UPDATE RE: BANKRUPTCY SURRENDER – DEBTOR’S SURRENDER IN BANKRUPTCY MOOTED APPEAL OF FORECLOSURE JUDGMENT
Earlier this month the Second DCA dismissed an appeal of a final summary judgment of foreclosure based on the statement of intentions the debtor/mortgagor (“Lewis”) filed in his chapter 7 bankruptcy proceedings. Lewis v. Innova Inv. Group, LLC. In Lewis the mortgagor appealed the bank’s final judgment of foreclosure and then the day before the foreclosure sale petitioned for chapter 7 bankruptcy protection. The bank moved to dismiss the appeal based on the debtor’s statement of intentions.
In the appellate proceedings the Second DCA took judicial notice of Lewis’ statement of intentions which reflected Lewis elected to surrender the subject property. The Second DCA concluded that Lewis’ election to surrender the property in his bankruptcy case rendered the appeal moot because he was “judicially estopped from contesting the foreclosure judgment.” The Court distinguished its prior holding in Fischer where it found application of the doctrine of judicial estoppel constituted error. The Court explained in Fischer the bankruptcy documents did “not reflect the surrender of the property,” whereas in Lewis the debtor “clearly and unambiguously declared…his election to surrender the subject property.” The Court concluded Fischer was inapposite for that reason.
As pointed out by the Court in Lewis, the Second DCA’s holding in this regard falls in line with prior holdings from the First, Fourth and Fifth DCAs as well as the Eleventh Circuit and the Middle District of Florida. Clay Cty. Land Tr. v. HSBC Bank USA, N.A., Sayles v. Nationstar Mortg., LLC, Rivera v. Bank of Am., N.A. ex rel. BAC Home Loans Servicing, L.P., In re Failla[i], In re Johnson, In re Metzler.
[i] SHD published a separate eBlast discussing the details of In re Failla and In re Johnson in October 2018.