U.S. Court of Appeals for the Second Circuit
Bankruptcy — Equity Interest
Possessory Interest — Wrongful Retention
Weber v. SEFCU
Judges Cabranes, Raggi and Carney
Background: The defendants appealed from a finding that it had violated the Bankruptcy Code’s automatic stay provision. The defendant held a loan secured in part by a vehicle owned by the plaintiff and repossessed the vehicle pursuant to the loan agreement shortly before the plaintiff filed a petition seeking relief under Chapter 13.
Ruling: The Second Circuit affirmed. The record established that the defendant received notice of the plaintiff’s petition and refused to return the vehicle absent entry of a court order and provision of protection that it deemed adequate. Because the plaintiff retained at least an equitable interest in the vehicle, the filing of his bankruptcy petition transformed the equitable interest into a possessory interest held by the plaintiff’s estate. Therefore, the defendant had improperly exercised control over property of the plaintiff’s bankruptcy estate.
Gary A. Lefkowitz of Schiller & Knapp for the defendant-appellant; Richard Croak for the plaintiff-appellee