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First National Bank of Oneida, N.A. v. Brandt

United States Court of Appeals, Eleventh Circuit

April 24, 2018

FIRST NATIONAL BANK OF ONEIDA, N.A., Plaintiff-Appellant,
v.
DONALD H. BRANDT, Defendant-Appellee.

          Appeal from the United States District Court for the Middle District of Florida D.C. Docket No. 8:16-cv-00051-EAK-MAP

          Before WILLIAM PRYOR and JULIE CARNES, Circuit Judges, and ANTOON, [*] District Judge.

          PER CURIAM.

         First National Bank of Oneida, N.A. ("First National") brought this action against Donald Brandt to collect the remaining amounts due on several loans after the real estate securing those loans was sold and the proceeds of those sales did not cover the outstanding balances. Brandt, who had earlier filed a Chapter 11 bankruptcy petition, moved to dismiss First National's claims on the ground that First National could not state a claim for a deficiency because it had not complied with certain provisions of Brandt's previously confirmed Chapter 11 plan. The district court agreed with Brandt and dismissed all of First National's deficiency claims that related to loans made before Brandt filed his Chapter 11 petition. First National appeals that dismissal.

         After the parties had filed their briefs in this appeal, Brandt moved the bankruptcy court to dismiss his Chapter 11 case. The bankruptcy court granted the motion to dismiss. Given this dismissal of his underlying bankruptcy petition, none of Brandt's debts or liabilities were discharged and the automatic stay was terminated. Brandt and First National disagree as to whether that dismissal has any effect on this case, but neither party has meaningfully briefed the issue. In light of what is potentially a significant development in the case, we vacate the district court's dismissal of First National's deficiency claims and remand for the district court to consider, in the first instance, whether the dismissal of Brandt's Chapter 11 case without a discharge has any effect on First National's ability to pursue its deficiency claims in this case.

         I. BACKGROUND

         A. Brandt's Bankruptcy Proceedings

         In July 2009, Brandt filed a voluntary Chapter 11 bankruptcy petition. When he filed the petition, Brandt owned, managed, and rented approximately 50 single-family homes and duplexes in Ohio, Tennessee, Arizona, and Florida. He was also in the business of selling and developing raw land in Tennessee.

         One of Brandt's creditors was First National Bank. Brandt owed First National more than $1.3 million on real-estate loans. First National filed eleven proofs of claim in Brandt's bankruptcy case-ten for the real-estate loans and one for a car loan that is not at issue in this appeal. In its proofs of claim, First National asserted that its real-estate loans were fully secured.[1] Brandt did not object to any of First National's proofs of claim. See 11 U.S.C. § 502(a) (providing that a claim is deemed allowed unless a party in interest objects).

         Brandt filed his Chapter 11 plan in February 2010. He grouped all of First National's real-estate loans into a single class-Class 19-"to the extent allowed as . . . secured claims[s] under" 11 U.S.C. § 506. No other claims were included in that class.

         The plan further provided that Brandt would issue a promissory note to First National secured by $150, 000 worth of real estate.[2] In exchange for Brandt assuming this additional obligation, First National would deem Brandt current on his real-estate loans through August 2010. Brandt would then resume his payments to First National in September 2010.

         The plan also established Class 45-a single class of all unsecured claims allowed under 11 U.S.C. § 502. In its description of Class 45, the plan stated: "Any secured creditor who has filed a secured claim and claims an entitlement to an unsecured claim must file an amended claim seeking entitlement to an unsecured claim by 30 days after the confirmation hearing (including any continued dates)." (Bolded emphasis in original).

         The bankruptcy court confirmed Brandt's Chapter 11 plan on December 31, 2011. Believing itself oversecured at that time as to its claims, First National did not amend its proofs of claim within 30 days after confirmation to claim an entitlement to an unsecured claim.

         By February 2013, which was a little over a year later, Brandt had defaulted on his obligations to First National: both on the pre-petition real-estate loans and on the post-petition promissory note. First National moved the bankruptcy court to lift the automatic stay so it could foreclose on the real estate securing its loans to Brandt. The bankruptcy court granted the requested relief.

         First National subsequently sold the real estate securing its loans. After applying the proceeds to the outstanding balances on Brandt's loans, Brandt still owed First National more than $1.2 million. According to First National, more than $180, 000 of that $1.2 million deficiency was related to the post-petition promissory note, while the rest related to the pre-petition real-estate loans.

         At a hearing on November 3, 2015, First National moved the bankruptcy court to lift the automatic stay to allow it to pursue in personam relief against Brandt. Brandt did not oppose the motion. Accordingly, the bankruptcy court granted the motion and lifted the automatic stay specifically to ...


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