FREEDOM MORTGAGE CORPORATION v. SMITH

Filing 12

OPINION. Signed by Judge Evelyn Padin on 11/21/2022. (lag, )

Case 2:21-cv-11025-EP Document 12 Filed 11/21/22 Page 1 of 21 PageID: 570

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
FREEDOM MORTGAGE CORPORATION,
Appellant,
Civil Action No. 21cv11025 (EP)
v.
OPINION
TIFFANY D. SMITH and
MARIE-ANN GREENBERG,
Appellees.
PADIN, District Judge.
This is a bankruptcy appeal. 1 Appellant Freedom Mortgage Corporation

is a
2

Freedom appeals the Bankruptcy C

Third Modified Chapter 13
Bankr. D.E. 85.3

The issues, while technical, boil down to this: Freedom objected to the Third Modified
Plan because it: (1) credited the

future rents to Debtor, rather than to Freedom, as the

required (the Jason Realty issue 4); (2) undervalued the Property; (3)
provided for unequal monthly payments; and (4) was not financially feasible. The Bankruptcy

1

This Court has appellate jurisdiction over Bankruptcy Court decisions. 28 U.S.C. § 158(a)(1).
Co-Appellee Marie-Ann Greenberg is the bankruptcy trustee, who takes no position in this
appeal.
3
at 19bk20603.
2

4

In re Jason Realty, L.P., 59 F.3d 423 (3d Cir. 1995), which held that upon an absolute assignment
of rent, the rents are not property of the estate and are not available as cash collateral nor as a
funding source for the debtor s reorganization plan.

Case 2:21-cv-11025-EP Document 12 Filed 11/21/22 Page 2 of 21 PageID: 571

Court held

objections were (or could have been) raised in

plans, and

overruled them on res judicata grounds. Because the Bankruptcy Court was correct, this Court
will AFFIRM.
I.

BACKGROUND
A. Debtor files for chapter 13 bankruptcy
Debtor filed her initial Chapter 13 bankruptcy petition on August 5, 2019. R. 16 (the
Freedom is one of her creditors. Id.

claim was for $242,905.98, about
Id. Freedom

(prioritized) by the mortgage on the Property, a two-unit building located at 255 South 11 th Street,
Newark, New Jersey.5 Id. The Property had a tenant in each unit who, at least before the COVID19 pandemic, paid rent.
B.
On October 11, 2019, Debtor sought the

of her First

Modified Plan. R. 64, et seq. The Plan, as relevant here, sought to limit secured claim values.,
i

Id. This took the form of

underlying claims as partially secured and partially
value to $95,000. R. 71. Or to use bankruptcy

colorful terminology,

the

905.98 mortgage into (1) a

$105,000 secured claim ($95,000 + 4% annual interest over 60 months); and (2) the rest into an
unsecured claim, to be paid with other unsecured (lower priority) creditors. Id.

The Property had a second lien, not at issue here: a $106,107 judgment lien by creditor West End
Properties. R. 71.
5

2

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To p

the First Modified Plan would have Debtor pay the bankruptcy
$8,2006, then $450 per month for the

trustee

remaining 56 months. R. 65.

From those funds, the Trustee would pay $15,400, and the remaining secured claim would be paid
, theoretically totaling $89,600 ($1,600 rental income for the
56 remaining months of the plan). R. 72.
C. Freedom objects
Freedom, as one might expect, objected to most of the First Modified Plan: the cramdown
and the

at $95,000, the proposed 4% interest rate, and

failure to account for all post-petition taxes and insurance (which Freedom was paying while
Debtor could not). R. 76-77.

to enforce
-2.

Freedom objected (and continues to object here) to
income to fund the Plan (the Jason Realty issue). According to Freedom, Debtor agreed, as part
of the

mortgage, to assign the rents to Freedom

make timely

mortgage payments. Thus, the argument goes, the
could not be considered to fund the Plan. R. 76. And without those rents, Freedom argues, the
Plan is no longer feasible. Id.
D. The Court confirms the First Modified Plan and addresses the rent issue
After a hearing on November 14, 2019, the Court addressed the Jason Realty issue. R. 7879, 135-52. The Court entered an order
The Bankruptcy Court adjourned the hearing to January
23, 2020 to determine how to effectuate that ruling, as well as to address

6

3

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. R. 153-61. What happened at this hearing and
thereafter
appeal

Debtor argues that the relevant issues were all decided then, and therefore subject to res

judicata, and Creditor argues that they were not, and therefore could be, and were, revisited later.
Before the adjourned hearing, on January 13, 2020, the Bankruptcy Court approved a
R. 80. The Consent
Order, as relevant here, agreed to a cramdo
fair market value: $95,000. R. 81 ¶ 3a. The remaining $147,905.98 would convert to unsecured
debt to be paid out with the other unsecured creditors. Id.
Additionally, Debtor would remain responsible for Property maintenance, tax payments,
and insurance. R. 82 ¶ 3i. If Debtor did not pay the taxes or lacked insurance, Freedom could
send a 10-day Notice of Default and then file to dismiss the bankruptcy proceeding if the default
was uncured. Id. ¶ 3j. Freedom could also pay those expenses and seek reimbursement as
additional debt owed by the Debtor. Id. ¶ 3k.
On January 30, 2020, after the January 23, 2020 hearing, the Bankruptcy Court confirmed
the First Modified Plan, which incorporated the Consent Order. R. 84-85. As relevant here, the
First Modified Plan established an annual interest rate of 6.75%
4%) on the $95,000 cramdown value, totaling $122,022.16 7 to be paid over 60 months. R. 82 ¶3d.
The Plan required $2,440 monthly payments for the

remaining 52 months.

R. 85. Crucially, the parties also resolved the rent assignment (Jason Realty) issue by determining

7

$95,000, plus $15,128.70 of interest and $11,893.46 of post-petition escrow on the Property paid
by Freedom. Smith had already paid $14,350.
4

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that rents would be turned over to the Trustee. R. 82 ¶ 3f. The extent of that resolution is disputed,
and discussed below.
E. Debtor modifies the Plan during the COVID-19 pandemic
The COVID-19 pandemic began in March of 2020. Congress passed the Coronavirus Aid,
, broad legislation
economic effects. Pub. L. No. 116-136, 134 Stat. 281 (Mar. 27, 2020). Included among its
provisions was the ability for Chapter 13 debtors to extend their payment plan terms beyond 60
months.
) seeking an extension of her plan beyond 60 months pursuant to the CARES Act and,
importantly, providing for unequal monthly payments. Bankr. D.E. 52. The Second Modified
Plan listed monthly payments of $1,500 for six months, then $2,483.00 for the following 47
months.8 Id. at 2. Freedom did not object, and the Bankruptcy Court confirmed the Second
Modified Plan on July 10, 2020. Bankr. D.E. 60.
As the pandemic persisted, o

two tenants was paying rent

and

even then, only partial rent. R. 97. Because Debtor could evict neither due to pandemic-related
eviction moratoriums, Debtor moved on December 5, 2020 to modify the bankruptcy plan a third
time. R. 86.
The new application sought, again pursuant to the CARES Act, to extend the payment term
to 84 months (the

. R. 94. The $95,000 cramdown value and escrow

($11,893.46) remained the same, but because of the longer payment period, interest would increase
to $24,466.69, totaling $131,360.15 to be repaid under the plan. R. 90. Like the Second Modified

8

The plan credited $16,350.00 paid by Debtor to that point. Bankr. D.E. 60 at 2.
5

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Plan, Smith would pay $1,500 payments for the first few months (but eight instead of six), then
equal monthly payments ($2,010

for the final 57 months. R. 130.

This time, Freedom objected. R. 99.
2021 Notice of Default which Freedom sent to Debtor. R. 115. The n
counsel that Freedom had advanced 3rd Quarter 2020 taxes ($1,441.95), property insurance
($1,961.00) and 4th Quarter 2020 taxes ($1,418.10) when Debtor failed to timely pay those bills
and demanded payment within 10 days to cure default. Id.
On March 10, 2021, Debtor provided updated financial information. R. 118. Specifically,
Debtor certified that

that Debtor

expected to receive a tax refund. R. 119.
taxes through first quarter 2021 and otherwise [has funds] on hand to reimburse [Freedom] for any
Id.
F. The Bankruptcy Court confirms the Third Modified Plan, finding that
objections were precluded by res judicata
On March 25, 2021, the Bankruptcy Court

ordering

Debtor to reimburse Freedom $2,860.05 for tax payments within 48 hours. 9 R. 128, ¶ 1. The
Court reserved judgment on

remaining objections to confirmation of the Third

Modified Plan. Id. ¶ 3.
issue here) were barred by res judicata. The Bankruptcy Court stated that it had not yet ruled
conclusively on the matter. R. 180. It would later, correctly, reverse itself.
After an April 22, 2021 hearing, the Court granted the modification on April 26, 2021. R.
129-30. Factoring in $25,350 paid over the preceding 19 months, Debtor would pay $1,500

9

denied without prejudice

application for reimbursement. R. 128, ¶ 2.
6

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payments for eight months, then $2,010 monthly for the final 57 months. R. 130. 10 The unsecured
creditors would be paid, pro rata, from
Id.
The order noted that the Bankruptcy Court had

rent

assignment (Jason Realty) objection on the record on April 22, 2021. The Bankruptcy Court
explained its reasoning: prior to the entry of the Consent Order and First Modified Plan on January
30, 2020 establishing the $95,000 cramdown value and 6.75% annual interest rate, the parties had
discussed the rent assignment issue. R. 202. And the subsequent Consent Order and confirmation,
according to the Bankruptcy Court

Id.

Likewise, the Bankruptcy Court also determined that
unequal/stepped payment plan, and the feasibility of the
payment plan, were also precluded by the confirmation of the First and Second Modified Plans.
R. 207. The Bankruptcy Court held

or

challenge the Second Modified Plan at all, precluded Freedom from objecting to the same issues
in the Third Modified Plan. Id.
G. This appeal
appeal followed, asserting five claims. The primary claim, and the focus of this
Opinion, is whether the Bankruptcy Court erred by invoking res judicata to overrule
objections and confirm the Third Modified Plan. Or phrased differently, whether
Modified Plan objections were (or could have been) raised or decided in response to the First or
Second Modified Plans.

10

Smith had already paid $25,350 over the first 19 months. R. 87, ¶ e.
7

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The remaining four issues are the same underlying objections discussed above, which
according to Freedom

.

Freedom argues that the Bankruptcy Court erred in confirming the Third Modified Plan because
it: (1) uses th

(the Jason Realty issue) (Freedom Br. 13);

(2) permits unequal monthly payments (Id. at 21); (3) ascribes a historical value to the Property
(Id. at 24); and (4) was not feasible because it
impermissibly relied upon uncertain rental income (Id. at 27).
As Debtor recognizes, if the res judicata issue is decided
determinative and the other objections

having been precluded

are irrelevant. This Court finds

that to be the case.
II.

LEGAL STANDARD

28 U.S.C. § 158(a)(1).
bankruptcy court s legal determinations de novo, its factual findings for clear error and its exercise
See In re United Health Sys., Inc., 396 F.3d 247, 249 (3d Cir.

Meridian Bank v. Alten, 958 F.2d 1226,
1229 (3d Cir. 1992) (cleaned up). The parties agree that every issue except the last (
feasibility) is a question of law reviewed by this Court de novo, while the feasibility issue must be
reviewed for abuse of discretion. Freedom Br. 1-2; Debtor Br. 6-7.

8

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III.

DISCUSSION
A. The First and Second Modified Plans were final for res judicata purposes
As in other contexts, res judicata

requires the

following four elements: (1) the parties must be identical in the two actions; (2) the prior judgment
must have been rendered by a court of competent jurisdiction; (3) there must be a final judgment
on the merits; and (4) the same cause of action must be involved in both cases. In re Notre Dame
Invs., Inc., 306 F. App x 62, 64 (5th Cir. 2009).
When a bankruptcy court enters a confirmation order, it renders a final judgment. In re
Arctic Glacier Int'l, Inc., 901 F.3d 162, 166 (3d Cir. 2018), as amended (Oct. 24, 2018) (citing 8
Collier on Bankruptcy ¶ 1141.01[4], at 1141-11 (Richard Levin & Henry J. Sommer eds., 16th ed.
2017)).

That judgment, like any other judgment, is res judicata.

Id.

It bars all challenges to

the plan that could have been raised. Challengers must instead raise any issues beforehand by
objecting to confirmation. Id. A plan s preclusive effect is a principle that anchors bankruptcy
law: A confirmation order is res judicata as to all issues decided or which could have been decided
Id. (cleaned up, emphasis added); cf In re Harrison, 259 B.R.
794, 798 (Bankr. M.D. Ga. 2000) (Chapter 13 trustee s proceeding to avoid creditor s security
interest in debtor

mobile home was not precluded where the avoidance issue was not raised

before confirmation, and the issue could not have been raised by trustee, since she did not discover
the untimely perfection of creditor s lien until after confirmation).
Thus, the entire [confirmed p]lan is res judicata, including its releases.

Arctic Glacier,

901 F.3d at 166 (emphasis added). The same is true of
accorded res judicata
In re Galluzzo, No. 06-15392-SLM, 2018 WL 4191476, at *22 (Bankr. D.N.J. Aug. 14, 2018)

9

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(citing Espinosa, 559 U.S. at 275),
2021),

, No. 06-BK-15392, 2021 WL 9595296 (D.N.J. Oct. 25,

No. 22-1550, 2022 WL 10319775 (3d Cir. Oct. 18, 2022). Res judicata is a double-

edged sword, applying equally to debtors and creditors. See, e.g., Ruhl v. HSBC Mortg. Servs.,
Inc., 399 B.R. 49, 57 (E.D. Wis. 2008) (holding that Chapter 13 debtors
interest were barred by res judicata); In re Beam, 510 B.R. 399, 404 (Bankr. N.D. Ga. 2014)
(Chapter 13 debtors were barred from belatedly asserting that value of mortgaged property on
petition date was lower for the
Freedom raises three arguments against applying res judicata to its objections: the first is
that the First Modified Plan could not be final because it violated certain Bankruptcy Code
requirements

in other words, the plan should never have been confirmed. The second is that all

plans, including the ones here, are subject to amendment, and therefore not final. And the final
argument is that

objections to the Third Modified Plan

value, unequal payments, and payment plan feasibility

rent assignment, Property

could not be barred because the

Bankruptcy Court never conclusively decided them earlier.
1. The First Modified Plan was final, even if certain provisions violated 11 § U.S.C. 1325,
because the violations do not implicate jurisdiction or due process concerns
first argument
the Bankruptcy Code

that the First Modified Plan was not final because it violated

highlights the tension between two competing Bankruptcy Code

provisions: 11 U.S.C. § 1327 and § 1325.
Section

he provisions of a confirmed plan bind the debtor and each

creditor, whether or not the claim of such creditor is provided for by the plan, and whether or not
such creditor has objected to, has accepted or has rejected the plan. Generally, § 1327 evidences
a

s plan binds both
In re Szostek, 886 F.2d 1405, 1408 (3d Cir. 1989).
10

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a confirmation order is res judicata as to all issues decided or which could have been decided at
Id. at 1408 (3d Cir. 1989) (emphasis added). Or as one leading
authority stated,
the binding effect of a chapter 13 plan extends to any issue actually litigated by the
parties and any issue necessarily determined by the confirmation order, including
whether the plan complies with sections 1322 and 1325 of the Bankruptcy Code.
For example, a creditor may not after confirmation assert that the plan was not filed
in good faith, ... that the creditor should have been paid interest; that the debtor is
ineligible for chapter 13 relief; or that the plan is otherwise inconsistent with the
Code in violation of Section 1322(b)(10) or section 1325(a)(1).
Id. at 1409 (citing 5 Collier on Bankruptcy, § 1327.01 (5th ed. 1988)).
But there is some tension with § 1325(a)
which meets [certain] conditions listed

provides that a court shall confirm a plan

for example, that the plan is proposed in good faith, that

the plan is feasible, and that the debtor has complied with other federal, state and local tax
regulations. Id. at 1408.
attend the confirmation hearing, object timely to the plan, or

as relevant here

ppeal the order

of confirmation, regardless of the reason, precludes the creditor from obtaining full recovery of
the present value of its claim when such was not provided for in the confirmed plan

Id. Or asked

differently: can a plan be final under § 1327 if it violated § 1325?
Szostek, and other cases since, have answered that question: with certain exceptions not
relevant here, yes

. The Third Circuit interpreted §

1325, which holds tha

if

, to be

discretionary. Id. at 1411 (comparing § 1325 to § 1322, which unequivocally provides that
three elements) (emphasis added).
to take an active role in protecting their claims

11

reditors are obligated

failure to timely appeal the First

Case 2:21-cv-11025-EP Document 12 Filed 11/21/22 Page 12 of 21 PageID: 581

Modified Plan

res judicata

later objections to the

Third Modified Plan. Id. at 1414.
Szostek was undercut in United Student Aid Funds, Inc. v. Espinosa,
requires bankruptcy courts to

U.S. 260, 277, n.14 (2010) (emphasis in original). But Espinosa

First, Espinosa involved a Rule 60(b)(4) motion to vacate what a student loan creditor
considered to be an invalid judgment. There, like here, the creditor argued that a bankruptcy

plan). Id. But as Freedom recognizes, Espinosa

when

considering plan confirmation
to what happens after the plan is already confirmed.
Second, and most importantly, the Espinosa Court did not
the bankruptcy

as Freedom urges here

void

confirma

contrary, the Supreme Court denied
The Supreme Court found that the defect

e

had neither jurisdictional nor due process implications. Id. at 271; cf. Jacobo v. BAC Home Loans
Servicing, LP, 477 B.R. 533, 538 (D.N.J. 2012) (res judicata did not apply to bar secured creditor
challenge to confirmed Chapter 13 plan where debtors did not serve creditor with plan and notice
of confirmation hearing).

12

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d]
enforceable and binding on [the creditor] because [the creditor] had notice of the error and failed
Id. at 275.

fter Espinosa,

its rights by not objecting to a plan does so at its own peril and as long as due process requirements
are met,

In re Diruzzo, 527 B.R. 800, 806 (B.A.P. 1st Cir. 2015) (quoting In

re McLemore, 426 B.R. 728, 744 (Bankr. S.D.Ohio 2010)). Because neither jurisdictional nor due
process concerns are implicated here, the First Confirmed Plan
preclude

notwithstanding its errors

can

objections.

2.

res judicata

preclusion

Freedom also argues that Section 1329, which permits certain post-confirmation
modifications

res judicata bar.

Specifically, Freedom argues that res judicata will not bar a post-confirmation modified plan
Freedom Br. 6, et
seq. Freedom argues that applying
language of 11 U.S.C. §

res judicata bar
Id.

But Freedom has it backwards

few approved modifications prove

general res judicata bar.

out of the Bankruptcy

Code. See DIRECTV, Inc. v. Pepe, 431 F.3d 162, 168 (3d Cir. 2005)
language, we must, whenever possible, read the statute in such a manner as to give effect to every
(citing Mountain States Tel. & Tel. Co. v. Santa Ana, 472 U.S. 237, 249 (1985)).
Section 1329 permit

(1) increase or reduce the amount of payments on claims of a particular class
provided for by the plan;
13

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(2) extend or reduce the time for such payments;
(3) alter the amount of the distribution to a creditor whose claim is provided for by
the plan to the extent necessary to take account of any payment of such claim other
than under the plan; or
(4) reduce amounts to be paid under the plan by the actual amount expended by the
debtor to purchase health insurance for the debtor (and for any dependent of the
debtor if such dependent does not otherwise have health insurance coverage) .
Moreover, the CARES Act explicitly permitted modification by adding a provision to §

-19] pandemi

PL 116-

136, March 27, 2020, 134 Stat 28.11 Debtor certified to that hardship. R. 96-98.
Freedom spends nearly its entire res judicata argument discussing cases which improperly
required a
mechanism

change in circumstance

to use

in other words, reading a requirement into § 1329 that strengthened

res

judicata bar. See Freedom Br. 6-12. Freedom appears to argue that it can shoehorn its own attempt
to relitigate precluded objections. But the Bankruptcy Court correctly held that Freedom could
not use

attempt to modify the payment schedule in the Third Modified Plan

authorized § 1329 res judicata exception

to relitigate

an

unrelated, precluded objections.

R. 206-07; Massachusetts Hous. Fin. Agency v. Evora, 255 B.R. 336, 343 (D. Mass. 2000)
(denying redetermination of secured claim); accord In re Loden, 572 B.R. 211, 219 (Bankr. W.D.
Ark. 2017). Accordingly, § 1329
3.

(res judicata) because were (or could have
been) addressed in earlier Plans, and cannot be raised here under § 1329
The remaining issue is whether

Third Modified Plan objections were

substantively raised and denied (or could have been raised) in prior plan confirmations. See Beam,

11

The provision had a sunset clause and was automatically repealed a year after passage.
14

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510 B.R. at 406
confirmed plan values collateral, and thus the secured status of an allowed claim, that valuation
cannot be changed absent a modification of the plan; and modification of a confirmed plan is
narrowly limited by section 1329

Because

Third Modified Plan objections were

previously raised and decided without further appeal at the First Modified Plan
and not raised at all during the Second Modified Plan

,

, they were properly barred

by the Bankruptcy Court.
Confirming the Third
iled by

record at the 4/22/21 confirmation hearing i.e. on res judicata grounds R. 130. In other words,
d

later dissatisfaction, the matter had actually been resolved as of the First

Specifically, the rent assignment issue was discussed at length at the November 14, 2019
hearing. R. 135, et seq. That hearing bega
Jason Realty

counse

Throughout the proceeding, the parties debated the finer points of the rent assignment issue.

ng to Freedom, afforded

15

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preserve its rights to the Property. R. 140.
The parties specifically addressed the two diverging views on how to apply Jason Realty
holding that a complete assignment of rents means that a debtor cannot utilize the rents in a
bankruptcy plan. R. 141. The first was

In re Parks, which resolved the

issue in favor of the debtor and credited rent payments toward secured debt. No. 12-13045, 2012
WL 3561738 (Bankr. D.N.J. Aug. 16, 2012)

In

re Surma, which declined to follow Parks. 504 B.R. 770, 775 (Bankr. D.N.J. 2014). R. 141. The

The parties addressed a middle ground
trustee collects the Pr

-

44.
And ultimately, the Bankruptcy Court discussed its interpretation of both the Parks and
Serma decisions. R. 144-

again, attempting a middle ground

the Bankruptcy Court

Id. The

R. 149debtor

16

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-52.
, without further objection
and apparently understanding the Bankr
then
discussed on the record. R. 153. And if there remained any doubt regarding the motion to enforce
the assignment of rents, it was eliminated when the Bankruptcy Court granted the motion. R. 157.
The Bankruptcy Court then discussed the exact wording of the proposed order and carried
any remaining issues (none relevant here) to January 23, 2020 for final confirmation of the First
Modified Plan. R. 159-161. But on January 13, 2020, and the Court approved, a consent order.

claim, and agreed that all rental payments held and received in the future by Debtor would be
forwarded to the bankruptcy trustee

the Parks approach. R. 112. The consent order also

provided that

requested and confirmed without objection.

The Second Modified Plan provided for step

payments similar to those which Freedom would later challenge: $1,500 equal monthly payments
for six months, followed by $2,440 equal monthly payments for the remaining 47 months of that
plan. Bankr. D.E. 52 at 2.
The Third Modified plan, filed on De
term to 84 months under the CARES Act due to economic hardship. R. 87. Like the Second
Modified Plan, Debtor would pay $1,500 monthly from for six months. Id. Debtor would then
pay $2,010 monthly for the final 57 months of the plan. Id.

17

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Only then did Freedom object. As relevant here, those familiar objections were: (1) that

(citing Jason Realty
faith nor feasible in violation of 11 U.S.C. § 1325, R. 101 at ¶ 11; and (3) that Debtor violated 11
U.S.C. § 1325 by undervaluing the Property, R. 101 at ¶¶ 12-14.
The Bankruptcy Court overruled the objections on the record on April 22, 2021. R. 200,
et seq.

The Bankruptcy Court recalled
Jason Realty

Bankruptcy Court
12

The

Parks

but believed the issue moot based on the consent order having resolved the matter.

Id. The Bankruptcy Court noted that the Second Modified Plan provided for unequal payments:
$1,500 for six months, then $2,483 for the remaining months of the plan. R. 203.
The Bankruptcy Court held that
other issues that really

-07. In other words, § 1329, under

which Debtor sought to modify the plan,
who agreed to the use of the rents of the payment of the rents to the trustee
object to the Second Modified Plan utilizing step payments, R. 207-08, another opportunity to
object when Debtor sought unrelated relief explicitly authorized by statute. Freedom did not have
210-11.

12

As Debtor argues, t
was incorrect, given as discussed
above the extensive discussion (and decision) at the First Modified Plan hearing. Indeed, in
reply, Freedom acknowledges in the context of arguing that it did not sleep on its rights that
[t]he [B]ankruptcy [C]ourt granted the motion to enforce
Freedom
Reply 6.
Id.
18

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Freedom could not have known

no one could have

that the COVID-19 pandemic was

around the corner, that it would have disastrous economic effects, and that Congress would pass
the CARES Act and include within it a provision enabling the extension of bankruptcy plan

But if Freedom disagreed with the Bankruptcy Cour
Plan, including the decision on the rent assignment issue or any other, or regretted entering into
the consent order, it did not timely say so. It did not immediately appeal. Nor did Freedom object
to
CARES Act to extend the payment term and introduced the stepped payment plan. Freedom slept
on its rights, opting not to object until the Third Modified Plan. Thus, the First and Second
Modified Plans precluded
Freedom argue, without support,
Confirmation. Reply 3. But to
In re Thomas, 395 B.R. 914, 917 (B.A.P. 6th Cir. 2008); cf
Bullard v. Blue Hills Bank,
of proposed Chapter 13 plan wit

order resolving an objection to the First Modified Chapter 13 Plan that benefit the Debtor and
refusing to enforce the default provisions that [Freedom] sought to exercise in the same consent
-10. Of course, this implicitly acknowledges that the Bankruptcy Court

19

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Freedom also argues that the Bankruptcy Court understood its First Modified Plan findings
to be dicta. Reply 2. There was, indeed, discussion on the record at a March 25, 2021 hearing in
which the Bankruptcy Court characterized its discussion of its First Modified Plan confirmation
hearing as dicta

as precluded by res

judicata. R. 191. But that comment followed earlier discussion in which the Bankruptcy Court
acknowledged that it

the content of the earlier hearing, R. 188-89.

And more importantly,
the Bankruptcy Court, having reviewed the prior
precluded.
to the Third Modified Plan were, or could have
been, adjudicated in response to either the First or Second Modified Plans. But because Freedom
eterminations on the rent assignment and Property
valuation issues in the First Modified Plan, or object to the unequal payment and feasibility issues 13
in response to the Second Modified Plan, the Bankruptcy Court correctly held that those objections
were precluded when Debtor filed the Third Modified Plan.

13

they would nevertheless have properly been denied. Numerous courts have confirmed Chapter 13
plans calling for unequal payments to secured creditors, finding that they do not violate § 1325 so
long as they are feasible. See In re Cochran, 555 B.R. 892, 901-06 (Bankr. M.D. Ga. 2016)
The feasibility issue, subject to
a more deferential abuse of
the First, Second, and Third Modified Plan confirmations.
20

Case 2:21-cv-11025-EP Document 12 Filed 11/21/22 Page 21 of 21 PageID: 590

IV.

CONCLUSION
For the reasons above, this Court will AFFIRM the

Order Confirming

85). An appropriate order accompanies this
Opinion.

__________________
Evelyn Padin, U.S.D.J.

Dated: November 21, 2022

21