Faria v. Hildebrand
Filing
16
MEMORANDUM OPINION OF THE COURT. Signed by Chief Judge Waverly D. Crenshaw, Jr on 6/27/2018. (xc:Pro se party by regular mail.) (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(mg)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
EDWARD GEORGE FARIA,
Appellant,
v.
HENRY E. HILDEBRAND, III,
Appellee.
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NO. 3:17-cv-01383
CHIEF JUDGE CRENSHAW
MEMORANDUM OPINION
Debtor-Appellant Edward George Faria, proceeding pro se, appeals the October 5, 2017
Order Denying Confirmation and Dismissing Case, entered by the United States Bankruptcy
Court for the Middle District of Tennessee (the “Bankruptcy Court”) in the Chapter 13 case, In
re Edward George Faria, Case No. 3:17-bk-04384. The appeal has been fully briefed by both
parties. For the reasons set forth below, the order of dismissal will be affirmed and this case
dismissed.
I.
Background and Procedural History
Appellant filed a voluntary petition under Chapter 13. (Bankr. No. 1. 1) On Schedule A/B,
Appellant listed an ownership interest in real property located at 5145 West Oak Highland Drive,
Antioch, TN 37013 (the “Property”). (Bankr. No. 9 at 3.) Appellant valued the Property at
$264,000. (Id.) He also disclosed that he has a potential lawsuit against Rubin Lublin TN, PLLC
valued at $278,514.51 for violation of the Fair Debt Collection Practices Act (“FDCPA”). (Id. at
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Documents filed in Case No. 3:17-bk-04384 will be referred to herein by their docket
number in that case, denoted as “Bankr. Doc. No. ___.” Documents filed in the case before this
court are referred to simply by docket number (“Doc. No. ___”).
Case 3:17-cv-01383 Document 16 Filed 06/27/18 Page 1 of 6 PageID #: 213
10.) Amended Schedule E/F lists Select Portfolio Services, Inc. (“SPS”) as having a nonpriority
unsecured claim for $191,755 based on a deed of trust. (Bankr. Doc. No. 36 at 2.) Schedule I
reflects that Appellant has gross monthly income of $384.62 from his employment with Raiser,
LLC, and anticipated rental income of $1,500 per month. (Bankr. Doc. No. 9 at 23–23.) Schedule
J reflects that Appellant has monthly expenses totaling $1,323 for a monthly net income of
$561.62. (Bankr. Doc. No. 9 at 24–26.)
Appellant filed an amended Chapter 13 plan on September 19, 2017, proposing a
monthly plan payment of $1,000 and a 36-month plan term. (Bankr. Doc. No. 48 at 2.)
The amended plan did not provide for any payment to secured creditors. The plan
classified SPS separately as a classified nonpriority unsecured creditor and provided for SPS to
be paid $0.00 for its failure to file a proof of claim. (Id. at 7.) SPS objected to confirmation of the
plan because it did not provide adequate protection to SPS relative to the Property, in violation of
11 U.S.C. § 362. Specifically, the plan did not list the mortgage serviced by SPS pertaining to the
Property and failed to address the arrears owed on the mortgage or determine a disbursement
agent for ongoing payments. (Id.) SPS’s objection stated that it would file a Proof of Claim
listing arrearages of approximately $104,065.87 as of July 1, 2017 and showing ongoing monthly
mortgage payments due in the amount of $1,331.29. (Bankr. Doc. No. 17 at 2.) 2
The Chapter 13 Trustee also objected to confirmation of the proposed plan on the basis
that it is not feasible and violates 11 U.S.C. § 1325(b). The Trustee requested dismissal of the
case in the event the Bankruptcy Court did not confirm the plan. (Bankr. Doc. No. 40.)
A hearing on confirmation of the plan, SPS’s objection, and the Trustee’s objection and
request for dismissal was conducted on September 27, 2017. At the hearing, the Bankruptcy
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The deadline for filing proofs of claim was November 13, 2017. (Bankr. Doc. No. 6 at
2.) SPS had not filed a proof of claim by the time of the confirmation hearing in September 2017.
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Court made findings from the bench including that the Appellant had failed to make any plan
payments and that the proposed plan failed to deal with the mortgage arrearage or for ongoing
mortgage payments and therefore was not feasible. (Bankr. Doc. No. 101 at 23.) The Bankruptcy
Court further found that “in the absence of any proposal being made by the debtor that would
indicate that there’s some amendment that could be made that would fix this problem on a timely
basis,” dismissal was appropriate. (Id.) The written order denying confirmation and dismissing
the case was entered on October 4, 2017. (Bankr. Doc. No. 57.)
Appellant filed a Motion to Reconsider the order of dismissal on October 13, 2017.
(Bankr. Doc. No. 62.) A hearing on the Motion to Reconsider was held November 22, 2017. The
Bankruptcy Court denied the motion because Appellant failed to offer “new evidence, argument
or circumstance to support reconsideration of the Order” dismissing his case. In addition, it
reaffirmed that the proposed plan did not properly address the secured debt on the Appellant’s
residence and that Appellant was in default of plan payments. (Bankr. Doc. No. 102 at 1–2.) The
Bankruptcy Court also concluded that Appellant’s “failure to provide for the secured debt on his
residence in his plan, despite the instruction from the secured lender, the Trustee, and [the
Bankruptcy] Court,” failure to maintain plan payments, requests to extend payment obligations
without explanation, and refusal to inform the Bankruptcy Court of his last mortgage payments
all constituted evidence of Appellant’s bad faith. (Id. at 1.)
Appellant filed a Notice of Appeal on October 17, 2017 seeking review of the order of
dismissal.
II.
Standard of Review of Bankruptcy Court Order
“The district courts of the United States shall have jurisdiction to hear appeals . . . from
final judgments, orders, and decrees . . . of bankruptcy judges entered in cases and proceedings
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referred to the bankruptcy judges under section 157 of this title.” 28 U.S.C. § 158(a). An order
denying confirmation with prejudice and dismissing the case is an immediately appealable final
order. See Bullard v. Blue Hills Bank, 135 S. Ct. 1686, 1692–93 (2015) (distinguishing between
dismissal with and without leave to amend).
On appeal, the district court reviews the bankruptcy court’s findings of fact for clear error
and its conclusions of law de novo. MNBA America Bank, N.A. v. Meoli (In re Wells), 561 F.3d
633, 634 (6th Cir. 2009); In re Rembert, 141 F.3d 277, 280 (6th Cir. 1998); see also Cluxton v.
Fifth Third Bank (In re Cluxton), 327 B.R. 612, 613 (B.A.P. 6th Cir. 2005) (“The determination
whether a plan provision violates the Bankruptcy Code is a legal conclusion reviewed de novo.”).
III.
Issues on Appeal
In his Statement of Issues on appeal, Appellant identifies two “issues”:
1. There has been no rebuttal signed under penalty of perjury to
Consumer/Administrator’s declarations.
2. Select Portfolio Servicing, Inc. and/or its agents and assigns are debt collectors
according to the [FDCPA].
(Doc. No. 9 at 2.)
In his Brief , Appellant identifies the issues as follows:
Whether the Bankruptcy Court erred in allowing Select Portfolio Servicing, Inc.
to enter this matter as a creditor without IRS Form 410 signed under penalty of
perjury.
Whether the Bankruptcy Court erred in allowing Select Portfolio Servicing, Inc.
to present hearsay evidence and testimony.
(Doc. No. 12 at 4.)
IV.
Analysis
While a party objecting to confirmation bears the burden of producing evidence in
support of denial of confirmation, the debtor has the ultimate burden to prove compliance with
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11 U.S.C. § 1325. As particularly relevant here, subsection 1325(a)(5) pertains to the treatment
of secured claims as set forth in § 1325(a)(5); subsection (a)(6) requires that the debtor be able to
make all payments under the plan and otherwise comply with the plan. Although SPS failed to
present to the Bankruptcy Court actual evidence of its claim and the amount thereof, Appellant
acknowledged a debt to SPS and identified the “type” as “Deed of Trust” in his Amended
Schedule E/F. (Bankr. Doc. No. 36 at 2.) He does not actually dispute the debt except to claim
that he is a “Consumer/Administrator” under the FDCPA and not a “Debtor” (Bankr. Doc. Nos.
32 ¶ 5, 46 ¶ 5) and to insist that Rubin Lublin TN, PLLC and SPS are “debt collectors” under the
FDCPA, rather than creditors. He admitted at the confirmation hearing that there was an
outstanding mortgage on the Property but refused to answer direct questions about when he had
last made payments on the mortgage and whether it was paid off. (See, e.g., Doc. No. 101 at 13
(“THE COURT: So I ask you again, do you know approximately when was the last time you
made any mortgage payments? MR. FARIA: I do not – under my – from what I know, it might
have been discharged, form what – for all I know.”).) When asked what his intention was and
whether he planned to live in his residence for free, going forward, without paying anything to
the mortgage holder, the Appellant responded only that he was “waiting for the true creditor to
come forward so we can make arrangements.” (Bankr. Doc. No. 101 at 16.)
The Court finds, under these circumstances, that the Bankruptcy Court did not err in
determining that Appellant had not adequately explained why his proposed plan did not take the
mortgage on his residence into account, as required by § 1325(a)(5). The Court noted that the
question of whether the precise terms offered by counsel for the mortgage holder were correct “is
not really critical to a determination of the motion to dismiss, because the current plan provides
for nothing.” (Bankr. Doc. No. 101 at 23.) In addition, the Bankruptcy Court did not err in
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finding that the proposed plan did not comply with § 1325(a)(6) either, as Appellant had failed to
make payments in the amount he proposed in the plan as originally submitted or as amended and
failed to offer any suggestion for modifying the plan to meet his obligations.
In sum, this Court has reviewed the underlying record in its entirety and finds no error in
the Bankruptcy Court’s findings of fact or conclusions of law. Appellant’s arguments based on
his being a “Consumer/Administrator” under the FDCPA are frivolous and have no bearing on
the bankruptcy proceedings. His arguments regarding the lack of actual proof of SPS’s claims at
the time of the hearing on its objection are beside the point in light of Appellant’s concession
that he had a mortgage on the Property which was not accounted for in the proposed plan, and in
light of his demonstrate inability to make payments in accordance with the plan.
V.
Conclusion
For the reasons set forth herein, the Bankruptcy Court’s October 5, 2017 Order Denying
Confirmation and Dismissing Case will be affirmed and this case dismissed.
An appropriate order will enter.
____________________________________
WAVERLY D. CRENSHAW, JR.
CHIEF UNITED STATES DISTRICT JUDGE
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