Residential Capital, LLC

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re:
Residential Capital, LLC, et al.,
Debtors.
NOT FOR PUBLICATION
Chapter 11
Case No. 12-12020 (MG)
(Jointly Administered)
MEMORANDUM OPINION AND ORDER DENYING CORLA JACKSON’S NOTICE
TO REISSUE EXPIRED OUT DATED CHECK
A P P E A R A N C E S:
CORLA R. JACKSON
Pro Se
13230 Tom Gaston Road
Mobile, AL 36695
By: 	Corla R. Jackson
MORRISON & FOERSTER LLP
Counsel for the ResCap Liquidating Trust
250 West 55th Street
New York, NY 10019
By: 	Norman S. Rosenbaum, Esq.
Adam A. Lewis, Esq.
MARTIN GLENN
UNITED STATES BANKRUPTCY JUDGE
Pending before the Court is Corla R. Jackson’s (“Jackson”) pro se Notice to Reissue
Expired Out Dated Check Funds Belonging to Corla Jackson GMAC Mortgage LLC Kept (the
“Notice,” ECF Doc. # 10489), filed on February 13, 2018 and seeking the reissuance of an
uncashed and expired check (the “Uncashed Check”) issued in February 2006 by GMAC
Mortgage, LLC (“GMAC Mortgage”), one of the debtor in this chapter 11 case (collectively, the
“Debtors”).1 On March 15, 2018, the ResCap Liquidating Trust (the “Liquidating Trust,” as
1 	While the Uncashed Check has not been filed on the docket, the original Uncashed Check was provided to
the Court with a copy of the Notice that Jackson mailed to the Court. (See Notice at 3.) A copy of the Uncashed
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successor in interest to the Debtors, filed The ResCap Liquidating Trust’s Response to Notice to
Reissue Expired Out Dated Check Funds Belonging to Corla Jackson GMAC Mortgage LLC
Kept (the “Response,” ECF Doc. # 10492).
For the reasons set forth below, Jackson’s Notice is DENIED.
I. 	BACKGROUND 2
A. 	General Background
On May 14, 2012 (the “Petition Date”), each of the Debtors filed a voluntary petition in
this Court for relief under Chapter 11 of the Bankruptcy Code. These cases are being jointly
administered pursuant to Bankruptcy Rule 1015(b). (See ECF Doc. # 59.)
On August 29, 2012, this Court entered an order (the “Bar Date Order,” ECF Doc. #
1309) establishing, among other things, November 9, 2012 at 5:00 p.m. as the deadline to file
proofs of claim by virtually all creditors against the Debtors, except by governmental units, and
prescribed the form and manner for filing proofs of claim. (Bar Date Order ¶ 2.) On November
7, 2012, the Court entered an order extending that date to November 16, 2012 at 5:00 p.m. (the
“Bar Date”). (See ECF Doc. # 2093.)
On December 11, 2013, the Court entered the Order Confirming Second Amended Joint
Chapter 11 Plan Proposed by Residential Capital, LLC, et al. and the Official Committee of
Unsecured Creditors (the “Confirmation Order,” ECF Doc. # 6065) approving the terms of the
Chapter 11 plan, as amended (the “Plan,” Confirmation Order Ex. 1), filed in these Chapter 11
cases. On December 17, 2013, the Effective Date (as defined in the Plan) of the Plan occurred,
and the Plan was substantially consummated. (See ECF Doc. # 6137.)
Check was provided to counsel to the Liquidating Trust (as defined below), and the original Uncashed Check was
returned to Jackson at Jackson’s request. (See ECF Doc. # 10496.)
2 	The following facts are taken from the Response.
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The Plan provides for the creation and implementation of the Liquidating Trust, which,
among other things, is “authorized to make distributions and other payments in accordance with
the Plan and the Liquidating Trust Agreement” and is responsible for the wind down of the
affairs of the Debtors’ estates. (See Plan, Art. VI.AD; see also Confirmation Order ¶ 22.)
Pursuant to the Confirmation Order and the Plan, the Liquidating Trust was vested with broad
authority over the post-confirmation liquidation and distribution of the Debtors’ assets. (See
Confirmation Order ¶¶ 26, 30, 48; Plan, Art. VI.)
B. 	Jackson’s Loan History
On May 26, 2004, Jackson obtained a home mortgage loan (the “Loan”) from Option
One Mortgage Corporation (“Option One”) and executed a note (the “Note”) in the amount of
$240,000.00. (Resp. ¶ 14.) GMAC Mortgage was the servicer on the Loan, and was later
assigned the Note by Option One. (Id.) The Note was secured by a mortgage on property
located at 13230 Tom Gaston Road, Mobile, Alabama 36695-8658 (the “Property”). (Id.) On
June 1, 2012, GMAC Mortgage, both servicer and owner of the Note, foreclosed upon the
Property and purchased it at a non-judicial foreclosure sale. (Id. at ¶ 15.) In June 2012, GMAC
Mortgage sent a notice of demand for possession of the Property in accordance with Alabama
state law. (Id.)
The servicing of Jackson’s Loan was later transferred to Ocwen Loan Servicing
(“Ocwen”) in connection with the sale of the Debtors’ servicing platform in February of 2013.
(Id. ¶ 16.) An order (id. Ex. A) granting GMAC Mortgage or its assigns possession of the
Property was entered on February 22, 2017, in an action commenced in the Circuit Court of
Mobile County, Alabama styled as GMAC Mortgage v. Corla Jackson, No. cv-2013-902219
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(Cir. Ct. Ala. Mobile Cty). The pendency of the Eleventh Circuit Appeal discussed below
appears to prevent Ocwen from taking possession of the Property. (Id. ¶ 16.)
C. 	The Lawsuits and Expungement of Jackson’s Claim
On January 18, 2012, Jackson commenced a lawsuit against GMAC Mortgage in
Alabama state court, later removed to the United States District Court for the District of Alabama
(the “Alabama District Court”), asserting numerous claims against the Debtors, including fraud,
and styled as Jackson v. GMAC Mortgage, LLC, Civil Action No. 1:12-CV-00111-KD-B (the
“District Court Action”). (See Debtors’ Objection to Proof of Claim Filed by Corla Jackson
(Claim No. 4443) (the “Claim Objection,” ECF Doc. # 5100) ¶ 23.)
Following the filing of the Debtors’ bankruptcy petitions, Jackson repeatedly sought
relief from the stay to continue the District Court Action. Such requests were denied by this
Court. (See id. ¶¶ 2735; see also Memorandum Opinion and Order Sustaining Objection and
Expunging Claim No. 4443 by Corla Jackson (the “Memorandum Opinion,” ECF Doc. # 6363)
at 23.) In denying Jackson’s requests for relief from stay, the “Court made clear to Ms. Jackson
that she could file a proof of claim in this case . . . .” (Mem. Op. at 3 (quotation omitted).)
On November 9, 2012, Jackson timely filed a proof of claim (Proof of Claim No. 4443)
against Debtors GMAC Mortgage and Residential Capital, LLC in the face amount of
$100,000,000, asserting secured and unsecured claims (the “Jackson Claim”). (Resp. ¶ 18.) The
Debtors filed the Claim Objection on September 18, 2013. (See Claim Obj.) As previously
explained by the Court, the stated basis for the Jackson’s Claim was: “They stole my identity
[and] everything I owned causing major damages from 2005-2012 to date,” and appeared to be
predicated on the District Court Action. (Mem. Op. at 34.)
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In the Memorandum Opinion, this Court sustained the Claim Objection and expunged the
Jackson Claim, holding that the claim was barred by judicial estoppel and was lacking in merit.
(See Mem. Op. at 19.) In a Memorandum Opinion and Order dated October 8, 2014 (the
“District Court Decision”), upon consideration of an appeal by Jackson of the Memorandum
Opinion, the District Court for the Southern District of New York dismissed the appeal for lack
of jurisdiction on account of Jackson’s failure to timely file a notice of appeal, and concluded,
for completeness, that the Court did not err in expunging Jackson’s claim based on both judicial
estoppel and the merits. (See Corla Jackson v. ResCap Borrower Claims Trust, No. 14-cv-02427
(JGK) (S.D.N.Y. 2014).) Jackson took an appeal of the District Court Decision to the Court of
Appeals for the Second Circuit. (See Corla Jackson v. ResCap Borrower Claims Trust, No. 14-
4637 (2d Cir. 2014)). The appeal was ultimately dismissed on procedural grounds as a result of
Jackson’s repeated failure to comply with the briefing schedule and other deadlines set by the
Court of Appeals. (Resp. ¶ 24.) Jackson took no further action in the Second Circuit and did not
file a petition for certiorari, and as a result, the Memorandum Decision became a final order.
(Id.)
On April 25, 2017, counsel to GMAC Mortgage filed in the District Court Action a status
report regarding the bankruptcy stay (the “Status Report,” Resp. Ex. B), appraising the Alabama
District Court of the expungement of the Jackson Claim, the outcome of the subsequent appeals,
and the entry by the Court of the Confirmation Order and the Order Granting the Motion for
Entry of an Order Establishing Procedures Enforcing Injunctive Provisions of the Plan and
Confirmation Order (the “Procedures Order,” ECF Doc. # 8303). The Alabama District Court
subsequently entered an Order on May 25, 2017, dismissing the case with prejudice (the
“Dismissal Order,” Resp. Ex. C) and concluding that the res judicata effect of the Memorandum
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Decision and the discharge provisions of the Confirmation Order was dipositive of Jackson’s
claims in the District Court Action. (Id. ¶ 26.)
Jackson appealed the Dismissal Order to the Court of Appeals for the Eleventh Circuit, in
an action styled Corla Jackson v. GMAC Mortgage Corporation, No. 17-12563-C (11th Cir.
2017) (the “Eleventh Circuit Appeal”). On July 13, 2017, the Trust as successor in interest to
GMAC Mortgage, filed a Notice of Bankruptcy Status in the Eleventh Circuit Appeal (id. Ex.
D), informing the Court of Appeals of the status of the Jackson Claim, the entry of the
Confirmation Order and the Procedures Order, and the Liquidating Trust’s intention to follow the
processes approved in the Procedures Order for enforcing the Injunction Provisions of the Plan.
(Id. ¶ 27.)
On February 1, 2018, upon consideration of Jackson’s application to proceed in forma
pauperis, and a separate motion filed by Jackson requesting the Court of Appeals to void all
previous orders entered in the Alabama District Court and to grant Jackson a new trial, the Court
of Appeals granted Jackson in forma pauperis status but denied the other motion. (Id. ¶ 28.) On
that same day, a Memorandum (id. Ex. E) was filed in the appeal advising the parties of the
appellate briefing schedule. (Id. ¶ 28.) According to the Memorandum, Jackson’s opening brief
was due on March 13, 2018. (Id.)
D. 	Jackson’s Notice
By the pro se Notice, Jackson seeks the reissuance of the Uncashed Check by GMAC
Mortgage. Jackson explains, among other allegations of fraud, that relief should be granted
“because GMAC Mortgage . . . kept my money and destroyed my home, credit and more in
reference to delayed settlement funds and claims to date . . . .” (Notice at 1.)
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E. 	The Liquidating Trust’s Response
The Liquidating Trust contends that Jackson’s request should be denied because “[t]o the
extent Movant believed she had a legitimate claim against the Debtors to the funds represented
by the Uncashed Check that is dated over 6 years prior to the date of the commencement of the
Chapter 11 Cases, Movant had a full and fair opportunity to assert this claim as part of the claims
allowance process.” (Resp. ¶ 2.) Since Jackson did not do so, either in her November 9, 2012
proof of claim or in connection with a separate proof of claim, Jackson is now enjoined by the
Bar Date Order, the final order of this Court expunging Jackson’s proof of claim, and the
provisions of the Plan and Confirmation Order from seeking any relief against the Debtors or the
Liquidating Trust with respect to the Uncashed Check. (Id.)3
II. 	LEGAL STANDARD
A. 	Disallowance of Claims Not Timely Filed
Section 502(b)(9) of the Bankruptcy Code empowers the court to disallow a claim with
respect to which an objection has been filed if “proof of such claim is not timely filed.” 11
U.S.C. § 502(b)(9). However, because known creditors must be afforded notice “reasonably
calculated, under all the circumstances to apprise” them of the pendency of the bar date, Mullane
v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950), if a debtor that files for chapter
11 bankruptcy protection does not give “reasonable notice” to a creditor of the bankruptcy
proceeding and of the applicable bar date, the creditor’s proof of claim cannot be constitutionally
discharged. In re U.S.H. Corp. of N.Y., 223 B.R. 654, 658 (Bankr. S.D.N.Y. 1998).
3 	The Liquidating Trust specifies that “[t]he Trust does not have access to the bank records that would
indicate whether the Uncashed Check cleared the amount from which it was issued and does not have the capacity to
independently verify that the [sic] existence of the Uncashed Check. For purposes of this Response, the Trust
assumes that the Uncashed Check was issued and did not clear the account from which it was issued as alleged by
Movant, but reserves all rights with respect to these issues.” (Resp. ¶ 1 n.1.)
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B. 	The Releases Under the Bar Date Order, Plan and Confirmation Order
The Plan and Confirmation Order contain broad release provisions. Specifically, Article
IX.I of the Plan provides, in relevant part:
[A]ll Entities, including Investors, who have held, hold or may hold
Claims, Equity Interests, Causes of Action or liabilities that constitute
Released Claims, are permanently enjoined and precluded, from and after
the effective date of the Plan, from: (a) commencing or continuing in any
manner or action or other proceeding of any kind against any Released
Party whether directly, derivatively or otherwise, on account of or in
connection with or with respect to any Released Claims[.]
Plan Art. IX.I; see also Confirmation Order ¶ 40. Under the Plan, the term “Released Party” is
defined as “the Liquidating Trust, and each Ally Released Party, Debtor Released Party, and
Exculpated Party, or the property or Estate of any Entity so released, discharged or exculpated.”
Plan Art. I.A.243. The term “Released Claims” is defined as “Claims, Equity Interests, Causes
of Action or liabilities that: (i) have been discharged, terminated, or satisfied pursuant to the
terms of the Plan; (ii) have been released pursuant to the Plan; or (iii) are subject to exculpation
pursuant to the Plan.” Plan Art. I.A.242. And the Plan specifically provides that the claim of
any creditor of the Debtors that failed to file a proof of claim by the applicable deadline
SHALL BE DEEMED DISALLOWED, DISCHARGED, RELEASED,
AND EXPUNGED AS OF THE EFFECTIVE DATE WITHOUT ANY
FURTHER NOTICE TO OR ACTION, ORDER, OR APPROVAL OF
THE BANKRUPTCY COURT, AND HOLDERS OF SUCH CLAIMS
MAY NOT RECEIVE ANY DISTRIBUTIONS ON ACCOUNT OF
SUCH 	CLAIMS, 	UNLESS 	SUCH 	LATE 	PROOF 	OF 	CLAIM 	IS
DEEMED 	TIMELY 	FILED 	BY 	A 	FINAL 	ORDER 	OF 	THE
BANKRUPTCY COURT.
Plan Article VIII.B (emphasis in original). The Bar Date Order, which established November 9,
2012 as the deadline to file proofs of claim against the Debtors, later extended to November 16,
2012, similarly provides that any party that did not file a proof of claim
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[S]hall be forever barred, estopped and enjoined from asserting such claim
against the Debtors (or filing a proof of claim with respect thereto), and
the Debtors, their Chapter 11 estates, their successors and their respective
property shall be forever discharged from any and all indebtedness or
liability with respect to such claim[.]
Bar Date Order ¶ 11.
III. 	DISCUSSION
As a preliminary matter, the Court notes that while Jackson seeks reissuance by GMAC
Mortgage of the Uncashed Check, Jackson’s Notice fails to provide any factual explanation as to
the nature of the claim underlying the Uncashed Check or the reasons why Jackson failed or was
unable, as the case may be, to cash the check before it became void, or why Jackson waited for
more than 12 years after the Uncashed Check expired to seek relief. The Notice also fails to
include any contentions of law or legal arguments on the basis of which the Uncashed Check
should be reissued by GMAC Mortgage or the Liquidating Trust. The Court concludes that
Jackson’s Notice does not support granting the relief requested.
The Uncashed Check, issued to “Corla Jackson & Anthony” and “void after 60 days,” is
dated February 15, 2006, 6 years prior to the Petition Date on May 14, 2012. To the extent
Jackson seeks to assert a prepetition claim, if any, against GMAC Mortgage or the Liquidating
Trust for the claim underlying the Uncashed Check, Jackson was required to file a timely proof
of claim in these Chapter 11 cases prior to the Bar Date on November 16, 2012. See 11 U.S.C.
§ 502(b)(9); ECF Doc. ## 1309, 2093. Jackson failed to file a timely proof of claim in relation
with the Uncashed Check. Jackson had due notice of the Bar Date, as Jackson filed a timely
proof of claim (Proof of Claim No. 4443) before the Bar Dateeventually expunged by this
Court and which did not include any claim for or reference to the amounts purportedly due
Jackson in connection with the Uncashed Check. Accordingly, Jackson’s claim for the amounts
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due under the Uncashed Check, if any, is deemed disallowed, discharged, released and expunged
under the Bar Date Order, the Plan and the Confirmation Order, and Jackson is enjoined and
precluded by the Bar Date Order, the Plan and the Confirmation Order from asserting such claim
or commencing any action against the Debtors or the Liquidating Trust in connection with the
Uncashed Check. See Plan Articles VIII.B, IX.I; Bar Date Order ¶ 11.
IV. 	CONCLUSION
For the foregoing reasons, Jackson’s Notice to reissue the Uncashed Check is DENIED.
IT IS SO ORDERED.
Dated: April 20, 2018
_____Martin Glenn____________
MARTIN GLENN
United States Bankruptcy Judge
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