In re Jordan
| Decision Date | 27 March 2009 |
| Docket Number | Bankruptcy No. 07-25082-TPA.,Adversary No. 07-2561-TPA. |
| Citation | 403 B.R. 339 |
| Parties | In re Harrison F. JORDAN and Bonnie S. Jordan, Debtors. Harrison F. Jordan and Bonnie S. Jordan, Plaintiffs. v. Greentree Consumer Discount Company and Beneficial Consumer Discount Company, Defendants. |
| Court | U.S. Bankruptcy Court — Western District of Pennsylvania |
Daniel R. White, Esq., Uniontown, PA, for the Plaintiffs.
Edward F. Voelker, Jr., Esq., Pittsburgh, PA, for Greentree Consumer Discount Company.
The Chapter 13 Debtors, Harrison F. Jordan and his wife, Bonnie S. Jordan, ("Jordans") own and reside in a mobile home currently located on real property also owned by them. Defendant Greentree Consumer Discount Company ("Greentree") has a first mortgage lien on the Jordans' real estate and a security interest in the mobile home. The Jordans have filed a Complaint seeking to modify the rights of Greentree pursuant to 11 U.S.C. § 506(d). Greentree answers that its rights are protected pursuant to 11 U.S.C. § 1322(b)(2) which prevents Chapter 13 debtors from modifying the rights of holders of secured claims that are secured "only by a security interest in real property that is the debtor's principal residence." The pleadings are closed and the Parties have filed cross-motions for summary judgment. The legal issues have been extensively briefed by the Parties and, aside from the notable exception of a dispute as to the value of the combined real estate parcel/mobile home,1 there are no material factual disputes. For the reasons that follow, the Court will deny both of the motions for summary judgment. However, pursuant to Fed.R.Civ.P. 56(d), incorporated pursuant to Fed.R.Bankr.P. 7056, the Court will enter an Order determining that Section 1322(b)(2) does not protect the Greentree claim from modification.2
On August 13, 2007, the Jordans filed their voluntary Chapter 13 bankruptcy Petition. They are the owners, as tenants by the entireties, of a parcel of real estate located at 315 Smithfield Highhouse Road, Smithfield Pa. ("the Smithfield Property") on which has been placed a 2001 Suncraft doublewide mobile home ("the Mobile Home") used as their principal residence. Schedules accompanying the Petition list the Smithfield Property with a market value of $20,000 and the Mobile Home with a value of $6,000. The Petition further identifies a claim by Greentree in the amount of $79,288.56 secured by a lien on the title to the Mobile Home and a first mortgage on the Smithfield Property. After deducting for unpaid property taxes of $1,115, Greentree's claim is therefore shown on the Petition as $24,885 secured and $54,403.56 unsecured.
On August 29, 2007, Greentree filed a Proof of Claim that alleged its claim to be fully secured in the same amount of $79,288.56 and included copies of the documents that created the Jordans' obligation to Greentree. See Proof of Claim 2-1. The other named defendant, Beneficial Consumer Discount Company ("Beneficial"), was identified in the Petition as holding a wholly unsecured claim of $11,000 with a second mortgage on the Smithfield Property.3 Prior to the filing of the within bankruptcy, Greentree had initiated both a foreclosure action and a replevin action against the Jordans.
On September 7, 2007, the Jordans filed their proposed Chapter 13 Plan, Document No. 13, which, consistent with the Petition, alleged a downward modified secured claim for Greetree in the amount of $24,885, with the balance of the Greentree claim to be treated as unsecured. On September 21, 2007, Greentree filed an Objection to Confirmation of Debtors' Chapter 13 Plan ("Objection"), Document No. 25, which alleged that the Jordans had greatly understated the value of the Smithfield Property and the Mobile Home and contended that the Jordans were precluded from modifying the terms of the Greentree security interest and mortgage because they cover and involve the Jordans' principal residence.4 On October 31, 2007, the Court confirmed the plan on an interim basis, while directing the Jordans to file an adversary proceeding to determine the extent and validity of the Greentree and Beneficial liens, and in the meantime, to pay Greentree $802.97 per month as adequate protection.
As they were directed, on November 12, 2007, the Jordans then filed the present Adversary Proceeding against Greentree and Beneficial titled as a Complaint to Determine Secured Status ("Complaint"). The Complaint asks the Court to find under Section 506(d) of the Bankruptcy Code that: (1) the Smithfield Property and the Mobile Home have a combined value of $26,000, subject to unpaid real estate taxes of $1,115; (2) "Greentree's mortgage is secured for $24,885 and unsecured for the balance of its claim;" and, (3) Beneficial's claim is wholly unsecured.5 The Complaint further alleges that the Mobile Home is not permanently affixed to the Smithfield Property, maintains its original title status, i.e., as a "motor vehicle," issued by the Commonwealth of Pennsylvania and constitutes personal property. On November 26, 2007, Greentree filed its Answer to Complaint to Determine Secured Status ("Answer") challenging the valuation of the Smithfield Property and the Mobile Home and arguing that the Jordans are precluded from modifying the terms of the security agreement and mortgage, or "cramming down" the Greentree lien, because they are entered and filed against the Jordans' principal residence, only.
Aside from the disputed valuation, the underlying, basic facts needed to decide this case are not complicated and not disputed. The Jordans bought the approximately one-acre Smithfield Property for $25,000 on September 30, 1999. A house was located on the Smithfield Property when the Jordans purchased the real estate but they later removed it. Thereafter, the Jordans decided to buy a mobile home and made financing arrangements with Conseco Finance Consumer Discount Company ("Conseco"), the predecessor in interest to Greentree. Pursuant to that arrangement, on August 23, 2000, the Jordans signed both a Note and a Mortgage, for a loan amount of $74,508.47.
The Mortgage indicates it is intended to encumber the "Smithfield Property." Additionally, the following language appears in the Mortgage form:
a security interest in that certain 2001, 76 × 28 SUNCREST mobile home, serial number: ORDERED UNIT.
The Note contains the following provision:
xx SECURITY: This note is separately secured by (describe separate documents by type and date): A Mortgage/Deed of Trust dated today on the real property located at: BOX 315 HIGHHOUSE RD, SMITHFIELD, PA 15478
This loan is also secured by a 1st lien on the following: 2001 FLEETWOOD HOMES SUNCRESTSER # ORDERED UNIT6
The Jordans did not actually acquire possession of the contemplated mobile home and place it on the Smithfield Property until several months after these documents were executed. The Certificate of Title for the Mobile Home displays a "date of issue" as "November 2, 2000," identifying the Mobile Home as a "2001 SUNCRAFT" with a vehicle identification number of PAFLY22AB48153SC13, a Pennsylvania title number of 55367634101, and a first lien in favor of Conseco. The Certificate of Title has not been surrendered to the Pennsylvania Department of Transportation.
When the Mobile Home was delivered to the Smithfield Property, the wheels and axles were removed and it was placed on blocks. All agree that since its placement on the Smithfield Property the Mobile Home has served as the principal residence of the Jordans. The Fayette County Board of Assessment has classified the Mobile Home as "real property" and assessed it at $7,200. The Smithfield Property has been assessed with a value of $19,400, for a total county assessment of $26,600.
For purposes of resolving a summary judgment motion, Fed.R.Civ.P. 56 is made applicable to adversary proceedings through Fed.R.Bankr.P. 7056. Summary judgment is appropriate if the pleadings, depositions, supporting affidavits, answers to interrogatories and admissions that are part of the record demonstrate that there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R. Civ.P. 56(c), Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is appropriate if no material factual issue exists and the only issue before the court is a legal issue. EarthData Int'l of N.C., L.L.C. v. STV, Inc., 159 F.Supp.2d 844 (E.D.Pa.2001); In re Air Nail Co., 329 B.R. 512 (Bankr. W.D.Pa.2005). The test under Fed.R. Civ.P. 56 is "whether the moving party is entitled to judgment as a matter of law." Med. Protective Co. v. Watkins, 198 F.3d 100, 103 (3d Cir.1999) (quoting Armbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir.1994)). The standard for summary judgment does not change when the parties file cross-motions. Reilly Foam Corp. v. Rubbermaid Corp., 206 F.Supp.2d 643, 649 (E.D.Pa.2002).
As noted, a material dispute of fact exists in this case as to the value of the combined property at issue requiring denial of summary judgment. However, Rule 56 does not require the Court to only grant relief that is dispositive of the full matter in controversy. Rule 56 specifically contemplates that a party moving for summary judgment may do so with respect to "all or part of the claim." Fed.R.Civ.P. 56(a). Furthermore, Rule 56 permits the Court to make rulings that, while short of entering a judgment on the entire case, nevertheless "shape" the litigation by disposing of legal issues or legal theories relevant to a claim. See 11-56 Moore's Federal Practice-Civil § 56.40[2] (2009). Although such shaping orders are sometimes referred to as "partial summary judgment" by both courts and parties, that term is not strictly accurate since no actual judgment is...
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