Mandate Issued: 10/12/2017
FROM THE DISTRICT COURT OF TULSA COUNTY, OKLAHOMA HONORABLE
CARLOS CHAPPELLE, TRIAL JUDGE
FREDERIC DORWART, SAMUEL S. ORY, SARA C. ROYSTER, FREDERIC
DORWART, LAWYERS, TULSA, OKLAHOMA, FOR PLAINTIFF/APPELLEE
L. MITCHELL, CHAD M. NEUENS, SHEILA D. SAYNE, NEUENS MITCHELL
PLLC, TULSA, OKLAHOMA, FOR DEFENDANTS/APPELLANTS
THOMAS THORNBRUGH, PRESIDING JUDGE
David Wayne Miller II and Heather Leigh Miller (Millers)
appeal the refusal of the district court to vacate a personal
judgment made against them during the pendency of a
bankruptcy stay, and the court's refusal to vacate a
resulting deficiency order. On review, we find the in
personum judgment was void because it was made during
the bankruptcy stay, and the subsequent deficiency order is
therefore also void.
Beginning in 2001, Millers entered into a series of loans
with Bank of Oklahoma, N.A. (Bank). In January 2009, Millers
filed a Chapter 7 bankruptcy case. In May 2009, the
bankruptcy court lifted its stay to allow Bank to proceed
in rem against real property at 8927 South Maplewood
Ave. in Tulsa, OK. In July 2009, Bank filed a petition
against Millers seeking to foreclose on various security
interests, including the Maplewood property. Millers did not
appear or reply, and, in October 2009, Bank moved for a
default judgment. The court ordered that Bank was entitled to
a lien of approximately $331, 000 against the Maplewood
property and to two other liens against similar properties.
In December, Bank filed an amended petition, and, in March
2010, the court issued a second order finding liens against
the three properties, and ordering the sale of same. The
property thereafter was sold.
In April 2011, the bankruptcy court denied Millers a
discharge, and, in June 2011, Bank filed a motion for leave
to enter deficiency judgment. The deficiency motion stated
that the court had previously rendered a judgment
"against Defendants David Wayne Miller, II and Heather
Leigh Miller" and sought a deficiency judgment of
approximately $1, 056, 000. Millers did not appear, and the
court granted this judgment. In April 2014, Millers filed a
motion to vacate the deficiency judgment as void, arguing
that Bank has never sought a personal judgment against them.
In a later response, Millers also argued that the bankruptcy
court had not lifted the stay to allow an in
personam proceeding, and any personal judgment rendered
against them during the bankruptcy stay was void. The
district court denied this motion. Millers now appeal.
The test for measuring the legal correctness of the trial
court's ruling on a motion to vacate or set aside
judgment "is whether sound discretion was exercised upon
sufficient cause shown to vacate, modify, open or correct the
earlier decision, or to refuse the relief sought."
Schepp v. Hess, 1989 OK 28, ¶ 11, 770 P.2d 34.
The discretion of the court in this matter, however, revolves
primarily around its interpretation of law, specifically
whether the interaction of federal bankruptcy law and the
state foreclosure statutes voids the judgment as a matter of
law. These questions of statutory interpretation and
implementation are reviewed de novo. Hubbard v.
Kaiser- -Francis Oil Co., 2011 OK 50, ¶ 6, 256 P.3d 69.
Although the parties discuss this matter primarily in terms
of whether an in personam claim was properly pled,
this question is irrelevant unless the bankruptcy court
lifted its stay to allow Bank to proceed with an in
personam claim in the first instance. This appeal
therefore initially presents two issues of law:
1. Could Bank obtain a valid in personam judgment
against Millers during the pendency ...