In re Forde

507 B.R. 509, 2014 WL 1379304, 2014 Bankr. LEXIS 1503
CourtUnited States Bankruptcy Court, S.D. New York
DecidedApril 9, 2014
DocketCase No. 13-36334-cgm
StatusPublished
Cited by4 cases

This text of 507 B.R. 509 (In re Forde) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Forde, 507 B.R. 509, 2014 WL 1379304, 2014 Bankr. LEXIS 1503 (N.Y. 2014).

Opinion

Chapter 13

MEMORANDUM DECISION REGARDING FUNDS HELD BY STATE COURT APPOINTED RECEIVER

CECELIA G. MORRIS, CHIEF UNITED STATES BANKRUPTCY JUDGE

Before the Court are several motions containing many issues including a motion to avoid a hen against the debtor’s real property held by his condominium association, a motion to quantify the condominium association’s claim, a motion for turnover of the funds held by a state court appointed receiver, a motion to amend a so ordered stipulation between the debtor and the condominium association, and motions to approve fees of various professionals. As each of these issues relates to and is dependent upon the outcome of one or more of the others, the Court asked the parties to submit a joint statement containing agreed upon facts, issues, and evidence, as well as the order in which the parties wanted the issues to be decided. The Court now resolves the six questions contained in the parties joint statement.

Jurisdiction

This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1334(a), 28 U.S.C. § 157(a) and the Standing Order of Reference signed by Chief Judge Loretta A. Preska dated January 31, 2012. This is a “core proceeding” under 28 U.S.C. § 157(b)(2)(A) (matters concerning the administration of the estate).

Background1

Prior to the filing a bankruptcy petition, Errol Forde (the “Debtor”) became the owner of two condominium units in Hill-crest Park (“Hillcrest”), Unit 1A and Unit 6G. All of the owners of units in Hillcrest are subject to the condominium declaration, by-laws, and house rules of Hillcrest (the “Condominium Documents”). Joint Statement, ECF No. 123, Ex’s. A-C. Prior to filing the case, the Debtor defaulted in paying obligations owed to Hillcrest under the Condominium Documents. As a result of the Debtor’s failure to pay obligations due under the Condominium Documents, Hillcrest filed three notices of lien relative to Unit 1A and two notices of lien relative to Unit 6G. Hillcrest subsequently filed a summons and complaint against the Debt- or and notices of pendency against each unit.

Hillcrest obtained an Order of Reference and Appointment of Receiver for each unit, which appointed Kenneth Gould as the Receiver (the “Receiver”). Hillcrest obtained a judgment of foreclosure against each unit, and a sale was scheduled for each unit.

On December 1, 2010, the Debtor filed a chapter 13 petition with this Court bearing case number 10-24487 (the “First Case”). The First Case was dismissed by order dated March 14, 2013. During the First Case, prior counsel for the Debtor and counsel for Hillcrest agreed that the Receiver would continue to collect rent pursuant to the State Court Orders of Reference. The Receiver collected rents during the First Case and continued to collect rents after the First Case was dismissed. Hillcrest did not make an application for an award of attorneys’ fees during the First Case. Upon dismissal of the First [513]*513Case, Hillcrest filed an application in state court (the “State Court Action”) to obtain release of the proceeds held by the Receiver. Prior to the state court making a decision on the application, the Debtor filed a second bankruptcy case. The state court in the State Court Action did not award attorneys’ fees to Hillcrest as the action was stayed by the second bankruptcy case.

On June 7, 2013, the Debtor filed a chapter 13 petition with this Court (the “Second Case”). Upon the filing of the Second Case, the Debtor, through his counsel, filed a motion to extend the automatic stay. Hillcrest filed opposition to that motion. The Court granted the Debt- or an extension of the automatic stay and, in an effort to resolve the issues set forth herein, the parties executed a stipulation (“Stipulation”), which was intended to relieve the Receiver of his obligations under the state court orders, to segregate the funds being held by the Receiver and create a mechanism by which each party would make its claim, in this Court, to the funds held by the Receiver.

The Receiver collected $66,557.17 in total. Pursuant to the terms of the Stipulation, counsel for Hillcrest is holding the sum of $56,500.00, while counsel for Debt- or is holding the remaining $10,057.17.

To date, and throughout the First Case, the Debtor remained substantially current on the fees and assessments owed to Hill-crest under the Condominium Documents. The parties agree that the market analysis of Unit 1A, filed as exhibit M to the Joint Statement, and the market analysis of Unit 6G, filed as exhibit T to the Joint Statement, accurately represent the value of the condominium units and are to be employed for the purpose of valuation herein.

On August 12, 2013, Hillcrest filed an objection to confirmation of the Debtor’s chapter 13 plan. ECF No. 60. On August 15, 2013, Hillcrest filed a Motion to Quantify the Prepetition Claim of Hillcrest Park Condominium Group 5, and for an Order Paying a Prepetition Referee and Receiver, and Related Relief (“Motion to Quantify”). ECF No. 43. On November 14, 2013, Debtor filed a motion to avoid Hillcrest’s lien. ECF No. 73. On November 20, 2013, Debtor filed opposition to Hillcrest’s Motion to Quantify. ECF No. 81. On January 17, 2014, Hillcrest filed opposition to Debtor’s motion to avoid its lien. ECF No. 95. On January 20, 2014, Hillcrest filed a reply to Debtor’s opposition to its Motion to Quantify. ECF No. 96. On February 19, 2014, Debtor filed a response to both of Hillcrest’s motions. ECF No. 106.

At the hearing held on February 25, 2014, the Court requested that Debtor and Hillcrest create a joint document summarizing the facts, issues, and law relevant to each position. On March 14, 2014, the parties filed a joint statement and twenty-five exhibits (“Joint Statement”). Joint Statement, ECF No. 123.

Discussion

In the Joint Statement, the parties asked the Court to decide the following six issues:

1) To what extent did Hillcrest perfect its lien against the condominium units prior to the Debtor’s filing of his second chapter 13 case?
2) To the extent that Hillcrest holds perfected liens against the Debtor’s condominium units, are the statutory liens created thereby subject to being voided and reclassified as general unsecured debts under 11 U.S.C. §§ 506(a), (d), 1322(b) and Federal Rule of Bankruptcy Procedure 3007?
[514]*5143) Does Hillcrest have a claim or a secured position against the money being held by the Receiver?
4) If Hillcrest does have an interest in the funds held by the Receiver, is that interest subordinate to the first mortgagee’s interest?
5) May Hillcrest now amend its claim to exceed the amount to which it was limited through the parties’ “So Ordered” stipulation of settlement filed with this Court?

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Cite This Page — Counsel Stack

Bluebook (online)
507 B.R. 509, 2014 WL 1379304, 2014 Bankr. LEXIS 1503, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-forde-nysb-2014.