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Koch v. Federal National Mortgage Assn.

United States District Court, E.D. Michigan, Southern Division

July 20, 2015

ROSEMARY KOCH, Appellant,
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION, Appellee.

OPINION AND ORDER AFFIRMING BANKRUPTCY COURT’S ORDER TO LIFT THE AUTOMATIC STAY AND CANCELING HEARING SET FOR JULY 22, 2015

HONORABLE GERSHWIN A. DRAIN U.S. DISTRICT JUDGE

Appellee Federal National Mortgage Association moved for relief of the automatic stay, which was triggered by Appellant Rosemary Koch’s latest Chapter 13 bankruptcy filing. The district court granted Appellee’s motion. Appellant now appeals the district court’s decision to lift the automatic stay.

The Court has reviewed and considered all briefs timely filed by both parties and finds no need for a hearing. See E.D. Mich. L.R. 7.1(f)(2). Upon review of the parties’ briefs, the Court concludes that Appellee was entitled to relief, under 11 U.S.C. § 362(d)(1), (2), and therefore affirms the Bankruptcy Court’s decision.

I. BACKGROUND

Presently before the Court is Appellant Rosemary Koch’s (“Koch”) Notice of Appeal from the United States Bankruptcy Court for the Eastern District of Michigan (the “Bankruptcy Court”). The Notice was filed on May 15, 2015. Koch requests that this Court review the Bankruptcy Court’s decision to lift the automatic stay, specifically as it concerns a parcel of real property.

Appellee Federal National Mortgage Association (“Fannie Mae”) purchased the real property at issue in a foreclosure sale held, on June 12, 2014, after Koch defaulted under her relevant loan agreement. A Sheriff’s Deed was thereafter recorded in Liber 4053, Page 950 of Washtenaw County Records, on June 27, 2014. ECF No. 3, Ex. 2. Koch failed to redeem the property after the sheriff’s sale within the six-month statutory period. Consequently, Koch’s opportunity to redeem the property expired on December 12, 2014.

On March 2, 2015, Koch filed her most recent petition for protection under Chapter 13 of the Bankruptcy Code.[1] For this reason, an automatic stay applied to the actions of all of Koch’s creditors. See 11 U.S.C. § 362(a). At the time of Koch’s filing Fannie Mae was seeking recovery of real property, of which Koch held possession.

On April 24, 2015, after holding oral arguments on the matter and being fully advised in the premises, the Bankruptcy Court held that Fannie Mae is entitled to continue eviction proceedings for the recovery of the real property, pursuant to 11 U.S.C. §§ 362(c)(3) and 362(d)(1), (2), and (4). Accordingly, the Bankruptcy Court lifted the automatic stay concerning the relevant real property. On May 4, the Chapter 13 Trustee filed a motion to dismiss Koch’s bankruptcy petition. The Trustee noted that Koch has essentially failed to participate in the bankruptcy proceedings. See ECF No. 3, Ex. 9.

II. STANDARD OF REVIEW

District courts must review “a bankruptcy court’s order granting or denying relief from an automatic stay only for abuse of discretion.” In re Laguna Assocs. Ltd. P’ships, 30 F.3d 734, 737 (6th Cir. 1994) (citing In re White, 851 F.2d 170, 174 (6th Cir. 1988)); see also In re M.J. Waterman & Assocs., Inc., 227 F.3d 604, 607 (6th Cir. 2000) (citing In re Zick, 931 F.2d 1124, 1126 (6th Cir. 1991)) (“Equitable determinations are within the sound discretion of the bankruptcy judge and will not be disturbed absent abuse of discretion.”).

An abuse of discretion is “a ‘definite and firm conviction that the court below committed a clear error of judgment.’” Id. at 607-8 (citing Soberay Mach. & Equip. Co. v. MRF Ltd., Inc., 181 F.3d 759, 770 (6th Cir. 1999); Bowling v. Pfizer, Inc., 102 F.3d 777, 780 (6th Cir. 1996)). The standard is, therefore, “not how the reviewing court would have ruled, but rather whether a reasonable person could agree with the bankruptcy court’s decision; if reasonable persons could differ as to the issue, then there is no abuse of discretion.” Id. at 608 (citing Washington v. Sherwin Real Estate, Inc., 694 F.2d 1081, 1087 (7th Cir. 1982); In re Carter, 100 B.R. 123, 126 (Bankr. D. Me. 1989)).

Additionally, when reviewing bankruptcy appeals, the district court must apply a de novo standard of review to conclusions of law. In re MCI, Inc., 151 B.R. 103, 106 (E.D. Mich. 1992) (citing In re Caldwell, 851 F.2d 852, 857 (6th Cir. 1988)). “[F]actual determinations which the bankruptcy court has made are subject to the clearly erroneous standard of review.” Id. “Only where there is the ‘most cogent evidence of mistake or miscarriage of justice’ may the district court disturb a factual finding made by the bankruptcy court.” Id.

III. DISCUSSION

Koch presently challenges the Bankruptcy Court’s order to lift the automatic stay as it concerns the real property, mentioned above. The facts in this case are not contested. The parties instead dispute whether the Bankruptcy Court granted ...


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