446 B.R. 220
Bankr. W.D. Pa.2011Background
- Debtor filed Chapter 13 on December 4, 2003 to cure and reinstate Wells Fargo's mortgage; plan confirmations occurred, last being November 18, 2004; monthly Wells Fargo payment per plan was $656.11; Debtor received discharge on July 20, 2009; Wells Fargo issued a Notice of Payment Amount increasing to $1,554.70 effective January 1, 2006, retroactively violating confirmation orders; Trustee filed an Application for Final Report and Completion, which Wells Fargo did not object to; the July 20, 2009 order deemed the mortgage current as of the Trustee's last distribution; Wells Fargo later moved to vacate portions of that order; the court denied the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the finality of the 2009 order can be challenged under Rule 9024 | Wells Fargo argues the order is unlawful due to no cure and should be vacated | Borkowski argues Espinosa forecloses vacatur for finality, and Wells Fargo slept on rights | Denied; finality preserved under Espinosa and related authorities |
| Whether due process or notice defects invalidated the Application/Order | Wells Fargo asserts trustee failed adversary procedures | Court found adequate notice and opportunity to respond; service to Wells Fargo's address and counsel sufficed | Denied; due process satisfied as to notice and opportunity to object |
| Whether the motion to vacate can be grounded on mistake under Rule 60(a)/(b)(1) | Wells Fargo claims clerical mistake or mistake in the order | No mistake appeared; order was entered because plan completed and no objections filed | Denied; no clerical or substantive mistake shown |
| Whether excusable neglect supports relief from the order | Wells Fargo cites excusable neglect due to delay | Equities weigh against relief; Wells Fargo delayed for years and faced potential prejudice to Debtor | Denied; neglect not excusable and equities do not favor vacatur |
| Whether Wells Fargo compliance failures justify vacatur in light of equities | Wells Fargo blames trustee/debtor/counsel for oversight | Wells Fargo delayed action for years after notice of payment change; creditor inaction and delay harmed administration | Denied; creditor's long delay and lack of action negate grounds for vacatur |
Key Cases Cited
- Espinosa v. United States, 130 S. Ct. 1367 (U.S. 2010) (finality; Rule 60 not substitute for appeal; due process notice standard)
- Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (U.S. 1950) (due process notice adequacy; notice must be reasonably calculated)
- In re Kalikow, 602 F.3d 82 (2d Cir. 2010) (due process; notice and service adequate despite procedural irregularities)
- In re Mansaray-Ruffin, 530 F.3d 230 (3d Cir. 2008) (finality and adversary proceeding requirements in bankruptcy)
- In re Szostek, 886 F.2d 1405 (3d Cir. 1989) (equitable considerations in excusable neglect)
- In re Guterl Special Steel Corp., 316 B.R. 843 (Bankr. W.D. Pa. 2004) (notice by creditor's counsel; due process not violated by service)
- In re Venuto, 343 B.R. 120 (Bankr. E.D. Pa. 2006) (distinguishing cases where final orders were not challenged timely)
- In re Euliano, 442 B.R. 177 (Bankr. D. Mass. 2010) (alternative precedents on finality)
- In re Kalikow, 602 F.3d 82 (2d Cir. 2010) (see above)