In re Bulson
| Citation | 327 B.R. 830 |
| Decision Date | 27 May 2005 |
| Docket Number | No. HG 03-13905.,HG 03-13905. |
| Parties | In re: Mark A. BULSON and Judith A. Bulson, Debtors. |
| Court | United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Western District of Michigan |
Paul B. Newman, Esq., Newaygo, Michigan, for Debtors.
Kim M. Rattet, Esq., Bingham Farms, Michigan, for Countrywide Home Loans, Inc.
James W. Batchelor, Esq., Grand Rapids, Michigan, for Countrywide Home Loans, Inc.
On August 6, 2004, Countrywide Home Loans, Inc. ("Countrywide") filed a motion entitled "Countrywide Home Loan, Inc.'s Motion to Reconsider the Judgment and Order Confirming Plan Entered on July 27, 2004." For the reasons stated in this opinion, Countrywide's motion is denied. However, for the reasons also stated in this opinion, I exercise my own authority pursuant to 11 U.S.C. § 105(a) to revoke the confirmation order and to dismiss this Chapter 13 proceeding.
I have jurisdiction to hear this matter pursuant to 28 U.S.C. § 1334 and LBR 83.2 (W.D.Mich.). This matter is a core proceeding. 28 U.S.C. § 157(b)(2)(L). Therefore, my decision constitutes a final order that may be appealed to the District Court for the Western District of Michigan pursuant to 28 U.S.C. § 158.
On November 17, 2003, Mark and Judith Bulson filed a petition for relief under Chapter 13 of the Bankruptcy Code. Confirmation of the Bulsons' Chapter 13 plan was first scheduled for hearing on March 26, 2004. However, the confirmation hearing was adjourned to April 15, 2004, and then adjourned again to May 27, 2004. The second adjournment was accompanied by what I refer to as a "no adjournment order." That order prohibited all parties, including the Bulsons, from adjourning the confirmation hearing beyond the May 27, 2004 date without cause being shown.
The Bulsons filed their original Chapter 13 plan at the same time that they filed their petition for relief. However, the Bulsons amended their plan on two separate occasions prior to the May 27, 2004 confirmation hearing.1 They filed their first amended plan on February 20, 2004 (the "February 20 amended plan") and they filed their second amended plan on May 19, 2004 (the "May 19 amended plan").
The Bulsons' February 20 amended plan treated Countrywide as a secured creditor whose rights could be modified pursuant to 11 U.S.C. § 1322(b)(2).2 The Bulsons' February 20 amended plan bifurcated Countrywide's total claim, which Debtors scheduled at $119,500, into a secured claim of $107,000 and an unsecured, non-priority claim for the balance. The February 20 amended plan further provided that Countrywide's $107,000 secured claim would accrue interest at 5.25% per annum and that it would amortize at $500 per month for the life of the plan and then at $600 per month thereafter.
However, the Bulsons' May 19 amended plan proposed a much more severe modification of Countrywide's secured claim. In fact, the Bulsons' May 19 amended plan proposed to treat Countrywide's entire claim as unsecured. The Bulsons' reason for invalidating Countrywide's mortgage was that Countrywide could not "produce the original of Mark A. Bulson's mortgage note duly endorsed to it."3
The Bulsons' May 19 amended plan was not confirmable. First, the plan as then amended, contemplated avoiding or invalidating Countrywide's claimed lien in Mr. Bulson's property. However, the Federal Rules of Bankruptcy Procedure do not permit a debtor to use the Chapter 13 plan confirmation process to accomplish what the Bulsons intended. Generally, the avoidance or invalidation of a creditor's lien requires the commencement of an adversary proceeding with the attendant service of a complaint and summons upon the affected creditor. Fed.R.Bankr.P. 7001(2).4 See also, In re Fuller, 255 B.R. 300 (Bankr.W.D.Mich.2000).5
Second, even if the Bulsons were able to invalidate Countrywide's lien through the confirmation process, the Bulsons had not given Countrywide sufficient notice of the proposed change in treatment of its claim under their amended plan. The court's docket indicates that the Bulsons served the May 19 amended plan upon Countrywide by mail on May 18, 2004. Consequently, the Bulsons had given Countrywide only nine (9) days notice of the revised plan that was to be considered for confirmation at the May 27 hearing. That notice was clearly inadequate.6
The Bulsons' inability to confirm their May 19 amended plan at the May 27, 2004 hearing created a dilemma for the Bulsons because I also refused to give the Bulsons any additional time to seek confirmation of a plan in their Chapter 13 proceeding. As already indicated, the May 27, 2004 hearing was the second adjournment of a confirmation hearing originally scheduled for February 26, 2004. The Bulsons had been forewarned by the "no adjournment order" served on April 20, 2004 that further adjournment of the confirmation hearing beyond the May 27, 2004 date would not be permitted unless cause were shown.
The Bulsons solved the dilemma by withdrawing their May 19 amended plan from consideration and by requesting instead that their February 20 amended plan be confirmed. The February 20 amended plan did not suffer from the same procedural defects as did the Bulsons' May 19 amended plan. Therefore, I permitted the Bulsons to proceed with the May 27, 2004 confirmation hearing on that basis.
The Chapter 13 trustee recommended that I confirm the Bulsons' February 20 amended plan.7 However, that recommendation was subject to the resolution of Countrywide's separate objection to the confirmation of the February 20 amended plan. Countrywide objected to confirmation of that amended plan because it purportedly contravened the provisions of Chapter 13. 11 U.S.C. § 1325(a)(1). Specifically, Countrywide contended that the February 20 amended plan could not be confirmed because Countrywide was a home mortgage lender and, therefore, its rights could not be modified by the Bulsons' plan. 11 U.S.C. § 1322(b)(2).
I heard Countrywide's objection on the same day. After considering both Countrywide's and the Bulsons' arguments, I concluded that Countrywide's rights were subject to modification pursuant to Section 1322(b)(2) and, therefore, the February 20 amended plan could be confirmed over Countrywide's objection.
The Chapter 13 trustee was asked to prepare a proposed order at the conclusion of the hearing. However, for some reason, the proposed order was not submitted until July 16, 2004. I signed the order on July 23, 2004.
On August 6, 2004, Countrywide filed a motion to reconsider my May 27, 2004 decision to confirm the Bulsons' February 20, 2004 amended plan over Countrywide's objection. I interpret Countrywide's motion as being brought pursuant to Rule 9023(e). Countrywide's request is that I change the July 23, 2004 order confirming the Bulsons' February 20 amended plan to one that denies confirmation of that plan.
The Bulsons argue that Countrywide did not file its motion within the 10-day period required by Rule 9023(e). That rule provides that, "[a]ny motion to alter or amend a judgment must be filed no later than 10 days after entry of the judgment." In this context, "judgment" means the confirmation order. Fed.R.Bankr.P. 9001(7).
The order I signed on July 23, 2004 did not immediately appear on the court's docket as the order confirming the Bulsons' February 20 amended plan. Instead, a "text order" appeared on the docket.8 Entry of the text order was a mistake. The court corrected its mistake by later entering the order I had actually signed on July 23, 2004.
The docket entry for the text order is No. 41 and the docket entry for the actual order is No. 43. To the immediate left of each entry is the date "07/23/04." The Bulsons' contend that the 10-day time period for Countrywide to file its Rule 9023(e) motion ran from that date. Therefore, the Bulsons' argue that Countrywide's August 6, 2004 motion was untimely.
However, July 23, 2004 is not the date either of these orders was entered. Rather, the docket clearly indicates that the text order was entered, albeit mistakenly, on July 27, 2004 and the order I actually signed was entered on August 6, 2004. Consequently, Countrywide's Rule 9023(e) motion is timely regardless of which order is relied upon to measure the requisite 10-day period.
Rule 9023 parallels Fed.R.Civ.P. 59. Courts should not grant motions brought pursuant to either rule as a matter of course.
Motions for a new trial or to alter or amend a judgment must clearly establish either a manifest error of law or fact or must present newly discovered evidence. Keene Corp. v. International Fidelity Ins. Co., 561 F.Supp. 656 (N.D.Ill.1982), aff'd, 736 F.2d 388 (7th Cir.1984). These motions cannot be used to raise arguments which could, and should, have been made before the judgment issued. Evans, Inc. v. Tiffany & Co., 416 F.Supp. 224, 244 (N.D.Ill.1976). Moreover, they cannot be used to argue a case under a new legal theory. Keene, 561 F.Supp. at 666; Evans, 416 F.Supp. at 244.
Fed. Deposit Ins. Corp. v. Meyer, 781 F.2d 1260, 1268 (7th Cir.1986).
Mr. Bulson owns a parcel of real property in Holton, Michigan. Mr. Bulson mortgaged the Holton property to Republic Bank in March 2003 to secure an indebtedness owing to Republic Bank.9 Countrywide claims that it is the assignee of Republic Bank's rights under that indebtedness and mortgage.
Countrywide objected to the confirmation of the Bulsons' February 20 amended plan because the plan contemplated the modification of Countrywide's rights as a mortgage lender on the Holton property. Generally, a Chapter 13 debtor may modify the rights of secured lender as part of his Chapter 13 plan. 11 U.S.C. § 1322(b)(2). However, a ...
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