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)). Unsubscribing from PBCBA E-Blasts If you have accidentally unsubscribed from the PBCBA e-blasts, (or if you opted not to receive them any longer), please keep in mind that other than the Bar Bulletin, the Bar sends all its information about special events and programming, as well as important Court information to its members via 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, (561) 395-0500, e-mail: [email protected] com Edwards involved a situation where the e-mail. If you wish to receive our eNewsletters again, simply visit the Bar’s home page at https://www.palmbeachbar.org and add your name to the mailing list by clicking the button that says "eNews Sign-up." Please note that Constant Contact will send you an e-mail to confirm that you wish to be added to the list, so be sure to complete that process. Due to SPAM laws, we cannot add your name back debtor inadvertently changed payment amounts to the mortgage holder whose collateral was the debtor’s homestead in the 6th modified plan, which constituted an on to our list. PBCBA BAR BULLETIN 9