546 B.R. 39
Bankr. E.D. Ky.2016Background
- Debtors Robin and Julia Snowden filed a Chapter 13 plan proposing to bifurcate Caliber Home Loans’ secured claim into a $40,000 secured portion and an unsecured remainder. Caliber objected under 11 U.S.C. § 1322(b)(2)’s anti‑modification rule.
- The loan is secured by a mortgage that covers Lots 15–18 and 20 of six contiguous lots (Mildred Estates); Lot 19 is not included in the mortgage and is unencumbered.
- The Debtors’ manufactured home (the Snowden Manufactured Home) primarily sits on Lot 18 but, by affidavit and testimony, also occupies part of Lot 19 and its septic system lies on Lot 19.
- A second manufactured home formerly stood on Lot 16 (separately addressed); it burned in ~2010 and was personal property of a relative at the time.
- The parties stipulated facts and submitted briefs; Caliber bore the initial burden to show its claim is protected from modification. The court found Caliber failed to meet that burden.
Issues
| Issue | Plaintiff's Argument (Caliber) | Defendant's Argument (Snowden) | Held |
|---|---|---|---|
| Whether § 1322(b)(2) bars bifurcation/modification of Caliber’s claim | Mortgage secures the Debtors’ principal residence, so anti‑modification protects the claim | Mortgage does not secure only the debtor’s principal residence because collateral includes separate lots and part of residence sits on unencumbered Lot 19 | Court: Anti‑modification does not apply; modification allowed (Caliber failed to prove all elements) |
| Whether the collateral is “only” real property that is the debtor’s principal residence | The mortgaged lots form the residence parcel securing the loan | The mortgaged lots are separate subdivided parcels; Lot 19 is unencumbered yet integral to use of the residence (septic/system) | Court: Separate lots, subdivision, and use show the mortgage is not secured only by the principal residence |
| Whether the mortgaged lots are so integrated with the residence that § 1322(b)(2) still applies | Contiguous lots function as single parcel serving the residence | Lack of evidence of integration; omission of Lot 19 and separate addresses/tax parcels indicate separate uses | Court: Insufficient evidence of integration; Caliber did not rebut inferences that lots are distinct |
| Evidentiary burden — who must prove anti‑modification applies | Caliber must prove by preponderance that all § 1322(b)(2) elements are met | Debtors only need to show modification is permitted once Caliber fails to prove the exception | Court: Caliber bears initial burden and failed to satisfy it; Debtors may modify claim |
Key Cases Cited
- Nobelman v. American Savings Bank, 508 U.S. 324 (construing § 1322(b)(2) anti‑modification policy)
- Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir. 1985) (single large tract containing residence may be protected)
- GMAC Mortgage Corp. v. Marenaro (In re Marenaro), 217 B.R. 358 (1st Cir. BAP 1998) (adjacent lots not used for other purposes may still be covered)
- Beckford (In re Beckford), 247 B.R. 27 (Bankr. D. Conn. 2000) (protection where lots used together as single residence and adjacent lot unsaleable)