In re Pak
| Decision Date | 03 July 2000 |
| Docket Number | No. 99-06042-3F3.,99-06042-3F3. |
| Parties | In re Song K. PAK, Debtor. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Middle District of Florida |
Edward P. Jackson, Jacksonville, FL, for Debtor.
Edward K. Cottrell, Roger K. Gannam, Jacksonville, FL, for Creditors.
Mamie L. Davis, Jacksonville, FL, trustee.
ORDER OVERRULING CREDITOR FIRST UNION NATIONAL BANK'S OBJECTION TO CONFIRMATION OF AMENDED CHAPTER 13 PLAN
This Case is before the Court upon Creditor First Union National Bank's Objection to Confirmation of Amended Chapter 13 Plan filed on April 4, 2000. (Doc. 25) The Court heard argument on this Objection at a Confirmation Hearing on May 30, 2000. At this hearing, the Court found that Debtor's Amended Proposed Plan should be confirmed, but that the Plan should provide First Union National Bank ("Creditor") reasonable attorneys' fees and costs as part of its secured claim. The Court requested that Creditor file an amended affidavit of attorneys' fees and costs, which included a project-billing statement, so that the Court may determine reasonable attorneys' fees and costs in this case. Creditor filed its Amended Affidavit of Attorneys' Fees and Costs on June 5, 2000. (Doc. 29) Song K. Pak ("Debtor") filed a Response to Affidavit of Attorney's Fees and Costs on June 14, 2000. (Doc. 31) Upon the presentation of counsel and in accordance with statements made orally on the record, the Court makes the following Findings of Fact and Conclusions of Law.
On March 26, 1999 Debtor and Chong Cha Pak ("Debtor's wife") issued a Promissory Note in favor of Creditor in the amount of $450,000.00. A Mortgage and Security Agreement on commercial real property owned by Debtor and Debtor's wife secure this note. The Mortgage states that the "institution of any voluntary bankruptcy" shall constitute default of the Mortgage.1 The Promissory Note also provides that bankruptcy shall constitute default of the note. The Note provides that:
Borrower Debtor shall pay all of Bank\'s reasonable expenses incurred to enforce or collect any of the Obligations, including, without limitation, reasonable arbitration, paralegals\', attorneys\' and experts\' fees and expenses, whether incurred without the commencement of a suit, in any trial, arbitration, or administrative proceeding, or in any appellate or bankruptcy proceeding.
(emphasis added).
On April 1, 1999 Debtor and Debtor's wife consolidated the March 26, 1999 Promissory Note with an April 1, 1999 Promissory Note for a total indebtedness of $450,000.00. Debtor, Debtor's wife, and Creditor simultaneously entered a Modification of Mortgage.
On August 6, 1999 Debtor filed a voluntary petition under Chapter 13 of the Bankruptcy Code. Debtor lists the real property securing the mortgage as having a value of $490,888.00 and Creditor's secured claim in the amount of $445,569.82. The Mortgage was current at the time of Debtor's filing but due to local practice the Mortgage was included in Debtor's Plan. On August 19, 1999 Debtor filed a proposed Chapter 13 Plan providing that:
FIRST UNION NATIONAL BANK holds a mortgage on the Debtor\'s real property. The Trustee shall make the regular monthly mortgage payment of $4,332.03 per month for sixty months. The Debtor is current on this mortgage. Because the Debtor filed this bankruptcy on August 6, 1999, the first regular monthly payment due after completion of this Plan shall be the August, 2002 payment.
The proposed Plan additionally provides that On January 11, 2000 Debtor filed an Amended Chapter 13 Plan reducing the term of the Plan to thirty-six months.
On December 16, 1999 Creditor filed a Proof of Claim for a secured claim in the amount of $454,527.29 and attached documentation supporting its claim. Included in these documents was a balance sheet noting the following:
Borrower: Song K. Pak
Original Loan Balance $450,000.00
Last Payments Received 8/26/99 $4,332.03
Loan Balance as of 12/07/99 $442,936.32
Accrued Interest as of 12/07/99 10,138.33
Late Charges 433.20
Attorneys' Fees 954.00
Costs 65.44
TOTAL $454,527.29
Interest continues to accrue at
$98.43 per diem
Attorneys' fees and other costs
continue to accrue
On December 22, 1999 Creditor filed an Agreed Motion for Adequate Protection with Debtor's consent attached. On December 28, 1999 the Court granted Creditor adequate protection and ordered that the Chapter 13 Trustee pay Creditor $4,332.03 per month from Debtor's interim Chapter 13 payments nunc pro tunc from September 1999.
On April 4, 2000 Creditor filed an Objection to Confirmation of Amended Chapter 13 Plan with an Affidavit of Attorneys' Fees and Costs. This Affidavit stated that Creditor incurred costs of $70.44 and attorneys' fees of $5,199.50. Creditor's Objection is based on Debtor's failure to address obligations under the Note and Mortgage. Creditor claims that Debtor's proposed Amended Chapter 13 Plan fails to meet the requirements of 11 U.S.C. § 1325 and therefore cannot be confirmed. On May 30, 2000 the Court conducted a Confirmation Hearing. Debtor testified that he incurred large gambling losses that forced him to seek bankruptcy protection.
On June 5, 2000 Creditor filed an Amended Affidavit of Attorneys' Fees and Costs reflecting total attorneys' fees of $6,948.00 and total costs of $128.19 incurred by Creditor in this bankruptcy case.2 Included in Creditor's Affidavit was the following billing statement:
TIME ENTRY SUMMARY TIME FEES
Initial review and analysis of First
Union loan documents and file 1.3 $188.50
Review of Bankruptcy court file (.4)
debtor's schedules and chapter 13
plan (.7), on-line docket (.2), court
orders (.1), notices (.1). 1.5 217.50
Preparation of Notice of Appearance .2 29.00
Preparation of Proof of Claim 1.0 145.00
Preparation of Motion for Adequate
Protection
- Drafting and general research 5.8 841.00
- Research regarding procedures
for obtaining distributions of payments
made prior to filing motion. 1.2 174.00
Preparation of Order Granting Motion
for Adequate Protection 3.8 551.00
Chapter 13 Plan Issues
- Review Amended Chapter 13 Plan .6 87.00
- Research re Plan provisions
(RKG) 1.4 175.00
- Research re recovery of attorneys
fees (RKG) .6 75.00
- Identify, research and analyze issues
and objections concerning
proposed Chapter 13 plan
EKC 2.9 420.50
RKG .7 87.50
- Prepare First Union's Objection
to Confirmation Amended Chapter
13 Plan and supporting exhibits
EKC 2.3 333.50
RKG 10.2 1,275.00
- Prepare proposed alternative plan
provisions 1.2 174.00
- Prepare for Confirmation Hearing
scheduled for April 4, 2000 2.8 406.00
- Attend Confirmation Hearing
4/4/00 1.2 174.00
- Prepare for Confirmation Hearing
scheduled for May 25, 2000 2.7 391.50
- Attend Confirmation Hearing
5/30/00 1.0 145.00
Communications with Trustee's Office
regarding
- Consent for Adequate Protection
Motion and Order .7 101.50
- Interim Payment disbursements .9 130.50
Communications with Debtor's Counsel
regarding
- Adequate Protection .6 87.00
- Proof of Insurance .4 58.00
- Objections to Amended Chapter
13 Plan 1.3 188.50
Communications with Bankruptcy
court office or clerk's office .3 43.50
Communications with Client
(D.Gause) regarding loan documents
case issues and strategy, payment
updates, etc. 3.1 449.50
TOTAL 49.8 $6,948.00
Debtor filed a Response to Affidavit of Attorney's Fees and Costs on June 14, 2000 claiming that the fees sought by Creditor are extremely excessive and should be disallowed.
To qualify for confirmation under Chapter 13, Debtor must satisfy the requirements set forth in § 1325(a) of the Code. Debtor's treatment of Creditor's secured claim, in particular, is governed by subsection (a)(5).3 Under § 1325(a)(5), a plan's proposed treatment of secured claims can be confirmed if one of three conditions is satisfied: The secured creditor accepts the plan; the debtor surrenders the property securing the claim to the creditor; or the debtor invokes the so-called "cram down" power. See Associates Commercial Corp. v. Rash, 520 U.S. 953, 956-57, 117 S.Ct. 1879, 138 L.Ed.2d 148 (1997).
Under the cram down option, debtors are permitted to keep property over the objection of secured creditors; the creditors retain the lien securing the claim and debtors are required to provide creditors with payments, over the life of the plan, that will total the present value of the allowed secured claim, i.e., the present value of the collateral. Id. The value of the allowed secured claim is governed by § 506(a) and inclusion of reasonable fees and costs is governed by § 506(b).
Debtor satisfies § 1325(a)(5) in that Debtor's Plan provides for full payment to Creditor, Creditor's secured lien...
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