Ford Motor Credit Co., LLC v. RobertsonFord Motor Credit Co., LLC v. Robertson
MEMORANDUM OPINION AND ORDER
Pеnding before the court is Ford Motor Credit Company’s appeal (Doc. No. 1 at 3) of the bankruptcy court’s September 24, 2007, Order Confirming Chapter 13 Plan (Doc. No. 2-13). For the reasons set forth below, the court vacates the bankruptcy court’s order and remands the case.
I. Background
The Appellee, Roger D. Robertson, purchased a 2006 F-350 pickup truck from Shelor Motоr Company on May 27, 2006, under a Retail Installment Sales Contact. (Doc. No. 2-15 at 2.) Pursuant to the sales contract, Ford Motor Credit Company (“Ford”) loaned Robertson $34,270.88, which included the cost of the vehicle, taxes, and other required fees, at a rate of 8.79% annually, and Robertson provided Ford with a purchase money security interest in the 2006 F-350. (Id.) Ford immediately perfeсted the security interest and such lien is noted on the vehicle’s title. (Id. at 3.)
On May 17, 2007, Robertson filed with the United States Bankruptcy Court for the Southern District of West Virginia a Petition for Chapter 13 Bankruptcy (Dоc. No. 2-8) and associated Plan (Doc. No. 2-9). The Plan proposed that Robertson pay Ford $34,279.16 without interest over the course of sixty months and that upon completion of the payments Ford turn over the title to the 2006 F-350, lien free. (Doc. No. 2-9 at 7.)
The bankruptcy court transmitted the Plan to Robertson’s creditors, including Ford pursuant to Rule 3015 of the Federal Rules of Bankruptcy Procedure. Ford then filed a secured proof of claim in the amount of $30,265.76 on June 13, 2007, (Doc. No. 2-15), and simultaneously objected to the Plan, arguing that it violates Title 11 United States Code Sеction 1325 because it does not provide for the payment of interest over the course of the sixty-month period (Doc. No. 2-11). Specifically, Ford requested an interest ratе of one to three percentage points above the prime rate (8.25%). (Id.) Robertson, by counsel, responded in opposition arguing that where the book value of the 2006 F-350 is only $24,975.00, the proposed Plan pays Ford over $10,000.00 more than the value of the collateral and is therefore proper pursuant to Title 11 United States Code Section 1326. (Doc. Nо. 2-12.)
During a September 14, 2007, hearing, the bankruptcy court overruled Ford’s objections, stating that the only “obligation of the debtor [Robertson] is to pay the claim [Ford’s secured claim] in full ovеr the life of the plan without interest.” (Doc. No. 2-14 at 8.) Specifically, the bankruptcy court reasoned that Title 11 United States Code Section 506 did not apply to the instant matter and thеrefore no section of the bankruptcy code requires interest to be paid on Ford’s secured claim. 1 (Id.) On September 24, 2007, the Plan was confirmed and Ford’s objection overrulеd in writing. (Doc. No. 2-13.) The plan, as confirmed, provided that Robertson pay Ford $30,265.76 without interest over the course of sixty months and that upon completion of the payments Ford turn over thе title to the 2006 F-350, lien free. (Id.)
*674 Ford immediately filed its Notice of Appeal. (Doc. No. 2-4.) This court received the appeal and the record on December 12, 2007, (Doc. Nos. 1, 2) and shоrtly thereafter set a briefing schedule (Doc. No. 3). Ford filed its initial brief on January 22, 2008, (Doc. No. 4), to which Robertson responded on February 6, 2008 (Doc. No. 5). Ford replied on February 18, 2008, (Doc. No. 6), and accordingly the question is ripe for review.
II. Jurisdiction and Standard of Review
This court is vested with jurisdiction pursuant to 28 U.S.C. § 158(a) and Rule 8002 of the Federal Rules of Bankruptcy Procedure. The bankruptcy court’s factual findings are entitled to deference and are consequently reviewed only for clear error. Fed. R. Bankr.P. 8013;
In re Ekenasi
III. Analysis
Chapter 13 of the Bankruptcy Code affоrds a reorganization remedy for consumers and business owners with relatively small debts.
Johnson v. Home State Bank,
In support of its decision to overrule Ford’s objection to the confirmation of the Plan, it appears the bankruptcy court reasoned that since the hanging paragraph of Section 1325(a)
2
renders Section 506
3
in
*675
applicable to Ford’s 910 Motor Vehicle Claim, Ford could not be considered as having an “allowed secured claim” for purposes of Section 1325(a)(5)(B)(II)(ii), which as stated above requires a reasonable rate of interest where full payment of the debt is deferred over a period of time. (Doc. Nos. 2-13, 2-14.) Although the bankruptcy court did nоt make written findings of fact or conclusions of law as urged by Rule 52 of the Federal Rules of Civil Procedure, it did state that in overruling Ford’s objection it was relying on its own opinion in the case of
In re Cook,
No. 06-50169 (S.D.W.Va. Aug. 27, 2007) which in turn relies almost exclusively on
In re Wampler,
The viability of
Wampler
and its very limited progeny, however, is dubious at best and completely non-existent at worst.
See In re Wilson,
Indeed, the vast majority of courts have held that “the language of the hanging paragraph means only that claims falling within its ambit can’t be bifurcated [and] does not mean that such claims are not sеcured; thus, post-petition interest must be provided for in the plan.”
In re Vandernick,
No. 07-1068,
This court agrees with the majority position that the hanging paragraph of Section 1325(a) does not render a 910 Motor Vehicle Claim unsecured. Accordingly, Ford’s 910 Motor Vehicle Claim is an “allowed secured claim” and entitled to the
Till
rate of interest which is the national prime rate of interest adjusted as appropriate so as to compensate Fоrd for the time value
of its
money and the risk of default. Moreover, the
Till
analysis governs regardless of whether the contract rate of interest is less than the market prime rate.
See In re Taranto,
IV. Conclusion
For the reasons stated above, the court VACATES the bаnkruptcy court’s September 24, 2007, Order Confirming Robertson’s Chapter 13 Plan (Doc. No. 2-13), and REMANDS for further proceedings consistent with this Memorandum Opinion and Order.
The Clerk is directed to forward a cоpy of this Memorandum Opinion and Order to *676 all counsel of record; Helen M. Morris, United States Trustee; and the Honorable Ronald G. Pearson, United States Bankruptcy Judge.
Notes
. Although the bankruptсy court did not make written findings of fact or conclusions of law regarding Ford’s objection, it indicated during a telephone hearing that it overruled Ford's objection based upon its priоr holding in In re Cook, No. 06-50169 (S.D.W.Va. Aug. 27, 2007).
. The awkwardly worded hanging paragraph contained at the end of Section 1325(a) reads as follows:
"For the purpose of paragraph (5), section 506 shall not apply to a claim described in that paragraph if the creditor has a purchase money security interest securing the debt that is the subject of the claim, the debt was incurred within the 910-day preceding the date of the filing of the petition, and the collateral for that debt consists of a motor vehicle acquired for the personal use of the debtor, or if collateral for that debt consists of any other thing of value, if the debt was incurred during the 1-year period preceding that filing.”
*675 11 U.S.C. § 1325(a). In the instant case, it appears that all parties and the bankruptcy court agree that Ford's claim fits squarely within the hanging paragraph and therefore constitutes a "910 Motor Vehicle Claim.”
. The bifurcation or claim valuation parаgraph of Section 506 provides in relevant part that:
"[a]n allowed claim of a creditor secured by a lien on property in which the estate has an interest ... is a securеd claim to the extent of the value of such creditor’s interest in the estate's interest in such property ... and is an unsecured claim to the extent that the value of such creditor's interest ... is less than the amount of such allowed claim.”
11 U.S.C. § 506(a)(1).