Thomas, In re

• Decision Date: 15 September 1989
• Docket Number: No. 88-7613,88-7613
• Citation: 883 F.2d 991
• Parties: , Bankr. L. Rep. P 73,128 In re James THOMAS and Linda Thomas, Debtors. SOUTHTRUST BANK OF ALABAMA, N.A., as Assignee of SouthTrust Mobile Services, Plaintiff-Appellee. v. James THOMAS and Linda Thomas, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 991

883 F.2d 991

19 Bankr.Ct.Dec. 1358, Bankr. L. Rep. P 73,128

In re James THOMAS and Linda Thomas, Debtors SOUTHTRUST BANK OF ALABAMA, N.A., as Assignee of SouthTrust Mobile Services, Plaintiff-Appellee. v. James THOMAS and Linda Thomas, Defendants-Appellants.

No. 88-7613.

United States Court of Appeals Eleventh Circuit.

Sept. 15, 1989.

Rehearing Denied Oct. 23, 1989.

Thomas J. Knight, Anniston, Ala., for defendants-appellants.

Carlos Heaps and Allen Ramsey, Heaps & Ramsey, Birmingham, Ala., for plaintiff-appellee.

Romaine S. Scott, III, Balch & Bingham, Birmingham, Ala., for Amicus Curiae, Alabama Power Co.

Appeal from the United States District Court for the Northern District of Alabama.

Before RONEY, Chief Judge, and HILL, Circuit Judge, and HOWARD ^*, Chief District Judge.

BACKGROUND

HOWARD, Chief District Judge:

The facts of this action are basically undisputed. ¹ On October 11, 1983, the debtors granted a purchase money security interest in a 1982 Commodore Frontier mobile home to SouthTrust Mobile Services, Inc. (SMSI). SMSI assigned its rights as secured party to SouthTrust Bank of Alabama, N.A. (SouthTrust). SouthTrust properly perfected its security interest in the mobile home by filing a financing statement as required under Alabama law. The debtors filed their bankruptcy petition under Chapter 13 on March 2, 1987, and scheduled SouthTrust as a secured creditor in the amount of $11,621.93. In said petition the debtors valued the mobile home at $8,000.00 ² and claimed no exemptions thereon. The debtors' concurrently-filed plan provided that "[t]he debtor(s) propose to pay in full all allowed claims, from future income, through the Chapter 13 trustee," that "[t]he holder of each filed and allowed secured claim shall retain the lien securing such claim until the claim is satisfied under the plan or the debt is otherwise satisfied," and that an interest factor of 11% be added to secured claims which claims were not to be paid immediately upon confirmation of the plan. On March 5, 1987, the bankruptcy court clerk mailed to all creditors (including SouthTrust) a notice advising that the debtors' petition had been filed, that the meeting of creditors would be held on April 8, 1987, that the bar date for filing claims was July 7, 1987, and that the confirmation hearing would be held July 22, 1987. The notice included a copy of a portion of the plan showing the provisions referred to above. SouthTrust did not file a proof of its claim in this case by July 22, 1987, (much less than by the bar date of July 7, 1987), but SouthTrust was represented by legal counsel at the hearing on confirmation of the debtors' plan on July 22, 1987. No objection was made to the plan, and said plan was confirmed by the order of the bankruptcy court dated July 27, 1987. No appeal was taken as to the confirmed plan. Since no claim was ever made as to the mobile home ³, the confirmed plan contained no provision for the payment of the debt owed to SouthTrust. The confirmation order included these provisions:

5. The holder of each allowed secured claim provided for by the plan shall retain such creditor's interest in the property of the debtor(s) which secures the claim, until such claim has been satisfied;

6. The property of the estate shall not vest in the debtor(s) until a discharge is granted under said Chapter 13 or this case is dismissed out of Court.

Absent from the plan and the order confirming the plan was any provision that the debtors not "remain in possession of all property of the estate".

On August 4, 1987, SouthTrust sought relief from the automatic stay provided for by 11 U.S.C. Sec. 362, by way of leave to foreclose its security interest in the mobile home. The debtors objected to the motion, and the bankruptcy court took the matter under submission after a hearing. The debtors did not obtain an order from the bankruptcy court that the stay continue in force, and by virtue of a provision of 11 U.S.C. Sec. 362(e) ⁴, the stay under Sec. 362 terminated automatically as to SouthTrust on September 3, 1987, prior to the bankruptcy court ruling on the matter. ⁵ On October 15, 1987, SouthTrust sued the debtors in state court for possession of the mobile home or, alternatively, for its value and for "damages for [its] detention, interest, and cost." However, SouthTrust's counsel represented to the bankruptcy court and to this Court that--notwithstanding the language of the detinue complaint--SouthTrust does not seek from the debtors any damages arising after the filing of the bankruptcy petition. In response to the filing of the foreclosure proceeding in state court, the debtors filed a complaint in the bankruptcy court seeking preliminary and permanent injunctions, a monetary judgment for damages, and other relief. On February 1, 1988, the bankruptcy court entered a temporary injunction forbidding SouthTrust from proceeding with its efforts to obtain possession of the mobile home from the debtors. After a hearing on the matter on February 2, 1988, the bankruptcy court orally ruled that SouthTrust was bound by the terms of the debtors' confirmed Chapter 13 plan not to proceed against the debtors or the property and that the debtors were entitled to the relief they sought. The bankruptcy court entered its written findings and conclusions in a lengthy order dated March 31, 1988. 85 B.R. 608.

SouthTrust appealed the bankruptcy court's decision to the district court. The issue addressed by the district court was "whether the bankruptcy court erred in reimposing the stay against a secured creditor which had obtained relief from stay under [11 U.S.C.] Sec. 362(e) to prevent the creditor's recovery of its collateral where the creditor's secured claims were not provided for in the Debtors' confirmed Chapter 13 plan and the Debtors claimed no equity in the collateral." In the conclusion of its lengthy opinion, the district court reversed the bankruptcy court, holding as a matter of law "that the lien of SouthTrust upon the mobile home has not been invalidated by the Debtors' Chapter 13 confirmed plan, and that SouthTrust is entitled to relief from the stay to pursue its detinue action to recover possession of the mobile home because the Debtors afford no adequate protection of SouthTrust's security in their confirmed plan and the Debtors claim no equity in the mobile home." 91 B.R. 117. The district court's ruling permitted SouthTrust to retake the mobile home. However, on November 1, 1988, a panel of this Court granted to the debtors a stay pending final disposition of this appeal, and consequently, the debtors currently have possession of the mobile home pending the ruling of this Court.

DISCUSSION

This Court has jurisdiction pursuant to 28 U.S.C. Sec. 158(d). ⁶

The applicable standard of review regarding findings of fact is set forth in bankruptcy rule 8013:

On an appeal the district court or bankruptcy appellate panel may affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings. Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses. Bankruptcy rule 8013.

The standard of review to be utilized by the court of appeals is the same as that to be utilized by the district court--"factual findings of the bankruptcy court cannot be set aside unless they are clearly erroneous." In re Downtown Properties, Ltd., 794 F.2d 647, 651 (11th Cir.1986) (citing In re Chalik, 748 F.2d 616, 619 (11th Cir.1984).

Regarding the legal conclusions of the lower courts, they "are subject to complete review by this court." T & B General Contracting, Inc., 833 F.2d 1455 at 1460 (11th Cir.1987) (citing Monson v. First National Bank of Bradenton, 497 F.2d 135 (5th Cir.1974)). Accord In re Fielder, 799 F.2d 656, 657 (11th Cir.1986) (While "this court as an appellate court gives deference to all findings of fact by the fact finder if based upon substantial evidence, [this court] freely examines the applicable principles of law to see if they were properly applied and freely examines the evidence in support of any particular finding to see if it meets the test of substantiality.").

I.

Our first concern is whether the mobile home is "property of the estate" as that term is defined in the bankruptcy code. The applicable section is 11 U.S.C. Sec. 541, ⁷ which provides that "property of the estate" includes in general "all legal or equitable interests of the debtor in property as of the commencement of the case." Sec. 541(a)(1). Sec. 541(b) & (c) set forth narrow exceptions to the interests of the debtor which are not considered as property of the estate; these exceptions are not applicable to this appeal. Sec. 541(d) provides more specifically that

Property in which the debtor holds, as of the commencement of the case, only legal title and not an equitable interest, such as a mortgage secured by real property, or an interest in such a mortgage, sold by the debtor but as to which the debtor retains legal title to service or supervise the servicing of such mortgage or interest, becomes property of the estate under subsection (a)(1) or (2) of this section only to the extent of the debtor's legal title to such property, but not to the extent of any equitable interest in such property that the debtor does not hold.

As the United States Supreme Court has noted, the phrase "all legal and equitable interests of the debtor in property as of the commencement of the case" is to be broadly construed so as to effectuate the intent of Congress that "a broad range of property [ ] be included in the estate." United States v. Whiting Pools, Inc., 462 U.S. 198, 204-205, 103 S.Ct. 2309, 2313, 76 L.Ed.2d 515 (1983). Accord In re May, 83 B.R. 812, 813-14 (Bankr.M.D.Fla.1988); Matter of Nichols, 42 B.R. 772,...