In re Fuentes

509 B.R. 832, 2014 WL 988593, 2014 Bankr. LEXIS 970
CourtUnited States Bankruptcy Court, S.D. Texas
DecidedMarch 13, 2014
DocketNo. 13-33464
StatusPublished
Cited by3 cases

This text of 509 B.R. 832 (In re Fuentes) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Fuentes, 509 B.R. 832, 2014 WL 988593, 2014 Bankr. LEXIS 970 (Tex. 2014).

Opinion

MEMORANDUM OPINION

DAVID R. JONES, Bankruptcy Judge.

Before the Court are the (i) Notice of Post-Petition Mortgage Fees, Expenses, and Charges filed by JPMorgan Chase Bank, N.A. (“Chase”) and (ii) Debtor’s Motion for Determination of Post-Petition Mortgage Fees, Expenses, and Charges Filed by JPMorgan Chase Bank, N.A. At issue is Chase’s entitlement to recover its attorney’s fees during the period after the bankruptcy filing and prior to confirmation of the Debtor’s chapter 13 plan when Chase is an undersecured creditor. In order to resolve the parties’ dispute, the Court must reconcile the language of 11 U.S.C. §§ 506 and 1322(b)(2). For the reasons set forth below, this Court finds that Chase is not entitled to recover its fees under the circumstances present in this case. A separate order consistent with this opinion will issue.

Procedural Background

Delmis Fuentes (the “Debtor”) filed a voluntary chapter 13 case on June 3, 2013 (the “Petition Date”). The hearing to consider confirmation of the Debtor’s proposed plan has been continued on several occasions.

The Debtor’s principal residence is encumbered with a mortgage lien in favor of Chase. On October 18, 2013, Chase filed its Notice of Post-Petition Mortgage Fees, Expenses, and Charges under Fed. R. BaNKR.P. 3002.1 (the “Notice”) [Docket No. 54], In the Notice, Chase seeks the reimbursement of attorney’s fees from the Debtor in the amount of $475.00 that were incurred after the filing of the Debtor’s bankruptcy and prior to confirmation of a plan.

On November 1, 2013, the Debtor filed her Motion for Determination of Post-Petition Mortgage Fees, Expenses, and Charges Filed by JPMorgan Chase Bank, N.A. (the “Motion”) [Docket No. 63]. In the Motion, the Debtor asserts that Chase is not entitled to recover any attorney’s fees under the plain reading of 11 U.S.C. § 506(b). More specifically, the Debtor asserts that because her home is worth $88,603.00 and Chase’s debt is $139,409.49, 11 U.S.C. § 506(b) prevents Chase from recovering any fees due to its status as an undersecured creditor.

[834]*834On December 17, 2018, the Court conducted a hearing on both the Notice and the Motion. At the hearing, the parties requested that the Court issue its ruling based on stipulated facts. The parties submitted their stipulated facts on December 18, 2013 [Docket No. 70].

Chase submitted its brief in support of its position on January 8, 2014 [Docket No. 71]. The Debtor filed her brief on January 10, 2014 [Docket No. 72]. Chase filed an amended brief on January 22, 2014 [Docket No. 73].

The Stipulations

The parties stipulated to the following facts which are accepted by the Court for purposes of issuing this decision:

1. The Debtor filed a chapter 13 bankruptcy case on June 3, 2013.
2. On the Petition Date, the Debtor was the owner of real property located at 7475 Dillion Street in Houston, Texas (the “Property”).
3. On the Petition Date, the Property was the Debtor’s primary residence.
4. On the Petition Date, Chase was the holder of a Texas Home Equity Note dated September 14, 2007 in the original principal amount of $118,400 (the “Note”).
5. On the Petition Date, the Note was secured by a lien on the Property pursuant to the terms of a Texas Home Equity Security Agreement (the “Security Agreement”). A copy of the Security Agreement was submitted with the parties’ stipulations. The Court accepts the submission as a joint exhibit.
6. On the Petition Date, Chase asserts that it was owed $139,409.49.
7. The Property is worth $88,603.
8. Chase’s claim is undersecured.
9. On October 18, 2013, Chase filed a Notice of Post-Petition Mortgage Fees, Expenses and Charges [Docket No. 54]. The Notice seeks the recovery of $475.00 in post-petition, pre-confirmation attorney’s fees (the “Fees”). The Fees were related to preparation of Chase’s proof of claim and the review of the Debtor’s proposed chapter 13 plan. The Fees were reasonable and necessary.
10. The Security Agreement provides in paragraph 8 that Chase may pay reasonable attorney’s fees related to protecting its interests in a bankruptcy proceeding and such amounts paid become additional debt secured by the Security Agreement and may be recovered by Chase.
11. On November 1, 2013, the Debtor filed a Motion for Determination of Post-Petition Mortgage Fees, Expenses, and Charges [Docket No. 63] objecting to Chase’s entitlement to the Fees.

Analysis

The Court has jurisdiction over this contested matter pursuant to 11 U.S.C. § 1322. This contested matter is a core proceeding arising under title 11 pursuant to 28 U.S.C. § 157(b). The Court has constitutional authority to enter a final order in this matter under the Supreme Court’s holding in Stern v. Marshall, — U.S.-, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011).

The issue presented to the Court is whether the holder of a claim secured by a debtor’s principal residence may recover its attorney fees incurred during the post-petition, pre-confirmation period when the value of the residence is less than the outstanding debt.

[835]*835Chase asserts that this matter is governed by the anti-modification provisions of 11 U.S.C. 1322(b)(2). Section 1322(b)(2) provides that a chapter 13 plan may “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. The Debtor does not contest § 1322(b)(2)’s effect during the post-confirmation period of the chapter 13 bankruptcy case. Rather, the Debtor asserts that § 1322(b)(2) applies only after a plan has been confirmed and that 11 U.S.C. § 506(b) controls during the post-petition, pre-confirmation period.

Section 506(b) provides that “[t]o the extent that an allowed secured claim is secured by property the value of which, after any recovery under subsection (c) of this section, is greater than the amount of such claim, there shall be allowed to the holder of such claim, interest on such claim, and any reasonable fees, costs, or charges provided for under the agreement or State statute under which such claim arose.” 11 U.S.C. § 506(b).

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Cite This Page — Counsel Stack

Bluebook (online)
509 B.R. 832, 2014 WL 988593, 2014 Bankr. LEXIS 970, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-fuentes-txsb-2014.