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After Foreclosure and Grant of Unlawful Detainer, Debtor no Longer Has Interest in Home

By Alexander Beeby posted 09-26-2021 13:56

Contributing Editor: Alexander J. Beeby, Larkin Hoffman Daly & Lindgren Ltd.

In Scott v. Anderson (In re Scott), 627 B.R. 134 (B.A.P. 8th Cir. April 16, 2021), rehearing denied (May 10, 2021), the BAP affirmed a Missouri bankruptcy court’s denial of sanction and, in turn, awarded sanctions against the appellant for a frivolous appeal.

This case stems from a home foreclosure, in which the debtors filed a chapter 13 petition after the unlawful detainer judgment became final, after service of the writ of execution and notice of eviction, and after the expiration of the deadline to vacate, but hours before the sheriff executed the writ and changed the locks on the home. The creditor promptly filed a dual motion to (1) confirm the absence of the stay and (2) for relief from the stay. The debtors countered with an emergency stay-violation motion seeking recovery of the home. The bankruptcy court (1) denied the debtors’ motion, concluding that the debtors did not have any interest in the home on the petition date, (2) denied the creditor’s comfort-order request to confirm the absence of the stay, considering it moot in light of the court’s denial of the debtors’ motion, and (3) granted the creditor’s lift-stay motion as to the debtors’ personal property left at the home. The district court affirmed, and the Eighth Circuit denied further appeal.

Two years later, after a Missouri court of appeals decision in an appeal of the unstayed unlawful detainer judgment, the debtors filed a Rule 9011 motion in the bankruptcy court, seeking sanctions against the creditor’s attorney, and motions seeking to undo the bankruptcy court’s prior decision. The debtors also filed a fifth motion to disqualify the judge, this time after the judge answered a call during the pandemic, which was from the creditor’s counsel’s assistant inquiring about telephonic appearance. The bankruptcy court denied all of the debtor’s motions.

In this decision, the BAP affirmed the bankruptcy court and also granted the creditor’s motion for appellate sanctions against the debtor. The BAP agreed that the creditor’s stay motions and bankruptcy court decisions on those motions were supported at the times they were made. The BAP also agreed that the accidental, non-substantive ex-parte communication did not warrant disqualification of the judge. The BAP then determined that the debtor’s ignored repeated warnings that their arguments were frivolous and awarded sanctions against the debtors in favor of the creditor’s counsel.

Co-Editors in Chief
Alexander J. Beeby, Larkin Hoffman Daly & Lindgren Ltd.
Kesha Tanabe, Tanabe Law