by The doctrine of laches applied a fatal blow to the creditor’s motion to reopen to compel surrender. In re Kourogenis, 2015 Bankr. LEXIS 3400, No. 09-32936 (Bankr. S.D. Fla. Oct. 7, 2015). Five years after discharge, a creditor, Green Tree Servicing, sought to reopen Ms. Kourogenis’s chapter 7 bankruptcy to compel surrender of real property which Ms. Kourogenis had opted to surrender in her Statement of Intentions. The court denied the motion.
Section 521(a)(2)(B) requires that the debtor perform on her selection with respect to the disposition of secured property within 30 days of the section 341 creditor’s meeting. In its motion, Green Tree complained the debtor had not performed her intention as required, and asked for an order compelling her to stop fighting the pending state foreclosure action. The court quoted Smith v. Clay, 3 Brown Ch. 638, 1 Pomeroy’s Equity Jurisprudence § 419 (1905), that: “A court of equity, which is never active in relief against conscience or public convenience, has always refused its aid to stale demands, where the party has slept upon his rights, and acquiesced for a great length of time. Nothing can call forth this court into activity but conscience, good faith, and reasonable diligence.” The court reasoned that where the fundamental purpose of bankruptcy is to afford the debtor a fresh start and Ms. Kourogenis had achieved that purpose five years ago, permitting Green Tree to reopen and drag her and her intervening financial life back into court would be inequitable. On that basis, the court denied the motion to reopen.
It nonetheless turned to the issue of a debtor’s right to fight state foreclosure of property surrendered in bankruptcy. In In re Metzler, 530 B.R. 894 (Bankr. M.D. Fla. 2015), the court concluded that fighting foreclosure was an overt act that interfered with a creditor’s right to take surrendered property and was therefore prohibited by the Code. In contrast, In re Plummer, 513 B.R. 135 (Bankr. M.D. Fla. 2014), held that “surrender” was not equivalent to permitting foreclosure. Rather, a debtor remains entitled to raise defenses to foreclosure within the confines of the equitable principle of judicial estoppel.
The Kourogenis court favored the nuanced approach used in Plummer and turned next to two factors the Eleventh Circuit has identified when applying the doctrine of judicial estoppel: “(1) it must be shown that the allegedly inconsistent positions were made under oath in a prior proceeding; and (2) such inconsistencies must be shown to have been calculated to make a mockery of the judicial system. Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282 at 1285 (11th Cir. 2002).” To apply the law of judicial estoppel to cases involving mixed questions of law and fact the court turned to state law for guidance. “For judicial estoppel to apply under Florida law, (a) the position assumed in the prior trial must have been successfully maintained; (b) the positions must be clearly inconsistent; (c) the parties and issues must be the same; and (d) the party claiming estoppel must have been misled and have changed its position. Chase & Co. v. Little, 156 So. 609, 610 (Fla. 1934).”
Having thus examined how to apply the doctrine of judicial estoppel, the court went on to conclude that it had no power to do so. Under the Rooker-Feldman doctrine, the application of judicial estoppel was to be decided in the subsequent action, in this case the state foreclosure case. The bankruptcy court concluded that it lacked authority to determine the significance of the debtor’s surrender in her bankruptcy case in the subsequent state court foreclosure action.