The Hadfeg decision was delivered to me in response to a standing search for bankruptcy decisions involving FRBP 3002.1.
But multi strands of legal theories run through this one. The questions, answered and unanswered, are tantalizing.
The facts are thus:
- Prepetition HOA dues scheduled for $5000, while HOA later claimed it was $33,000.
- No proof of claim filed by HOA
- Post petition, HOA levies special assessments, without filing notices provided in R. 3002.1
- Special assessments unpaid at plan’s end
At the conclusion of the plan, the debtor filed a motion pursuant to R.3002.1 to compel the HOA to deem the HOA payments current. The HOA filed no opposition, then moved to vacate the order entered by default.
HOA’s wish list
The HOA was expansive in its list of wants.
It wanted a determination that the difference between the arrears scheduled in the plan and the arrears shown on its books, survived the discharge as an enforceable lien on the condo.
It wanted a determination that the special assessments made post petition remained enforceable obligations of the debtor.
Court delivers half a loaf
Citing Espinosa, the court held that the confirmed plan providing for $5000 in delinquent HOA dues was preclusive on the amount of the prepetition debt. Whereas Florida condominium law made the dues a covenant that runs with the land, and a personal liability of the homeowner and any subsequent purchaser, completion of a confirmed plan to “cure and maintain” settled the amount of the prepetition arreages and satisfied them through the plan.
While a bankruptcy court cannot eliminate a condominium association’s statutory enforcement rights, it can determine with finality the amounts that are owed and enforceable.
Secured creditors relying on the precept that a secured claim passes through bankruptcy unaffected (absent a proceeding focused on the lien) take note.
On the issue of the unpaid special assessments, the HOA fared better. Finding that the confirmed plan did not address other charges and special assessment to be paid post petition, the court found the unpaid assessments would survive the discharge.
The argument that the HOA’s failure to file a notice of payment change was fatal to its claim was rejected. “Other charges” are not the type of contractual installment payments that are encompassed in R. 3002.1.
The take-away
The court scattered all kinds of practice pointers for both sides in its opinion.
Creditors
- Object to confirmation if you don’t accept the measure and the treatment of your claim in the plan
- File a proof of claim if your calculations differ from the sum in the plan
Debtors
- Be more explicit in your plan terms if you want to provide for secured debts other than the usual payments
- Articulate the full scope of the relief you seek in a motion to deem a secured debt current.
- Get service of your motion right
Unanswered is what would have resulted if the plan language purported to provide for all HOA impositions, post petitions in the absence of a notice of payment change or a notice of fees, expenses and charges.
