In re Calzadilla
534 B.R. 216
Bankr. S.D. Florida2015Background
- Debtors filed Chapter 13 and confirmed a plan that required mediation under the court’s Mortgage Modification Mediation (MMM) Procedures regarding a mortgage held by U.S. Bank on their home.
- Mediation failed and the Plan required the Debtors, within 14 days of the mediator’s final report, to either amend the plan to conform to the lender’s proof of claim or provide that the property will be "surrendered."
- Debtors filed a Second Modified Plan proposing to treat the mortgage "outside the plan" and consent to stay relief, but did not include a surrender provision.
- U.S. Bank objected, arguing the modified plan failed to comply with the MMM Procedures because it did not provide for surrender of the property.
- At hearing, Debtors argued that treating the claim outside the plan and consenting to stay relief is functionally the same as surrender; U.S. Bank argued surrender is distinct and precludes a debtor from opposing foreclosure.
- The court denied the motion to modify without prejudice, holding the plan must provide for surrender and explaining that surrender bars later actions to impede foreclosure.
Issues
| Issue | Debtors' Argument | U.S. Bank's Argument | Held |
|---|---|---|---|
| Does a plan modification after failed MMM mediation satisfy the Plan by treating the mortgage "outside the plan" and consenting to stay relief, or must it provide for "surrender"? | Treating mortgage outside plan + consent to stay relief = surrender. | The MMM Procedures and confirmed Plan require explicit "surrender." | Must provide for surrender; treating outside the plan without surrender is insufficient. |
| What is the legal effect of "surrender" in a Chapter 13 plan? | Surrender only grants relief from stay; debtor may still contest foreclosure in state court. | Surrender means relinquishing rights and cannot take overt acts to impede foreclosure. | Surrender precludes the debtor from taking overt actions to defend or impede the creditor’s foreclosure. |
| Can debtor, after surrendering property in plan, continue to litigate lender’s right to foreclose in state court? | Yes; surrender does not bar contesting foreclosure. | No; surrender estops debtor from opposing foreclosure or otherwise impeding creditor’s repossession. | Debtor may not return to state court to contest the lender’s right to complete foreclosure after surrender. |
| Is physical delivery required to effectuate surrender? | Physical delivery is required. | Surrender does not require physical delivery but does bar impediment of creditor’s efforts. | Surrender need not be physical delivery but forbids acts that impede creditor’s possession. |
Key Cases Cited
- In re Metzler, 530 B.R. 894 (Bankr. M.D. Fla. 2015) (surrender means not taking overt acts to prevent secured creditor from foreclosing)
- In re White, 487 F.3d 199 (4th Cir. 2007) (surrender = relinquishment of all rights in property)
- In re Pratt, 462 F.3d 14 (1st Cir. 2006) (surrender bars debtor from impeding foreclosure)
- In re White, 282 B.R. 418 (Bankr. N.D. Ohio 2002) (surrender functions as consent to stay relief and estoppel to defend foreclosure)
- In re Failla, 529 B.R. 786 (Bankr. S.D. Fla. 2014) (surrender precludes continued defense of foreclosure and does not require actual physical turnover)