ORDER

LOUISE W. FLANAGAN, District Judge.

This matter is before the court on appeal from the United States Bankruptcy Court for the Eastern District of North Carolina. Plaintiff-appellant ("plaintiff") challenges the bankruptcy court's order granting summary judgment in favor of defendant-appellee ("defendant") on plaintiff's claims filed in an adversary proceeding, case number 16-00031-5. See Hurlburt v. Black (In re Hurlburt), 572 B.R. 160, 162 (Bankr. E.D.N.C. 2017) ("Hurlburt"). The issues raised have been briefed fully and in this posture are ripe for ruling. For the reasons that follow, the judgment of the bankruptcy court is affirmed.

BACKGROUND

In conjunction with plaintiff's purchase of residential real property located at 130 South Navassa Road, Leland, North Carolina 28451 (the "property") from defendant in May 2004, plaintiff entered into a seller-financed promissory note and purchase-money deed of trust in favor of defendant in the principal amount of $131,000.00. Under the terms of the note, the principal balance accrued interest at the rate of 6% per annum and was payable over 119 monthly installments at the rate of $785.41, with a balloon payment for the remaining balance due May 26, 2014.

When the balloon payment remained unpaid in accordance with the terms of the note, defendant initiated foreclosure January 29, 2016, in Brunswick County, said action bearing special proceedings file number 16 SP 49. On April 13, 2016, plaintiff initiated a Chapter 13 bankruptcy proceeding, which halted foreclosure proceedings. In his petition, plaintiff listed the value of the property as $40,000.00. On April 13, 2016, the same day he filed his petition, plaintiff filed a complaint in the adversary proceeding entitled "Complaint to Quiet Title, Determine Validity, Priority, and Extent of Lien, in the Alternative to Avoid Lien, and Objection to Claim of Juliet J. Black," followed by a similarly captioned amended pleading, filed June 24, 2016. Between the two filing dates, on June 13, 2016, defendant filed a proof of claim, in order to make a claim for payment in the bankruptcy action, in the amount of $131,000.00, consisting of a secured claim designated in the amount of $40,000.00 and an unsecured claim designated in the amount of $91,000.00. The next day, defendant filed an amended proof of claim in the amount of $180,971.72 but did not designate how much of that amount was secured or unsecured.

In order entered December 5, 2016, the bankruptcy court determined the deed of trust was valid but reserved ruling on other pending issues as premature. See In re Hurlburt, No. 16-00031-5-SWH-AP, 2016 WL 7076980, at *2 (Bankr. E.D.N.C. Dec. 5, 2016).1

After the bankruptcy court entered its order finding that defendant held a valid lien on the property, plaintiff filed an amended Chapter 13 plan proposing to treat defendant's claim as secured in the amount of $34,132.19, representing the $40,000.00 asserted value of the property minus a tax lien held by Brunswick County in the amount of $5,867.81. The plan proposed to pay defendant's secured claim in full at the rate of 4.5% per annum. It did not propose any payment of the balance due under the note. A second amended plan was filed on February 23, 2017, in part revising the amount of the secured claim to reflect higher appraised value of the property of $47,000.00, resulting in a secured claim of $41,132.19.

Also on February 23, 2017, defendant filed an objection to plaintiff's amended plan, asserting that pursuant to 11 U.S.C. § 1322(b)(2) ("anti-modification provision") plaintiff cannot modify defendant's rights because defendant is a creditor secured only by a security interest in real property that is the debtor's principal residence, that plaintiff must pay defendant's claim in full with interest, and that plaintiff is required to pay in full even without sufficient disposable income to fund the plan.

On March 9, 2017, defendant filed a motion for summary judgment with respect to the legal issues raised in her objection and further requested that the legal issues be considered separately from confirmation of plaintiff's plan. Meanwhile, the parties also briefed the remaining issues contained in defendant's motion for summary judgment in the adversary proceeding; in his response brief, plaintiff requested that summary judgment be entered in his favor.2 A hearing on the objection, defendant's motion for summary judgment on the legal issue raised in the objection, and cross-motions for summary judgment in the adversary proceeding was held in Wilmington, North Carolina on April 13, 2017. The court, in the instant order on appeal, held pursuant to 11 U.S.C. § 1322(b)(2), the United States Supreme Court's holding in Nobelman v. American Savings Bank, 508 U.S. 324 (1993), and the United States Court of Appea ls for the Fourth Circuit's holding in Witt v. United Companies Lending Corp., (In re Witt), 113 F.3d 508 (4th Cir. 1997), that plaintiff is not allowed to modify the rights of defendant and plaintiff must pay defendant's claim in full, thereby rejecting plaintiff's second amended plan.

This appeal followed.3 Plaintiff argues that either the Fourth Circuit's holding in Witt does not apply to the present situation or, if it does, Witt was wrongly decided. In either instance, plaintiff argues that he owes defendant only that portion of the debt that reflects the value of the home and not the balance of the note.

COURT'S DISCUSSION

A. Standard of Review

This court has jurisdiction over plaintiff's appeal pursuant to 28 U.S.C. § 158(a)(1). On appeal from the bankruptcy court, this court reviews findings of fact for clear error and conclusions of law de novo. Zurich Am. Ins. Co. v. Tessler (In re J. A. Jones, Inc.), 492 F.3d 242, 249 (4th Cir. 02007). Only legal issues are presented here for decision.

Federal Rule of Bankruptcy Procedure 7056 incorporates the standard for summary judgment articulated in Federal Rule of Civil Procedure 56. Summary judgment is appropriate where an examination of the pleadings, affidavits, and other discovery materials properly before the court demonstrates "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (holding that a factual dispute is "material" only if it might affect the outcome of the suit and "genuine" only if there is sufficient evidence for a reasonable jury to find for the non-moving party).

The party seeking summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met its burden, the non-moving party must then "set forth specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). There is no issue for trial unless there is sufficient evidence favoring the non-moving party for a jury to return a verdict for that party. Anderson, 477 U.S. at 250. In making this determination, the court must view the inferences drawn from the underlying facts in the light most favorable to the non-moving party. United States v. Diebold, Inc., 369 U.S.654, 655 (1962).

Nevertheless, "permissible inferences must still be within the range of reasonable probability, . . . and it is the duty of the court to withdraw the case from the jury when the necessary inference is so tenuous that it rests merely upon speculation and conjecture." Lovelace v. Sherwin-Williams Co., 681 F.2d 230, 241 (4th Cir. 1982) (quotations omitted). Thus, judgment as a matter of law is warranted where "a reasonable jury could reach only one conclusion based on the evidence," or when "the verdict in favor of the non-moving party would necessarily be based on speculation and conjecture." Myrick v. Prime Ins. Syndicate, Inc., 395 F.3d 485, 489 (4th Cir. 2005). By contrast, when "the evidence as a whole is susceptible of more than one reasonable inference, a jury issue is created," and judgment as a matter of law should be denied. Id. at 489-90.

The court may affirm the bankruptcy court on any ground supported by the record. See Helvering v. Gowran, 302 U.S. 238, 245-46 (1937) ("In the review of judicial proceedings the rule is settled that, if the decision below is correct, it must be affirmed, although the lower court relied upon a wrong ground or gave a wrong reason.").

B. Analysis

The principal purpose of bankruptcy is "to grant a `fresh start' to the `honest but unfortunate debtor.'" Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365, 381 (2007) (citing Grogan v. Garner, 498 U.S. 279, 286 (1991)). Plaintiff filed for Chapter 13 bankruptcy protection to stop pending foreclosure of his home. With the filing for Chapter 13 relief, plaintiff must propose a repayment plan. See 11 U.S.C. § 1321. In addition to mandatory plan provisions, § 1322(b)(11) provides that a plan may "include any other provision not inconsistent with [title 11]." As part of provisions governing repayment plans, § 1322(b)(2) states "the plan may . . . 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. . . ." 11 U.S.C. § 1322(b)(2).

The Supreme Court in Nobelman addressed § 1322(b)(2). In that case, the debtors' Chapter 13 plan proposed to modify or bifurcate the claim on debtors' principal residence into secured and unsecured claims and reduce the debt owed to fair market value of the residence. 508 U.S. at 326-27. The Court held § 1322(b)(2) prevents such bifurcation and protects the "rights of holders" of such claims that are enforceable under state law. Id. at 329. To determine what "rights of holders" were being protected, the Court stated

Id. at 329-30 (emphasis added); see also Anderson v. Hancock, 820 F.3d 670, 673 (4th Cir. 2016) (citing Nobelman, 508 U.S. at 329) ("While `[t]he term `rights' is nowhere defined in the Bankruptcy Code,' the Supreme Court has held that it includes those rights that are `bargained for by the mortgagor and the mortgagee' and enforceable under state law.").4

In 1994, Congress added § 1322(c)(2) to the Bankruptcy Code, creating an exception to the anti-modification provision of § 1322(b)(2). This added section applies to loans that mature before the end of the bankruptcy plan and provides as follows:

11 U.S.C. § 1322(c)(2) (emphasis added). In turn, under § 1325(a)(5), a Chapter 13 bankruptcy plan can only be approved if it meets one of three conditions with respect to each "allowed secured claim": (A) the holder of the claim has accepted the plan; (B) the holder both retains its lien and receives property worth at least the allowed amount of the claim; or (C) the holder is given the property securing the claim. See Witt, 113 F.3d at 511 n.2.

Following the enactment of this provision, multiple courts found that § 1322(c)(2) overturned Nobelman and, pursuant to the incorporation of § 1325(a)(5), allowed for the modification or "strip down" of the rights of holders of a claim secured only by a security interest in real property that is the debtor's principal residence.5 See, e.g., American General Financial, Inc. v. Paschen, (In re Paschen) 296 F.3d 1203, 1209 (11th Cir. 2002) ("§ 1322(c)(2) was intended to except short-term and balloon mortgages from [§ 1322(b)(2)'s] reach, thereby overruling Nobelman insofar as it applied to [those] types of mortgages") (interior citation omitted); id. at 1206 ("Section 1325(a)(5) is recognized as the source of a Chapter 13 debtor's authority to bifurcate secured claims and to `strip down' the value of the claim to an amount equal to the value of the collateral.").

However, the Fourth Circuit in Witt addressed the addition of § 1322(c)(2) as follows:

Here we must decide whether 11 U.S.C. § 1322(c)(2), enacted as part of the Bankruptcy Reform Act of 1994, allows Chapter 13 debtors to bifurcate undersecured home mortgage loans into separate secured and unsecured claims. Before § 1322(c)(2) was enacted, the Supreme Court in [Nobelman] held that another provision, § 1322(b)(2), prohibited a Chapter 13 debtor from bifurcating home mortgage debt. In their proposed Chapter 13 plan in this case, debtors . . . bifurcated their home mortgage debt owed to [defendant]. When [defendant] objected to confirmation of the plan, the Witts argued that § 1322(c)(2) should be interpreted to overrule Nobelman and permit bifurcation . . . . We agree with the district court that § 1322(c)(2) does not allow bifurcation.

Witt, 113 F.3d at 509.6 In Witt, the debtors' Chapter 13 plan proposed to modify or bifurcate the claim on the debtors' principal residence into secured and unsecured claims and pay the full amount of the secured portion of the debt over five years but only 30% of the unsecured portion of the claim. Id. at 509-10. The court held that § 1322(c)(2) allowed only the modification of the payment of the claim, not the modification of the claim itself. Therefore, the court held that the Witts must "pay back the full amount of their mortgage loan," but that § 1322(c)(2) allows the Witts to pay back that debt "over time" pursuant to a bankruptcy plan of repayment, instead of having to tender "immediate payment" as was the case prior to the enactment of § 1322(c)(2). Id. at 512 and 514.

Basing his argument on N.C. Gen. Stat. § 45-21.38 ("North Carolina's anti-deficiency statute"), plaintiff argues that he is not precluded by the bankruptcy code, Nobelman, or Witt from owing defendant only that portion of the debt that reflects the value of the property. Plaintiff's argument essentially proceeds as follows: First, plaintiff turns to § 506(a)(1) to determine the amount of defendant's secured claim. Pursuant to this section, defendant's claim is "a secured claim to the extent of the value of such creditor's interest in the estate's interest in such property, . . . and is an unsecured claim to the extent that the value of such creditor's interest . . . is less than the amount of such allowed claim." In other words, according to plaintiff, defendant has a secured claim in the amount of $41,132.19. Second, plaintiff turns to § 502(b)(1) to determine how to treat the remainder of plaintiff's claim that is not secured. Section 502(b)(1) directs the court to "allow such claim in such amount, except to the extent that — such claim is unenforceable against the debtor . . . under . . . applicable law." Third, plaintiff turns to North Carolina law to conclude that the remainder of plaintiff's claim is not even an unsecured claim and is not actionable. Under North Carolina law, according to plaintiff, because defendant seller-financed her home, she cannot have an unsecured claim. See N.C. Gen. Stat. § 45-21.38;7 Adams v. Cooper, 340 N.C. 242, 243 (1995)("[W]hen the purchase money debtor defaults, the purchase money creditor is limited strictly to the property conveyed in all cases in which the note and mortgage or deed of trust are executed to the seller of the real estate.") (interior citation omitted).

Unlike the case currently before this court, neither the Supreme Court in Nobelman nor the Fourth Circuit in Witt was confronted with a situation where the real property at issue was located in a state which has an anti-deficiency statute.8 Witt, however, is applicable to the court's current analysis in that Witt confirmed in this circuit that Nobelman was not overturned by the enactment of § 1322(c)(2). Therefore, this court must determine, consistent with Nobelman, what rights were "bargained for by the mortgagor and the mortgagee" and are enforceable under North Carolina law, in particular the North Carolina's anti-deficiency statute. See Nobelman, 508 U.S. at 329-30.

Here, defendant's rights as set forth in the note and deed include the right to receive repayment of the principal amount of $131,000.00 at a fixed rate of interest and to foreclose on the property in the event of default. Pursuant to North Carolina law, once plaintiff defaulted, defendant's only option was to foreclose upon the real property securing the obligation, which defendant sought to do.9 However, when plaintiff filed a Chapter 13 bankruptcy petition, defendant's foreclosure proceedings were stayed. Plaintiff then proposed a plan that requires repayment to defendant of $41,132.19 at 4.5 % rate of interest instead of $131,000.00 at the 6 % interest rate, as prescribed in the note.

The court holds that plaintiff's proposed plan is an impermissible modification of defendant's rights inconsistent with § 1322(b)(2) as explained in Nobleman and Witt. Under the note and deed of trust, and consistent with North Carolina law, defendant bargained for the right first to be repaid the principal amount of $131,000.00, and failing that, to foreclose upon the real property securing the obligation upon default, neither of which is accomplished under plaintiff's proposed plan. Therefore, in order for defendant's right to not be impermissibly modified, first, plaintiff's proposed plan must provide for defendant to be repaid the principal amount of $131,000.00. Second, in the event that plaintiff defaults on those payments, defendant will be able to foreclose on the real property.10 Additionally, under bankruptcy law, plaintiff receives the benefit of being able to pay the balance he owes over the time span of an approved plan, and, in the event of default, under North Carolina law, he will suffer no personal liability on the note. This holding is consistent with § 1322(b)(2), as explained in Nobleman and Witt, and North Carolina's anti-deficiency statute.11

The court also rejects plaintiff's argument that "Witt's holding erroneously interprets 11 U.S.C. § 1322(c)(2) and must be overruled to conform with every other federal court" that has interpreted this provision. (DE 13 at 15). Although the court recognizes the extensive criticism of the Witt decision found in courts outside the Fourth Circuit,12 this court is, of course, bound by that decision.

CONCLUSION

Based on the foregoing, the judgment of the bankruptcy court is AFFIRMED. Because the facts and legal arguments are adequately presented in the briefs and record, the court dispenses with the argument, as argument would not aid significantly the decisional process. The clerk is DIRECTED to close this case.

SO ORDERED.