759 F.3d 621
6th Cir.2014Background
- Debtors' property in Akron, Ohio, had delinquent real estate taxes with two tax lien certificates purchased by Plymouth Park at a negotiated rate (Certificate #1: 0.25%; Certificate #2: 18%).
- The certificates create a lien and allow foreclosure if not redeemed; they state a six-year (now certificate period) horizon for foreclosure actions.
- Debtors filed Chapter 13 to repay through a plan that proposed paying the certificate rates shown on the certificates during bankruptcy.
- Bankruptcy Court treated the rate as governed by Ohio law, applying 0.25% for Certificate #1 under § 5721.37(A)(3)(b) and 18% for Certificate #2 under § 5721.38(B) depending on redemption.
- BAP affirmed the 0.25% rate for Certificate #1, holding § 5721.37(A)(3)(b) tolls interest during bankruptcy and that § 5721.38 does not apply to a Chapter 13 plan redemption.
- This court reviews state-law interpretation de novo and affirms the Bankruptcy Court’s ruling that the correct rate for Certificate #1 is 0.25% during the pendency of the bankruptcy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What rate of interest applies to Certificate #1 during the pendency of bankruptcy? | Plymouth Park argues 18% under § 5721.38(B). | Debtors argue 0.25% under § 5721.37(A)(3)(b). | 0.25% applied during bankruptcy. |
| Does § 5721.37(A)(3)(b) tolling apply to the six-year period when bankruptcy is open? | N/A (Plymouth Park relies on § 5721.38) | § 5721.37(A)(3)(b) tolls period; certificate rate continues. | Yes, tolling applies; 0.25% rate continues. |
| Can a Chapter 13 plan constitute redemption under § 5721.38 to trigger 18%? | Yes, bankruptcy plan could satisfy redemption. | Redemption requires explicit statutory framework; plan does not trigger redemption. | Plan does not trigger 18%; 0.25% rate governs. |
Key Cases Cited
- Countrywide Home Loans Servicing v. Nichpor, 990 N.E.2d 565 (Ohio 2013) (Ohio redemption and tax lien mechanics cited in decision)
- Hartmann v. Duffey, 768 N.E.2d 1170 (Ohio 2002) (statutory construction principles; co-existence of statutes)
- RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 132 S. Ct. 2065 (S. Ct. 2012) (specific statute prevails over general when interpreting bankruptcy-related text)