Case Type:
Case Status:
22-1067 (10th Circuit, Dec 13,2022) Published
A chapter 13 plan that does not expressly address a specific claim has no res judicata or equitable effect on such claim. Thus, a claim that is recognized as a secured claim under state law does not become, nor can it be treated, as an unsecured claim under a confirmed plan unless that treatment was actually litigated or necessarily determined by the confirmation order. Further, a claim created and given secured status by state law does not require the claim holder to take action to protect this interest before the commencement of the bankruptcy case.
Procedural context:
The bankruptcy court ruled that the debtor's estranged wife held an equitable interest in the marital residence and that the chapter 13 trustee could withhold distributions to the debtor's estranged wife, pending resolution of her claims against the estate. The debtor appealed to the BAP, which affirmed the bankruptcy court. The debtor then appealed to the Tenth Circuit Court of Appeals.
The debtor and his estranged wife ("Ms. Williams") were married in 2003. In 2016, the debtor bought a house that the couple moved into with their children. The residence was titled only in the debtor's name. Ms. Williams filed for divorce later that year. In the divorce proceedings, the couple agreed to sell the house. Ms. Williams filed a notice of lis pendens in the real property records. After the divorce court entered an order regarding the distribution of the proceeds from the sale of the house, the debtor refused to sign a listing agreement. He then filed a chapter 13 petition without selling the house. Ms. Williams filed an adversary proceeding in the debtor's bankruptcy case, seeking a declaration that her interest in the marital residence was not part of the debtor's bankruptcy estate and the debtor's obligations to Ms. Williams were not dischargeable under 11 U.S.C. § 523(a)(2)(A). The debtor counterclaimed and moved for attorney's fees under 11 U.S.C. § 523(d). Following a trial on the parties' claims and counterclaims, the bankruptcy court ruled that Ms. Williams' interest in the marital residence was not part of the debtor's bankruptcy estate under 11 U.S.C. § 541(d) but that the debtor's debts to Ms. Williams were dischargeable under 11 U.S.C. § 523(a)(2)(A). The bankruptcy court also rejected the debtor's remaining counterclaim but did not rule on the debtor's claim for attorney's fees. The debtor filed a motion alerting the bankruptcy court of its failure to rule on his request for attorney's fees and seeking reconsideration. The debtor also filed a notice of appeal the same day. Six days later, on January 28, 2021, the bankruptcy court denied the debtor's motion for reconsideration and denied his request for attorney's fees. The debtor did not appeal the January 28 order. Meanwhile, (1) Ms. Williams filed three proofs of claim in the debtor's case, including Claim 5, which is the claim for her equitable interest in the marital residence; and (2) the debtor's chapter 13 plan was confirmed. Under the plan, holders of allowed general unsecured claims were to be paid as Class 4 claims. But the pending appeal put the chapter 13 trustee in a bind -- if Ms. Williams lost, she would receive a distribution from the bankruptcy estate; if she won, she would be paid outside of the Chapter 13 plan. On the trustee's motion, the bankruptcy court ordered the chapter 13 trustee to hold Ms. Williams' prospective distributions in trust pending resolution of the appeal. The BAP issued two opinions affirming the bankruptcy court. The BAP ruled that it could not consider the debtor's attempted appeal of the bankruptcy court's January 28 order because the debtor failed to file a notice of appeal of that order. The BAP affirmed the bankruptcy court's holding that Ms. Williams had an equitable interest in the house, and would be paid for her interest outside of plan distributions. The debtor appealed both of the BAP's opinions.

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