In re Ranieri

598 B.R. 450
CourtUnited States Bankruptcy Court, N.D. Illinois
DecidedMarch 29, 2019
DocketNo. 15 B 20765
StatusPublished
Cited by7 cases

This text of 598 B.R. 450 (In re Ranieri) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Ranieri, 598 B.R. 450 (Ill. 2019).

Opinion

A. Benjamin Goldgar, United States Bankruptcy Judge

This case shows that the belt-and-suspenders approach to bankruptcy can cause trouble. In his chapter 13 case, debtor Bruno Ranieri stripped off the lien of second mortgagee 21st Mortgage Corp. in two different ways. He confirmed a plan that stripped the lien, and he moved successfully to have the collateral supporting the lien valued at $ 0.00. But there was a problem. The confirmed plan said the lien would be stripped when Ranieri completed his plan payments. The valuation order said the lien would be stripped when he completed his payments and received a discharge. Because Ranieri had a recent chapter 7 discharge, he received no discharge in the chapter 13 case.

When the case ended, 21st Mortgage sent Ranieri a statement for the mortgage debt. Ranieri says that sending the statement violated the confirmation order and asks to have 21st Mortgage held in contempt. In its defense, 21st Mortgage points to the valuation order. Because that order has preclusive effect, 21st Mortgage argues, its lien was never stripped. So sending the statement was not contempt.

For the reasons discussed below, the confirmation order controls here. Ranieri's motion will therefore be granted and 21st Mortgage held in contempt. It can purge the contempt by releasing its lien.

1. Jurisdiction

The court has subject matter jurisdiction under 28 U.S.C. § 1334(a) and the district court's Internal Operating Procedure 15(a). This is a core proceeding. 28 U.S.C. § 157(b)(2)(A) ; see In re Castle Home Builders, Inc. , 520 B.R. 98, 106 (Bankr. N.D. Ill. 2014) ("The Court is empowered by 11 U.S.C. § 105 to ensure compliance with the terms of its orders.").

2. Background

The relevant facts are taken from the parties' papers, Ranieri's schedules in his two bankruptcy cases, and the court's *453docket and claim register in both cases.1 No facts are in dispute.

Bruno Ranieri owned and presumably still owns a residence in Mundelein, Illinois. Two mortgages encumbered the property. U.S. Bank held the first mortgage. 21st Mortgage held the second.

In December 2013, Ranieri filed a chapter 7 bankruptcy case, No. 13 B 48986. The case was brief and uneventful. The trustee found no assets to administer and filed a "no distribution" report. (Ch. 7 Dkt. No. 10).2 Ranieri received his discharge in April 2014. (Id. Dkt. No. 12). The discharge eliminated his personal liability for debts he owed as of the petition date, see 11 U.S.C. § 727(b), including his personal liability for the two mortgages, Johnson v. Home State Bank , 501 U.S. 78, 82-83, 111 S.Ct. 2150, 115 L.Ed.2d 66 (1991).

A little over a year later, Ranieri filed this chapter 13 case, No. 15 B 20765. In his schedules, Ranieri disclosed the Mundelein property, valuing it at $ 305,000. (Dkt. No. 1). The balance of U.S. Bank's first mortgage he listed as $ 423,703.89. (Id. ). The balance of the second mortgage, the mortgage 21st Mortgage held, he listed as $ 109,055.22. (Id. ).

Along with his petition and schedules, Ranieri filed a proposed plan. (Dkt. No. 2). Section G of the plan treated 21st Mortgage's lien. In section G, Ranieri (1) valued the lien at $ 0.00; (2) declared that the lien would be stripped "upon completion of plan payments"; (3) said that 21st Mortgage would receive no payments under the plan (given the lien strip and the discharge of Ranieri's personal liability for the mortgage debt in the chapter 7 case); and (4) obligated 21st Mortgage to release its lien "within 30 days of completion of plan payments." (Id. ).

21st Mortgage objected to confirmation of the plan, disputing its treatment on the ground that Ranieri had undervalued the property. (Dkt. No. 15). The actual value, 21st Mortgage said, was $ 380,000 - and although that value would produce no equity to support the second mortgage, U.S. Bank had not yet filed a proof of claim. (Id. ). 21st Mortgage also observed that Ranieri had not "filed a motion ... properly requesting that [the] lien be stripped." (Id. ).

In October 2015, Ranieri accepted 21st Mortgage's invitation, moving under section 506(a) of the Code and Bankruptcy Rule 3012 to determine the value of the Mundelein property and strip the lien. (Dkt. No. 21). In the motion, Ranieri asserted that the property's value was $ 305,000. (Id. ). Since the balance of the first mortgage exceeded the value, he said, the second mortgage was wholly unsecured, and 21st Mortgage's lien should be stripped "upon entry of discharge." (Id. ).

The same day Ranieri filed his Rule 3012 motion, he also proposed an amended plan. (Dkt. No. 23). The amended plan reduced Ranieri's expenses, increased his monthly payments to the trustee, increased the estimated total payments on non-attorney priority claims, and increased the estimated trustee fees. (Id. ). The amended plan's treatment of 21st Mortgage's lien, though, was identical to the lien's treatment in the initial plan. (Id. ). Section G remained the same.

*45421st Mortgage objected to confirmation of the amended plan and to the Rule 3012 motion. (Dkt. Nos. 24, 30). But before briefing could be completed, U.S. Bank filed a proof of claim for $ 423,789 in connection with its first mortgage. (Claim No. 3-1). That claim left the second mortgage lien wholly unsecured, even under 21st Mortgage's higher valuation. A week later, 21st Mortgage withdrew its objections to confirmation and to the Rule 3012 motion. (Dkt. No. 35).

On March 11, 2016, Ranieri's motion to value the property was granted. (Dkt. No. 51).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Avery v. Gonzalez
C.D. California, 2024
Andre Gentry
E.D. Wisconsin, 2020
Colone v. Marshall
N.D. Illinois, 2020
Joseph Van
N.D. Illinois, 2020
Jeffrey B. Bruce
E.D. Wisconsin, 2019
Zenell L. Pugh
E.D. Wisconsin, 2019

Cite This Page — Counsel Stack

Bluebook (online)
598 B.R. 450, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-ranieri-ilnb-2019.