PBCBA BAR BULLETINS pbcba_bulletin_JulAug 2019 | Page 9

BANKRUPTCY CORNER
Just How Conclusive is that Confirmed
Chapter 13 Plan?
JASON S. RIGOLI
A confirmed Chapter 13 plan is conclusive
as to all parties with notice, regardless
of whether the plan satisfies all other
procedural or statutory requirements. See
In re Coralee Edwards , Case No. 13-25698-
EPK, 2019 WL 2194114 at *6 (Bankr. S.D.Fla.
May 19, 2019).
This has not always been the law of
this Circuit in every instance, but as the
Honorable Erik P. Kimball recently held
in Edwards , it has been since 2010 when
the Supreme Court issued its opinion in
United Student Aid Funds, Inc. v. Espinosa ,
559 U.S. 260 (2010). Espinosa involved
the discharge of student loans through
a Chapter 13 plan, which was confirmed
without objection by the creditor who had
notice of the plan despite that the debtor
had not filed an adversary nor followed the
applicable service rules. 599 U.S. at 264-66.
Six years after confirmation of the Chapter
13 plan the creditor filed a motion under
Fed. R. Civ. P. 60(b)(4) seeking to set aside
the confirmation order as void. Id. at 266.
As Judge Kimball stated:
The Supreme Court held that, while the
debtor's failure to serve a summons and
complaint deprived the creditor of a right
granted by a procedural rule, the creditor's
due process rights were not violated
because the creditor received actual notice
of the plan. Id. at 272. While noting that
the bankruptcy court should not have
confirmed a plan that discharged a portion
of the student loan debt without first
making the dischargeability determination
required under section 523(a)(8), the
Supreme Court nonetheless held that
the confirmed plan “remains enforceable
and binding on [the creditor] because [the
creditor] had notice of the error and failed
to object [to confirmation] or timely appeal
[the bankruptcy court's confirmation
order].”
Edwards , at *6 ( citing Espinosa , at 275).
improper modification of a claim secured by
a mortgage on a debtor’s principal residence
under 11 U.S.C. § 1322(b)(5). Edwards , at *1-
3. The mortgage holder received notice of
the 6th modified plan and did not object or
file an appeal.
The issue is whether the confirmation of the
plan, which violated the anti-modification
provision of § 1322(b)(2) incorporated into
§ 1325(a)(1), which states that a court shall
confirm a plan that complies with the
applicable provisions of Chapter 13 and
title 11 of the United States Code. Prior to
Espinosa , the Eleventh Circuit addressed
this issue on similar facts, Edwards , at
*5 n.4, and came down on the side of
the secured lender; finding the secured
lender with a mortgage on the debtor’s
principal residence was entitled to “greater
protection under the anti-modification
provision under 1322(b)(2).” Edwards , at *5
(citing Universal Am. Mort. Co. v. Bateman
(In re Bateman) , 331 F.3d 821, 829-34 and n.
12 (11th Cir. 2003)).
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As stated earlier, however, the subsequent
decision of the Supreme Court in Espinosa
overrules this portion of the Bateman
as Espinosa is broadly interpreted to
mean that a confirmed Chapter 13 plan
id conclusive of all issues as though fully
litigated against all parties with notice
of the plan, notwithstanding that the
plan may not comply with all applicable
statutory requirements or procedural
rules. Therefore, creditors must be vigilant
in timely objecting to and appealing any
Chapter 13 confirmation order that affects
their rights and does not comply with
the applicable statutory requirements or
procedural rules.
This article was submitted by Jason S.
Rigoli, Esq., Furr Cohen, P.A., 2255 Glades
Road, Suite 301E, Boca Raton, Florida 33431,
[phone], e-mail: jrigoli@furrcohen.
com
Edwards involved a situation where the
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debtor inadvertently changed payment
amounts to the mortgage holder whose
collateral was the debtor’s homestead in
the 6th modified plan, which constituted an
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