Led by partner Vincent Howard, our Norco foreclosure defense lawyers routinely work on lawsuits alleging improper behavior by lenders, including predatory lending, discrimination and more. So we were interested to see a case involving a lawsuit like this that made its way into bankruptcy court. In Cockhren v. Midwest OneBank et al., Margaret and James Cockhren of Iowa sued their lender in state court for predatory lending and discrimination. After they filed for bankruptcy, the bank offered their Chapter 7 bankruptcy trustee $5,000 to buy the claims and all stock in two defunct Iowa corporations they owned. The trustee moved for and received approval from the bankruptcy court, but the Cockhrens appealed and asked for oral argument in the case. The Eighth U.S. Circuit Court of Appeals Bankruptcy Appellate Panel ultimately ruled no oral argument was needed and upheld the bankruptcy court.
The Cockhrens first sued the bank, which holds their mortgage, for unspecified reasons in 2007, but the case was dismissed in 2009. The bank brought a foreclosure action in 2008 and the Cockhrens filed counterclaims, but that action was ended after they filed for Chapter 13 bankruptcy. The bankruptcy case was filed in 2008, and while it was pending, the Cockhrens filed another state-court case for lender liability. However, they were unable to keep up their payment plan and defaulted in 2010, only to file a Chapter 7 bankruptcy case in 2011. In between, the bank sought to foreclose again. After the Chapter 7 filing, the Cockhrens also filed a federal lawsuit repeating their state-court claims. While the lawsuits were pending, the bank offered their Chapter 7 trustee $5,000 to purchase all claims as well as the stock, and the trustee moved to approve that compromise. The Cockhrens objected but lost after a hearing they failed to attend.
They appealed, representing themselves because their bankruptcy attorney had withdrawn earlier in the case. The Bankruptcy Appellate Panel addressed four contentions on appeal, only one of which was a challenge to the compromise. The Cockhrens argued that the court erred in approving the settlement, implicitly arguing that the settlement was unreasonable. The BAP found it reasonable, saying the claims were speculative at best. In fact, it noted, the Cockhrens themselves originally valued the claims at zero. In their various state-court claims, it noted, they had not been able to get an attorney to represent them, also suggesting the claims had little value. Furthermore, the claims belonged to the Trustee since their bankruptcy filing, the court said, and the Trustee did not have the funds to pursue lengthy district-court litigation. Thus, the panel found that the settlement was within a reasonable range. It also found that the bankruptcy court did not err in denying a continuance requested for vague reasons and breaking the court rules. Nor did it err in declining to dismiss the bankruptcy entirely, the panel said, especially without cause and when it is not in the best interests of the creditors.
Vincent Howard and our San Juan Capistrano foreclosure defense attorneys wonder if this case could have come out better if the Cockhrens had the help of an experienced attorney. A lawyer may not make much difference in a bad case, but he or she would certainly have been able to avoid some of the mistakes the panel cited in its opinion. For example, the Cockhrens' request for a continuance did not follow local rules of court because they never contacted the other parties to discuss the request; this could easily have been arranged. An attorney's help might also have helped them structure a request to dismiss the Chapter 7 case for cause, or even discouraged them from filing it in the first place if they couldn't get what they needed from it. This kind of pre-filing counseling on what to expect is a standard but important service of the Vista foreclosure defense lawyers here at Howard Law, P.C.
If you're fighting foreclosure in California and you're ready to talk to an experienced attorney like Vincent Howard about bankruptcy or litigation, don't wait to call Howard Law for help. You can reach us at 1-800-872-5925 or send us a message through our website.