493 B.R. 453
Bankr. M.D. Penn.2013Background
- Adversary to determine extent of secured status of Bank's mortgage on Debtor's residence.
- Debtor filed Chapter 13 on August 17, 2012; no confirmed Chapter 13 plan at the time.
- Bank and Debtor filed cross motions for summary judgment in April 2013; Bank granted, Debtor denied.
- Debtor argues Bank's mortgage is secured by rents and personal property beyond fixtures; seeks reduction of Bank claim.
- Bank asserts mortgage is limited to fixtures and protected by anti-modification clause in 11 U.S.C. § 1322(b)(2) and related provisions.
- Court analyzes scope of security interest, incidental property, and applicability of the anti-modification clause to principal residence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 1322(b)(2) anti-modification apply to the mortgage lien? | Shull contends mortgage removes anti-modification protection. | PNC argues anti-modification applies to principal residence liens. | Anti-modification applies; lien cannot be modified. |
| What is the scope of Bank's security interest under the Mortgage? | Personal Property includes equipment and non-fixture items beyond fixtures. | Security interest limited to fixtures attached to real property. | Security interest limited to fixtures; incidental property includes rents under § 101(27B). |
| Do incidental-property definitions extend protection to rents tied to the principal residence? | Rents may be encumbered as part of incidental property for principal residence. | Rents fall within incidental property; but actual security interest is fixtures-based. | Rents are within incidental property; anti-modification still applies to the mortgage. |
Key Cases Cited
- Butner v. United States, 440 U.S. 48 (1979) (state-law governs property interests in bankruptcy.)
- Cloverleaf Development, Inc. v. Horizon Financial Assoc. (Pa. Super. Ct.), 500 A.2d 163 (Pa. Super. 1985) (construction of mortgage terms; intent from writing.)
- Mahoney v. Furches, 468 A.2d 458 (Pa. 1983) (contract interpretation; intent and language control.)
- Noll by Noll v. Harrisburg Area YMCA, 643 A.2d 81 (Pa. 1994) (trusts and security interests; Pennsylvania law governing.)
- In re Ferandos, 402 F.3d 147 (3d Cir. 2005) (anti-modification doctrine under § 1322(b)(2).)