In re Rangel

• Decision Date: 29 May 2009
• Docket Number: No. 08-33200-H4-13.,No. 07-37452-H4-13.,No. 07-38242-H4-13.,No. 08-32404-H4-13.,07-37452-H4-13.,07-38242-H4-13.,08-32404-H4-13.,08-33200-H4-13.
• Citation: 408 B.R. 650
• Parties: In re Josephine RANGEL, Maria E. Meza, Charles D. Gilbreath and Kristin B. Gilbreath, and Lawrence David Velazquez and Tracy Louise Velazquez, Debtors.
• Court: U.S. Bankruptcy Court — Southern District of Texas

408 B.R. 650 In re Josephine RANGEL, Maria E. Meza, Charles D. Gilbreath and Kristin B. Gilbreath, and Lawrence David Velazquez and Tracy Louise Velazquez, Debtors. No. 07-37452-H4-13. No. 07-38242-H4-13. No. 08-32404-H4-13. No. 08-33200-H4-13. United States Bankruptcy Court, S.D. Texas, Houston Division. May 29, 2009.

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Eloise A. Guzman, Guzman Law Firm, Michael Glen Walker, Walker Patterson P.C., Houston, TX, for Debtors.

MEMORANDUM OPINION REGARDING APPLICATIONS FOR APPROVAL OF FEES UNDER FIXED FEE AGREEMENT

JEFF BOHM, Bankruptcy Judge.

I. INTRODUCTION

Two home lenders and one servicing company have filed fee applications in the four above-referenced Chapter 13 cases in order to recover attorneys' fees that these entities paid or promised to pay Barrett, Daffin, Frappier, Turner & Engel, LLP (Barrett Daffin) for its legal services in those cases.

A home lender's ability to collect fees and costs from a Chapter 13 debtor's bankruptcy estate is governed, in the first instance, by the language of its loan documents. This memorandum opinion therefore concerns the importance of drafting loan documents and home mortgage contracts¹ in a clear and deliberate manner and the consequences of failing to do so.

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Set forth below are this Court's findings of fact and conclusions of law in the abovereferenced matters. To the extent that a finding of fact is construed as a conclusion of law, it is adopted as such. To the extent that a conclusion of law is construed as a finding of fact, it is adopted as such. The Court reserves the right to make additional findings of fact and conclusions of law as it deems necessary or appropriate.

II. FINDINGS OF FACT

A. The Rangel Case

1. On November 2, 2007, Josephine Rangel (Rangel) filed a voluntary Chapter 13 petition, initiating case number 07-37452 (the Rangel case). [Case No. 07-37452, Docket No. 1.]

2. The last day for non-government creditors to file a proof of claim in the Rangel case was March 20, 2008. See [Case No. 07-37452, Docket No. 14.]

3. On March 20, 2008, Countrywide Home Loans, Inc. (Countrywide) filed a proof of claim in the Rangel case for $55,664.90. Countrywide's claim consists of the balance Rangel owes on her note, including $12,412.03 in arrearages that Rangel owed on the date she filed her petition. Countrywide attached the following documents in support of its proof of claim in the Rangel case: the deed of trust securing the note; an assignment of the note from Sterling Capital Mortgage Company, the original note holder, to Countrywide; a loan modification agreement between Rangel and Countrywide; and a number of invoices reflecting various professional fees and expenses incurred by counsel for Countrywide, Barrett Daffin, in connection with the Rangel case. The note itself is not attached to Countrywide's proof of claim.

4. The deed of trust contains the following language under the heading "Charges to Borrower and Protection of Lender's Rights in the Property":

If Borrower fails to make these payments or the payments described in paragraph 2, or fails to perform any other covenants and agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect Lender's rights in the property (such as a proceeding in bankruptcy, for condemnation or to enforce laws or regulations), then Lender may do and pay whatever is necessary to protect the value of the Property and Lender's rights in the Property, including payment of taxes, hazard insurance and other items mentioned in paragraph 2.

Any amounts disbursed by Lender under this paragraph shall become an additional debt of Borrower and be secured by this Security Instrument.

The deed of trust also provides that "Lender may collect fees and charges authorized by the Secretary."²

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5. On December 15, 2008, Countrywide filed an Application for Approval of Fees Under Fixed Fee Agreement. [Case No. 07-37452, Docket No. 45.] The application sets forth that Countrywide has paid or promised to pay Barrett Daffin a fixed fee of $200.00 for preparing and filing proofs of claim and $150.00 for preparing and prosecuting fee applications. Attached to the application is a list of the services performed by Barrett Daffin in connection with the Rangel case, the hours expended on each, and the hourly rate of each employee that performed the services. Countrywide seeks a total of $350.00 in connection with Barrett Daffin's services in the Rangel case.

6. On December 18, 2008, Rangel filed Debtor's Response to Application for Approval of Fees Under Fixed Fee Agreement, in which she requests that Countrywide's fee application be denied. [Case No. 07-37452, Docket No. 46.]

B. The Meza Case

1. On December 2, 2007, Maria E. Meza (Meza) filed a voluntary Chapter 13 petition, initiating case number 07-38242 (the Meza case). [Case No. 07-38242, Docket No. 1.]

2. The last day for non-government creditors to file a proof of claim in the Meza case was April 10, 2008. See [Case No. 07-38242, Docket No. 12.]

3. On April 15, 2008, America's Servicing Company (ASC), a division of Wells Fargo Home Mortgage, filed a proof of claim in the Meza case for $110,362.89.³ Countrywide's claim consists of the balance Meza owes on her home mortgage note, including $9,695.79 in arrearages that Meza owed on the date she filed her petition. ASC attached the following documents in support of its proof of claim in the Meza case: the note; the deed of trust securing the note; an assignment of the note from Mortgages First Real Estate Services, Ltd., the original note holder, to U.S. Bank National Association;⁴ and a number of invoices reflecting various professional fees and expenses incurred by counsel for ASC, Barrett Daffin, in connection with the Meza case.

4. The note contains the following language under the heading "Borrower's Failure to Pay as Required":

If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount of

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Principal that has not been paid and all the interest that I owe on that amount. That date must be at least 30 days after the date on which the notice is mailed to me or delivered by other means.

. . . .

If the Note Holder has required me to pay immediately in full as described above, the Note Holder will have the right to be paid back by me for all of its costs and expenses in enforcing this Note to the extent not prohibited by applicable law. Those expenses include, for example, reasonable attorneys' fees.

5. The deed of trust contains the following language under the heading "Protection of Lender's Interest in the Property and Rights Under this Security Instrument":

If (a) Borrower fails to perform the covenants and agreements contained in this Security Instrument, (b) there is a legal proceeding that might significantly affect Lender's interest in the Property and/or rights under this Security Instrument (such as a proceeding in bankruptcy, probate, for condemnation or forfeiture, for enforcement of a lien which may attain priority over this Security Instrument or to enforce laws or regulations), or (c) Borrower has abandoned the Property, then Lender may do and pay whatever is reasonable or appropriate to protect Lender's interest in the Property and rights under this Security Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing the Property. Lender's actions can include, but are not limited to: (a) paying any sums secured by a lien which has priority over this Security Instrument; (b) appearing in court; and (c) paying reasonable attorneys' fees to protect its interest in the Property and/or rights under this Security Instrument, including its secured position in a bankruptcy proceeding.

. . . .

Any amounts disbursed by Lender under this section 9 shall become additional debt of Borrower secured by this Security Instrument. These amounts shall bear interest at the Note rate from the date of disbursement and shall be payable, with such interest, upon notice from Lender to Borrower requesting payment.

The deed of trust also provides that "Lender may collect fees and charges authorized by the Secretary."⁵

6. The deed of trust contains the following language under the heading "Loan Charges":

Lender may charge Borrower fees for services performed in connection with Borrower's default, for the purpose of protecting Lender's interest in the Property and rights under this Security Instrument, including, but not limited to, attorneys' fees, property inspection and valuation fees. In regard to any other fees, the absence of express authority in this Security Instrument to charge a specific fee to Borrower shall not be construed as a prohibition on the charging of such fee. Lender may not charge

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fees that are expressly prohibited by this Security Instrument or by Applicable Law.

7. On December 1, 2008, ASC filed an Application for Approval of Fees Under Fixed Fee Agreement. [Case No. 07-38242, Docket No. 45.] The application sets forth that ASC has paid or promised to pay Barrett Daffin a fixed fee of $250.00 for preparing and filing proofs of claim and $150.00 for preparing and prosecuting fee applications. Attached to the application is a list of the services performed by Barrett Daffin in connection with the Meza case, the hours expended on each, and the hourly rate of each employee that performed the services. ASC seeks a total of $400.00 in connection with Barrett Daffin's services in the Meza case.

8. On December 18, 2008, Meza filed Debtor's Response to Application for Approval of Fees Under Fixed Fee Agreement, in which she requests that ASC's fee application be denied. [Case No....