Chagolla, et al. v. JP Morgan Chase Bank, N.A. (In re Chagolla)

Citation:
no official cite as of yet
Tag(s):
Ruling:
The Bankruptcy Appellate Panel for the Ninth Circuit reversed the bankruptcy court's denial of the Debtors' unopposed valuation motion that was filed postdischarge after the Debtors completed their plan payments. The BAP held that the motion was timely and was within the court's jurisdiction to rule upon.
Procedural context:
Case came on appeal to the BAP after the bankruptcy court entered an order denying the valuation motion based on lack of jurisdiction and untimeliness. The BAP reviewed the conclusions of law de novo and reviewed the facts under the clearly erroneous standard.
Facts:
The Debtors owned a home that was underwater as to the first and the second mortgages on the home. The second mortgage of JP Morgan was the subject of the Debtors' valuation motion. Pursuant to the Debtors' chapter 13 plan, the Debtors intended to avoid the junior lien of JP Morgan within 90 days of the commencement of the case. However, the plan was confirmed without the Debtors commencing an action to avoid JP Morgan's junior lien. After the Debtors completed plan payments, Debtors obtained their discharge. The case was eventually closed. A year after the case was closed, the Debtors sought to reopen the case in order to file a lien avoidance motion. The case was reopened and the Debtors filed a lien avoidance motion against JP Morgan's junior lien. The Debtors established that JP Morgan's junior lien was wholly unsecured and should be avoided. The motion was served properly but JP Morgan did not oppose the relief sought. Notwithstanding that the motion was unopposed, the bankruptcy court denied the relief on ground that it lacked jurisdiction to hear the motion and that the motion was untimely having been filed after the plan was confirmed. The BAP ruled that the bankruptcy court retained jurisdiction for implement and enforce the Debtors' chapter 13 plan. The BAP further held that the motion was not untimely as the Code does not provide a time limitation for filing a sec. 506(A) or 522(f) motion. At the same time, JP Morgan was not prejudiced by the delay and chose not to oppose the motion.
Judge(s):
BAP Judges JURY and KURTZ and Bankruptcy Judge WASLEE (sitting by designation)

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