In re Ware

• Decision Date: 17 July 2015
• Docket Number: Case No. 15bk03414
• Citation: 533 B.R. 701
• Parties: In re: Mesha E. Ware, Debtor.
• Court: U.S. Bankruptcy Court — Northern District of Illinois

533 B.R. 701

In re: Mesha E. Ware, Debtor.

Case No. 15bk03414

United States Bankruptcy Court, N.D. Illinois, Eastern Division.

Signed July 17, 2015

Attorney for Debtor: Jaime Torres, The Semrad Law Firm, LLC, Chicago, IL

Attorneys for Creditor: David J. Frankel and Cari A. Kauffman, Sorman & Frankel, Ltd., Chicago, IL

MEMORANDUM DECISION

TIMOTHY A. BARNES, Judge.

The matter before the court arises out of the Objection of Santander Consumer USA Inc. to Confirmation of Debtor's Proposed Chapter 13 Plan (the “Objection ”), filed by Santander Consumer USA Inc. (“Santander ”), objecting to the chapter 13 plan of Mesha E. Ware (the “Debtor ”). The Debtor asserts that surrender of a vehicle under section 1325(a)(5)(C) does not require her to physically deliver that vehicle when she is incapable of doing so through no fault of her own. Santander conversely argues that if the Debtor is unable to tender physical delivery, the Debtor's plan should not be confirmed.

For the reasons stated below, the Objection is overruled.

JURISDICTION

Federal district courts have “original and exclusive jurisdiction” of all cases under title 11 of the United States Code (the “Bankruptcy Code ”). 28 U.S.C. § 1334(a). Federal district courts also have “original but not exclusive jurisdiction” of all civil proceedings arising under the Bankruptcy Code, or arising in, or related to cases under title 11. 28 U.S.C. § 1334(b). District courts may, however, refer these cases to the bankruptcy judges for their districts. 28 U.S.C. § 157(a). In accordance with section 157(a), the District Court for the Northern District of Illinois has referred all of its bankruptcy cases to the Bankruptcy Court for the Northern District of Illinois. N.D. Ill. Internal Operating Procedure 15(a).

A bankruptcy judge to whom a case has been referred may enter final judgment on any core proceeding arising under the Bankruptcy Code, or arising in a case under the Bankruptcy Code. 28 U.S.C. § 157(b)(1). Plan confirmation and objections thereto may arise in a case only under title 11 and are specified as core matters in which this court has jurisdiction to enter final orders. 28 U.S.C. § 157(b)(2)(B), (E) and (L). In re Nicola, 244 B.R. 795, 796 (Bankr.N.D.Ill.2000) (Lefkow, J.). Such matters, thus, are within the court's constitutional authority. Stern v. Marshall, ––– U.S. ––––, ––––, 131 S.Ct. 2594, 2618, 180 L.Ed.2d 475 (2011).

Accordingly, final judgment is within the scope of the court's jurisdictional and constitutional authority.

PROCEDURAL HISTORY

In considering the Objection, the court has reviewed and considered the Objection [Dkt. No. 15], the attached exhibits submitted in conjunction therewith, and the following filed documents in the bankruptcy proceeding:

(1) Chapter 13 Plan (the “Plan ”) [Dkt. No. 6];

(2) Modified Chapter 13 Plan (the “Modified Plan ”) [Dkt. No. 20];

(3) Debtor's Response to Santander Consumer's Objection to Confirmation (the “Response ”) [Dkt. No. 27]; and

(4) Reply of Santander Consumer USA Inc. in Support of Its Objection to Confirmation (the “Reply ”) [Dkt. No. 29].

Though the foregoing items do not constitute an exhaustive list of the filings in the bankruptcy case, the court has taken judicial notice of the contents of the docket in these matters. See Levine v. Egidi, No. 93C188, 1993 WL 69146, at *2 (N.D.Ill. Mar. 8, 1993) (authorizing a bankruptcy court to take judicial notice of its own docket); In re Brent, 458 B.R. 444, 455 n. 5 (Bankr.N.D.Ill.1989) (Goldgar, J.) (recognizing same).

BACKGROUND

On February 15, 2011, the Debtor purchased a 2006 Chevrolet Monte Carlo (the “Vehicle ”) financed by Santander pursuant to a retail installment contract. That contract called for an interest rate of 24.99% and equal monthly payments to Santander, each in the sum of $475.92.

Sometime in October 2012, the Vehicle was allegedly stolen from a Jewel–Osco parking lot located at 2203 W. 87th Street, Chicago, IL. The Debtor promptly filed a police report with the Chicago Police Department and an insurance claim with KAI Advantage Auto Insurance. In February 2013, for reasons not disclosed to the court, the insurance claim was denied. The Debtor informed Santander of the theft, the police report and the insurance claim's denial, but made no further payments to Santander or efforts to satisfy the debt owed. In the two years after the insurance claim was denied, Santander never attempted to contact the Debtor regarding the Vehicle nor did Santander commence any action in state court for the recovery of the Vehicle or for collection of the underlying debt. Santander did not file a claim with or pursue action against KAI Advantage Auto Insurance.

On February 2, 2015, the Debtor filed a voluntary petition under chapter 13 of the Bankruptcy Code. Neither the Debtor's schedules nor the Plan addressed Santander's secured claim or the Vehicle. Santander filed its secured claim as to the Vehicle in the amount of $18,806.67 and objected to confirmation of the Plan on the grounds that the Plan omitted its claim. The Debtor later filed the Modified Plan which contains the following language: “Debtor hereby surrenders the 2006 Chevrolet Monte Carlo to Santander Consumer Usa [sic] in full satisfaction of its secured claim.”

Santander thereafter asserted the objection at bar, arguing that the Debtor cannot satisfy section 1325(a)(5)(C) by providing for surrender in the plan alone, as the Debtor is required to physically deliver the Vehicle to Santander or pay Santander's allowed secured claim in full. The Debtor responds that “surrender” under section 1325(a)(5)(C) of the Bankruptcy Code does not require actual physical delivery of the Vehicle, therefore Santander's secured claim is satisfied simply by the surrender plan provision alone.

THE MEANING OF “SURRENDER”

This is a case that turns on the meaning of the term “surrender” as used in the Bankruptcy Code.¹ As this court has previously stated:

The Supreme Court has stated that “[t]he task of resolving [a] dispute over the meaning of [a statute] begins where all such inquiries must begin: with the language of the statute itself.” United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989) ; In re Randle, 358 B.R. 360, 362 (Bankr.N.D.Ill.2006) (Doyle, J.), aff'd, No. 07C631, 2007 WL 2668727 (N.D.Ill. July 20, 2007). Where the language of the statute is unambiguous, no further inquiry is necessary or appropriate. Sebelius v. Cloer, 659 U.S. ––––, ––––, 133 S.Ct. 1886, 1895, 185 L.Ed.2d 1003 (2013) ; In re Vecera, 430 B.R. 840, 842 (Bankr.S.D.Ind.2010) (citing Griffin v. Oceanic, Inc., 458 U.S. 564, 570, 102 S.Ct. 3245, 73 L.Ed.2d 973 (1982) ). Absent contrary definitions within the statute itself, words in a statute are presumed to have their “ordinary, contemporary, common meaning.” Pioneer Inv. Servs. v. Brunswick Assocs., 507 U.S. 380, 388, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993) (citing Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 62 L.Ed.2d 199 (1979) ).

In re Walker, 502 B.R. 324, 327 (Bankr.N.D.Ill.2013) (Barnes, J.).

As in Walker, the inquiry thus begins with the statute itself. Section 1325 provides that “the court shall confirm a [chapter 13 reorganization] plan” if the plan, with respect to each allowed secured claim provided for by the plan, allows for “surrender [of] the property securing such claim to such holder.” 11 U.S.C. § 1325(a)(5)(C) (emphasis added). Neither section 1325 specifically nor the Bankruptcy Code as a whole provides a definition, however, of the word “surrender.”

Anticipating such an instance, the Seventh Circuit has stated:

We examine the statute according to the conventional rules of statutory construction: absent statutory definitions, we accord words and phrases their ordinary and natural meaning and avoid rendering them meaningless, redundant, or superfluous; we view words not in isolation but in the context of the terms that surround them; we likewise construe statutes in the context of the entire statutory scheme and avoid rendering statutory provisions ambiguous, extraneous, or redundant; we favor the more reasonable result; and we avoid construing statutes contrary to the clear intent of the statutory scheme.

In re Merchants Grain, Inc., 93 F.3d 1347, 1353–54 (7th Cir.1996).²

As a result, below, the court first looks to the “ordinary and natural meaning” of the term. The court then considers that statutory scheme within which the term is used, followed by some of the cases that have interpreted the term within that scheme. Following that, the court considers the use of alternative terms in the Bankruptcy Code, as that too can provide insight as to the meaning of the term.

A. The Ordinary and Natural Meaning of “Surrender”

The Oxford English Dictionary provides a number of alternative definitions of the term “surrender.” Of most interest is, perhaps, the following: “The giving up by a bankrupt of his property to his creditors or their assignees; also, his due appearance in the bankruptcy court for examination, as formerly required by the bankruptcy acts.” Oxford English Dictionary(online version, November 2010), http://www.oed.com (last visited July 17, 2015).

This definition turns on the meaning of “property,” which is an expansive concept under bankruptcy law. “[T]he term ‘property’ has been construed most generously and an interest is not outside its reach because it is novel or contingent or because enjoyment must be postponed.” Segal v. Rochelle, 382 U.S. 375, 86 S.Ct. 511, 515, 15 L.Ed.2d 428 (1966) ; see also In re Yonikus, 996 F.2d 866, 869 (7th Cir.1993), abrogated on other grounds, Law v. Siegel, ––– U.S. ––––, 134 S.Ct. 1188, 188 L.Ed.2d 146 (2014) ; Mason v. Costello (In re Klarchek), 508 B.R. 386, 394–95 (Bankr.N.D.Ill.2014) (Barnes, J.). As such, surrender of “property” could be accomplished under these definitions by surrendering rights alone.

By way of comparison, Black's Law Dictionary defines “surrender” as the “giving up of a...