Davis v. U.S. Bank, N.A. (In re Davis)

Summarized by Lars Fuller , BakerHostetler
11 years 1 week ago

Citation:

Davis v. U.S. Bank, N.A. (In re Davis), No. 12-60069 (9th Cir. Feb. 17, 2015)

Tag(s):

Ruling:

The 9th Circuit affirmed the ruling of the BAP, which had affirmed the ruling of the bankruptcy court, dismissing debtor's chapter 12 bankruptcy because debtor's debts exceeded the statutory limit. The 9th Circuit agreed that even though debtor had discharged her personal liability on secured claims in a chapter 7 bankruptcy filed less than a year previously, the amount of the "claims" for purposes of the statutory limit, was the total amount of the secured claims, even though the real property that secured the claims was worth less than half of the statutory limit. Thus, even though the secured creditors' liens might be limited to the value of the collateral, and even though debtor did not have any personal liability for any deficiency to the secured creditors, for purposes of the statutory limit, the bankruptcy court correctly counted the total amount of the secured creditors' claims without reduction to the value of the collateral.

Procedural context:

Creditors moved to dismiss debtor's chapter 12 case, and debtor opposed motion. Bankruptcy court granted motion to dismiss, and debtor appealed to BAP for 9th Circuit. BAP for 9th Circuit affirmed, and debtor appealed to 9th Circuit. Ninth Circuit affirmed.

Facts:

Under 11 USC 109(f) applicable at the time, eligibility to file chapter 12 was limited to family farmers with debts of $3,792,650 or less. Debtor filed chapter 7, discharging her personal liability on a number of debts, including any deficiency claims held by secured creditors. Less than a year later, debtor filed chapter 12, seeking to reorganize her secured debts. The secured creditors asserted claims totaling $4.1 million, an amount in excess of the statutory debt limit. The secured creditors held liens in debtor's real property, which appraised at $1.6 million. Debtor argued that since secured creditors' liens only encumbered value of real property, and secured creditors had no deficiency claims against debtor, secured claims should be counted only up to value of collateral for purposes of statutory debt limit.

Judge(s):

Graber, Gould, Callahan

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