In re Halperin, Bankruptcy No. 2-93-03769.

• Decision Date: 08 August 1994
• Docket Number: Bankruptcy No. 2-93-03769.
• Citation: 170 BR 500
• Court: U.S. Bankruptcy Court — District of Connecticut
• Parties: In re Susan E. HALPERIN, Debtor.

170 B.R. 500 (1994)

In re Susan E. HALPERIN, Debtor.

Bankruptcy No. 2-93-03769.

United States Bankruptcy Court, D. Connecticut.

August 8, 1994.

Charles A. Maglieri, Bloomfield, CT, for debtor.

Randall S. McHugh, Reiner & Reiner, P.C., Farmington, CT, for Dime Sav. Bank of New York, FSB, objecting creditor.

Gilbert L. Rosenbaum, Chapter 13 Trustee, Hartford, CT.

MEMORANDUM OF DECISION AND ORDER ON OBJECTION TO CONFIRMATION OF CHAPTER 13 PLAN

ROBERT L. KRECHEVSKY, Chief Judge.

I.

The matter before the court is the confirmation of a Chapter 13 plan to which The Dime Savings Bank of New York, FSB ("Dime"), the holder of a first mortgage on the debtor's residence, has filed an objection. The issue for decision, submitted by way of a stipulation of facts and the parties' memoranda, is whether the debtor's plan circumvents the prohibition against stripping down an undersecured first mortgage on a debtor's residence on the basis that Dime's mortgage extends to collateral in addition to the real property.

II.

Susan E. Halperin, Esq., the debtor and a practicing attorney, filed for relief under Chapter 13 on October 1, 1993, and on November 22, 1993 filed her First Amended Plan ("plan"). The debtor also filed a motion, pursuant to Code § 506(a) and Fed. R.Bankr.P. 3012, to have the court value the debtor's principal residence, known as 490 Prospect Avenue, Hartford, Connecticut, and determine the secured and unsecured portions of Dime's total claim of $241,211.93. The court, on February 4, 1994, based upon the parties' consent, entered an order finding the value of the residence to be $185,000, the mortgage claim secured to the extent of $185,000 and unsecured to the extent of $56,211.93.

The debtor's plan provides, in material part, that the Dime mortgage, which is in default, be decelerated during the five-year term of the plan through the Chapter 13 trustee paying to Dime the mortgage arrearage, and that Dime receive, along with other Class 2 unsecured creditors, a 10% dividend on their unsecured claims. The debtor proposes thereby to reinstate the mortgage's original payment schedule and to pay, outside the plan, the regular monthly mortgage payment to Dime only to the extent of the secured claim plus interest. The debtor proposes to pay to the trustee 60 monthly payments totaling not less than $44,280, which the trustee is to apply to certain priority unpaid federal income taxes, the Dime mortgage arrearage, and the 10% dividend to unsecured creditors.

Dime filed an objection to the plan asserting that, as determined in Nobelman v. American Savings Bank, ___ U.S. ___, ___, 113 S.Ct. 2106, 2108, 124 L.Ed.2d 228 (1993), Code "§ 1322(b)(2) prohibits a Chapter 13 debtor from relying on § 506(a) to reduce an undersecured homestead mortgage to the fair market value of the mortgaged residence." The debtor responds that § 1322(b)(2),¹ which prohibits a plan from modifying the rights of holders of secured claims "secured only by a security interest in real property that is the debtor's principal residence," does not apply here because Dime's security agreement extends to additional collateral described in the security agreement: i.e., (a) "easements, rights, appurtenances, rents, royalties, minerals, oil and gas rights and profits, water rights and stock and all fixtures now or hereafter a part of the property," together with "all replacements and additions"; (b) certain funds to be held by Dime in escrow to pay for real estate taxes and hazard insurance premiums; and (c) any awards for the taking of any part of the property or for the conveyance of the property in lieu of condemnation. The debtor notes that she conducts her law practice at her residence, owner-occupied businesses being permitted by the local zoning law.

III.

The issue of whether an undersecured residential mortgage can be bifurcated into secured and unsecured claims because the security interest was secured by other collateral in addition to the residence has received varying treatment in the courts. See generally Daniel C. Fleming and Marianne McConnell, The Treatment of Residential Mortgages In Chapter 13 After Nobelman, 2 Am.Bankr.Inst.L.Rev. 147 (1994). As emphasized in Dime's memorandum, two bankruptcy judges in this district have previously ruled that a residential mortgagee has not taken additional security interests in more than the real property when the security interest is in property interests that have some corresponding connection to the real property and are standard provisions in home mortgages. See In re Moreland, 124 B.R. 921, 922 (Bankr.D.Conn.1991) (Krechevsky, J.) (residential mortgage which extends to rents, royalties, oil and gas rights and profits, stock and all fixtures does not create additional collateral for the claim distinct from that normally considered incidental to ownership of realty within the contemplation of § 1322(b)(2)); In re Spano, 161 B.R. 880, 884-90 (Bankr.D.Conn.1993) (Shiff, J.) (Under Connecticut law, rents, fixtures, right to hazard insurance proceeds, and mineral rights all relate to particular real property and mortgage granting mortgagee interest in such items does not remove mortgage from protection of § 1322(b)(2)). Cf. Adebanjo v. Dime Sav. Bank (In re Adebanjo), 165 B.R. 98, 104 (Bankr.D.Conn.1994) (Shiff, J.) (Chapter 13 plan not barred from modifying claim secured by debtor's principal residence and two rental units in which debtors do not reside.).

The debtor, in her memorandum, requests this court not to follow Moreland and Spano and to accept the construction adopted by Third Circuit rulings — that if a mortgagee takes a security interest in any of the above-identified items, the mortgage, under the express terms of § 1322(b)(2), takes security interests in property other than the real property. Sapos v. Provident Inst. of Sav., 967 F.2d 918, 925 (3d Cir.1992) (Security interest in wall-to-wall carpeting and rents and profits placed claim outside the anti-modification provision of § 1322(b)(2).); Wilson v. Commonwealth Mortgage Corp., 895 F.2d 123, 128-29 (3d Cir.1990) (holding alternatively that rights of undersecured claimant could be modified notwithstanding § 1322(b)(2) because mortgagee's security interest, which attached to appliances, machinery, furniture, and equipment (whether fixtures or not), was not secured only by a security interest in real property); In re Hammond, 27 F.3d 52, 57-58 (3d Cir.1994) (determining that Nobelman did not overrule the holdings of Sapos and Wilson that § 1322(b)(2) did not apply to mortgagees who take...