In re Holmes

• Decision Date: 19 September 2017
• Docket Number: Case No: 15–14034 (RG)
• Citation: 573 B.R. 549
• Parties: IN RE: Lindsey Catherine HOLMES, Debtor.
• Court: U.S. Bankruptcy Court — District of New Jersey

573 B.R. 549

IN RE: Lindsey Catherine HOLMES, Debtor.

Case No: 15–14034 (RG)

United States Bankruptcy Court, D. New Jersey.

Signed September 19, 2017

RAYMOND AND RAYMOND, BY: Herbert B. Raymond, Esq., Kevin L. de Lyon, Esq., 7 Glenwood Avenue, 4^th Floor, Suite 408, East Orange, New Jersey 07017, Attorney(s) for Debtor, Lindsey Catherine Holmes

ANSELL GRIMM & AARON, P.C., BY: James G. Aaron, Esq., Richard B. Linderman, Esq., Jay B. Feldman, Esq., 214 Carnegie Center, Suite 112, Princeton, New Jersey 08540, Attorney(s) for Community Hills Condominium Association, Inc.

Marie–Ann Greenberg, Esq., Chapter 13 Standing Trustee, Joseph D. Petrolino, Jr., Esq., Brian M. Knapp, Esq., 30 Two Bridges Road, Suite 330, Fairfield, New Jersey 07004

OPINION

ROSEMARY GAMBARDELLA, UNITED STATES BANKRUPTCY JUDGE

MATTER BEFORE THE COURT

This matter comes before the Court by way of a Remand Order and Opinion dated September 16, 2016 issued by the United States District Court for the District of New Jersey (the "District Court") concerning confirmation of the Debtor's Modified Chapter 13 Plan. This Court previously entered an Order dated August 27, 2015 denying confirmation of Debtor's Modified Plan and dismissing Debtor's petition without prejudice.¹ This Court determined that Debtor's Plan could not be confirmed because it attempted to strip off a condominium lien on Debtor's principal residence in violation of 11 U.S.C. § 1322(b). Thereafter, the Debtor filed an appeal, and the District Court reversed and remanded for further proceedings. The parties have since filed their respective briefs concerning the remand, and this Court conducted a Hearing on April 3, 2017. The following constitutes this Court's findings of fact and conclusions of law.

JURISDICTION

This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and the Standing Order of Reference from the United States District Court for the District of New Jersey dated July 23, 1984 and amended September 18, 2012. This matter constitutes a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(L), as it concerns confirmation of Debtor's Modified Chapter 13 Plan.

FACTUAL BACKGROUND

The Debtor, Lindsey Catherine Holmes ("Debtor") owns a condominium unit located at 252 West Kinney Street, Newark, New Jersey ("Property"). The Debtor purchased the Property by Deed recorded on April 19, 2007 ("Deed"). Feldman Cert., ECF No. 112, ¶ 7. It is undisputed that the Property is the Debtor's principal residence. Id. The Property is subject to mortgage lien held by Bank of America, N.A., as the successor to Countrywide Home Loans, Inc. ("Countrywide" or "Mortgagee"), in the amount of $206,525.23 according to its filed proof of claim. The estimated value of the Property is $85,000. Holmes v. Cmty. Hills Condo. Ass'n, No. 15-6834 (KM), ––– B.R. ––––, ––––, 2016 WL 4950993, at *1 (D.N.J. Sept. 16, 2016). The Property is part of Community Hills Condominium Association, Inc. ("Community Hills"). Community Hills is a non-profit corporation condominium association organized pursuant to N.J.S.A. 15A: 1–1 et seq. and N.J.S.A. 46:8B–1 et seq. , the New Jersey Condominium Act, (the "Act") and by Master Deed, ("Master Deed") and By-laws ("By–Laws") dated August 22, 2000 and recorded August 23, 2000 with the Register's Office in Essex County, New Jersey. Community Hills has filed condominium liens against the Property in the aggregate amount of $27,358.71 for unpaid condominium fees and other charges. See Amended Proof of Claim, No. 3–2.

Pursuant to Community Hills' governing documents, the Debtor, as a unit owner, is responsible for a proportionate share of common expense assessments, attorney's fees and costs, and administrative costs of operating the association. Feldman Cert., ¶ 8. The Deed recorded on August 19, 2007 with the Register's Office in Essex County, New Jersey, references the Master Deed. Feldman Cert., Ex. B.² Paragraph 7.02 of the Master Deed states in pertinent part:

7.02 Lien in Favor of the Association.

All charges and expenses chargeable to any Unit constitute a lien against that Unit in favor of the Association. Those liens are prior to all other liens except (a) assessments, liens and charges for taxes past due and unpaid on the Unit and (b) payments due under bona fide and duly recorded Mortgage instruments, if any, except to the extent modified by any applicable New Jersey or federal law...

Master Deed, ¶ 7.02.

Paragraph 16.03 of the Master Deed, titled "Master Deed Provisions and Exhibits to be a Covenant Running with the Land", states:

The present title to the Property herein described, the title to each Unit hereafter to be conveyed ad the acquisition of title by any person to a Unit means that the acquirer adopts, ratifies and will comply with the provision of this Master Deed, the Bylaws and Rules and Regulations and their Amendments and Supplements. The covenants, agreements, and restrictions set forth herein run with the land and bind the Developer (except as conditioned herein), all Owners and the successors and assigns of each, as their interest appear.

Master Deed, ¶ 16.03.

On August 18, 2008, Countrywide, which held a first mortgage on the Property, filed a foreclosure complaint against the Property in the Superior Court of Essex County, Chancery Division under the docket number F–31885–08 ("First Foreclosure Complaint"). Linderman Cert., ECF No. 115–1, ¶ 7. The Complaint also named Community Hills as a defendant. Id. ¶ 8. On October 27, 2008 Community Hills filed a non-contesting Answer in that action. Id. ¶ 10. The First Foreclosure Complaint was subsequently dismissed on January 26, 2012 without prejudice. Id. ¶ 9. (Supplemental Reply Cert. No. 119, ¶ 4, Ex. A). After the First Foreclosure Complaint was filed, but before it was dismissed, Community Hills recorded a first lien against the Property on December 19, 2008 in the amount of $5,822.25 for unpaid common expense assessments and other charges. ("2008 Lien"). Id. ¶ 11. Prior to recording its first lien, Community Hills sent notices to the Debtor on September 2, 2008 and October 15, 2008, first warning that failure to pay the delinquency amounts may result in the association filing a lien against the Property and then advising that the Association had directed its counsel, Stark & Stark, P.C. to prepare and file a Notice of Assessment of Lien against the Property. See Molina Cert., ECF No. 115–14, ¶¶ 4, 5. On March 20, 2009, Countrywide filed a second foreclosure complaint under docket F–14960–09 ("Second Foreclosure Complaint") against the Property. Linderman Cert. ¶ 12 (Reply Cert. at 6, ¶ 5). The Second Foreclosure Complaint also named Community Hills as a defendant. Id. The Complaint specifically referred to Community Hill's 2008 lien in the amount of $5,822.25. ¶ 13, Exh. D. The Second Foreclosure Complaint was dismissed on January 24, 2013 without prejudice. Id. ¶ 6 (Supplemental Reply Cert. ECF No. 1119, ¶ 6, Ex. B). On April 17, 2009, Community Hills recorded a lien on the Property in the amount of $4,348.00 for unpaid common expense assessments and other charges. ("2009 Lien"). Linderman Cert. ¶ 15, Exh. E. Community Hills filed an action against the Debtor in the Superior Court of New Jersey, Law Division, Special Civil Part (Docket No. DC–041534–08) seeking a money judgment for unpaid fees and charges and obtained a money judgment on October 2, 2009 in the amount of $11,899.00. Id. ¶¶ 16, 17, Ex. F. Community Hills sent multiple letters to the Debtor with respect to the Special Civil Action. Id. ¶ 17, Exh. F. On April 9, 2010, Community Hills sent the Debtor a letter advising her of the second lien recorded against her property. Id., ¶ 19. A copy of the letter was sent to Countrywide, ¶ 19, Exh. G. On or about May 28, 2010, Community Hills' advised the Mortgagee of the payoff amount of $ 18,707.41 representing the delinquency owed to Community Hills. See id. ¶ 20.

Following the apparent satisfaction of the first two liens, Community Hills filed four (4) additional liens for unpaid common expense assessments and other charges, which make up its current Proof of Claim. The first lien was recorded on December 15, 2011, in the amount of $5,237.38. Feldman Cert. ¶ 11, Exh. D. Community Hills sent Debtor notice of its intent to file this lien on November 4, 2011. Linderman Cert. ¶ 21, Exh. I. On January 11, 2012 Community Hills sent Debtor Notice of Intent To Foreclose. Linderman Cert. ¶ 23, Exh. J. On March 5, 2012, Community Hills recorded a second lien in the amount of $5,186.00. Exh. E, Feldman Cert. ¶ 12. Notice that the second lien had been recorded was sent to Debtor and the Mortgagee Countrywide on March 16, 2012. Linderman Cert. ¶ 24, Exh. K. A third lien was recorded on September 25, 2013, in the amount of $7,375.28. Feldman Cert. ¶ 13, Exh. F. Notice that the third lien had been recorded was sent to Debtor and the Mortgagee Countrywide on October 7, 2013. Linderman Cert, ¶ 25, Exh. L. A fourth lien was recorded on March 21, 2014, in the amount of $9,560.05. Feldman Cert. ¶ 14, Exh. G. These four liens remain unsatisfied.

PROCEDURAL HISTORY

Prior Proceedings in the Bankruptcy Court

On March 9, 2015 ("Petition Date"), the Debtor filed a petition under chapter 13 of the Bankruptcy Code. ECF No. 1. Marie–Ann Greenberg, Esq. serves as the Standing Chapter 13 Trustee. On July 20, 2015, Community Hills filed an Amended Proof of Claim in the total amount of $36,585.06 for unpaid assessments, late fees, attorney's fees and other charges, including $27,358.71 secured by its condominium liens and an unsecured claim of $9,226.35. See Amended Proof of Claim, No. 3–2. On March 20, 2015, Community Hills filed a Motion to Dismiss Debtor's Case, or, in the alternative, to Vacate the Automatic Stay and for Prospective Relief. ECF No. 12.³ The Motion to Dismiss was adjourned on several occasions to provide Debtor with an opportunity to set forth a feasible chapter 13 plan. Debtor filed her first Chapter 13 Plan on ...