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McLean v. Greenpoint Credit LLC

United States District Court, M.D. Alabama, Southern Division

August 25, 2014



W. KEITH WATKINS, Chief District Judge.

Greenpoint Credit LLC and Green Tree Servicing, LLC ("Green Tree") appeal the memorandum and order (Doc. #2-7) of the United States Bankruptcy Court for the Middle District of Alabama in an Adversary Proceeding (No. 13-1008). The Bankruptcy Court found in favor of the plaintiffs, Eric Allen and Deborah Dianne McLean ("the McLeans"). Specifically, the Bankruptcy Court found that Green Tree had willfully violated the discharge injunction in the McLeans' earlier bankruptcy proceeding. It awarded actual damages in the amount of $25, 000.00, attorney's fees (that, according to the parties' briefs, were later determined to be in the amount of $18, 355.16), and a sanction in the amount of $50, 000.00. For the reasons to follow, the Bankruptcy Court's order is due to be affirmed.


This court has jurisdiction to hear appeals from orders of the Bankruptcy Court. 28 U.S.C. ยง 158(a). Venue is proper because an appeal "shall be taken only to the district court for the judicial district in which the bankruptcy judge is serving." Id.


A bankruptcy court's findings of fact are reviewed for clear error and its legal conclusions de novo. Educ. Credit Mgmt. v. Mosley (In re Mosley), 494 F.3d 1320, 1324 (11th Cir. 2007). A finding of fact "is clearly erroneous when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Anderson v. City of Bessemer City, N.C. , 470 U.S. 564, 573 (1985) (citation, internal quotation marks, and alterations omitted).


The parties do not dispute the Bankruptcy Court's findings of facts or the procedural posture this case. They are briefly summarized here and discussed where necessary in the opinion.

The McLeans filed a voluntary Chapter 13 petition in 2006. Green Tree was an unsecured creditor for a deficiency balance of $11, 018.00 owed on a sales contract for a mobile home. The Chapter 13 case was ultimately converted to a Chapter 7. The McCleans received a Discharge Order on January 6, 2009, and the Order t was sent to all creditors, including Green Tree. The McLeans filed a second Chapter 13 on June 18, 2012. On August 16, 2012, Green Tree filed a proof of claim in the 2012 bankruptcy seeking payment for the same deficiency balance owed on the mobile home sales contract that was the subject of Green Tree's claim in the 2006 bankruptcy. Green Tree took no further action with respect to the discharged debt after filing the proof of claim. The McLeans filed an objection to the Green Tree claim on December 13, 2012, due to the previous discharge of the debt. They initiated the adversary proceeding that is the basis of this appeal on January 7, 2013, seeking actual damages for emotional distress, legal fees, and punitive damages. Green Tree then moved to withdraw the claim on January 11, 2013. The Bankruptcy Court sustained the McLean's objection on January 16, 2013.

The Bankruptcy Court held the trial in the adversary proceeding on October 15, 2013, and heard testimony from the McLeans and Mr. Dalpiaz, a representative of Green Tree. Mr. McLean testified that he is a disabled veteran with post-traumatic stress disorder ("PTSD") related to an injury sustained during his military service. His PTSD symptoms are treated with medication, but they worsen during what he calls his "anniversary period" in the fall and early winter of each year. After Green Tree filed its claim on the discharged debt in the current bankruptcy, Mr. McLean received notice from the Bankruptcy Court's clerk's office, who informed him that his monthly payment under the chapter 13 plan would increase. Mr. McLean testified that the monthly payment would nearly double, meaning it "would make him unable to complete the chapter 13 plan, and expose his family to creditors and the loss of their home and possessions." (Doc. #2-7, at 3.) This realization caused stress that exacerbated his symptoms for a few months. Mrs. McLean also testified about her husband's symptoms and the stress she incurred due to worrying about her husband's mental state.

The Green Tree representative testified that Green Tree had notice of the Discharge Order in the 2006 bankruptcy. The Bankruptcy Court found that:

Green Tree was unsure how the filing of the 2012 claim occurred in light of the existing discharge injunction. Dalpiaz testified to Green Tree's internal procedures for complying with discharge injunctions, as well as their procedures for initiating debt collection upon the filing of a bankruptcy petition. He further testified that although the McLeans' internal file contained some notations that might have flagged it as a discharged debt, recent software changes had made the notations unreadable.

(Doc. #2-7, at 3-4.) Green Tree emphasizes in briefing that filing the claim in 2012 was a computer error.


Green Tree raises nine issues, but the gist of Green Tree's appeal is a complete denial of liability and damages. The McLeans respond to each issue. The ...

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