In Re: Aurora Commercial Corp.

Background

Gerard M. Pierre, representing himself, appealed an order of the United States Bankruptcy Court for the Southern District of New York. That court had sustained Aurora Commercial Corp.’s objection to Pierre’s proof of claim and disallowed and expunged the claim.

Pierre’s allegations arose from a 2009 Chapter 7 bankruptcy proceeding in Colorado involving property at 10176 Park Meadows Drive #2405 in Lone Tree, Colorado. Aurora Loan Services LLC, a wholly owned subsidiary of Aurora Commercial Corp., obtained an order from the Colorado bankruptcy court granting relief from the automatic bankruptcy stay. The order allowed Aurora Loan Services to exercise its rights under Colorado law, including foreclosing on the property. Pierre did not appear at the hearing on the motion for relief from the stay. He received a bankruptcy discharge in June 2009, and the property was foreclosed on in September 2009.

In 2019, during Aurora Commercial Corp.’s Chapter 11 bankruptcy proceedings in New York, Pierre filed a proof of claim for personal injury. He alleged fraud and malicious injury related to the 2009 Colorado bankruptcy proceeding, mortgage servicing, and foreclosure practices. The New York bankruptcy court treated the allegations as asserting two possible claims: a claim under 11 U.S.C. § 362(k) for a willful violation of the automatic stay and a claim that the Colorado bankruptcy court denied Pierre procedural due process when it lifted the stay.

Timeliness of the Appeal

The district court first determined that it had jurisdiction to hear the appeal. Bankruptcy Rule 8002 generally requires a notice of appeal to be filed within 14 days after entry of the order being appealed. The New York bankruptcy court granted Pierre an extension of time based on excusable neglect, extending the deadline through December 4, 2019. Because Pierre filed his notice of appeal on that date, the appeal was timely.

Statutes of Limitations and Laches

The district court held that both of Pierre’s claims were time barred. For the alleged violation of the automatic stay, the court applied Colorado’s two-year statute of limitations for tort actions. The conduct at issue occurred in 2009, while Pierre did not file the proof of claim until 2019.

The court also applied the same two-year limitations period to Pierre’s procedural-due-process claim. Pierre argued that the claims should accrue under the discovery rule, which generally starts the limitations period when a person discovers, or should have discovered with reasonable diligence, the injury underlying the claim. Pierre alleged that he learned of the relevant injury by July 2013, based on a $300 payment related to deficient mortgage servicing and foreclosure practices and a news article about federal sanctions against an attorney involved in another Colorado foreclosure proceeding. The court concluded that even if 2013 were treated as the accrual date, Pierre’s 2019 filing was still outside the two-year period.

The court also upheld the application of laches, an equitable defense based on unreasonable delay and prejudice to the opposing party. It concluded that Pierre’s delay until 2019 showed a lack of diligence and that the delay would prejudice Aurora Commercial Corp.

The court rejected equitable tolling, which can pause a limitations period in some circumstances. Pierre argued that lawsuits he began in Colorado in 2014 showed diligent pursuit of his rights. The court held that those lawsuits did not explain the delay from 2009 to 2014 and did not establish an extraordinary circumstance preventing timely filing.

Merits of the Claims

The district court also held that Pierre’s claims lacked merit, independently supporting the bankruptcy court’s decision.

For the automatic-stay claim, 11 U.S.C. § 362(k) allows an injured individual to recover damages for a willful violation of the stay. The district court held that Aurora Loan Services did not violate the stay when it foreclosed and sold the property in September 2009 because the Colorado bankruptcy court had already entered an order authorizing it to exercise its state-law remedies, including foreclosure. Because the foreclosure was expressly permitted by that order, the court found no violation, much less a willful violation.

For the due-process claim, the court explained that due process requires notice reasonably calculated to inform an interested person about the proceeding and give that person an opportunity to object. The record showed that Pierre received notice of the motion for relief from the stay and of the March 17, 2009 hearing. Although he did not appear, he had the opportunity to do so. The court therefore held that Pierre was not denied due process.

A footnote states that Pierre and Aurora discussed a possible claim under 42 U.S.C. § 1983, but that issue had not been raised in the bankruptcy court and was therefore forfeited. The court added that the claim would not be plausible because the opinion found no allegation that Aurora Loan Services acted under color of state law.

Disposition

The district court affirmed the bankruptcy court’s order sustaining Aurora Commercial Corp.’s objection and quashing Pierre’s proof of claim. The Clerk was directed to close all pending motions and the case.