In re Cherry-Crockette (2026)

Case details
Full caption
In re Nicholia Cherry-Crockette
Country
United States
Jurisdiction
New Jersey (NJ)
Court
New Jersey Supreme Court
Decided
2026
Case 25-21600-VFP Doc 169 Filed 05/20/26 Entered 05/20/26 12:16:18 Desc Main Document Page 1 of 20 ILED May 20, 2026 Jeanne A. Naughton, CLERK United States Bankruptcy Court Newark, NJ By: . fran Filqueiras, Couttroom Deputy UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY In Re: Case No.: 25-21600 (VFP) Nicholia Cherry-Crockette, Chapter: 13 Hearing Date: April 2, 2026 Debtor. Judge: Vincent F. Papalia OPINION DENYING MOTION FOR SANCTIONS FOR WILLFUL VIOLATION OF THE AUTOMATIC STAY FOR PUBLICATION Appearances: Nicholia Cherry-Crockette Steven P. Kelly, Esq. 59 Morris Street STERN & EISENBERG East Orange, NJ 07017 1120 Rt. 73 Pro se Mt. Laurel, NJ 08054 Counsel for Rocket Mortgage, LLC Jk/a Quicken Loans, LLC HONORABLE VINCENT F. PAPALIA, Bankruptcy Judge L INTRODUCTION This matter comes before the Court on the pro se Debtor’s Motion for Sanctions against Rocket Mortgage, LLC for Willful Violation of the Automatic Stay (the “Sanctions Motion™) filed December 3, 2025.! For the reasons stated in this Opinion, the Sanctions Motion is DENIED. ! Dkt. No. 29Naughton, 25-21600 THE Judge Motion
Case 25-21600-VFP Doc 169 Filed 05/20/26 Entered 05/20/26 12:16:18 Desc Main Document Page 3 of 20 violation or, whether despite that regulation, Rocket’s communication with the Debtor violated the automatic stay. At the Initial Hearing, the Court found that the Debtor had failed to meet her burden of establishing a willful violation of the automatic stay under 11 U.S.C. § 362(k). Additionally, the Court noted that even if there had been a willful stay violation, the Debtor had failed to establish any actual damages resulting from the violation. Considering that the Debtor was appearing pro se, the Court permitted the Debtor to supplement her Motion as to these matters. ” The Debtor filed her supplemental brief * on March 3, 2026, and Rocket filed its reply* on March 20, 2026. The Court did not authorize any further submissions, but the Debtor nevertheless filed a Reply to Respondent’s Supplemental Submission on March 27, 2026.° For the sake of completeness, the Court will address the Debtor’s unauthorized submission as part of this Opinion. IV. FACTUAL BACKGROUND The Debtor filed her chapter 13 petition on October 31, 2025 and listed Rocket as a creditor. Rocket filed a Proof of Claim on December 22, 2025 asserting a secured claim in the amount of $439,231 based on a mortgage on the Debtor’s property in East Orange, New Jersey. On November 6, 2025, Rocket sent the Debtor a notice outlining potential loss mitigation options available to the Debtor and addressing other related matters (the “Notice™). The Notice is the sole ? The Debtor did not list any damage amounts in the Sanctions Motion, but in her supplemental submission she asserted actual damages in the amount of $500; emotional distress damages in the amount of $7,500; and punitive damages in the amount of $10,000. 3 Dkt. No. 120-2 4 Dkt. No. 135 * Dkt. No. 146 wMarch amount November amount damages amount
Case 25-21600-VFP Doc 169 Filed 05/20/26 Entered 05/20/26 12:16:18 Desc Main Document Page 4 of 20 basis for the Debtor’s claim that Rocket violated the automatic stay.® The Notice is comprised of six pages.” The first page states, in its entirety: Hi Nicholia Cherry-Crockette & Michael Crockette, We know you're in bankruptcy or have received a bankruptcy discharge, and this is not an attempt to get you to pay. We are required to send this notice. However, we have resources that can help you, whether you've had: * À financial challenge * A loss of income * A serious life event We collect all the information needed to accurately understand your current situation and find the best solution for you. If a valuation is obtained in connection with your application, you're entitled to a free copy. Please return your application by December 6, 2025.In the event you need additional time to work with your attorney or a trustee, please feel free to call us as we are here to help. If you have other mortgages secured to this property, consider contacting the mortgagees of those mortgages to discuss loss mitigation options. Sincerely, Your Account Resolution Team AccountResolution@RocketMortgage.com The second through fifth pages of the Notice contain “Information About Avoiding Foreclosure.” The sixth and final page of the Notice is the Servicemembers Civil Relief Act Notice Disclosure, known as a HUD-92070, which is also a required disclosure in the foreclosure context. V. ANALYSIS 6 At the Initial Hearing, the Debtor stated that the Notice was not the only communication she received from Rocket while in bankruptcy, but her supplemental submission does not mention any further communication and there is no evidence before the Court that there were any. 7 Sanctions Motion, Ex. A. [Dkt. No. 29-3]know However, needed mortgages Account
Case 25-21600-VFP Doc 169 Filed 05/20/26 Entered 05/20/26 12:16:18 Desc Main Document Page 15 of 20 inform the Debtor about her options to avoid foreclosure. The Notice also advised that any foreclosure would have to take place in accordance with applicable law. That the Debtor chose to focus on certain aspects of the Notice to support her apparent belief that it was coercive is not determinative. As the Court found in Brown, it is the nature of the communication itself and not the debtor’s subjective understanding of it that controls.*° The foregoing case citations should not be understood to mean that this Court is finding that a disclaimer shields all communications by a lender to a debtor/borrower from potentially violating the stay or discharge injunction.*! Quite to the contrary, numerous cases have found a violation of the stay or discharge injunction despite a disclaimer, where evidence of coercion or t.* In this case, the Debtor has not presented the Court with any evidence of harassment is present alleged coercion or harassment beyond the sending of the Notice—and only the Notice. As already noted, the Court does not find the contents of the Notice to be per se or otherwise coercive or harassing. S. The Inapplicable or Non-Existent Cases Cited by Debtor In her supplemental submission, the Debtor cites three cases in support of her position that there is a willful stay violation. None of those cases involved a legally required notification such as what is at issue here, nor did any of those cases analyze the sufficiency of a disclaimer in the particular circumstances of the case. # Td. #1 In re Kirby, 599 B.R. 427, 44445 (B.A.P. 1st Cir. 2019) (noting that the inclusion of a bankruptcy disclaimer does not insulate a creditor from liability for a stay violation but finding on those facts that there was no violation of the discharge injunction) 42 See, e.g., Sears Roebuck & Co. v. Epperson (In re Epperson), 189 B.R. 195, 198-99 (E.D. Mo. 1995); In re Youngkin, 2014 Bankr. LEXIS 765, at *16 (Bankr. E.D.N.C. Feb 27, 2014) (finding that in spite of the disclaimer, the mortgagee’s monthly informational statement violated the discharge injunction because it was “nothing more than a cleverly disguised form meant to induce payment of funds [from the debtor] to the mortgagee].”) 15Notice—and Roebuck Epperson
Case 25-21600-VFP Doc 169 Filed 05/20/26 Entered 05/20/26 12:16:18 Desc Main Document Page 18 of 20 to be on point, Joubert does not stand for that proposition. In Joubert, the Third Circuit was addressing the issue of whether § 105(a) of the Bankruptcy Code affords a debtor a private cause of action to remedy alleged violations of § 506(b). At no point in the case does it discuss the proposition of law for which the Debtor cited it. Finally, the Debtor argues that Rocket’s reliance on 15 U.S.C $ 1692c(c) (failure to file a cease communication notice) is irrelevant. The Court agrees. The existence or non-existence of a cease communication notice forms no part of its reasoning for why sending the Notice was not a stay violation. Further, there were no notices from the Debtor to Rocket to cease communicating and no further communications were sent in any event. 6. Rocket Did Not Willfully Violate the Stay As noted above, to successfully plead a cause of action for a willful violation of the stay under 11 U.S.C. § 362(k), a debtor must “show, by a preponderance of the evidence, that: (1) a violation of the stay occurred; (2) the creditor had knowledge of the bankruptcy case when acting; and (3) the violation caused actual damages.”>* Under $ 362(k), conduct that violates the automatic stay is willful if the creditor knew of the stay and if the creditor's conduct that violated the automatic stay was intentional > Here, the Debtor has proven only one of those three elements—that Rocket had knowledge of the bankruptcy filing on November 6 when it mailed the Notice to the Debtor. The Notice itself directly acknowledges the bankruptcy filing by noting in the opening line: “We know you’re in bankruptcy or have received a bankruptey discharge, and this is not an attempt to 4 Kaushas v. Popple Constr., Inc. (In re Kaushas), 616 B.R. 57, 62 (Bankr. M.D. Pa. 2020) S Id. 18remedy November element— Kaushas
Case 25-21600-VFP Doc 169 Filed 05/20/26 Entered 05/20/26 12:16:18 Desc Main Document Page 20 of 20 Conclusion I'he Debtor has the burden to demonstrate by a preponderance ol the evidence that a willful stay violation occurred, and she has not met that burden. For the reasons stated, the Sanctions Motion is DIENIED. The Court will enter an Order in accordance with this Opinion. May 20, 2026 - A Hon. Vincent F. preponderance DIENIED. 20
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