Baldwin v. Fidelity National Title Insurance Company of New Y

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE:
BELINDA GRAY BALDWIN,
DEBTOR
BELINDA GRAY BALDWIN,
PLAINTIFF,
v.
FIDELITY NATIONAL TITLE INSURANCE
COMPANY OF NEW YORK, INC., TRUSTEE
ET AL.,
DEFENDANTS.
CASE NO. 09-09854-8-JRL
CHAPTER 13
ADVERSARY PROCEEDING
NO.10-00309-8-JRL
ORDER
The matter before the court is Ocwen Loan Servicing, L.L.C. and U.S. Bank N.A., in its
capacity as Trustee for MASTR Asset Backed Securities Trust 2002-NC1 Mortgage Pass-
Through Certificates, Series 2002-NC1s’ (“defendants”) motion to dismiss. A hearing was held
on May 9, 2011 in Raleigh, North Carolina.
SO ORDERED.
SIGNED this 11 day of May, 2011.
________________________________________
J. Rich Leonard
United States Bankruptcy Judge
____________________________________________________________
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The debtor filed the adversary proceeding on December 8, 2010, seeking to avoid two
deeds of trust held against property of the debtor. In response, defendants filed a motion to
dismiss the action for lack of standing. Defendants contend the debtor lacks standing to pursue
an avoidance claim under 11 U.S.C. § 544. Debtor’s counsel was properly served notice of the
motion on February 10, 2011, but failed to file a response to the motion within 21 days.
E.D.N.C. LBR 7007-1(b). Debtor’s counsel was also provided adequate notice of the scheduled
hearing, but failed to appear.
The main issue before the court is whether a chapter 13 debtor has the ability to assert
avoidance powers granted to the trustee under 11 U.S.C. § 544. The debtor asserts that 11 U.S.C.
§ 522(h) authorizes the debtor to pursue an avoidance action in the same capacity as the trustee
would under § 544. However, the debtor’s ability to exercise this power under § 522(h) is limited
to challenging transfers that are not made voluntarily. Generally, the granting of a mortgage or
security interest in the debtor’s property is considered a voluntary transfer, In re Millerburg, 61
B.R. 125 (Bankr. E.D.N.C. 1986), while “execution, repossession, or certification of a judgment”
against property is deemed involuntary. In re Trevino, 96 B.R. 608, 613 (Bankr. E.D.N.C.
1989).
In the present case, the debtor does not have the ability to bring an avoidance action
because she voluntarily executed two separate deeds of trust in favor of the defendants.
Furthermore, this court recently determined a chapter 13 debtor’s ability to bring an avoidance
action. See Robinson v. World Omni Financial Corp., 2011 Bankr. LEXIS 437 (Bankr. E.D.N.C.
2011). The court concluded that section 1303 defines the rights and powers of a chapter 13
debtor and that “[t]he language of this provision clearly indicates that chapter 13 debtors were
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not granted the trustee’s avoidance powers found in chapter 5 of the Code.” Id. at 5.
Based on the foregoing, the defendants’ motion to dismiss the adversary proceeding is
ALLOWED.
END OF DOCUMENT
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