MIKE K. NAKAGAWA, Bankruptcy Judge.
On November 14, 2018, the court heard the Motion for Relief From the Automatic Stay ("Firebird MRAS") brought by Firebird Living Trust Dated July 18, 2008 ("Firebird Trust"). The court also heard the Motion to Abandon Certain Assets ("US Abandonment Motion") brought by the United States of America ("USA"). The appearances of counsel were noted on the record. After arguments were presented, both matters were taken under submission.
On July 23, 2018, Joe Christopher Brice and Regina Reschelle Brice aka Regina Reschelle Chambers ("Debtors") filed a voluntary joint Chapter 13 petition ("Petition") along with their schedules of assets and liabilities ("Schedules"), their statement of financial affairs ("SOFA"), a proposed Chapter 13 Plan #1, and other required information. (ECF Nos. 1 and 2). On the same date, a notice of the Chapter 13 filing was issued scheduling a meeting of creditors for September 4, 2018 and notifying creditors of the appointment of a Chapter 13 trustee. (ECF No. 8). The Chapter 13 proceeding was assigned for administration to a panel Chapter 13 trustee, Kathleen A. Leavitt ("Chapter 13 Trustee").
On their Schedule "A/B," Debtors listed a primary residence located at 8325 Jeeves Cir., Las Vegas, NV 89149 ("Jeeves Property") at a value of $799,000. Debtors also listed a rental property located at 2437 Antlers Point, Henderson, NV 89074 ("Antlers Property") at a value of $499,990, and an additional rental property located at 4607 Reliant Street, North Las Vegas, NV 89031 ("Reliant Property") at a value of $254,000. On their Schedule "C," Debtors did not claim an exemption in any of the real property listed on Schedule "A/B." On their Schedule "D," Debtors listed "US Loan Servicing" ("US Loan") as having a claim in the amount of $544,867 secured by a first mortgage against the Jeeves Property,
On August 3, 2018, the instant Firebird MRAS was filed and noticed to be heard on September 5, 2018. (ECF Nos. 14 and 16). Attached to the Firebird MRAS is the supporting Affidavit of Steven Pickett ("Pickett Affidavit"). The Firebird MRAS alleges that it sold the Jeeves Property to the Debtors in June 2017 and received a deed of trust to secure the payment of $549,995. The MRAS alleges that relief from stay should be granted under Section 362 but identifies only Section 362(d)(2) as the legal basis for granting relief, while merely arguing that the Debtors have not provided adequate protection. See Firebird MRAS at 3:9-12.
On August 10, 2018, the USA filed opposition to the Firebird MRAS ("Opposition"). (ECF No. 21). A reply was never filed.
On September 6, 2018, the Chapter 13 Trustee filed an opposition to plan confirmation combined with a recommendation for dismissal. (ECF No. 24). On this same date, Debtors filed amended Schedules "A/B" and "C" as well as an amended SOFA ("SOFA 2"). (ECF Nos. 25 and 26). The Schedules were amended only to include additional vehicles owned by the Debtors, and the SOFA 2 was amended to include: a transfer of a 2016 BMW vehicle to a law firm (Callister Law Group) in full satisfaction of a debt within 90 days of filing the bankruptcy petition,
On October 10, 2018, the Chapter 13 Trustee filed an amended opposition to plan confirmation combined with a recommendation for dismissal. (ECF No. 34).
On October 11, 2018, Debtors filed an amended petition to reflect all other names used in the last 8 years (ECF No. 35) as well as amended Schedules and another amended SOFA ("SOFA 3"). (ECF No. 36). The SOFA 3 was amended to include: deposits of funds into three different checking or savings accounts, interests in five different incorporated and unincorporated businesses, transfers of vehicles to a family member, the seizure of three trucks by the USA, and ownership or membership interests in four of the previously identified incorporated and unincorporated businesses.
On October 17, 2018, the instant US Abandonment Motion was filed on behalf of the USA. (ECF No. 40). On this same date, the USA filed a "Motion to File Statement of Additional Facts Under Seal" (ECF No. 41), which was granted by an order entered on this court's docket on October 22, 2018 (ECF No. 47). The US Abandonment Motion was set to be heard on November 14, 2018. (ECF No. 48). The USA argues that the interest of the Chapter 13 bankruptcy estate in the Jeeves Property, Antlers Property, and Reliant Property (collectively, the "Brice Realty") must be abandoned pursuant to Section 554(b) because exclusive jurisdiction over the property was obtained by the United States District Court in Nevada ("USDC") through civil forfeiture actions commenced before the bankruptcy case was filed. The USA argues, however, that the bankruptcy court should require abandonment of any interest in personal property ("Brice Personalty") even though the personalty is not the subject of a civil forfeiture action pending before the USDC. According to the USA, relinquishment of in rem jurisdiction over the Brice Personalty would allow the USDC to adjudicate "all interests in that property through a forfeiture proceeding, either civil or criminal." US Abandonment Motion at 7:25-26.
On October 17, 2018, a separate motion for relief from stay was filed by Michael Rohland ("Rohland") in connection with the Reliant Property ("Rohland MRAS"). (ECF No. 42). That motion was noticed to be heard on November 14, 2018. (ECF No. 44). Rohland alleges that in August 2017, he entered into a contract to sell the Reliant Property to the Debtors, but that the Debtors subsequently defaulted on their monthly payments. Rohland asserts that in February 2018, the USA recorded a lis pendens against the Reliant Property.
On November 2, 2018, oppositions were filed by the Debtors to the Firebird MRAS as well as the US Abandonment Motion. (ECF Nos. 52 and 53). On this same date, the USA filed a reply in support of the US Abandonment Motion. (ECF No. 56). Also, on this same date, the Chapter 13 Trustee filed an amended opposition to plan confirmation with recommendation for dismissal. (ECF No. 58).
On November 5, 2018, the Chapter 13 Trustee filed opposition to the US Abandonment Motion. (ECF No. 62).
On November 14, 2018, the Chapter 13 Trustee filed a further amended opposition to plan confirmation along with recommendation for dismissal. (ECF No. 66).
On November 14, 2018, the Firebird MRAS, the US Abandonment Motion, and the Rohland MRAS were heard by the court. Inasmuch as no opposition was filed to the Rohland MRAS, it was granted in open court. After arguments were presented on the Firebird MRAS and US Abandonment Motion, both matters were taken under advisement.
On November 26, 2018, an order was entered granting the Rohland MRAS. (ECF No. 69).
On November 27, 2018, an order was entered denying confirmation of the Debtors' Chapter 13 plan and requiring an amended plan to be filed no later than December 3, 2018. (ECF No. 70).
On November 30, 2018, while the Firebird MRAS and US Abandonment Motion were still under submission, a Motion for Mandatory Partial Withdrawal of Reference ("Withdrawal Motion") was filed on behalf of the USA. (ECF No. 74). The motion asserts that the USA "seeks only partial withdrawal, limited to the issues relating to the Brice Personalty and [Brice] Realty." Withdrawal Motion at 5:12-13. Under 28 U.S.C. § 157(d) and Local Rule 5011, the Withdrawal Motion was transmitted to the USDC. No action on a withdrawal of the reference motion is taken by a bankruptcy court inasmuch as the determination to withdraw the matter is made solely by the district court.
On December 3, 2018, Debtors filed their proposed Chapter 13 Plan #2 in accordance with the prior order. (ECF No. 75). A hearing on confirmation of that proposed plan was noticed to be held on February 14, 2019. (ECF No. 76).
As previously mentioned, the Firebird MRAS seeks to terminate the automatic stay to permit the creditor to pursue its non-bankruptcy remedies with respect to the Jeeves Property. An order granting relief from stay already has been granted to Rohland with respect to pursuing non-bankruptcy remedies with respect to the Reliant Property. The US Abandonment Motion seeks to remove from the bankruptcy estate any interest in the Jeeves, Reliant, and Antlers properties, as well as any personal property to which the USA might request civil or criminal forfeiture.
One of the fundamental issues in a Chapter 13 proceeding is whether any plan proposed by the debtors meets the "best interest of creditors test." A requirement for confirming a Chapter 13 plan is that "the value, on the effective date of the plan, of property to be distributed . . . on account of each allowed unsecured claim is not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under chapter 7 . . ." 11 U.S.C. § 1325(a)(4). To determine what would be liquidated in a Chapter 7 proceeding, both the parties and the court must know what assets are included in the bankruptcy estate. Moreover, until a liquidation analysis is performed, the court cannot determine whether a proposed Chapter 13 plan will distribute to allowed unsecured claims an amount at least equal to a Chapter 7 distribution. In addition, because a Chapter 13 plan may not provide for payments over a period longer than five years, see 11 U.S.C. § 1322(d), neither the parties nor the court will be able to determine whether the total payments required by the plan can be made through the maximum number of payments. In other words, the court might not be able to determine whether the proposed Chapter 13 plan is feasible. See 11 U.S.C. § 1325(a)(6).
Separate and apart from the best interests and feasibility requirements to confirm a Chapter 13 plan, debtors in Chapter 13 are usually required to devote their "projected disposable income" to the payment of unsecured claims if the Chapter 13 trustee or an unsecured creditor objects to plan confirmation. See 11 U.S.C. § 1325(b)(1)(B). The calculation of projected disposable income takes into account the amounts spent by the debtors to pay the creditor whose claim is secured by the primary residence. See 11 U.S.C. § 1325(b)(3) and 11 U.S.C. § 707(b)(2)(A)(iii)(II). In the absence of such an expense, there obviously may be a greater amount of disposable income available to pay unsecured creditors under the proposed Chapter 13 plan. As previously mentioned, the Debtors have filed an amended Chapter 13 plan, and a hearing to confirm that proposal is now scheduled for February 14, 2019. Because the Brice Realty includes the Jeeves Property that the debtors claim as their primary residence, the "issues relating to" that property clearly include whether the proposed Chapter 13 plan can be confirmed.
Thus, separate and apart from the issues underlying the Firebird MRAS and the US Abandonment Motion, the Withdrawal Motion raises the prospect of inconsistent decisions between this court and the USDC. Moreover, if the USA is correct that the bankruptcy court never obtained jurisdiction over the Brice Realty due to the civil forfeiture proceedings filed in the USDC prior to the commencement of this Chapter 13 case, then the effectiveness of any related order issued by this bankruptcy court is in doubt.
Rather than simply delaying any decision on the submitted matters pending the outcome of the Withdrawal Motion, the court resolves them as follows:
In addition to this disposition of the Firebird MRAS and the US Abandonment Motion, the court also concludes that hearing on confirmation of the Debtors' proposed Chapter 13 Plan #2 should be held for status purposes only in light of the concerns expressed in this Order.
