Joel Rodriguez Lopez

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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Memorandum
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	Case No. 10-47520 EDJ
Chapter 13
JOEL RODRIQUEZ LOPEZ,
Debtor./
MEMORANDUM: MOTION TO VALUE COLLATERAL
On September 8, 2010, Joel Lopez, the above-named debtor,
(“Lopez”) filed a Motion to Value Collateral seeking an order of
this court determining the value of the claim secured by a lien held
by Wells Fargo Bank N.A. (“Wells Fargo”) on the debtor’s real
property located at 127 Pasco Drive, Brentwood, California (the
“Property”). 	Lopez seeks to limit Wells Fargo’s secured claim to
the fair market value of the Property, rendering unsecured the
portion of its claim that is in excess of that amount.
Bankruptcy Code § 506(a)(1) provides that, “[a]n allowed claim
of a creditor secured by a lien on property in which the estate has
an interest ... is a secured claim to the extent of the value of
Signed: November 24, 2010

EDWARD D. JELLEN
U.S. Bankruptcy Judge

Entered on Docket
November 24, 2010
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 10-47520 Doc# 28 Filed: 11/24/10 Entered: 11/24/10 16:45:28 Page 1 of 5

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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1All further section references herein are to the Bankruptcy
Code, 11 U.S.C. § 101 et. seq.
2	Memorandum
such creditor’s interest in the estate’s interest in such property
...” 	11 U.S.C. § 506(a)(1). 1 	A secured claim is thereby limited to
the value of the collateral that secures it. 	But, § 1322(b)(2)
provides that a debtor may not, through the chapter 13 plan, modify
the rights of a claim “secured only by a security interest in real
property that is the debtor’s principal residence ....” 	In other
words, the first priority lien against the debtor’s residence is
exempt from the so-called “cramdown” provision of § 506(a)(1).
Lopez does not dispute that the Property is his principal
residence. 	Rather, he argues that the lien held by Wells Fargo is
not secured “only by a security interest in real property” because
the lien is secured by the Property, “together with all the
improvements now or hereafter erected on the property, and all
easements, appurtenances, and fixtures now or hereafter a part of
the property.” 	See Supplemental Request for Entry of Default at 1.
Lopez argues that because the Wells Fargo lien extends to easements,
which Lopez seeks to characterize as personal property, the lien is
no longer secured “only” by “real property” and is therefore exempt
from § 1322(b)(2). 	Lopez relies on the Fourth Circuit’s reasoning
in In re Ennis, 558 F.3d 343, 346 (4th Cir. 2009), which held that
the debtor was able to modify the first lien against his principal
residence, a mobile home, because it was considered personal
property under Virginia law. 	The Fourth Circuit concluded that the
Case: 10-47520 Doc# 28 Filed: 11/24/10 Entered: 11/24/10 16:45:28 Page 2 of 5

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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2Note that § 1123(b)(5), applicable in a chapter 11 case,
contains anti-modification language that is identical to
§ 1322(b)(2), applicable in a chapter 13 case.
3	Memorandum
real property element of the § 1322(b)(2) anti-modification clause
is distinct from, and in addition to, the principal residence
element. 	Id.
Lopez’s argument fails on three grounds. 	First, the Bankruptcy
Code specifically includes easements within its definition of
“debtor’s principal residence.” 	See §§ 101(13A), 101(27B)(defining
“debtors principle residence” as “a residential structure, including
incidental property...” and “incidental property” as “all easements,
rights, appurtenances, fixtures, rents, royalties, mineral rights,
oil or gas rights or profits, water rights, escrow funds, or
insurance proceeds....”). 	Easements are included in “debtor’s
principal residence” for purposes of § 1322(b)(2) by the plain
language of the Bankruptcy Code.
Second, the Ninth Circuit does not follow the rule identified
by the Fourth Circuit in Ennis. 	Rather, the Ninth Circuit BAP held
in Lee v. Home Savings of America, 216 B.R. 22 (9th Cir BAP 1997),
that chapter 11 debtors were prohibited from modifying the first
lien against their primary residence, even though that lien
encompassed additional collateral. 2 	Id. at 26. 	In so holding, the
BAP adopted the reasoning of In re French, 174 B.R. 1 (Bankr.D.Mass
1994), which held that so called “additional collateral” does not
divest a lienholder of the anti-modification provision of
§ 1322(b)(2) where the collateral is “nothing more than an
Case: 10-47520 Doc# 28 Filed: 11/24/10 Entered: 11/24/10 16:45:28 Page 3 of 5

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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4	Memorandum
enhancement which is or can, by agreement of the parties, be made a
component part of the real property or is of little or no
independent value.” 	Id. at 7. 	In the Ninth Circuit, the inclusion
of additional collateral that is personal property as security for a
first mortgage does not divest the lienholder of the anti-
modification protection of § 1322(b)(2).
Finally, even if this court were to follow the Fourth Circuit,
Lopez would need to show that the lien against his principal
residence is also secured by personal property. 	The determination
of property rights in the assets of the bankruptcy estate are
governed by state law. 	See Butner v. United States, 440 U.S. 48,
54-44 (1979). 	Unfortunately for Lopez, easements are real property
interests under California law. 	See Balestra v. Button, 54
Cal.App.2d 192, 197 (1942)(“An easement in gross is a personal
right, or a right attached to the person; it is an interest in the
real property of another; but it is not personal property.”); see
also Callahan v. Martin, 3 Cal.2d 110, 121-22 (1935).
The court holds that Wells Fargo’s first priority lien against
the Property is secured only by a security interest in the debtor’s
principal residence, and is therefore exempt from the “cramdown”
provision of § 506(a)(1). 	The court will accordingly issue its
order denying Lopez’s motion.
END OF ORDER
Case: 10-47520 Doc# 28 Filed: 11/24/10 Entered: 11/24/10 16:45:28 Page 4 of 5

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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5	Memorandum
COURT SERVICE LIST
David Ashley Smyth
Smyth Law Offices
1990 N California Blvd. #830
Walnut Creek, CA 94596
Wells Fargo Bank National Association
Attn: Managing Officer
101 N. Phillips Avenue
Sioux Falls, SD 57104
Martha G. Bronitsky
P.O. Box 5004
Hayward, CA 94540-5004
Office of the U.S. Trustee
1301 Clay St. #690N
Oakland, CA 94612
Case: 10-47520 Doc# 28 Filed: 11/24/10 Entered: 11/24/10 16:45:28 Page 5 of 5