547 B.R. 204
Bankr. S.D. Tex.2016Background
- Debtor filed Chapter 13 and confirmed a plan (60 months) that treated Mesquite Bean’s claims for Lot 27 pro rata (principal $10,659.64 at 13%), not under §1322(b)(5).
- Trustee completed plan payments and filed a Rule 3002.1(f) Notice of Final Cure asserting Lot 27 was paid in full; Mesquite Bean objected to the notice’s applicability and disputed the balance remaining.
- Mesquite Bean had been applying trustee disbursements first to escrow/taxes and interest (per loan terms) and then to principal; Trustee and Debtor contended plan required a different application of plan funds.
- Mesquite Bean filed a Notice of Post-Petition Fees/Charges (NPE) seeking additional amounts (~$4,385.52) largely for post-petition ad valorem taxes and accrued interest; Trustee had already paid Mesquite Bean $13,682.38 and $1,902.53 toward the NPE.
- Court found Rule 3002.1 inapplicable because the claim was not treated under §1322(b)(5) (it was payable within the plan term and treated pro rata under §1322(c)(2)); Mesquite Bean failed to timely seek administrative-expense relief and failed to provide required RESPA escrow notices.
- Court ruled Mesquite Bean waived any unpaid post-petition tax/charge claims, struck the Trustee’s 3002.1 notice, disallowed Claim No. 7 (NPE), ordered disgorgement of $1,902.53 to Trustee, and directed Mesquite Bean to release liens on Lots 26 and 27.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of Fed. R. Bankr. P. 3002.1 to creditor’s claim | Trustee/Debtor: Rule 3002.1 governs and supports trustee’s final-cure notice | Mesquite Bean: Rule 3002.1 does not apply because claim was paid pro rata, not under §1322(b)(5) | Rule 3002.1 inapplicable: claim was not a §1322(b)(5) cure/maintenance claim but payable within plan term (pro rata) |
| Proper application of trustee disbursements (to principal vs. escrow/interest) | Trustee/Debtor: Plan/order controls application; creditor improperly applied payments to escrow/interest first | Mesquite Bean: applied payments per loan contract (escrow, fees, interest then principal) | Plan/order controls; creditor’s application violated confirmed plan; res judicata precludes creditor’s contrary accounting |
| Timeliness and form of claim for post-petition taxes/administrative expenses | Trustee/Debtor: Mesquite Bean failed to timely file Rule 2016/§503 administrative expense requests | Mesquite Bean: filed NPE and accounting late and argued Rule 3002.1 issues | Mesquite Bean failed Rule 2016/§503 procedures; NPE insufficient and untimely — administrative expense claim disallowed |
| Nonbankruptcy notice obligations (RESPA) and remedy for failure | Trustee/Debtor: Mesquite Bean did not provide required escrow notices under RESPA; remedy should bar recovery | Mesquite Bean: contested scope/applicability of notice rules | Court found RESPA/escrow notice violations for 2011–2014 and, in equity, deemed Mesquite Bean waived any right to recover those post-petition deficiencies; disgorgement ordered |
Key Cases Cited
- In re Pierrotti, 645 F.3d 277 (5th Cir.) (§1322(b)(5) applies only where pre-bankruptcy terms show last payment due after plan end)
- Stern v. Marshall, 564 U.S. 462 (U.S. 2011) (constitutional limits on bankruptcy courts’ authority to enter final judgments)
- Wellness Int’l Network v. Sharif, 135 S. Ct. 1932 (U.S. 2015) (parties may consent to bankruptcy court adjudication to cure Stern concerns)
- Landgraf v. USI Film Prods., 511 U.S. 244 (U.S. 1994) (limits on retroactive application of new law)
- United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (U.S. 2010) (res judicata effect of confirmed plan and importance of timely objections/appeals)
- Rake v. Wade, 508 U.S. 464 (U.S. 1993) (application of §506(b) to secured claims and interest/fees)
- In re Padilla, 379 B.R. 643 (Bankr. S.D. Tex.) (creditors must seek court permission and comply with Rule 2016 to recover post-petition fees/expenses)
- Stratford of Texas v. Commissioner, 635 F.2d 365 (5th Cir.) (application of §1327 and effect of confirmation order)