In Re: deLone , 358 F. App'x 964 ( 2006 )

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
11-15-2006
In Re: deLone
Precedential or Non-Precedential: Non-Precedential
Docket No. 06-1932
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Recommended Citation
"In Re: deLone " (2006). 2006 Decisions. Paper 205.
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 06-1932
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IN RE: H. FRANCIS DELONE, JR.,
Debtor
H. Francis deLone, Jr.,
Appellant
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On Appeal From the United States District Court
For the Eastern District of Pennsylvania
(D.C. Civ. Nos. 05-cv-05707 & 05-cv-06345)
District Judge: Honorable John P. Fullam
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Submitted Under Third Circuit LAR 34.1(a)
September 12, 2006
Before: RENDELL, AMBRO and ROTH, Circuit Judges
(Filed November 15, 2006 )
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OPINION
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PER CURIAM
Appellant H. Francis deLone, Jr., appearing pro se, appeals the District Court’s
order affirming the Bankruptcy Court’s orders lifting the automatic stay and dismissing
his bankruptcy proceeding. For the reasons that follow, we will affirm.
In March of 2003, the Delaware County Court of Common Pleas issued an order
granting mortgage foreclosure to Washington Mutual Bank, at that time the holder of the
mortgage on Appellant’s home at 478 St. David’s Avenue in Wayne, Pennsylvania. On
September 24, 2004, Washington Mutual assigned the mortgage, for which it had already
obtained a foreclosure judgment, to Homecomings Financial Network, Inc.
(“Homecomings”).
On March 15, 2005, Appellant filed for bankruptcy under Chapter 13 of the United
States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of
Pennsylvania. Appellant then filed a proposed Chapter 13 plan. On June 22, 2005,
Wilshire Credit Corporation (“Wilshire”), acting as the servicer for Homecomings, filed a
proof of claim in connection with the bankruptcy proceedings. The proof of claim
included the principal amount owing on the mortgage as of March 15, 2005, plus interest,
arrearages, and other charges. Wilshire also filed objections to confirmation of the plan
proposed by Appellant and a motion seeking relief from the automatic stay.
The Bankruptcy Court held a hearing on July 26, 2005, at which it concluded that
Appellant’s plan was insufficient to cover his debts, ordered him to file an amended plan,
and scheduled a final hearing on Wilshire’s motion for relief from the stay. Appellant
filed an amended Chapter 13 Plan on August 19, 2005. On September 21, 2005, the
Bankruptcy Court entered an order granting Wilshire’s motion for relief from the
automatic stay. Then, in an order dated October 28, 2005, the Bankruptcy Court denied
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confirmation of the amended bankruptcy plan and ordered the case dismissed. Appellant
appealed both of these decisions to the United States District Court for the Eastern
District of Pennsylvania, which affirmed the Bankruptcy Court’s orders on February 13,
2006. It is from this order that Appellant now appeals.
We have jurisdiction to review the District Court’s order under 28 U.S.C.
§§ 158(d) & 1291. Our review is plenary. See Kool, Mann, Coffee & Co. v. Coffey, 300
F.3d 340, 353 (3d Cir. 2002). We review the Bankruptcy Court’s determinations as the
District Court would. See id. We do not set aside factual findings of the Bankruptcy
Court unless they are clearly erroneous. See id. We subject the legal determinations of
the Bankruptcy Court to plenary review, and review its exercises of discretion for abuse
thereof. See id.
Appellant advances two arguments on appeal: (i) that the Bankruptcy Court erred
in concluding that he was required to continue to make payments on the original
mortgage even after his mortgage debt had been reduced to judgment by the Court of
Common Pleas’ 2003 order; and (ii) that the Court erred in rejecting his amended plan
where 11 U.S.C. § 1322(b) and (c) permit a debtor to pay off long-term debt within a
“reasonable period of time” rather than a set time.
Neither of these arguments is meritorious. The proof of claim filed by Wilshire
reflected the amount Appellant would owe should he reinstate his mortgage via his
Chapter 13 plan. If Appellant’s plan had been confirmed and he had reinstated the
mortgage, he would have been required to pay the arrears on the mortgage as detailed in
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Wilshire’s proof of claim, and then to continue to maintain regular mortgage payments
according to the original terms of the mortgage. See In re Cole, 122 B.R. 943, 950
(Bankr. E.D. Pa. 1991). Because Appellant’s plan has not been confirmed, and therefore
the mortgage not reinstated, Appellant currently owes Wilshire no more than the amount
reduced to judgment by the Court of Common Pleas.
Appellant’s argument that the Bankruptcy Court erred in rejecting his plan is
similarly misguided. Appellant maintains that 11 U.S.C. § 1322(b) and (c) permit him a
“reasonable amount of time to cure the mortgage foreclosure judgment against his home.”
These sections provide:
(b) Subject to subsections (a) and (c) of this section, the plan may–
(2) modify the rights of holders of secured claims, other than a
claim secured only by a security interest in real property that
is the debtor’s principal residence . . .
(3) provide for the curing or waiving of any default; . . .
(5) notwithstanding paragraph (2) of this subsection, provide for
the curing of any default within a reasonable time and
maintenance of payments while the case is pending on any
unsecured claim or secured claim on which the last payment
is due after the date on which the final payment under the plan
is due . . . .
(c) Notwithstanding subsection (b)(2) and applicable nonbankruptcy
law–
(1) a default with respect to, or that gave rise to, a lien on the
debtor’s principal residence may be cured under paragraph (3)
or (5) of subsection (b) until such residence is sold at a foreclosure sale that is cond
(2) in a case in which the last payment on the original payment
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schedule for a claim secured only by a security interest in real
property that is the debtor’s principal residence is due before
the date on which the final payment under the plan is due, the
plan may provide for the payment of the claim as modified
pursuant to section 1325(a)(5) of this title.
DeLone’s amended plan contemplated paying $412 per month for 60 months and
making mortgage payments in the amount of $1550 per month for 30 years. However, §
1322(b)(2) precludes debtors from modifying the rights of home lenders. If Appellant
intended to keep his home and continue making mortgage payments, he was required to
do so according to the original terms of the mortgage and not according to the terms of
his plan. See In re Cole, 122 B.R. at 950. Furthermore, even if Appellant intended to
take this course, he would first be required to cure the default on his mortgage pursuant to
§ 1322(b)(5). See id. This would have to be done “within a reasonable time,” which we
have interpreted as meaning “within the duration of the chapter 13 plan, which may not
exceed five years.” Sapos v. Provident Institution of Savings, 967 F.2d 918, 926 (3d Cir.
1992). In addition to altering the terms of the mortgage agreement, Appellant included no
provision in his plan for curing the default on the mortgage within five years. In the
alternative, if Appellant intended to pay off the foreclosure judgment in the context of
Chapter 13, he was required to have made provisions to do so within five years. See 11
U.S.C. § 1322(a)(2), (d). Because Appellant’s plan was underfunded and would have
altered Wilshire’s rights under the mortgage agreement, the Bankruptcy Court did not err
in lifting the automatic stay and dismissing the bankruptcy proceedings. See 11 U.S.C.
§ 362(d), 1307(c), 1325.
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Accordingly, we will affirm the judgment of the District Court.
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