Shanks v. Fields

1 	Pursuant to Rule 56 of the Federal Rules of Civil Procedure, applicable in adversary
proceedings by Rule 7056 of the Federal Rules of Bankruptcy Procedure, summary judgment is
appropriate only if there is no genuine issue of material fact and the moving party is entitled to
judgment as a matter of law. Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 883-84 (1990); Sylvia
Dev. Corp. v. Calvert County, Maryland, 48 F.3d 810, 817 (CA4 1995). In considering a motion
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt
In Re: 	Case No. 02-19461PM
Nina J. Shanks,
Chapter 7
Debtor.
Nina J. Shanks, 	Adv. Proc. 05-01969
Plaintiff,
v.
Scott D. Field, Chapter 7 Trustee,
Defendant.
MEMORANDUM OF DECISION
This adversary proceeding came before the court on motions for summary judgment filed
by plaintiff/debtor and defendant/Trustee. For the reasons explained below and because there is
no genuine issue as to any material fact, the court finds that defendant/Trustee is entitled to
judgment as a matter of law and that this adversary proceeding will be dismissed. See FED . R.
BANKR . P. 7056(c); FED . R. CIV . P. 56(c). 1
Date signed April 17, 2006
Entered: April 18, 2006 Case 05-01969 Doc 18 Filed 04/18/06 Page 1 of 5

for summary judgment, the court must view all permissible inferences in a light most favorable
to the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574
(1986). Summary judgment is appropriate only if, taking the record as a whole, a reasonable
jury could not possibly return a verdict in favor of the non-moving party. Matsushita Elec.
Indus. Co., Ltd., 475 U.S. at 587.
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Undisputed Facts
Plaintiff/debtor, Nina J. Shanks, filed a bankruptcy case under chapter 13 on September
3, 2002. She scheduled real property located in Upper Marlboro with a market value of
$132,960.00, the S.D.A.T. value as of January 1, 2000. The real property was encumbered by
the secured claims of Chase Manhattan Mortgage Corporation totaling $162,000.00 and of the
Drumsheugh H.O.A. totaling $721.00.
The Chapter 13 Trustee objected to plaintiff/debtor's proposed plan as being
underfunded. The Amended Chapter 13 Plan was confirmed at a hearing held on December 17,
2002, and by order entered January 6, 2003. The Order Confirming Plan provided that the
property of the estate did not vest in plaintiff/debtor until a discharge was granted or the case
was dismissed or otherwise terminated.
In December, 2003, Chase Manhattan Mortgage Corporation moved for relief from the
automatic stay as to the real property. The court was advised that a settlement had been reached
by the parties; however, in March, 2004, a hearing on the motion was requested, culminating in
an Agreed Order Modifying the Stay entered May 20, 2004. In July, 2004, Chase Manhattan
Mortgage Corporation filed an Affidavit of Default and, in September, 2004, the Chapter 13
Trustee moved to dismiss the case for plaintiff/debtor's failure to make plan payments.
On October 13, 2004, Chase Manhattan Mortgage Corporation foreclosed on its interest
in plaintiff/debtor's real property. The real property was sold at foreclosure for $218,000.00.
The chapter 13 case was converted to one under chapter 7 on November 29, 2004. The
foreclosure sale was ratified by the Circuit Court for Prince George’s County, Maryland, on
December 6, 2004, after conversion of the case.
Following ratification, defendant/Trustee designated the chapter 7 case an asset case and
interested parties were advised of the need to file proofs of claim by April 4, 2005. Although
claims totaling $191,945.22 were filed ($174,408.94 secured and $11,630.28 unsecured), as a
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2 The court notes that plaintiff/debtor assigned the S.D.A.T. value from 2000 to the real
property at the time the petition was filed in 2002. The scheduled value certainly did not reflect
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result of the efforts of plaintiff/debtor's counsel and the payoff of the secured claims related to
the real property, claims totaling approximately $10,000.00 remain unpaid.
Plaintiff/debtor initiated this adversary proceeding by filing a complaint seeking the
turnover from defendant/Trustee of the proceeds from the foreclosure sale. Defendant/Trustee is
holding $37,674.74.
Discussion
Pursuant to 11 U.S.C. § 541(a)(1), a bankruptcy estate is comprised of all legal or
equitable interests of the debtor in property as of the commencement of a case. The real property
was property of the estate at the time the chapter 13 case was filed.
After the foreclosure sale on October 13, 2004, plaintiff/debtor retained a right to object
to the ratification of the foreclosure sale and retained a legal interest in the surplus proceeds. See
generally, Simard v. White, 859 A.2d 168, 201 (Md. 2004); In re Denny, 242 B.R. 593, 597-98
(BC Md. 1999); In re Edwards, 62 B.R. 609 (BC Md. 1986). The timing of the ratification, in
this case, was not determinative.
Upon conversion of the case to one under chapter 7 on November 29, 2004, the surplus
proceeds became property of the chapter 7 estate in accordance with 11 U.S.C. § 348(f)(1)(A),
which provides:
(f)(1) Except as provided in paragraph (2), when a case under chapter 13 of this
title is converted to a case under another chapter under this title –
(A) property of the estate in the converted case shall consist of
property of the estate, as of the date of filing of the petition, that
remains in the possession of or is under the control of the debtor on
the date of conversion[.]
Plaintiff/debtor acknowledges that the sale proceeds remained property of the bankruptcy
estate after conversion; however, in reliance upon 11 U.S.C. § 348(f)(1)(B), she asserts that the
interest was only to the extent of the scheduled value ($132,960.00), which was implicitly valued
by this court by its Order Confirming Plan, entitling plaintiff/debtor to any postpetition/pre-
conversion appreciation.2
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the property's worth. Indeed, the best indication of value, albeit in 2004, was the price obtained
at the foreclosure sale.
3 The court notes Congress' revision to 11 U.S.C. § 348(f)(1)(B) of the BAPCPA,
specifically excluding from a converted chapter 7 case a valuation made in a chapter 13 case.
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Defendant/Trustee argues, relying predominantly on the case of In re Jackson, 317 B.R.
511 (BC N.D. Ill. 2004), that confirmation of a chapter 13 plan, alone, does not transform a
scheduled value into a judicial finding of value that is binding on a chapter 7 trustee.
Section 348(f)(1)(B) provides:
(f)(1) Except as provided in paragraph (2), when a case under chapter 13 of this
title is converted to a case under another chapter under this title –
(B) valuations of property and of allowed secured claims in the
chapter 13 case shall apply in the converted case, with allowed
secured claims reduced to the extent that they have been paid in
accordance with the chapter 13 plan[.]3
As explained by the court in In re Jackson, Congress' purpose in enacting 11 U.S.C.
§ 348(f)(1)(B) was to assure that property of the estate of the succeeding chapter 7 case excludes
property that appreciated in value during the pendency of the chapter 13 case. In re Jackson, 317
B.R. at 513 (citing In re Wegner, 243 B.R. 731, 734 (BC D. Neb. 2000)). The issue in the
Jackson case, as with the subject case, is whether property was actually valued by the court
during the chapter 13 case.
This court does not agree with plaintiff/debtor's conclusion that the real property's
scheduled value was established by the confirmation order – a position that was also rejected by
the court in In re Jackson. 	Plaintiff/debtor's real property was not valued by this court. In
confirming plaintiff/debtor's plan, the court merely established that the plan satisfied the "best
interest" test of 11 U.S.C. § 1325(a)(4). A specific valuation of the real property was not
necessary to make this finding as long as the creditors were satisfied with the proposed plan
payments.
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Appropriate orders will be entered granting defendant/Trustee's motion for summary
judgment, denying plaintiff/debtor's motion for summary judgment and dismissing this adversary
proceeding.
cc: 	Bennie R. Brooks – bbrookslaw@aol.com
James M. Hoffman – jhoffman@srgpe.com, mwashington@srgpe.com
Nina J. Shanks, 11570 Dunloring Drive, Upper Marlboro, MD 20772
End of Memorandum of Decision
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