489 B.R. 698
Bankr. S.D. Ohio2013Background
- Kreitzers filed a Chapter 13 petition and plan concerning their residence at 3434 Lindale Ave., Dayton, Ohio.
- Mortgage to Decision One was assigned to MERS and later to Household Realty; a 2009 assignment followed.
- State Foreclosure action (2009) resulted in a State Court Judgment in favor of Household Realty for ownership and standing.
- Bankruptcy adversary proceeding (August 2011) includes five counts challenging Household Realty/HSBC’s claim and proceedings.
- First count seeks bifurcation of the claim under § 506 based on a miscellaneous‑proceeds provision; other counts challenge fees, standing, and an alleged defective mortgage assignment.
- The court granted Household summary judgment on counts 1, 3, 4, and 5, denied summary judgment on count 2, and denied Kreitzers’ cross-motion as to count 1.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the miscellaneous proceeds clause create additional security under § 1322(b)(2)? | Kreitzers: proceeds are personal property; bifurcation allowed | Household: proceeds are incidental benefits bound to Real Property | No; § 1322(b)(2) preserved; proceeds not additional security |
| Is count 2 barred by res judicata or collateral estoppel from state foreclosure? | Kreitzers: NovaStar/Ohio law allow post-judgment review | Household: preclusion applies; state judgment controls | Not barred; issue-specific review permitted; state judgment did not preclude this challenge |
| Are counts 3 and 4 barred by res judicata or collateral estoppel? | Kreitzers: standing issues alleged; could be relitigated | Household: standing adjudicated in state court | Barred by res judicata and issue preclusion; claims dismissed |
| Can Kreitzers or trustee avoid the Mortgage for faulty assignment under § 544(a)? | Fifth count: defective second assignment jeopardizes lien | Assignment issues do not void the mortgage if properly recorded | Grant summary judgment for Household; faulty assignment does not avoid mortgage |
| Do the Kreitzers have derivative standing to challenge the claim on behalf of the Trustee? | Derivative standing pleaded | Trustee not party; insufficient record | Denied; Kreitzers lack proper derivative standing to sue on trustee's behalf |
Key Cases Cited
- Allied Credit Corp. v. Davis, 989 F.2d 208 (6th Cir. 1993) (miscellaneous proceeds not extra security; incidental property; §1322(b)(2) protection preserved)
- In re Thomas, 344 B.R. 386 (Bankr. W.D. Pa. 2006) (miscellaneous proceeds issue discussed in dicta; chose in action independent of real property)
- Nobelman v. American Sav. Bank, 508 U.S. 324 (1993) (legislative history of 1322(b)(2) supports residential mortgage protections)