21st Mortg. Corp. v. Glenn (In re Glenn)

Decision Date13 August 2018
Docket NumberNo. 17-60533,17-60533
Citation900 F.3d 187
Parties In the MATTER OF: Kayla GLENN, Debtor 21st Mortgage Corporation, Appellant, v. Kayla Glenn, Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

Scott Burnett Smith, Bradley Arant Boult Cummings, L.L.P., Huntsville, AL, Alicia Kate Margolis, Esq., Attorney, Bradley Arant Boult Cummings, L.L.P., Jackson, MS, for Appellant.

Catherine Anne Umberger, Mayfield Law Firm, Tupelo, MS, for Appellee.

Michael H. Rubin, Esq., McGlinchey Stafford, P.L.L.C., Baton Rouge, LA, Rudy Joseph Cerone, Esq., McGlinchey Stafford, P.L.L.C., New Orleans, LA, for Amicus Curiae MANUFACTURED HOUSING INSTITUTE.

Before ELROD, COSTA, and HO, Circuit Judges.

JENNIFER WALKER ELROD, Circuit Judge:

This case involves whether, under § 506(a) of the Bankruptcy Code, delivery and setup costs should be included in the valuation of a retained mobile home in a Chapter 13 proceeding. Both the bankruptcy court and the district court determined that delivery and setup costs should not be included in the mobile home’s valuation. We agree and therefore AFFIRM.

I.

The relevant facts of this case are undisputed. 21st Mortgage Corporation financed Kayla Glenn’s purchase of a used mobile home for the "base price" of $29,910. This base price apparently included the cost of delivering the mobile home, as well as the costs of blocking, leveling, and anchoring required by Mississippi law. 21st Mortgage retains a purchase-money security interest in the home and has a secured claim of $27,714.

Glenn filed for bankruptcy under Chapter 13. Glenn’s bankruptcy plan allowed her to retain her mobile home and pay 21st Mortgage the secured value (plus 5% interest) over the life of the plan. 21st Mortgage objected to the confirmation of the plan because it disputed the valuation of Glenn’s home. The dispute is whether $4,000—the alleged cost of necessary delivery and setup services for Glenn’s mobile home—should be included in the valuation. Because Glenn has chosen to retain her mobile home, she will not again incur the costs of delivery and setup.

The bankruptcy court determined that the delivery and setup costs should not be included in the valuation of Glenn’s mobile home, overruling 21st Mortgage’s objection to the plan’s confirmation. In light of the text of § 506(a) and the Supreme Court’s decision in Associates Commercial Corp. v. Rash , 520 U.S. 953, 117 S.Ct. 1879, 138 L.Ed.2d 148 (1997), the bankruptcy court reasoned that including delivery and setup costs in the valuation of a mobile home that has already been delivered and set up would be inconsistent with the statutory mandate to consider the "proposed disposition or use" of the property and with the Supreme Court’s interpretation of that language.

The district court agreed with the bankruptcy court’s decision in light of Rash and the text of § 506(a), noting that "[v]irtually all of the courts that have considered ... whether to include delivery and setup costs in a mobile home valuation have reached the same conclusion." The district court therefore affirmed the bankruptcy court’s judgment and dismissed the appeal. 21st Mortgage timely appealed to our court.

II.

"We review ‘the decision of a district court sitting as an appellate court in a bankruptcy case by applying the same standards of review to the bankruptcy court’s findings of fact and conclusions of law as applied by the district court.’ " Endeavor Energy Res., L.P. v. Heritage Consol., L.L.C. (In re Heritage Consol., L.L.C.) , 765 F.3d 507, 510 (5th Cir. 2014) (quoting Clinton Growers v. Pilgrim’s Pride Corp. (In re Pilgrim’s Pride Corp.) , 706 F.3d 636, 640 (5th Cir. 2013) ). "Acting as a ‘second review court,’ " we review a bankruptcy court’s legal conclusions de novo and its findings of fact for clear error. Official Comm. of Unsecured Creditors v. Moeller (In re Age Ref., Inc.) , 801 F.3d 530, 538 (5th Cir. 2015) (quoting Fin. Sec. Assurance Inc. v. T-H New Orleans Ltd. P’ship (In re T-H New Orleans Ltd. P’ship) , 116 F.3d 790, 796 (5th Cir. 1997) ); ASARCO, L.L.C. v. Barclays Capital, Inc. (In re ASARCO, L.L.C.) , 702 F.3d 250, 257 (5th Cir. 2012). Issues of statutory interpretation are reviewed de novo . Nowlin v. Peake (In re Nowlin) , 576 F.3d 258, 261 (5th Cir. 2009).

III.

The dispute here centers on conflicting interpretations of § 506(a) of the Bankruptcy Code. 21st Mortgage argues that because § 506(a)(2) requires calculating replacement value "without deduction for costs of sale or marketing," delivery and setup costs should be included in the replacement value of a mobile home. Moreover, according to 21st Mortgage, a mobile home’s "replacement value"—defined as "the price a retail merchant would charge for property of that kind"—necessarily includes delivery and setup costs. 21st Mortgage also contends that the "proposed disposition or use" standard from the Supreme Court’s decision in Rash does not apply here because § 506(a)(2) ’s language was added after Rash and applies regardless of whether a debtor retains her property. The Manufactured Housing Institute submitted an amicus brief in support of 21st Mortgage’s argument, asserting that, under § 506(a)(2), the price a retail merchant would charge includes delivery and setup costs for mobile homes.

Glenn did not submit a brief to our court on appeal. We requested the input of the United States Trustee Program.1 The United States Trustee for Region 5 (the Trustee) submitted a brief in support of the district court’s determination that the valuation of a mobile home should not include delivery and setup costs. The Trustee first contends that § 506(a)(2) ’s definition of replacement value as "the price a retail merchant would charge for property of that kind" indicates that courts should "identify the retail price of a mobile home, not all costs incurred in connection with the purchase of a home." The Trustee relies on Rash as directing courts to focus on the proposed disposition of property in making a valuation. Moreover, the Trustee emphasizes that § 506(a)(2) ’s exception for "costs of sale or marketing" does not apply here because delivery and setup costs "are not ‘costs of sale,’ a term which refers to the seller’s costs of doing business."

We begin with the text of § 506(a). See Nowlin , 576 F.3d at 261 ("When interpreting a statute, we begin by examining its language."); see also BedRoc Ltd. v. United States , 541 U.S. 176, 183, 124 S.Ct. 1587, 158 L.Ed.2d 338 (2004) ("[O]ur inquiry begins with the statutory text, and ends there as well if the text is unambiguous."). It is a cardinal rule of statutory interpretation that "effect shall be given to every clause and part of a statute." RadLAX Gateway Hotel, LLC v. Amalgamated Bank , 566 U.S. 639, 645, 132 S.Ct. 2065, 182 L.Ed.2d 967 (2012) (quoting D. Ginsberg & Sons, Inc. v. Popkin , 285 U.S. 204, 208, 52 S.Ct. 322, 76 L.Ed. 704 (1932) ).

Section 506(a) of the Bankruptcy Code governs the valuation of secured claims in Chapter 13 bankruptcy proceedings. Section 506(a)(1) states that the value of a creditor’s claim "shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property ...." Section 506(a)(2) states:

If the debtor is an individual in a case under chapter 7 or 13, such value with respect to personal property securing an allowed claim shall be determined based on the replacement value of such property as of the date of the filing of the petition without deduction for costs of sale or marketing. With respect to property acquired for personal, family, or household purposes, replacement value shall mean the price a retail merchant would charge for property of that kind considering the age and condition of the property at the time value is determined.

11 U.S.C. § 506(a)(2).

Section 506(a)(2) should not be construed to the exclusion of § 506(a)(1) when the two clauses can be read consistently. "[I]t is a ‘cardinal rule that a statute is to be read as a whole,’ in order not to render portions of it inconsistent or devoid of meaning." Zayler v. Dep’t of Agric. (In re Supreme Beef Processors, Inc.) , 468 F.3d 248, 253 (5th Cir. 2006) (en banc) (quoting Wash. State Dep’t of Soc. & Health Servs. v. Guardianship Estate of Keffeler , 537 U.S. 371, 385 n.7, 123 S.Ct. 1017, 154 L.Ed.2d 972 (2003) ); see also Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 180 (2012) (Under the harmonious-reading canon, "[t]he provisions of a text should be interpreted in a way that renders them compatible, not contradictory."). We agree with the district court that there is nothing in § 506(a)(2) that prohibits considering the "proposed disposition or use" of the property in the valuation.

Moreover, the Supreme Court in Rash , considering the language of what is now § 506(a)(1), stated that "the ‘proposed disposition or use’ of the collateral is of paramount importance to the valuation question." 520 U.S. at 962, 117 S.Ct. 1879. In Rash , the Supreme Court held that § 506(a) requires a replacement-value standard when a debtor exercises the "cram down" option provided by § 1325(a)(5)(B) of the Code and thus "seeks to retain and use the creditor’s collateral in a Chapter 13 plan."2 Id. at 955–56, 117 S.Ct. 1879. While declining to establish an exclusive method for calculating replacement value, the Court reasoned that "replacement value, in this context, should not include certain items." Id. at 965 n.6, 117 S.Ct. 1879. As an example, the Court stated that "where the proper measure of the replacement value of a vehicle is its retail value, ... [a] creditor should not receive portions of the retail price, if any, that reflect the value of items the debtor does not receive when he retains his vehicle, items such as warranties, inventory storage, and reconditioning." Id.

Section 506(a)(1) —and the Supreme Court’s interpretation of its language in Rash —inform our interpretation of § 506(a)(2).3 We interpret § 506(a)(2) as consistent...

To continue reading

Request your trial
28 cases
  • Thomas v. Bryant
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • September 3, 2019
    ...plan because the Legislature’s enactment of a new plan superseded the district court’s order.26 See 21st Mortg. Corp. v. Glenn (In re Glenn ), 900 F.3d 187, 189 (5th Cir. 2018) (holding questions of statutory interpretation are reviewed de novo).27 Sealed Appellee 1 v. Sealed Appellant 1 , ......
  • Franco v. Mabe Trucking Co.
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • July 8, 2021
    ...and issues of statutory interpretation de novo . Romero v. City of Grapevine , 888 F.3d 170, 175 (5th Cir. 2018) ; In re Glenn , 900 F.3d 187, 189 (5th Cir. 2018).A.1. We begin by addressing whether § 1631 is relevant when a district court determines that there is a lack of personal, as opp......
  • Conrad v. Dehart (In re Conrad), Case No. 1:16-bk-03844-HWV
    • United States
    • U.S. Bankruptcy Court — Middle District of Pennsylvania
    • August 13, 2019
    ...that a statute is to be read as a whole,’ in order not to render portions of it inconsistent or devoid of meaning." Matter of Glenn , 900 F.3d 187, 190 (5th Cir. 2018) (citing Zayler v. Dep't of Agric. (In re Supreme Beef Processors, Inc.) , 468 F.3d 248, 253 (5th Cir. 2006) (en banc) (quot......
  • Franco v. Mabe Trucking Co.
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • March 18, 2021
    ...and issues of statutory interpretation de novo . Romero v. City of Grapevine , 888 F.3d 170, 175 (5th Cir. 2018) ; In re Glenn , 900 F.3d 187, 189 (5th Cir. 2018).A.1. We first address whether § 1631 permits a district court to transfer a case for lack of personal, as opposed to subject-mat......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT