Wednesday, October 19, 2005

bankruptcy - mobile home - ch. 13 - cram down - realty v. personalty - valuation

Nowlin v. Tammac Corporation - ED Pa. - October 17, 2005

Nowlin filed a chapter 13 bankruptcy case and brought an adversary action against the secured holder of her installment loan contract, seeking a cram down its claim to the actual value of her mobile home. The bankruptcy court held that

a) the mobile home was personalty, not realty;
b) the value was $38,000, compared to principal balance at time of trial of $41, 368.28;
c) interest of 8% should apply to the creditor's claim, as opposed to the contract rate of 12.5%.

Nowlin appealed the valuation, which she thought should be lower, as well as the 8% interest rate. The creditor appealed the ruling that the home was personality and not realty.

The district court held that

a) the home was personalty, in the bankruptcy context (detailed discussion of this issue) - This determination allowed the court to bifurcate the creditor's claim into secured and unsecured elements, based on fair market value.
b) the valuation of $38,000 was not clearly erroneous -- somewhere between the $ figures provided by the parties' experts.
c) 8% was the appropriate interest rate to be applied to the crammed down claim, under a
"formula approach" - national prime rate, adjusted according to risk factors.

Donald Marritz
MidPenn Legal Services

debt collection - FDCPA - attorney fees

Moyer v. Turnbrook Associates, Inc. -- ED Pa. - October 17, 2005

The court rejected all of defendant's arguments and awarded attorney fees to plaintiff's counsel under the Fair Debt Collection Practices Act, 15 USC 1692 et seq.

size of award - Plaintiff's judgment was for $1,000, the statutory maximum. The judgment was based on defendant's failure to comply with the statutory requirements, "suggesting a significant level of non-compliance. Attorney fees are then mandatory under" Graziano v. Harrison, 950 F.2d 107 (3d Cir. 1991).

timing of request for fees -- Defendant said that plaintiff should have made her claim for fees during arbitration. Federal civil rules require plaintiff to request fees no later than 14 days after the entry of judgment. Plaintiff filed w/in that time.

proper party defendant - post-judgment amendment of pleading - Defendant said that the judgment against the corporate entity was unenforceable against the unincorporated Turnbrook Associates. The court allowed a post-judgment amendment of the pleading, under equitable estoppel principles, because defendant "actively misled" plaintiff when it admitted that it was a N.J. corporation.

Donald Marritz
MidPenn Legal Services