche Bank proceeded with foreclosure of the Granger Place property,
and conducted a foreclosure sale on October 5, 2005. Relying on
its in rem relief, Deutsche Bank seeks an order from this court
finding that no stay was imposed by Ms. Vindum's filing and validating
the foreclosure sale.
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Ms. Vindum contends that she did not have notice of Deutsche
Bank's request for in rem relief in Mr. Hagler's case, nor did she
receive a copy of the order. She further contends that even if she had
received the Objection to Confirmation and Motion to Dismiss with
Prejudice, or for In Rem Relief, she would not have been on notice that
the request for in rem relief would apply to her interest in the
property. Ms. Vindum asserts that she received no due process with
respect to the order allowing in rem relief, that the stay did go into
effect when she filed her petition, and that the foreclosure sale
violated the automatic stay and should not be validated.
This court previously considered the rights of a co-owner when an
in rem order is entered in a separate bankruptcy case filed by another
co-owner in In re Harris, Case. No. 04-01644-5-ATS (Bankr. E.D.N.C.
June 6, 2005). In that case, the court observed that some courts have
held that non-debtor co-owners must be served with a summons naming
them as defendants in an adversary proceeding if their rights in
property are to be subjected to limitation through an order providing
in rem relief. Harris at 2 (citing In re Snow, 201 B.R. 968, 976
(Bankr. C.D. Ca. 1996); In re Amey, 314 B.R. 864, 870-71 (Bankr. N.D.
Ga. 2004)). On the other hand, a bankruptcy court may, pursuant to 11
U.S.C. § 105, grant in rem relief where the debtor and non-debtor co-
owner have abused the bankruptcy process with successive "tag-team"
filings designed to frustrate a secured creditor's foreclosure rights.
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Harris at 2 (citing In re Price, 304 B.R. 769, 773 (Bankr. N.D. Ohio
2004)). Ultimately, this court concluded that because in rem relief is
an extraordinary remedy, "[t]he request for in rem relief must be clear
and unequivocal and the order granting the relief must clearly specify
the effect of the in rem relief granted." Harris at 3.
In Mr. Hagler's case, the request for in rem relief was contained
in a document entitled "Objection to Confirmation and Motion to Dismiss
with Prejudice, or for In Rem Relief." The request for in rem relief
appears in two places: paragraph 4 and the prayer for relief.
Paragraph 4 reads
Creditor shows that the aforesaid conduct of the Debtor
authorizes the Court under 11 U.S.C. § 105(a), § 109(g), §
349(a), and § 1307(c) to dismiss this case with prejudice
and to enjoin the Debtor from filing another case for a
period of 180 days, or for In Rem Relief.
The prayer for relief requests, in relevant part, "(b) an Order
enjoining the Debtor from filing another petition for relief under all
Chapters of Title 11, United States Code, for 180 days from the date of
entry of the Order, and for In Rem Relief . . . ." The objection was
served on Mr. Hagler, his attorney, and the chapter 13 trustee. Ms.
Vindum did not receive a copy of the objection. If she had, it is not
at all clear that she would have been on notice that the creditor
sought to alter her rights with respect to the property; there is
nothing "clear and unequivocal" about this request and its effect on
Ms. Vindum's property rights.
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1The plan lists the creditor as Washington Mutual Bank, FA, which
was the servicer for the loan previously held by Long Beach Mortgage.
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The order that was entered is far more specific: it provides that
the stay is lifted In Rem for the property located at 5440
Granger Place, Fayetteville, NC 28303. Any subsequent
bankruptcy filings by Debtor or any other entity shall not
impose an automatic stay as to any efforts [by] Long Beach
Mortgage Company, its successors or assigns, to obtain
lawful possession of this property.
In re Hagler, Case No. 05-00129-8-ATS (Bankr. E.D.N.C. June 28, 2005).
The court record reflects that Ms. Vindum was not served with this
order.
The bankruptcy court is a court of equity. There is nothing
before the court that suggests abuse of the bankruptcy process by
successive "tag-team" filings; though Mr. Hagler filed three petitions,
this is Ms. Vindum's first bankruptcy petition. Ms. Vindum and Mr.
Hagler have the funds available to bring all postpetition payments
current within ten days. Ms. Vindum's chapter 13 plan proposes to pay
the arrearage due to Deutsche Bank1 in the amount of $30,000 through the
trustee and to make the postpetition payments directly to the creditor.
The objection filed by Long Beach Mortgage in Mr. Hagler's case was
insufficient to put any parties on notice that the creditor sought
relief as to a co-owner of the property, and the objection was not
provided to Ms. Vindum. While the language of the order allowing
in rem relief is more specific, it also was not provided to Ms. Vindum
in time for her to contest its terms. Accordingly, the court concludes
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that the order entered in Mr. Hagler's case did not operate to preclude
the automatic stay from going into effect as to Ms. Vindum's interest
in the property.
Based on the foregoing, the motion for relief from stay and to
validate the foreclosure sale is DENIED, provided that the
postpetition payments are brought current within 10 days of the date of
this order.
SO ORDERED.
DATED: February 1, 2006
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