In re Bauer

660 B.R. 649

IN RE: Louis Thomas BAUER, Jr., Debtor.

Case No. 21-32089

United States Bankruptcy Court, N.D. Ohio, Western Division, WESTERN DIVISION

Signed March 29, 2024

MEMORANDUM OF DECISION REGARDING OBJECTION TO CLAIM

John P. Gustafson, United States Bankruptcy Judge

This matter comes before the court upon pro se Debtor's Louis Thomas Bauer, Jr.'s ("Debtor") Objection to Claim Number 3 by Claimant Perrysburg Land Company ("Objection"). [Doc. #64]. Perrysburg Land Company ("Creditor") filed a Response to Debtor's Objection to Claim No. 3 ("Response"). [Doc. #74]. Debtor did not file a reply. An Order for Evidentiary Hearing was entered on June 29, 2023, scheduling the evidentiary hearing on Debtor's Objection for August 2, 2023. [Doc. #146].

On August 2, 2023, the court held the evidentiary hearing on the Objection. Debtor, Creditor, and Creditor's counsel attended the hearing in person. The Chapter 13 Trustee attended the hearing telephonically. At the hearing, Debtor, Creditor, and Creditor's counsel presented testimony and other evidence in support of their respective positions.

For the reasons below, Debtor's Objection will be sustained.

JURISDICTION AND VENUE

The district court has jurisdiction over this Chapter 13 case under 28 U.S.C. § 1334. This case has been referred to this court by the district court under its general order of reference. 28 U.S.C. § 157(a); General Order 2012-7 of the United States District Court for the Northern District of Ohio. Matters concerning administration of the estate and allowance or disallowance of claims are core proceedings that the court may hear and determine. 28 U.S.C. §§ 157(a), (b)(2)(A), (B). Venue is proper under 28 U.S.C. § 1409(a).

These findings of fact and conclusions of law are made pursuant to Federal Rule of Bankruptcy Procedure 7052, made applicable to this contested matter by Federal Rule of Bankruptcy Procedure 9014. See e.g., Corzin v. Fordu (In re Fordu), 201 F.3d 693, 710 (6th Cir. 1999). Whether or not specifically referred to in this Memorandum of Decision, the court has examined all the submitted materials, weighed and observed the demeanor and credibility of the three witnesses, carefully considered all the evidence, and reviewed the entire record of the case in determining the facts pertinent to the case and drawing conclusions therefrom. See e.g., In re Parrish, 326 B.R. 708, 711 (Bankr. N.D. Ohio 2005)("In doing so, the court considered the witnesses' demeanor, the substance of the testimony, and the context in which the statements were made, . . .").

FACTS

A full account of Debtor's filing history, including Debtor's previous bankruptcy cases, is set forth in this court's Order re: Motion to Continue Hearing. [Doc. #136]. The court adopts and incorporates the Background section as if set forth herein. [Id., pp. 1-9].

In 1988, Debtor purchased real property, consisting of three lots at 190 W.S. Boundary, Perrysburg, Ohio ("Property"), located in a shopping center known as Country Charm Plaza, and placed a carwash on the Property after the City of Perrysburg granted a variance. (Testimony of Louis Thomas Bauer, August 2, 2023, 2:28:08-28:50 ("Bauer Test.")). Creditor sued the City of Perrysburg for granting the variance. (Id.) On February 19, 1991, Debtor and Creditor agreed to settle that lawsuit by executing two documents. (Id.) The documents consisted of the Extinguishment of Easements, Grant of Easements, and Declaration of Covenants, Conditions and Restrictions, and the Compromise and Settlement Agreement (hereinafter referred to as the "Shared Maintenance Agreement"). (Creditor's Exs. C, E). Debtor testified that he executed both documents, and these are the only agreements between Debtor and Creditor. (Bauer Test., 2:39:36-40:05).

Pursuant to Paragraph 11 of the Shared Maintenance Agreement, Creditor is responsible for managing the common areas of Country Charm Plaza, such as the parking lot and sidewalk. (DeWood Test., August 2, 2023, 3:04:26-05:01); (Creditor's Ex. E). The terms outlined in the Shared Maintenance Agreement govern the obligations of various lot owners, including Debtor, in relation to shared costs and expenses incurred by Creditor for maintaining and repairing the common areas, including insurance costs and trash removal. (Id. at 03:05:28-06:00, 03:07:31-08:57). Per the Shared Maintenance Agreement, each owner of property shares in the costs and expenses incurred by Creditor in maintaining and repairing the common areas for that calendar year. (Creditor's Ex. E).

The Shared Maintenance Agreement also governs the monetary amounts and obligations due by each property owner. (Id.) The amounts due by each property owner for that calendar year are paid in monthly installments. (Id.) Failure to pay the monthly installment results in a 10% late charge. (Id.) There is an additional 8% late charge after ten days. (Id.) Monthly installments that remain unpaid for a year after the due date accrue interest at the rate of 18% a year. (Id.) Furthermore, according to the Shared Maintenance Agreement, Creditor can secure the outstanding balance by obtaining a lien against the Property. (Id.)

On February 19, 1991, Creditor sued Debtor for monies allegedly owed. (Creditor's Ex. C). At issue was the amount of Debtor's proportionate share under the Shared Maintenance Agreement, which was 9%. (Creditor's Ex. E). However, the parties executed a Compromise and Settlement Agreement (the "Settlement"), altering, inter alia, this figure down to 7.272%. (Creditor's Ex. C); (Bauer Test., 2:34:28-24:36); (DeWood Test., 03:13:08-13:23).

In the Settlement, Creditor and Debtor agreed that Debtor's monthly charge would be "thirty-six percent (36%)" of the 7.272% amount owed. (Id. at 03:20:52-21:42). This would be a monthly payment of approximately $243.84 to be started on July 2002. (Creditor's Ex. C); (Id. at 3:22:13-3:22:45). Further, Debtor agreed to no longer "vote on any matter submitted to the shareholders," granting Creditor a permanent proxy. (Creditor's Ex. C). Since July 2002, Debtor has not made a payment to Creditor. (DeWood Test., 03:19:54-20:05).

Debtor has not conducted business on the Property for twenty years, and the Property has remained essentially abandoned during that time. (DeWood Test., 03:40:03-41:36). Nor has Debtor made any payments to Creditor in fifteen or twenty years. (Bauer Test., 2:35:27-2:35:36). Debtor does not dispute his obligations under the debt but does contest the $460,000.00 figure Creditor presented. (Bauer Test., 2:36:20-2:36:35).

In 2005, Creditor commenced a foreclosure action asserting its lien rights, which was subsequently voluntarily dismissed by Creditor. (Bauer Test., 2:31:58-2:33:21); (Testimony of Creditor attorney Mark W. Sandretto, August 2, 2023, 1:42:52-43:20 ("Sandretto Test.")). In 2010, Creditor increased the monthly payment by 5% for all individual lot owners. (DeWood Test., at 3:22:41-3:22:48). As a result, Debtor's monthly payment increased from $243.84 to $256.03. (Creditor's Exs. B, F). The amount owed for the billing period ending on December 31, 2013, was $68,661.50. (Creditor's Ex. B). The amount owed for the billing period ending on December 31, 2021, was $337,314.93. (Creditor's Ex. B).

The two Chapter 13 cases filed by the Debtor in 2019 are detailed in the court's Order re: Motion to Continue Hearing, Doc. #136.

On October 9, 2020, the Treasurer of Wood County, Ohio, commenced a foreclosure action against the Property. (Debtor's Ex. 20). Creditor was identified as a lienholder or as a party with an interest in the Property. M. Charles Collins represented Creditor in the foreclosure action. (DeWood Test., 03:35:04-36:01).

On July 22, 2021, Debtor filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code. Creditor was not listed or scheduled in that case. Creditor did not file a claim in that case. (DeWood Test., 02:02:12-02:16). On August 31, 2021, the court dismissed Debtor's Chapter 13 case, for cause, including the failure to prosecute the case in accordance with the Bankruptcy Code and Federal Rules of Bankruptcy Procedure and the case was closed on October 12, 2021. Also scheduled for hearing at the same time as the court's Order to Show Cause was Debtor's Motion for Leave for Waiver of Credit Counseling or in the Alternative an Additional 7 Days to Comply Due to Exigent Circumstance. Because the case was being dismissed, the Motion for Leave was denied as moot.

On December 16, 2021, Debtor filed another voluntary petition for relief under Chapter 13 of the Bankruptcy Code. On or about December 16, 2021, Mr. DeWood learned about Debtor's intention of petitioning for relief. (Bauer Test., 2:22:16-22:26). Less than two weeks after Debtor filed a Petition for relief under Chapter 13 of the Bankruptcy Code, Mr. DeWood informed Debtor he was aware of the bankruptcy case. (Id. at 2:22:28-22:36). Debtor testified that, in his view, this is when "they" learned about the bankruptcy. (Id.) In the foreclosure case, a decree was issued with respect to Debtor's Property, and a sale occurred after the petition for relief was filed in which an entity associated with Mr. DeWood was the successful bidder at the real estate judicial sale. (Sandretto Test., 11:42:49-43:06); (Sandretto Test., 1:34:35-38:01). However, Peter Shawaker, not Mr. DeWood, was Creditor's president at the time Debtor filed this bankruptcy in late 2021. (DeWood Test., 02:09:47-09:59).

In the foreclosure action, Creditor was represented by Mr. Collins. Mr. DeWood did not know Mr. Collins. (DeWood Test., 02:10:44-11:07).

In Creditor's proof of claim, the only charge that postdates the date of filing is the late charge of 18% interest for the year on December 31, 2021. (Id.); (DeWood Test., 03:28:28-28:46). The amount owed as of the date of filing appears to be $337,314.93, which is found in the statement for the billing period starting January 1, 2021 and ending December 31, 2021, less the 18%...