OPINION
Conrad Noll, a prominent Springfield attorney and banker, used to offer this bit of advice to lenders and other people who don’t like losing money:
A. Paternity is a matter of conjecture and opinion.
B. Maternity is a matter of certainty.
C. Value of collateral is a matter of conjecture and opinion.
D. Amount of debt is a matter of certainty.
This is a dispute about the value of collateral.
The Debtors, Ray and Mary Watkins, filed a petition pursuant to Chapter 12 of the Bankruptcy Code on March 18, 1996. One of the assets of the bankruptcy estate was a family farm of approximately 150 acres. The real estate was secured by a first mortgage to Agribank, FCB in the approximate amount of $200,000 and a second mortgage to Brandt Fertilizer.
On November 6, 1996, the Court held a valuation hearing on the Debtor’s real estate. The Debtor’s appraiser, Richard Samples, appraised the proрerty at $167,-595.35. Brandt’s appraiser, James Dodds, appraised the property at $275,000.00. Mr. Dodds admitted on cross-examination that his appraisal assumed that the land would be divided into three separate parcels to be sold separately. In addition, Brandt submitted a report from Wayne Briggs which criticized Mr. Samples’ appraisal. Mr. Briggs’ analysis of the Samples comparables suggested “a realistic bare land value near $1,300/acre for the subject.” After considering all of the evidence, the Court found the value of the property to be $197,600.00. This finding resulted in Brandt being treated as an unsecured creditor.
On November 18, 1996, the Court entered a written Order determining the value of the real estate to be $1,300 per acre for a totаl of $197,600.00. Brandt did not appeal this Order.
On February 3, 1997, the Court confirmed the Debtor’s Chapter 12 plan. The plan provided in paragraph 16 as follows:
That with respect to the claim of BRANDT CONSOLIDATED, INC., and the Court having determined the value of the real estate to be only $197,-600.00, the mortgage held by BRANDT CONSOLIDATED, INC. is null and void and of no consequence and BRANDT CONSOLIDATED, INC. is hereby ordered to immediately releasе its mortgage and shall therefore be treated as an unsecured creditor.
The Order of confirmation was not appealed.
On January 15, 1999, the Debtors filed a Request for Discharge. The Debtors assert that they “have completed all payments called for under the terms of the Plan.”
On January 29, 1999, Brandt filed a Motion to Reconsider Court’s Order of
At oral argument on Brandt’s motion, Brandt’s counsel advised the Court that one of its experts, Mr. Briggs, was alsо disciplined by the agency for his report concerning the subject real estate. The third appraiser in this case, Mr. Dodds, was not a licensed appraiser, and therefore not subject to administrative review.
11 U.S.C. § 502(j) provides in pertinent part as follows:
A claim that has been allowed or disallowed may be reconsidered for cause. A reconsidered claim may be allowed or disallowed according to the equities of the case ...
Bankruptcy Rule 3008 provides as follows:
A party in interest may move for reconsideration of an order allowing or disallowing a claim against the estate. The court after a hearing on notice shall enter an appropriate order.
Conspicuously missing from both the statute and the rule is a time limit for the filing of a motion for reconsideration. However, courts will generally deny reconsideration of a claim after confirmation of a reorganization plan because such reconsideration would conflict with the binding effect of a confirmation order under 11 U.S.C. § 1227(a). In re Duke, 153 B.R. 913, 916-17 (Bankr.N.D.Ala.1993).
11 U.S.C. § 1227(a) provides as follows:
Except as provided in section 1228(a) of this title, the provisions of a confirmed plan bind the debtor, each creditor, each equity security holder, and each general partner in the debtor, whether or not the claim of such creditor, such equity security holder, or such general partner in the debtor is provided for by the plan, and whether or not such creditor, such equity security holder, or such general partner in the debtor has objected to, has accepted, or has rejeсted the plan.
The Seventh Circuit has recognized the sanctity of confirmation orders.
Matter of UNR Industries, Inc.,
The claims allowance process, which includes the valuation of collateral, is a process that occurs preconfirmation.
In re Duke, supra,
The unappealed confirmation оrder herein precludes Brandt from seeking reconsideration of the valuation order alone. The valuation could be altered only if the creditor were also entitled to revoke, vacate, or modify the confirmed plan itself. Brandt has neither sought relief from the plan itself nor alleged grounds which might entitle it to relief from the plan.
11 U.S.C. § 1229, which provides for рostconfirmation modification, is an exception to § 1227.
In re Taylor,
Revocation of a confirmed plan is authorized by 11 U.S.C. § 1230. Revocation must be sought within 180 days of confirmation, and relief is limited to confirmation orders procured by fraud. The revoсation proceeding must be brought as an adversary proceeding and there must be a showing of fraudulent intent.
Matter of Pence, supra,
After confirmation, a motion to reconsider under § 502(j) is the only means to question the validity of a claim.
In re Bernard,
Neither the Bankruptcy Code nor the Bankruptсy Rules define “cause” for reconsideration of a claim. However, courts generally agree that Bankruptcy Rule 9024, which incorporates Fed. R.Civ.P. 60, sets forth the standards for reconsideration of claims and helps define “cause” under § 502(j).
In re Farley, Inc.,
Rule 60 lists several available grounds for relief from a final judgment or order. The only grounds of any possible relevance tо this proceeding are Rule 60(b)(2) for newly discovered evidence and the catchall of Rule 60(b)(6) for any other reason justifying relief.
A Rule 60(b)(2) motion must be brought within one year of the judgment or order in question. The present matter was brought more than one year after the or
In any event, the administrative decision disciplining Mr. Samples does not justify relief under Rule 60(b)(2). Newly discovered evidence is limited to (1) evidence in existence at the time of trial but not discovered until later; (2) evidence which could not have been timely discovered by due diligence; (3) evidence which is not merely cumulative or impeaching; (4) evidence which is material, and (5) evidence which would probably produce a new result at trial. All of these requirements must be mеt.
Matter of Wildman,
The conclusions of the disciplinary agency were not in existence at the time of the valuation hearing or confirmation order and thus cannot qualify as newly discovered.
Rivera v. M/T Fossarina,
Brandt cross-examined Mr. Samples at the valuation hearing. In addition, Brandt submitted its own appraiser’s critique of the Samples appraisal. Thus, the agency’s opinion regarding the Samples appraisal is cumulative evidence offered merely as further impeachment of the Samples appraisal.
The Court is not bound by the agency’s criticisms of the Samples appraisal. The agency’s standards may well be quite different from the standard used by this Court in valuing farmland in a Chapter 12 proceeding. Therefore, the agency’s criticisms do not constitute material evidence. This is particularly true where the agency merely criticized the procedure used by Mr. Samples; the agency never said that Mr. Samples’ value was wrong or purported to make any determination concerning the value of the property.
Further, the state administrative proceeding was a complaint against Mr. Samples’ real estate appraisal license. A real estate apрraisal license is not a prerequisite to qualify as an expert witness.
See In re Southern Industrial Banking Corp.,
The agency’s criticisms of the Samples appraisal would not have аffected the result of the valuation hearing. The Court did not accept the Samples appraisal at 'face value. Instead, the Court made its own determination of value based upon all of the evidence. The Court’s value was approximately 18% higher than Mr. Samples’ value.
The agency criticized Mr. Samples for failing to use a particular comparable sale. However, that comparable sale was included in another appraisal before the Court and it was considered by the Court. The agency also questioned the appropriateness of the comparables used by Mr. Samples. Mr. Samples testified extensively about the appropriateness of his compara-bles. In addition, the Briggs report consisted primarily of Mr. Briggs’ criticism of the five comparable sales used by Mr. Samples. The Court considered all of this evidence in reaching its valuation.
The agency criticized Mr. Samples for failing to include an income approach to
The only competing appraisal offered by Brandt was the Dodds appraisal, which assumed that the land would be divided up into separate smaller parcels and sold separately. This is not a proper method for valuing property which a Chapter 12 debtor will be retaining for use in implemеnting the reorganization plan. The Debtors’ current and prospective use of the real estate, i.e. as a full-time family farm, is the correct basis for an appraisal in determining the amount of a creditor’s secured claim.
In re Brace,
Given the problems with the Dodds appraisal, Brandt has failed to show any probability that reconsideration would lead to a new valuation in excess of the amount of the first mortgage indebtedness. Indeed, the Court’s valuation was entirely consistent with the report submitted by Brandt’s other witness, Mr. Briggs, in his critique of the Samples appraisal. Brandt has not satisfied any of the requirements for obtaining relief on the grounds of newly discovered evidence.
Rule 60(b)(6) authorizes relief from a judgment or order on any other grounds justifying relief. A creditor seeking relief on these grounds must act within a reasonable time. Waiting to bring a reconsideration motion until the plan is near completion is not reasonable.
In re Haynes,
Moreover, Rule 60(b)(6) relief is limited to extraordinary circumstances which create a substantial danger of an unjust result.
Industrial Associates, Inc. v. Goff Corp.,
Reconsideration of the valuation is not necessary to prevent an unjust result. For all of the reasons previously discussed, the agency’s disciplinary action of Mr. Samples would not alter the result of the initial valuation.
If the initial valuation had been higher, Brandt would have received payments under the plan for the secured amount of its claim, thereby leaving less money available for unsecured creditors. The payments to Brandt would have satisfied and discharged its lien accordingly, and the Debtors would, upon completion of the plan, have rеceived their discharge without continuing to be burdened by the lien. The relief sought by Brandt would not accomplish this same result. Instead of seeking to recover back payments made to unsecured creditors. Brandt seeks to retain a lien against the property. The Debtors would be in a worse position than they would have been in had a higher valuation been made at the outset. The Debtors relied upon the plan as confirmed in making payments thereunder, and reconsideration at this point in time would create, rather than prevent, an unjust result.
For the foregoing reasons, the Motion of Brandt Fertilizer to Reconsider Court’s Order of November 18, 1996, is denied.
This Opinion is to serve as Findings of Fact and Conclusions of Law pursuant to Rule 7052 of the Rules of Bankruptcy Procedure.