Everett Harold Fifield, III and Carolyn E. Fifield

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
GREENVILLE DIVISION
IN RE:
EVERETT HAROLD FIFIELD, III,
CAROLYN E. FIFIELD,
DEBTORS
CHAPTER 13
CASE NO. 12-00894-8-RDD
ORDER SUSTAINING DEBTORS’ OBJECTION
TO PROOF OF CLAIM OF WATERSIDE VILLAGES OF CURRITUCK
Pending before the Court is the Objection to Claim (the “Objection”) filed by Everett Harold
Fifield, III and Carolyn E. Fifield (the “Debtors”) on August 27, 2012, and the Response to
Objection to Claim (the “Response”) filed by Waterside Villages of Currituck Community Assoc.,
Inc. (the “Waterside Villages”) on September 26, 2012. 	The Court conducted a hearing on the
Objection and Response in Wilson, North Carolina on November 27, 2012.
BACKGROUND
The Debtors filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code
on February 3, 2012. The Debtors previously owned twenty-six (26)1 lots within the Waterside
1At the hearing, the male debtor testified that the Debtors owned thirty (30) lots rather
than twenty-six (26). The male debtor testified that at one point the developer of the property,
VOC, LLC, purchased one of the lots from the Debtors, but in exchange gave the Debtors back a
different lot. Counsel for Waterside Villages stated the records of Waterside Villages show the
SO ORDERED.
SIGNED this 03 day of January, 2013.
________________________________________
Randy D. Doub
United States Bankruptcy Judge
____________________________________________________________
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Villages subdivision secured by a deed of trust in favor of the Bank of Currituck. The Bank of
Currituck subsequently foreclosed on the deed of trust and on July 29, 2009, a Trustee’s deed was
recorded in the Currituck Register of Deeds in Book 1097, Page 116 transferring Debtors’ property
to the Bank of Currituck. The Waterside Villages filed Proof of Claim No. 1-1 (“POC 1") in the
amount of $77,844.00 based on association dues owed on the foreclosed property in the Waterside
Villages subdivision.
The Debtors object to POC 1 and contend that for a substantial number of months prior to
the foreclosure of the deed of trust to Bank of Currituck, access to the subdivision was restricted to
the Debtors and others by Wachovia Bank which had foreclosed on the developer, VOC, LLC on
July 2, 2008.2 The Debtors allege that this prevented them from being able to market the lots which
they owned. Further, the Debtors contend that Waterside Villages did very little to maintain the
properties or to provide other services for which dues and assessments were to be paid.
At the hearing on November 27, 2012, Waterside Villages acknowledged the claim amount
was miscalculated and verbally amended the claim. 	Counsel for Waterside Villages stated the
amended claim should be unsecured in the amount of $65,520.00, representing association dues and
late fees on the twenty-six (26) lots from December 31, 2007, until the Trustee’s deed was recorded
on July 29, 2009.
At the hearing, the male debtor testified that when they contracted to purchase the lots from
the developer VOC, LLC, the contract to purchase provided that VOC, LLC would be responsible
Debtors owned twenty-six (26) lots. For purposes of determining the amount of claim, the Court
will assume the Debtors owned twenty-six (26) lots.
2The Objection states Wachovia Bank foreclosed on the developer, VOC, LLC on
November 6, 2008. At the hearing counsel for the Debtors stated that the Trustee’s Deed from
Trustee, Inc. (the Trustee for Wachovia Bank), shows the Deed was recorded on July 2, 2008.
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for the homeowners’ association fees and assessments and that the Debtors would not be responsible
for these payments. The male debtor did not have any records as to whether VOC, LLC, actually
paid the homeowners’ association fees and assessments. Further, the male debtor testified, that their
contract provided that VOC, LLC, was to buy back lots from the Debtor on a schedule over a two-
year period of time. It was the male debtor’s understanding that VOC, LLC had control over the
homeowners’ association until it sold a certain percentage of lots. 	He testified that prior to
Wachovia Bank foreclosing on VOC, LLC, the Debtors received a few homeowners’ association
fee bills, but that VOC, LLC assured them that they should not be getting the bills and that VOC,
LLC would take care of them. Once VOC, LLC was foreclosed upon, the male debtor represented
that they started receiving more bills. The male debtor testified that when Wachovia foreclosed on
the subdivision, they had to start making efforts to market their property to the public. Wachovia put
up a gate at the entrance of the subdivision making it difficult for any potential buyers to view the
property. 	Further, the male debtor testified that the subdivision was not maintained, making it
unattractive to potential buyers.
DISCUSSION
Section 502 of the Bankruptcy Code provides that “[a] claim or interest, proof of which is
filed under section 501 of this title, is deemed allowed, unless a party in interest . . . objects.”
11 U.S.C. § 502(a). Section 502 further provides:
(b) Except as provided in [other sections], if such objection to a claim is
made, the court, after notice and a hearing, shall determine the amount of
such claim in lawful currency of the United States as of the date of the
filing of the petition, and shall allow such claim in such amount. . . .
11 U.S.C. § 502(b). If a party in interest objects to a claim filed under § 502, the party in interest
“must introduce evidence to rebut the claim's presumptive validity.” In re Harford Sands Inc., 372
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F.3d 637, 640 (4th Cir. 2004) (citing Fed. R. Bankr.P. 9017, Fed.R.Evid. 301). 	If the party in
interest does introduce evidence that rebuts the claim’s validity, “the creditor has the ultimate burden
of proving the amount and validity of the claim by a preponderance of the evidence.” Id.
Waterside Villages’ POC 1 was properly executed and filed, and thus “constitute[s] prima
facie evidence of the validity and amount of the claim.” Fed. R. Bankr. P. 3001(f). In response, the
Debtor filed a timely objection to the claim. The Debtor introduced evidence objecting to the claims
validity, rebutting the claim’s presumptive validity, therefore shifting the burden to Waterside
Villages to prove the amount and validity of the claim by a preponderance of the evidence. In re
Harford Sands Inc., 372 F.3d 637, 640 (4th Cir. 2004).
Based on the evidence, the Court disallows the homeowners’ association fee dues that would
have been due and owing from the Debtors prior to July 2, 2008, when Wachovia foreclosed on
VOC, LLC, and subsequent to July 28, 2009, when the Bank of Currituck foreclosed upon the
Debtors’ lots. Accordingly, the amount due and owing per lot is $2,160.00 for the twenty-six (26)
lots. The Objection to Claim is SUSTAINED. Waterside Villages is allowed an unsecured claim
in the amount of $56,160.00.
SO ORDERED.
END OF DOCUMENT
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