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Faria v. Hildebrand

United States District Court, M.D. Tennessee, Nashville Division

June 28, 2018




         Debtor-Appellant Edward George Faria, proceeding pro se, appeals the October 5, 2017 Order Denying Confirmation and Dismissing Case, entered by the United States Bankruptcy Court for the Middle District of Tennessee (the “Bankruptcy Court”) in the Chapter 13 case, In re Edward George Faria, No. 3:17-bk-04384. The appeal has been fully briefed by both parties. For the reasons set forth below, the order of dismissal will be affirmed and this case dismissed.

         I. Background and Procedural History

         Appellant filed a voluntary petition under Chapter 13. (Bankr. No. 1.[1]) On Schedule A/B, Appellant listed an ownership interest in real property located at 5145 West Oak Highland Drive, Antioch, TN 37013 (the “Property”). (Bankr. No. 9 at 3.) Appellant valued the Property at $264, 000. (Id.) He also disclosed that he has a potential lawsuit against Rubin Lublin TN, PLLC valued at $278, 514.51 for violation of the Fair Debt Collection Practices Act (“FDCPA”). (Id. at 10.) Amended Schedule E/F lists Select Portfolio Services, Inc. (“SPS”) as having a nonpriority unsecured claim for $191, 755 based on a deed of trust. (Bankr. Doc. No. 36 at 2.) Schedule I reflects that Appellant has gross monthly income of $384.62 from his employment with Raiser, LLC, and anticipated rental income of $1, 500 per month. (Bankr. Doc. No. 9 at 23-23.) Schedule J reflects that Appellant has monthly expenses totaling $1, 323 for a monthly net income of $561.62. (Bankr. Doc. No. 9 at 24-26.)

         Appellant filed an amended Chapter 13 plan on September 19, 2017, proposing a monthly plan payment of $1, 000 and a 36-month plan term. (Bankr. Doc. No. 48 at 2.)

         The amended plan did not provide for any payment to secured creditors. The plan classified SPS separately as a classified nonpriority unsecured creditor and provided for SPS to be paid $0.00 for its failure to file a proof of claim. (Id. at 7.) SPS objected to confirmation of the plan because it did not provide adequate protection to SPS relative to the Property, in violation of 11 U.S.C. § 362. Specifically, the plan did not list the mortgage serviced by SPS pertaining to the Property and failed to address the arrears owed on the mortgage or determine a disbursement agent for ongoing payments. (Id.) SPS's objection stated that it would file a Proof of Claim listing arrearages of approximately $104, 065.87 as of July 1, 2017 and showing ongoing monthly mortgage payments due in the amount of $1, 331.29. (Bankr. Doc. No. 17 at 2.)[2]

         The Chapter 13 Trustee also objected to confirmation of the proposed plan on the basis that it is not feasible and violates 11 U.S.C. § 1325(b). The Trustee requested dismissal of the case in the event the Bankruptcy Court did not confirm the plan. (Bankr. Doc. No. 40.)

         A hearing on confirmation of the plan, SPS's objection, and the Trustee's objection and request for dismissal was conducted on September 27, 2017. At the hearing, the Bankruptcy Court made findings from the bench including that the Appellant had failed to make any plan payments and that the proposed plan failed to deal with the mortgage arrearage or for ongoing mortgage payments and therefore was not feasible. (Bankr. Doc. No. 101 at 23.) The Bankruptcy Court further found that “in the absence of any proposal being made by the debtor that would indicate that there's some amendment that could be made that would fix this problem on a timely basis, ” dismissal was appropriate. (Id.) The written order denying confirmation and dismissing the case was entered on October 4, 2017. (Bankr. Doc. No. 57.)

         Appellant filed a Motion to Reconsider the order of dismissal on October 13, 2017. (Bankr. Doc. No. 62.) A hearing on the Motion to Reconsider was held November 22, 2017. The Bankruptcy Court denied the motion because Appellant failed to offer “new evidence, argument or circumstance to support reconsideration of the Order” dismissing his case. In addition, it reaffirmed that the proposed plan did not properly address the secured debt on the Appellant's residence and that Appellant was in default of plan payments. (Bankr. Doc. No. 102 at 1-2.) The Bankruptcy Court also concluded that Appellant's “failure to provide for the secured debt on his residence in his plan, despite the instruction from the secured lender, the Trustee, and [the Bankruptcy] Court, ” failure to maintain plan payments, requests to extend payment obligations without explanation, and refusal to inform the Bankruptcy Court of his last mortgage payments all constituted evidence of Appellant's bad faith. (Id. at 1.)

         Appellant filed a Notice of Appeal on October 17, 2017 seeking review of the order of dismissal.

         II. Standard of Review of Bankruptcy Court Order

         “The district courts of the United States shall have jurisdiction to hear appeals . . . from final judgments, orders, and decrees . . . of bankruptcy judges entered in cases and proceedings referred to the bankruptcy judges under section 157 of this title.” 28 U.S.C. § 158(a). An order denying confirmation with prejudice and dismissing the case is an immediately appealable final order. See Bullard v. Blue Hills Bank, 135 S.Ct. 1686, 1692-93 (2015) (distinguishing between dismissal with and without leave to amend).

         On appeal, the district court reviews the bankruptcy court's findings of fact for clear error and its conclusions of law de novo. MNBA America Bank, N.A. v. Meoli (In re Wells), 561 F.3d 633, 634 (6th Cir. 2009); In re Rembert, 141 F.3d 277, 280 (6th Cir. 1998); see also Cluxton v. Fifth Third Bank (In re Cluxton), 327 B.R. 612, 613 (B.A.P. 6th Cir. 2005) (“The determination whether a plan provision violates the Bankruptcy Code is a legal conclusion reviewed de novo.”).

         III. ...

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