Opinion
22-02617-LT13
07-06-2023
In re: MICHAEL SIMSER. Debtor.
NOT FOR PUBLICATION
This opinion is intended only to resolve the dispute between these parties and is not intended for publication.
LAURA S. TAYLOR, JUDGE.
The parties, at this point, are in partial agreement as to the amount owed to creditor Summit Imports. Inc. dba San Diego Trucks and Vans ("Summit") by debtor Michael Simser. The Court, having reviewed the matter thoroughly, will now sustain the claim objection in part and overrule it in part as follows.
FACTS
Debtor initiated this chapter 13 case on October 6. 2022 (Dkt. No. 1). In his case initiation documents, he scheduled Summit as holding a secured claim of $4,000. Id.
The Debtor also scheduled Summit's collateral as having a value well in excess of the secured claim. As a result. Summit, an over-secured creditor, was and is entitled to recover interest, costs, and attorneys' fees to the extent owed under its contract.
Debtor's initial plan proposed to pay Summit's scheduled claim at 0% interest.
The alleged $4,000 claim amount was understated in the schedules and plan and, thus, erroneous. It is likely that the $4,000 number was a rough calculation of the amount owed on the petition date. And Debtor initially asserted that it made two payments on this debt - not one as Summit claims. But on the petition date four payments had come due; this would leave a balance owing of no less than $4,524 plus late charges. As one of the alleged payments is in dispute - Debtor lacks any documentary evidence of the alleged second payment - the amount owed appears to be higher. The Court makes this point only because the Debtor makes strong claims about the inaccuracy of Summit's proof of claim. There are significant problems there, but the Debtor needs to acknowledge his own lack of precision.
Summit filed a Proof of Claim on December 7, 2022 (Claim Dkt. No. 5) (the "Proof of Claim"). It sought recovery of $11,698.22. In its attachment it outlined the components of its claim. The Debtor objected to every line item.
After several hearings and written submissions and after the parties agreed "for purposes of settlement" in several areas, the Court sustains the objection in part:
1. Costs. Summit sought recovery of $480 in unspecified costs. It has never documented these costs or explained them. As Debtor reasonably asked for specificity and proof, and given the lack thereof, the Court sustains the claim objection in part and disallows this portion of the Proof of Claim.
2. Repossession charges. Summit retained a Firm to repossess its collateral (the "Truck") but was not successful. Summit requested $1,795 in repossession expenses in the Proof of Claim, but its evidence shows that its actual cost was $450. Summit now agrees to a reduction to this portion of its claim. The Debtor, however, argues that no repossession costs should be awarded given the allegedly plain language of the operative contract. It states that since Summit could not repossess the car, which was behind a locked gale, a "repossession" did not occur and Summit cannot recover for repossession.
The Court initially determined that the term repossession should be read more broadly to include attempts at repossession. But even if this is not an appropriate interpretation, the contract allows recovery of these costs.
If, as Debtor argues, repossession costs are only available when a repossession actually occurs, the fees for attempted repossession are still allowable as post-default "costs of collection." The contract states: "[y]ou agree that upon your default we shall be entitled to recover from you a reasonable collection cost including but not limited to an attorney fee."
The Debtor cannot have it both ways. To the extent attempted repossession costs are not recoverable under the repossession paragraph, then they are recoverable as reasonable costs of collection.
The Court, thus, sustains the claim objection in part, reduces the claim for repossession costs, and awards $450 in repossession costs.
3. Penalty Charges. The Debtor does not dispute that he owes penalty charges in connection with the payments he missed or where he was late by more than ten days. Instead, there is a dispute about whether they should cover three, four, or five months' worth of missed payments. ""For purposes of settlement" it appears that he is willing to concede that only one payment was made. Thus, unless the Debtor requests an evidentiary hearing within seven days of issuance of this Memorandum Decision, the Court will assume that only one payment was made.
Assuming that only one timely payment occurred before the petition date, the Debtor failed to make payments for June. July, August, and September. The May payment was less than ten days late, so no penalty is due on that account. Thus, on the petition date he owed four late charge payments of $57.81. The Debtor is correct that the fifth payment for the October payment would be due after the petition date. The due date appears to be the 21st of the month. The Court assumes, without deciding the point, that the Proof of Claim included the October payments in its calculation. The Court, thus, sustains the claim objection in part and reduces the amount of penalty charges by $57.81. The new total, calculated as of the petition date, is $231.24. If the October payment was not paid or was more than ten days late, the penalty is owed but this was not true on the petition date - the date relevant for the Proof of Claim.
4. Principal and Interest. The Court understands that the Debtor agreed to make seven payments of $1,156.14 which totals $8,092.98. This amount included contractual interest. The parties agree for purposes of settlement. unless Debtor requests an evidentiary hearing within seven days of the issuance of this Memorandum Decision, that only one of these payments was made timely, so interest continued to accrue on the unpaid balance; the amount owed cannot be calculated through simple reduction of the anticipated total payments less the payment made.
As to interest, the Court sustains the objection as to the additional claimed interest of $597.35, This amount appears to double count interest already included in the total principal and interest paid.
Debtor provided detailed calculations which lead to only a small difference between the parties' principal and interest numbers. The Court will use Debtor's calculation of principal and interest owed ''as of the petition" date of $7,189.31. The slight difference in interest is probably - like the penalties - just a matter of the choice of date for calculation. The claim objection is sustained in this limited regard.
5. Attorney's Fees. The remaining objection is to the attorney's fees charged in connection with this matter. The contract clearly provides for the costs of collection, including attorney's fees. So, as the Court has previously noted, some level of attorney's fees is awardable as collection costs. And in accessing these fees, the Court will not, as the Debtor seems to wish, focus only on the claim objection. As previously noted, the Debtor proposed a plan which by any metric understated the arrearage (and amount) owed on the petition date and proposed repayment with 0% interest. The Court notes that the Debtor recently agreed to pay 7.5% interest towards repayment of arrearage to another automotive secured creditor. The Court also notes that Till v. SCS Credit Corp., 541 U.S. 465 (2004) would require payment of the risk-free (low risk) rate plus an upward adjustment. As a result, Summit had every right to employ counsel to not only file its Proof of Claim but also to defend against the plan and generally monitor the case. All reasonable fees are recoverable as costs of collection.
The Court also notes that the Debtor's reliance on California Civil Code § 1717 and his ''prevailing party'" argument is inapt. California Civil Code § 1717 relates to litigation on the contract. Here there are some contractual interpretation disputes. But the vast - vast majority of the requested fees involve collection activity where contractual disputes do not exist. Most of the claim will be allowed; Debtor is not the clearly prevailing party. The plan as initially proposed will not be confirmed over opposition. The Court will not second-guess fee generating activity in attending the 341(a) meeting and monitoring the case.
Claimant agreed to a $625.00 reduction in fees and costs to account for inefficiency. The-Court cannot identify other specific areas requiring reduction. The Debtor's call for global disallowance is not helpful. The Court will sustain the claim objection to fees in part and orders reduction of $625.00 as agreed by Claimant. Kan.evidentiary hearing is not required, the Debtor should lodge an order.
UNITED STATES BANKRUPTCY COURT, S.D. CALIFORNIA
Michael Simser, Bankruptcy Case No. 22-02617-LT13
CERTIFICATE OF MAILING
The undersigned, a regularly appointed and qualified employee in the office of the United States Bankruptcy Court for the Southern District of California, at San Diego, hereby certifies that a true copy of the attached document, to wit:
MEMORANDUM DECISION
was enclosed in a sealed envelope bearing the lawful frank of the Bankruptcy Judges and mailed to each of the parties at their respective address listed below:
Jeffery R. Menard Law Offices of Jeffery R. Menard 325 7th Avenue, Suite 1706 San Diego, CA 92101
Jeffery R. Menard, Esq. 12089 Meriden Lane San Diego, CA 92128
Michael Simser 4659 Luneta View Julian, CA 92036
Pamela Kleinkauf Law Offices of Pamela Kleinkauf 16870 West Bernardo Dr., Suite 400 San Diego, CA 92127
Thomas H. Billingslea 402 West Broadway, Suite 1350 San Diego, CA 9210
Gary A. Sehnert Law Office of Gary Sehnert 418 W Ivy St. San Diego, CA 92101-1816
Joseph Delmotte Aldridge Pite, LLP 8880 Rio San Diego Dr., Suite 725 San Diego, CA 92108
Sheryl K. Ith Cooksey, Toolen, Gage, Duffy & Woog 535 Anton Blvd., 10th floor Costa Mesa, CA 92626
Said envelope(s) containing such document were deposited by me in a regular United States mailbox in the City of San Diego, in said district on July 6, 2023.
Regina A. Fabre, Judicial Assistant