Opinion
Case No. 94-14445-AM, Contested Matter No. 96-1641
May 28, 1996
Denise L. Palmieri, Palmieri Palmieri, P.C., Vienna, VA, of counsel for Heath Glen Homeowners Association
Richard Hall, Annandale, VA, of counsel for the debtors/defendants
MEMORANDUM OPINION AND ORDER
A preliminary hearing was held in open court on May 28, 1996, on the motion for relief from the automatic stay filed by Heather Glen Homeowners Association on April 25, 1996 seeking relief "as to the Property and the Debtor" (emphasis added) with respect to unpaid post-petition homeowners association assessments on property located at 14904 Enterprise Lane, Woodbridge, Virginia. Although the motion contains a "copy to" notation with the names and address of the debtor's counsel and the standing chapter 13 trustee, there is no certificate of service reflecting service of the motion on either debtor's counsel or the chapter 13 trustee, nor does it appear that service was made on the debtors themselves, as required by Local Rule 302(E)(1), F.R.Bankr.P. 9014 (requiring that a motion in a contested matter be served in the same manner as a complaint and summons) and 7004(b)(9) (allowing service on a debtor by first class mail to the debtor and his attorney). The motion also does not contain the notice of response period required by Local Rule 302(C). A "Notice of Preliminary Hearing" was mailed by the clerk on April 25, 1996, reflecting service "upon the parties as set forth in the proof of service accompanying the said motion," but since no certificate of service accompanies the motion, the court is unable to determine who was sent a copy of the notice of hearing. No response to the motion was filed by either the debtors or the chapter 13 trustee, and neither the debtors nor the chapter 13 trustee appeared at the preliminary hearing.
See Local Rule 302(D): "With the original motion for relief from stay, the proponent shall also file: . . . (3) a properly completed proof of service."
The movant's proof of claim filed January 9, 1995, however, sets forth the amount of the secured claim as $831.97. Presumably, the chapter 13 trustee is paying the claim based on the proof of claim.
The plan shows the monthly amount as $45.00; the motion reflects that it is more precisely $44.90.
The order tendered by movant's counsel at the hearing contained language that would have granted the movant relief from the stay "in order to pursue the Debtors and the property for the pre-petition and post-petition obligations," but counsel advised the court that the reference to the Debtors' pre-petition liability was a typographical error and that leave was sought only to enforce the post-petition liability.
One reason the court is unwilling to assume that, despite the lack of a proper certificate of service, the debtors had actual notice of the preliminary hearing is because the standing chapter 13 trustee — who, in the court's experience, nearly always files a response — has not filed a pleading in response to the motion.
The debtors filed their voluntary chapter 13 petition in this court on November 22, 1994. Among the debts listed on their schedules was the secured claim of the movant in the amount of $399.50 for homeowners association dues. The property, described as 14904 Enterprise Lane, Woodbridge, Virginia, is valued on the debtors' schedules at $109,000 and is shown as also being subject to a first-lien deed of trust in favor of Inland Mortgage in the amount of $113,300. On April 11, 1995, an order was entered confirming the debtor's amended plan dated December 28, 1994 and filed January 6, 1995. The plan provides for the debtor to make payments to the chapter 13 trustee of $291.54 per month for 60 months. The movant's secured prepetition claim is to be paid through the plan over 60 months without interest, and post-petition homeowners association dues are to be paid directly by the debtor outside the plan. The motion for relief from stay alleges that only one payment (in the approximate amount of three months dues) has been made by the debtors since January 1, 1995, with respect to homeowners association dues, and that the debtors, at the time the motion was filed, were 13 months in arrears, for a total pre-petition claim of $948.40 ($562.40 in assessments and $386.00 in attorneys fees).
The motion for relief from the automatic stay seeks leave not only to enforce the unpaid post-petition assessments against the property but against the debtors personally. It has been held that housing cooperative assessments that become due post-petition are, in effect, post-petition obligations and are therefore not discharged by a chapter 7 discharge. River Place East Housing Corp. v. Rosenfeld (In re Rosenfeld), 23 F.3d 833 (4th Cir. 1994). Whether the analysis Rosenfeld is still good law in light of the Bankruptcy Reform Act of 1994, however, is unclear. The Reform Act amended D 523, Bankruptcy Code, to add a new provision excepting from discharge post-petition condominium or homeowners association dues if the debtor physically occupies the dwelling unit or receives rent from a tenant occupying the unit. That is, the statute assumes the debt would otherwise be dischargeable — which would only be the case if the post-petition assessments were part of pre-petition obligation — but then declares the post-petition payments nondischargeable in the appropriate circumstances. It has also been held that the automatic stay in a chapter 13 case does not stay action by a creditor to enforce a debt incurred post-petition and does not prevent garnishment of the debtor's post-confirmation wages to enforce such an obligation to the extent such wages are not necessary to make plan payments. In re Leavell, 190 B.R. 536 (Bankr. E.D. Va. 1995) (St. John, J.)
In any event, without proper service of the motion for relief from stay, the court is unable to grant the requested relief. Under the circumstances, however, dismissal of the motion for lack of proper service would not appear to be appropriate, since the allegations of the motion, if true, might well justify the requested relief. The court determines, therefore, that the appropriate course is to set the motion over for a final hearing and require that proper proof of service be made. Accordingly, it is
ORDERED:
1. Relief from the automatic stay is denied without prejudice, and the motion is set over for a final hearing to be held on June 17, 1996, at 9:30 a.m. at the United States Bankruptcy Court, 206 N. Washington Street, Room 322, Alexandria, Virginia 22314.
2. The movant shall promptly, but in no event less than 10 days prior to the final hearing, serve a copy of the motion for relief from the automatic stay and a notice of hearing on the debtors, the standing chapter 13 trustee, and counsel of record for the debtors and shall file a proof of such service with the clerk.
3. The clerk shall mail a copy of this order to counsel for the movant, counsel for the debtors, the debtors, and the standing chapter 13 trustee.