In re Peterson

581 B.R. 789

IN RE: Assata N. PETERSON, Debtor.

Case No. 16–13521–DER

United States Bankruptcy Court, D. Maryland, (Baltimore Division).

Signed February 7, 2018

Brett Weiss, Esq., Chung & Press, LLC, 6404 Ivy Lane, Suite 650, Greenbelt, Maryland 20770, Attorney for the Debtor, Assata N. Peterson.

Kathleen M. Elmore, Esq., Elmore & Throop, P.C., 5 Riggs Avenue, P.O. Box 1473, Severna Park, Maryland 21146, Attorney for the Movant, The Newport Condominium, Board of Directors and Council of Unit Owners.

Nancy Spencer Grigsby, 185 Admiral Cochrane Drive, Suite 240, Annapolis, Maryland 21401, Chapter 13 Trustee

MEMORANDUM OPINION

DAVID E. RICE, U.S. BANKRUPTCY JUDGE

This is the second of two cases in which this court was asked to determine the extent to which a condominium should be granted relief from the automatic stay to pursue collection of post-petition assessments from a debtor who surrendered an over-encumbered condominium unit under a previously confirmed Chapter 13 plan. Neither the lender nor the condominium objected to confirmation of that plan. Unlike the plan considered in In re Wiley , 2018 WL 604401, 581 B.R. 441 (Bankr. D. Md. Jan. 26, 2018), however, the plan in this case provided not just for the unit to be surrendered, but also for title to be vested in the lender upon confirmation pursuant to 11 U.S.C. § 1322(b)(9). Because a confirmed plan is binding on the parties, the court concludes that in this case the condominium also should be granted relief from the stay, but only to pursue collection from the debtor of the post-petition assessments that accrued prior to confirmation of the Chapter 13 plan.

The court has before it the Motion for Relief from Automatic Stay (the "Motion") filed by The Newport Condominium Association, Board of Directors and Council of Unit Owners (the "Condominium"), and the Opposition filed by the debtor, Assata N. Peterson (the "Debtor"). The Condominium requests termination of the automatic stay to (i) foreclose its in rem lien rights against the Debtor's condominium unit, and (ii) pursue an in personam collection action against the Debtor for unpaid assessments that accrued after commencement of this case. The Debtor does not oppose enforcement of in rem rights against her unit, but takes the position that she has no ongoing in personam liability for the post-petition assessments because under the terms of her confirmed Chapter 13 plan (i) the unit was surrendered to lienholders, (ii) the surrender was in full satisfaction of the underlying claims secured by the unit, and (ii) title to the unit was vested in the first priority mortgage lender, which was identified in the plan as Residential Credit Solutions, Inc. ("RCS").¹

The court conducted an evidentiary hearing on the Motion, following which the court held this matter under advisement and requested the parties to each submit a memorandum of law. After due deliberation and consideration of the memoranda, the court is prepared to rule on this matter.

Jurisdiction

The court has subject matter jurisdiction over this proceeding under 28 U.S.C. § 1334, 28 U.S.C. § 157(a), and Local Rule 402 of the United States District Court for the District of Maryland. This is a "core proceeding" under 28 U.S.C. § 157(b)(2)(G). This memorandum opinion constitutes the court's findings of fact and conclusions of law in accordance with Rule 52 of the Federal Rules of Civil Procedure (made applicable here by Rules 4001(a)(1), 7052, and 9014 of the Federal Rules of Bankruptcy Procedure ).²

Findings of Fact

Based upon the hearing, the court makes the following findings of fact which the court understands are not disputed.

This case was commenced when the Debtor filed a voluntary petition in this court on March 18, 2016 (the "Petition Date") seeking relief under Chapter 13 of Title 11 of the United States Code (the "Bankruptcy Code"). On the Petition Date, the Debtor owned real property commonly known as Unit 1413N, 4800 S. Chicago Beach Drive, Chicago, Illinois 60615 (the "Property").³ The Property is situated in The Newport Condominium, which is located in Cook County, Illinois. The Debtor has not lived at, used, or leased the Property at any time after the Petition Date.⁴

Under the terms of the Declaration of Condominium Ownership for the Newport Condominium recorded in the Land Records for Cook County, Illinois (the "Declaration"), unit owners are obligated to make monthly payments to the Condominium to cover the common expenses to the Condominium. The Declaration provides in pertinent part as follows:

[E]ach Owner of a Unit Ownership by acceptance of a deed therefor , whether or not it shall be so expressed in any such deed or other conveyance , shall be and is deemed to covenant and hereby agrees to pay to the Association such assessments or other charges or payments as are levied pursuant to this Declaration. Such assessments, or other charges or payments, together with interest thereon and costs of collection, if any, as herein provided, shall be a charge on the Unit Ownership against which each such assessment is made. Each such assessment, or other charge or payment, together with such interests and costs, shall also be the personal obligation of the Owner of such Unit Ownership at the time when the assessment or other charge or payment is due .

Declaration, § 6.01 (emphasis added).⁵ Thus, if such amounts are not timely paid, unit owners are obligated to pay the Condominium the amount of the past due assessments, plus late fees, interest, and attorney's fees; all such amounts constitute a lien on the owner's unit and may be collected by the Condominium by either (i) foreclosure of its lien against the unit, or (ii) the filing of a collection lawsuit in personam against the owner of the unit at the time the particular assessment is due.

The Property is subject to two mortgages. According to the proofs of claim filed by the secured creditors, as of the Petition Date the Debtor owed $99,137.14 secured by the first mortgage and $28,062.71 secured by the second mortgage.⁶ No objection has been filed with respect to allowance of either proof of claim. In her Schedules, the Debtor stated that the value of the Property as of the Petition Date was $50,000.00. Apparently, RCS instituted a foreclosure proceeding against the Property in state court in Illinois prior to the Petition Date, but the parties are uncertain as to the status of that proceeding. The Debtor does not dispute the Condominium's contention that she is the record owner of the Property according to the Land Records of Cook County, Illinois.

Although the Condominium did not file a proof of claim, it is also a secured creditor of the Debtor. According to the terms of the Declaration, however, the priority of the Condominium's lien is subordinate to at least the first mortgage.⁷ At the time the Motion was filed, the Condominium asserted that it was owed under the Declaration at least $12,420.08 for assessments, late fees and other charges with respect to the Property that were due for time periods after the Petition Date. According to the Ledger attached to the Motion, however, the amount due at the time the Court confirmed the Debtor's plan was only $4,096.05.

In addition, the court takes judicial notice of the following facts which are also not in dispute and which can be determined from the record in this case. On November 29, 2016, this court entered an Order Confirming Plan (the "Confirmation Order") that confirmed the Debtor's amended Chapter 13 plan filed on September 26, 2016 (the "Chapter 13 Plan"). The Debtor served the Chapter 13 Plan on RCS, Ditech, SLS, and the Condominium. The only objection to confirmation of the Chapter 13 Plan was filed by the Chapter 13 Trustee, whose objection was resolved prior to the confirmation hearing scheduled for November 22, 2016.

With respect to the Property and the secured claims of RCS, SLS, and the Condominium, the Chapter 13 Plan provides in pertinent part as follows:

The following secured claims will be satisfied through surrender of the collateral securing the claims (describe the collateral); any allowed claims for deficiencies will be paid pro rata with general unsecured creditors; upon confirmation of the plan, the automatic stay is lifted, if not modified earlier, as to the collateral of the listed creditors:

[Thereafter, the Debtor lists RCS, SLS, and the Condominium as claimants, states an amount for each of their claims, and describes the collateral of each of them as the Property.]

Amended Chapter 13 Plan, ¶ 2(e)(iv) [Docket No. 41, Page 2 of 3]. In addition, the Chapter 13 Plan contained the following relevant nonstandard provision:

All collateral listed in ¶ 2(e)(iv) claims is surrendered in full satisfaction of the underlying claims secured by the collateral. Pursuant to §§ 1322(b)(8) and (9), title to the [Property] shall vest in Residential Credit Solutions upon confirmation, and the Confirmation Order shall constitute a deed of conveyance of the Property when recorded at the applicable Land Records office.

Amended Chapter 13 Plan, ¶ 8 [Docket No. 41, Page 3 of 3]. None of RCS, Ditech, SLS, or the Condominium filed a notice of appeal from the Confirmation Order, which order is now, and long has been, a final order. The Confirmation Order provides (consistent with the terms of the Chapter 13 Plan)⁸ that "the property of the estate shall not vest in the Debtor until the Debtor is granted a discharge or the case is dismissed or otherwise terminated." Order Confirming Plan [Docket No. 49, page 1 of 2].

Conclusions of Law

The outcome here is in large part governed by this court's recent decision in Wiley . In this case (like that one) the Condominium seeks relief from the automatic stay to enforce its in rem and in personam collection rights against the Property and the Debtor. For the reasons stated in Wiley , in light of confirmation of the Chapter 13 Plan there is no reason why any further order of this court is needed should the...