In Re Breeden

180 B.R. 802, 1995 Bankr. LEXIS 485, 1995 WL 223223
CourtUnited States Bankruptcy Court, N.D. West Virginia
DecidedApril 11, 1995
DocketBankruptcy 92-31442
StatusPublished
Cited by14 cases

This text of 180 B.R. 802 (In Re Breeden) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. West Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Breeden, 180 B.R. 802, 1995 Bankr. LEXIS 485, 1995 WL 223223 (W. Va. 1995).

Opinion

MEMORANDUM OPINION AND ORDER

L. EDWARD FRIEND, II, Bankruptcy Judge.

The matters presently before the Court include: (1) the Apphcation for Payment of Arrearages filed by Huntington Bank Mar-tinsburg, N.A.; (2) the Apphcations for Allowance and Payment of Attorney Fees and Expenses to Attorneys for Huntington Bank Martinsburg, N.A.; and (3) the Application for Allowance of Attorney Fees and Expenses filed by Counsel for the Debtors. Objections to Huntington Bank’s various applications have been filed by the Debtors, *806 and City Hospital Inc. has formally objected to the application filed by Debtors’ counsel.

FACTUAL BACKGROUND

On December 11, 1987, Edward and Tina Breeden (hereinafter “Debtors”) obtained a $80,000 loan from Huntington Bank Martins-burg, N.A. (hereinafter “the Bank”), which was known at the time as People’s National Bank. As security for the loan, Debtors granted the Bank a first lien security interest against property located at 308 East Liberty Street and 304-/é Moler Avenue in Martins-burg, West Virginia. Debtors further indebted themselves to the Bank on July 21, 1988 in the amount of $21,000, which debt was secured by a first lien security interest against property located at 129 Woodberry Avenue, also in Martinsburg. Debtors also obtained a $42,800 loan from the Bank on October 28, 1988. This debt was secured by a first lien security interest in property located in Light’s Addition, which is also located in Martinsburg. All of the security interests granted to the Bank were properly perfected by the filing of various Deeds of Trust with the Berkeley County Clerk’s office.

Debtors subsequently fell behind in their payments on the aforementioned loans and ultimately filed for relief under Chapter 13 of the Bankruptcy Code on December 21, 1992 to stall the Bank’s proposed foreclosure proceedings. At the time of the filing, Debtors were in arrears under the terms of the various notes in the approximate amount of $3,863.92, along with interest and late charges. At that time Debtors were also obligated to the Internal Revenue Service for at least $44,653.98 in priority tax claims. 1 On January 6, 1993 Debtors filed the first of their numerous plans with the Court. The Bank subsequently objected to this plan due to the fact that it failed to address the curing of Debtors’ defaults under the notes. The Bank also filed a Motion for Relief from the Automatic Stay on March 5, 1993 in which it alleged that it’s position was not being adequately protected and argued that cause existed for allowing it to proceed with foreclosure of the subject properties. By Order of June 23, 1993 (amended by Order of August 10, 1993) Debtors were required to bring their payments to the Bank up to date and, beginning with their July payments, to make future payments outside their plan directly to the Bank. By separate Order, Debtors were also required to file an amended plan with the Court.

Debtors ultimately fell further behind on their payments to the Bank and on October 12, 1993 the Bank filed a Motion to Convert Debtors’ ease to Chapter 7, along with a renewed Motion for Relief from the Automatic Stay. After a hearing was held on the Bank’s motions on November 16, 1993, the Court issued a “drop-dead” Order in which it stated that if Debtors failed to make timely payments to the Bank under the notes secured by 129 Woodberry Avenue, 304)6 Moler Avenue and 306 East Liberty Street the Bank would have the right, subject to ten days negative notice, to immediately foreclose on those properties. The Order further indicated that the automatic stay would remain in full effect as to the Light’s Addition property, which was the Debtors’ residence.

On March 18, 1994, after several extensions of time were granted by the Court to allow Debtors to obtain information necessary to fill out their delinquent tax returns, an amended plan was filed. The Bank subsequently filed an objection to the amended plan on March 22,1994, in which it articulated that its central problem with the amended plan was that the plan still failed to cure the arrearages on the three notes held by the Bank. On March 25, 1994 the Court once again denied confirmation of Debtors’ amended plan and gave them until May 2, 1994 to filed their second amended plan. Debtors filed said plan on May 4, 1994. After confirmation of Debtors’ first amended plan was denied, the Bank filed another Motion to Convert their case to a Chapter 7. By Order of May 13, 1994 the Court denied the Bank’s motion but also required Debtors to make monthly payments of $216 per *807 month to the Bank for sixty months beginning June 1, 1994.

On June 15, 1994 the Court entered an Order which authorized Ms. Natalies Hoffman to list the subject properties for sale at prices agreed upon by Debtors, the Bank and Ms. Hoffman. As a result of this listing, Debtors received an offer of $69,900 for the property located at 129 Woodberry Avenue and on August 4, 1994 they made motion to sell the property and distribute the proceeds as follows: (1) approximately $21,000 to the Bank to pay off its first deed of trust on the property; (2) $5,194 in closing costs and realtor’s fees; (3) $25,498.02 to the Internal Revenue Service for payment of its priority tax claim in full; (4) $11,185.21 to Debtors’ counsel for payment of legal fees in full; and (5) the remaining sum of approximately $7,022.77 to the Bank for payment of the arrearages on the remaining notes at issue. Objections to the proposed distribution of sales proceeds were filed by the Bank, the United States Trustee, and City Hospital, Inc. These objections centered on the proposed payment of Debtor counsel’s fees. Relevant to the issues presented for consideration here, the Bank objected to payment of Debtor counsel’s legal fees prior to the curing of the arrearages on the notes held by it. The Court, by Order entered August 24, 1994, authorized the sale of the property free and clear of all encumbrances and further indicated that the balance of the sales proceeds, after payment of approximately $6,500 in closing costs and $21,368.43 to the Bank on its first deed of trust, was to be turned over to the Chapter 13 Trustee pending further direction from the Court.

On November 3, 1994 Debtors moved this Court for authority to sell their residence located in Light’s Addition for $85,263. 2 Such authority was granted by Order of this Court on November 30, 1994. In its Order, the Court instructed that the sale proceeds, less closing costs, realtor’s fees and the amount owing the Bank on its note, were to be placed with the Chapter 13 Trustee pending further disposition by the Court.

After consummation of the Light’s Addition sale, the Chapter 13 Trustee had on Debtors’ account $80,974.87, of which he proposed to distribute $64,244.36 for payment in full of all Internal Revenue Service claims, all unsecured claims for which a proof of claim had been filed, and for his own fees. 3 The Bank objected to the Trustee’s proposed distribution on the ground that it failed to make any provision for the payment of the arrear-ages due it under the one remaining note, which was secured by the 308 East Liberty Street and 304% Moler Avenue properties.

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Cite This Page — Counsel Stack

Bluebook (online)
180 B.R. 802, 1995 Bankr. LEXIS 485, 1995 WL 223223, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-breeden-wvnb-1995.