513 B.R. 489
Bankr. D.S.C.2014Background
- Lighty filed a Chapter 13 petition on June 4, 2013; plan confirmed August 15, 2013; Chase holds a first mortgage; arrearage existed.
- Kings filed Chapter 13 petition on February 14, 2014; plan confirmed April 14, 2014; CitiMortgage holds a first mortgage; arrearage existed.
- Johnnie King filed Chapter 13 petition on February 21, 2014; plan confirmed May 8, 2014; Bayview holds a first mortgage; no arrearage as of petition date per claim.
- Rule 3002.1 notices post-petition sought $425 fees labeled as bankruptcy/POC fees for services related to proof of claim preparation and plan review.
- Debtors objected to the $425 fees; Bayview did not respond in Johnnie King’s case; hearings consolidated for efficiency.
- Court analyzed whether the $425 fees are payable as cure/maintenance under 11 U.S.C. §1322(b)(5) and Rule 3002.1(e).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the $425 Rule 3002.1 fees are required to cure a default. | Lighty/Kings contend fees are payable under the mortgage agreements to cure defaults. | Chase/CitiMortgage argue fees fall within permissible post-petition charges to protect their interests. | Yes for Lighty and Kings; the fees are required to cure defaults under the underlying agreements. |
| Whether 11 U.S.C. §506(b) governs these fee issues in a plan-cure context. | §506(b) provides payment of certain fees when secured by over-encumbered property. | Plan-cure context under §1322(b)(5) governs; §506(b) does not apply. | Inapplicable; §506(b) does not govern these post-petition fees in plan-cure scenarios. |
| Whether the $425 fee in Johnnie King’s case is reasonable and payable. | Fees are similar to Lighty/Kings work and should be payable. | No sufficient evidence to prove reasonableness or payability. | Not proven; the fee in Johnnie King’s case is not shown to be required or reasonable. |
Key Cases Cited
- United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (2010) (plan confirmation limits creditor rights; certifies treatment under plan)
- Deutsche Bank Nat’l Trust Co. v. Tucker, 621 F.3d 460 (6th Cir. 2010) (plan-cure framework governs default remedies in Chapter 13)
- Baron Data Sys., Inc. v. Loter, 377 S.E.2d 296 (S.C. 1989) (six-factor test for reasonable attorney’s fees in contract cases)
- Dedes v. Strickland, 414 S.E.2d 134 (S.C. 1992) (six-factor framework for determining reasonable fees)