Opinion
Case No. 02-85121-RGM
August 8, 2003
MEMORANDUM OPINION
This case is before the court on the debtors' motion for an expedited hearing on their motion to reinstate the automatic stay. Because the underlying motion does not state a basis upon which relief may be granted, both motions will be denied.
Bud Clyde Cribley and Karen Fay Cribley filed a voluntary petition in bankruptcy under chapter 13 of the United States Bankruptcy Code on October 16, 2002. They listed their home on Schedule A, Real Property, with a value of $336,000 and liens of $232,660. Schedule B reflects two liens against the property, a first lien in favor of Heltzel Mortgage Company in the amount of $207,000 and a second lien in favor of CitiFinancial Mortgage Company in the amount of $25,000. Both Heltzel and CitiFinancial filed proofs of claims. Heltzel's proof of claim was for a total payoff of $207,861.14 which included five missed mortgage payments and the costs of advertisement for a foreclosure sale. CitiFinancial's proof of claim was for a total of $24,613.92 which included one missed mortgage payment of $399.87. Heltzel estimated the value of the home at $350,000 on its proof of claim. CitiFinancial made no estimate of value.
Schedule I reflects net monthly income of almost $8,900. Schedule J reflects net monthly disposable income of almost $2,000. The Statement of Financial Affairs states that their gross income for 2000 and 2001 was between $120,000 and $130,000 per annum.
The debtors' chapter 13 plan proposed to cure the mortgage arrearage and pay all creditors in full. It was confirmed on March 4, 2003 after various objections were resolved. On March 13, 2003, CitiFinancial filed a motion for relief from the automatic stay asserting a total arrears of $1,999.35. The payments appear to be due on the 25th of month; consequently, it appears that CitiFinancial was alleging that no post-petition payments had been made. The parties agreed to a resolution of the motion for relief from the automatic stay. An initial payment of $1,500 was to be made by April 20, 2003 followed by six monthly payments of approximately $254.03 each. In addition, all future regular payments were required to be timely made. In the event of a default in making any required payment under the consent order within fifteen days after the payment was due, the lender was permitted to give notice of the default. The debtors had an additional 15 days after the default notice within which to cure the default. In addition, the debtors could request a hearing to show that no default existed or "other reason why an Order granting relief from the automatic stay should not be entered".
The consent order was entered on the docket on May 2, 2003. On May 15, 2003, the lender mailed a default notice as required by the consent order. It recited that neither the April 2003 regular payment nor the first cure payment had been timely made. On June 9, 2003 the lender filed an affidavit of default reciting the default and the failure to cure the default. The debtors did not request a hearing on the issue of default or to show any other reason why the automatic stay should not be terminated. On June 11, 2003, an order was entered granting CitiFinancial relief from the automatic stay.
On August 1, 2003, the debtors filed a motion to stay the order granting relief from the automatic stay. It recited the default, the notice of default and the entry of the June 11, 2003 order granting relief from the automatic stay. It also stated that a foreclosure sale was scheduled for August 26, 2003. The debtors allege that they have enough money to "pay a substantial part of the post-petition delinquency." They also allege that the lender will not permit a reinstatement of the mortgage unless all arrears are paid — both pre-petition arrears and post-petition arrears. They sought to place the motion on the court's August 6, 2003, docket by noticing it for that date. This, however, violated this Division's order establishing motions day procedures. The order requires that all motions be filed with the court at least 15 days before the scheduled hearing date. See Motions Day Procedures for Alexandria Division, ¶ 4. The motion was, therefore, not placed on the docket. The motion was refiled the following day together with a request for an expedited hearing. There are no new allegations in either motion. The lender opposes the reinstatement of the automatic stay.
The debtors' motion is, in effect, a motion to alter or amend the June 11, 2003 order under F.R.Bankr.P. 9023 (which incorporates F.R.Civ.P. 59) or for relief from it under F.R.Bankr.P. 9024 (which incorporates F.R.Civ.P. 60). The motion is not timely as a motion to alter or amend. Such a motion must be filed within ten days after entry of the motion sought to be altered or amended. F.R.Civ.P. 59(b) and (e).
If the motion seeks an injunction under 11 U.S.C. § 105, the matter must be brought as an adversary proceeding. F.R.Bankr.P.7001(7).
Nor can the motion be granted under F.R.Civ.P. 60 for relief from the order. There is no clerical error under Rule 60(a). That leaves only the grounds under Rule 60(b). None of the first five grounds are applicable. They are (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence; (3) fraud; (4) the judgment is void; and (5) the judgment has been satisfied, released or discharged. None are alleged and the recitation of the facts negates all five of them. The sixth ground is the catch-all "any other reason justifying relief from the operation of the judgment." Here, however, the debtors knew what was happening when it was happening. They knew what their obligations were and the actions required of them. They had ample opportunity to comply but did not. They have offered no explanation or excuse for their non-compliance. Their proffered ability to perform is nebulous at best. They only say that they have a "substantial part" of the post-petition arrears. The actual amount is unclear. There are no reasons suggested that justify relief from the June 11, 2003 order.
There are fundamental reasons why the motion should not be granted. First, the consent order itself built in a flexible means to avoid the termination of the automatic stay if the debtors could not comply with the order. It permitted them to object to the granting of the relief if they had any good reason. That is analogous to Rule 60(b)(6). They made no timely request. If they had a good reason, they should have asserted it within the parameters of the consent order.
The second reason is that parties ought to be bound by their own agreements as they are memorialized by court orders. If consent orders are to have any meaning, they cannot be simply avoided whenever one of the parties feels like it. Both parties are entitled to rely on the consent orders. Nor can these be an appeal to the likely injury to the unsecured creditors. Not only did the consent order require notice to the debtors and their counsel, but also the chapter 13 trustee so that he could protect the unsecured creditors, if appropriate.
There may be more than $100,000 in equity in the property, more than enough to payoff all unsecured creditors.
The unsecured creditors may be substantially injured by a foreclosure sale. They may lose a valuable asset from which they might have been paid had there been some other resolution. But, given the notice required by the consent order and the flexible remedies available under the order itself, that cannot now be sufficient grounds for the belatedly requested relief from the June 11, 2003 order.
The court notes that the debtors undoubtedly have the right to reinstate the note and thereby avoid a sale under the deed of trust. Paragraph 18 of the deed of trust, a copy of which is attached to the lender's proof of claim, gives the debtors the right to reinstate the note under the conditions set forth in Paragraph 18. Basically, at least five days before the scheduled sale of the property, the debtors must fully reinstate all past-due payments and pay all costs associated with the default. That remedy is adequate here given the debtors' income and the fact that the pre-petition arrears was under $400 and all but $500 of the cure payments will have become due before the scheduled foreclosure sale.
Conclusion
The motion for an expedited hearing and the motion to reinstate the automatic stay will be denied.