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Carr v. Bronitsky

United States District Court, N.D. California

March 9, 2017

ANITA B. CARR, Appellant,
MARTHA BRONITSKY, Appellee/Trustee.



         Appellant Anita B. Carr, proceeding pro se, challenges the actions and inactions of the Bankruptcy Trustee and the Bankruptcy Court as well as the ultimate dismissal of her Chapter 13 case. The question before me is a narrow one; did the Bankruptcy Court commit legal error in dismissing Carr's case? The answer, as explained below, is no. The Bankruptcy's Court Order is AFFIRMED.


         Carr filed her Chapter 13 petition on July 15, 2015. Bankruptcy Case No. 15-42212 (here after BRC), Dkt. No. 1.[1] She filed her initial Plan on July 28, 2015 and an Amended Chapter 13 Plan on August 31, 2015. Id., Dkt. Nos. 9, 23. Plaintiff filed a Third Amended Plan on September 23, 2015. BRC Dkt. No. 38. On October 30, 2015, the Bankruptcy Trustee filed an “Objection to Confirmation of Chapter 13 Plan and Motion to Dismiss Chapter 13 Case.” BRC Dkt. 45. The Trustee's objections to the Third Amended Plan were that:

• “The plan fails to provide for submission of all or such portion of future earnings or other future income to the supervision and control of the Trustee as is necessary for execution of the plan, ” in other words, “Debtor's Plan fails to commit her income to the Plan for the duration of the Plan because in Section 1.01(c) Debtor has failed to enter the Plan term.”
• “The plan unfairly discriminates between a class or classes of unsecured claims, ” because “Debtor provides for payment of certain unsecured claims in full in Section 2.11 while providing a 3% dividend for the remainder in Section 2.12. The reason for this discrimination is unclear. Per Section 1325(a)(4), all unsecured creditors must be paid in full.”
• “The plan fails to provide for the value, as of the effective date of the plan, of property to be distributed under the plan on account of each allowed unsecured claim is at least the amount that would be paid on such claim if the estate of the Debtor was liquidated under Chapter 7 of this title on such date, ” because “Debtor's proposed 3% Plan fails to pay into the Plan the amounts that unsecured creditors would receive in the estate was liquidated in a hypothetical Chapter 7. Debtor's real property in Fairfield Bay, AR and Dublin, CA have sufficient equity to pay a 100% dividend to unsecured creditors. Trustee also has a pending objection to all claims of exemptions.”
• “The Plan is not feasible. The Debtor will not be able to make all payments under the plan and comply with the plan, ” because “Debtor has attached provisions to the Plan that are unnecessary, redundant, and lack purpose. Debtor has already provided for Hyundai Motor's claim in Section 2.07 of the Plan, so the additional provision is redundant and unnecessary. Regarding the potential lawsuit recoveries, Debtor has not provided sufficient information regarding these claims on Schedule B and the combined value of the lawsuits are stated to be $4.00. (Schedule B, Doc. #40).”
• “Debtor has filed a 28 day plan notice, but not a certificate of service. Parties have not been appropriately served in this case thus far.” The Trustee also moved to dismiss the case because:
• “Unreasonable delay by the Debtor that is prejudicial to creditors, ” because “Debtor's Confirmation Hearing was continued from September 24, 2015 to November to give Debtor ample time to retain counsel. As of now Debtor has not retained counsel and is no closer to resolving objections.”

BRC Dkt. No. 45. In addition to the Trustee's objections, JP Morgan Chase (Chase) filed an objection as the servicer for the J.P. Morgan Mortgage Acquisition Trust 2006-NC1, a trust that Chase alleges is the holder of a secured claim recorded against Carr's residence (Residence) that Carr listed as an assert on her Plan. Dkt. No. 43. Chase argued that the Third Amended Plan was deficient in that it did not provide for any repayment of the pre-petition arrearages owed on the mortgage, and failed to provide that post-petition monthly mortgage payments will be made to Chase. Id. Carr objected to Chase's objection, arguing that Chase has not submitted any proof that it was a valid servicer on a valid obligation held by a valid trust, or that TILA rescission didn't invalidate her debt; all issues that Carr had been litigating in other proceedings, including proceedings pending in this Court.[2] BRC Dkt. No. 44.

         Carr also filed objections to the Trustee's motion, arguing that the Trustee was not impartial and Carr's due process rights were being violated because the Trustee was assuming that Chase had rights with respect to her Residence. Carr requested the Trustee to “examine” Chase's claims to determinate their veracity (i.e., whether Chase was a valid servicer on a valid obligation held by a valid trust and whether TILA rescission invalidated the alleged debt). Dkt. No. 48. The Trustee responded, identifying a number of reasons separate and apart from Chase's objections and regardless of whether Chase has a valid creditor's claim on the Residence, as to why the Plan was deficient and why the case should be dismissed for delay and harm to Carr's other creditors. Dkt. No. 49. The Trustee asserted that the “duties” Carr wanted the Trustee to perform (e.g., “producing affidavits on Debtor's behalf and acting the role of Debtor's attorney”), were not duties the Trustee is required or authorized to perform. Id. Finally, the Trustee noted that Chase had not even filed a proof of claim or an affidavit of its validity, so that any objections by Chase were irrelevant to the Trustee's analysis and position. Id.

         A hearing was held with the Bankruptcy Judge on November 12, 2015. Dkt. No. 74. At that hearing, Carr raised the issue of Chase's objections. The Trustee responded that issues regarding Chase and its standing were not appropriately resolved in the Bankruptcy Court, but should be resolved in District Court. Id. The Bankruptcy Judge agreed that the resolution of whether Chase had a secured interest was not appropriately resolved in Bankruptcy Court and that in any event the Plan had serious deficiencies, including the discrimination between unsecured creditors and given her position about the equity in her Residence, the need to propose a 100% Plan, which Carr had repeatedly failed to do. Id. at pgs. 6-7. The Bankruptcy Judge noted that despite having continued the hearing two months, ...

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