In re Glenn

124 B.R. 195, 1991 Bankr. LEXIS 239, 21 Bankr. Ct. Dec. (CRR) 746, 1990 WL 265983
CourtDistrict Court, W.D. Pennsylvania
DecidedMarch 5, 1991
DocketBankruptcy No. 88-1665-BM
StatusPublished
Cited by1 cases

This text of 124 B.R. 195 (In re Glenn) is published on Counsel Stack Legal Research, covering District Court, W.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Glenn, 124 B.R. 195, 1991 Bankr. LEXIS 239, 21 Bankr. Ct. Dec. (CRR) 746, 1990 WL 265983 (W.D. Pa. 1991).

Opinion

MEMORANDUM OPINION

BERNARD MARKOVITZ, Bankruptcy Judge.

William C. Glenn and Mildred Glenn (“debtors”) have objected in part to a proof of claim submitted by Fidelity & Deposit Company of Maryland (“F & D”) in the amount of $191,656.41. Although debtors do not object to the principal amount of the claim, they do object to the interest on the principal, which approximates $22,706.41. Debtors contend that the interest is not allowable because F & D is an unsecured creditor.

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FACTS

Debtors filed a voluntary chapter 11 petition on June 24, 1988. F & D was listed in the petition as a secured creditor in the [197]*197amount of $168,000.00 and was not included among the unsecured creditors.

F & D filed a proof of claim on September 19, 1988. The claim arose out of a promissory note allegedly executed by William Glenn on December 4, 1984, and consisted of the following elements:

Principal $168,950.00
Interest 33,450.03
Attorney’s Fees 33,790.00
Total $236,190.03

The amounts claimed for interest and attorney’s fees were at the rates purportedly prescribed in the promissory note.

F & D further alleged that its claim was secured by virtue of certain duly recorded judgments. Specifically, F & D alleged that judgment by confession had been entered against debtors on December 20, 1984 at GD84-23070 in the Court of Common Pleas of Allegheny County, Pennsylvania. F & D further alleged that judgment had been entered against debtors in May of 1988 at GD88-8468 and GD88-8469 in the same court. These judgments allegedly arose out of a judgment in the amount of $168,950.00 in favor of F & D and against both debtors dated November 19, 1987 in the United States District Court for the Western District of Pennsylvania at Cr. No. 86-110.

Debtors objected in part to F & D’s proof of claim. They did not object to the claim for the principal due and owing under the note. Rather, debtors objected only to those portions of the claim pertaining to interest and attorney’s fees. Debtors’ objection was based on the fact that none of the above judgments specifically included interest and/or attorney’s fees. Their objection was not based on the contention that F & D was an unsecured creditor. To the contrary, no objection was raised as to F & D’s secured status.

A hearing was held on February 16,1989 on debtors’ objection to F & D’s proof of claim. F & D’s purported secured status was not controverted at the hearing. The sole issue raised at that time was whether F & D was entitled by virtue of the promissory note to attorney’s fees and interest at the rate of 11.5% per annum.

An Order of Court was entered that same day. The order provided that the claim of F & D was “limited to the amount of $168,950.00 plus interest (statutory) from the date of the filing of the judgment to the date of the filing in this court”. No appeal was ever taken of this Order.

On February 19, 1990, debtors’ previous counsel withdrew and new counsel was approved to represent them.

This bankruptcy case was converted to a chapter 7 proceeding on June 21, 1990.

Subsequent to the conversion, F & D filed another proof of claim on October 22, 1990. The basis for the claim is essentially the same as the basis set forth in its previous proof of claim. The only salient difference is in the amount of the claim. The principal amount of the claim — i.e., $168,-950.00 — is unchanged. However, F & D claims $22,612.06 in interest and does not seek any attorney’s fees.

Debtors have objected in part to F & D’s second proof of claim. The objection is basically identical to their objection to the prior proof of claim. Debtors do not object to that portion of F & D’s claim for the principal amount due and owing — i.e., $168,950.00. They do object, however, to that portion of the claim which seeks interest — i.e., $22,612.06.

The only salient difference in debtors’ second objection lies in the basis for their objection. Debtors had not previously challenged F & D’s purported secured status. This time, however, debtors argue that interest is not allowable because F & D is an unsecured creditor. According to debtors, the judgments entered at GD88-8468 and GD88-8469 were obtained within ninety (90) days of the filing of the bankruptcy petition and thus are avoidable preferential transfers. Debtors further contend that-F & D is not secured by virtue of the confessed judgment at GD84-23070 because it is against William Glenn only and thus does not attach to debtors’ marital residence (which they own as tenants by the entirety).

[198]*198-II-

ANALYSIS

A. F & D’s Status As Secured Creditor

On November 19, 1987, an Order of Court was issued in the United States District Court for the Western District of Pennsylvania at Cr. No. 86-110. The Order entered judgment in the amount of $168,950.00 in favor of F & D and against William C. Glenn and Mildred Glenn, jointly and severally. The order directed the Clerk of Court to “enter the within judgment on the Judgment Index and to issue a judgment card so that the judgment can be enforced by the F & D”.

On May 13, 1988, the following was noted on the Judgment Roll in the United States District Court for the Western District of Pennsylvania at Cr. No. 86-110:

ORDER dated 11-19-87 that the restitution of $168,950 to Fidelity and Deposit Company of Maryland is entered as a judgment jointly and severally against William C. Glenn and Mildred Glenn; FURTHER that the Clerk enter the within judgment on the Judgment Index and issue a judgment card so that the judgment can be enforced by the F & D. CERTIFIED from the record this 13th day of May, 1988.
Catherine D. Martrano

A judgment of a federal court within Pennsylvania is a lien on property located within Pennsylvania in the same manner, to the same extent, and under the same conditions as a judgment of a Pennsylvania court of common pleas. 42 Pa.C. S.A. § 4305(a) (Purdon’s 1981). A judgment of a court of common pleas for the payment of money shall be a lien upon real property when said judgment was entered of record and indexed in the office of the court of common pleas where the real property is located. 42 Pa.C.S.A. § 4303(a) (Purdon’s 1981).

Debtors’ residence is located in Allegheny County, Pennsylvania. On May 13, 1988, F & D transferred the judgment at Cr. No. 86-110 to the office of the Prothon-otary of the Court of Common Pleas of Allegheny County, Pennsylvania. Said judgments were docketed at GD Nos. 88-8468 and 88-8469.

F & D presently is a secured creditor in light of the fact that GD Nos. 88-8468 and 88-8469 were recorded and indexed prior to the date on which debtors filed their bankruptcy petition.

Debtors further argue that F & D is not a secured creditor because the judgments entered at GD Nos. 88-8468 and 88-8469 were entered within 90 days of the filing of the bankruptcy petition and hence are avoidable as preferential transfers.

Debtors have raised this matter in a motion objecting to F & D’s claim.

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Bluebook (online)
124 B.R. 195, 1991 Bankr. LEXIS 239, 21 Bankr. Ct. Dec. (CRR) 746, 1990 WL 265983, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-glenn-pawd-1991.