In re Jablonski
| Decision Date | 19 February 1987 |
| Docket Number | Bankruptcy No. 85-03026K. |
| Citation | 70 BR 381 |
| Parties | In re Kathleen A. JABLONSKI a/k/a Kathleen A. Peterson, Debtor. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
Irwin Trauss, Philadelphia, Pa., for debtor.
Lawrence T. Phelan, Philadelphia, Pa., for Mortgagee.
James J. O'Connell, Philadelphia, Pa., for Trustee.
Kathleen A. Jablonski, pro se.
MEMORANDUM SUR DEBTOR'S MOTION FOR RECONSIDERATION OF OPINION AND ORDER DATED JANUARY 9, 1987
On January 20, 1987, the Debtor filed a timely1 Motion that we reconsider certain portions of our Opinion and Order of January 9, 1987, in which we ruled upon an Objection of the Debtor to the Proof of Claim of the Debtor's Mortgagee, now known as Meritor Mortgage Corporation East (hereinafter referred to as "the Mortgagee"), and a Motion of the Debtor to determine the value of the secured interest of the Mortgagee in the interest of the Debtor's estate in residential real estate which she owns by the entireties with her husband.
We carefully reviewed the Debtor's Motion and we conclude that it must be denied except as to one issue, i.e., our ruling that the Mortgagee was entitled to its claim of a "legal fee" of $1,100.00 and costs of $350.80, totalling $1,450.80. We therefore entered an Order on February 3, 1987, vacating our Opinion and Order insofar as it allowed these fees and costs in the Mortgagee's Proof of Claim, and accorded the parties until February 11, 1987, to file Supplemental Briefs addressing this issue. The Mortgagee opted not to file a Brief, and the Debtor belatedly filed a Brief that addresses issues which, as it develops, were totally irrelevant to our ultimate disposition.
Despite this lack of assistance from either party, we conclude that we must revise our ruling of January 9, 1987, on the issue of allowable fees and costs. We now hold that since the Mortgagee has not met its burden of showing that any such fees and costs can be allowed per 11 U.S.C. § 506(b), we must deny this portion of the Mortgagee's Claim.
Our prior ruling was based exclusively on our misperception that a pre-petition state court foreclosure judgment had been entered against the Debtor and that, therefore, the Opinion of former Chief Judge Lord of the District Court in Werts v. Federal National Mortgage Ass'n., 48 B.R. 980, 985 (E.D.Pa.1985), was relevant to the disposition of this issue. That such a pre-petition judgment had been entered was not an irrational presumption, because letters warning the Debtor of the institution of foreclosure proceedings were dispatched as early as 1982, and the Debtor did not file her bankruptcy case until July 24, 1985. However, there is certainly nothing in the record to support this presumption, and moreover, it was erroneous, as counsel for both parties concede. We therefore cannot base our decision on Werts, and we do not believe that the holding in Werts can be directly or analogously applied to a situation where not only has no pre-petition foreclosure judgment been entered, but there is nothing in the record which indicates that any pre-petition foreclosure proceeding had even been commenced.
We note that a change in our ruling on this issue results in some alteration of several portions of our previous Opinion and Order. We shall therefore proceed to vacate the Opinion and Order in its entirety, and resubmit same in its entirety. We do note that, except for a few minor corrections elsewhere, only pages 1 and 17-22 of our previous Opinion and, of course, the Order, are altered.
Before us in the instant matter are Motions of the Debtor (1) Objecting to the Proof of Claim filed by the Debtor's mortgagee, formerly known as Central Mortgage Corporation, and now known as Meritor Mortgage Corporation East (referred to hereinafter as "the Mortgagee"); and (2) "to Determine the Value of Debtor's Interest in Property and to Avoid Its the Mortgagee's Lien," relative to the Debtor's residential real estate, owned by the entireties with her husband, Harry Jablonski, at 2221 Taggart Street, Philadelphia, PA 19125. We hold that, on the basis of the Stipulation of Facts which the parties have agreed shall constitute the record in this matter, we can only proceed to reduce the Mortgagee's Proof of Claim by the amount of an agreed $1,000.00 penalty for a violation of the federal Truth-in-Lending Act, 15 U.S.C. § 1601, et seq. (TILA), and by $1,450.80 of alleged attorney's fees and costs, to $6,888.53, and declare that the Mortgagee's lien in the Debtor's premises is limited to the extent of $19,350.00.
On July 24, 1985, the Debtor, though married, filed, individually, a Petition seeking relief under Chapter 13 of Title 11, United States Code. On October 16, 1985, the Mortgagee filed a Proof of Claim setting forth a "Reinstatement Amount" of arrearages totalling $9,339.33, and a "Total Debt" amounting to $24,273.54. The arrearages computation included, as components, $7,888.53 in monthly payments and late charges; and "legal fee" and costs of $1,100.00 and $350.80, respectively, the source of which was not explained further. The "total debt" figure included a principal balance of $15,660.38, pre-petition interest of $6,107.40, late charges of $303.42, an "escrow deficit" of $751.54, and the "legal fee" and costs cited above, which together total $1,450.80.
On February 13, 1986, the Debtor filed the Motions in issue. In the Motion to determine the value of the Mortgagee's Claim and to avoid its lien in part, the Debtor claimed that (1) The value of the realty in issue was $20,000.00; (2) The value of the Debtor's interest as co-tenant by the entireties was half of this amount, or $10,000.00; and (3) The $10,000.00 figure should be further reduced to $9,450.00, in view of the existence of two (2) prior City liens, for taxes and water and sewer, in the amounts of $450.00 and $200.00, respectively.1 In the Objection to the Proof of Claim, the Debtor, starting with the $9,450.00 figure, contended that the Mortgagee's "total debt" claim was properly a secured claim of $8,450.00, having deducted $1,000.00 for the recoupment claim for the TILA violation; and an unsecured claim of $6,210.38. The Debtor also contended that an alleged failure of the Mortgagee to comply with certain federal Regulations and state law in the state court foreclosure case precluded any valid claim for the "legal fee," or attorney's fees, and costs.
The Mortgagee filed Answers contesting these Motions on February 28, 1986, and March 12, 1986, respectively. The matters were scheduled for hearing two (2) times, but, on the latter occasion, the Motions disappeared from the Court listings with the notation "continued generally — Stipulation to be filed" on May 22, 1986.
These matters first came to our attention on October 15, 1986, when a Motion by the Chapter 13 Trustee to dismiss the Debtor's case due to the apparent infeasibility of her Plan came before us for disposition. We learned that the Trustee's Motions had been listed and continued seven (7) times in the past due to the Debtor's contention that the feasibility problem could be resolved only upon the disposition of these Motions and the amicable disposition of these Motions, though allegedly pending, had never been consummated. In order to break this cycle of non-resolution, we listed the instant Motions for disposition on October 30, 1986, and continued the hearing on the Trustee's Motion to Dismiss to December 9, 1986, indicating that no further continuances would be granted.
On October 30, 1986, Counsel for the Debtor and for the Mortgagee reported that they had nearly completed a Stipulation of Facts upon which the Motions could be decided. With reluctance, we continued the matter one more week, until November 7, 1986, with direction to the parties to either complete the Stipulation by that date or try the case on that date. On November 7, 1986, the parties presented the Stipulation of Facts which they agreed would constitute the entire record in the matters, and we issued an Order requiring the parties to file Briefs on or before November 17, 1986, and November 24, 1986, respectively, holding the December 9, 1986, date for, hopefully, the last continued hearing on the Trustee's Motion to Dismiss.
Although the Debtor filed her Brief in timely fashion, the Mortgagee did not file its Brief, due to a series of unanticipated and hence excusable events, until December 4, 1986. We were therefore unable to decide this matter prior to the continued hearing on the Trustee's Motion to Dismiss on December 9, 1986, and we were compelled to continue the Trustee's Motion once again, until February 3, 1987. In our Order accompanying this Opinion, we indicate that the Debtor must resolve the feasibility problem, in light of our rulings herein, or suffer dismissal of her case, on that date.
In the Stipulation, the parties agreed, in pertinent part, as follows:
1. The value of the residence owned by the Debtor and her non-Debtor husband was $21,000.00 at the time of filing,
2. The City's liens, in the total amount of $650.00, were senior to the Mortgagee's lien.
3. The Debtor had a valid recoupment claim in the amount of $1,000.00 against the Mortgagee. How this was to be "applied" to the Mortgagee's claim was, however, left "for the court to decide."
4. The Mortgagee sent certain letters attached to the Stipulation in purported compliance with the pertinent Veterans Administration (VA) Regulations and pertinent Pennsylvania mortgage foreclosure statute, Act 6 of 1974, 41 P.S. § 101, et seq.
5. Since filing the Petition, the Debtor had paid "not less than $3,335.96" to the Mortgagee.
The Debtor states, in her Brief, that the following three (3) questions, paraphrased as follows by us, are "at the heart of this dispute:"
1. What is the value of the interest of the Debtor's estate in the premises in issue? More specifically,...
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