Opinion
Case No. 6:16-bk-2252-TPG
2023-08-03
IN RE: Sharon Lynetta GILBERT, Debtor.
Robert B. Branson, BransonLaw PLLC, Orlando, FL, for Debtor. Laurie K. Weatherford, Winter Park, FL, Trustee, Pro Se.
Robert B. Branson, BransonLaw PLLC, Orlando, FL, for Debtor. Laurie K. Weatherford, Winter Park, FL, Trustee, Pro Se. OPINION AND ORDER DENYING MOTION TO MODIFY CONFIRMED CHAPTER 13 PLAN AND MOTION TO VACATE CONFIRMATION ORDER Tiffany P. Geyer, United States Bankruptcy Judge
THIS CASE came on for hearing on the following:
(1) Debtor Sharon Lynetta Gilbert's "Motion to Modify Confirmed Chapter 13 Plan" (the "Motion to Modify") (Doc. No. 186);The Court held preliminary hearings on the above matters on December 15, 2022 (Doc. No. 204) and February 1, 2023 (Doc. No. 217) and conducted an evidentiary hearing on May 25, 2023 (Doc. No. 238). The Motion to Modify and the Motion to Vacate stem from the Debtor's inadvertent failure to include the Secured Creditor's claim in her Chapter 13 Plan. (Doc. No. 205 ¶ 4.) Upon consideration of the pleadings, evidence and testimony, arguments of counsel and the law, and being otherwise fully advised in the premises, the Motion to Vacate (Doc. No. 205) and the Motion to Modify (Doc. No. 186) are denied.
(2) "Objection to Debtor's Motion to Modify Confirmed Chapter 13 Plan [D.E. 186]," (the "Objection to Modification") filed by Deutsche Bank National Trust Company, as Certificate Trustee on behalf of Bosco Credit II Trust Series 2010-1 ("Secured Creditor") (Doc. No. 191);
(3) "Trustee's Objection to Motion to Modify Confirmed Plan Doc 186" (the "Trustee's Objection to Modification") (Doc. No. 201);
(4) Debtor's "Motion to Vacate Confirmation Order" (the "Motion to Vacate") (Doc. No. 205);
(5) Secured Creditor's "Objection to Debtor's Motion to Vacate Confirmation Order [D.E. 205]" (the "Objection to Motion to Vacate") (Doc. No. 207);
(6) Debtor's "Response to Objection to Motion to Vacate Confirmation Order" (Doc. No. 213); and
(7) "Secured Creditor's Reply to Debtor's Response to Objection to Debtor's Motion to Vacate Confirmation Order [D.E. 213]" (Doc. No. 214).
I. FACTS AND PROCEDURAL HISTORY.
Approximately seventeen years ago, on December 18, 2006, FMF Capital, LLC loaned $57,600 to the Debtor. The loan was subsequently assigned to Franklin Credit Management Corporation ("Franklin Credit"). (Claim No. 13-1 at 8, 19, 28.) The loan was secured by a second mortgage (the "Mortgage") on the Debtor's property located at 2121 Mangrove Drive, Orlando, Florida 32828 (the "Property"). (Id. at 8.) The Mortgage was eventually assigned to the Secured Creditor on July 26, 2013, but Franklin Credit remained the servicer. (Id. at 29-30.)
This is the Debtor's third Chapter 13 bankruptcy case. Her first case was filed with her husband as a co-debtor on September 27, 2012 (the "First Bankruptcy"). (No. 6:12-bk-13221-ABB, Doc. No. 1.) The couple claimed the Property as exempt and listed Franklin Credit as a secured creditor with a claim in the amount of $62,454. (Id. at 9, 10.) The First Bankruptcy was dismissed on October 12, 2012, without a discharge for failing to file information. (No. 6:12-bk-13221-ABB, Doc. No. 11.)
On February 1, 2013, the Debtor again filed a Chapter 13 case in this Court under Chapter 13 (the "Second Bankruptcy"). (No. 6:13-bk-01952-ABB, Doc. No. 1.) In the Second Bankruptcy, the Secured Creditor filed a claim for $66,249.31 on March 19, 2013. (No. 6:13-bk-01952-ABB, Claim 4-1.) The Debtor again claimed the Property as exempt and again scheduled the loan servicer, Franklin Credit, as a secured creditor. (No. 6:13-bk-01952-ABB, Doc. No. 1 at 10, 11.) Because a first mortgage exceeded the value of the Property, the Court entered an order granting the Debtor's motion to strip Franklin Credit's lien and treated its claim as unsecured. (No. 6:13-bk-01952-ABB, Doc. No. 56.) The order provided that, upon entry of an order of discharge, the lien would be extinguished. (Id. ¶ 4.) Debtor's counsel served the order on Franklin Credit. (No. 6:13-bk-01952-ABB, Doc. No. 61.) Unfortunately, the Debtor was not able to maintain timely plan payments, and the Second Bankruptcy was dismissed effective March 4, 2016, without an order of discharge. (No. 6:13-bk-01952-ABB, Doc. Nos. 144, 146.)
One month later, on April 5, 2016, the Debtor filed the instant Chapter 13 case (the "Third Bankruptcy"). (Doc. No. 1.) The Debtor did not schedule the Property as exempt. (Id. at 16, 17.) She also did not include the Secured Creditor or Franklin Credit on her schedules (Id. at 18-27); thus, the Secured Creditor did not receive notice of the Third Bankruptcy. In an order dated September 26, 2016 ("Confirmation Order") (Doc. No. 45), the Court confirmed the Debtor's Chapter 13 plan (the "Plan") (Doc. No. 33). The Plan has since been modified ten times, for the following reasons: (1) to allow the Debtor to become current; (2) to account for a permanent mortgage modification; (3) to include post-petition homeowners' association dues; (4) to extend the plan payments beyond five years because the Debtor's income was affected by COVID-19; (5) the Debtor experienced ongoing medical problems that prevented her from working from April 2021 until May 2021; and (6) the Debtor was approved to receive COVID Homeowners Assistance Funds ("HAF") and wished to use the funds to pay the mortgage delinquency due in Month 81 of the modified Plan. (Doc. Nos. 47, 50, 56, 59, 68, 72, 80, 88, 93, 96, 106, 112, 118, 121, 125, 132, 137, 142, 174, 181.) The Plan was last modified on October 26, 2022. (Doc. No. 181.)
In the motion to extend the automatic stay, the Debtor represented that her circumstances changed in that she started a new job, was receiving overtime pay that increased her disposable income, and her children started contributing to the household expenses. (Doc. No. 4 ¶¶ 4, 5.)
From June 2008 through October 2022 Franklin Credit sent periodic monthly mortgage statements to the Debtor including unpaid late charges. (Doc. No. 206-1 at 1-6, 8, 10-129; Doc. No. 206-2; Doc. No. 206-3; Doc. No. 206-4 at 1-52, 57-68; Doc. No. 206-5 at 7-13, 27-40, 47-50, 56-75.) Franklin Credit also mailed letters to the Debtor dated November 2, 2007, December 3, 2007, June 26, 2020, December 30, 2020, April 27, 2021, November 10, 2021, and February 9, 2022, notifying the Debtor of an outstanding balance and missed payments. (Doc. No. 206-1 at 7, 9; Doc. No. 206-4 at 53-56; Doc. No. 206-5 at 1-6, 16-26, 42-46, 51-55.) The most recent mortgage statement, dated October 10, 2022, listed a total amount due of $33,026.91, including late charges and other fees. (Doc. No. 206-5 at 74.) On October 14, 2022, Franklin Credit again notified the Debtor that she was behind in payments. (Doc. No. 213 at 14.)
On November 4, 2022, the Debtor filed an amended Schedule D, listing Franklin Credit as having a secured claim on the Property for an unknown amount. (Doc. No. 184 at 3.) The Debtor then filed the Motion to Modify, asking that the Plan be modified for an eleventh time to account for the HAF funds to be paid directly to the Debtor's mortgage servicer. (Doc. No. 186 ¶ 5.) A spreadsheet attached to the Motion to Modify listed Franklin Credit as having its lien stripped on May 5, 2016. (Id. at 8.) The Secured Creditor objected to the Motion to Modify on the basis that its receipt of the motion was the first time it received notice of the Third Bankruptcy. (Doc. No. 191 ¶ 6.) The Secured Creditor argues that the confirmed Plan is res judicata and that § 1329 of the Bankruptcy Code does not permit the Debtor to modify the confirmed Plan "to retroactively reclassify the status of Secured Creditor's claim." (Id. at 4.) The Trustee also objects to the Motion to Modify, questioning whether a modification is permitted at this juncture of the case. (Doc. No. 201 ¶ 2.) See infra note 3.
All section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, all "Rule" references are to the Federal Rules of Bankruptcy Procedure, and all "Civil Rule" references are to the Federal Rules of Civil Procedure.
The Debtor also filed the Motion to Vacate the Confirmation Order entered by the Court six years ago. (Doc. No. 205.) The Debtor argues vacatur is appropriate because she inadvertently omitted the Secured Creditor's claim from her bankruptcy schedules. (Id. ¶ 4.) She argues vacatur would permit her to strip off the lien, treat the Secured Creditor's claim as an unsecured claim, and "provide the pro rata amount that [the Secured Creditor] would have received if [the Secured Creditor] had originally been dealt with in the [P]lan." (Id. ¶¶ 7-8.)
The Secured Creditor objects to vacating the Confirmation Order, arguing that there is no authority for such relief. (Doc. No. 207.) In response, the Debtor contends that § 105(a) and Civil Rule 60(b)(6) pro vide such authority. (Doc. No. 213 ¶¶ 1-3.) The Secured Creditor replies that the Debtor's inadvertent omission does not amount to excusable neglect and that even if the Confirmation Order were vacated, the Trustee would not be able to make any further disbursements because the Plan, the term of which was extended under the CARES Act, cannot be further extended. (Doc. No. 214 ¶¶ 4-6.)
"The Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116-136, enacted on March 27, 2020, amended § 1329 of the Bankruptcy Code to allow a debtor financially impacted by the coronavirus epidemic to propose up to a seven-year plan." In re Mercer, 640 B.R. 577, 578 (Bankr. D. Colo. 2022) (citing 11 U.S.C. § 1329(d) (2020)). This provision expired on March 27, 2022. Id.
On January 22, 2023, after the Debtor filed the Motion to Modify and the Motion to Vacate, the Secured Creditor filed the claim, now in the amount of $74,341.68, and secured by the Property. (Claim No. 13-1.) At the December 15, 2022, hearing, the Trustee represented that the Debtor made her last plan payment in September 2022, but at the February 1, 2023 hearing, the Debtor's attorney represented that the Plan was not complete because the Debtor had recently received HAF funds and wanted to distribute them.
The Court held hearings on the issues on December 15, 2022 (Doc. No. 204), February 1, 2023 (Doc. No. 217) and May 25, 2023 (Doc. No. 238). At the May hearing, the Court took testimony from the Debtor, and admitted into evidence documents from the Secured Creditor including: a transcript of the Debtor's Rule 2004 examination; her petition from the Second Bankruptcy; the motion to determine secured status in the Second Bankruptcy; her petition in the Third Bankruptcy; and the motions to modify the Plan in the Third Bankruptcy. (Doc. Nos. 223, 238.) The Debtor testified that she did not realize that the Secured Creditor's claim was not included in the Third Bankruptcy. When she opened Franklin Credit's October 10, 2022 statement asserting delinquencies and late fees, she sent it to her attorney to investigate, as she (unfortunately, erroneously) believed all her debt was being taken care of in her Plan and she made all payments through the Trustee. During her 2004 examination, the Debtor testified that she forgot to list Franklin Credit as a creditor in the Third Bankruptcy and to include the claim on her schedules, and that failing to do so was an oversight. (Doc. No. 223-1 at 11-12, 14-17, 21, 22-23, 24-28.) She also testified during her 2004 examination that she thought the claim had been addressed during her Second Bankruptcy, and that during the Third Bankruptcy she was struggling with health issues and trying to stay afloat financially. (Id. at 12, 22-28.) The Debtor testified that she could not definitively remember whether she received monthly statements from Franklin Credit and that sometimes she had trouble receiving mail during the Third Bankruptcy. (Id. at 19-20.) However, the Debtor also stated, "I receive letters from my first mortgage that I didn't even open because I know it was part of the bankruptcy, just like with Franklin." (Id. at 20.) When she did receive a billing statement, because she was in bankruptcy, she "just put it to the side." (Id. at 18-19.)
II. FINDINGS OF FACT AND CONCLUSIONS OF LAW
The Court finds that the Debtor's failure to include the claim on her schedules until November 2022 and to include the claim in the Plan was wholly inadvertent. Her testimony that, to whatever extent she received monthly statements for the claim, they did not prompt her to investigate whether the claim was provided for in the Third Bankruptcy is credible, considering that she testified that she was also receiving mail regarding the first mortgage, which was provided for in the Plan, and that Franklin Credit, despite sending monthly statements for over ten years containing substantial late charges, did not attempt to collect the debt before October 2022.
The Debtor's objective is to treat the Secured Creditor's claim in the Third Bankruptcy as unsecured. If the Motion to Modify is granted, there is no need to vacate the Confirmation Order. If the Motion to Modify is denied, however, the Debtor may be able to obtain the relief she seeks if the Confirmation Order is vacated. Thus, the Court begins its analysis with the Motion to Modify.
A. The Motion to Modify
In the Motion to Modify, the Debtor lists the statutory basis for modification as § 1329. (Doc. No. 186 ¶ 4.) Under § 1329, a plan may be modified after confirmation but before payments are completed upon the debtor's request to
(1) increase or reduce the amount of payments on claims of a particular class provided for by the plan;11 U.S.C. § 1329(a).
(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 .
. . .
The spreadsheet attached to the Debtor's Motion to Modify proposes that the Secured Creditor's claim be stripped. (Doc. No. 186 at 8.) However, the Plan previously did not provide for the claim. (Doc. No. 33.) Because of this, the Debtor is not requesting to modify the Plan to increase or decrease the amount of payments on claims of a particular class, to extend or reduce the time for such payments, to alter the amount of distribution to a creditor whose claim is provided for by the Plan, or to reduce the amounts paid under the Plan to purchase health insurance. Section 1329 therefore does not provide authority for the Court to grant the Motion to Modify. See In re Guillen, 972 F.3d 1221, 1229 (11th Cir. 2020) (modification of confirmed plans may only be sought by specific parties for express, limited purposes set forth in § 1329); In re Parmenter, 527 F.3d 606, 609 (6th Cir. 2008) (modifications permitted under § 1329 do not include creating "a new obligation on the estate . . . ."); Beam v. Chase Home Fin., LLC (In re Beam), 510 B.R. 399, 405 (Bankr. N.D. Ga. 2014) (in denying motion to modify plan that would strip lien of second mortgagee, where original plan provided that second mortgagee's claim was secured, stating, "The Code does not permit modification of the Plan for the purpose of reclassifying a claim or taking relief that would reclassify a claim."). As such, there is no authority for the Court to grant the Motion to Modify.
B. The Motion to Vacate
Alternatively, the Debtor requests to vacate the Confirmation Order to treat the claim in accordance with 11 U.S.C. § 1325, strip the Secured Creditor's lien, and treat the claim as unsecured. (Doc. No. 202 ¶ 7.) The Debtor seeks relief under § 105(a) and Civil Rule 60(b)(6). (Id. ¶ 2; Doc. No. 213 ¶ 3.)
The Secured Creditor argues that the Confirmation Order should not be vacated because the Debtor knew about its claim when she filed for bankruptcy and such relief would be inconsistent with § 1330(a). (Doc. No. 207 at 2-3.) Further, the Secured Creditor argues that § 1330(a) contains an explicit mandate regarding when a confirmation order can be revoked, such that the Court cannot use § 105(a) to vacate the Confirmation Order, because § 105(a) " 'does not allow the bankruptcy court to override explicit mandates of other sections of the Bankruptcy Code.' " (Id. at 2 (quoting 2 Collier on Bankruptcy ¶ 105.01[2], p. 105-6 (16th ed. 2013).)
In response, the Debtor points to the provision in Rule 60(b)(6) that relief may be sought within a reasonable time if there is a "reason justifying relief from the operation of the judgment." (Doc. No. 213 ¶¶ 2, 3.) The Debtor argues that the claim's omission was due to inadvertence and excusable neglect, and not to defraud the Secured Creditor. (Id. ¶¶ 4, 5.) She argues that the Secured Creditor should not receive the benefit of her inadvertent oversight and mistake because it took no action to enforce its lien for many years, she cannot afford to pay the claim (id. ¶ 5) and that, absent relief under Rule 60(b)(6), she will be denied a fresh start (id. ¶¶ 11, 12).
In response, the Secured Creditor argues that the Debtor and her counsel knew about the claim yet waited seven years to attack it (Doc. No. 214 ¶ 4), noting that under Civil Rule 60(b)(1), relief from an order due to excusable neglect must be brought within a year of the order's entry (Id. ¶ 5). The Secured Creditor further asserts that it was acting within its rights in making the business decision, as a junior lienholder, not to take action to enforce its lien at an earlier time. (Id. ¶ 10.)
Rule 9024 sets forth the procedure for moving for relief from an order in bankruptcy cases and provides, in pertinent part: "Rule 60 F.R.Civ.P. applies in cases under the Code except that . . . (3) a complaint to revoke an order confirming a plan may be filed only within the time allowed by § 1144, § 1230, or § 1330." As applicable here, Civil Rule 60(b) provides that: "On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; . . . (6) any other reason that justifies relief." Civil Rule 60(c)(1) sets forth the timing of such motions: "A motion under [Civil] Rule 60(b) must be made within a reasonable time—and for reasons (1), (2), and (3) no more than a year after the entry of the judgment or order or the date of the proceeding."
In addition to the rules regarding relief from orders, § 1330(a) is specific to confirmation orders under Chapter 13, and states, "On request of a party in interest at any time within 180 days after the date of the entry of an order of confirmation under section 1325 of this title, and after notice and a hearing, the court may revoke such order if such order was procured by fraud."
The interplay between Rule 9024, Civil Rule 60, and § 1330 was considered by the Third Circuit in Branchburg Plaza Associates, L.P. v. Fesq (In re Fesq), 153 F.3d 113, 114 (3d Cir. 1998). In that case, the debtor filed a Chapter 13 and proposed paying the creditor in the plan about ten percent of its claim. Fesq, 153 F.3d at 114. Due to the creditor's attorney's oversight, the creditor did not timely file an objection to the plan, and the court entered a confirmation order. Id. Fifteen days later, the creditor filed a motion to vacate the order. Id. The issue before the court was "whether a final order confirming a debtor's Chapter 13 plan can be vacated without a showing of fraud . . . ." Id. at 115.
The Third Circuit concluded that under § 1330(a) "a confirmation order can be revoked only upon a showing of fraud, and [establishes] a 180-day time frame within which a motion for such relief may be tendered." Id. The court rejected the creditor's argument that § 1330(a) prescribes a time limit only on motions to revoke a confirmation order based on fraud and does not foreclose motions to revoke on other bases as provided for in Civil Rule 60. Id. at 115-20. The court stated that this interpretation would permit "Rule 9024(3) to deprive the final phrase of Section 1330(a) of any substantive effect . . . ." Id. at 116. The reading is untenable because "bankruptcy rules cannot 'abridge, enlarge, or modify' the substantive rights afforded by the Bankruptcy Code." Id. at 117 (quoting 28 U.S.C. § 2075, which grants the Supreme Court the power to prescribe general rules in cases under the Code). Congress intended § 1330(a) to limit motions to revoke confirmation orders in Chapter 13 cases to those based on fraud and filed within 180 days "because it protects the finality of Chapter 13 confirmation orders[, which is] . . . an important goal of bankruptcy law." Id. at 119. The Third Circuit thus held "that fraud is the only ground for relief available for revocation of a Chapter 13 confirmation order." Id. at 120. See also Fla. Dep't of Revenue v. Randolph (In re Randolph), 273 B.R. 914, 918 (Bankr. M.D. Fla. 2002) ("Fraud is the only ground available for revocation of the confirmation order."); Young v. Mason (In re Young), 237 B.R. 791, 803 (B.A.P. 10th Cir. 1999) ("We hold that section § 1330 provides the complete substantive basis for all motions for revocation of confirmed Chapter 13 plans."), aff'd on other grounds, 237 F.3d 1168 (10th Cir. 2001).
Although the Eleventh Circuit has not explicitly addressed whether § 1330(a) limits motions to revoke Chapter 13 confirmation orders to those based on fraud and filed within 180 days, there are indications that it would make such a determination. In United States v. Hochman (In re Hochman), 853 F.2d 1547 (11th Cir. 1988), the Eleventh Circuit affirmed the district court "for the reasons stated . . . in its Order . . . ." One of the reasons in the district court's order for denying the motion to revoke or vacate the bankruptcy court's confirmation order was that fraud was not alleged "as required by § 1330(a)." United States v. Lee, 89 B.R. 250, 256 (N.D. Ga. 1987), aff'd sub nom. In re Hochman, 853 F.2d 1547 (11th Cir. 1988).
In addition, in the unpublished opinion in BFP Investments, Inc. v. BFP Investments Ltd., 150 F. App'x 978 (11th Cir. 2005), the Eleventh Circuit interpreted § 1144 as limiting motions to revoke a confirmed plan in a Chapter 11 case to those where the confirmation order was procured by fraud and the motion was brought within 180 days of the order. Section 1144 states, "On request of a party in interest at any time before 180 days after the date of the entry of the order of confirmation, and after notice and a hearing, the court may revoke such order if and only if such order was procured by fraud." 11 U.S.C. § 1144. Because the creditor filed his complaint to vacate the confirmation order almost one year after its entry, the creditor argued "that the time limits provided in Bankruptcy Rule 9024 are not applicable to Rule 60(b)(6) complaints." BFP Invs., 150 F. App'x at 979. Negating this argument, Rule 9024(3) states that "a complaint to revoke an order confirming a plan may be filed only within the time allowed by § 1144, § 1230, or § 1330." In addition, as in Fesq, the court observed that "[r]ules of procedure may not modify substantive law." BFP Invs., 150 F. App'x at 979. The Eleventh Circuit also relied on the Advisory Committee Notes for Rule 9024, which state that " 'Clauses (2) and (3) of this rule make it clear that the time periods established by §§ 727(e), 1144 and 1330 of the Code may not be circumvented by the invocation of F.R.Civ.P. 60(b).' " Id. (quoting Rule 9024 advisory committee note). Rule 60(c)'s allowance of motions filed for relief from an order due to any reason that justifies relief to be filed within a reasonable time does not trump the 180-day limitation in § 1144. Id.
In the Eleventh Circuit, "Unpublished opinions are not considered binding precedent, but they may be cited as persuasive authority." 11th Cir. R. 36-2.
Although BFP Investments concerned § 1144, that section is the Chapter 11 equivalent to § 1330. Fesq, 153 F.3d at 116 n.4, 117 ("Sections 1144 and 1230(a) are companion statutes to Section 1330(a)" and holding that "no intended difference in meaning flows from" § 1144's "if and only if" language). BFP Investments, together with the affirmance and explicit approval of the district court's reasoning in Hochman, indicates that the Eleventh Circuit would hold that Rule 60 does not permit the Court to vacate the Confirmation Order when the Motion to Vacate was filed after 180 days from entry of the Confirmation Order and is not based on fraud.
The Debtor relies on In re Clemmons, No. 6:15-bk-5285-ABB, Doc. No. 104 (Bankr. M.D. Fla. May 10, 2018), to support her argument that the Court may vacate the Confirmation Order. (Doc. No. 213 ¶ 1.) In Clemmons, this Court granted the debtor's motion to vacate a confirmation order in a Chapter 13 case where a property was encumbered by two mortgages, the debtor objected to the second mortgage, and the creditor holding the second mortgage withdrew its claim and did not appear at the hearing on the objection. In re Clemmons, No. 6:15-bk-5285-ABB, Doc. No. 104 at 2. The debtor's confirmed plan provided that the Trustee would discontinue disbursements if a claim is withdrawn. Id. The debtor liquidated his retirement account to pay off the first mortgage and filed a motion to vacate the confirmation order and to strip the second mortgage lien. Id. The creditor objected, arguing, among other things, that the only basis to revoke the confirmation order was fraud. Id. at 3. Without addressing § 1330, the Court held, "Relief from the Confirmation Order is appropriate under 60(b)(6)." Id. Equity called for the confirmation order to be vacated because the creditor was attempting to benefit from the honest debtor liquidating his retirement account to pay off the first mortgage and the debtor's reasonable assumption based on the creditor's actions that the claim was unsecured. Id. at 5-6. The Court also cited § 105(a), quoting from its provision that " '[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.' " Id. at 5.
The Clemmons Court relied on In re Kelly, 281 B.R. 62 (Bankr. S.D. Ala. 2001), Bank of America, N.A. v. White (In re White), 2012 Bankr. Lexis 1105 (Bankr. N.D. Ga. Feb. 13, 2001), and In re Abrams, 305 B.R. 920 (Bankr. S.D. Ala. 2002), in noting that bankruptcy courts within the Eleventh Circuit vacated confirmation orders under Civil Rule 60(b)(1) and Rule 9024. In re Clemmons, No. 6:15-bk-5285-ABB, Doc. No. 104 at 4. In Kelly, there was no discussion of § 1330; instead, the court granted the creditor's request for relief from the confirmation order under Rule 9024, and then determined that the creditor was entitled to relief under Civil Rule 60(b)(1) based on excusable neglect. In re Kelly, 281 B.R. at 66-67. The court in White also did not address § 1330 and used the standard for setting aside a default judgment for excusable neglect to find a sufficient basis to set aside the confirmation order under Civil Rule 60(b)(1). In re White, 2012 Bankr. Lexis 1105, at *4-5.
The Abrams court did discuss § 1330 but treated it as an alternative basis to Rule 9024 for relief from a confirmation order. In re Abrams, 305 B.R. at 923 ("There are only two possible provisions- § 1330 of the Bankruptcy Code or Fed. R. Bankr.P. 9024 (which incorporates Fed.R.Civ.P. 60 into the Bankruptcy Rules)." (Emphasis added.)). Because the creditor in Abrams did not allege fraud and filed the motion after 180 days following the confirmation order, the court considered the relief as authorized under Rule 9024. Id. The court cited Fesq and Hochman in acknowledging that "[t]his Rule has been held inapplicable to chapter 13 plan revocations or modifications by many courts." Id. However, because a due process issue regarding lack of notice was raised, the court decided that it would be inappropriate to preclude relief under Rule 9024. Id. Even with this concession, the court did not set aside the confirmation order, but did permit a hearing to consider an amended confirmation order on the treatment of secured claims. Id. at 925.
Because Clemmons, Kelly, and White do not address § 1330 in any capacity, they do not aid the Court in deciding the issue specifically raised by Secured Creditor that § 1330 precludes the relief the Debtor seeks. Abrams does address § 1330 and declines to hold that it prevents setting aside the confirmation order, but the issue before Abrams involved a lack of due process. In re Abrams, 305 B.R. at 923. When courts have found that confirmation orders in Chapter 13 cases may be set aside under § 105, despite § 1330, it is within the context of a lack of due process, a plan filed in bad faith, or a mistake on the court's part. See Chinichian v. Campolongo (In re Chinichian), 784 F.2d 1440, 1443 (9th Cir. 1986) (§ 105(a) does not conflict with § 1330(a), as § 1330(a) references a request by a party in interest, and the court could find its order void on its own under § 105(a) and the plan was not filed in good faith); In re Rideout, 86 B.R. 523, 530 (Bankr. N.D. Ohio 1988) (voiding confirmation order in Chapter 11 case under § 105(a) despite § 1144 limiting revocation of such orders to those based on fraud because creditors did not receive notice of the hearing on the plan, possibly because the court failed to direct the debtors to provide notice to all parties, the court did not have jurisdiction over the creditors, and the creditors promptly brought the matter before the court).
Here, the Debtor alleges a due process violation exists because the Secured Creditor did not receive notice of the Plan (Doc. No. 213 ¶ 7), but the Secured Creditor is not seeking vacatur of the Confirmation Order. There are also no allegations that the Court made a mistake or that the Plan was filed in bad faith. Without such bases, there is no authority for the Court to vacate the Confirmation Order in light of the Secured Creditor's argument that § 1330 precludes such relief.
Finally, courts, including this Court, specifically reject using § 105(a) to vacate a confirmation order in a Chapter 13 case. In a different Kelly bankruptcy case than the one relied on in Clemmons, this Court rejected the trustee's argument that § 105(a) could be used to convert a Chapter 13 case to a Chapter 7 case due to the debtors' fraud, as this would be an unauthorized method to avoid § 1330(a)'s time requirements to revoke a confirmation order. In re Kelly, 358 B.R. 443, 447 (Bankr. M.D. Fla. 2006). See also Fed. Nat'l Mortg. Ass'n v. Meeko, No. 3:15-CV-01200-AA, 2016 WL 1108941, at *5 (D. Or. Mar. 17, 2016) ("This Court cannot vacate the confirmation order using its equitable powers under section 105(a) because that relief would be inconsistent with a more specific statute, 11 U.S.C. § 1330.").
The Court is cognizant that it is a court of equity and that the primary purpose of bankruptcy is to give the honest debtor a fresh start, and here, it is easy to conclude that we have an honest and deserving debtor. But the Court "cannot, in the name of its equitable powers, ignore specific statutory mandates." Hamilton v. Lumsden (In re Geothermal Res. Int'l, Inc.), 93 F.3d 648, 651 (9th Cir. 1996). Under § 1330, a confirmation order in a Chapter 13 case may only be revoked by motion filed within 180 days and if it was procured by fraud; "§ 105(a) 'does not allow the bankruptcy court to override explicit mandates of other sections of the Bankruptcy Code.' " Law v. Siegel, 571 U.S. 415, 421, 134 S. Ct. 1188, 1194, 188 L.Ed.2d 146 (2014) (quoting 2 Collier on Bankruptcy ¶ 105.01[2], p. 105-6 (16th ed. 2013)). Under § 105(a), the Court may issue any order "that is necessary or appropriate to carry out the provisions of this title[,]" 11 U.S.C. § 105(a), "but it is quite impossible to do that by taking action that the Code prohibits[,]" Id. "[A] statute's general permission to take actions of a certain type must yield to a specific prohibition found elsewhere." Id.
Section 1330 provides the only basis for revoking a confirmation order in a Chapter 13 case, and it limits that relief to motions filed within 180 days based on orders procured by fraud. The Motion to Vacate was filed more than six years after the Confirmation Order, and the Debtor presents no evidence or allegation that it was procured by fraud; indeed, the Court cannot conclude that the Debtor is anything but honest and simply made a mistake. But the Court cannot use § 105(a) to grant the Debtor relief as such would run contrary to specific provisions of the Bankruptcy Code, in particular because the Debtor's request is not based upon a lack of due process afforded to her or upon the Court's mistake. Because there is no authority for the Court to take the action the Debtor requests, the Motion to Vacate is denied.
III. CONCLUSION.
Both § 1329 and § 1330 authorize the relief the Debtor seeks only in particular situations, none of which are applicable here. Her motions must therefore be denied.
Accordingly,
it is ORDERED:
1. The Motion to Modify (Doc. No. 186) is DENIED;
2. The Objection to Modification (Doc. No. 191) is SUSTAINED;
3. The Trustee's Objection to Modification (Doc. No. 201) is SUSTAINED;
4. The Motion to Vacate (Doc. No. 205) is DENIED; and
5. The Objection to Motion to Vacate (Doc. No. 207) is SUSTAINED.
ORDERED.