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In re Dunn

United States District Court, E.D. Pennsylvania

July 24, 2018





         Before this Court is an appeal by Appellant-Creditor, Toyota Motor Credit, from the Order of the United States Bankruptcy Court for the Eastern District of Pennsylvania dated October 3, 2017. In that Order, the Bankruptcy Court granted the Motion for Sanctions for Violation of Automatic Stay filed by Appellee-Debtor, Markel Steven Dunn, because Toyota repossessed Dunn's vehicle prior to the expiration of time for Dunn to reaffirm the debt. Because this Court agrees with the Bankruptcy Court that Toyota wrongfully repossessed the Land Rover only sixteen days into the thirty days allotted to Dunn to perform his stated intention, the Bankruptcy Court's Order is affirmed.


         The personal property at issue is a Toyota Land Rover, which acts as collateral for a loan from Toyota to Dunn. See Order of Oct. 3, 2017, ¶ 1(a), ECF No. 2-1.

         On June 12, 2017, Dunn filed his initial bankruptcy petition under Chapter 7. Id.; Petition, ECF No. 2-2. Along with that petition, he filed a statement of intention, which indicated that his intent with respect to the Land Rover was to “Retain - Debtors [sic] will continue to make payments.” Id.; Stmt Intention, ECF No. 2-2. The Bankruptcy Court found that Dunn's statement: “will continue to make payments” meant he wanted to retain the Land Rover and would attempt to reaffirm the debt. See Order of Oct. 3, 2017, ¶ 7(c) n.2, ¶ 12(c) n.6. The court, guided by the “fresh start” the Bankruptcy Code is intended to provide a debtor, reasoned that the language constituted a reaffirmation because it did not sound in either surrender or redemption. See Id. and ¶ 15.

         The first date for the meeting of creditors was set for August 2, 2017. See Order of Oct. 3, 2017, ¶ 1(b). Sixteen days after that date, on August 18, 2017, Toyota repossessed the Land Rover. Id. ¶ 1(c). Dunn moved for sanctions against Toyota for violation of the automatic stay. Id. at 1; 11 U.S.C. § 362(a). The Bankruptcy Court found that Dunn timely complied with § 521(a)(2)(A) and could have fulfilled his intention to reaffirm in compliance with § 521(a)(2)(B), but Toyota made it impossible by repossessing the Land Rover only sixteen days later. Id. ¶¶ 7(a)-(d), 9-10.[1] The court concluded that § 362(h)(1) did not provide Toyota relief from the automatic stay and, therefore, Toyota was not within its rights to repossess the vehicle on August 18, 2017. Id. ¶¶ 7(c)-(d), 14, 16.

         Toyota appeals the Order for sanctions entered against it. On appeal, Toyota argues, inter alia, Dunn did not timely file a statement of intention with respect to the Land Rover because his statement that he “will continue to make payments” did not indicate either an intent to redeem or to reaffirm the debt. Toyota asserts, instead, Dunn elected the “ride-through” option, but that option was eliminated by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”), Pub. L. No. 109-8, 119 Stat. 23. Accordingly, Toyota contends that Dunn failed to timely file the required statement of intention and that the automatic stay had terminated pursuant to 11 U.S.C. § 362(h).


         On appeal, a district court reviews a bankruptcy court's findings of fact applying a “clearly erroneous” standard of review. See Am. Flint Glass Workers Union v. Anchor Resolution Corp., 197 F.3d 76, 80 (3d Cir. 1999). A district court reviews the bankruptcy court's legal determinations de novo. See Sovereign Bank v. Schwab, 414 F.3d 450, 452 (3d Cir. 2005); J.P. Fyfe, Inc. v. Bradco Supply Corp., 891 F.2d 66, 69 (3d Cir. 1989).


         A. Statement of Intention, 11 U.S.C. § 521(a)(2)

         Title 11 of the United States Code sets forth the procedure for filing bankruptcy. See generally 11 U.S.C. §§ 101-1532. Specifically, § 521 of Title 11 provides the “Debtor's duties” with respect to filing for bankruptcy. See Id. § 521.

         When an individual files for bankruptcy and his or her “schedule of assets and liabilities includes debts which are secured by property of the estate . . . [, ]” a debtor must take action to file a “statement of intention” with respect to the secured property. 11 U.S.C. § 521(a)(2)(A). The debtor has “thirty days after the date of the filing of the petition under chapter 7 . . . or on or before the date of the meeting of the creditors, whichever is earlier . . .” to file his statement of intention. Id. The statement must specify the debtor's โ€œintention with respect to the retention or surrender of such property and, if applicable, ...

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