Wile v. Household Bank (In Re Wile)Wile v. Household Bank (In Re Wile)
OPINION
Before the Court is Debtor’s Motion (1) for Reconsideration of Opinion and Order dated January 9, 2004 (“Reconsideration Motion”) and (2) to Transfer Case to Another District (“Transfer Motion”) and the objections of Decision One Mortgage Company (“Decision One”) to both motions. After notice and hearing, I find no basis to reconsider my January 9 ruling which held that the Chapter 13 case should be dismissed for inability to propose a confirmable plan
1
and granted Fairbanks Capital Corporation (“Fairbanks”) relief from stay based on Debtor’s failure to
DISCUSSION
A.
Preliminarily I note, as also pointed out by Decision One, that in seeking reconsideration the Debtor does not indicate what rule of procedure she relies upon. As she asks me to vacate my Order “pending consideration of the pertinent law and ‘policy’ ” issues she raises, I too assume her motion is made pursuant to Fed. R.Bankr.P. 9023 incorporating Fed. R.Civ.P. 59(e).
“The purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence.”
Harsco Corp. v. Zlotnicki,
The purpose of a Rule 59(e) motion is to allow the court to reevaluate the basis of its decision.... Motions for reconsideration are not at the disposal of an unsuccessful party to “rehash” the same arguments and facts previously presented.
See also Reich v. Compton
The thrust of Debtor’s argument is that my legal conclusion,
i.e.,
that the Chapter 13 case should be dismissed under 11 U.S.C. § 1307(c)(1) and (5) and Fairbanks should no longer be stayed from exercising its state court remedies because of Debt- or’s lack of payment, is erroneous because Fairbank’s secured claim has not been allowed. It has not been allowed because Debtor filed an adversary proceeding contending that she had no obligation to pay her mortgage because she had exercised her right to rescind it. Debtor’s thesis, unsupported by any legal authority, is that by placing a claim at issue through an objection or adversary proceeding and remaining current on the plan payment she proposes (in this case $10), she need do nothing further to make current payment to the secured claimant nor provide for its claim in her plan pending the outcome of the claim dispute. Moreover, she appears to advance the proposition that the pen-dency of the adversary proceeding in and
In enacting the Bankruptcy Code, Congress carefully balanced the rights of debtors and creditors. For example, while the automatic stay enjoins creditor action against the debtor and her property, it provides the creditor with adequate protection of its interest in the debt- or’s property so that its position does not deteriorate while it is statutorily enjoined. Moreover, it is generally accepted that the debtor’s burden to demonstrate that a reorganization is in process increases with the passage of time.
3
See United Savings Association of Texas v. Timbers of Inwood Forest Associates, Ltd.,
We note that bankruptcy courts are authorized to go forward with confirmation, for the benefit of the debtor and all other creditors, even when final liquidation of a claim of a particular creditor is impossible, by allowing the estimation of claims. See 11 U.S.C. § 502(c).
Id. See also In re Claypool,
In
In re Vincente,
Ab I understand Debtor’s argument, so long as there is an objection to a claim (therefore obviating allowed claim status at that juncture), the creditor cannot object to its treatment in the plan and the debtor can request confirmation, as done here, that treats the claim as though the debtor has prevailed. 4 Debt-or Memorandum at 6. Debtor’s syllogism is as follows: Since Debtor has objected to Advanta’s secured claim, Advanta does not have an allowed claim and its objection to the Debtor’s plan on the basis of its failure to pay the full amount of the secured claim must fail. Whether Advanta is the holder of an allowed secured claim will be determined in the yet to be tried adversary case. The Debtor offers no authority for his analytical framework.... His view, if correct, would put a premium on unresolved litigation and loses sight of § 502(c) which provides for the estimation of any unliquidated claim that may hold up the administration of the estate, [citations omitted]. While practically speaking it may be prudent to simply defer confirmation to allow the claim to be fixed, where as here, confirmation has been deferred for over one year and payments were not being made, the Debtor lost that accommodation. The only other option, if a debtor insists on seeking to confirm a plan that impairs a lien creditor’s rights, is to meet his burden under § 1325(a)(1). This Debtor chose to do nothing, and that is another reason confirmation alludes him in this case.
In this case, Debtor filed a Chapter 13 case on November 19, 2002. Her Chapter 13 plan dedicated $10 per month for 36 months as payment to the Chapter 13 trustee. The Chapter 13 trustee objected to confirmation on the grounds that the filed proofs of claim exceeded the plan funding and filed a motion to dismiss the Chapter 13 case. Debtor then filed these adversary proceedings on December 10, 2003 to assert rights under various consumer protection statutes which she contends will obviate the requirement of paying the mortgage and to secure damages from Decision One. Taking advantage of court-sponsored mediation, the Debtor was accorded six adjournments of the dismissal and confirmation hearings to allow the parties to engage in voluntary negotiations. When the discussions did not bring a consensual resolution, the Debtor was advised that no further continuances would be granted. Accordingly, on November 20, 2003, one year after the filing of the petition, the confirmation hearing was held. The record of that hearing is reflected in the Opinion. None of the factual findings have been challenged.
While the trustee or creditor has the initial burden of articulating a clear and cognizable objection to confirmation, “the debtor has burden of ultimate persuasion, and is therefore obliged to make a record if such is necessary to persuade us to overrule the objection and confirm the plan in the face of such an objection.”
Fricker,
The same rule applies with respect to a motion for relief. Again it is not sufficient to defend this contested matter by intoning the pendency of the adversary proceeding. Fairbanks met its burden of establishing “cause” for relief by proving that it had not been paid since the bankruptcy case • was filed. 11 U.S.C. § 362(d)(1). The burden then shifted to the Debtor to prove something more than that she had challenged Fairbank’s secured claim. While a stay relief hearing is a summary matter and will not determine the claim issue finally, it is nonetheless within the court’s discretion to require the party opposing relief to prove that it has a “colorable claim” pending. As noted by the Court in
Montgomery v. Dennis Joslin Company II, LLC (In re Montgomery),
Evidence of the alleged infirmity of the movant’s secured position or ownership is relevant in a procedural sense, as well; it may aid the fashioning of relief that is best balanced among the competing interests, and that will best promote the goals of the Code chapter under which the debtor filed for bankruptcy relief.
As Debtor failed to adduce any evidence that related to the alleged infirmity of Fairbank’s position, the sole record before me was Debtor’s failure to make any payments to its mortgagee for the term of this case. Granting relief on that record was inevitable.
Debtor also argues that I misapplied my decision in
In re Williams,
Finally I also stand on my decision not to transfer the adversary cases under 28 U.S.C. § 1631.
6
The only new argument made by the Debtor is that she believes “there is a significant potential limitations issue” with respect to the Destiny loan
7
“which may no longer be subject to rescission.” Motion ¶ 4. Notwithstanding that the separate Transfer Motion was filed, I am still unable to determine whether there is an actual statute of limitations bar to prosecution of the adversary complaints if she had to start anew. The Debtor’s contention is equivocal on this point and insufficiently developed for me to determine its merits. Given my admonition in the Opinion that the unsupported statement that there may be a statute of limitations problem was an insufficient basis to transfer this case, I would have expected a clear articulation of the problem now. Thus, if I treat the request to transfer as a new motion (as opposed to a reconsideration where an error of fact or law or newly discovered evidence must be established),
In short, the Reconsideration Motion and Transfer Motion are denied. Moreover, given the Chapter 7 trustee’s failure to administer the causes of action framed by Adversary Nos. 02-1373 and 02-1397, they will be dismissed forthwith for lack of jurisdiction. An Order consistent with this Opinion shall be entered.
ORDER
■ AND NOW, this 4th day of May 2004, upon consideration of the Debtor’s Motion (1) for Reconsideration of Opinion and Order dated January 9, 2004 (“Reconsideration Motion”) and (2) to Transfer Case to Another District (“Transfer Motion”) and the objections of Decision One Mortgage Company thereto, after notice and hearing, and for the reasons stated in the accompanying Opinion;
It is hereby ORDERED and DECREED that the Reconsideration Motion and Transfer Motion are DENIED. It is further ORDERED that the above captioned adversary proceedings are DISMISSED without prejudice.
Notes
. As the Debtor requested that I convert the case rather than dismiss it, my order accommodated that request.
. Upon conversion, this court would have no subject matter jurisdiction over the adversary cases unless the Chapter 7 trustee chose to prosecute them for the benefit of the estate. I gave the Chapter 7 trustee 30 days from service of the Opinion to either intervene or abandon the causes of action. Failure to intervene would be deemed an abandonment. On January 30, 2004, Howard Glassman was appointed Chapter 7 trustee. The first meeting of creditors was held on February 27, 2004, and on March 4, 2004, he filed his no-asset report and request to be discharged. He has taken no steps to intervene, and thus I consider these actions to have been abandoned.
. While the term “reorganization” is commonly used with respect to proceedings under Chapter 11, the concept applies to Chapter 13 as well which involves an adjustment of the debts of an individual with regular income. Chapter 13 cases are more commonly described as rehabilitation proceedings.
. Unlike the Debtor, Vincente requested confirmation of his plan. Debtor here seeks merely to keep continuing confirmation until the claim is resolved. I respectfully suggest that the difference in approaches is not as significant as it may appear. In both cases, the secured claimant is not being paid.
. As noted by the Flicker Court, while the Chapter 13 trustee uses the shorthand "lack of feasibility” as grounds for his objection, it is somewhat of a misnomer. When the trustee states that there is insufficient funding, it is "in fact a checkpoint to determine whether the requirement of 11 U.S.C. § 1325(a)(5)(B)(ii) is satisfied.” Id. at 436.
. The Debtor has presented this request both as part of the Reconsideration Motion and by separate motion being “mindful that she never formally requested a transfer” of the adversary proceedings to the District Court. Transfer Motion at ¶ 7. Rather the request was made at the conclusion of the confirmation and stay relief hearing and was treated as an oral motion and ruled upon.
. I do not know what "Destiny loan” Debtor is referring to as being possibly time barred. Transfer Motion ¶ 9. None of the parties are named Destiny.