In re Britt
| Decision Date | 01 August 1996 |
| Docket Number | No. 95-42688 and No. 95-42596.,Bankruptcy No. 95-42587,95-42688 and No. 95-42596. |
| Citation | 199 BR 1000 |
| Parties | In re Johnny C. BRITT and Betty Britt and Deborah A. Waltman and Carol McNeal Smith, Debtors. |
| Court | U.S. Bankruptcy Court — Northern District of Alabama |
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S. Keith Eady, Talladega, Alabama, for debtors.
Allen Ramsey, Birmingham, Alabama, for Sears Roebuck Co.
Linda Gore, Gadsden, Alabama, for Mavis Willingham, the standing Chapter 13 trustee.
Carolyn Buchanon, for Coast to Coast.
Each of these proceedings came before the Court on May 2, 1996, for a hearing on confirmation of a debt adjustment plan filed pursuant to 11 U.S.C. § 1321. This Court has jurisdiction pursuant to 28 U.S.C. §§ 157(a) and 1334(a). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (B), (K) and (L). The Court must determine whether the plans of reorganization in these cases may be confirmed despite an apparent discrepancy between the amount of one or more allowed secured claims in each case and the amount to be paid on account of such allowed secured claim under the respective plans.
Appearing at the Carol McNeal Smith hearing were Mavis Willingham, standing Chapter 13 trustee, Carolyn Buchanon, for Coast to Coast, and S. Keith Eady, Esq., attorney for the debtor. Appearing at the Johnny and Betty Britt hearing were Mavis Willingham, standing Chapter 13 trustee, Allen Ramsey, Esq., for Sears Roebuck Co., and S. Keith Eady, Esq., attorney for the debtors. Appearing at the Deborah A. Waltman hearing were Mavis Willingham, standing Chapter 13 trustee and S. Keith Eady, Esq., attorney for the debtor. No one was present for Sears Roebuck Co. or Farmer's Furniture at the Waltman hearing. The Court ordered briefs on the issues presented at these hearings. The debtor and trustee filed briefs in all three cases. Sears filed briefs in the Britt and Waltman cases. Upon full consideration of the arguments by counsel, the facts, and the law, the Court makes these findings:
FINDINGS OF FACT
Carol McNeal Smith (hereinafter referred to as "Smith") filed her Chapter 13 bankruptcy petition on November 3, 1995. (BK 95-42596, Doc. 1) Coast to Coast filed a proof of claim on December 11, 1995, in the amount of $799.41. (BK Claim 5) Of this amount, the claimant declared that the claim was secured in the amount of $710.14 and was unsecured in the amount of $89.27. The proof of claim includes supporting documents (contract and security agreement) which indicate the claimant holds a purchase money security interest in the property securing the claim. Smith filed an amended plan, replacing all earlier plans, on April 5, 1996. (BK Doc. 23) In her amended plan, Smith lists the total amount of the claim at $799.41 (the amount claimed by Coast to Coast) but proposes to treat the claim as secured in an amount different from the amount claimed by Coast to Coast to be secured. Smith values the collateral at $150.00 and, therefore, proposes to treat the claim of Coast to Coast as secured in the same amount and as unsecured in the amount of $649.41. Smith's amended plan calls for the secured portion of the claim to be paid in 60 months with monthly payments of $3.04, which includes 8% interest. The plan further estimates that allowed unsecured claims will be paid in full. At the confirmation hearing, there were no pending objections to confirmation.
Neither Smith nor the standing Chapter 13 trustee has filed an objection to the allowance of the claim of Coast to Coast. Neither Smith nor the standing Chapter 13 trustee has filed a motion for the valuation of the claim secured by a lien on property in which the estate has an interest. Coast to Coast filed a motion for valuation, but at the confirmation hearing, it moved to dismiss the motion; without objection the motion was dismissed.
Johnny Britt and Betty Britt (hereinafter referred to collectively as "Britt") filed a joint Chapter 13 bankruptcy petition on November 2, 1995. (BK 95-42587, Doc. 1) Sears Roebuck & Co. (hereinafter referred to as "Sears") filed two proofs of claim on December 6, 1995.1 Sears filed the first for $1,707.24 (BK Claim 5) and claimed the entire amount as a secured claim. Sears attached to this claim supporting documentation consisting of a copy of a Sears credit card receipt, which incorporates by reference a contract (also attached to the proof of claim) in which Britt granted Sears a purchase money security interest in all property purchased with the Sears credit card. Sears filed the second proof of claim in the amount of $456.11, all of which it claimed as unsecured. (BK Claim 4) The sum of Sears's two claims is $2,163.35, which is the current balance of the account, as indicated by the supporting document attached to Claim 4.
Britt filed an amended plan replacing all earlier plans on January 16, 1996. (BK Doc. 14) This amended plan lists the total amount of indebtedness to Sears in the amount of $2,163.35, but proposes to treat the indebtedness as a secured claim in an amount different from the amount Sears asserted to be secured. Britt values the collateral at $500.00 and therefore proposes to treat the claim as secured only to the extent of $500.00 instead of $1,707.24, as filed by Sears. Britt proposes to pay the secured portion by paying $10.14 for each of 60 months, which also included 8% interest. The amended plan estimates that no money will be distributed to holders of allowed unsecured claims. An analysis of the plan by the standing Chapter 13 trustee shows that unsecured claims will be paid 75% of the allowed unsecured portion of the claim. Sears objected to confirmation based on the valuation of its collateral. (BK Doc. 12)
Neither Britt nor the standing Chapter 13 trustee has filed an objection to the allowance of any claim of Sears. Neither Britt nor the standing Chapter 13 trustee has filed a motion to determine the value of the claim secured by a lien on property in which the estate has an interest.
Deborah A. Waltman filed a Chapter 13 bankruptcy petition on November 13, 1995. (BK 95-42688, Doc. 1) Sears filed four proofs of claims — Claims 8, 9, 10, and 11 — on December 26, 1995. Sears filed Claim 8 in the amount of $2,511.51, asserting the entire claim to be secured; this claim was not accompanied by any documentation. Sears filed Claim 9 in the amount of $0.00; this claim was accompanied by documentation that may be applicable to Claim 8. Sears filed Claim 10 in the amount of $971.79, all of which Sears characterized as unsecured. The documentation supporting this claim is illegible. Sears filed Claim 11 in the amount of $115.34, all of which it claimed to be secured; Sears attached no documentation with this fourth claim.
In addition to presenting these four claims, Sears later filed three more proofs of claims (Claims 19, 20, and 21). Claim 21, which is substantially identical to Claim 8, contains the same documentation as Claim 9. It may have been filed to provide a proof of secured claim with all necessary supporting documentation. Claim 19 is the same as Claim 10, but it has no attached documentation. Claim 20 is the same as Claim 11, and the attached supporting documentation is illegible. The standing Chapter 13 trustee objected to all three claims on the ground that said claims were duplicates of previously filed claims; the Court sustained her objections and disallowed Claims 19, 20, and 21 on the date of the hearing, May 2, 1996. Sears objected to confirmation based on the valuation of its collateral, but was not present at the hearing. Its objection is deemed waived.2
Farmer's Furniture filed a proof of claim on November 27, 1995, in the amount of $1,490.25. (BK Claim 3) Farmer's Furniture stated the entire claim to be secured. Farmer's Furniture includes with the proof of claim copies of the contract supporting the claim and the purchase money security agreement creating a security interest in the purchased collateral.
Farmer's Furniture objected to confirmation on November 27, 1995, objecting both to the value given by the plan to the collateral and interest rate provided in the plan. (BK Doc. 10) Farmer's Furniture did not attend the confirmation hearing to advocate its objection, and, therefore, its objection is deemed waived.3 Waltman filed an amended plan (BK Doc. 12) on December 7, 1995, in which she values the collateral of Farmer's Furniture at $400.00 and therefore treats the claim as secured to the amount of $400.00 and not $1,490.25 as Farmer's Furniture claims. The plan proposes to pay this secured claim in 36 monthly installments in the amount of $12.53; this proposed payment includes interest at an annual rate of 8 per cent. The amended plan also provided for "Sears Plus" claim in the amount of $2,511.51 (presumably Claim 8) with collateral securing the claim valued at $175.00; with plan payments of $5.48 for 36 months on the secured portion of the claim. Waltman filed an amended plan on May 14, 1996 (BK Doc. 23), increasing the value attributed to Sears's collateral to $700.00, and treating the claim as secured to the amount of $700.00 and paying the secured portion of the claim in 36 monthly installments of $21.94, which includes interest at 8 per cent. The remaining portion of the claim, $1,811.51, is treated as unsecured. The plan proposes to pay nothing on unsecured claims.
Except as indicated above, neither Waltman nor the standing Chapter 13 trustee has filed any objection to the allowance of any claim of Sears or Farmer's Furniture. Neither Waltman nor the standing Chapter 13 trustee has filed a motion for valuation of a claim secured by a lien on property in which the estate has an interest.
Each debtor is represented by the same law firm and each plan and plan summary contains the following provision:
If a timely...
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