Bankr. Case No. 08-12305 (KCF)
The opinion of the court was delivered by: Pisano, District Judge.
Before the Court is an appeal by Debtor-Appellant David Leroy Beers ("Beers") of the orders of Bankruptcy Judge Kathryn C. Ferguson granting Appellee EMC Mortgage Corporation‟s ("EMC") motion for relief from the automatic stay and denying Beers‟ cross motion for contempt. For the following reasons, the Bankruptcy Judge‟s decision will be affirmed.
EMC is the holder of a mortgage on Beers‟ principal residence. See Third Ch. 13 Plan, Bankr. Ct. Docket Entry ("BCDE") no. 133, 2 (showing EMC as mortgagee of the residence); Voluntary Pet., BCDE no. 1 (listing the residence as Beers‟ address). Beers filed his initial Chapter 13 petition on February 8, 2008. BCDE no. 1. Beers‟ original Chapter 13 Plan, filed on March 26, 2008, called for the cure of EMC‟s mortgage on Beers‟ residence pursuant to 11 U.S.C. § 1322(b)(5) and continued monthly payments outside the plan.*fn1 BCDE no. 21. It also called for payment of arrears in the amount of $25,000. Id. Plaintiff filed an amended plan on June 3, 2008, which also provided for the cure and reinstatement of EMC‟s mortgage and continued monthly payments outside the plan. BCDE no. 43. On November 24, 2008, that plan was confirmed by the bankruptcy court, BCDE no. 101, with the additional amendment that the arrearage on the mortgage was set at zero, BCDE no. 69.
Payments were made to EMC pursuant to a wage order garnishing the wages of Beers‟ daughter, BCDE no. 108, but payments were interrupted when she became ill, see BCDE no. 119 (certification explaining why payments were interrupted); see also Transcript of Mot. to Vacate Hearing ("Tr.") 5, BCDE no. 167. To settle the Trustee‟s ensuing motion to dismiss the case, BCDE no. 112, Beers filed another amended plan on July 21, 2009, which still provided for payments outside the plan, and listed "0" for the amount of arrearage even though monthly payments had been missed. BCDE no. 133. This plan was confirmed on September 16, 2009. BCDE no. 139.
On June 24, 2009, EMC filed with the bankruptcy court a Notice of Payment Change, which informed Beers that his monthly payments to EMC would increase to $1,352.14 to cover changes in taxes and insurance to his property, effective August 1, 2009. BCDE no. 131. According to a certification by EMC, Beers continued to pay the original, lower amount instead of the newer, increased amount, despite the Notice of Payment Change. See Certification, BCDE no. 153. On March 30, 2010, EMC moved before the bankruptcy court to vacate the automatic stay*fn2 because Beers failed to maintain the increased payments to EMC. Beers opposed the motion, claiming that he had maintained the payments, and filed a cross motion requesting that the bankruptcy court find EMC in contempt. EMC responded, clarifying that Beers had continued his payments, but at the lower, original amount rather than at the increased, newer amount in place pursuant to the Notice of Payment Change. On July 15, 2010, the bankruptcy court granted EMC‟s motion to vacate the stay and denied Beers‟ motion for contempt. Beers filed the instant appeal of the bankruptcy court‟s orders on August 27, 2010, which EMC opposes.
This Court has jurisdiction to hear appeals from final orders of the bankruptcy court. 28 U.S.C. § 158(a). Such appeals are a matter of right. The District Court reviews a bankruptcy court‟s decision to grant a motion to vacate the automatic stay for abuse of discretion. Rocco v. J.P. Morgan Chase Bank, 255 Fed. Appx. 638, 640 (3d Cir. 2007); see 11 U.S.C. § 362 (ascribing the decision to award stay relief to the discretion of the bankruptcy court). Similarly, the District Court also reviews the bankruptcy court‟s decision not finding EMC in contempt for abuse of discretion. In re Ben Franklin Hotel Associates, 1998 WL 94808, *3 (E.D. Pa. 1998) (citing Fellheimer, Eichen & Braverman, P.C. v. Charter Technologies, Inc., 57 F.3d 1215, 1223 (3d Cir. 1995)).
The Bankruptcy Judge granted EMC‟s motion to vacate the stay because Beers failed to maintain his payments to EMC outside the Chapter 13 plan. Tr. 16. This failure resulted from Beers‟ not increasing his payments pursuant to EMC‟s Notice of Payment Change, even though the notice was docketed with the bankruptcy court. Id. Beers contends that he was not in default because the latest amended plan confirmed a payment to EMC of $877. Nowhere in his argument before the bankruptcy court nor in his papers before this Court does Beers address the change in payment; instead, it appears that he relies on the amount in the plan as the controlling factor.
A Chapter 13 bankruptcy plan, however, may only modify the rights of holders of secured claims other than a claim secured only by a security interest in real property that is the debtor‟s principal residence. 11 U.S.C. § 1322(b)(2). The Supreme Court has recognized that, among a homestead mortgagee‟s "rights" which may not be modified by a bankruptcy plan are those "reflected in the relevant mortgage instruments, which are enforceable under [state] law." Nobelman v. American Sav. Bank, 508 U.S. 324, 329-330, 113 S. Ct. 2106, 2110 (1993). "These are the rights that were "bargained for by the mortgagor and the mortgagee,‟ and are rights protected from modification by § 1322(b)(2)." Id. at 329-330 (quoting Dewsnup v. Timm, 502 U.S. 410, 417, 112 S. Ct. 773, 778 (1992)).
In this case, EMC‟s claim is secured only by a security interest in real property that is the debtor‟s principal residence. See Third Ch. 13 Plan, BCDE no. 133, 2 (showing EMC as mortgagee of the residence); Voluntary Pet., BCDE no. 1, 1 (listing the residence as Beers‟ address). The relevant mortgage instrument provides that, in addition to monthly principal and interest payments, Beers is required to make monthly payments on yearly taxes and assessments on the property, as well as various insurance premiums. Sec. Instrument ¶2, BCDE no. 145-1, 23. On June 24, 2009, EMC filed with the bankruptcy court a Notice of Payment Change, which informed Beers that his monthly payments to EMC would increase to $1,352.14 to cover changes in taxes and insurance to his property, effective August 1, 2009. BCDE no. 131. That Beers‟ Chapter 13 plan listed a certain amount that Beers was to pay monthly to EMC outside the plan did not, as a matter of law, modify EMC‟s ...