Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Litton Loan Servicing, L.P. v. Ephraim

August 14, 2008

LITTON LOAN SERVICING, L.P., APPELLANT,
v.
INEZ EPHRAIM, DEBTOR-APPELLEE.



Appeal from the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division. Bankr. No. 03 B 35580.

The opinion of the court was delivered by: Robert M. Dow, Jr. United States District Judge

MEMORANDUM OPINION AND ORDER ON APPEAL

Appellant Litton Loan Servicing, L.P. ("Litton") timely filed this appeal from a final order of the bankruptcy court denying Litton's motion for relief from an automatic stay. This Court has jurisdiction pursuant to 28 U.S.C. § 158(a). The Court reviews the bankruptcy court's conclusions of law de novo and its factual findings for clear error. In re Lloyd, 37 F.3d 271, 274 (7th Cir. 1994); Matter of UNR Indus., Inc., 986 F.2d 207, 208 (7th Cir. 1993). As explained below, finding no error of fact or law in the decision of the bankruptcy court, this Court affirms the bankruptcy court's judgment.

I. Background

In 1972, Inez Ephraim ("Ephraim" or "Debtor")*fn1 purchased a residence in Chicago. Ephraim secured a loan for her residence with an FHA mortgage. In 1997, Ephraim obtained a loan from Freedom Mortgage Corporation ("Freedom") that was secured by a mortgage in favor of Freedom that was recorded as junior to the FHA mortgage. The Freedom note and mortgage were assigned to Provident Bank later in 1997.*fn2

In 2003, Ephraim filed a Chapter 13 bankruptcy petition. She filed an original Chapter 13 plan of reorganization on September 26, 2003, and an amended plan ("Plan") on October 23, 2003. The terms of the Plan that are pertinent to this appeal include the following:

2. Debtor's claims against Provident Bank under the Illinois Interest Act (IIA) exceed the amount owed by debtors [sic] to Provident Bank. This plan provides that the claim of Provident Bank shall be fully satisfied by an offset against the debtor's claims under the IIA. Within 30 days of confirmation of this plan, Provident shall provide debtor's counsel with a release of its lien on the debtor's property.

3. Debtor intends to file an action to recover the amount by which debtor's claims under the IIA exceed the claim of Provident Bank. The net proceeds of such action or $5,000, whichever is less, will be paid to the Chapter 13 Trustee. It is estimated that this will be received within 12 months.

Debtor's Chapter 13 Plan ¶¶ G.2 & G.3; Debtor's Modified Chapter 13 Plan ¶¶ G.2 & G.3.*fn3

On December 8, 2003, prior to the approval of the Plan, the Debtor filed an adversary proceeding in which, among other things, she objected to Provident's secured claim. See In re Ephraim, 318 B.R. 419 (Bankr. N.D. Ill. 2004). While the Debtor's adversary proceeding was still pending, the Debtor moved to confirm her Plan. On December 10, 2003, Provident filed a motion to lift the automatic stay along with an objection to the Plan. In its motion, Provident objected that "[t]he debtor, while owing an arrearage of no less than $2,520, fails to acknowledge any mortgage arrearage in the proposed Plan," and that "[t]he Plan fails to provide for any payment to Provident Bank." Provident Motion and Objection ¶¶ 8-9.

The bankruptcy court initially scheduled Provident's motion to lift the stay and to object to the Plan and the Debtor's motion for Plan confirmation for hearing on December 18, 2003, but later continued those matters to February 5, 2004. As Litton acknowledges, Provident's motion and objection were stricken when Provident failed to appear on February 5, 2004, and the Plan was confirmed that day as well.

Federal Rule of Bankruptcy Procedure 8002 provides that an appeal of a final order of a bankruptcy court, including an order confirming a Plan, must be filed within ten days of the entry of the judgment, order, or decree from which the appeal is taken. Provident did not file a notice of appeal within that time period. However, on March 17, 2004, Provident did file a motion to dismiss the Debtor's adversary action on the ground that the section of the Interest Act on which the Debtor's action was premised had been repealed. On September 13, 2004, the bankruptcy court granted Provident's motion and dismissed the adversary proceeding. In re Ephraim, 318 B.R. at 425.

On July 20, 2006, Litton filed a motion to modify the stay in the bankruptcy court. Litton offered three grounds constituting cause to modify the stay: (1) the debtor's house was not necessary for reorganization; (2) the Debtor was unwilling or unable to provide adequate protection to Litton; and (3) the Debtor was in arrears in her payments to Litton. On March 22, 2007, the bankruptcy court issued an order denying Litton's motion and ordering Litton to release its mortgage within thirty days. See Order, March 22, 2007 Trans. at 11.*fn4 In denying Litton's motion, the bankruptcy court reasoned that Litton was precluded from raising any of its arguments through a motion to stay because Litton was bound by the confirmed Plan, including with respect to the valuation of its claim, pursuant to Section 1327(a) of the Bankruptcy Code.

Id. at 6; 10-11. The bankruptcy court viewed Litton's motion to stay as an impermissible collateral attack on the confirmed plan, because the issues that Litton raised should have been presented and resolved, if at all, in the Plan confirmation process. Id. at 6-7. The bankruptcy court concluded that Litton, as Provident's successor, "cannot now be heard to complain" about issues related to the confirmation of ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.