Opinion
Case No. 05-15440.
5-19-2009
In Re: RICHARD J. TRAPP, Chapter 13, Debtor.
Presently before the Court is a motion to reopen ("Motion") (Doc. 44) filed by the Debtor. The Motion seeks to reopen the case to contest the current balance due to the Debtor's mortgagee, JPMorgan Chase Bank, N.A. ("JPMorgan"). The Motion is opposed by JPMorgan and the Chapter 13 Trustee. See Docs. 45 & 50. Because the dispute is governed exclusively by state law and does not give rise to any federal bankruptcy interest, the Motion is not warranted.
The Debtor's confirmed plan proposed to cure a prepetition arrearage to JPMorgan while making postpetition mortgage payments outside the plan. See Doc. 15. In August of 2006, JPMorgan obtained relief from stay by default. See Doc. 25. The Debtor filed a motion for reconsideration. See Doc. 27. The motion for reconsideration was resolved by an agreed order reimposing the stay and requiring the Debtor to cure a postpetition arrearage over four months. See Doc. 30. JPMorgan subsequently filed an affidavit of default and obtained an order granting relief from stay. See Doc. 32 & 33. Again, the Debtor filed a motion for reconsideration. See Doc. 35. This time, however, the Debtor eventually withdrew his motion. See Doc. 38. Thereafter, a discharge was issued and the case was closed. Subsequent to closing, JPMorgan filed a foreclosure action in the Hamilton County Court of Common Pleas, case number A0804596. The foreclosure action was later dismissed without prejudice.
The decision to reopen a case is left to the discretion of the Court. In re Coogan, 36 B.R. 621, 623 (Bankr. S.D. Ohio 1984). The party seeking to reopen bears the burden of proving circumstances sufficient to justify reopening. In re Janssen, 396 B.R. 624, 634 (Bankr. E.D. Pa. 2008).
The issue of whether to reopen a chapter 13 case to contest the amount owed to a mortgagee was recently addressed in Janssen.
In the context of a motion to reopen a closed chapter 13 case, it is unlikely that a state-law based dispute will impact substantially the administration of the bankruptcy case because there is no extant case being administered. Thus, if a dispute appears to turn entirely, or at least primarily, on state law issues and there are no equitable or other factors favoring the exercise of bankruptcy jurisdiction, the bankruptcy court may have good reason to decline to reopen a chapter 13 case and thereby, defer to a pending state court proceeding. Where, however, a debtor articulates a colorable claim that is closely linked to the administration of the bankruptcy case or to a specific provision of a debtor's chapter 13 plan or that requires the construction of a provision of the Bankruptcy Code, the balance may tip in favor of exercising bankruptcy jurisdiction.
Id. at 637 n. 15. In Janssen, the debtor argued that the case should be reopened because the mortgagee, post-discharge, attempted to collect prepetition arrears that had been cured and discharged during the chapter 13 case. The court reopened the case because the debtor raised a colorable claim that was closely linked to the binding effect of the debtor's plan and the discharge of the prepetition arrears.
If proven, the Debtor's claim is tied directly to the bankruptcy court's claims allowance and distribution process in chapter 13 cases. The bankruptcy system has a substantial interest in protecting the integrity of these processes and in enforcing the principle set forth in 11 U.S.C. § 1327 that the provisions of a confirmed plan bind the debtor and each creditor. The Debtor's claim that Chase continues to try to collect the Prepetition Arrears involves a significant federal bankruptcy interest warranting the exercise of this court's subject matter jurisdiction.
Id. at 636.
There is one fact that significantly distinguishes this case from Janssen. JPMorgan obtained relief from stay. This caused the Trustee to discontinue disbursements on JPMorgan's prepetition arrearage claim. Consequently, the prepetition arrearage was not cured or discharged. Therefore, unlike Janssen, the Motion does not raise a colorable claim with respect to the discharge, the binding effect of the plan, or any other provision of the Bankruptcy Code. Once relief from stay was granted, the Debtor and JPMorgan were restored to their rights under state law, as if the bankruptcy had never been filed. Their dispute is purely a state law issue governed by the note and mortgage. This weighs against reopening. See Janssen, 396 B.R. at 637-38.
Because the Debtor has failed to sustain his burden of proving a colorable claim that implicates a significant interest under federal bankruptcy law, the Motion is hereby DENIED.
IT IS SO ORDERED. --------------- Notes: Although the Debtor has been represented by counsel in this case, the Debtor filed the Motion without the assistance of counsel.