Bankruptcy – Discharge injunction – Mortgage

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Where a debtor filed a complaint alleging that post-discharge communications from a defendant mortgage lender were attempts to collect a discharged debt in violation of 11 U.S.C. section524(a)(2)’s discharge injunction, a U.S. Bankruptcy Court judge did not err in awarding judgment to the lender, as the communications were not coercive or harassing.

Affirmed.

“Gregory M. Kirby (‘Mr. Kirby’) appeals from the bankruptcy court’s order (the ‘Order’) granting summary judgment in favor of 21st Mortgage Corporation (’21st Mortgage’) on his complaint alleging that post-discharge communications from 21st Mortgage were attempts to collect a discharged debt in violation of section 524(a)(2)’s discharge injunction and the Fair Debt Collections Practices Act (‘FDCPA’). …

“… 21st Mortgage acknowledged that it had notice of Mr. Kirby’s discharge and had sent a total of 22 post-discharge communications regarding the defaulted loan, but contended that none of those communications improperly harassed or coerced Mr. Kirby to pay a discharged debt in violation of the discharge injunction. …

“… Examining each of the post-discharge communications sent by 21st Mortgage, the court held that none of the post-discharge communications were improperly ‘coercive’ or ‘harassing.’ …

“… Because the discharge injunction only prohibits those communications ‘designed to collect, recover or offset any [discharged] debt as a personal liability of the debtor,’ … correspondence that is ‘informational in nature’ does not violate the automatic stay or discharge injunction. …

“It is undisputed on appeal that 21st Mortgage had actual knowledge that Mr. Kirby received a discharge under section727 and that, after receiving notice of the discharge, it sent 24 communications to Mr. Kirby or his counsel and filed a pleading in the state court foreclosure action. Consequently, the first two elements of the discharge injunction standard under section524(a)(2) — that the creditor had notice of the discharge and intended the actions which violated the discharge — are satisfied. Our focus, therefore, is on the third element — whether, under an objective standard and considering the facts and circumstances surrounding the communications, the post-discharge communications improperly coerced or harassed Mr. Kirby into paying the discharged debt. …

“Here, 21st Mortgage sent 24 written communications to Mr. Kirby or his counsel during the 26-month period following the entry of the Mr. Kirby’s discharge. Nineteen of the post-discharge communications were sent while the parties were actively engaged in mediation to negotiate an alternative to foreclosure. After the conclusion of the mediation process in October 2015, 21st Mortgage and its counsel sent five additional written communications, but ceased all correspondence after the foreclosure sale in February 2017.

“Although Mr. Kirby argues that the sheer volume of the communications amounts to coercion, even if the individual communications do not, the surrounding circumstances and context in which the communications were sent eliminated any coercive or harassing effect of the post-discharge communications.  …

“We conclude that Mr. Kirby failed to demonstrate genuine issues of material fact which would have precluded the entry of summary judgment. Additionally, we conclude, based on the totality of the circumstances surrounding the post-discharge communications contained in the summary judgment record, together with the substance of those communications, that Mr. Kirby did not establish that the correspondence in question, whether viewed individually or cumulatively, coerced or harassed him to pay a discharged debt in violation of the discharge injunction. Therefore, the bankruptcy court did not err in granting summary judgment in favor of 21st Mortgage, and we affirm.”

In Re: Kirby, Gregory M., et al. (Lawyers Weekly No. 03-008-19) (32 pages) (Katz, J.) Appealed from the U.S. Bankruptcy Court for the District of Maine (BAP NO. EP 18-024) (May 14, 2019).

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