Now Updating
In re Carol Engen

Summarizing by Bradley Pearce

In re Erickson

Case Type:
Consumer
Case Status:
Affirmed
Citation:
WW-19-1251-FSTa & WW-19-1277-FSTa (9th Circuit, May 29,2020) Not Published
Tag(s):
Ruling:
BAP for 9th Cir. affirmed ruling of bankruptcy court (WD Wa.) dismissing chapter 13 debtor's case. Bankruptcy court properly rejected debtor's due process argument that she did not have adequate notice of chapter 13 trustee's motion to dismiss. Court's grant of debtor's motion to file amended chapter 13 plan was without prejudice to pending motion to dismiss, which was expressly referenced in court's order, including the date of hearing. to Dismiss.
Procedural context:
Bankruptcy court granted chapter 13 trustee's motion to dismiss case and debtor moved to vacate. Bankruptcy court denied motion and debtor appealed to BAP for 9th Circuit, appealing both order dismissing case and denial of motion to vacate.
Facts:
Ms. Erickson and her husband own real property located in Auburn, Washington (the “Property”) worth approximately $700,000. Deutsche Bank National Trust Company (“Deutsche Bank”) holds a first-position lien against the Property to secure a debt of about $923,193. Deutsche Bank sought to foreclose on its lien. At Ms. Erickson’s request, the state court issued a temporary restraining order halting foreclosure. It declined to convert the temporary restraining order to a preliminary injunction, and it expired. Ms. Erickson filed a chapter 13 bankruptcy petition and scheduled Deutsche Bank’s lien. She reported that she and her husband had a combined gross monthly income of $4,126.19 and monthly disposable income of $1,182.02. Her initial chapter 13 plan (“Plan”) proposed that she would pay $1,182.02 per month for the first three months while she attempted to modify the loan. Thereafter, the monthly plan payments would increase to $12,949.98, unless she could secure a loan modification and modify the Plan. She proposed to sell the Property if the loan modification was unsuccessful. Deutsche Bank objected to plan confirmation. It argued that the Plan failed to meet the confirmation requirements in § 1325(a), primarily because Ms. Erickson could not afford the cure and maintenance payments totaling over $14,000 per month. She took the position that she did not owe Deutsche Bank anything because it was a “fraudulent creditor.” The chapter 13 trustee objected to debtor's plan and filed a motion to dismiss case. The bankruptcy court issued an order (“Order Denying Confirmation”) denying confirmation of the Plan, allowing Ms. Erickson to file an amended plan, and continuing the hearing. It provided that “This order is without prejudice to the Trustee’s Motion to Dismiss Case . . . which may be heard on the Court’s September 18, 2019 calendar[.]” The bankruptcy court held a hearing on the Trustee’s Motion to Dismiss on September 18, 2019. Ms. Erickson did not appear. The bankruptcy court found cause to dismiss her case under § 1307(c). It held that her income was insufficient to fund a confirmable plan. It further held that the amended plan was unconfirmable on its face and that there was prejudicial delay to her creditors. The court issued an order dismissing the case (“Dismissal Order”). Ms. Erickson filed a “Motion for Appeal” and asserted that she “was not told about this hearing . . . . The hearing was set to be October 2, 2019.” The following day, she filed a motion to vacate the Dismissal Order that repeated the same argument. The bankruptcy court denied the motion to vacate. It stated that Ms. Erickson did not provide any legally sufficient reason to vacate the dismissal. It also rejected Ms. Erickson’s argument that she did not have notice of the September 18 hearing.
Judge(s):
Faris, Spraker, Taylor

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