Gelletich v. Household Realty Corp. (In Re Gelletich)

167 B.R. 370, 1994 Bankr. LEXIS 712, 1994 WL 199901
CourtUnited States Bankruptcy Court, E.D. Pennsylvania
DecidedMay 18, 1994
Docket12-11378
StatusPublished
Cited by17 cases

This text of 167 B.R. 370 (Gelletich v. Household Realty Corp. (In Re Gelletich)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gelletich v. Household Realty Corp. (In Re Gelletich), 167 B.R. 370, 1994 Bankr. LEXIS 712, 1994 WL 199901 (Pa. 1994).

Opinion

OPINION

DAVID A. SCHOLL, Chief Judge.

A INTRODUCTION

Presently before this court are several matters arising in the Chapter 13 bankruptcy case of DENISE J. GELLETICH (“the Debtor”), including an adversary proceeding (“the Proceeding”) filed by the Debtor and her husband, RONALD L. GELLETICH (“the Husband,” and with the Debtor, “the Plaintiffs”) 1 against HOUSEHOLD REALTY CORP. (“Household”). In the Proceeding, the Plaintiffs seek to “avoid” the liens of Household, whose loan is secured by a second mortgage on the Plaintiffs’ residential real property at 3209 Mink Road, Kintners-ville, Bucks County, PA (“the Home”).

Although the complaint filed in the Proceeding (“the Complaint”) alleges only that Household’s lien is a judicial lien which impairs the Debtor’s exemptions and may be avoided pursuant to 11 U.S.C. § 522, an undeveloped reference in the Complaint to 11 U.S.C. § 506, as well as the Plaintiffs’ arguments at the hearing on the Proceeding, make it clear that the Plaintiffs also believe that Household’s lien either should be avoided completely as a result of a discharge order entered in the Plaintiffs’ prior Chapter 7 bankruptcy, or at least avoided in large part because of the small amount of equity in the Home which exceeds the lien of the first mortgagee, Anchor Mortgage Services, Inc. (“Anchor”). Also before us are the motions of Household and Anchor for relief from the automatic stay (“the Household Motion” and “the Anchor Motion” respectively; collectively, “the Relief Motions”).

Resolution of the Proceeding prompts this court to review the history of debtors’ use of § 506 to bifurcate loans of mortgagees into secured and unsecured portions, pejoratively referred to as “lien-stripping,” in this jurisdiction, and to update the status of this issue in the eyes of this court. Unfortunately, due to the Plaintiffs’ bad timing in assertion of their bifurcation-like claims, we can provide no relief to the Plaintiffs in the Proceeding. We will provide the Debtor with a limited time to respond to this ruling. If she is unable or unwilling to respond as we deem appropriate, the case will be dismissed and the Relief Motions will effectively be granted.

B. PROCEDURAL AND FACTUAL HISTORY

The Debtor filed this case under Chapter 13 of the Bankruptcy Code on November 19, 1993. This case was preceded by two other pertinent filings: (1) Bankr. No. 90-23179T (“the 1990 Case”), in which both Plaintiffs were debtors, filed under Chapter 13 on December 3,1990, and converted to a Chapter 7 case on March 18, 1991; and (2) Bankr. No. 93-21487T, an individual Chapter 13 case filed by the Debtor only on May 27, 1993, and dismissed on September 23, 1993, just prior to disposition of a predecessor to the instant Household Motion. After the Plaintiffs were duly discharged in the 1990 Case on July 22, 1991, and upon Household’s institution of a state court foreclosure action against the Plaintiffs, the Plaintiffs moved, on November 6, 1992, to reopen the 1990 Case to challenge the dischargeability of Household’s lien. This Motion to reopen was denied by Judge Twardowski of this court on December 8, 1992, and an appeal was ultimately abandoned.

The Household Motion presently before us was filed on December 17, 1993. In that Motion, Household sought, in addition to relief to proceed with its foreclosure of the Home, an Order that no future bankruptcy case would stay any foreclosure action instituted by it against the Home, in light of the history of (now) three bankruptcy cases which had forestalled its efforts at foreclosure. After an agreed continuance, we conducted a March 1, 1994, hearing on the Household Motion. The following day, we entered an Order of March 2, 1994 (“the *372 March Order”), consistent with our articulated resolution at the close of the hearing. In that Order, we decreed that the automatic stay would remain in place contingent upon the Debtor’s

a. Mak[ing] payments of at least $750 monthly to the Trustee on or before March 25, 1994, and the 25th day of each successive month, pending confirmation of a Plan.
b. Filling] and serving] an adversary proceeding to establish the amount of Household’s secured claim on or before March 11, 1994.

The trial date for the projected proceeding was set for April 14,1994, the first scheduled date for a hearing to consider confirmation of the Debtor’s plan. The plan provides that the Debtor will pay $498 to the Trustee for five years, and, in addition, will pay $450 monthly, presumably the Plaintiffs’ regular mortgage payment, directly to Anchor.

The Proceeding was filed by the Plaintiffs on March 9, 1994, in response to the March Order. The Anchor Motion was filed on March 10, 1994, alleging that, despite the plan provisions calling for same, regular monthly mortgage payments were not being made to it. The initial hearing on the Anchor Motion, scheduled on April 7, 1994, was continued by agreement until April 21, 1994.

Finally, on March 21, 1994, the Debtor filed an objection to Household’s secured proof of claim in the amount of $129,824.84 (“the Objection”). Because the Objection was filed with the number of the Proceeding on it, rather than with only the main bankruptcy case number affixed, a hearing on the Objection was not scheduled. The Objection reiterates the positions advanced by the Plaintiffs in the Complaint and questions the calculation of Household’s claim as reflected in its proof of claim.

The parties all agreed to continue the trial of the Proceeding and hearings on' the Household Motion and confirmation to the April 21, 1994, date of the hearing on the Anchor Motion. At the outset of that hearing, the Debtor’s counsel agreed that, because the Objection was based upon the same grounds as the Complaint, it was appropriate for him to withdraw it. Although the relief sought by the Objection is actually broader than the Complaint in that it also seeks to recalculate Household’s claim in the alternative to the relief sought in the Complaint, in light of our ruling adversely to the Plaintiffs in the Proceeding, we will dismiss the Objection.

The Husband was the sole witness for the Plaintiffs. He testified that he believed that the present value of the Home was $194,000, as opposed to the $180,000 to $185,000 range he had recited for the value of the Home at the March 1, 1994, hearing. An appraiser called by Household presently valued the Home at $200,000. Since the Debtor testified that Household had appraised the Home at $255,000 when it made the loan to the Plaintiffs in February 1988, it seems fair to assume that its value has dropped rather sharply over the past few years.

The Debtor’s counsel stipulated that the Anchor claim could be valued at $190,000 for purposes of this hearing. Thus, the secured portion of Household’s claim, declared in a total amount in excess of $129,000, was effectively agreed to be between $4,000 and $10,-000.

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Cite This Page — Counsel Stack

Bluebook (online)
167 B.R. 370, 1994 Bankr. LEXIS 712, 1994 WL 199901, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gelletich-v-household-realty-corp-in-re-gelletich-paeb-1994.