In re Jenkins (21-10350)

The Debtor asserted that a pawned vehicle was property of the estate and moved for turnover under § 542(a).  The redemption period expired prior to the petition date—passing title to Respondent under state law—but Respondent failed to repossess the vehicle at that time, so it was in the Debtor’s possession when she filed her case.  The Debtor’s confirmed plan provided for surrender of the vehicle, which was shown as inoperable.  After confirmation, Respondent did not attempt to retrieve the vehicle.  Several months later, the Debtor had repairs made, which substantially increased the vehicle’s value.  Much later, the Respondent repossessed the vehicle, after which the Debtor filed a motion to modify her plan to retain the vehicle and pay the Respondent’s claim through monthly payments.  The modified plan drew no objection and was confirmed.  The Debtor argues that the modified plan is res judicata and deems the vehicle estate property subject to turnover.  The Debtor argues, alternatively, that: (1) Respondent abandoned its ownership interest in the vehicle via its failure to repossess; (2) Debtor’s repairs to vehicle give her an ownership interest or an equitable or mechanic’s lien; and (3) Debtor is owed recovery under unjust enrichment or quantum meruit due to the increase in value from the Debtor’s repairs.  The Court held that, because the redemption period expired before the petition date, the vehicle was excluded from the estate and the Debtor could not transform it into estate property through plan modification. In addition, the Court found that the equities did not favor the Debtor because she repaired a vehicle owned by the Respondent under Georgia title pawn law, and that she was obligated to surrender through her confirmed plan.  Additionally, Debtor benefited from use of the repaired vehicle while representing that it was inoperable in two proposed modified plans filed after repairs were made.

Friday, June 10, 2022