In re Henline, Bankruptcy No. 96-34033 DDO.
| Decision Date | 21 December 1999 |
| Docket Number | Bankruptcy No. 96-34033 DDO. |
| Citation | 242 BR 459 |
| Parties | In re Roy B. HENLINE and Rebecca A. Henline, Debtors. |
| Court | U.S. Bankruptcy Court — District of Minnesota |
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Rebecca A. Henline, Roy B. Henline, Vadnais Heights, MN, pro se.
Jasmine Z. Keller, Minneapolis, MN, trustee.
This matter was heard on November 24, 1999 on motion for relief from stay brought by Dokmo II Townhouse Association, Inc. Appearances were noted in the record of the hearing. The Court, having heard arguments of counsel and reviewed the briefs submitted, now makes this ORDER pursuant to the Federal and Local Rules of Bankruptcy Procedure.
Dokmo II Townhouse Association, Inc. ("Movant") requests an order of the Court modifying the automatic stay to permit Movant to record against the title to real property and townhouse unit owned by the Debtors, Roy B. Henline and Rebecca A. Henline ("Debtors"), a statement or notice of a lien in favor of Movant, and to permit Movant to foreclose that lien. The Motion is based upon Debtors' failure to pay to Movant postpetition debt, but the relief sought is to permit foreclosure for both prepetition and postpetition debt.
Debtors responded to the motion, alleging that Movant has violated the automatic stay by certain post confirmation collection efforts, thereby damaging the Debtors by at least whatever might be the allowed amount of the Movant's postpetition debt. They dispute the nature of the prepetition claim and postpetition debt, arguing that it is unsecured; and, Debtors challenge the amount of the postpetition debt. Finally, Debtors represent that they stand ready to pay the postpetition debt once the nature and amount have been determined. They argue that no cause exists for granting the motion; and, that the motion should be denied in the best interests of other creditors.
Debtors filed their Petition in this Chapter 13 case on July 22, 1996. Debtors' Chapter 13 Plan was confirmed by the Court in an Order entered on September 12, 1996. Movant filed a secured claim (the "Claim") in this case on August 29, 1996 for prepetition debt owed by Debtors to Movant in the amount of $4,989.82, which is secured by a lien on Debtors' homestead. The claim is for homeowners association dues and charges related to the property. The Debtors did not object to either the nature or amount of the filed claim; but, the confirmed plan does not mention Movant or the claim.
Debtors had scheduled Movant's claim as unsecured. The value of Debtors' homestead was listed at $61,000 and the lien of Chemical Mortgage Co., the holder of the first mortgage, was listed at $64,000. In addition there was a federal tax lien in the amount of $28,018.89 filed on May 11, 1992, and a state tax lien in the amount of $2,520.26, filed on October 25, 1994. Movant's lien was subordinate to the lien of Chemical Mortgage Co. and the Internal Revenue Service. Movant has received no payment from the Chapter 13 trustee.
According to Movant, the postpetition debt owed by Debtors to Movant is $5,295.22, itemized as follows:
1. Unpaid portion of the monthly installment
of the 1998 annual (common expense)
assessment levied against the Lot
for May, 1998 $ 14.11
2. Unpaid monthly installment of the
1998 annual (common expense) assessment
levied against the Lot for December
1998 $ 84.00
3. Unpaid monthly installments of the
1999 annual (common expense) assessment
levied against the Lot for January
through and including November, 1999
at $88.00 per month $ 968.00
4. Unpaid monthly installments of the
special (common expense) assessment
levied against the Lot for May and December
1998, and January through and
including June, 1999, at $36.20 per
month $ 289.60
5. Unpaid insurance premium assessment
levied against the Lot for December
1998 $ 110.00
6. Unpaid late charges and interest, levied
against the Lot from April 27, 1998
through October 25, 1999 $ 234.39
7. Unpaid attorney's fees and costs of
collection, through the date hereof $3,595.12
_________
Total post-petition debt $5,295.22
Movant has not filed a postpetition claim in the case; nor have Debtors filed a postpetition claim on Movant's behalf.
Movant is the homeowners association that operates, maintains and manages Dokmo II Townhomes ("Dokmo II"), located in Vadnais Heights, Minnesota. The Debtors listed in Schedule A of their Petition the real property and townhome unit located at 4224 Bridgewood Terrace, Vadnais Heights, Minnesota (collectively the "Lot"). The Lot is part of Dokmo II and is legally described as:
Lot 16, Block 2, Dokmo 2nd Addition, Ramsey County, Minnesota.
The Debtors are the record owners of the fee title of the Lot as shown on that certain Warranty Deed, dated October 22, 1982, and recorded in the office of the County Recorder in and for Ramsey County, Minnesota on December 27, 1982 as Document No. 2165005 (the "Warranty Deed"). The property is the Debtors' homestead.
All the property comprising Dokmo II, including the Lot, is held, platted, built upon, sold, conveyed and occupied subject to the easements, covenants, conditions, restrictions, charges, and liens contained in (i) the Declaration of Covenants, Conditions and Restrictions for Dokmo II recorded in the office of the County Recorder in and for Ramsey County, Minnesota as Document No. 2115987 (the "Declaration"), and (ii) Movant's By-Laws recorded in said office as Document No. 2122602 (the "By-Laws").
The preamble of the Declaration establishes that all easements, covenants, conditions, restrictions, charges, liens and equitable servitudes provided in the Declaration shall run with the real property comprising Dokmo II, in furtherance of an overall development plan. Movant and Debtors are bound by those provisions.
Pursuant to Article I, Section 6 of the Declaration and Article II, Section 3 of the By-Laws, the term "Lot," as used in the Declaration and By-Laws, means and refers to any plot of land which may be shown upon any subdivision map of the property comprising Dokmo II. Pursuant to Article I, Section 2 the Declaration and Article II, Section 4 of the By-Laws, the term "Owner," as used in the Declaration and By-Laws, means and refers to, among other person or entities, the collective holders of the fee simple absolute title to any Lot, including any contract for deed vendors. Pursuant to those definitions, the Lot and Debtors, as Owners of the Lot, are subject to and bound by the Declaration and the By-Laws.
Pursuant to Article II, Section 1 of the Declaration and Article IV, Section I of the By-Laws, Debtors became members of Movant through their status as Owners of the Lot. Pursuant to the preamble of the Declaration, Debtors, as the Owners of the Lot, are obligated to abide by and comply with the terms, conditions, easements, covenants, restrictions, charges, liens and equitable servitudes in the Declaration. Pursuant to Article III, Section I of the Declaration and Article XII of the bylaws, Debtors agreed that their membership in Movant is subject to their obligations to pay all common expense assessments and/or installments thereof assessed to and levied against the Lot by Movant, together with interest, costs and reasonable attorneys' fees.
Pursuant to Article III of the Declaration, Movant, through its Board of Directors levies common expense assessments and/or installments thereof against all of the Lots at Dokmo II to (i) pay Movant's common expenses including, but not limited to, blanket insurance premiums and exterior maintenance and repair upon each Lot at Dokmo II, and (ii) promote the recreation, health, safety and welfare of the residents of and dwellings in Dokmo II. Under Article III, Section I of the Declaration, the unpaid common expense assessments and/or installments thereof, together with all costs of collection, late charges, interest and reasonable attorney's fees become a continuing lien against the Lot in favor of Movant.
Under Article III, Section I of the Declaration and Article XII of the By-Laws, the common expense assessments and/or installments thereof (including insurance premiums paid for by Movant) assessed to and levied against the Lot, and charged to the Debtors by Movant, together with all costs of collection of unpaid assessments, late charges, interest and reasonable attorneys' fees, become the personal obligation of the Debtors.
Pursuant to Article III, Section 8 and Article VIII, Section 1 of the Declaration, Movant has the authority to commence legal action against the Debtors, and to foreclose Movant's lien against the Lot, for unpaid monthly assessments, insurance premiums paid for by Movant, late charges, interest, costs and reasonable attorneys' fees incurred in connection with the collection of said unpaid amounts.
Debtors' original plan filed with their petition was completed on an old form no longer properly used under the Local Rules when the case was filed. The plan contained the following language:
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