In re Smith
| Decision Date | 19 January 2012 |
| Docket Number | No. 10–14703 ELF.,10–14703 ELF. |
| Citation | 463 B.R. 756 |
| Parties | In re Raymond E. SMITH, Debtor. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
OPINION TEXT STARTS HERE
Devon E. Sanders, Community Legal Services, Inc., Philadelphia, PA, for Debtor.
The confirmed chapter 13 plan of Debtor Raymond E. Smith (“the Debtor”) provides, inter alia, that the Debtor will procure a “reverse mortgage” on his residential real property and use the proceeds to pay off the existing mortgage on the property held by M & T Bank (“M & T”).
Before the court is the Debtor's objection (the “Objection”) to M & T's amended proof of claim, which is in the amount of $32,053.58. The Debtor bases his objection primarily on the ground that the claim improperly includes charges assessed after the entry of a pre-petition state court judgment in foreclosure. The Debtor also disputes the calculation of interest and the propriety of various legal expenses included in the claim. He asserts that the allowed claim should be only $24,987.81.
For the reasons set forth below, I conclude that the Objection is largely without merit. I find that M & T's claim should be allowed in the amount of $30,351.55, which includes post-petition interest through the date of confirmation of the Debtor's chapter 13 plan.
The Debtor commenced this chapter 13 bankruptcy case on June 7, 2010. The Debtor's confirmed chapter 13 plan provides, as the “primary option” for treatment of the secured claim on his residence, as follows:
The Debtor proposes to pay the allowed secured claims in full, by obtaining a home equity conversion mortgage (reverse mortgage) by application filed on or before his 62nd birthday on August 18, 2011. Debtor believes that his primary residence, 6246 N. Camac Street, Philadelphia, PA is of sufficient value to pay the claims even with any interest accruing.
(Debtor's Chapter 13 Plan ¶ 5) (Doc. # 18).
Dovenmuehle Mortgage, Inc. (“Dovenmuehle”) filed a secured proof of claim in the amount of $30,758.37. On May 11, 2011, Dovenmuehle's assignee, M & T, filed an amended proof of claim in the amount of $32,053.58 (“the Amended Proof of Claim”). On May 24, 2011, the Debtor filed the Objection to the Amended Proof of Claim. (Doc. # 50). M & T responded to the Objection on June 28, 2011. (Doc. # 56). On July 12, 2011, a hearing on the Objection was held and concluded. Both parties filed post-hearing memoranda in support of their positions, the last of which was filed on August 9, 2011. (Doc. # 's 68, 70).
Neither party presented any witnesses at the hearing in this contested matter. Without objection, the Debtor introduced three (3) documents and M & T introduced two (2) documents into evidence. In addition to the documentary evidence, I have considered certain factual representations in the parties' post-hearing memoranda, but only to the extent that it is clear that the facts are not in dispute. I have also taken judicial notice of the court docket in Dovenmuehle Mortgage, Inc. v. Smith, March Term 2009, No. 1503 (C.P. Phila.). See, e.g., In re Soto, 221 B.R. 343, 347 (Bankr.E.D.Pa.1998) ().
Based on this record, I make the following findings:
the note and mortgage
1. The Debtor is the owner of the residential real property located at 6246 N. Camac Street, Philadelphia, PA (“the Property”). (Ex. D–1).1
2. On June 3, 1994, the Debtor executed a note (“the Note”) in the amount of $44,000.00 payable to GMAC Mortgage Corporation of PA (“GMAC”). ( Id.).
3. The Note provides for:
a. interest to accrue on the principal at a yearly rate of 7.375%;
b. the indebtedness to be repaid in monthly instalments of $404.77; and
c. the Note to mature on July 1, 2009.
( Id.).
4. The Note was secured by a mortgage on the Property (“the Mortgage”). ( Id.).2
5. On or about January 17, 1995, GMAC assigned the Note to Dovenmuehle Mortgage Inc. (“Dovenmuehle”). ( Id.).
the foreclosure action
6. On March 10, 2009, Dovenmuehle instituted an action in mortgage foreclosure against the Debtor in the Pennsylvania Court of Common Pleas, Philadelphia County (“the CP Court”), docketed as Dovenmuehle Mortgage, Inc. v. Smith, March Term 2009, No. 1503 (“the Foreclosure Action”).
7. On April 6, 2009, the Debtor filed an Answer to Dovenmuehle's Complaint in the Foreclosure Action.
8. By Order dated June 23, 2009 (“the CP Judgment”), the CP Court granted Dovenmuehle's motion for summary judgment.
9. The CP Judgment provides, in pertinent part:
judgment, in rem, shall be entered in favor of the Plaintiff and against Raymond Smith in the amount of $23,573.41 (as calculated from the Complaint), together with ongoing per diem interest, escrow advances, and any additional recoverable costs to date of Sheriff's Sale; and for foreclosure and sale of the mortgaged property.
(Ex. M & T–2) (underline in original, bold and italics added).
10. Following the entry of judgment, Dovenmuehle filed a writ of execution and scheduled a sheriff's sale of the Property.
11. On motion of the Debtor, the CP Court postponed the sheriff's sale scheduled in November 2009 until December 1, 2009.
12. On November 30, 2009, the CP Court denied the Debtor's motion to strike the CP Judgment and to cancel or stay the sheriff's sale scheduled the next day.
13. On December 1, 2009, Dovenmuehle and the Debtor entered into a “Consent Agreement to Postpone Sheriff's Sale of December 1, 2009” (“the Consent Agreement”). (Ex. M & T–1).
14. The Consent Agreement provides, inter alia, for:
a. the “confirm[ation]” of the $23,573.41 judgment arising from the CP Judgment dated June 23, 2009, “along with additional ongoing per diem interest, ongoing escrow advances (taxes and insurance) and any additional recoverable costs per the Mortgage, to the date of Sheriff's sale;” and
b. the Debtor's waiver of any right to postpone or stay the March 10, 2010 sheriff's sale or any other Sheriff's sale.
( .
15. On Dovenmuehle's request, the CP Court postponed the March 2010 sheriff's sale to June 1, 2010.
16. On April 20, 2010, Dovenmuehle filed a motion to reassess damages in the Foreclosure Action, to which the Debtor responded on May 18, 2010.
17. The CP Court scheduled a hearing on the Motion to Reassess Damages for June 17, 2010.
18. For reasons not explained in the record, no sheriff's sale of the Property took place on June 1,2010.
the bankruptcy filing
19. On June 7, 2010, the Debtor commenced this bankruptcy case.3
20. On August 30, 2010, Dovenmuehle filed a secured proof of claim in the amount of $30,758.37 (“the Proof of Claim”). (Ex. D–1).
21. On March 25, 2011, M & T filed a Notice of Transfer of Claim pursuant to Fed. R. Bankr.P. 3001(e)(2), identifying M & T as the current holder of the Proof of Claim. (Doc. # 45).
22. On May 11, 2011, M & T filed the Amended Proof of Claim in the amount of $32,053.58. (Ex. D–2).
23. The Amended Proof of Claim itemizes the claim as follows:
+------------------------------------------------------------------------+
¦principal ¦$11,392.23 ¦
+----------------------------------------------------+-------------------¦
¦interest through 6/7/2010 @ 7.35% 4 ¦2,951.95 5 ¦
+----------------------------------------------------+-------------------¦
¦interest on unpaid principal over 36 month plan term¦1,341.50 ¦
+----------------------------------------------------+-------------------¦
¦late charges ¦404.46 ¦
+----------------------------------------------------+-------------------¦
¦escrow advances ¦8,402.44 ¦
+----------------------------------------------------+-------------------¦
¦foreclosure legal fees ¦4,180.00 ¦
+----------------------------------------------------+-------------------¦
¦foreclosure costs ¦3,031.50 ¦
+----------------------------------------------------+-------------------¦
¦property inspection costs ¦349.50 ¦
+----------------------------------------------------+-------------------¦
¦Total ¦$32,053.58 6 ¦
+------------------------------------------------------------------------+
24. On July 12, 2011, this court confirmed the Debtor's chapter 13 plan (“the Confirmed Plan”). (Doc. # 61).
25. The Confirmed Plan provides for the Debtor to pay M & T's allowed secured claim in full “by obtaining a home equity conversion mortgage (reverse mortgage) by application filed on or before his 62nd birthday on August 18, 2011.” (Confirmed Plan ¶ 5) (Doc. # 18).
26. In its Memorandum of Law following the hearing on the Objection, M & T revised its payment demand, effectively further amending the Amended Proof of Claim and itemizing its claim as follows:
+-----------------------------------------------------------------------------+
¦judgment in the Foreclosure Action ¦$23,573.41 ¦
+-------------------------------------------------------+---------------------¦
¦interest to the date of the bankruptcy filing @ 7.35% ¦891.74 8 ¦
¦7 ¦ ¦
+-------------------------------------------------------+---------------------¦
¦sheriff's costs ¦1,500.00 ¦
+-------------------------------------------------------+---------------------¦
¦affidavit of service per Pa. R. Civ. P. 3129.1 ¦58.38 ¦
+-------------------------------------------------------+---------------------¦
¦service of notice ¦65.00 ¦...To continue reading
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