In re Tursi, Bankruptcy No. 81-00089G
| Citation | 9 BR 450 |
| Decision Date | 11 March 1981 |
| Docket Number | Adv. No. 81-0049G.,Bankruptcy No. 81-00089G |
| Parties | In re Sandra TURSI a/k/a Sandra J. Tursi, Debtor. GREAT AMERICAN CREDIT CORPORATION, Plaintiff, v. Sandra TURSI, and Trustee in Bankruptcy, Defendant. |
| Court | United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania |
Samuel L. Spear, Meranze, Katz, Spear & Wilderman, Philadelphia, Pa., for plaintiff, Great American Credit Corp.
Jerome N. Gerenson, Philadelphia, Pa., for debtor/defendant, Sandra Tursi, a/k/a Sandra J. Tursi.
Leonard P. Goldberger, Philadelphia, Pa., Trustee.
Far from being a model of clarity, counsel for both litigants have committed numerous procedural and substantive errors in the preparation of the pleadings and the trial of this simple case. The issue to be determined by the court is whether we should modify the automatic stay imposed by § 362(a) of the Bankruptcy Code ("the Code"). Since § 541(a) provides that the commencement of a case creates an estate, it is mandatory that the trustee be named as a party defendant. He was not. Hence an essential party to this litigation was never made part of it.
Instead, it was not until the filing of the original and two amended complaints (in none of which the trustee was even mentioned by the plaintiff) that the defendant, mirabile dictu! joined a nameless "Trustee in Bankruptcy" as an additional defendant. There is no authority in law for the defendant to do this and we could dismiss this case on that ground alone.
But, the plaintiff having failed to object to the sudden and unauthorized appearance in the caption of the trustee, we have determined to dispose of this case as though all of the necessary parties were properly before us. We do this because the substantive evidence presented by the plaintiff is so inadequate that the trustee's rights are unaffected.
The facts of the instant case are as follows:1 On January 25, 1979, Sandra J. Tursi ("the debtor") purchased with her husband, Louis R. Tursi, as tenants by the entirety, a home at 1084 Randolph Drive, Yardley, Pennsylvania. The debtor and her husband granted a first mortgage on that property to Commonwealth Federal Savings and Loan Association ("the first mortgagee") and a second mortgage to Great American Credit Corporation ("the second mortgagee"). On January 8, 1981, the debtor filed a petition for relief under chapter 7 of the Code.2 Thereafter, the second mortgagee filed an original and an amended complaint for relief from the automatic stay provisions of § 362(a) of the Code. None of them, as we have stated, even mentioned the trustee in bankruptcy.
At the trial, the second mortgagee offered evidence, through the testimony of one of its employees (who was no expert appraiser) that, in his opinion, the property in question is worth no more than $100,000, that he had learned by phone that the balance due the first mortgagee is about $88,300, and that the balance due the second mortgagee is $15,800 plus costs. However, on cross-examination, the witness admitted that his valuation of the property was based on an examination of the property made two years previously and that he had no personal knowledge of the amount of the first mortgage debt other than the fact that he had been told, in a telephone conversation with one of the first mortgagee's employees, that it is about $88,300. (This blatant hearsay met with no motion to strike by the debtor.)
In light of the inadequacy of this opinion evidence and the hearsay testimony, we discount the testimony given by the second mortgagee's witness with respect both to the present fair market value of the property and the amount due on the first mortgage.
The evidence offered by the debtor was equally incompetent and unconvincing. The debtor's evidence consisted of the testimony of two real estate sales representatives, neither of whom was a qualified, licensed real estate appraiser nor had either had more than five years experience in the business of selling real estate. Both of those witnesses testified that the present value of the property is $117,900 and that, with only $1,000 worth of cosmetic repairs, it would be worth $125,900. While their evaluation of the property was based on recent inspections of the property, as well as comparisons of sales of other properties in the development in which this property stands, we find their testimony unconvincing. The comparison properties upon which the witnesses relied in fixing a value on the debtor's property are apparently newer homes and the witnesses testified that even these newer properties are not bringing the asking price of $119,000. The debtor also offered evidence (amazingly without objection) in the form of a letter from the first mortgagee, that the amount of the first mortgage debt was $78,000 as of September 4, 1980, (which was 5 months prior to trial). However, not a word (or letter) of evidence was offered by the debtor as to the amount of the first mortgage debt at the time of trial (which is, of course, the only relevant date).
Because we are totally unconvinced by the evidence presented by both parties to this controversy, our findings and conclusion must depend on who had the burden of proof and failed to sustain it. Section 362(d) of the Code specifies the grounds on which relief from the stay is available:
Section 362(g) allocates the burden of proof of each of the above elements as follows:
As noted above, we have found the evidence offered by both parties to be totally inadequate. However, since the burden of proof on the issue of the debtor's equity in the property is on the party seeking the relief (the second mortgagee) and since it has failed to sustain that burden, it is not entitled to relief from the stay under § 362(d)(2) since the debtor's lack of equity is an essential element thereunder.
Furthermore, we conclude that the second mortgagee is not entitled to relief from the stay under § 362(d)(1) either for cause or for lack of adequate protection. While the second mortgagee alleged in its complaint that the debtor is in default on her payments to it, which would be "cause" for modifying the stay, the...
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