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Butler v. Household Mortgage Servs. Inc.

State court had jurisdiction to hear bankruptcy debtor's suit claiming his creditors breached an agreement with him regarding the mortgage on his house, since the bankruptcy court had lifted the stay.

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Michael B. Butler appeals the trial court’s dismissal of his breach of contract action for lack of subject matter jurisdiction, following the defendant mortgage companies’ suggestion of bankruptcy. Because the evidence fails to show that Butler’s action was preempted by federal bankruptcy law, we reverse. However, we affirm the trial court’s grant of an extension of time to respond to Butler’s motions for summary judgment, sanctions, and discovery requests.

In 1995, Butler filed a bankruptcy petition, which under 11 USC § 541 automatically stayed any claims against property of his estate. His mortgage company, Household Mortgage Services, Inc., successfully moved the bankruptcy court to lift the stay and began foreclosure proceedings. After Butler paid $18,000 to Household Mortgage, the company stopped its foreclosure proceedings. Subsequently, the company transferred Butler’s mortgage to Fleet Mortgage Group, Inc., and after further interaction between the parties, Fleet instituted foreclosure proceedings again in June 1996. Also in June, Butler filed suit against Household Mortgage and Fleet in Fulton Superior Court, alleging they acted in bad faith and were stubbornly litigious in repudiating an alleged agreement to roll over the mortgage arrearage into a new loan. The trial court granted Butler a temporary restraining order, conditioned on his paying into the court registry $34,512 and the monthly mortgage payments as they came due.

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