Court Opinion

ID: 3106113
Source: CourtListenerOpinion
Date Created: 2015-10-16 05:53:48.474557+00
Date Added: 2024-06-11T12:05:53.886243
License: Public Domain

COURT OF APPEALS FOR THE
                         FIRST DISTRICT OF TEXAS AT HOUSTON

                                         ORDER

Appellate case name:        Joseph Mills and Kathy Mills v. GMAC, LLC, US Bank
                            National Association, as Trustee of the RASC 2006KS5 Trust

Appellate case number:      01-11-01104-CV

Trial court case number:    1125950

Trial court:                80th District Court of Harris County

       Appellants, Joseph Mills and Kathy Mills, filed suit against GMAC, LLC and US
Bank National Association, as Trustee of the RASC 2006KS5 Trust, in the trial court,
seeking a declaratory judgment stating that the mortgage lien on their home is invalid and
that GMAC and US Bank are not entitled to payments on the mortgage loan, and seeking
damages, attorney’s fees, and costs. The trial court granted summary judgment in favor
of appellees and dismissed appellants’ claims with prejudice, holding that appellants’
causes of action are barred by the statute of limitations. Appellants appealed.
       On June 28, 2012, appellants filed a notice stating that GMAC, LLC had filed a
petition for bankruptcy. See TEX. R. APP. P. 8.1. As a result, this case has been stayed
pursuant to 11 U.S.C. § 362(a) and Texas Rule of Appellate Procedure 8.2.
       Appellees, GMAC, LLC and US Bank National Association, as Trustee of the
RASC 2006KS5 Trust, have filed a “Motion to Reinstate Appeal.” In their motion,
appellees argue that the bankruptcy court has lifted the stay “to permit non-Debtor parties
in foreclosure and eviction proceedings, borrower bankruptcy cases and title disputes to
continue to assert and prosecute certain defenses, claims and counter-claims.” Appellees
argue that to “the extent that Appellants/Plaintiffs’ claims pertain to the validity of the
lien and potential foreclosure of the property, they are Permitted Claims and may
proceed,” but that any claims that include a demand for monetary relief, including
appellants’ claims for damages and for attorney’s fees, “remain[] subject to the automatic
stay and the continued prosecution of” those claims is prohibited. Appellees move that
“the instant appeal be reinstated and ruled upon by the Court.”
       In response, appellants argue that the appeal cannot “be reinstated piecemeal” and
that the appeal cannot be reinstated because their “demand for monetary relief remains
stayed.” Appellants request that the entire appeal remain stayed.
        In its July 13, 2012 order1, the bankruptcy court granted limited relief from the
automatic stay. First, the court granted relief from the automatic stay in “pending and
future foreclosure actions initiated by the Debtors or in those states providing for non-
judicial foreclosures, by a borrower” and in “pending and future eviction proceedings.”
Second, the court granted relief in cases involving a “borrower who currently has filed, or
in the future files, for bankruptcy protection.” Third, the court granted relief in “pending
and future foreclosure actions initiated by the Debtors in cases where they act as servicer
for the Senior Loan and also own . . . the Junior Loan.” Finally, the court granted relief
in “actions involving the amount, validity, and/or priority of liens commenced by third
parties purporting to have a lien interest or other claim (‘Third Party Claimants’) with
respect to properties that are subject to mortgages owned or served by the Debtors.”
Further, the bankruptcy court ordered that any “disputes regarding the extent, application
and/or effect of the automatic stay under this Order shall be heard and determined in the
Debtors’ jointly administered bankruptcy cases.”
        Here, the parties dispute the extent, application and/or effect of the automatic stay
under the bankruptcy court’s July 13, 2012 order. Further, it is not clear whether the
order provides relief from the automatic stay in this case, as this case involves neither a
foreclosure action nor an eviction proceeding,2 there is no indication in the record that
either Joseph Mills or Kathy Mills has filed for bankruptcy protection, and it is not clear
that this case involves a “Third Party Claimant” as that term is defined in the bankruptcy
court’s order. Finally, although it is undisputed that appellants’ claims for monetary
damages remain subject to the automatic stay, appellees provide no argument as to how
the bankruptcy court’s order lifts the automatic stay in an appeal from a case involving
claims brought by a borrower seeking to recover monetary damages or what authority we
have to reinstate an appeal wherein some claims remain subject to the automatic stay.
See 11 U.S.C. § 362(c)(2) (stating that stay continues in effect until bankruptcy is closed

1
       The order is styled the “Final Supplemental Order Under Bankruptcy Code
       Sections 105(a), 362, 363, 502, 1107(a), and 1108 and Bankruptcy Rule 9019
       (I) Authorizing the Debtors to Continue Implementing Loss Mitigation Programs;
       (II) Approving Procedures for Compromise and Settlement of Certain Claims,
       Litigations and Causes of Action; (III) Granting Limited Stay Relief to Permit
       Foreclosure and Eviction Proceedings, Borrower Bankruptcy Cases, and Title
       Disputes to Proceed; and (IV) Authorizing and Directing the Debtors to Pay
       Securitization Trustee Fees and Expenses.”
2
       In their reply, appellees state that “[t]he claims here are primarily made as a
       defense to an impending foreclosure.” Whether this is true is irrelevant, as the
       claims were not made in a foreclosure action.
or dismissed or until discharge is granted or denied); TEX. R. APP. P. 8.3(a) (authorizing
appellate court to “reinstate the appeal if permitted by federal law or the bankruptcy
court”), 8.3(b) (authorizing only severance of bankrupt party from appeal and
reinstatement of appeal with respect to other parties); see, e.g., In re Residential Capital,
LLC, No. 12-12020 (MG), 2012 WL 3423285, at *2 (Bankr. S.D.N.Y. Aug. 14, 2012)
(“[T]he Supplemental Servicing Order permits defendants in state court foreclosure
actions to assert and prosecute claims and counterclaims that are defenses to foreclosure
under applicable state law. The automatic stay was not lifted, however, to permit
borrowers to assert and prosecute claims against the Debtors seeking to recover monetary
damages.”).
        Accordingly, if appellees desire reinstatement of this appeal, they must either
obtain clarification from the bankruptcy court stating that its July 13, 2012 order
authorized reinstatement of this appeal or they must obtain an order of the bankruptcy
court lifting the automatic stay in this case. See, e.g., In re Residential Capital, LLC, No.
12-12020 (MG) (Bankr. S.D.N.Y. May 8, 2013) (order granting in part and denying in
part motion for clarification/enforcement of automatic stay and authorizing pending
appeals to proceed to completion).
        The motion to reinstate the appeal is DENIED. The court will entertain any future
motions to reinstate after the parties have either received clarification from the
bankruptcy court or obtained an order from the bankruptcy court lifting the stay in this
case. Appellees’ motion to substitute party and appellants’ motion for extension of time
to file response will be carried with the case until the appeal is reinstated. See TEX. R.
APP. P. 8.2.
       It is so ORDERED.

Judge’s signature: /s/ Chief Justice Sherry Radack
                    Acting individually  Acting for the Court

Date: April 17, 2014