Court Opinion

ID: 4669166
Source: CourtListenerOpinion
Date Created: 2021-03-18 17:00:50.83016+00
Date Added: 2024-06-11T07:58:26.104393
License: Public Domain

USCA11 Case: 20-11636   Date Filed: 03/18/2021   Page: 1 of 9

                                                    [DO NOT PUBLISH]

             IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT
                       ________________________

                              No. 20-11636
                          Non-Argument Calendar
                        ________________________

                   D.C. Docket No. 2:19-cv-00074-LGW,
                      Bkcy No. 2:07-bkc-20244-MJK

In re: SHARON H. SMITH,
       MARVIN B. SMITH, III,

                                                         Debtors.
_______________________________________________________________

SHARON H. SMITH,
MARVIN B. SMITH, III,

                                                    Plaintiffs-Appellants,

                                 versus

M. DELORES MURPHY,
CHOATE & COMPANY, P.C.,
ZACHARY B. HARRIS,
SAMUEL CHOATE,

                                                    Defendants-Appellees.
           USCA11 Case: 20-11636         Date Filed: 03/18/2021     Page: 2 of 9

                             ________________________

                     Appeal from the United States District Court
                        for the Southern District of Georgia
                           ________________________

                                    (March 18, 2021)

Before JILL PRYOR, LUCK, and EDMONDSON, Circuit Judges.

PER CURIAM:

       Marvin and Sharon Smith, proceeding pro se, 1 appeal the district court’s

order affirming the bankruptcy court’s denial of the Smiths’ motion to enforce a

bankruptcy discharge injunction and to hold in contempt Delores Murphy and her

lawyers. No reversible error has been shown; we affirm.

I.     Background

       This appeal arises out of extensive litigation stemming from the Smiths’

bankruptcy proceedings and from property the Smiths owned on St. Simons Island,

1
 We construe liberally pro se pleadings. See Tannenbaum v. United States, 148 F.3d 1262,
1263 (11th Cir. 1998).

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Georgia (the “Property”). We will summarize the facts and procedural history only

as necessary to provide context for our decision.2

       The Property is located within a two-unit condominium building comprised

of the Property (Unit B) and Unit A. Unit A is owned by Murphy. Both units are

governed by the Enchantment by the Sea Condominium Owner’s Association

(“Association”). The owners of each unit are members of the Association and

have voting rights.

       In 2007, the Smiths filed for bankruptcy seeking to discharge over $2

million in mortgage debt on the Property. On their bankruptcy petition, the Smiths

listed Countrywide Home Loans (“Countrywide”) as holding two secured claims

against the Property.

       In 2008, Countrywide -- as servicing agent for HSBC Bank USA, N.A.

(“HSBC”) -- moved for relief from the automatic stay under 11 U.S.C. § 362(a).

The bankruptcy court denied the motion but entered a Consent Order modifying

the automatic stay to allow the bankruptcy trustee to market the Property for sale.

If the Property remained unsold on 4 May 2009, the automatic stay would

terminate without further hearing or order; and foreclosure proceedings could

2
  A more thorough description of the underlying factual and procedural history is set forth in the
district court’s decisions in Smith v. HSBC Bank, N.A., 616 B.R. 438 (S.D. Ga. 2020), and in
Smith v. Murphy, 616 B.R. 228 (S.D. Ga. 2020).
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commence. In July 2009, the bankruptcy court denied the Smiths’ motion to

vacate the Consent Order and stated that foreclosure on the Property could

proceed.

      In April 2012, the bankruptcy trustee abandoned the bankruptcy estate’s

interest in the Property. HSBC foreclosed on the Property in May 2015. On 1

June 2016, the bankruptcy court entered an order discharging the Smiths’ debt

under Chapter 7. The Smiths were later evicted from the Property in August 2017.

      Meanwhile, in March 2015, members of the Association elected Marvin

Smith as president and elected Murphy as secretary/treasurer of the Association.

In July 2015 -- after the foreclosure on the Property -- Murphy filed the

Association’s annual registration with the Georgia Secretary of State, naming

herself as CEO.

      In February 2017, Murphy -- on behalf of the Association -- filed a

complaint in state court seeking to enjoin the Smiths and HSBC from preventing

the Association from entering the Property to inspect and to make repairs. In an

affidavit supporting her motion, Murphy purported to be the president of the

Association and alleged that the Property had fallen into disrepair, was causing

water damage to her unit, and that the Smiths had refused to cooperate with repair

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efforts. In March 2017, the state court issued a temporary restraining order

(“TRO”).

      In April 2017, the Smiths filed in state court a petition for a TRO against

Murphy; Murphy counterclaimed for private nuisance based on the Smiths’ failure

to maintain the Property. Following a jury trial on the counterclaim, the state court

entered final judgment in favor of Murphy and awarded damages of approximately

$690,000.

      In August 2017, the Smiths moved in the underlying bankruptcy action to

enforce against Murphy the automatic stay under 11 U.S.C. § 362. The Smiths

alleged that Murphy had violated the automatic stay by (1) filing documents with

the Georgia Secretary of State declaring herself CEO/President of the Association;

(2) seeking a TRO against the Smiths; and (3) by filing a counterclaim against the

Smiths in state court.

      The Smiths then filed an adversary proceeding against Murphy in October

2017 in which they reasserted the same purported automatic stay violations.

      The bankruptcy court denied the Smiths’ August 2017 stay motion in

January 2018. The bankruptcy court later dismissed with prejudice the Smiths’

adversary proceeding in June 2019.

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      In September 2018, the Smiths filed the motion at issue in this appeal: a

motion titled “Emergency Motion for Enforcement of the Discharge Injunction

and/or Automatic Stay and Motion for Contempt” (“Emergency Motion”). In their

motion, the Smiths contended (for the third time) that Murphy and Murphy’s

lawyers violated the automatic stay by filing documents with the Georgia Secretary

of State, seeking a TRO against the Smiths, and by filing a counterclaim against

the Smiths. The Smiths also alleged that Murphy and her lawyers violated the

bankruptcy court’s discharge injunction under 11 U.S.C. § 524 by filing and

prosecuting the private nuisance counterclaim.

      The bankruptcy court denied the Emergency Motion, finding no violation of

the automatic stay or the discharge injunction. The district court affirmed.

II.   Discussion

      We review de novo legal conclusions of both the bankruptcy court and the

district court. See Finova Cap. Corp. v. Larson Pharmacy, Inc. (In re Optical

Techs., Inc.), 425 F.3d 1294, 1299-1300 (11th Cir. 2005). We review for clear

error the bankruptcy court’s factual findings. See id. at 1300.

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      A. Automatic Stay

      The Smiths first contend that Murphy and her lawyers violated the automatic

stay in July 2015 by filing registration documents with the Georgia Secretary of

State. By that time, however, the bankruptcy trustee had abandoned the Property;

and HSBC had foreclosed on the Property. The Property was thus no longer

“property of the estate” or “property of the debtor” subject to protection under the

automatic stay. Nor were the Smiths -- although former owners of the Property --

still members of the Association.

      The Smiths’ other two asserted stay violations also lack merit. The

automatic stay expired in June 2016, when the Smiths’ Chapter 7 debt was

discharged. Thus, no automatic stay was in effect (or could be violated) at the time

of the complained-of acts in February 2017 and May 2017.

      We see no error in the bankruptcy court’s determination that neither Murphy

nor her lawyers violated the automatic stay.

      B. Discharge Injunction

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      A Chapter 7 discharge “operates as an injunction against the commencement

or continuation of an action, the employment of process, or an act, to collect,

recover or offset any such debt as a personal liability of the debtor.” 11 U.S.C. §

524(a)(2). The purpose of the discharge injunction is “to insure that once a debt is

discharged, the debtor will not be pressured in any way to repay it.” See Green

Point Credit, LLC v. McLean (In re McLean), 794 F.3d 1313, 1321 (11th Cir.

2015) (emphasis omitted). In determining whether a creditor has violated the

discharge injunction we consider “whether the objective effect of the creditor’s

action is to pressure a debtor to repay a discharged debt, regardless of the legal

entity against which the creditor files its claim.” Id.

      The record supports the bankruptcy court’s determination that no violation

of the discharge injunction occurred. Neither Murphy nor her lawyers were

creditors of the Smiths. And nothing evidences that Murphy’s counterclaim for

private nuisance -- filed and prosecuted after the Smiths’ Chapter 7 discharge --

was an attempt to recover on an already-discharged debt.

      C. Constitutional Due Process

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      On appeal, the Smiths contend they were denied their Fifth Amendment due

process rights when the bankruptcy court denied their Emergency Motion without

a hearing. Contrary to the Smiths’ assertion, nothing establishes that the party

seeking a contempt order (as opposed to the party charged with contempt) is

entitled to an evidentiary hearing. We also reject the Smiths’ conclusory

allegations about due process violations stemming from adverse rulings by the

bankruptcy court and the district court in the Smiths’ adversary proceeding against

Murphy.

      AFFIRMED.

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