Debtor filed a motion for sanctions against Bayview pursuant to 11 U.S.C. § 105 for civil contempt based on its alleged violation of the discharge injunction provided by 11 U.S.C. § 524(a)(2). The actual holder of the note, Deutsche Bank National Trust Company, as Trustee for Registered Holders of VCM Trust Series 2009-2 (“Deutsche Bank”), filed an opposition to the Debtor’s motion.
The Debtor signed a note and mortgage on his home in 1988. At some point, Debtor defaulted on his obligation to make regular contractual payments under the Note and Mortgage and a foreclosure action was commenced in the Supreme Court for the State of New York. The Debtor filed a Chapter 13 case and a plan which provided for the mortgage arrears to be paid. The Court confirmed the Debtor’s plan.
Debtor defaulted on his post-petition mortgage debt. Deutsche Bank filed a Motion for Relief from the Automatic Stay. Debtor did not oppose the Stay Relief Motion and the Court granted the motion. The Debtor then filed a Modified Chapter 13 Plan and a motion to modify his Plan pursuant to § 1329 to surrender the home, excuse missed payments under the plan, and resume monthly plan payments to the Trustee. The Court’s records show that the Motion to Modify was electronically received by counsel for Deutsche Bank and each of its servicers. The Court granted the Debtor’s motion to modify plan and entered an Order, which was also electronically noticed to counsel for all parties. Finally, the Court issued an Order Discharging Debtor(s) After Completion of Chapter 13 Plan. As set forth in the Bankruptcy Noticing Center’s Certification of Notice filed, both Deutsche Bank and Bayview were electronically served with the Discharge Order on April 12, 2015.
On November 7, 2016, Debtor filed an ex parte motion to reopen his case, which the Court granted by Order issued November 7, 2016. Debtor then filed the instant Motion, with the following attachments:
(a) An undated Mortgage Statement that shows a payment due date of 12/09/15, and a total amount due of $73,927.54 (the “Undated 2015 Statement”). Under the heading titled “Important Messages,” it informs Debtor that his loan payment in the amount of $629.60 remains unpaid, causing a late charge in the amount of $6.10 to be assessed to his account. Under the heading titled “Delinquency Notice,” it informs Debtor that failure to bring his loan current may result in fees and foreclosure and, in bold letters, stated: “Total: $73,927.54 due. You must pay this amount to bring your loan current.” The bottom of the 2015 Statement contains a detachable payment coupon.
(b) A Mortgage Statement dated December 24, 2015, which shows a payment due date of 01/09/16, and a total amount due of $74,563.24 (the “December 24 Statement”). The December Statement contains the same information and notices as the Undated 2015 Statement, but in fine print it also includes the following language: “To the extent that your obligation has been discharged or is subject to an automatic stay in bankruptcy this notice is for information purposes only and does not constitute a demand for payment or any attempt to collect such obligation.”
(c) A Mortgage Statement dated February 24, 2016, which shows a payment due date of 03/09/16, and a total amount due of $75,819.17. In all other respects, it is identical to the December 24 Statement.
(d) A Mortgage Statement dated March 24, 2016, which shows a payment due date of 04/09/16, and a total amount due of $76,433.60. In all other respects, it is identical to the December 24 Statement.
(e) A Mortgage Statement dated April 25, 2016, which shows a payment due date of 05/09/16, and a total amount due of $77,047.43. In all other respects, it is identical to the December 24 Statement.
(f) An undated Mortgage Statement that shows a payment due date of 06/09/16, and a total amount due of $77,661.56. In all other respects, it is identical to the Undated 2015 Statement.
The Debtor agreed that the Discharge Order does not impair Deutsche Bank’s lien on the Real Property. Thus, the only disputed legal question is whether Debtors’ personal liability on the Mortgage Debt was discharged. If so, the factual question is whether the Mortgage Statements from Bayview constitute a willful violation of the discharge injunction.
Deutsche Bank raises five arguments in opposition to the Motion: (1) the Motion is procedurally infirm because Debtor did not comply with Rule 9011(c)(1)(A); (2) § 1322(b)(2) prohibits discharge of personal liability for debts secured by a principal residence; (3) nothing in the Bankruptcy Code and/or Rules require a secured creditor to accept surrender of property; (4) Debtor’s personal liability for the Mortgage Debt was not discharged pursuant to § 1328(a) because the Mortgage Claim was not provided for under Debtor’s Amended Plan; and (5) neither Deutsche Bank nor Bayview have engaged in willful conduct sufficient to warrant sanctions because they are required by non-bankruptcy federal law, namely the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601-2617 (2012), to send periodic statements to Debtor until title to the Real Property passes from Debtor to Deutsche Bank or a third-party.
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