In re Campbell
| Decision Date | 16 March 2009 |
| Docket Number | Bankruptcy No. 07-10358-JNF.,Adversary No. 07-1401. |
| Citation | 402 B.R. 453 |
| Parties | In re William G. CAMPBELL and Maurene J. Campbell, Debtors. Maurene J. Campbell, Plaintiff v. Michael K. Buckley, Defendant. |
| Court | U.S. Bankruptcy Court — District of Massachusetts |
Nina M. Parker, Parker & Associates, Winchester, MA, for Debtor.
The matter before the Court is the "Motion of Debtors, William and Maurene Campbell, Requesting Determination of Status and to Disallow Proof of Secured Claim by Michael Buckley under rule 3007-1." Through their Motion, the Debtors ask the Court to find that Michael Buckley ("Buckley"), who owns property with Maurene Campbell ("Campbell") as a tenant in common, and who holds a mortgage secured by the co-owned property, is only entitled to attorneys' fees as part of his secured claim to the extent that those fees are attributable to his status as a lender and not to his status as a co-owner of property. Buckley opposed the Motion. The Court heard the matter on December 10, 2008, and the parties filed supplemental briefs at the end of January, 2009. The issue before the Court is to what extent Buckley is entitled to attorneys' fees under 11 U.S.C. § 506(b) and the mortgage instrument.
Maurene J. Campbell and her spouse, William G. Campbell filed a joint Chapter 13 petition on January 22, 2007. On February 15, 2007, less than one month after the Debtors filed their Chapter 13 petition, Buckley, Campbell's brother, filed a "Motion for Relief from the Automatic Stay to Pursue Appeal and Related Matters" "for cause" pursuant to 11 U.S.C. § 362(d)(1). In his motion, Buckley referenced the Debtor's appeal from a decision of the Massachusetts Trial Court, Probate and Family Court Department (the "Suffolk Probate Court"), after a trial on the merits with respect to ownership of real property located at 465 Revere Beach Boulevard, Revere, Massachusetts (the "property"). In so doing, Buckley set forth the genesis of a legal feud between the siblings that persists to this day.
According to Buckley, he and his sister agreed in 2001 to invest in the property which contains five, ocean-front apartment units. They agreed to pay an equal amount toward the down payment and to share equally in the payment of the purchase money mortgage, as well as operating and maintenance expenses for the property. They also agreed that the Debtor and her spouse, co-debtor William Campbell, could occupy one of the units as their residence. Additionally, the parties agreed to manage and operate the property through the BCI Ocean Realty Trust (the "Trust"), which they declared on October 30, 2001. Buckley and Campbell were the trustees and each held a 50 percent beneficial interest in the Trust.
On October 31, 2001, the Trust took title to the property. Because Campbell and her spouse could not afford one-half of the deposit for the property, Buckley advanced the entire amount of the deposit in the sum of $142,500. The Debtors then executed a demand promissory note to Buckley in the original principal amount of $71,250, and the Trust gave a mortgage to Buckley to secure the Debtors' portion of the deposit Buckley advanced for her benefit. The Trust did not record the mortgage.
In May of 2002, Buckley and Campbell decided to refinance the property. The lender insisted that the Trust convey the property to Buckley and Campbell as tenants in common. The Trust conveyed the property to them for nominal consideration. According to Buckley, the parties orally agreed to reconvey the property to the Trust. On the day of the refinancing, May 31, 2002, the Debtors executed a demand promissory note to Buckley in the amount of $3,750.
Between May of 2001 and 2004, neither Buckley nor Campbell sought to enforce the oral agreement to transfer the property back to the Trust. The Debtors paid monthly interest on the two promissory notes to Buckley until January, 2004. According to Buckley, in the spring of 2004, Campbell informed him that she and her spouse could not afford to satisfy the unrecorded mortgage.
On March 19, 2004, Campbell, individually, executed a mortgage (the "2004 Mortgage") in favor of Buckley to secure repayment of the outstanding notes totaling $75,000. Buckley recorded the 2004 Mortgage, and, in the summer of 2004, commenced foreclosure proceedings.
On June 7, 2004, Campbell filed a petition in the Suffolk Probate Court to partition the property. On December 19, 2006, that court entered a judgment dismissing Campbell's petition for partition, ordering enforcement of the oral agreement to transfer the property to the Trust, and ordering both Buckley and Campbell to transfer all right, title and interest in the property to the Trust within 30 days. The Suffolk Probate Court also stated: "[s]hould Mr. Buckley proceed with foreclosure, any surplus equity (i.e., the balance left after payment of the mortgages and counsel fees and costs directly related to the foreclosure) shall be paid to the BCI Ocean Realty Trust." Cambell v. Buckley, Nos. 04E-0058, 04E-0103, Judgment (Dec. 19, 2006) (emphasis supplied). The Debtors filed their Chapter 13 petition approximately one month after the entry of the Suffolk Probate Court judgment.
Neither Buckley nor Campbell were satisfied with the Suffolk Probate Court judgment. The Debtor filed both a motion for stay of the judgment and an appeal, and Buckley filed a Motion to Alter or Amend Judgment pursuant to M.R. Civ. P. 59(e) and a Motion to Stay Paragraph 5 of the Judgment in which he sought an estimated 90 to 120 days to transfer his interest in the property as a tenant in common to the Trust so that he could conduct a mortgagee's sale in accordance with Mass. Gen. Laws ch. 244, § 14, which the Massachusetts Land Court had permitted.
The Motion for Relief from Stay, to which the Debtors filed a timely response in which they observed that the property has substantial equity, was needed for their reorganization, and that they did not dispute the validity of the 2004 Mortgage, was the first contested matter between Buckley and Campbell in the Debtors' Chapter 13 case. Buckley objected to confirmation of the Debtors' Chapter 13 Plan, which was predicated upon a $900,000 valuation of the property, subject to mortgage debt and other encumbrances of $499,196.27. Through their plan, the Debtors had proposed to cure arrearages owed to the holder of the first mortgage on the property, CitiMortgage, Inc. in the sum of $3,000, as well as mortgage arrearages owed to Buckley as the holder of a second mortgage on the property in the sum of $5,500. They also proposed to make monthly mortgage payments directly to both CitiMortgage, Inc. whose claim was listed on Schedule D in the amount of $405,723.49, and to Buckley.
In his objection to confirmation of the Debtors' plan, Buckley asserted that his secured claim was in the approximate amount of $160,400 and that the notes matured prepetition. Additionally, he asserted that the Debtor misstated her interest in the property as a co-tenancy on Schedule A — Real Property. He opined that the market value of a tenancy in common interest exceeds the market value of a beneficial interest in the Trust, which would be reported on Schedule B — Personal Property. Additionally, he asserted that the Debtor misstated her interest in the property so that she could acquire a homestead exemption and could retain the interest in the property against his claim and those of unsecured creditors.
Buckley also objected to the homestead declared by the Debtor pursuant to Mass. Gen. Laws ch. 188, § 1, and he filed a second Motion for Relief from the Automatic Stay or, in the Alternative, for Adequate Protection, in which he asserted that the Campbells had failed to make $4,075.30 in post-petition payments to CitiMortgage, Inc. with respect to its first mortgage and $1,500 in post-petition payments to him on his mortgage. He added that Campbell had failed to forward rent proceeds collected from tenants in violation of the assignment of rents.
The Debtors responded, attaching copies of checks establishing that payments had been brought current. On May 3, 2007, the Debtors filed an application to employ a real estate broker. Buckley objected, noting that he objected to the employment of "any real estate broker."
In early May of 2007, the Court denied Buckley's motions for relief from the automatic stay and overruled his objection to the homestead exemption. The Court also ordered the Debtors to file an amended Chapter 13 plan. On June 20, 2007, the Court authorized the Debtors to employ a real estate broker, although one month later they moved for authority to employ another broker.
On August 22, 2007, the Debtors objected to Buckley's proof of claim. The proof of claim set forth the following:
Specifically, they objected to Buckley's claim for $77,129 in attorneys' fees pursuant to paragraph 14 of the 2004 Mortgage which provides the following:
Lender may charge Borrower fees for services performed in connection with Borrower's default, for the purpose of protecting Lender's interest in the Property and rights under this Security Instrument, including, but not limited to, attorney's fees, property inspection and valuation fees.
Paragraph 9 of the Mortgage also provides:
If (a) a Borrower fails to perform the covenants and agreements contained in this Security Instrument, (b)...
To continue reading
Request your trial
-
In re 201 Forest Street LLC
...fees if the agreement under which the claim arose entitles the creditor to such fees. See 11 U.S.C. § 506(b); In re Campbell, 402 B.R. 453, 461 (Bankr. D.Mass.2009). The December and March Notes entitle LBM to recover its attorney's fees. A creditor seeking attorney's fees bears the burden ......
-
In re Arlynn S. Henderson, Case No. 08-30684-HJB (Bankr.Mass. 10/15/2009)
...for under the agreement or State statute under which such claim arose. 11 U.S.C. § 506(b). 5. See also, Campbell v. Buckley (In re Campbell), 402 B.R. 453, 461 (Bankr. D. Mass. 2009) (citing, quoting Holland v. EMC Mortgage Corp. (In re Holland), 374 B.R. 409, 429 (Bankr. D. Mass. 2007)); E......
-
In re Cotsis, Case No.: 15-20588
...Further, the cases cited by the Debtors are distinguishable. The Debtors cite three cases in support of their argument: In re Campbell, 402 B.R. 453 (Banker. D. Mass. 2009); In re Tate, 253 B.R. 653 (Bankr. W.D.N.C. 2000); and In re Jack Kline Co., Inc., 440 B.R. 712 (Bankr. S.D. Tex. 2010)......