Velazquez v. Countrywide Home Loans Servicing, L.P. (In Re Velazquez)
660 F.3d 893
5th Cir.2011Background
- Velazquez filed Chapter 13; Note=$125,986 with Deed of Trust securing it; Debtors defaulted and filed bankruptcy May 19, 2008.
- Countrywide filed a timely proof of claim for $141,733.93, including $200 post-petition attorney fees as arrearage.
- Countrywide filed a Fee Application Feb 2009 seeking $200 plus $150 for preparation of the application.
- Bankruptcy Court ruled Countrywide could not recover its fees under the Deed of Trust and found Rule 2016 inapplicable since no controversy existed.
- District Court affirmed; Countrywide appealed to the Fifth Circuit.
- Court reverses and remands for entry of an order allowing the fees; discusses interpretation of contract and Rule 2016 applicability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| How Section 9 of the Deed of Trust should be read | 'And' means 'either or both'—fees may be incurred to protect either interest or rights under the Instrument. | 'And' means 'both'—fees accrue only when both property interest and rights under the Deed of Trust are protected. | 'And' read as 'either or both'; Countrywide may recover the fees. |
| Whether Rule 2016 applies to Countrywide's fee recovery | Rule 2016 compliance was not required because the Claim was filed and unobjected to. | Rule 2016 applies to interim/final compensation for services in the estate. | Issue moot after reversal/remand; court did not decide applicability. |
Key Cases Cited
- In re Rangel, 408 B.R. 650 (Bankr.S.D. Tex. 2009) (fees for protecting lender's rights under the Deed of Trust in bankruptcy context)
- Bruce v. First Fed. Sav. & Loan Ass'n of Conroe, Inc., 837 F.2d 712 (5th Cir. 1988) (interpretation of 'and' vs 'or' in contract language)
- Aerospatiale Helicopter Corp. v. Universal Health Servs. Inc., 778 S.W.2d 492 (Tex.App.-Dallas 1989) ('and' may be read as 'any one or all of' when context requires)
- Phoenix Holdings, Ltd. v. Circle C Land Corp., 987 S.W.2d 933 (Tex.App.-Austin 1999) (interpret contract harmonization and meaning of provisions)
- Nat'l Union Fire Ins. Co. of Pittsburgh v. CBI Indus., Inc., 907 S.W.2d 517 (Tex. 1995) (contract interpretation under Texas law; whole writing approach)