570 B.R. 287
Bankr. W.D. Mich.2017Background
- Debtor Cynthia Brumley filed Chapter 13 and the plan was confirmed to cure mortgage arrearage and maintain payments under 11 U.S.C. § 1322(b)(5).
- After confirmation, the mortgagee/assignee (the Lender) served a Rule 3002.1(c) notice seeking $90 for six post-petition visual property inspections ($15 each).
- Debtor objected; parties agreed no evidentiary hearing was needed if the Lender produced invoices showing the inspections occurred.
- The Lender produced vendor invoices establishing the six inspections occurred on specified dates; the trustee reported Debtor is current on post-petition mortgage payments (minor plan-payment delinquency only).
- The Mortgage permits inspections if the property is vacant/abandoned or the loan is in default, and authorizes fees only to the extent the HUD Secretary has authorized them (Mortgage ¶¶ 5, 8); Lender did not produce any HUD regulations authorizing the inspection fees.
- The court concluded the Lender bore the burden to prove entitlement to post-petition fees under Rule 3002.1(e) and sustained Debtor’s objection because the Lender failed to identify applicable non-bankruptcy (HUD) authority for the fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lender may collect $90 in post‑petition inspection fees under Rule 3002.1 | Brumley argued fees are unauthorized because Mortgage ties fee authority to HUD regulations, which Lender did not produce | Lender argued inspections occurred and default under mortgage (prepetition arrearage) permits inspection and fee collection | Court held Lender cannot collect the fees; Lender failed to prove regulatory authorization required by the Mortgage |
| Who bears burden to prove entitlement to post‑petition fees under Rule 3002.1(e) | Brumley argued Lender must prove entitlement | Lender did not dispute burden allocation at hearing but relied on proof of inspections and mortgage language | Court assigned burden to creditor (Lender) to prove entitlement and findings required under Rule 3002.1(e) |
| Whether inspections were permissible given Debtor’s occupancy and post‑petition payment status | Brumley noted Debtor occupies the property and is current on post‑petition payments, so vacancy/abandonment exceptions do not apply | Lender pointed to default status (prepetition arrearage) as triggering inspection rights | Court found occupancy and post‑petition payment history undercut justification for inspections; Mortgage permits inspections for vacant/abandoned or default conditions, and Lender did not show applicable regulatory basis |
| Whether Rule 3002.1's procedural timing or prima facie effect alters proof requirements | Brumley relied on Rule 3002.1(d) weakening any prima facie effect and procedural protections | Lender relied on having timely served the notice and producing invoices | Court noted Rule 3002.1 does not afford notice the evidentiary benefit of a proof of claim; Lender still must prove entitlement and failed to do so |
Key Cases Cited
- In re Lighty, 513 B.R. 489 (Bankr. D.S.C. 2014) (treating objection to post‑petition charge as motion under Rule 3002.1(e))
- In re Bodrick, 498 B.R. 793 (Bankr. N.D. Ohio 2013) (discussing allocation of burden to creditor for post‑petition fees under Rule 3002.1)