In re Knevel, Bankruptcy No. B88-03794.

• Court: United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Northern District of Ohio
• Citation: 100 BR 910
• Docket Number: Bankruptcy No. B88-03794.
• Parties: In re Mark H. KNEVEL and Cynthia Knevel, Debtors.
• Decision Date: 23 June 1989

100 B.R. 910 (1989)

In re Mark H. KNEVEL and Cynthia Knevel, Debtors.

Bankruptcy No. B88-03794.

United States Bankruptcy Court, N.D. Ohio.

June 23, 1989.

Stephen D. Hobt, Strachan, Green, Miller, Olender & Hobt, Cleveland, Ohio, for debtors.

John P. Malone, Jr., Cleveland, Ohio, for objectors.

MEMORANDUM OF DECISION

DAVID F. SNOW, Bankruptcy Judge.

The matters before the Court arise out of an objection to confirmation of the Debtors' Chapter 13 plan filed on behalf of Diane L. Scott-Cool and John W. Cool on January 5, 1989 (the "Objection"). The Debtors' plan came on for confirmation on January 10, 1989. The standing Chapter 13 trustee recommended confirmation conditioned upon the Debtors overcoming the Objection. It soon became apparent, however, that the

100 BR 911

Objection reflected the continuation of prefiling litigation between the parties and could not be ruled upon at that hearing. Therefore we transferred the case to the Court's pre-trial docket

On January 24, 1989 the Debtors filed an objection to the allowance of the Cools' claim and a motion to value the collateral of the Cools. The Cools filed a response to that pleading on January 31. The Court held a preliminary pre-trial conference on February 15. At that conference the parties agreed that there were no disputed issues of fact. The Court authorized the parties to file additional briefs on the issues and took the matter as heard and submitted. The Debtors and the Cools thereafter filed briefs in support of their positions.

The facts on which the parties' pleadings agree or which appear undisputed from the record or statements of counsel are as follows:

1. In June 1980 the Cools, as Seller, and the Debtors, as Purchaser, signed a brokers one-page printed form contract (the "Sales Contract") for the sale and purchase of a home at 6624 Cypress Avenue in North Olmsted, Ohio (the "Property"). One nonstandard provision in the Sales Contract, and the one that has generated the present dispute, is a typewritten statement that "buyer assumes 10% VA Mortgage with Mellon Mortgage and agrees to obtain conventional financing by July 15, 1982" (the obligation to refinance is hereinafter referred to as the "Refinancing Commitment").

2. The sale of the Property was consummated on July 15, 1980 upon the filing of the Cools' deed with the Recorder for Cuyahoga County, Ohio (the "Deed"). The Deed is a statutory Ohio form of deed which under section 5302.04 of the Ohio Revised Code purports to convey to the Debtors the Cools' entire interest in the Property; no mention is made of the Sales Contract or of the Debtors' Refinancing Commitment. However the Deed expressly makes the grant of the Property subject to

"restrictions of record taxes and assessments for the first half 1980 and thereafter and a first mortgage to Mellon National Mortgage Co. of Ohio recorded in Volume 15341 P 863, assigned to Manhattan Savings Bank in Volume 1264 P 679 of Cuyahoga County Records, with an approximate balance of $79,490.00 which the grantees herein assume and agree to pay."

3. The Debtors did not refinance the Property and the Property continues subject to the mortgage described in the Deed (the "Mortgage"). The Debtors' failure to refinance apparently led the Cools to file a complaint for fraud, breach of contract and equitable relief in the Court of Common Pleas of Cuyahoga County, Ohio (the "Complaint") prior to the commencement of this case. In the Complaint the Cools allege not only that they continue to be personally liable under the debt secured by the Mortgage, a conclusion which has not been disputed, but that they have incurred attorneys fees, real estate fees and title fees and have suffered other monetary damages and lost opportunities, all in unspecified amounts. It appears doubtful from their pleadings that the Cools believe that these incidental or additional damages are secured. But their pleadings are too diffuse to rule out that possibility.

4. Debtors assert that the Property has a value of $90,000 and that the unpaid balance of the mortgage is only $74,000. The Debtors also assert that the Property is encumbered by a lien in favor of the Internal Revenue Service in the amount of nearly $59,000, which would have priority over any interest in the Property claimed by the Cools. Although the Cools do not appear to take issue with Debtors' valuation of the Property or the balance of the Mortgage, they have not on...