Hoggle, In re

• Decision Date: 11 January 1994
• Docket Number: No. 92-6952,92-6952
• Parties: , Bankr. L. Rep. P 75,698 In re Teresa Jo HOGGLE, Debtor. GREEN TREE ACCEPTANCE, INC., Plaintiff-Appellant, v. Teresa Jo HOGGLE, C. Michael Stilson, Defendants-Appellees. In re Annie White BRYANT, Debtor. GREEN TREE ACCEPTANCE, INC., Plaintiff-Appellant, v. Annie White BRYANT and C. Michael Stilson, as trustee of the estate of debtor, Defendants-Appellees. In re Kenneth M. SHELTON and Pamela Shelton, Debtors. GREEN TREE ACCEPTANCE, INC., Plaintiff-Appellant, v. Kenneth M. SHELTON, Pamela Shelton and C. Michael Stilson, as trustee of the estate of debtors, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1008

12 F.3d 1008

62 USLW 2437, Bankr. L. Rep. P 75,698

In re Teresa Jo HOGGLE, Debtor.

GREEN TREE ACCEPTANCE, INC., Plaintiff-Appellant, v. Teresa Jo HOGGLE, C. Michael Stilson, Defendants-Appellees.

In re Annie White BRYANT, Debtor.

GREEN TREE ACCEPTANCE, INC., Plaintiff-Appellant, v. Annie White BRYANT and C. Michael Stilson, as trustee of the

estate of debtor, Defendants-Appellees.

In re Kenneth M. SHELTON and Pamela Shelton, Debtors.

GREEN TREE ACCEPTANCE, INC., Plaintiff-Appellant, v. Kenneth M. SHELTON, Pamela Shelton and C. Michael Stilson, as trustee of the estate of debtors, Defendants-Appellees.

No. 92-6952.

United States Court of Appeals, Eleventh Circuit.

Jan. 11, 1994.

Michael L. Hall, William S. Hereford, Burr and Forman, Birmingham, AL, for appellants.

George M. Ritchey, Ritchey & Ritchey, P.A., Birmingham, AL, for Leader Fed. Bank.

Melinda Murphy Dionne, Schoel, Ogle, Benton & Centeno, Birmingham, AL, for C. Michael Stilson.

Claude M. Burns, Jr., Tuscaloosa, AL, for Annie White Bryant.

E. Calhoun Wilson, Tuscaloosa, AL, for K.M. Shelton and P. Shelton.

Darryl C. Hardin, Tuscaloosa, AL, for Teresa Jo Hoggle.

Appeal from the United States District Court for the Northern District of Alabama.

Before ANDERSON and DUBINA, Circuit Judges, and GODBOLD, Senior Circuit Judge.

ANDERSON, Circuit Judge:

BACKGROUND

This appeal arises from the order of the United States District Court for the Northern District of Alabama entered in three consolidated cases affirming final orders of the United States Bankruptcy Court for the Northern District of Alabama, Western Division which confirmed the debtors' modified Chapter 13 plans and denied the appellant's motion for relief from the automatic stay After confirmation, each Debtor failed to make a payment in accordance with the plan. Green Tree filed motions for relief from the automatic stay in each case due to the defaults. The bankruptcy court, in denying Green Tree's motions, modified the Debtors' respective confirmed Chapter 13 plans to provide for the cure of the postconfirmation arrearages. Green Tree appealed the bankruptcy court's orders, and the district court affirmed.

provisions of 11 U.S.C. Sec. 362. Teresa Jo Hoggle, Annie White Bryant, and Kenneth and Pamela Shelton (collectively "Debtors"), each commenced separate voluntary cases under Chapter 13 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Alabama, Western Division. The Debtors live in mobile homes purchased with financing from Green Tree Acceptance, Inc. ("Green Tree"). When the Debtors filed their respective Chapter 13 petitions, each was past due on payments to Green Tree. At the time of their respective filings, each Debtor proposed, pursuant to 11 U.S.C. Sec. 1322(b)(5), to cure the then past due payments. Green Tree filed proofs of claim in each case. The bankruptcy court in confirming the Chapter 13 plans expressly provided in its orders that the debt to Green Tree was a long term debt being maintained pursuant to Sec. 1322(b)(5).

This appeal raises solely a question of law: whether the district court has authority to modify a confirmed Chapter 13 plan to allow the Debtor to cure a postconfirmation default with reference to a secured claim on the Debtor's house. ¹ We conclude that the district court has such authority.

DISCUSSION

In addressing the legal issue presented, we review the determinations of the bankruptcy and district courts de novo. In re Empire for Him, Inc., 1 F.3d 1156, 1159 (11th Cir.1993). Section 1322(b) of the Bankruptcy Code outlines the permissible contents of a plan, providing in pertinent part:

(b) subject to subsections (a) and (c) of this section, the plan may--

. . . . .

(2) modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor's principal residence, or of holders of unsecured claims, or leave unaffected the rights of holders of unsecured claims, or leave unaffected the rights of holders of any class of claims;

(3) provide for the curing or waiving of any default;

. . . . .

(5) notwithstanding paragraph (2) of this subsection, provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending on any unsecured claim or secured claim on which the last payment is due after the date on which the final payment under the plan is due.

11 U.S.C. Sec. 1322 (emphasis supplied).

Under 11 U.S.C. Sec. 1329, ² the Debtor may modify a Chapter 13 plan at any time after it is confirmed, provided that the plan, as modified, conforms to the requirements of Sec. 1322. Green Tree contends that sections 1322 and In construing sections 1322 and 1329, we turn first to the text of the statutes to determine their plain meaning. Rules of statutory construction dictate that the plain meaning is conclusive, "except in the 'rare cases [in which] the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters.' " United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 242, 109 S.Ct. 1026, 1031, 103 L.Ed.2d 290 (1989) (quoting Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 570, 102 S.Ct. 3245, 3250, 73 L.Ed.2d 973 (1982)). Section 1322(b)(2) authorizes debtors to modify the rights of secured claim holders, but it provides protection for home mortgage lenders by creating a specific "no modification" exception for holders of claims secured only by a lien on the debtor's principal residence. However, notwithstanding Sec. 1322(b)(2)'s prohibition against modifications of the rights of home mortgage lenders, Sec. 1322(b)(5) expressly authorizes plans to provide for the timely curing of any default and maintenance of payments during the life of the plan. Section 1322(b)(5) clearly states that a plan may provide for the curing of any default. Congress could have easily inserted the word prepetition to modify default but failed to do so. The omission is significant. The plain meaning of Sec. 1322(b)(5) permits cure of any default whether occurring prior to the filing of the petition or subsequent to confirmation of the plan. ³ Thus, Sec. 1322(b)(5) would permit cure of postconfirmation defaults.

1329 foreclose modification of a plan to permit cure of postconfirmation defaults. Green Tree argues that because Sec. 1329 requires adherence to the requirements of Sec. 1322(b), describing what a plan at confirmation may include, a modified plan could not provide for the cure of postconfirmation defaults because an original plan could not so provide. We disagree.

Moreover, we believe that this result is consistent with legislative intent. Chapter 13's overall policy is to facilitate adjustments of the debts of individuals with regular income through flexible repayment plans funded primarily from future income. H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 118 (1977); S.Rep. No. 95-989, 95th Cong., 2d Sess. 141 (1978) U.S.Code Cong. & Admin.News 1978, p. 5787. The flexibility permitted in the formulation of Chapter 13 plans represents a central element in the implementation of the Congressional goal to encourage expanded use of Chapter 13. H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 117-18 (1977). A main area of expansion was the Code's recognition of the desire of homeowners to save their homes through Chapter 13. Under prior law, a Chapter XIII plan could not provide protection to the debtor's home. As a result, courts evolved a solution, granting injunctions against foreclosure on mortgages during the pendency of Chapter XIII cases where foreclosure would defeat the purposes of the plan, and allowing debtors to cure defaults on their mortgages while maintaining current payments. See In re Garrett, 203 F.Supp. 459 (N.D.Ala.1962). Section 1322(b)(5) was intended to codify the practice under which foreclosure was enjoined during the pendency of a Chapter XIII, with the debtor given a reasonable time to cure defaults. 5 Collier on Bankruptcy, p 1322.09, at 1322-25 (15th Ed.1993). Accordingly, permitting cure of postconfirmation defaults best accords with Congressional intent to permit homeowners to utilize its flexible provisions for debt relief without sacrificing their homes.

Legislative history accompanying Sec. 1322(b)(5) specifies that a plan may "provide for the curing [of] any default" on long-term debt, such as mortgage debt. H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 429 (1977). The Senate Report likewise states that under Sec. 1322(b)(5), a Chapter 13 plan may cure "any default." S.Rep. No. 95-989, 95th Cong., 2d Sess. 141 (1978). With respect to Sec. 1322(b)(3), an analogous section which provides generally for curing defaults, the legislative history unambiguously provides that a plan may provide for the curing or waiving of any default. H.R.Rep. No. 95-595, 95th The legislative history accompanying Sec. 1329 also supports our interpretation. Congress designed Sec. 1329 to permit modification of a plan due to changed circumstances of the debtor unforeseen at the time of confirmation. The House Report suggests that modification is permissible where problems such as a "natural disaster, a long-term layoff, or family illness or accidents with attendant medical bills" prevent compliance with the original plan. H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 125 (1977). Fueling the creation of flexible modification provisions was the simple recognition that "[t]he problems which caused financial distress to begin with, ... do not magically disappear on the filing of a petition under chapter XIII." S.Rep. No. 95-989, 95th Cong., 2d Sess. 12 (1978).

Cong., 1st Sess. 429 (1977); S.Rep. No. 95-989, 95th Cong., 2d Sess. 141 (1978).

Thus, the general legislative intent surrounding Chapter 13 as well as specific legislative history relating to Sec. 1322(b)(5) and Sec. 1329 suggest that defaults, either preconfirmation or postconfirmation, may be cured...