In re Manning

567 B.R. 260, 2017 Bankr. LEXIS 1268
CourtUnited States Bankruptcy Court, S.D. New York
DecidedMay 9, 2017
DocketCase No. 14-37279 (CGM)
StatusPublished
Cited by1 cases

This text of 567 B.R. 260 (In re Manning) 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 Manning, 567 B.R. 260, 2017 Bankr. LEXIS 1268 (N.Y. 2017).

Opinion

MEMORANDUM DECISION AND ORDER

HON. CECELIA G. MORRIS, CHIEF U.S. BANKRUPTCY JUDGE

Before the Court is the motion of Ford Motor Credit Company LLC (“Ford”) for approval to file an administrative claim in the chapter 13 case of Thomas E. Manning, Jr., the Debtor here (“Debtor”). See Mot. for Admin. Claim, ECF No. 89.1 Pursuant to the Debtor’s confirmed chapter 13 plan, this Court gives Ford leave to late file a Section E claim consistent -with Categories 3 and 4 of the confirmed chapter 13 plan.

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, and under § 167(b)(2)(B), determination of claims against the estate.

Background

The Debtor filed this chapter 13 ease on November 18, 2014. See Petition, ECF No. 1. The deadline for filing proofs of claim was March 10, 2015. On November 26, 2014, Ford on behalf of Lincoln Automotive Financial Services (“Lincoln”) filed a proof of claim in an amount of $15,929.24, on account of Debtor’s lease of a 2013 Lincoln MKX (the “Vehicle”). See Claim #3-1 at 1, 4.2 The proof of claim states that 27 payments remained at the time of filing, that monthly payments were $589.87, and that the lease had a termination date of March 11, 2017. See id. at 1. Ford’s proof of claim indicated that there were no arrears at the time of filing. See id.

On January 23, 2015, this Court entered a signed stipulation between the Debtor and Ford, whereby Debtor agreed to assume the Vehicle lease pursuant to the terms of the lease agreement. Stip. and Order, ECF No. 24. The assumption was to be incorporated into an amended plan and any resulting confirmation order. Id. at 1-2.

Debtor confirmed a chapter 13 plan on July 1, 2016. Order Confirm. Chap. 13 Plan, ECF No. 87. The confirmed chapter 13 plan provided for ongoing monthly payments of $589 to Lincoln on account of the Vehicle lease. See Am. Chap. 13 Plan at 5, ECF No. 83; Claim # 3-1 at 4. The chapter 13 plan did not provide for the assumption of Ford’s Vehicle lease. See Am. Chap. 13 Plan at 4, ECF No. 83. Debtor returned the Vehicle on March 9, 2017, consistent with the scheduled termination date of the lease. See Mot. for Admin. Claim at 1, ECF No. 89.

At the time of return, Ford claims Debt- or owed certain charges on account of the Vehicle lease, including excess mileage and wear and tear in the amount of $2,116.75, and taxes of $171.47, for a total of $2,288.22. See Mot. for Admin. Claim at 1-2, ECF No. 89; Ex. C at 2, ECF No. 89-4; Malone Aff, at 1, ECF No. 89-5. Ford also asserts it is owed additional attorneys’ fees of $325 that were incurred during the pen-dency of the case. Mot. for Admin. Claim [263]*263at 2, ECF No. 89. Ford now seeks permission to file an administrative claim pursuant to Bankruptcy Code § 503(b)(1)(A), for the expenses Ford incurred for excess mileage, wear and tear, taxes, and attorneys’ fees, in the amount of $2,613.22. See id. at 2; see also Mem. Law in Supp. at 2, ECF No. 90. Ford claims that the administrative expense claim is allowable under Bankruptcy Code § 503(b)(1)(A), as an actual and necessary cost of preserving the bankruptcy estate. Mem. Law in Supp. at 2, ECF No. 90.

Discussion

Ford asserts it is entitled to a § 503(b) administrative claim for certain fees generated by the Debtor during the pendency of the Debtor’s chapter 13 plan. See Mot. for Admin. Claim at 1-2, ECF No. 89; see also Mem. Law in Supp. at 2, ECF No. 90. Ford argues that under Bankruptcy Code § 503(b)(1)(A), administrative expenses are allowed for the actual and necessary costs of preserving the estate, and that here, the Debtor’s use of the vehicle contributed to the preservation of the bankruptcy estate. Mem. Law in Supp. at 2, ECF No. 90. Ford not only fails to explain why the assumption of a lease that is subsequently rejected may, in certain circumstances, give rise to an administrative claim for the resulting damages, Ford fails to argue the necessary point of rejection. Luckily for Ford, as long as the Debt- or properly assumed the Vehicle lease through the chapter 13 plan, the plan provides procedures regarding the kinds of claims Ford wishes to recover.

Under Bankruptcy Code § 365(a), “the trustee, subject to the court’s approval, may assume or reject any executory contract or unexpired lease of the debtor.” If a chapter 13 trustee does not reject or timely assume a lease of personal property at any time before confirmation of the plan, “the leased property is no longer property of the estate and the stay under section 362(a) is automatically terminated.” 11 U.S.C. § 365(d), (p)(1). Even if the chapter 13 trustee fails to take any demonstrable action on a debtor’s unexpired leases, a chapter 13 debtor may still assume an unexpired lease at the time of confirmation. Chapter 13 debtors are allowed to assume or reject any unexpired lease through the chapter 13 plan, as long as the' trustee has not already rejected the lease under § 365. See 11 U.S.C. § 1322(b)(7). Pursuant to Bankruptcy Code § 365(p)(3), if a chapter 13 debtor’s lease of personal property “is not assumed in the plan confirmed by the court, the lease is deemed rejected as of the conclusion of the hearing on confirmation.”

Here, the Court entered a signed stipulation in which both parties agreed the Debtor would assume the Vehicle lease through the chapter 13 plan, and that the stipulation would be incorporated into the plan and confirmation order. Stip. and Order, ECF No. 24. While the Debtor’s amended plan did not indicate any leases were being assumed, it did provide for ongoing payments to Ford on account of the Vehicle lease. Am. Chap. 13 Plan at 4-5, ECF No. 83. Despite the plan’s failure to indicate the Debtor was assuming the Vehicle lease, the language of the stipulation and order expressly incorporates the assumption into any amended plan and confirmation order. Stip. and Order, ECF No. 24. As such, this Court will give effect to the parties’ intentions and the signed stipulation and order, and treat the Debt- or’s confirmed chapter 13 plan as if it had assumed the Vehicle lease.

A lease assumed in a chapter 13 plan becomes property of a debtor upon confirmation of the plan. Under Bankruptcy Code § 1327(b), “the confirmation of a [chapter 13] plan vests all of the property of the estate in the debtor.”

[264]*264An assumption of a lease should be indicated in Category 3 of the standard chapter 13 plan. As Debtor assumed the Vehicle lease, Ford must abide by the enumerated terms and conditions in Category 3 of the plan. Category 3 of the plan requires creditors to comply with additional terms further explained in Section E of the plan.

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Bluebook (online)
567 B.R. 260, 2017 Bankr. LEXIS 1268, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-manning-nysb-2017.