Maplethorpe v. CitiMortgage Inc. (In re Maplethorpe), Case No. 16–57117
| Decision Date | 16 June 2017 |
| Docket Number | Case No. 16–57117,Adv. Pro. No. 17–4032 |
| Citation | 569 B.R. 157 |
| Parties | IN RE: William R. MAPLETHORPE and Nancy J. Maplethorpe, Debtors. William R. Maplethorpe and Nancy J. Maplethorpe, Plaintiffs, v. Citimortgage Inc., Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of Michigan |
A. Stephen Ramadan, Law Offices of A. Stephen Ramadan, PLC, St. Clair Shores, Michigan, Attorney for Plaintiffs.
John P. Kapitan, Trott Law, P.C., Farmington Hills, Michigan, Attorney for Defendant.
This adversary proceeding is what is often referred to as a "lien-strip" action. Plaintiffs William R. Maplethorpe and Nancy J. Maplethorpe ("Plaintiffs") are the Debtors in a pending Chapter 13 bankruptcy case. They seek a judgment determining that in their proposed Chapter 13 plan, they may treat as a wholly unsecured claim the claim of the Defendant Citimortgage Inc. ("Defendant"). Defendant's claim against Plaintiffs is secured by a second mortgage on Plaintiffs' home, located at 8635 Avoca Road, Avoca, Michigan (the "Property"). Plaintiffs allege that as of the bankruptcy petition date (December 23, 2016), the value of the Property was less than the balance owing on the first mortgage on the Property (the "First Mortgage debt"). Defendant disputes this.
The Court began a bench trial on June 13, 2017, during which Plaintiffs presented, and then rested, their case-in-chief. At that point, Defendant orally moved for a judgment on partial findings, under Fed. R. Civ. P. 52(c), which applies in this adversary proceeding under Fed. R. Bankr. P. 7052 (the " Rule 52(c) Motion"). After hearing oral argument on that motion from the parties, the Court recessed the trial, so that it could further consider, and issue a written ruling on, the Rule 52(c) Motion.
The Court has carefully considered all of the arguments and evidence presented by the parties at trial so far, including their arguments regarding the Rule 52(c) Motion. For the reasons stated in this opinion, the Court will grant the Rule 52(c) Motion, and will enter a judgment in Defendant's favor. This opinion states the Court's findings of fact and conclusions of law, as required by Rule 52(c).
At least a few of the facts are undisputed. The parties have stipulated to the following facts, as stated in the Final Pretrial Order, filed June 5, 2017 (Docket # 25):
In Plaintiffs' most recently-amended Chapter 13 plan, filed on May 9, 2017, Plaintiffs propose to treat Defendant's claim as a wholly unsecured claim.2 The Plan thus proposes to treat Defendant's claim as all other general unsecured claims, in Class Nine, by paying a minimum dividend of 0% of the allowed claim, with no interest, over the life of the Plaintiffs' 60–month Plan.3
In this adversary proceeding, Plaintiffs have the burden at trial of proving, by a preponderance of the evidence, that the value of the Property as of the December 23, 2016 petition date was equal to or less than the balance owing on the First Mortgage debt as of the petition date. See generally 11 U.S.C. §§ 506(a)(1) and 506(d) ; Lane v. Western Interstate Bancorp , 280 F.3d 663 (6th Cir. 2002). If Plaintiffs meet that burden of proof at trial, they will prevail in this adversary proceeding. If Plaintiffs do not meet that burden, then Defendant will prevail.
This Court has subject matter jurisdiction over this adversary proceeding under 28 U.S.C. §§ 1334(b), 157(a) and 157(b)(1), and Local Rule 83.50(a) (E.D. Mich.). This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(K), 157(b)(2)(L), and 157(b)(2)(O).4
This proceeding also is "core" because it falls within the definition of a proceeding "arising under title 11" and of a proceeding "arising in" a case under title 11, within the meaning of 28 U.S.C. § 1334(b). Matters falling within either of these categories in § 1334(b) are deemed to be core proceedings. See Allard v. Coenen (In re Trans–Industries, Inc. ), 419 B.R. 21, 27 (Bankr. E.D. Mich. 2009). This is a proceeding "arising under title 11" because it is "created or determined by a statutory provision of title 11," see id. , including Bankruptcy Code § 506. And this is a proceeding "arising in" a case under title 11, because it is a proceeding that "by [its] very nature, could arise only in bankruptcy cases." See id. at 27.
For these reasons, this Court has statutory authority, under 28 U.S.C. § 157(b)(1), to enter a final judgment on Plaintiffs' claim in this adversary proceeding. If and to the extent this Court might otherwise lack constitutional authority to enter a final judgment, under Stern v. Marshall , 564 U.S. 462, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011), such a problem does not exist in this case. This is because all of the parties in this adversary proceeding have expressly, knowingly, and voluntarily consented to this bankruptcy court entering a final order or judgment, as permitted by 28 U.S.C. § 157(c)(2).5 Given that consent, this bankruptcy court has both statutory and constitutional authority to enter a final judgment on Plaintiffs' claim. See Ralph Roberts Realty, LLC v. Savoy (In re Ralph Roberts Realty ), 562 B.R. 144, 147–48 (Bankr. E.D. Mich. 2016) ().
In support of its Rule 52(c) Motion, made after the close of Plaintiffs' case-in-chief, Defendant argues that Plaintiffs have failed to meet their burden of proof, because they failed to prove what amount was owing on the First Mortgage debt as of the December 23, 2016 petition date. As part of their burden of proof, Plaintiffs have to prove, by a preponderance of the evidence, that the amount owing on the First Mortgage debt as of the petition date was equal to or greater than the value of the Property, which value Plaintiffs and their appraisal evidence say is $350,000.00. Thus, Plaintiffs have the burden to prove that the First Mortgage debt amount as of the petition date was at least $350,000.00 (or more, to the extent the Court finds that the value of the Property is more than $350,000.00).
Defendant argues that Plaintiffs failed to prove this in their case-in-chief at trial, and in fact presented no admissible evidence regarding the amount of the First Mortgage debt. Plaintiffs disagree.
Fed. R. Civ. P. 52(c), made applicable to bankruptcy adversary proceedings by Fed. R. Bankr. P. 7052, states that:
If a party has been fully heard on an issue during a nonjury trial and the court finds against the party on that issue, the court may enter judgment against the party on a claim or defense that, under the controlling law, can be maintained or defeated only with a favorable finding on that issue. The court, may, however, decline to render any judgment until the close of the evidence. A judgment on partial findings must be supported by findings of fact and conclusions of law as required by Rule 52(a).
"In deciding whether to enter judgment on partial findings under Rule 52(c), the district court is not required to draw any inferences in favor of the non-moving party; rather, the district court may make findings in accordance with its own view of the evidence." Ritchie v. U.S. , 451 F.3d 1019, 1023 (9th Cir. 2006) (footnote omitted) (citing Lytle v. Household Mfg., Inc. , 494 U.S. 545, 554–55, 110 S.Ct. 1331, 108 L.Ed.2d 504 (1990) ()); see also Aubert v. Russell Collection Agency, Inc. , 215 F.Supp.3d 583, 593 n.10 (E.D. Mich. 2016) (internal quotation marks and citations omitted) ("It should be borne in mind that the Court was not required to draw any special inferences in favor of the nonmoving party in deciding a Rule 52 motion for judgment on partial findings.").
"The rule ‘authorizes the court to enter judgment at any time that it can appropriately make a dispositive finding of fact on the evidence.’ " New Products Corp. v. Tibble (In re Modern Plastics Corp.) , 543 B.R. 819, 824 (Bankr. W.D. Mich. 2016) (quoting Fed. R. Civ. P. 52(c), Advisory Committee Note to 1991 Amendment). "A court that enters judgment on partial findings, like one that enters judgment at the conclusion of all evidence, must nevertheless state its findings of fact and conclusions of law separately, in accordance with Rule 52(a)." Id.
The Court finds Defendant's Rule 52(c) Motion to be well taken. Given the Court's evidentiary rulings made during the June 13 trial, and for the reasons stated by the Court on the record during the trial, and for the following additional reasons, the Court finds and concludes that Plaintiffs failed to present any admissible evidence at trial regarding what the amount of the First Mortgage debt was as of the December 23, 2016 petition date (or as of any date after the petition date, for that matter). And more specifically, Plaintiffs failed to present any admissible evidence that the...
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