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Liebman v. Ocwen Loan Servicing, LLC

United States District Court, S.D. Florida

January 22, 2018

Andrea Rosen Liebman, Appellant,
Ocwen Loan Servicing, LLC, and Futura Miami Invest, LLC, Appellees.



         Andrea Rosen Liebman appeals the United States Bankruptcy Court for the Southern District of Florida's July 19, 2017 order: addressing various issues on remand from the district court; denying her motion to reinstate her Chapter 13 bankruptcy; and modifying a prior dismissal order. (Appellant's Am. Initial Br., ECF No. 8, 5.) Appellees Ocwen Loan Servicing, LLC, and Futura Miami Invest, LLC, both responded (Ocwen's Appellee Br., ECF No. 33; Futura's Appellee Br., ECF No. 31.) Liebman replied to both briefs. (Appellant's Reply, ECF No. 36.) For the following reasons, the Court affirms the bankruptcy court's order, 1. Background

         This case involves a somewhat complicated procedural history and posture. In February 2015, Liebman filed a voluntary bankruptcy petition pursuant to Chapter 13 of the Bankruptcy Code. See Liebman v. Neidich, 15-13372-AJC, ECF No. 1 (Bank. S.D. Fla. Feb. 25, 2015) (docket entries in the underlying bankruptcy case are hereinafter identified as "Bankr. R." followed by the ECF No. of the entry). Less than two weeks later, Liebman's bankruptcy case was dismissed for filing deficiencies. (Bankr. R. ECF No. 7.) A month later, however, on April 9, 2015, in response to an emergency motion, the bankruptcy court reinstated Liebman's case. (Bankr. R, ECF No. 18.) That order, though, specifically excluded from the automatic stay the previously set foreclosure sale of Liebman's townhouse, which had been scheduled to proceed through the circuit court in Miami-Dade County on May 14, 2015. (Id. at 2.) The Court directed that sale to "proceed as scheduled, in due course, pending further order of this Court, or the state court." (Id.)

         Thereafter, Liebman filed a motion to stay the foreclosure sale. (Bankr. R. ECF No. 24.) The bankruptcy court held a hearing on the motion, the day before the scheduled foreclosure sale, and, in open court, granted the motion to stay the sale. (May 13, 2015 Hr'g Tr. at 12:16-19, Bankr. R. ECF No, 160.) The court labeled the stay, at one point, an "automatic stay." (Id.) Ocwen's counsel represented that she would "advise foreclosure to stay the sale." [Id. at 12:14-15.) The court advised Liebman's counsel to confer with Ocwen's counsel to finalize the form of the proposed order, reflecting the stay. (Id. at 12:24-13:2.) Despite the Court's oral order, and the parties' apparent agreement to stay the sale, the state court nonetheless proceeded with the foreclosure auction the following day, with the townhome selling to Futura, as the highest bidder. A paper order, reflecting that "[t]hc automatic stay continues to be imposed until further order of this Court, " was not entered until May 26, 2015, almost two weeks after the sale. (Am. Order, Bankr. R. ECF No. 46.)

         After the sale of her home, Liebman filed an emergency motion for an order to show cause, also on May 26th. (Emerg. Mot., Bankr. R. ECF No. 43.) In that motion, Liebman asked the bankruptcy court, among other things, to enter an order requiring Ocwen to show cause why it failed to comply with the court's order to cancel the May 14th foreclosure sale; and to instruct Ocwen's counsel to cooperate with Liebman's counsel to obtain an order vacating the foreclosure sale. (Id. at 4.) At the hearing on that motion, on June 3, 2015, the court harshly criticized Liebman's counsel for not submitting a proposed order to the court regarding the stay. [E.g., June 3, 2015 Hr'g Tr., Bankr. R. ECF No. 161, 5:1-3 ("Counsel, it sounds to me like you're confessing to malpractice."), 5:25-6:4 ("The order was directed to you to stop the sale if you wanted to stop it, but you failed to represent your client properly, and they may have lost their property."), 6:22-24 ("Where 1 see the failure is on the part of counsel for Ms. Liebman to have gotten an order entered and notify the clerk.").) During the hearing, however, Ocwen's counsel agreed to have the foreclosure sale vacated, contingent on the confirmation of Liebman's bankruptcy's plan. (Id. at 14:8-10.) Ultimately, in a written order entered on June 5, 2015, the bankruptcy court held in abeyance both the motion to vacate that was then pending in state court as well as the court's order staying the May 14th foreclosure sale. Both abeyances were pending the confirmation of Liebman's Chapter 13 plan which was scheduled for a hearing on June 16, 2015. (Order on Emerg. Mot., Bankr. R. ECF No. 61, 2.) The order provided that should Liebman's plan be confirmed, "the sale process in Circuit Court will be determined to be void in violation of the automatic stay." (Id.) On the other hand, the order also specified that if the plan was not confirmed, the court would vacate its order staying the foreclosure sale and the sale "shall be deemed valid." (Id.)

         At the June 16th hearing, Liebman's plan was not confirmed. (June 16, 2015 Hr'gTr., Bankr. R. ECF No. 171.) Despite Liebman's counsel's ardent plea that the plan was confirmable, notwithstanding Liebman's failure to timely provide all of the necessary materials and properly prepared schedules, the bankruptcy court nonetheless vacated its order staying the foreclosure sale and allowed the sale to proceed unchecked.

         After the court denied Liebman's two pro se emergency motions for a rehearing, she filed, also pro se, an appeal, in July 2015, which was considered by United States District Court Judge Joan A, Lenard. Relying on the bankruptcy court's labeling of the stay in place when the state court proceeded with the foreclosure sale as an "automatic stay, " Judge Lenard found that the sale was void ab initio. Liebman v. Ocwen Loan Serv., Inc., 15-cv-22539-JAL, Order, ECF No. 45 (S.D. Fla. Sep. 7, 2016) ("J. Lenard Order"). On the other hand, however, Judge Lenard also noted that under "rare circumstances, " bankruptcy courts could retroactively lift automatic stays. Id. at 11. As Judge Lenard opined, a court may retroactively lift a stay after evaluating a number of factors as set forth in In re Stockwell, 262 B.R. 275 (Bankr. D. Vt. 2001). Judge Lenard noted the bankruptcy court had nonetheless failed to consider any of these Stockwell factors when it decided to "annul the stay." J. Lenard Order at 13. As a result, she concluded, the bankruptcy court had "abused its discretion when it retroactively lifted the stay and sanctioned the foreclosure sale of [Liebman's] home." Id. She therefore remanded the case so that the bankruptcy court could "apply the appropriate legal standards and make supplemental findings." Id.

         After Judge Lenard entered her remand order, Liebman continued to seek confirmation of her bankruptcy plan. Ultimately, however, in February 2017, the bankruptcy court denied confirmation of her proposed plan and dismissed her case with prejudice. (Order Denying Confirmation and Dismissing Ch. 13 Case, Bankr. R. ECF No, 246, 1.) Liebman filed motions to again reinstate her case and Ocwen asked the court to amend its February 2017 dismissal order. In response, and without a hearing, the bankruptcy court entered an order; denying Liebman's motion to reinstate; modifying its February 2017 dismissal order; and addressing the remand issues set forth by Judge Lenard. (Order on Remand, Bankr. R. ECF No. 322.) It is this order that Liebman appeals.

         2. The Order Under Appeal

         With respect to Judge Lenard's remand, the bankruptcy court's response was basically twofold. On the one hand, the court explained that it had improperly labeled its stay of the May 14, 2015 state court foreclosure sale as an "automatic stay" (as provided for under § 362 of the Bankruptcy Code) when, in fact, the court's true intent had been to enjoin the sale in accordance with § 105. (Order on Remand at 6.) The court clarified; "The amended Order should have omitted the word 'automatic' and simply have stated that the stay (or injunction) continues until further Court order." (Id.) By it terms then, the bankruptcy court's order on remand purported to modify the order staying the sale to reflect this change. [Id. at 17.) Accordingly, there was no automatic-stay or Stockwell-related barrier preventing the bankruptcy court from holding the § 105 stay (or injunction) in abeyance and then later vacating it. In other words, according to the bankruptcy court, there was nothing keeping it, based on the record in the case, from "lift[ing] or dissolving] the injunction when the Debtor failed to confirm a Chapter 13 plan" and "granting relief nunc pro tunc" to Ocwen and Futura. (Id. at 8.)

         Alternatively, the bankruptcy court opined, even if the stay imposed stopping the foreclosure sale was immutably deemed an automatic stay under § 362, the court's retroactive relief was nonetheless proper based on an evaluation of the seven Stockwell factors. In re Stockwell, 262 B.R. at 281 ("(1) if the creditor had actual or constructive knowledge of the bankruptcy filing and, therefore, of the stay; (2) if the debtor has acted in bad faith; (3) if there was equity in the property of the estate; (4) if the property was necessary for an effective reorganization; (5) if grounds for relief from the stay existed and a motion, if filed, would likely have been granted prior to the automatic stay violation; (6) if failure to grant retroactive relief would cause unnecessary expense to the creditor; and (7) if the creditor has detrimentally changed its position on the basis of the action taken."). The bankruptcy court concluded that all seven Stockwell factors supported retroactive relief.

         3. Discussion

         In her initial brief, Liebman separates her issues on appeal into the following six concerns. (1) She complains that the bankruptcy court's modification of its foreclosure-sale stay order, changing the automatic stay under § 362 to an injunction or stay under § 105, is internally contradictory and therefore "void on [its] face." (2) Liebman next argues that she was denied due process when her proposed plan was not confirmed and the bankruptcy court dismissed her case. (3) Third, Liebman submits that the bankruptcy court erred in concluding that Ocwen did not violate the automatic stay. (4) She further claims the bankruptcy court improperly evaluated and applied the Stockwell factors to the stay. (5) Although it is not entirely clear, it appears Liebman's fifth issue is that the bankruptcy court also erred by not finding the foreclosure sale void ab initio. (6) Lastly, Liebman insists that, contrary to the bankruptcy court's decision, her bankruptcy case must be reinstated.

         A. Issues (1) and (5): Liebman has failed to establish that the bankruptcy court erred in declining to ...

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