James K. Bredar, United States District Judge.
This is an appeal from the United States Bankruptcy Court for the District of Maryland. The appeal has been briefed (ECF Nos. 12, 14, 15), and no oral argument is necessary, Local Rule 105.6 (D. Md. 2016). For the reasons stated below, the judgment of the Bankruptcy Court is affirmed.
Appellant Chukwunenye Henry Ekweani filed a Chapter 13 Petition on June 8, 2016. In re Ekweani, No. 16-17776 (Bankr. D. Md.), ECF No. 1. On the same day, he filed Adversary Proceeding No. 16-00277 against Wells Fargo Home Mortgage Corporation ("WFHM") seeking, inter alia, an injunction preventing WFHM from foreclosing on the home in which Appellant and his nonfiling spouse, Ijeamaka Ekweani, have resided since purchase of the property located at 6604 Sewells Orchard Drive, Columbia, Maryland (the "Property"), on July 29, 1999. Id. ECF No. 6.
Appellant filed his Chapter 13 Plan in which he proposed to pay $0 per month for a term of 0 months. Id. ECF No. 11. Also, in his Chapter 13 Plan was the following Non-standard Provision: "At the conclusion of the pending Adversary Proceeding Case No.: 16-00277 seeking declaratory judgment concerning Wells Fargo Home Mortgage's anticipated claim, debtor and his wife will obtain financing to pay the amount determined by the Court." Id. Appellant also filed his calculation of disposable income, which showed Appellant having $0 income and his spouse having gross monthly income of $11,105.85; further, the form showed their joint monthly disposable income (after subtraction of certain allowable expenses) as $3,564.62. Id. ECF No. 13. The Court notes that one of Appellant's subtracted expenses was a home mortgage payment of $2,039.69 per month. Id. Even though the mortgage payments were apparently in arrears, Appellant showed a "cure amount" payable to WFHM of $0. Id.
The Trustee
Following a hearing, the Bankruptcy Court concluded the proposed plan did not meet the requirements of 11 U.S.C. § 1325 and denied confirmation of the plan but provided Appellant with leave to amend. Id. ECF No. 20. The court also denied Appellant's motion to continue the confirmation hearing. Id. ECF No. 21. Both of these orders were entered August 10, 2016.
Appellant then filed an Amended Chapter 13 Plan. Id. ECF No. 25. In this proposal, Appellant planned to pay "$0 per month prior to confirmation of this plan, and $1,388.72 per month after confirmation of this plan, for a total term of 60 months." Id. He also stated that WFHM's secured claim was "not affected by this plan and will be paid outside of the plan directly by the Debtor." Id. He continued to include the same Non-standard Provision regarding his plan to obtain refinancing on the mortgage at the conclusion of the adversary proceeding. Id.
After a second confirmation hearing, the Bankruptcy Court denied confirmation of Appellant's Chapter 13 Plan without leave to amend on September 28, 2016. Id. ECF No. 32. Consistent with the Trustee's Objection, the court concluded that the proposed Plan did "not fulfill the requirements for confirmation set out in 11 U.S.C. § 1325 and that the Debtor [was] unable to file a Plan that is susceptible of confirmation." Id. Further, the Bankruptcy Court
Id. No proceedings on the merits have occurred in No. 16-17776 since the denial of confirmation of Appellant's Chapter 13 Plan without leave to amend. As of this writing, the Bankruptcy Court has not exercised its authority to dismiss the case.
Appellant filed a Notice of Appeal and Statement of Election on October 11, 2016. Id. ECF No. 37. In his notice, Appellant described "the judgment, order, or decree appealed from" as the Order Denying Confirmation of Chapter 13 Plan Without Leave to Amend entered on September 28, 2016. Id.
Thereafter, on November 8, 2016, Wells Fargo Bank, N.A. ("Wells Fargo"), filed its Motion for Order Confirming No Stay Pursuant to 11 U.S.C. § 362(c)(3)(A) and Granting Relief as to the Bankruptcy Estate and Co-Debtor Stay; the motion was filed as to both Appellant and his spouse, Ijeamaka N. Ekweani. Id. ECF No. 42. After a hearing, that motion was denied without prejudice for failure to demonstrate standing. Id. ECF No. 47 (entered January 26, 2017). On February 23, 2017, Wells Fargo filed a similar motion, indicating the total amount due on the mortgage was $737,403.62. Id. ECF No. 55. Included as exhibits to the motion were documents establishing the merger of Wachovia Mortgage Corporation (the original mortgagee on the 2007 promissory note at issue) with and into Wells Fargo Bank, National Association, effective May 6, 2011. Id. This time, Wells Fargo's motion was granted, and the court entered an order on April 12, 2017, confirming no automatic stay was in effect with respect to Appellant and lifting the automatic stay of 11 U.S.C. § 362(a) as to the Bankruptcy Estate as well as the Co-Debtor Stay of 11 U.S.C. § 1301(a) so that Wells Fargo could proceed to a foreclosure sale of the Property. Id. ECF No. 61. The court further ordered an equitable servitude for a period of 180
While the primary Bankruptcy Court case No. 16-17776 was in process, the Adversary Proceeding No. 16-00277 was also moving forward. Wells Fargo filed a motion to dismiss the complaint or, alternatively, to abstain, which the Bankruptcy Court granted on September 1, 2016; after a hearing, the court concluded it should abstain pursuant to 28 U.S.C. § 1334. No. 16-00277 (Bankr. D. Md.) ECF Nos. 8, 18. No notice of appeal was filed from that order. The adversary proceeding was closed March 31, 2017. Id. Dkt. Ent.
In addition to Appellant's Case No. 16-17776 in the Bankruptcy Court in this District, Appellant and his wife have filed several other bankruptcy proceedings since 2008.
Ijeamaka Ekweani filed a pro se Chapter 7 petition on May 21, 2008, which was converted to a Chapter 13 petition on December 10, 2008. No. 08-16913 (Bankr. D. Md.) ECF Nos. 1, 72, 77. That case was dismissed on June 18, 2009, because the debtor had "failed to commence making timely payments as required by 11 U.S.C. § 1326." Id. ECF No. 117.
On September 29, 2009, Appellant filed a Chapter 7 voluntary petition in the Bankruptcy Court for the District of Arizona. No. 09-24272 (Bankr. D. Ariz.) ECF No. 1. On January 25, 2010, Appellant and his wife filed an adversary proceeding against Wachovia Mortgage Corporation for rescission of the promissory note and deed of trust, claiming Wachovia did not have a valid lien on the Property because Wachovia did not have either a note or deed of trust signed by Appellant or by anyone authorized by Appellant to sign those documents. Adversary Proceeding No. 2:10-ap-00160 (Bankr. D. Ariz.) ECF No. 1.
Id. 1-2.
The court analyzed the Ekweanis' claims and concluded that Wells Fargo had authority to foreclose on the Property, that no TILA violation had occurred, and that the Ekweanis were not entitled to injunctive relief. Id. 3-6. The court further addressed Wells Fargo's counterclaim and concluded that it was entitled to a declaratory judgment requiring the Ekweanis to tender all loan proceeds as a prerequisite to rescission under TILA, that Ms. Ekweani's default on her obligation to pay the mortgage loan according to the note's terms constituted a breach of contract, that the Ekweanis were unjustly enriched by their receipt of the loan proceeds and their subsequent failure to repay the loan, that no evidence showed any defect in the loan paperwork had occurred thereby rendering moot Wells Fargo's alternative count seeking an equitable lien on the Property, and, last, that Wells Fargo was also entitled to be equitably subrogated to the lien position of GMAC because some of the loan proceeds were used to pay off the GMAC loan. Id. 6-9. Following the Ekweanis' notice of appeal, id. ECF No. 146, the Bankruptcy Appellate Panel concluded the appeal was untimely and dismissed it on June 17, 2013, for lack of jurisdiction, 2:10-ap-00160-DPC ECF No. 155 (see also ECF No. 7, No. 13-1193 (B.A.P. 9th Cir.)).
The next bankruptcy case was a Chapter 13 petition filed by Ms. Ekweani on October 5, 2012.
Ms. Ekweani then filed another Chapter 13 petition on May 8, 2013. No. 13-18075 (Bankr. D. Md.) ECF No. 1. On August 13, 2013, the court granted Wells Fargo's motion for relief from the automatic stay and the co-debtor stay in order to permit foreclosure on the deed of trust on the Property; the court also imposed an equitable servitude of 180 days, barring application of the automatic stay and the co-debtor stay with respect to the Property in any Title 11 case filed by either of the Ekweanis or any subsequent transferee; finally, the court ordered that the termination of the automatic stay and the co-debtor stay as to the Property shall be binding in any case filed under Title 11 by either of the Ekweanis or any subsequent transferee within two years after the court's order. Id. ECF No. 73. That order was appealed, but the appeal was dismissed because the
The most recent bankruptcy case involving the Ekweanis, besides the instant case, was Appellant's Chapter 13 petition filed on September 15, 2015. No. 15-22846 (Bankr. D. Md.) ECF No. 1. That filing, it is noted, occurred roughly one month after the expiration of the two-year bar on either an automatic stay or a co-debtor stay with respect to the Property. The court denied confirmation of the Chapter 13 plan without leave to amend. Id. ECF No. 35. Thereafter, Appellant moved to dismiss his case; the motion was granted and the automatic stay was terminated on December 10, 2015. Id. ECF Nos. 37, 38. The case was closed on March 2, 2016. Id. ECF No. 44.
In an appeal from Bankruptcy Court, this Court reviews factual findings for clear error and conclusions of law de novo. Gold v. First Tenn. Bank Nat'l Ass'n (In re Taneja), 743 F.3d 423, 429 (4th Cir. 2014). A finding is clearly erroneous only if, after reviewing the record, the reviewing court is left with "a firm and definite conviction that a mistake has been committed." Klein v. PepsiCo, Inc., 845 F.2d 76, 79 (4th Cir. 1988).
Appellant frames the issues on appeal as follows:
Appellant's Brief 2.
In contrast, the Trustee frames the only issue for the Court's review as, "Whether the Bankruptcy Court made an error or abused its discretion in denying confirmation of the Debtor's plan without leave to amend." Appellee's Brief 3.
The Court concludes the Trustee's statement of the issue is correct. This Court's review is limited to the one order of the Bankruptcy Court specified in the notice of appeal, that of September 28, 2016, which denied confirmation of Appellant's Chapter 13 Plan without leave to amend. See Moses
Thus, the Court limits its review to the issue of whether the Bankruptcy Court erred or abused its discretion when it denied confirmation of Appellant's Chapter 13 Plan without leave to amend.
Initially, the Trustee raises the question of whether the order denying confirmation without leave to amend is considered a final order that may be the subject of an appeal. Appellee's Brief 7-8. Both the Trustee and the Appellant contend the order at issue should be considered a final, appealable order. Id. 8; Appellant's Reply Brief 1. The Court agrees.
This Court's authority to hear an appeal in a bankruptcy case is governed by 28 U.S.C. § 158(a), which provides,
In Mort Ranta v. Gorman, 721 F.3d 241 (4th Cir. 2013), the Fourth Circuit held that an order denying confirmation of a Chapter 13 plan "can be a final order for purposes of appeal even if the case has not yet been dismissed." Id. at 248. The instant case fits squarely within that holding. The Bankruptcy Court's order of September 28, 2016, is, therefore, a final, appealable order.
On the merits, the Trustee reiterates in this Court his contention below that Appellant's proposed Chapter 13 Plan did not comply with 11 U.S.C. § 1325 or § 1326. Section 1325(b)(1)(B) provides,
As earlier noted, Appellant's projected disposable income was $3,564.62 per month. The Trustee objected to confirmation because, among other reasons, all of Appellant's projected disposable income
The Trustee also argues that the Plan was not feasible. The feasibility requirement derives from section 1325(a)(6), which requires that a debtor will be able to make all payments under a plan and comply with it. Mort Ranta, 721 F.3d at 253. Appellant's Plan hinged upon his being successful in his adversary proceeding against Wells Fargo and either being relieved of the mortgage debt or having it reduced significantly. To the extent the debt would only be reduced, then Appellant spoke in vague terms about seeking refinancing for the debt. He has not provided any evidence that he would be approved for refinancing. According to Wells Fargo's proof of claim, the total amount owed on the mortgage was $711,106.73, and the amount to cure default as of the date the Chapter 13 petition was filed was $354,048.33. Proof of Claim #6, filed Oct. 11, 2016, No. 16-17776 Claims Register. As noted earlier, the Bankruptcy Court abstained from addressing the merits of the adversary proceeding, so Appellant never obtained relief from the debt. Nothing in Appellant's Plan permits a reasonable inference of feasibility.
Finally, the Court finds merit in the Trustee's argument that neither Appellant's case nor his Chapter 13 Plan was filed in good faith. Section 1325(a)(3) requires that a plan be proposed in good faith. The statute does not define "good faith," so the Fourth Circuit has noted the general parameters of that concept: "`Broadly speaking, the basic inquiry should be whether or not under the circumstances of the case there has been an abuse of the provisions, purpose, or spirit of [the Chapter] in the proposal or plan....'" Deans v. O'Donnell, 692 F.2d 968, 972 (4th Cir. 1982) (quoting 9 Collier on Bankruptcy 9.20 at 319 (14th ed. 1978)) (alteration in original). Some factors that may be considered in this inquiry are the following:
Deans, 692 F.2d at 972.
In Appellant's case, the factor that stands out beyond all others is the repeated bankruptcy filings. Between the Ekweanis, they have filed six different bankruptcy petitions since 2008, and all of them have been dismissed (save for the instant case, which is due for dismissal). It is reasonable to infer they are serial filers who have abused the spirit of the bankruptcy
The Bankruptcy Court aptly ruled that Appellant's Plan did not meet statutory requirements and should not be confirmed. Moreover, the court correctly concluded Appellant could not propose a plan that was susceptible of confirmation and properly denied confirmation without leave to amend. A separate order will issue affirming the Bankruptcy Court's order of September 28, 2016.