Narro et al v. Ford Motor Credit

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
MIGUEL NARRO and
JANE M. NARRO,
Debtors. 	No. 7-10-15859 SA
MIGUEL NARRO and
JANE M. NARRO,
Plaintiffs,
v. 	Adv. No. 11-1070 S
FORD MOTOR CREDIT, 1
Defendant.
MEMORANDUM OPINION
IN SUPPORT OF ORDER GRANTING
DEFENDANT’S MOTION TO DISMISS
This matter is before the Court on Defendant Ford Motor
Credit’s Motion to Dismiss 2 (doc 17). 	Plaintiffs (“Plaintiffs”
or “Debtors”) are represented by the Banning Law Firm (Dennis A.
Banning). 	Defendant (“Defendant” or “Ford”) is represented by
its attorneys Allan L. Wainwright and Kilpatrick & Associates,
P.C. (Richardo I. Kilpatrick). 	The parties filed briefs in
support of their respective positions. 	The Court has reviewed
the briefs and consulted applicable authorities and now issues
1 Sic. 	In fact, it appears that Defendant’s current name is
“Ford Motor Credit, LLC”, see Answer (doc 10), and that
previously it was “Ford Motor Credit Company”. 	See Motion to
Dismiss (doc 17). 	Since Defendant has (helpfully) made no issue
of the specific name, the Court will use the name as it initially
appeared on the complaint.
2The Motion to Dismiss cites Fed.R.Civ.P. 12(b)(6) as the
basis of the motion. 	The Memorandum in Support of the Motion,
Part II, also seeks dismissal for lack of subject matter
jurisdiction, implicating Rule 12(b)(1).
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this Memorandum Opinion. 	The Court finds that the Motion to
Dismiss should be granted.
LEGAL STANDARD FOR MOTIONS TO DISMISS UNDER RULE 12(b)(1)
“Federal courts are courts of limited
jurisdiction; they are empowered to hear only those
cases authorized and defined in the Constitution which
have been entrusted to them under a jurisdictional
grant by Congress.” 	Henry v. Office of Thrift
Supervision, 43 F.3d 507, 511 (10th Cir. 1994)
(citations omitted). 	A plaintiff generally bears the
burden of demonstrating the court's jurisdiction to
hear his or her claims. 	See Steel Co. v. Citizens for
a Better Env't, 523 U.S. 83, 104, 118 S.Ct. 1003, 140
L.Ed.2d 210 (1998) (“[T]he party invoking federal
jurisdiction bears the burden of establishing its
existence.”). 	Rule 12(b)(1) of the Federal Rules of
Civil Procedure allows a party to raise the defense of
the court's “lack of jurisdiction over the subject
matter” by motion. 	Fed. R. Civ. P. 12(b)(1). 	The
United States Court of Appeals for the Tenth Circuit
has held that motions to dismiss for lack of subject-
matter jurisdiction “generally take one of two forms:
(1) a facial attack on the sufficiency of the
complaint's allegations as to subject-matter
jurisdiction; or (2) a challenge to the actual facts
upon which subject-matter jurisdiction is based.” 	Ruiz
v. McDonnell, 299 F.3d 1173, 1180 (10th Cir. 2002).
On a facial attack, a plaintiff is afforded
safeguards similar to those provided in opposing a
rule 12(b)(6) motion: the court must consider the
complaint's allegations to be true. 	See Ruiz v.
Mc-Donnell, 299 F.3d at 1180; Williamson v.
Tucker, 645 F.2d 404, 412 (5th Cir. 1981). 	But
when the attack is aimed at the jurisdictional
facts themselves, a district court may not presume
the truthfulness of those allegations. 	A court
has wide discretion to allow affidavits, other
documents, and a limited evidentiary hearing to
resolve disputed jurisdictional facts under Rule
12(b)(1). 	In such instances, a court's reference
to evidence outside the pleadings does not convert
the motion to a Rule 56 [summary-judgment] motion.
Alto Eldorado Partners v. City of Santa Fe, No. CIV
08–0175 JB/ACT, 2009 WL 1312856, at *8–9 (D. N.M. Mar.
11, 2009)(Browning, J.)(citations omitted). 	As the
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United States Court of Appeals for the Fifth Circuit
has stated:
[T]he trial court may proceed as it never could
under 12(b)(6) or Fed.R.Civ.P. 56. 	Because at
issue in a factual 12(b)(1) motion is the trial
court's jurisdiction—its very power to hear the
case—there is substantial authority that the trial
court is free to weigh the evidence and satisfy
itself as to the existence of its power to hear
the case. 	In short, no presumptive truthfulness
attaches to plaintiff's allegations, and the
existence of disputed material facts will not
preclude the trial court from evaluating for
itself the merits of jurisdictional claims.
Williamson v. Tucker, 645 F.2d 404, 412–13 (5th Cir.
1981)(quoting Mortensen v. First Fed. Sav. & Loan
Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)).
When making a rule 12(b)(1) motion a party may go
beyond the allegations in the complaint to challenge
the facts upon which jurisdiction depends, and may do
so by relying on affidavits or other evidence properly
before the court. 	See New Mexicans for Bill Richardson
v. Gonzales, 64 F.3d 1495, 1499 (10th Cir. 1995); Holt
v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995).
In those instances, a court's reference to evidence
outside the pleadings does not necessarily convert the
motion to a rule 56 motion for summary judgment. 	See
Holt v. United States, 46 F.3d at 1003 (citing Wheeler
v. Hurdman, 825 F.2d 257, 259 n. 5 (10 th Cir. 1987)).
Where, however, the court determines that
jurisdictional issues raised in rule 12(b)(1) motion
are intertwined with the case's merits, the court
should resolve the motion under either rule 12(b)(6) or
rule 56. 	See Franklin Sav. Corp. v. United States, 180
F.3d 1124, 1129 (10th Cir. 1999); Tippett v. United
States, 108 F.3d 1194, 1196 (10th Cir. 1997). “When
deciding whether jurisdiction is intertwined with the
merits of a particular dispute, ‘the underlying issue
is whether resolution of the jurisdictional question
requires resolution of an aspect of the substantive
claim.’” 	Davis ex rel. Davis v. United States, 343
F.3d 1282, 1296 (10th Cir. 2003) (quoting Sizova v.
Nat'l Inst. of Standards & Tech., 282 F.3d 1320, 1324
(10th Cir. 2002)).
Walker v. THI of New Mexico at Hobbs Center, 803 F.Supp.2d 1287,
1294-96 (D. N.M. 2011).
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STANDARDS FOR A MOTION TO DISMISS UNDER RULE 12(b)(6)
Under rule 12(b)(6), a court may dismiss a
complaint for “failure to state a claim upon which
relief can be granted.” 	Fed.R.Civ.P. 12(b)(6). 	“The
nature of a Rule 12(b)(6) motion tests the sufficiency
of the allegations within the four corners of the
complaint after taking those allegations as true.”
Mobley v. McCormick, 40 F.3d 337, 340 (10th Cir. 1994).
The sufficiency of a complaint is a question of law,
and when considering and addressing a rule 12(b)(6)
motion, a court must accept as true all well-pleaded
factual allegations in the complaint, view those
allegations in the light most favorable to the
non-moving party, and draw all reasonable inferences in
the plaintiff's favor. 	See Tellabs, Inc. v. Makor
Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct.
2499, 168 L.Ed.2d 179 (2007); Moore v. Guthrie, 438
F.3d 1036, 1039 (10th Cir. 2006); Hous. Auth. of Kaw
Tribe v. City of Ponca, 952 F.2d 1183, 1187 (10th Cir.
1991).
A complaint challenged by a rule 12(b)(6) motion
to dismiss does not require detailed factual
allegations, but a plaintiff's burden to set forth the
grounds of his or her entitlement to relief “requires
more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will
not do.” 	Bell Atl. Corp. v. Twombly, 550 U.S. 544,
546, 127 S.Ct. 1955, 167 L.Ed.2d 929 	(2007). 	See
Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949,
173 L.Ed.2d 868 (2009) (stating that a plaintiff's
complaint must set forth more than a threadbare recital
“of the elements of a cause of action, supported by
mere conclusory statements”). 	“Factual allegations
must be enough to raise a right to relief above the
speculative level, on the assumption that all the
allegations in the complaint are true (even if doubtful
in fact).” 	Bell Atl. Corp. v. Twombly, 550 U.S. at
545, 127 S.Ct. 1955 (citation omitted). 	To survive a
motion to dismiss, a plaintiff's complaint must contain
sufficient facts that, if assumed to be true, state a
claim to relief that is plausible on its face. 	See
Bell Atl. Corp. v. Twombly, 550 U.S. at 570, 127 S.Ct.
1955; Mink v. Knox, 613 F.3d 995 (10th Cir. 2010). 	“A
claim has facial plausibility when the pleaded factual
content allows the court to draw the reasonable
inference that the defendant is liable for the
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misconduct alleged.” 	Ashcroft v. Iqbal, 129 S.Ct. at
1940, 129 S.Ct. 1937. 	“Thus, the mere metaphysical
possibility that some plaintiff could prove some set of
facts in support of the pleaded claims is insufficient;
the complaint must give the court reason to believe
that this plaintiff has a reasonable likelihood of
mustering factual support for these claims.” 	Ridge at
Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177
(10th Cir. 2007). The United States Court of Appeals
for the Tenth Circuit has stated:
“[P]lausibility” in this context must refer to the
scope of the allegations in a complaint: if they are so
general that they encompass a wide swath of conduct,
much of it innocent, then the plaintiffs “have not
nudged their claims across the line from conceivable to
plausible.” 	The allegations must be enough that, if
assumed to be true, the plaintiff plausibly (not just
speculatively) has a claim for relief.
Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir.
2008) (quoting Bell Atl. Corp. v. Twombly, 127 S.Ct. at
1974) (citations omitted).
Genesee County Employees’ Retirement System v. Thornburg Mortgage
Securities Trust 2006-3, 825 F.Supp.2d 1082, 1120-21 (D. N.M.
2011).
LAW REGARDING TAKING JUDICIAL NOTICE OF DOCUMENTS WHEN RULING ON
A MOTION TO DISMISS
Rule 201 of the Federal Rules of Evidence allows a
court to, at any stage of the proceeding, take notice
of “adjudicative” facts that fall into one of two
categories: (i) facts that are “generally known within
the territorial jurisdiction of the trial court;” or
(ii) facts that are “capable of accurate and ready
determination by resort to sources whose accuracy
cannot reasonably be questioned.” 	Fed.R.Evid. 201(b),
(f). 	“Adjudicative facts are simply the facts of the
particular case.” 	United States v. Wolny, 133 F.3d
758, 764 (10th Cir. 1998) (quoting Advisory Committee
Notes to rule 201). 	A court has discretion to take
judicial notice of such facts, whether requested or
not. 	See Fed.R.Evid. 201(c). 	On the other hand, if a
party requests that the court take judicial notice of
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certain facts, and supplies the necessary information
to the court, judicial notice is mandatory. 	See
Fed.R.Evid. 201(d). 	Also, if the parties timely
request an opportunity to be heard, the Court must
grant such an opportunity “as to the propriety of
taking judicial notice and the tenor of the matter
noticed.” 	Fed.R.Evid. 201(e).
Judicial notice may be taken during any stage of
the judicial proceeding, including the stage of a
motion to dismiss. 	See 21B C. Wright & K. Graham,
Federal Practice & Procedure § 5110, at 294 & n. 17 (2d
ed. 2005). 	And, while ordinarily, a motion to dismiss
must be converted to a motion for summary judgment when
the court considers matters outside the complaint, see
Fed.R.Civ.P. 12(d), matters that are judicially
noticeable do not have that effect, see Duprey v.
Twelfth Judicial Dist. Court, 760 F.Supp.2d 1180,
1192–93 (D. N.M. 2009)(Browning, J.)(citing Grynberg v.
Koch Gateway Pipeline Co., 390 F.3d 1276, 1279 n. 1
(10th Cir. 2004)). 	Also, when considering a motion to
dismiss, “the court is permitted to take judicial
notice of its own files and records, as well as facts
which are a matter of public record.” 	Van Woudenberg
v. Gibson, 211 F.3d 560, 568 (10th Cir. 2000) abrogated
on other grounds by McGregor v. Gibson, 248 F.3d 946,
955 (10th Cir. 2001). 	The documents judicially
noticed, however, should not be considered for the
truth of the matters asserted therein:
Exhibits attached to a complaint are properly
treated as part of the pleadings for purposes of
ruling on a motion to dismiss. 	Ordinarily,
consideration of material attached to a
defendant's answer or motion to dismiss requires
the court to convert the motion into one for
summary judgment and afford the parties notice and
an opportunity to present relevant evidence.
However, facts subject to judicial notice may be
considered in a Rule 12(b)(6) motion without
converting the motion to dismiss into a motion for
summary judgment. 	This allows the court to take
judicial notice of its own files and records, as
well as facts which are a matter of public record.
However, the documents may only be considered to
show their contents, not to prove the truth of
matters asserted therein.
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Tal v. Hogan, 453 F.3d at 1265 n. 24 (alterations
omitted)(citations omitted)(internal quotation marks
omitted).
In addition to those documents that are judicially
noticeable, a court may consider documents to which the
complaint refers, if the documents are central to the
plaintiff's claim and the parties do not dispute their
authenticity. 	See Jacobsen v. Deseret Book Co., 287
F.3d 936, 941–42 (10th Cir. 2002). 	If a document is
not incorporated by reference or attached to the
complaint, but is referenced in the complaint and is
central to the plaintiff's claim, the defendant may
submit an “indisputably authentic copy to the court to
be considered on a motion to dismiss.” 	GFF Corp. v.
Assoc. Wholesale Grocers, Inc., 130 F.3d 1381, 1384
(10th Cir. 1997). 	See 5A C. Wright & A. Miller,
Federal Practice & Procedure § 1327, at 438–39 (3d ed.
2004)(“[W]hen the plaintiff fails to introduce a
pertinent document as part of her pleading ... the
defendant may introduce the document as an exhibit to a
motion attacking the sufficiency of the pleading.”).
Genesee County Employees’ Retirement System, 825 F. Supp.2d at
1121-23 (Footnote omitted.)
PROCEDURAL POSTURE
The Court takes judicial notice of the Plaintiffs’
bankruptcy case No. 7-10-15859 SA filed on November 24, 2010.
Their Schedule B listed a 2006 Lincoln Navigator (“Vehicle”),
valued at $14,000 and subject to a lien with Ford. 	Schedule D
listed Ford as a secured creditor on the Vehicle with a claim of
$27,144.79. 	On Schedule C the Debtors claimed the Vehicle
exempt. 	Doc 1. 	Debtors filed a Statement of Intention with the
petition that listed Ford as a secured creditor on the Vehicle,
and stated that Debtors would retain the Vehicle, reaffirm the
debt and claim it exempt. 	Doc 6. 	The first meeting of creditors
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was scheduled for December 20, 2010. 	Doc 2. 	On December 23,
2010 the Chapter 7 Trustee filed a Report of No Distribution and
certified that the meeting of creditors was held and concluded
and that the estate had been fully administered. 	Doc 12.
On January 25, 2011 Debtors’ attorney filed a Reaffirmation
Agreement between Debtor and Ford concerning the Vehicle. 	Doc
13. 	The Reaffirmation Cover Sheet listed a net monthly income
(deficit) of <$501.70>. 	Debtors’ attorney signed the coversheet
and certified that “the attached agreement is a true and correct
copy of the reaffirmation agreement between the parties
identified on this Reaffirmation Agreement Cover Sheet.” 	The
first page of the Reaffirmation Agreement states that there is a
“Presumption of Undue Hardship.” 	The Reaffirmation Agreement was
signed by the Debtors and dated December 20, 2010. 	Ford did not
sign or date the agreement. 	Part C of the Reaffirmation
Agreement, the Certification by Debtors’ Attorney, stated as
follows:
I hereby certify that (1) this agreement represents a
fully informed and voluntary agreement by the debtor;
(2) this agreement does not impose an undue hardship on
the debtor or any dependent of the debtor; and (3) I
have fully advised the debtor of the legal effect and
consequences of this agreement and any default under
this agreement.
(Strikeout in original.) 	Debtors’ attorney signed the altered
certification and dated it December 20, 2010. 	No hearing on the
Reaffirmation Agreement was requested by any party or scheduled
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by the Court. 	On March 28, 2011 the Debtors were discharged, the
Final Decree was entered and the case was closed. 	Docs 20, 21.
On April 22, 2011 Debtors commenced this adversary proceeding.
THE COMPLAINT
The Complaint is styled “Complaint to Compel Turnover of
Property and for Willful Violation of the Discharge Injunction.”
Doc 1. 	It alleges:
COME NOW the Plaintiffs, Miguel Narro and Jane Narro
(hereinafter referred to as “Narro”), by and through
counsel as undersigned, and would pray the Court for an
Order requiring the immediate return of property to the
Debtor’s possession, and enjoining violation of the
Discharge Injunction pursuant to 11 U.S.C. §524, and in
support thereof would state as follows:
JURISDICTION AND VENUE
1. 	This matter is a core proceeding under 28 U.S.C.
§157(b)(2)(A) and (F).
2. 	Jurisdiction is conferred on this Court pursuant to
the provisions of §157(b)(2) and §1334 of Title 28 of
the U.S. Code in that this proceeding arises in and is
related to the above-captioned Chapter 7 case under
Title 11 and concerns property of the Debtor in that
case. The Court has inherent jurisdiction to enforce
the dignity of the Court and proceedings before it, and
has jurisdiction pursuant to Section 105 of Title 11 of
the U.S. Code to enter any relief in furtherance of,
and in order to protect, the dignity and integrity of
proceedings before this Court.
3. 	Venue is proper herein pursuant to 28 U.S.C. §1409.
COUNT I: COMPLAINT TO ENJOIN VIOLATION OF THE DISCHARGE
INJUNCTION UNDER §524
4. The Debtors filed a voluntary petition under Chapter
7 of the Bankruptcy Code on November 24th, 2010.
5. Debtors filed their Chapter 7 Individual Debtor’s
Statement of Intention on November 24th, 2010.
6. The Debtor’s Statement of Intention indicated the
2006 Lincoln was claimed as exempt, and indicated the
Debtors intent to retain their 2006 Lincoln Navigator
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and reaffirm the debt with Ford Motor Credit which is
secured by the vehicle.
7. The Debtor’s 341 Meeting was set for and held on
December 20th, 2010.
8. On December 20th, 2010 the Debtors signed the
Reaffirmation Agreement sent to them by Ford Motor
Credit.
9. On or about December 20th, 2010 Counsel for Debtors
mailed the signed Reaffirmation Agreement to Allan
Wainwright, Counsel for Ford Motor Credit.
10. On January 25th, 2011 the Reaffirmation Agreement
was filed in the Bankruptcy Court by Counsel for the
Debtors.
11. On March 28th, 2011 the Debtors received a
Discharge in their bankruptcy, and the Discharge was
entered on the docket on March 30th, 2011.
12. On April 21st, 2011 with full knowledge of these
facts, Ford Motor Credit sent representatives to
repossess the Debtors 2006 Lincoln Navigator, despite
the Debtors being current on their payments and having
insurance in place.
13. The actions of Ford Motor Credit on April 21st,
2011 constitute a willful, knowing, intentional
violation of the Discharge injunction provided by §524
of the Bankruptcy Code.
WHEREFORE, the Plaintiff prays for an Order from this
Court: requiring the immediate return of the 2006
Lincoln Navigator to the Debtors in the condition it
was in prior to the repossession; for compensation for
lost wages due to the Debtors inability to work, for
the reimbursement of expenses for an extended warranty
and for repairs to the 2006 Lincoln Navigator, for an
award against the Defendant and in favor of the
Plaintiff for damages for all violations of the
automatic stay and of the Discharge Order, for
attorneys fees and for punitive damages in the amount
of $25000.00, and for any other relief the Court deems
just and proper.
Debtors also filed a Motion for Turnover of the Vehicle with the
Complaint. 	Doc 2. 	The parties resolved the Turnover issue in a
Stipulated Order entered April 28, 2011. 	Doc 7.
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Ford filed an answer, denying most of the allegations 3 (doc
10) and filed a Motion to Dismiss (doc 17). 	Part 1 of the Motion
to Dismiss argues that the facts alleged do not constitute a
violation of the discharge injunction. 	Part 2 argues that the
Bankruptcy Court lacks subject matter jurisdiction over any
claims the Debtors may have. 	Each will be addressed. 	First,
however, the Court will briefly discuss the reaffirmation aspects
of the case.
REAFFIRMATION
Reaffirmation agreements run contrary to the
concept of the “fresh start.” 	Debt that would
otherwise be trapped within the snare of the bankruptcy
discharge, if reaffirmed, remains the debtor's personal
liability and burden. 	Consider the following statement
of the United States Court of Appeals for the First
Circuit:
Although reaffirmation is consensual in nature,
the myriad safeguards erected by Congress reflect
its recognition that a debtor's decision to enter
into a reaffirmation agreement is likely to be
fraught with consequence. 	In point of fact,
reaffirmation represents the only vehicle through
which an otherwise dischargeable debt can survive
the successful completion of Chapter 7
proceedings. 	Moreover, once a debt is reaffirmed,
the creditor can proceed to enforce its rights as
if bankruptcy had not intervened. 	Because
reaffirmation constitutes a debtor-invoked
exception to the tenet that underpins the
bankruptcy system-the “fresh start” principle-a
reaffirming debtor must be afforded some
protection against his own (potentially)
short-sighted decisions.
3Ford specifically denies that this adversary proceeding is
a core proceeding. 	It also does not consent to the entry of
final orders by the Bankruptcy Court. 	Doc 18, p.18 n.3.
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In re Jamo, 283 F.3d 392, 398 (1st Cir.2002).
Many such protections are found in the Bankruptcy
Code. 	Reaffirmation agreements must be in writing and
entered into prior to the granting of the discharge.
§ 524(c)(1). 	The debtor must be advised that
reaffirmation agreements are purely voluntary. 	§
524(c)(2). 	He or she must be advised of the
consequences and effect of a reaffirmation agreement,
either by counsel or the Court. 	§ 524(c)(3) and (d).
A debtor also has an absolute right to rescind a
reaffirmation agreement within certain time frames. 	§
524(c)(4). 	In addition, in order for a reaffirmation
agreement to be binding, one of two additional events
must take place: if a debtor is represented by counsel,
his or her counsel must file a declaration or affidavit
stating that the reaffirmation agreement was
voluntarily and knowledgeably entered into by the
debtor, that counsel explained the effects and
consequences of the reaffirmation, and that, in the
attorney's opinion, reaffirmation of the debt at issue
does not impose an undue hardship upon the debtor or
any of his or her dependents. 	§ 524(c)(3); see also In
re Minardi, 399 B.R. 841 (Bankr. N.D. Okla. 2009). 	If
a debtor is not represented by counsel, then the Court
must hold a hearing at which the debtor must appear.
At that hearing, the Court must explain to the debtor
the legal effect of the reaffirmation agreement, and
find that reaffirmation of the debt at issue does not
impose an undue hardship upon the debtor or any of the
debtor's dependents. 	§ 524(d). 	These requirements
represent an attempt to insure that a debtor does not
improvidently enter into reaffirmation agreements, and
that the vitality of a debtor's “fresh start” is
preserved.
In re Reed, 403 B.R. 102, 104 (Bankr. N.D. Okla. 2009).
When represented by counsel, the attorney’s affidavit or
declaration must be completed and filed as part of the
reaffirmation agreement for it to be valid. 	And, “11 U.S.C. §
524(c) is not satisfied if counsel does not make all the
certifications set forth in § 524(c)(3), including the no undue
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hardship certification set forth in § 524(c)(3)(B).” 	In re
Perez, 2010 WL 2737187 at *4 (Bankr. D. N.M. 2010).
In this case, Debtors’ attorney did not make the no undue
hardship certification. 	The reaffirmation agreement is therefore
not enforceable. 	Debtors’ debt to Ford was discharged.
DISCHARGE INJUNCTION
Bankruptcy Code section 524(a)(2) is the source of the
discharge injunction:
A discharge in a case under this title ... 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, whether or not discharge of
such debt is waived[.]
“[A] bankruptcy court may sanction a party for
violating the discharge injunction only if the party
took some action prohibited by § 524(a)(2)— i.e., an
action ‘to collect, recover or offset any [discharged]
debt ... of the debtor.’”
Paul v. Iglehart (In re Paul), 534 F.3d 1303, 1307 (10 th Cir.
2008). 	However,
[n]otwithstanding the facial permissibility of a
lawsuit or some other action taken by a creditor vis a
vis a discharged debtor, a violation of § 524(a)(2) may
still be found if the debtor proves “the creditor acted
in such a way as to ‘coerce’ or ‘harass' the debtor
improperly,” i.e., so as to obtain payment of the
discharged debt. 	Pratt v. Gen. Motors Acceptance Corp.
(In re Pratt), 462 F.3d 14, 19 (1st Cir. 2006); see In
re Schlichtmann, 375 B.R. 41, 95–97 (Bankr. D. Mass.
2007)(applying Pratt with extensive discussion); see
also In re Jones, 367 B.R. 564, 570 & n. 3 (Bankr. E.D.
Va. 2007); 3 Norton Bankruptcy Law & Practice 3d §
58:5, at 58–24 & n. 13 (noting that discharge
injunction precludes otherwise permissible actions
against third parties if “designed to collect the debt
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from the discharged debtor”). 	The inquiry is
objective; the question is whether the creditor's
conduct had the practical, concrete effect of coercing
payment of a discharged debt, and bad faith is not
required. 	In re Pratt, 462 F.3d at 19; In re
Schlichtmann, 375 B.R. at 95.
Id. at 1308.
The discharge injunction protects the debtor from personal
liability on prepetition debts. 	11 U.S.C. § 524(a)(2) (“as a
personal liability of the debtor.”) 	The discharge injunction
does not preclude in rem actions by secured creditors. 	Chandler
Bank of Lyons v. Ray (In re Ray), 804 F.2d 577, 579 (10 th Cir.
1986). 	See also In re Paul, 534 F.3d at 1308 n.6 (“The discharge
injunction prohibits efforts to collect a debt ‘as a personal
liability of the debtor,’ 11 U.S.C. § 524(a)(2) (emphasis added),
and thus in rem rights are not affected. 3 Norton Bankruptcy Law
& Practice 3d § 58:4.”); Arruda v. Sears, Roebuck & Co. (In re
Arruda), 310 F.3d 13, 21 (1 st Cir. 2002):
It is hornbook law that a valid lien survives a
discharge in bankruptcy unless it is avoidable and the
debtor takes the proper steps to avoid it. 	Holloway v.
John Hancock Mut. Life Ins. Co. (In re Holloway), 81
F.3d 1062, 1063 (11th Cir. 1996). 	A surviving lien
remains enforceable, for “a bankruptcy discharge
extinguishes only one mode of enforcing a claim-namely,
an action against the debtor in personam-while leaving
intact another-namely, an action against the debtor in
rem.” 	Johnson v. Home State Bank, 501 U.S. 78, 84, 111
S.Ct. 2150, 115 L.Ed.2d 66 (1991).
The Plaintiffs’ complaint is that, basically, they filed
bankruptcy and stated an intention to reaffirm the debt; Ford
sent them a reaffirmation agreement; they (albeit not Ford)
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signed it and it was filed with the Court; they received their
discharge; and after their discharge, despite being current on
their payments and having insurance on the vehicle, Ford sent
representatives to repossess the vehicle. 	Taking all of these
facts as true and viewing them in a light most favorable to the
Plaintiffs, the Court finds that this does not state a cause of
action. 	These facts do not allege any misconduct by Ford. 	Ford
had a valid lien on the vehicle and exercised its rights to
repossess. 	Plaintiffs do not allege that the repossession lacked
any legitimate economic purpose or that it was a veiled attempt
to obtain payment of the discharged debt. 	The facts alleged do
not support a claim for violation of the discharge injunction, so
the case should be dismissed under Rule 12(b)(6) 4.
4Of course, if the complaint stated a cause of action for
violation of the discharge injunction, this Court would have core
jurisdiction over it. 	Discharges “arise under” Title 11, so the
bankruptcy courts have core jurisdiction under 28 U.S.C. §
157(b)(1). 	See In re Kewanee Boiler Corp., 270 B.R. 912, 917
(Bankr. N.D. Ill. 2002)
A case “arises under” Title 11 when the cause of
action is based on a right or remedy expressly provided
by the Bankruptcy Code. 	1 Collier on Bankruptcy ¶
3.01[4][c][i] (Matthew Bender 15th ed. rev. 2001).
...
Proceedings flowing from a core matter are
themselves core matters. 	In re Williams, 256 B.R. 885,
892 (8th Cir. BAP 2001). Moreover, bankruptcy courts
have core jurisdiction to interpret and enforce their
orders. 	Cox v. Zale Delaware, Inc., 239 F.3d 910, 917
(7th Cir. 2001); Matter of Weber, 25 F.3d 413, 416 (7th
Cir. 1994) (bankruptcy court's interpretation of its
own confirmation order is entitled to the same
deference as accorded any court construing its own
(continued...)
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JURISDICTION
Bankruptcy Court jurisdiction is established by 28
U.S.C. § 1334, which lists four types of matters over
which the district court has bankruptcy jurisdiction:
1) cases “under” title 11 (which are the bankruptcy
cases themselves, initiated by the filing of a Chapter
7, Chapter 11, etc. petition), 2) proceedings “arising
under” title 11 (such as a preference recovery action
under § 547), 3) proceedings “arising in” a case under
title 11 (such as plan confirmation), and 4)
proceedings “related to” a case under title 11 (such as
a collection action against a third party for a
pre-petition debt). 	Wood v. Wood (In re Wood), 825
F.2d 90, 92 (5th Cir. 1987). 	In the District of New
Mexico, all four types have been referred to the
bankruptcy court. 	See 28 U.S.C. § 157(a);
Administrative Order, Misc. No. 84–0324 (D. N.M. March
19, 1992).
Jurisdiction is then further broken down by 28
U.S.C. § 157, which grants full judicial power to
bankruptcy courts not only over cases “under” title 11
but also over “core” proceedings, § 157(b)(1), but
grants only limited judicial power over “related” or
“non-core” proceedings, § 157(c)(1). 	Wood, 825 F.2d at
91; Personette v. Kennedy (In re Midgard Corporation),
204 B.R. 764, 771 (10th Cir. BAP 1997). 	This
core/non-core distinction is important, because it
defines the extent of the Bankruptcy Court's
jurisdiction and the standard by which the District
Court (or Bankruptcy Appellate Panel) reviews the
factual findings. 	Halper v. Halper, 164 F.3d 830, 836
(3rd Cir. 1999).
Core proceedings
“Core” proceedings are matters “arising under” and
“arising in” cases under title 11. 	Wood, 825 F.2d at
96; Midgard, 204 B.R. at 771. 	Matters “arise under”
title 11 if they involve a cause of action created or
determined by a statutory provision of title 11. 	Wood,
825 F.2d at 96; Midgard, 204 B.R. at 771. 	Matters
“arise in” a bankruptcy if they concern the
administration of the bankruptcy case and have no
existence outside of the bankruptcy. 	Wood, 825 F.2d at
97; Midgard, 204 B.R. at 771. 	Bankruptcy judges may
4(...continued)
judgments).
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hear and determine core proceedings and enter final
orders and judgments. 	28 U.S.C. § 157(b)(1). 	28
U.S.C. § 157(b)(2) contains a nonexclusive list of 16
types of core proceedings.
Non-core proceedings
“Non-core” proceedings are those that do not
depend on the bankruptcy laws for their existence and
that could proceed in another court even in the absence
of bankruptcy. 	Wood, 825 F.2d at 96; Midgard, 204 B.R.
at 771. 	“Proceedings ‘related to’ the bankruptcy
include (1) causes of action owned by the debtor which
become property of the estate pursuant to 11 U.S.C. §
541, and (2) suits between third parties which have an
effect on the bankruptcy estate.” 	Celotex Corporation
v. Edwards, 514 U.S. 300, 307 n. 5, 115 S.Ct. 1493, 131
L.Ed.2d 403 (1995). 	The Tenth Circuit has adopted the
widely used Pacor, Inc. v. Higgins, 743 F.2d 984, 994
(3rd Cir. 1984) test to determine if a proceeding is
related: “the proceeding is related to the bankruptcy
if the outcome could alter the debtor's rights,
liabilities, options, or freedom of action in any way,
thereby impacting on the handling and administration of
the bankruptcy case.” 	Gardner v. United States (In re
Gardner), 913 F.2d 1515, 1518 (10th Cir. 1990).
Bankruptcy courts have jurisdiction over non-core
proceedings if they are at least “related to” a case
under title 11. 	28 U.S.C. § 157(c)(1)(“A bankruptcy
judge may hear a proceeding that is not a core
proceeding but that is otherwise related to a case
under title 11.”) 	However, unless all parties consent
otherwise, 28 U.S.C. § 157(c)(2), bankruptcy judges do
not enter final orders or judgments in non-core
proceedings. 	Rather, they submit proposed findings of
fact and conclusions of law to the district court,
which enters final orders and judgments after de novo
review. 	28 U.S.C. § 157(c)(1); Federal Bankruptcy Rule
9033. 	See also Orion Pictures Corporation v. Showtime
Networks, Inc. (In re Orion Pictures Corporation), 4
F.3d 1095, 1100–01 (2nd Cir. 1993)(discussing Section
157's classification scheme).
McCraney v. High Desert Neurology, Inc. (In re McCraney), 439
B.R. 188, 190-92 (Bankr. D. N.M. 2010). 5
5 The facts of this case do not implicate the issue of the
(continued...)
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The Court makes two initial observations. 	First, a chapter
7 estate is comprised of all legal or equitable interests of the
debtor in property as of the commencement of the case (with
certain exceptions not relevant here). 	11 U.S.C. § 541(a).
Property subsequently acquired by the debtor does not become
estate property, but becomes the debtor’s, clear of all claims
that are discharged by the bankruptcy proceedings. 	Patrick A.
Casey, P.A. v. Hochman (In re Hochman), 963 F.2d 1347, 1350 (10 th
Cir. 1992)(Citation omitted). 	Second, when a chapter 7
bankruptcy is closed, all scheduled property is deemed
administered and is abandoned. 	11 U.S.C. § 554(c). 	Therefore,
after closing, there is no longer a bankruptcy estate.
As stated above, Plaintiffs’ complaint fails to state a
cause of action for violation of the discharge injunction. 	To
the extent the Plaintiffs’ complaint can be construed to state
any other cause of action, the Bankruptcy Court lacks
jurisdiction to hear it.
Debtors’ contract claim against Ford is not a case under
title 11. 	It cannot be initiated by filing a petition with the
bankruptcy court. 	See 11 U.S.C. § 301(a). 	The contract claim
does not “arise under” title 11 because the claim is not created
5(...continued)
constitutional authority of a non-Article III court to adjudicate
state law controversies as addressed in Stern v. Marshall, 564
U.S. ___, 131 S.Ct. 2594 (2011).
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or governed by any provision in title 11. 	The contract claim
also does not “arise in” a case under title 11; the claim can
exist whether a bankruptcy case was filed or not. 	In fact, the
bankruptcy was closed before the claim accrued. 	Therefore, there
is federal jurisdiction only if the contract claim is “related
to” a case under title 11. See 28 U.S.C. §§ 1334(a) 6 and (b) 7 .
Under Tenth Circuit law, the contract claim is not “related
to” Debtor’s bankruptcy case. 	In re Gardner, 913 F.2d at 1518.
While the outcome may affect the Debtors’ rights in some way,
there can be no impact on the handling or administration of their
bankruptcy case. 	As noted above, the contract claim is not
estate property. 	Any proceeds of the claim will benefit the
Debtors only, not the creditors. 	Therefore, the Bankruptcy Court
lacks jurisdiction to hear or determine the Debtors’ post-
petition contract claim against Ford.
CONCLUSION
The Court will enter an Order dismissing this adversary
proceeding.
628 U.S.C. § 1334(a) provides, in part: “[T]he district
courts shall have original and exclusive jurisdiction of all
cases under title 11.”
728 U.S.C. § 1334(b) provides, in part: “[T]he district
courts shall have original but not exclusive jurisdiction of all
civil proceedings arising under title 11, or arising in or
related to cases under title 11.”
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Case 11-01070-t Doc 31 Filed 09/12/12 Entered 09/12/12 14:37:12 Page 19 of 20

Honorable James S. Starzynski
United States Bankruptcy Judge
Date Entered on Docket: 	September 12, 2012
Copies to:
Dennis A Banning
Banning Law Firm
10801 Lomas Blvd, NE
Suite 104
Albuquerque, NM 87112
Allan L Wainwright
800 Lomas Blvd NW
Albuquerque, NM 87102-3150
Richardo I Kilpatrick
Kilpatrick & Associates, P.C.
903 North Opdyke Road Ste C
Auburn Hills, MI 48326
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