                IN THE COURT OF APPEALS OF TENNESSEE
                           AT KNOXVILLE
                            Assigned on Briefs April 8, 2013

 BAC HOME LOANS SERVICING, LP, F/K/A COUNTRYWIDE HOME LOANS
SERVICING, LP v. KAISER C. TAYLOR AND ALL KNOWN AND UNKNOWN
        HEIRS OF KAISER C. TAYLOR AND KATHY K. TAYLOR

                Appeal from the Chancery Court for Hamilton County
                  No. 10-0905    W. Frank Brown, III, Chancellor

                         _________________________________

                No. E2012-01985-COA-R3-CV-FILED-JUNE 20, 2013


This case involves a foreclosure sale that occurred while an automatic stay was in effect
pursuant to the mortgagor’s bankruptcy proceeding. The mortgagee petitioned the trial court
to find the foreclosure void ab initio and to reform the real estate records by voiding the
successor trustee’s deed and placing the parties in their original positions as to the deed of
trust. The trial court denied the relief requested by the mortgagee. The mortgagee appeals.
We hold that the foreclosure sale is invalid and of no effect because it is voidable, pursuant
to United States Code § 362(a)(6) and (c) (Supp. 2012) and Tennessee law, and because there
existed no equitable circumstances sufficient to constitute an exception to the operation of
the stay. We reverse the denial of summary judgment and remand to the trial court for
further proceedings.

      Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
                            Reversed; Case Remanded

T HOMAS R. F RIERSON, II, J., delivered the opinion of the Court, in which C HARLES D.
S USANO, J R., P.J., and D. M ICHAEL S WINEY, J., joined.

Peter L. Lublin and J. Kelsey Grodzicki, Peachtree Corners, Georgia, for the appellant, BAC
Home Loans Servicing, LP, f/k/a Countrywide Home Loans Servicing, LP.

Tabitha Finch, Chattanooga, Tennessee, for the appellees, Kaiser C. Taylor and All Known
and Unknown Heirs of Kaiser C. Taylor and Kathy K. Taylor.
                                         OPINION

                           I. Factual and Procedural Background

        The essential facts of this case are undisputed. On June 26, 1996, Kathy K. Hunter
(Taylor) and Kaiser C. Taylor purchased real property improved with a home located at 6642
Sandwood Circle, in Harrison, Hamilton County, Tennessee (“Property”). They were not
married yet and purchased the Property as tenants in common. Although they married soon
after, they remained tenants in common as to the Property. The Taylors refinanced their
mortgage in March 2003, obtaining a loan in the original principal amount of $92,000.00
from Mortgage Investors Group. To secure the loan, Kathy and Kaiser Taylor executed a
deed of trust, conveying title to the Property to Charles E. Tonkin, II as trustee for Mortgage
Electronic Registration Systems, Inc. as nominee for Mortgage Investors Group (“Deed of
Trust”). The Deed of Trust was recorded on March 10, 2003.

       Kaiser Taylor died on July 14, 2006, and was survived by his wife and one son from
a prior relationship, Chappell Taylor, who was eighteen at the time of his father’s death.
Kaiser Taylor’s estate was admitted to probate by the Hamilton County Chancery Court
Probate Division on December 18, 2006. The probate court appointed Attorney Tabitha
Finch as the Administratrix of the estate (“Administratrix”).

       After her husband’s death, Ms. Taylor defaulted in payment on the promissory note,
and pursuant to the terms of the Deed of Trust, the secured creditor began foreclosure
proceedings. The relationship between Mortgage Investors Group and the Appellant,
Countrywide Home Loans Servicing, LP, now doing business as BAC Home Loans
Servicing, LP (“BAC”), is not clear from the record; however, it is undisputed that BAC was
the secured creditor at the time of default. After publication for the foreclosure proceedings
had begun, Ms. Taylor filed a petition for Chapter 7 bankruptcy, case number 1:08-bk-11768,
in the United States Bankruptcy Court for the Eastern District of Tennessee, Chattanooga
Division, on April 14, 2008.

       BAC conducted a foreclosure sale at the Hamilton County Courthouse on April 24,
2008. According to the Successor Trustee’s Deed, Countrywide Home Loans, Inc. (now
BAC) was the highest bidder for the Property at $96,620.55. Per Countrywide’s (BAC’s)
instruction, the Property was conveyed to the Federal National Mortgage Association
(“Fannie Mae”) via the Successor Trustee’s deed, which was recorded on May 5, 2008
(“Successor Trustee’s Deed”). Title to the Property was later conveyed via quit claim deed
from Fannie Mae to BAC on September 21, 2011.




                                              -2-
       On June 4, 2008, the Trustee in Bankruptcy reported to the bankruptcy court that there
would be no distributions in the bankruptcy case and abandoned all of Ms. Taylor’s property.
Pursuant to 11 United States Code Annotated § 362 (c), BAC filed a motion in the
bankruptcy court to lift the stay barring recovery of a claim, said stay having been imposed
automatically with the filing of the bankruptcy petition. See 11 U.S.C.A § 362(a)(6). The
bankruptcy court granted the motion and lifted the stay on July 1, 2008. Ms. Taylor received
a discharge in her bankruptcy case on July 16, 2008. She also vacated the Property.

       BAC filed a petition for reformation and declaratory judgment against Ms. Taylor,
Kaiser Taylor, and all known and unknown heirs of Kaiser Taylor in the Hamilton County
Chancery Court on October 25, 2010. In its petition, BAC asked the trial court to void the
Successor Trustee’s Deed and reform the real estate records so that the parties would be
returned to the positions they held before the foreclosure sale, with Ms. Taylor owning the
Property subject to an open promissory note and deed of trust held by BAC.

       In response to a motion filed by BAC, the trial court entered an order on June 22,
2011, in which it added Chappell J. Taylor and the Administratrix of Kaiser Taylor’s estate
as parties to the action. In his answer to the petition, Chappell Taylor asserted affirmative
defenses of no contractual relationship with BAC, failure of consideration, and his status as
a minor at the time the contract was formed. With reference to a separate motion filed by
BAC, the trial court entered an Order granting default judgment against the unknown heirs
of Kaiser C. Taylor on September 8, 2011, as no unknown heirs had come forward to answer
BAC’s petition.

       On May 3, 2012, BAC filed the motion for summary judgment that is at issue here,
contending that the foreclosure sale was void as a matter of law due to the automatic stay
triggered by Ms. Taylor’s bankruptcy proceeding. BAC sought to rescind the foreclosure and
restore the parties to their positions before the foreclosure sale. The Administratrix filed a
response to the motion for summary judgment, in which she argued that BAC knew that the
Property was under bankruptcy protection when it foreclosed on the Property. She alleged
that BAC was served on April 17, 2008, with a notice of a meeting of creditors, which she
said BAC attended on May 17, 2008. She argued that the sale was invalid, not void, and that
a remedy could only be granted in federal bankruptcy court.

      Following a hearing, the trial court denied the motion for summary judgment as to
BAC’s claim that the foreclosure sale was void. The court acknowledge BAC’s interest in
seventy-five percent (75%) of the Property. In its Memorandum Opinion and Order, entered
on July 24, 2012, the trial court made extensive findings of fact and the following
conclusions of law:



                                             -3-
1.    Kaiser C. Taylor and Kathy K. Hunter, prior to their marriage, bought
      the Property on June 26, 1996 as tenants in common and the “right of
      survivorship” is not part of the deed to them.
2.    An estate by the entireties can only be created for married persons.
      Tennessee Code Annotated § 66-1-109 and 14 Tenn. Jur., Husband and
      Wife, §§ 11-17 (2009).
3.    Because there was no subsequent transfer between Kaiser C.Taylor and
      Kathy K. Taylor after their marriage, they continued to hold the
      property as tenants in common even after their marriage.
4.    Tennessee abolished survivorship in joint property, Tenn. Code Ann.
      § 66-1-107, and there are no words of survivorship in the deed to
      Kaiser C. Taylor and Kathy K. Taylor.
5.    Prior to the death of Kaiser C. Taylor on July 14, 2006, Kathy K. Taylor
      owned 50% of the Property and Kaiser C. Taylor owned 50% of the
      Property.
6.    Upon his death, Kaiser C. Taylor’s one-half [½] interest did not go to
      his estate but passed outside his estate in equal shares directly to his
      heirs: Kathy K. Taylor, his widow, and Chappell Taylor, his son.
7.    After the death of Kaiser C. Taylor, Kathy K. Taylor owned 75% of the
      Property and Chappell Taylor owned 25% of the Property.
8.    BAC has no monetary claim against Kaiser C. Taylor because neither
      BAC nor its predecessor filed a Proof of Claim in his estate
      proceedings in accordance with Tennessee law. Further, neither BAC
      nor its predecessor had to file a claim against the Estate of Kaiser C.
      Taylor because the Estate did not own the real estate.
9.    The Estate of Kaiser C. Taylor, in over five and one-half years (5-½)
      years, has filed nothing to bring the Property into the Estate for sale to
      pay the debts and expenses of the Estate. Tennessee Code Annotated
      § 30-2-402.
10.    No claims have been filed against the Estate of Kaiser C. Taylor and
      the court file is very thin. There were no proceedings for Year’s
      Support or anything else of a substantive nature.
11.   Chappell Taylor and Kathy K. Taylor are the only heirs of Kaiser C.
      Taylor and BAC has no valid claim against any unknown heirs of
      Kaiser C. and/or Kathy K. Taylor, the Estate of Kaiser C. Taylor, nor
      Kathy K. Taylor due to death and bankruptcy.
12.   All interest of Kathy K. Taylor in and to the Property, which was 75%
      after her husband’s death, was divested from her as a result of (a) the
      foreclosure on April 24, 2008 and the Substitute Trustee’s deed
      recorded on May 5, 2008 and/or (b) her surrender of all of her interest

                                     -4-
      in the Property during her Chapter 7 Bankruptcy case, her failure to
      reaffirm the debt secured by the Property, the Trustee’s abandonment
      of all property of Kathy K. Taylor, the Bankruptcy Court’s discharge of
      all of her debts, and her vacating the Property.
13.   Neither Kathy K. Taylor, nor anyone on her behalf, took any action in
      Bankruptcy court, during pendency of those proceedings or since her
      discharge, to make an issue of Countrywide’s apparent violation of the
      automatic stay.
14.   This court, under the unique facts and equities of this case, deems the
      Substitute Trustee’s Deed to be voidable, not void per se, and no one
      has filed anything in the Bankruptcy Court nor any other court to
      declare the Substitute Trustee’s Deed illegal or void [per] se. See Ditto
      v. Delaware Savings Bank, No. E2006-01439-COA-R3-CV, 2007 WL
      471146 at *6-7 (Tenn. Ct. App. Feb. 14, 2007).
15.   This court CAN NOT restore the debt to the name Kathy K. Taylor
      because that debt has been discharged in bankruptcy and the court’s
      view that, if BAC obtained the relief it seeks, BAC’s subsequent
      foreclosing on a discharged debt would be a violation of the
      Bankruptcy Code.
16.   Kathy K. Taylor has stated to this court that she claims no interest in the
      Property and this court declares based upon the evidence in this case
      and the Bankruptcy case, that Kathy K. Taylor has no legal or equitable
      interest in and to the Property.
17.   Countrywide Home Loans Servicing, L.P. was entitled to 75%
      ownership of the Property upon the registration of the Substitute
      Trustee’s deed and/or the discharge of Ms. Taylor’s debts and the
      closing of her Bankruptcy case as set forth above.
18.   Neither the Trustee in Bankruptcy Court nor the Bankruptcy Court has
      any interest in reopening Kathy K. Taylor’s bankruptcy case, due to the
      apparent violation of the stay provided by Bankruptcy Act, because she
      had no equity in the Property that could have been made available to
      her creditors and her case was a no asset case.
19.   Chappell Taylor, who was not listed in the Substitute Trustee’s
      Advertisement, Notice or Deed, has a claim of a 25% ownership
      interest in the Property.
20.   This court has subject matter jurisdiction over equitable claims and
      declaratory judgments, personal jurisdiction over the parties, and venue
      is proper because the Property is located in Hamilton County and the
      Respondents live in Hamilton County, Tennessee.



                                      -5-
                The court also relies upon the following Equity Maxims. Equity looks
        to the intent rather than to the form [§ 2.10], Equity regards that as done which
        ought to be done [§ 2.12], Equity regards the beneficiary as the real owner [§
        2.24], and Equity enforces what good reason and conscience require [§ 2.25].
        The foregoing Equity maxims are found in Chapter 2 in the specific section
        numbers cited in Gibson’s Suits in Chancery (8th ed. 2004).
                                          The Conclusion
                In reviewing the Public Records, the court noted the Quit Claim Deed
        dated September 21, 2011 from Federal National Mortgage Association to
        [Countrywide] Home Loans, Inc. This deed was recorded on October 24, 2011
        in book 9500, page 407 ROHC. Federal National Mortgage Association was
        the grantee of the Substitute Trustee’s Deed in May of 2008. Thus, one could
        wonder if BAC had standing to file the lawsuit it did on October 25, 2010 or
        if the subsequent deed would cure such a problem.
                Kaiser C. Taylor had been dead for almost two years before the
        foreclosure. His heirs were a matter of public record in his probate case for at
        least 15 months before the foreclosure. There is nothing in this record that
        shows that Countrywide or the Substitute Trustee tried to notify Chappell J.
        Taylor of the default or foreclosure. Chappell J. Taylor was not a party to the
        note or deed of trust. He was a minor at the time those documents were signed
        by his father and stepmother in 2003.
                At the latest BAC or its predecessor would have had the right to Kathy
        K. Taylor’s interest in the Property at the end of her Bankruptcy. The court is
        not certain why the parties have not been able to resolve these issues. The
        court cannot grant BAC the reformation relief it seeks. The court has declared
        the rights of BAC, and Chappell J. Taylor, in and to the Property. Therefore,
        there is really nothing else the court can do in this case based upon the
        pleadings. The court is certain that BAC and Chappell J. Taylor can resolve
        any remaining issues that are beyond the bounds of this lawsuit.

        In its Order, the trial court decreed the following:

        1.      The Motion for Summary Judgment filed by BAC is granted in part and
                denied in part1 based upon the findings of fact and conclusions of law
                set forth above;



        1
          The trial court denied in full the relief requested by BAC in the motion for summary judgment. The
court’s ruling, however, acknowledged BAC’s interest in the Property, which appears to be the reason the
court stated that the motion was granted in part.

                                                    -6-
       2.     Chappell J. Taylor owns a 25% interest in the 6642 Sandwood Circle
              Property as a result of his father’s (Kaiser C. Taylor’s) death without a
              will;
       3.     Kathy K. Taylor has no legal or equitable interest in the improved real
              estate known as 6642 Sandwood Circle, Harrison, Hamilton County,
              Tennessee for the reasons set forth above and below;
       4.     BAC Home Loans Servicing, L.P. f/k/a Countrywide Home Loans
              Servicing, L.P. is declared the owner of seventy-five percent (75%) of
              the improved real estate known as 6642 Sandwood Circle, Harrison,
              Hamilton County, Tennessee, either as a result of (a) the Substitute
              Trustee’s deed recorded in Book 8657, page 352 ROHC on May 5,
              2008 as to Kathy K. Taylor, and/or (b) Kathy K. Taylor’s actions in her
              bankruptcy case, No. 1:08-bk-11768 in (i) abandoning the real estate,
              (ii) failing to reaffirm the debt, (iii) the Trustee’s abandonment of all
              assets of Kathy K. Taylor, and (iv) Ms. Taylor’s discharge in
              Bankruptcy;
       5.     BAC cannot receive part of the relief it seeks, restoration of the title
              and debt in the names of Kaiser C. Taylor and Kathy K. Taylor, because
              of her bankruptcy;
       6.     BAC’s Petition for Reformation and Declaratory Judgment is dismissed
              as to Kaiser C. Taylor, Tabitha Finch as Administratrix of the Estate of
              Kaiser C. Taylor, all unknown heirs of Kaiser C. Taylor and Kathy K.
              Taylor, and Kathy K. Taylor as such Respondents have no interest in or
              to the 6642 Sandwood Circle Property;
       7.     The court hereby dismisses the action against Chappell J. Taylor
              because the court has granted the declaration of BAC’s interest in the
              Property and denied the reformation relief sought by BAC as against
              the Bankruptcy Laws and probably unclean hands and/or the maxims
              that Equity aids the vigilant [§ 2.16], no one can take advantage of his
              own wrong [§ 2.18], and where one of two persons must suffer loss, he
              should suffer loss whose act or negligence occasioned the loss [§ 2.19].
              Gibson’s Suits in [Chancery] (8th ed. 2004)[)]; and
       8.     This is a Final Order as all issues presented have been resolved and the
              Clerk’s costs, if any, are adjudged against BAC, for which execution
              may enter.

        On July 24, 2012, BAC filed a “Motion to Reconsider,” in which it presented
additional argument supporting why the foreclosure sale should be found void ab initio.
BAC requested, however, that if the foreclosure sale was held to be valid, it should be valid
as to the interests of all respondents, including Chappell Taylor.

                                             -7-
       Following a hearing, the trial court issued a second Memorandum Opinion and Order
on August 21, 2012, in which it denied BAC’s motion. The court noted that the Tennessee
Rules of Civil Procedure do not allow for a motion to reconsider and stated it nonetheless
considered BAC’s pleading as a motion to alter or amend pursuant to Rule 59.04 of the
Tennessee Rules of Civil Procedure. See McCracken v. Brentwood United Methodist
Church, 958 S.W.2d 792, 795 n.3 (Tenn. Ct. App. 1997) (noting that the “Tennessee Rules
of Civil Procedure do not authorize ‘motions to reconsider’” and construing a motion to
reconsider as a motion to alter or amend).

      In denying the motion, the trial court stated in pertinent part:

             BAC’s legal argument in support of its contention that this court’s
      decision rested on an erroneous interpretation of the law is less than
      persuasive. The only new case law BAC cites to support its argument is an
      unpublished Tennessee Court of Appeals opinion interpreting the effect of an
      automatic stay in bankruptcy on foreclosure proceedings. See BAC Brief in
      Support of Motion to Reconsider at 7 (citing Diggs v. LaSalle National Bank
      Ass’n, 2012 WL 1939799, at *1 n. 2 (Tenn. Ct. App. May 30, 2012)).

              Interestingly, in its earlier Brief in Support of the Motion for Summary
      Judgment, BAC quoted the Sixth Circuit Court of Appeals in Easley v.
      Pettibone Mich. Corp., stating “‘actions taken in violation of the stay are
      invalid and voidable and shall be voided absent limited equitable
      circumstances.’” 990 F.2d 905 (6th Cir. 1993) (emphasis added). This court’s
      ruling as to the voidable nature of the substitute trustee’s deed was based
      precisely on such “equitable circumstances” deemed proper in the Sixth
      Circuit’s decision Easley: “This court, under the unique facts and equities of
      this case, deems the Substitute Trustee’s Deed to be voidable, not void per se.
      . .” July 12, 2012 Order at 10, ¶14; see also July 12, 2012 Order at 11 ¶20, 13
      ¶7 (“The court . . . denied the reformation relief sought by BAC as against the
      Bankruptcy Laws and probably unclean hands and/or the maxims that Equity
      aids the vigilant, no one can take advantage of his own wrong, and where one
      of two persons must suffer loss, he should suffer loss whose act or negligence
      occasioned the loss.” (internal citations omitted). Accordingly, this court
      finds that the July 12, 2012 Order rested on sound legal grounds and equitable
      principles. Therefore, BAC is not entitled to relief on this argument.

             Further, regardless of the merit of their argument above, the more basic
      principle BAC fails to address in its Brief is that “this court CAN NOT restore
      the debt to the name Kathy K. Taylor because that debt has been discharged

                                             -8-
      in bankruptcy and it is the court’s view that, if BAC obtained the relief it
      seeks, BAC’s subsequent foreclosing on a discharged debt would be a
      violation of the Bankruptcy Code.” July 12, 2012 Order at 10, ¶15. Rather
      than addressing the legal ramifications of Chancery Court interfering with a
      bankruptcy case, BAC attempts to persuade the court that reinstating the
      Property and the Deed of Trust will somehow benefit Ms. Taylor. Primarily,
      BAC claims it does not seek to “restore the debt” to Ms. Taylor. Rather, it
      seeks to “put the Property back in the name of Ms. Taylor and the heirs of
      Kaiser C. Taylor, subject to the Deed of Trust.” As a practical matter, contrary
      to BAC’s claims in its Brief, restoring title subject to the deed of trust has the
      same effect as restoring the debt. Likewise, if there is no “debt” in default in
      Ms. Taylor’s name, then on what basis would BAC foreclose on the Property?

              Further, the publication of a foreclosure proceeding would have to be
      embarrassing to Ms. Taylor. Some credit reporting agency may discover the
      2012 foreclosure, or she, as an honest person, may self-declare such in a credit
      application. Accordingly, regardless of whether the foreclosure sale was
      “void” or “voidable,” this court cannot grant BAC the relief it seeks without
      violating the Bankruptcy Code. See 11 U.S.C.A. § 727 (“. . . a discharge under
      subsection (a) of this section discharges the debtor from all debts that arose
      before the date of the order for relief under this chapter . . .”); Prod. Credit
      Ass’n of Fourth Dist. v. Ward, 1990 WL 39350, at *1 (Tenn. Ct. App. Apr. 9,
      1990) (finding that the Chancery Court did not have the power to determine
      whether a promissory note was properly discharged in bankruptcy: “This Court
      cannot and should not attempt to place a construction on the final judgment of
      the [bankruptcy court], other than what is apparent from the face of [the]
      instrument, by undertaking to construe the various pleadings that led to [their]
      conclusion . . . All other questions pertaining to that proceeding or the manner
      in which that proceeding was concluded should properly be addressed to that
      court.”); see also In re LaPorta, 26 B.R. 687, 692 (Bankr. N.D. Ill. 1982)
      (“Requests to modify or vacate a debtor’s discharge lies within the sound
      discretion of the bankruptcy court.”). If BAC disagrees with this court’s ruling
      that the foreclosure was voidable, that there are equitable grounds to not void
      the Substitute Trustee’s deed, and Ms. Taylor’s failure to challenge the
      foreclosure deed, then it is free to petition the Bankruptcy Court to reopen her
      case and do what is right under the law and by Ms. Taylor.

(Section Roman numeral omitted; footnote added.)

      BAC timely appealed.

                                             -9-
                                          II. Issues Presented

        On appeal, BAC presents four issues, which we have restated as follows:

1.      Whether the trial court erred by finding that the foreclosure sale of the Property,
        conducted in violation of an automatic stay imposed by 11 U.S.C. § 362(a)(6) and (c),
        was only voidable and not void ab initio and therefore erred by finding the foreclosure
        sale to be valid.

2.      Whether the trial court erred by finding that it could not rescind the foreclosure sale
        because any subsequent re-foreclosure would be a violation of the Bankruptcy Code.

3.      In the event that the trial court did not err in finding the foreclosure sale valid,
        whether the trial court erred by finding that Chappell Taylor’s interest in the Property
        was not extinguished by the foreclosure of the deed of trust.

4.      Whether the trial court erred by finding that Chappell Taylor was entitled to notice of
        the foreclosure sale and therefore finding that the foreclosure sale was invalid as to
        Chappell Taylor’s interest.

                                       III. Standard of Review

        Our Supreme Court has succinctly described the applicable2 standard of review of a
trial court’s grant of summary judgment:

        A summary judgment is appropriate only when the moving party can
        demonstrate that there is no genuine issue of material fact and that it is entitled
        to judgment as a matter of law. Tenn. R. Civ. P. 56.04; Hannan v. Alltel
        Publ’g Co., 270 S.W.3d 1, 5 (Tenn. 2008). When ruling on a summary
        judgment motion, the trial court must accept the nonmoving party’s evidence
        as true and resolve any doubts concerning the existence of a genuine issue of
        material fact in favor of the nonmoving party. Shipley v. Williams, 350 S.W.3d
        527, 536 (Tenn. 2011) (quoting Martin v. Norfolk S. Ry., 271 S.W.3d 76, 84


        2
           The recently enacted Tennessee Code Annotated § 20-16-101 (Supp. 2012), 2011 Tenn. Pub. Acts
498, is applicable only to cases commenced on or after July 1, 2011, and therefore is not applicable to this
case. Tennessee Code Annotated § 20-16-101 provides a standard of review for summary judgment with the
stated purpose “to overrule the summary judgment standard for parties who do not bear the burden of proof
at trial set forth in Hannan v. Alltel Publishing Co., its progeny, and the cases relied on in Hannan.” See
Sykes v. Chattanooga Hous. Auth., 343 S.W.3d 18, 25 n.2 (Tenn. 2011).

                                                   -10-
       (Tenn. 2008)). “A grant of summary judgment is appropriate only when the
       facts and the reasonable inferences from those facts would permit a reasonable
       person to reach only one conclusion.” Giggers v. Memphis Hous. Auth., 277
       S.W.3d 359, 364 (Tenn. 2009) (citing Staples v. CBL & Assocs., Inc., 15
       S.W.3d 83, 89 (Tenn. 2000)). “The granting or denying of a motion for
       summary judgment is a matter of law, and our standard of review is de novo
       with no presumption of correctness.” Kinsler v. Berkline, LLC, 320 S.W.3d
       796, 799 (Tenn. 2010).

Dick Broad. Co. of Tenn. v. Oak Ridge FM, Inc., 395 S.W.3d 653, 671 (Tenn. 2013). In the
case at bar, the relevant facts are undisputed, and therefore whether the trial court erred in
denying summary judgment hinges on whether BAC demonstrated that it was entitled to a
conclusion of law that the foreclosure sale was invalid due to the automatic stay initiated by
the bankruptcy proceeding.

                               IV. Effect of Violation of Stay

       The parties agree that the foreclosure sale, held on April 28, 2008, violated the
automatic stay triggered by the filing of Ms. Taylor’s bankruptcy petition on April 14, 2008.
The trial court found that under the Sixth Circuit’s decision in Easley v. Pettibone Mich.
Corp., 990 F.2d 905 (6th Cir. 1993), the foreclosure was voidable rather than void and that
only the bankruptcy court had the authority to void the sale. BAC contends that because the
foreclosure sale was conducted in violation of the automatic stay, it was void ab initio and
did not require an action by the bankruptcy court to void it. We conclude that the foreclosure
sale was voidable, but we also conclude that because no annulment of the stay was requested
from or granted by the bankruptcy court and because none of the limited equitable
circumstances constituting exceptions to the operation of the stay were present, the
foreclosure sale was invalid.

        Under United States Code Annotated § 362(a)(6), a petition filed in federal court for
bankruptcy “operates as a stay, applicable to all entities, of any act to collect, assess, or
recover a claim against the debtor that arose before the commencement of the case under this
title.” The automatic stay provision provides “fundamental protection to the debtor” by
“‘stop[ping] all collection efforts, all harassment, and all foreclosure actions.’” Easley, 990
F.2d at 910.

        Whether a creditor’s act committed in violation of the stay is void or voidable is a
matter on which the federal circuits have been split. See Easley, 990 F.2d at 909-10; Ditto
v. Del. Sav. Bank, No. E2006-01439-COA-R3-CV, 2007 WL 471146 at *6 (Tenn. Ct. App.
Feb. 14, 2007). The majority view is that actions in violation of the stay are void ab initio.

                                             -11-
See Easley, 990 F.2d at 909 (internal citations omitted); Ditto, 2007 WL 471146 at *6
(internal citations omitted). The Sixth Circuit, however, in Easley held that “actions taken
in violation of the stay are invalid and voidable and shall be voided absent limited equitable
circumstances.” 990 F.2d at 911. This Court expressly adopted the Easley approach in
Southland Express, Inc. v. Scrap Metal Buyers of Tampa, Inc., 895 S.W.2d 335, 341 (Tenn.
Ct. App. 1994) (“We believe the better reasoned approach is that stated by the Sixth Circuit;
therefore, we hold that an action filed in violation of the automatic bankruptcy stay is
voidable and not void.”).

       The Sixth Circuit’s analysis of this issue in Easley began with the following definition
of “void” as contrasted with “voidable”:

               “Void” is defined as “an instrument or transaction [that] is nugatory and
       ineffectual so that nothing can cure it,” Black’s Law Dictionary 1573 (6th ed.
       1990); and as that “of no legal force or effect and so incapable of confirmation
       or ratification.” Webster’s Third New International Dictionary 2562 (1971).
       “Voidable” is defined as “not void in itself,” Black’s Law Dictionary 1574 (6th
       ed. 1990), and as “capable of being adjudged void, invalid, and of no force,”
       Webster’s Third New International Dictionary 2562 (1971). We think that
       “invalid” is a more appropriate adjective to use when defining an action taken
       against a debtor during the duration of the automatic stay. Like the word
       “void,” “invalid” describes something that is without legal force or effect.
       However, something that is invalid is not incurable, in contrast to a void action
       which is incapable of being ratified.

990 F.2d at 909.

       The Easley court further reasoned that a violation of the stay is voidable because of
the bankruptcy court’s statutory authority to retroactively annul the stay:

               Bankruptcy courts have the jurisdiction to modify the automatic stay so
       as to allow actions against the debtor. 11 U.S.C. § 362(d).FN3 This section
       expressly permits the bankruptcy court to annul the stay. This power to annul
       “permits the order to operate retroactively, thus validating actions taken by a
       party at a time when he was unaware of the stay. Such actions would
       otherwise be void.” 2 Collier on Bankruptcy § 362.07 (footnotes omitted). If
       we are to give effect to the statutory authority to annul a stay, such actions can
       only be described as invalid and voidable, since void actions are incapable of
       later cure or validation.



                                             -12-
       FN3. Section 362(d) provides in pertinent part:
              On request of a party in interest and after notice and a hearing, the court
       shall grant relief from the stay provided under subsection (a) of this section,
       such as by terminating, annulling, modifying, or conditioning such stay--
              (1) for cause, including the lack of adequate protection of an interest in
       property of such party in interest. . . .

       11 U.S.C. § 362(d) (West Supp. 1992).

Id. at 909-10 (quoted section of statute unchanged as of 2012 Supp.)

        The trial court found, inter alia, that it did not have authority to void the foreclosure
sale. We disagree. The trial court and this Court have jurisdiction to determine whether the
stay applied at the time of the sale and whether any circumstances existed to lift the stay. See
Ditto, 2007 WL 471146 at *7 (“While the bankruptcy court has exclusive authority to allow
a party relief from the stay, a nonbankruptcy court has jurisdiction to determine whether the
stay applies at all.”) (citing In re Glass, 240 B.R. 782, 787 (Bankr. M.D. Fla. 1999)). If no
order was in place to annul the stay and no equitable circumstances existed sufficient to
suspend operation of the stay, it was in force, and the action taken in violation must be
voided. See 11 U.S.C.A. § 362(a) & (c); Easley, 990 F.2d at 911-12; Ditto, 2007 WL 471146
at *7-8.

       In the case at bar, Ms. Taylor received a discharge in her bankruptcy case on July 16,
2008. Prior to that discharge, BAC moved for modification of the automatic stay, which the
bankruptcy court granted in its order entered July 1, 2008. The bankruptcy court ruled in
pertinent part:

       It is therefore ordered, adjudged and decreed that: the automatic stay imposed
       under 11 U.S.C. § 362 hereby is modified in favor of Creditor [BAC] with
       respect to the hereinafter described Collateral [Property] so that Creditor may
       exercise all state law remedies to foreclose its interest in the Collateral,
       including foreclosure of Creditor’s liens in the Collateral by judicial or non-
       judicial means, sale of the Collateral pursuant to the Uniform Commercial Code
       or other applicable law, and application of the sale proceeds to Debtor’s
       indebtedness to Creditor secured by the Collateral, including reasonable
       attorneys fees to the extent allowable under non-bankruptcy law.

       The modification had the effect of lifting the stay from that time forward, but the
bankruptcy court did not issue an order retroactively annulling the stay. The stay was in
place from the time that Ms. Taylor filed her petition in bankruptcy court on April 14, 2008,

                                              -13-
through entry of the order to modify the stay on July 1, 2008. At the time of the foreclosure
sale on April 24, 2008, the stay was in full force. Because no action was taken to annul the
stay while the bankruptcy case was active, the stay was not retroactively removed.

       This brings us to whether any of the limited equitable exceptions to the stay apply in
this case. In holding that actions taken in violation of the automatic stay are voidable, the
Easley court also held that such actions “shall be voided absent limited equitable
circumstances,” which the court summarized as:

       We suggest that only where the debtor unreasonably withholds notice of the
       stay and the creditor would be prejudiced if the debtor is able to raise the stay
       as a defense, or where the debtor is attempting to use the stay unfairly as a
       shield to avoid an unfavorable result, will the protections of section 362(a) be
       unavailable to the debtor.

990 F.2d at 911; see, e.g., In re Dupuy, 308 B.R. 843, 850 (Bankr. E.D. Tenn. 2004)
(granting motion to annul stay on equitable grounds because debtor had “repeatedly filed his
bankruptcy cases in bad faith” and had “used the automatic stay as a ‘shield to avoid an
unfavorable result’” (citing Easley, 990 F.2d at 911)). The Easley court further clarified that
“‘any equitable exception to the stay must be applied sparingly’” and that “in the absence of
1) an attempt to exploit the stay to gain an unfair advantage or (2) the fraudulent, willful
delay in asserting the stay as a defense, actions taken during the pendency of the stay are
void.” 990 F.2d at 911; see also Ditto, 2007 WL 471146 at *7.

       In this case, there are no allegations that Ms. Taylor, as the debtor, unreasonably
withheld notice of the foreclosure sale or that she attempted to use the stay unfairly as a
shield. The limited equitable exceptions simply do not apply. The case is an unusual one
because where the creditor would typically be the party to request that a foreclosure be
upheld and the debtor the party to request that it be voided, these positions are inverted.
Creditors and debtors both have standing to allege violations of the automatic stay. See
Ditto, 2007 WL 471146 at *5-6 (holding that because “the automatic stay protects both
debtors and creditors,” the creditor in the case had standing to challenge a tax sale to the
purchaser). The creditor in this case, BAC, has admitted with this action that it violated the
stay, and none of the limited equitable circumstances delineated by the Sixth Circuit and
accepted by this Court have been shown to exist. See Easley, 990 F.2d at 911; Southland
Express, 895 S.W.2d at 341; Ditto, 2007 WL 471146 at *7.

        In reaching this conclusion, we have considered the equitable principles applied by
the trial court in this case when it found the foreclosure sale valid. In its initial Memorandum
Opinion and Order, the trial court stated:

                                              -14-
       The court also relies upon the following Equity Maxims. Equity looks to the
       intent rather than to the form [§ 2.10], Equity regards that as done which ought
       to be done [§ 2.12], Equity regards the beneficiary as the real owner [§ 2.24],
       and Equity enforces what good reason and conscience require [§ 2.25]. The
       foregoing Equity maxims are found in Chapter 2 in the specific section
       numbers cited in Gibson’s Suits in Chancery (8th ed. 2004).

Regarding its rationale for denying to BAC the remedy of reformation, the trial court stated
that such relief would be

       against the Bankruptcy Laws and probably unclean hands and/or the maxims
       that Equity aids the vigilant [§ 2.16], no one can take advantage of his own
       wrong [§ 2.18], and where one of two persons must suffer loss, he should
       suffer loss whose act or negligence occasioned the loss [§ 2.19]. Gibson’s
       Suits in [Chancery] (8th ed. 2004[)] . . . .

As compelling as these maxims are, we conclude that they do not expand the reach of the
limited equitable exceptions to the automatic stay recognized as a matter of law.

       Ms. Taylor argues in her brief on appeal that BAC’s remedy would be to have the stay
annulled through a new petition in bankruptcy court. She cites as her sole authority for this
argument a Fifth Circuit case describing the bankruptcy court’s power to annul. See Sikes
v. Global Marine, Inc., 881F.2d 176, 178-79 (5th Cir. 1989) (also explicitly holding in the
minority that the automatic stay is voidable). We note that federal intermediate appellate
decisions are but persuasive authority for Tennessee courts. See Gossett v. Tractor Supply
Co., 320 S.W.3d 777, 785 n.3 (Tenn. Ct. App. 2010) (internal citations omitted); but see
Southland Express, 895 S.W.2d at 341 (expressly adopting the Sixth Circuit’s approach in
Easley). This point aside, there is no dispute in the case at bar over whether the bankruptcy
court had the authority to annul the stay during the pendency of the bankruptcy case. No
motion to annul was requested or granted, and the bankruptcy court’s order to modify the stay
took effect more than two months after the foreclosure sale.

        Upon our conclusion that the foreclosure sale violated the automatic stay, we conclude
that the sale was voidable, and because there was no retroactive annulment of the stay and
there were no equitable circumstances present as an exception to the operation of the stay,
the foreclosure sale was invalid and of no effect.




                                             -15-
                           V. Effect of Voiding Foreclosure Sale

        The trial court concluded that it did not have the authority to restore the deed of trust
and underlying promissory note to its pre-foreclosure status because of the discharge of Ms.
Taylor’s debts in bankruptcy, reasoning that to reinstate the lien in Ms. Taylor’s name would
violate bankruptcy law. Ms. Taylor does not address this issue separately in her brief,
although she maintains in her argument summary that BAC’s relief, if any, should be granted
in bankruptcy court. BAC contends that the court’s finding was in error because the effect
of a discharge in bankruptcy is not to erase the debt but to prevent the creditor from pursuing
liability under the debt against the debtor. We agree.

        In its Order and Memorandum Opinion denying BAC’s post-judgment motion, the
trial court stated in relevant part:

       Accordingly, regardless of whether the foreclosure sale was “void” or
       “voidable,” this court cannot grant BAC the relief it seeks without violating
       the Bankruptcy Code. See 11 U.S.C.A. § 727 (“. . . a discharge under
       subsection (a) of this section discharges the debtor from all debts that arose
       before the date of the order for relief under this chapter . . .”); Prod. Credit
       Ass’n of Fourth Dist. v. Ward, 1990 WL 39350, at *1 (Tenn. Ct. App. Apr. 9,
       1990) (finding that the Chancery Court did not have the power to determine
       whether a promissory note was properly discharged in bankruptcy: “This Court
       cannot and should not attempt to place a construction on the final judgment of
       the [bankruptcy court], other than what is apparent from the face of [the]
       instrument, by undertaking to construe the various pleadings that led to [their]
       conclusion . . . All other questions pertaining to that proceeding or the manner
       in which that proceeding was concluded should properly be addressed to that
       court.”); see also In re LaPorta, 26 B.R. 687, 692 (Bankr. N.D. Ill. 1982)
       (“Requests to modify or vacate a debtor’s discharge lies within the sound
       discretion of the bankruptcy court.”). If BAC disagrees with this court’s ruling
       that the foreclosure was voidable, that there are equitable grounds to not void
       the Substitute Trustee’s deed, and Ms. Taylor’s failure to challenge the
       foreclosure deed, then it is free to petition the Bankruptcy Court to reopen her
       case and do what is right under the law and by Ms. Taylor.

        BAC concedes that pursuant to the bankruptcy code, it cannot pursue Ms. Taylor for
her personal liability on the promissory note even with Ms. Taylor’s status as the holder of
the deed reinstated. The trial court properly cited 11 United States Code Annotated § 727(b)
(Supp. 2012) for the rule that a discharge in bankruptcy discharges the debtor from debts and
liability arising before filing of the bankruptcy petition, barring limited exceptions that do

                                              -16-
not apply in this case. Specific to the effect of a discharge, 11 United States Code Annotated
§ 524(a) (Supp. 2012) provides in pertinent part:

       (a)     A discharge in a case under this title–
               (1)   voids any judgment at any time obtained, to the extent that such
                     judgment is a determination of the personal liability of the
                     debtor with respect to any debt discharged under section 727,
                     944, 1141, 1228, or 1328 of this title, whether or not discharge
                     of such debt is waived;
               (2)   operates as an injunction against the commencement or
                     continuation of an action, the employment of process, or an act,
                     to collect, recover or offset any such debt as a personal liability
                     of the debtor, whether or not discharge of such debt is waived;
                     ...

        There is no question that the statutory effect of a discharge in bankruptcy is to release
the debtor from personal liability for a debt that arose before the bankruptcy action
commenced, such as Ms. Taylor’s debt in this case. It is important, however, to distinguish
between Ms. Taylor’s personal liability with respect to any debt and the existence of the lien
on real property. The United States Supreme Court has noted that “a lien on real property
pass[es] through bankruptcy unaffected.” Dewsnup v. Timm, 502 U.S. 410, 418 (1992); see
also Johnson v. Home State Bank, 501 U.S. 78, 84 (1991) (“[A] bankruptcy discharge
extinguishes only one mode of enforcing a claim–namely, an action against the debtor in
personam–while leaving intact another–namely, an action against the debtor in rem.”); In re
Glance, 487 F.3d 317, 321 (6th Cir. 2007) (“In the final analysis, just as a debtor may seek
protection from a bank’s foreclosure on a lien, because it is a ‘claim’ under the Code . . . so
a debtor must treat the same lien as a ‘debt’ in determining whether he has exceeded the debt
limitations for filing a Chapter 13 petition.”) (citing Johnson, 501 U.S. at 85).

        The trial court cited this Court’s opinion in Prod. Credit Ass’n of the Fourth Dist. v.
Ward, 1990 WL 39350 (Tenn. Ct. App. Apr. 9, 1990), for the conclusion that the state court
did not have the authority to determine whether a promissory note was discharged in
bankruptcy court. In Prod. Credit Ass’n, the record from the defendants’ bankruptcy case
showed that the case had been closed but not that the debts at issue had been discharged.
1990 WL 39350 at *4. This Court held that “absent such proof [of the discharge] in the
record, it was error for the trial court to dismiss [the creditors’] suit upon the two notes.” Id.
(“This court, as the court below, is not empowered to modify or amend the pleadings filed
in the bankruptcy court.”). The holding in Prod. Credit Ass’n is not applicable to this case.
The bankruptcy court’s record clearly indicates that Ms. Taylor’s debts were discharged, and



                                              -17-
BAC has not argued otherwise. Our decision to void the foreclosure sale will not modify or
amend the judgment or any pleadings in Ms. Taylor’s bankruptcy case.

        The trial court also cited a bankruptcy court decision from the Northern District of
Illinois for the proposition that modification or vacation of a discharge is within the sound
discretion of the bankruptcy court. See In re LaPorta, 26 B.R. 687, 692 (Bankr. N.D. Ill.
1982). In re LaPorta is also factually distinguishable from the case at bar. There, the
bankruptcy court held that it was not necessary to revoke the debtor’s discharge in order to
allow the United States Secretary of Labor to proceed with an administrative hearing
regarding the debtor’s liability for alleged violations of a federal act. Id. at 693. The trial
court appears to have equated voiding the foreclosure sale and reinstating the Deed of Trust
with revoking Ms. Taylor’s discharge in bankruptcy. No revocation of the discharge of Ms.
Taylor’s debts has been proposed by BAC, and reinstating the Deed of Trust will not result
in such a revocation. We conclude that because the lien against the Property survived the
discharge of Ms. Taylor’s debts in her bankruptcy case, said discharge does not bar
rescinding the Successor Trustee’s Deed and restoring the Deed of Trust and underlying
promissory note.

                           VI. and VII. Chappell Taylor’s Interest

       The remaining two issues raised by BAC concern Chappell Taylor’s interest in the
Property and whether the trial court erred in finding that he held a twenty-five percent 25%
interest that was not extinguished by the foreclosure sale due to a lack of personal notice.
Our review of the record reveals that the trial court correctly found that Chappell Taylor
inherited half of his father’s interest in the Property as a tenant in common with Ms. Taylor.
Because we have concluded, however, that the foreclosure sale must be voided and the Deed
of Trust restored, Chappell Taylor’s interest in the Property still exists but is subject to the
Deed of Trust, as it was when the foreclosure proceedings began. Further review of the
remaining issues is pretermitted as moot. The trial court’s dismissal of the action against
Chappel J. Taylor is reversed.

                                       VIII. Conclusion

        For the reasons stated above, the dismissal of BAC’s motion for summary judgment
is vacated, summary judgment is granted in favor of BAC, the foreclosure sale of the
Property is declared to be invalid and of no effect, the Successor Trustee’s Deed is declared
to be void and of no effect, and the Deed of Trust is restored. This case is remanded to the
trial court, pursuant to applicable law, for further action as necessary and consistent with this
opinion. Exercising our discretion and noting that BAC in its motion for summary judgment



                                              -18-
voluntarily assumed court costs for summary judgment, we assess costs of this appeal equally
between the parties.




                                                   _________________________________
                                                   THOMAS R. FRIERSON, II, JUDGE




                                            -19-
