In re Stewart

• Decision Date: 15 March 2000
• Docket Number: No. 96-2465-3P3.,96-2465-3P3.
• Parties: In re: Eunice Elizabeth STEWART, Debtor.
• Court: United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Middle District of Florida

247 B.R. 515 (2000)

In re: Eunice Elizabeth STEWART, Debtor.

No. 96-2465-3P3.

United States Bankruptcy Court, M.D. Florida, Jacksonville Division.

March 15, 2000.

COPYRIGHT MATERIAL OMITTED

Grace E. Robson, Miami, FL, for EMC Mortgage Corporation.

David J. Pinkston, Jacksonville, FL, for Eunice Elizabeth Stewart.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

GEORGE L. PROCTOR, Chief Judge.

This case came before the Court upon EMC Mortgage Corporation's ("EMC") Motion for Relief from Order Confirming Chapter 13 Plan and for Allowance of Amended Proof of Claim and upon EMC's Motion to Determine Pre-Petition Arrearage, to Compel Debtor to Modify Chapter 13 Plan, and for Sanctions Against David J. Pinkston ("Debtor's Attorney"). The Court held a hearing on November 23, 1999. In lieu of oral closing argument, the Court directed the parties to submit proposed briefs and proposed findings of fact and conclusions of law. Upon the evidence presented, the Court makes the following Findings of Fact and Conclusions of Law.

FINDINGS OF FACT

1. On October 16, 1995 First Union Mortgage Company ("First Union"), holder of a note and mortgage secured by Debtor's residence, obtained a Final Summary Judgment of Foreclosure in Duval County Circuit Court. (EMC. Ex. 1.) Toni L. Kemmerle and Tammy N. Giroux ("Attorneys for First Union" collectively) represented First Union in the foreclosure case.

2. On December 18, 1995 First Union transferred its interest in the mortgage to UMLIC-EIGHT Corporation ("UMLIC") by assignment of mortgage.

3. On January 9, 1996 UMLIC sent a letter to J.W. Stewart, Debtor's non-debtor spouse ("Debtor's Spouse") indicating that First Union had assigned the mortgage to UMLIC. (EMC Composite Ex. 5.)

4. On March 26, 1996, despite the assignment to UMLIC, Tammy N. Giroux filed a Motion to Reschedule Foreclosure Sale in the foreclosure case. (Debtor Ex. 2.)

5. On March 28, 1996 UMLIC sent a letter which contained a payoff amount to Debtor's Spouse. (EMC Composite Ex. 5.)

6. On April 26, 1996 Debtor filed a voluntary petition under Chapter 13 of the Bankruptcy Code. (Doc. 1.)

7. September 16, 1996 was set as the deadline to file a proof of claim in the case. (Doc. 3.)

8. On Schedule D of her bankruptcy schedules Debtor listed First Union as the holder of a secured claim in the amount of $43,203.12. (Doc. 10.)

9. On April 29, 1996 Debtor's Attorney filed a Suggestion of Bankruptcy in the foreclosure case. (Debtor Ex. 3.)

10. Debtor filed a Chapter 13 plan on May 13, 1996 indicating a $17,106.53 arrearage owed to First Union which was to be paid as part of the plan. Additionally, the plan provided for maintenance of Debtor's monthly mortgage payments of $450.76. Debtor's monthly plan payment was to be $906.00. (Doc. 7.)

11. On May 14, 1996 Debtor's Attorney sent a letter to Attorneys for First Union requesting the status of Debtor's account, including arrearage, as of the date of the filing of the petition. (Debtor Ex. 6.)

12. Debtor's Attorney testified that he did not receive a response to the letter. (November 23, 1999 Hr'g.)

13. On October 3, 1996 Debtor filed Amended Chapter 13 plan which provided for maintenance of Debtor's monthly payments of $450.76 but did not indicate an arrearage owed to First Union. Debtor's monthly plan payment was to be $586.00 (Doc. 12.)

14. First Union and Attorneys for First Union received all notices in the case. Neither First Union nor UMLIC filed a proof of claim in the case.

15. In response to the Chapter 13 Trustee's request, Debtor filed a proof of claim on behalf of First Union in the amount of $43,203.12 on January 27, 1997. The proof of claim indicated that there was no arrearage and that no judgment had been rendered on the claim. (EMC Ex. 4.)

16. On January 28, 1997 the Court held a confirmation hearing at which it confirmed Debtor's Amended Chapter 13 plan. (Doc. 25.) Neither First Union nor UMLIC objected to confirmation of Debtor's plan.

17. On March 21, 1997 UMLIC assigned its interest in the mortgage to EMC.

18. On March 26, 1997 the Court entered Order Confirming Chapter 13 plan. (Doc. 30.)

19. On April 14, 1998 Patrick J. Casey filed a notice of appearance in the case on behalf of EMC. (Doc. 32.)

20. On May 29, 1998 EMC filed "Amended Proof of Claim" which indicated a principal balance as of April 26, 1996 of $43,203.12, a pre-petition arrearage of $27,045.60, and bankruptcy attorney's fees and costs of $875.00.

21. On April 21, 1999 EMC filed Motion for Relief of Order Confirming Chapter 13 Plan and for Allowance of Amended Proof of Claim. (Doc. 33.)

22. On July 14, 1999 the Court held a hearing which it continued until August 19, 1999. (Doc. 40.)

23. The Court held a hearing on August 19, 1999 at which time it gave the parties fifteen days to file additional motions or briefs supporting their respective positions.

24. On September 2, 1999 EMC filed Motion for Extension of Time to File Additional Motion. (Doc. 45.)

25. On September 3, 1999 Debtor filed Memorandum of Law in Opposition to EMC's Motion for Relief of Order Confirming Chapter 13 Plan. (Doc. 46.)

26. On September 3, 1999 the Court entered Order Granting EMC's Motion for Extension of Time to File Additional Motion. (Doc. 47.)

27. On September 29, 1999 EMC filed Motion to Determine Pre-Petition Arrearage, to Compel Debtor to Modify Chapter 13 Plan, and for Sanctions Against Debtor's Attorney upon which the Court scheduled a November 23, 1999 hearing. (Doc. 48.)

28. On October 13, 1999 Debtor filed Motion to Strike EMC Mortgage Corporation's Motion to Determine Pre-Petition Arrearage, to Compel Debtor to Modify Chapter 13 Plan, and for Sanctions Against Debtor's Attorney. (Doc. 50.)

29. At the November 23, 1999 hearing the Court construed Debtor's Motion to Strike as a response. (Doc. 58.)

CONCLUSIONS OF LAW

I. Motion for Relief from Order Confirming Chapter 13 Plan and for Allowance of Amended Proof of Claim

EMC framed its initial motion as a request for relief from order confirming chapter 13 plan pursuant to Rule 9024, Federal Rule of Bankruptcy Procedure and Rule 60(b)(6), Federal Rule of Civil Procedure, and for allowance of amended proof of claim. In its motion EMC stated "the confirmation order entered in this case admittedly binds all affected parties to its terms. However, the terms of the Order Confirming Chapter 13 Plan are unfairly prejudicial to secured creditor." (Doc. 33 at p. 3.) Additionally, EMC stated that the circumstances constitute good cause justifying relief from the operation of the confirmation order and for allowance of the amended proof of claim. However, in later pleadings, EMC abandoned its argument seeking relief from the Order Confirming Chapter 13 plan. "Secured creditor requested additional time to research Section 1330 and came to the conclusion that it did not have recourse pursuant to this section of the bankruptcy code . . . The Motion clearly states the relief requested, and revocation of the confirmation order is not requested." (Doc. 53 at p. 3.) Accordingly, the Court will not address 11 U.S.C. § 1330 and will treat Motion for Relief from Order Confirming Chapter 13 Plan as withdrawn. However, because EMC does not explicitly abandon its argument concerning the filing of an amended proof of claim, the Court will address that portion of EMC's argument.¹

II. Applicability of Excusable Neglect to a Late Filed Proof of Claim in a Chapter 13 Case

EMC cites Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993) for the proposition that bankruptcy courts are empowered to allow late proofs of claim on the basis of excusable neglect. Subdivision (b) of Bankruptcy Rule 9006 provides the circumstances under which a court may enlarge the time periods in a bankruptcy case. "Except as provided in paragraphs (2) and (3) of this subdivision, . . . the court . . . may at any time in its discretion . . . permit the act to be done where the failure to act was the result of excusable neglect." FED. R. BANKR. P. 9006(b)(1). Paragraph 2 enumerates the bankruptcy rules for which enlargement is not permitted and paragraph 3, which includes Rule 3002(c), enumerates the bankruptcy rules for which enlargement of time is limited to the "extent and under the conditions stated in those rules." FED. R. BANKR. P. 9006(b)(3). With certain exceptions, none of which applies here, Rule 3002(c) Federal Rule of Bankruptcy Procedure sets forth the time by which an unsecured creditor must file a proof of claim in a Chapter 7, 12, or 13 case. "In a Chapter 7 liquidation, chapter 12 family farmer's debt adjustment, or Chapter 13 individual's debt adjustment case, a proof of claim is timely filed if it is filed not later than 90 days after the first day set for the meeting of creditors called under § 341(a) of the Code . . ." FED. R. BANKR. P. 3002(c). Pioneer made clear that Rule 3002(c) was excluded from the operation of the excusable neglect standard. See 507 U.S. at 389 n. 4, 113 S.Ct. 1489. Additionally, the Court stated "by contrast, Rule 9006(b) does not make a similar exception for Rule 3003(c), which, as noted earlier, establishes the time requirements for proofs of claim in Chapter 11 cases. Consequently, Rule 9006(b)(1) must be construed to govern the permissibility of late filings in Chapter 11 bankruptcies." Id. See also Jones v. Arross, 9 F.3d 79, 81 (10th Cir.1993) (holding that excusable neglect standard applies only in Chapter 11 cases). A bankruptcy court does not have the discretion to allow late filed claims in a Chapter 13 case. In re Euston, 120 B.R. 228, 230 (Bankr. M.D.Fla.1990); In re Jones, 154 B.R. 816, 818 (Bankr.M.D.Ga.1993); In re Turner, 157 B.R. 904, 910 (Bankr.N.D.Ala.1993).

Rule 3002 does not address the filing of a proof of claim by a secured creditor. Although it is clear that a secured creditor is not required to file a proof of claim and may instead look to its lien...