In re Sauber
Decision Date | 07 June 1990 |
Docket Number | Bankruptcy No. 3-90-00383. |
Citation | 115 BR 197 |
Parties | In re Janis M. SAUBER, Debtor. |
Court | U.S. Bankruptcy Court — District of Minnesota |
Kenneth Keate, St. Paul, Minn., for debtor.
J.J. Mickelson, Minneapolis, Minn., Chapter 13 Trustee.
Patrick Hennessy, Minneapolis, Minn., for United Mortg. Corp.
This matter is before the Court on objection by United Mortgage Corporation (UMC) to the Debtor's proposed Chapter 13 plan. The issues were heard on May 10, 1990, and appearances are as noted in the record. The matter was thereupon continued pending receipt of final briefs, which have now been submitted. The Court, having considered the evidence and arguments introduced and submitted, and now being fully advised in the matter, makes this Order pursuant to the federal and local Bankruptcy Rules.
UMC holds a first mortgage on the Debtor's homestead, which had a balance owing at filing in the amount of $61,108.41. Debtor was in default in the total amount of $7,075.44. Market value of the property was approximately $52,000, and UMC holds no other security for the debt.
Debtor proposes the following treatment of UMC under her plan:
The plan is not confirmable because it would modify the rights of UMC beyond the limitations of 11 U.S.C. § 1322(b)(2) and (b)(5).
UMC argues that it is a holder whose rights cannot be modified by a plan except to the limited extent that a plan can provide a reasonable period of time for the Debtor to cure defaults under the mortgage, citing 11 U.S.C. § 1322(b)(2) and (b)(5).1 The Debtor argues that her plan treatment of UMC is consistent with the limitations of § 1322(b)(2) and (b)(5), relying heavily on Hougland v. Lomas & Nettleton Co. (In re Hougland), 886 F.2d 1182 (9th Cir.1989).
The Ninth Circuit Court of Appeals, in Hougland, observed that § 506(a) applies to Chapter 13 proceedings. It then determined that the terms "secured claim" and "unsecured claim" used in § 1322(b)(2) have the same meaning as they are given by § 506(a). From that, with the help of language and sentence structure analysis, the Court concluded that: Id. at 1185.
The Ninth Circuit, in Hougland, takes an overly technocratic approach in both analyzing the language of § 1322(b)(2) and (b)(5), and in relating § 506(a) to it. Although ostensibly undertaken in search of the plain meaning of these statutes, that meaning, and the proper setting of the statutes in the context of the overall scheme of the Code, is as clearly missed as the proverbial forest might be missed in examining the trees. As the Hougland court noted, we are not concerned with the significance of misplaced or omitted commas here, as was the Supreme Court in United States v. Ron Pair Enterprises, 489 U.S. 235, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989).
But what the Hougland court did not seem to appreciate, is that we are dealing with general and specific concepts that are intended to apply to, and govern, the rights of debtors and their creditors in different situations, and with different applications, depending upon particular Code purposes to be served. The application of general concepts is not universal in the scheme of the Code, but is subject to specific limitation, and even total disregard, in some instances. Thus, the general definition of "secured claim" in § 506(a), for instance, has no application to a creditor who has made an election under § 1111(b) in connection with a Chapter 11 case.
That Congress has provided certain home mortgagees with protection against the modification of their rights which might otherwise result through application of § 506(a) in Chapter 13 cases, is a simple and logical conclusion, readily drawn from reading § 1322(b)(2) and (b)(5). And, it is not surprising. The vast majority of Chapter 13 cases are filed by homeowners, and most plans treat mortgage defaults. Section 1322(b)(2) and (b)(5), in a relatively simple and straight-forward manner, protects the home loan industry from perceived adverse consequences that might otherwise result from general application of § 506(a) to it in Chapter 13 cases.
The protection afforded preserves the integrity of the mortgage contract, with the limited exception of allowing a debtor a reasonable period in which to cure defaults. Whether such protection is necessary or appropriate, is a political question. That it has been afforded this class of creditors in Chapter 13 cases, is a judicial conclusion compelled, in this Court's view, by a straight-forward, common-sense reading of § 1322(b)(2) and (b)(5), both standing alone and in the overall context of the Code. The clearly focused concern is with the rights of holders of residential real estate mortgages. By focusing on...
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