Tracey Patterson

UNITED S TATES B ANKRUPTCY COURT
FOR T HE E ASTERN DISTRICT O F PENNSYLVANIA
In re 	: 	Chapter 13
:
TRACEY PATTERSON, 	: 	Bankruptcy No. 04-32201DWS
:
Debtor. 	:
:
TRACEY PATTERSON, 	: 	Adversary No. 07-0023
:
Plaintiff, 	:
:
v. 	:
:
LJR INVESTMENTS, LLC 	:
OF BUCKS COUNTY, 	:
aka LJR Investments, LLC, 	:
:
Defendant. 	:
MEMORANDUM OPINION
BY: 	DIANE WEISS SIGMUND, Chief Bankruptcy Judge
Before the Court are the (1) Complaint of the debtor Tracey Patterson (“Debtor”)
pursuant to 11 U.S.C. § 506 to determine the extent of the lien held by LJR Investments,
LLC 	of 	Bucks 	County 	(“LJR”) 	on 	real 	property 	owned 	by 	Debtor 	located 	at
1241 Myrtlewood Street, Philadelphia, PA (“Myrtlewood”) and 2914 Thompson Street,
Philadelphia, PA (“Thompson”) (the “Adversary Proceeding”) and (2) Debtor’s Motion to
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1 LJR contends it was not served with the Modification Motion. 	Debtor which filed a
Certificate of Service which does not name the parties served, did not indicate otherwise.
Accordingly, I entered a bench order directing its counsel to promptly file a response which it
has now done objecting to the Modification Motion on the grounds that the modified Chapter 13
plan improperly treats its secured claim.
2 I concluded that LJR had a valid mortgage on the Properties, including Baltz which Debtor
claimed had been released, but denied stay relief provided Debtor made monthly adequate protection
payments of $200 pending the adjudication of the Adversary Proceeding.
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Modify Plan after Confirmation (the “Modification Motion”).1 This is the second litigation
between these parties. 	The first, LJR’s motion for relief from stay to exercise its state
law remedies against Myrtlewood, Thompson and a third property owned by Debtor at
3029 Baltz Street, Philadelphia, PA (“Baltz”) (together with Myrtlewood and Thompson,
(the “Properties”), sets forth the legal relationship between the parties, and my findings will
be incorporated herein to the extent relevant to the disposition of the Adversary Proceeding.
In re Tracey Patterson, 2007 WL 987306 (April 2, 2007 Bankr. E.D. Pa.) (“Patterson I”).2
Debtor contends that LJR is either unsecured or undersecured by reason of the City of
Philadelphia (the “City”) tax and municipal liens on the Myrtlewood and Thompson
properties and asks that I fix LJR’s secured claim at zero. 	This litigation is intended to
support Debtor’s failure to treat LJR’s lien on these properties in his Chapter 13 plan.
Resolution of the Adversary Proceeding requires a determination of the amount of the
prior liens and the value of Myrtlewood and Thompson and approval of the Modification
Motion requires a finding that there is no value above the prior City liens to attach to LJR’s
claim.
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3 I shall take judicial notice of the docket entries in this case. Fed.R.Evid. 201, incorporated
in these proceedings by Fed.R.Bankr.P. 9017. See Maritime Elec. Co., Inc. v. United Jersey Bank,
959 F.2d 1194, 1200 n.3 (3d Cir. 1991); Levine v. Egidi, 1993 WL 69146, at *2 (N.D. Ill. 1993);
In re Paolino, 1991 WL 284107, at *12 n. 19 (Bankr. E.D. Pa. 1991); see generally In re Indian
Palms Associates, Ltd., 61 F.3d 197 (3d Cir. 1995). While a court may not take judicial notice
sua sponte of facts contained in the debtor’s file that are disputed, In re Augenbaugh, 125 F.2d 887
(3d Cir. 1942), it may take judicial notice of adjudicative facts “not subject to reasonable dispute ...
[and] so long as it is not unfair to a party to do so and does not undermine the trial court’s
factfinding authority.” 	In re Indian Palms Assoc., 61 F.3d 197, 205 (3d Cir. 1995) (citing
Fed.R.Evid. 201(f) advisory committee note (1972 proposed rules).
4 Debtor does not claim that LJR is undersecured on Baltz and treats LJR’s claim with
respect to Baltz under its recently filed Amended Chapter 13 Plan. 	According to Debtor’s
(continued...)
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BACKGROUND
Debtor commenced this bankruptcy case on September 10, 2004. 	While it took
Debtor until August 3, 2005 to file Schedules that listed all his properties and the
acknowledged secured claims against them, Doc. No. 54 and 55, 3 he still did not schedule
LJR who therefore did not get notice of the commencement of the case and the bar date
for filing proofs of claim. Doc. No. 12. Debtor’s rationale was that LJR was not a creditor.
Accordingly, Debtor’s Second Amended Plan confirmed on September 8, 2005, Doc. No. 64,
and the prior versions, made no mention of LJR. 	As it does not appear that LJR was on
notice of the Chapter 13 proceedings, it is not surprising that it did not object to the
proposed plans. On November 21, 2006 LJR filed a motion for relief seeking to exercise its
state law remedies with respect to the Properties. 	Debtor responded by filing the above-
captioned Adversary Proceeding. As noted, the motion for relief was decided on April 2,
2007 and Debtor commenced making monthly adequate protection payments of $200 to LJR
with respect to Baltz, and filed the Modification Motion to treat arrears under its confirmed
Chapter 13 plan with respect to Baltz only.4
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(...continued)
bankruptcy counsel Pamela Reiss, the plan’s payment obligation of $7,200 with respect to Baltz
represents the release price for that property under LJR’s blanket mortgage less the payments
made by Debtor. No evidence of any release prices was presented. LJR objects to the treatment as
being inadequate to amortize its lien on Baltz which it contends is $87,928. LJR’s President Monte
Resnick 	testified 	to 	that 	number 	which 	was 	derived 	by 	allocating 	the 	total 	asserted
claim of $791,354 among the various properties subject to the blanket mortgage. Fortunately this
contested matter does not require me to liquidate the Baltz secured claim but rather only to
determine whether the $7,200 proposed to be paid over the life of the Plan comports with
§ 1325(a)(5).
5 To date Debtor has not filed an objection.
6 The original purchase in April 1986 of the thirty-three properties (“Total Properties”)
by Stephen V. Aurello and Robert G. LaPlante (“Prior Owner”) was financed pursuant to a note in
the principal amount of $420,000 and the conveyance of a blanket mortgage to Robert H. Glazier
(“Glazier”). In December 1998 Prior Owner sold ten of the Total Properties, including the three
to Debtor. The sales were subject to the blanket mortgage. On April 2, 2005 Glazier assigned
the blanket mortgage to LJR in consideration of the payment of $14,500. 	Patterson I, 2007
WL 987306, at *1.
7 I take judicial notice of the proof of claim as evidence of LJR’s claim only, not the
truth of the matters asserted.
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Because LJR had not been given notice of the bankruptcy case, it not only did not
have an opportunity to object to the Chapter 13 plan but also had not filed a proof of claim.
It has done so now. 5 Myrtlewood, Thompson and Baltz are three of thirty-three properties
subject to a blanket mortgage held by LJR. 6 In the proof of claim,7 LJR claims a debt of
$791,354, $197,838 of which it allocates to these three properties as follows: 	$87,929
Thompson, $87,928 Baltz and $21,982 Myrtlewood. The claim is consistent with Resnick’s
testimony concerning the allocation of LJR’s debt to Debtor and the three properties.
In Patterson I, I found that the lien of the blanket mortgage is valid. Moreover, it is
undisputed that it is subject to liens of the City for unpaid real estate taxes and municipal
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8 In his initial Complaint, Debtor pled that the value of Myrtlewood and Thompson were less
than the amount of prior City tax and water and sewer liens and municipal claims against the
properties. Complaint ¶ 3. LJR filed a motion to dismiss contending, inter alia, that the Complaint
was insufficient in failing to plead a value for the properties and the amount of the liens against each.
Refusing to dismiss, I allowed Debtor to amend his Complaint to plead with more specificity his
claim under § 506(a) with respect to Myrtlewood and Thompson, stating the value of each property
and the municipal liens and claims that cause him to aver that LJR’s liens are undersecured.
Order dated March 3, 2005. Doc. No. 8. The Amended Complaint that was filed complied with that
directive in pleading the tax and water and sewer liens with respect to each property but also averred
“possible municipal claims in some unknown amount.” Doc. No. 10. This language was perceived
by LJR as an attempt to evade the purpose of the amendment, i.e., to put it on notice of the prior
liens and claims Debtor would be relying on, and a second motion to dismiss was filed with that
claim and another relevant only to Baltz. After yet another hearing, I entered an Order dismissing
the Amended Complaint and allowing the filing of the Second Amended Complaint which strikes
the claims with respect to Baltz and conforms to the March 9 Order by “pleading all liens on the
Myrtlewood and Thompson Street properties.” Doc. No. 15. LJR relied on a footnote in that Order
which binds Debtor to his representation that he had pled all liens and that no other liens would be
counted at trial to move for a nonsuit at the conclusion of Debtor’s case contending that
this limitation had been fatal to his proof. Since Debtor had pled certain liens and the property
values that his appraiser testified to were less than those values, a nonsuit was not warranted, and
the motion was denied.
9 The Adversary Proceeding was handled by different counsel.
-5-
water and sewer charges. The Second Amended Complaint pled those liens as follows:
Myrtlewood- tax liens of $4,640.87 and water and sewer liens
of $6,401.00 (aggregating $11,041.87); and
Thompson- tax liens of $2,333.41 and water and sewer liens of
$12,541.96 (aggregating $14,875.37).8
To support his averment at trial regarding prior liens, Debtor called his bankruptcy
counsel9 who testified that the City had filed two claims in the amount of $2,804.58 and
$44,572.47, and that Debtor intended to pay both claims in full under his Chapter 13 plan.
He introduced two proofs of claim filed by the City on June 15, 2005 and August 3, 2005
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10 After working through the various proofs of claim filed by the City, I found that the
$27,009.48 claim dated June 15, 2005, Exhibit P-2, has been superceded by the later filed proof
of claim, Exhibit P-1. 	While Exhibit P-2 lists the water and sewer charges on the Properties,
Exhibit P-1 covers both the water/sewer charges and taxes. A comparison of the detail shows the
same account numbers for the same periods. 	Finally I take judicial notice that the $2,804.58
claim which Debtor’s counsel spoke of relates to Baltz and is not relevant to this dispute.
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in the amount of $27,009.48 and $44,572.47, respectively. 	Exhibit P-2 and P-1. 10
Debtor’s counsel explained that the City’s proofs of claim related to properties in addition
to Myrtlewood and Thompson, and stated that the Schedules would reflect the allocation as
to each property. An examination of the Amended Schedule D filed shortly after Debtor
settled an objection to the City’s proof of claim supports that contention. Debtor schedules
real estate and water/sewer lien claims in the aggregate amount of $8,983.00 and $15,075.70
against Myrtlewood and Thompson, respectively. These numbers are consistent with the
allocation of the unpaid prepetition charges in the City’s proof of claim #10 introduced
as Exhibit P-1. 	While the numbers in the Schedules and Proof of Claim are identical,
the number in the Complaint is higher for the water liens, Debtor having relied on the earlier
and amended proof of claim, Exhibit P-2. The tax liens are essentially the same in each.
For the purpose of quantifying the lien claims, I will consider the non-controverted proof
of claim, Exhibit P-1, as adopted by Debtor’s Schedule D, to establish tax and water/sewer
liens of $8,983.00 and $15,075.70 against Myrtlewood and Thompson respectively.
The second part of the equation necessary to render the § 506 determination is the
value of each property. Myrtlewood is, and has been since seven months ago, a vacant lot.
Exhibit P-13. 	The house that stood on the property was uninhabitable due to a fire that
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11 An owner of property may testify as to his opinion of value without demonstrating
any additional qualifications to give opinion testimony. In re Karakas, 2007 WL 1307906, at *7
(Bankr. N.D.N.Y. (May 3, 2007) (citing cases)).
12 In its brief LJR complains of Debtor’s failure to timely produce the appraisals he intended
to rely upon at trial and the burden imposed upon it to respond to that evidence when it was finally
supplied. However, LJR also concedes that it affirmatively waived any objection to the introduction
of that evidence.
13 I find both appraisers equally qualified by reason of their education and experience.
If there was any deficiency in the appraisal testimony, it resulted from counsel’s failure to focus their
experts on the date governing these valuations so that neither addressed the economic conditions in
the community in September 2005 as impacting on the value of abandoned shells being rehabilitated
for resale. While Debtor argues that Symanski was the more qualified due to the proximity of his
office to the subjects, I find that Edelson actually provided more insight into the area, albeit at a
later date.
14 These values are lower than those reflected in Debtor’s Amended Schedule A which
fixes a $10,000 value on Myrtlewood and a $13,000 value on Thompson.
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occurred prior to Debtor’s purchase in 1998. 	Thompson is a corner unoccupied building
that Debtor intends to rehabilitate. 	Exhibit P-14. 	The valuation evidence consisted of
Debtor’s testimony11 and the appraisals of the certified valuation experts John Symanski
(“Symanski”) 12 on behalf of Debtor and Len Edelson (“Edelson”) on behalf of LJR. 13
The following chart reflects the disparate opinions of value for the two properties:
MYRTLEWOOD
Appraisal 	Debtor 	Debtor’s 	LJR’S
Date 	Testimony14 Appraiser 	Appraiser
9/10/04 	$5,000-$6,000 	$1,500 	$20,000
9/08/05 	$5,000-$6,000 	$2,000 	$40,000
6/28/07 	$1,500 	$1,500 	$15,000
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15 Since the appropriate valuation date presented a legal question, I directed the parties to
submit briefs. LJR had sought and was granted an extension for its responsive submission, reporting
that settlement negotiations were ongoing. 	The brief now having been filed and no settlement
reported, I assume they were unsuccessful and will rule.
16 Section 506(a) of the Bankruptcy Code, in pertinent part, states as follows:
value shall be determined in light of the purpose of the valuation and the proposed
disposition or use of such property, and in conjunction with any hearing on such disposition
or use or on a plan affecting such creditor's interest.
11 U.S.C. § 506(a). In anticipation of a need to address the different dates of value proffered by the
experts and awaiting the parties’ briefs, I observed a less than uniform rule in the decided cases.
However, given the parties’ agreement that the confirmation date controls, it is not necessary to
consider the effect of the passage of time on the creditor’s status vis a vis appreciation or
depreciation of the collateral.
-8-
THOMPSON
Appraisal 	Debtor 	Debtor’s 	LJR’S
Date 	Testimony 	Appraiser 	Appraiser
9/10/04 	$9,000 	$8,500 	$18,000
9/08/05 	$9,500-$10,500 	$10,500 	$50,000
6/28/07 	$7,000-$8,000 	$15,000 	$65,000
Exhibits P-7 through P-9, D-4 through D-6. 	The three valuation dates represent current
appraisals done as of the petition date (9/4/04), plan confirmation date (9/8/05) and the date
of trial (6/28/07) as the parties had not discussed what date was applicable in the context of
this case.15 While the evidence reflects widely divergent views of value of each property,
the parties do concur that value as of the September 2005 confirmation date is dispositive in
this proceeding.16
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DISCUSSION
As noted above, Debtor seeks a determination that LJR has either an unsecured or
undersecured claim within the meaning of § 506(a). This section provides, in pertinent part:
An allowed claim of a creditor secured by a lien on property in which the
estate has an interest ... is secured to the extent of the value of such creditor's
interest in the estates' interest in such property ... and is an unsecured claim to
the extent that the value of such creditor's interest....is less than the amount of
such allowed claim.
11 U.S.C. § 506(a). Debtor’s contention is that the amount of the prior liens held by the City
exceed the value of Myrtlewood and Thompson so LJR’s entire claim is unsecured and it
does not have to be provided for in Debtor’s Chapter 13 plan. To evaluate this thesis, I need
to determine value and deduct the amount of the prior liens which I have determined above.
Certain fundamental realities about the valuation process supply the context for the
task at hand. They were well stated by the Court in In re Smith, 267 B.R. 568, 572 (Bankr.
S.D. Ohio 2001):
“Valuation outside the actual market place is inherently inexact.” Rushton v.
Commissioner, 498 F.2d 88, 95 (5th Cir.1974). (further citations omitted)
Because the valuation process often involves the analysis of conflicting
appraisal testimony, a court must necessarily assign weight to the opinion
testimony received based on its view of the qualifications and credibility of
the parties' expert witnesses. See In re Coates, 180 B.R. 110, 112 (Bankr. D.
S.C. 1995) (“The valuation process is not an exact science, and the court must
allocate varying degrees of weight depending upon the court's opinion of the
credibility of ... [the appraisal] evidence.”).
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17 The comparative sales approach selects sales of properties the characteristics of which
are as close as possible to the subject property and makes adjustments to the sales prices to account
for differences. The adjusted sales prices are then reconciled to arrive at an opinion of value for the
subject property. 	Both appraisers used this approach which is well accepted for non-income
producing real estate.
18 Edelson’s comparatives sales were within .10 mile of the subject whereas Symanski’s
were .69-.79 miles. Compare Exhibits P-8 and D-5. While Symanski did not view this to be a
material factor as the properties are within the same zip code and less than a mile apart, in a
changing area as I find this one to be, this might account for some of the difference. However, the
(continued...)
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Reconciling the professional appraisals, which both relied on a comparison sales
approach,17 is difficult given the paucity of information in the reports which used different
properties as their base lines and presumably different assumptions about what was
comparable. Symanski acknowledged that because the buildings were at the end of their
economic life, and in the case of Myrtlewood had been removed, he saw the value to be
in the land. 	Thus, he sought “nominal sales” of land (Myrtlewood) and properties with
abandoned shells (Thompson). 	His value for Thompson is higher because it had a shell
capable of rehabilitation. However, for the year at issue, 2005, his Myrtlewood appraisal is
flawed because the house had not yet been removed. Symanski concedes that an abandoned
shell has value, and Edelson explained that its presence facilitates reconstruction as zoning
would be preserved. To what extent that value was impaired because the structure was a
burned out shell was not addressed. 	In any event, the $2,000 value for Myrtlewood is
simply too low. With respect to Thompson, LJR argues that I should give less weight to the
Symanski report because he appears to select properties further from the subjects when there
were multiple property transactions in the immediate area as reflected on the Edelson
report. 18 As both parties produced their appraisals on the eve of trial, it is not surprising that
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(...continued)
real issue is whether the properties were indeed comparable. Neither inspected the interiors of the
Myrtlewood (when it was standing) or Thompson houses. 	Symanski stated he was looking for
abandoned shells which presumably would not require such inspection. 	It does not appear that
Edelson’s criterion was that narrow. While he included photographs of the comparables, they are
current images of the properties and not images at the relevant time. One (2915 Thompson) appears
to have been rehabilitated, one appears to be occupied and while 3030 Baltz appears boarded up, it
is not clear how that condition relates to its condition in September 2005 or the date of its sale
sometime earlier.
19 While LJR’s counsel made much of this distinction, Symanski opined that public records
are more accurate and are normally consulted first. No explanation for not consulting the MLS was
given. 	The statement advanced by LJR’s counsel that the MLS provides wider notice of the
availability of a property and promotes competitive bidding was accepted in part. A private and
public sale would each generate competitive bidding although Symanski acknowledged there is
more exposure on the MLS.
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the significance of this distinction was not adequately explored. 	LJR also argues that
Syzamski’s comparatives are inapposite to the extent some represent properties sold at
sheriff’s or tax sales whereas the Edelson comps were drawn from properties listed on
the “MLS”, i.e., multiple listing service.19 While Symanski refused to concede the point,
contending that these types of properties are usually sold in this manner, for the purposes of
this bankruptcy case, it does not follow that a distressed sale is the standard of value to be
used. Finally Debtor himself, as indicated by his testimony and the higher value reflected
on his Schedule A as well as his zealous efforts to retain the properties, appears to subscribe
to a higher value for both properties. It seems unlikely that Debtor would pay off the City’s
liens in excess of $24,000 on Myrtlewood and Thompson as he proposes in his Chapter 13
plan and engage in this litigation to retain a lot presently worth $1,500 and an uninhabitable
house presently worth $15,000.
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20 The September 2004 reports state that there were 42 comparable properties ranging
from $5,000 to $75,000 whereas the September 2005 report indicates 69 comparable properties from
$10,500 to $130,000. 	Both suggest a doubling of values over the twelve month period.
While hardly a scientific means of evaluating price escalation of any given property, these numbers
lend support to my scepticism over Edelson’s annual growth numbers.
-12-
While I am not persuaded that Symanski’s values are representative of the market
for the properties, I view the Edelson opinion as being overly optimistic. 	Edelson was
influenced by the appreciation he recently observed in the surrounding area, in particular a
new development he identified in 2007 located two blocks away from Thompson. It appears
that the interest that both litigants have in owning these properties has more to do with
their potential for rehabilitation than their current state. Indeed many of the comparative
properties that Edelson included in his report show dilapidated houses recently sold for
$50,000 and more, reflecting a current confidence in the investor market for development
of the area which is corroborated by the evidence of nearby construction. 	I conclude, as
I believe both appraisers would agree, that Thompson is worth considerably more today
than it was when the bankruptcy case was filed. 	However, I am more persuaded by
Symanski’s gradual escalation of value over time with the greater increase occurring in the
past year as opposed to Edelson’s values which almost triple between the filing and
confirmation dates and reflect a significant but less drastic escalation this past year.
A comparison of the range of values in Edelson’s 2004 and 2005 reports does not reflect a
trebling of value.20 Without explanation of why the twelve month increase in 2005 was far
greater than the 22 month increase in 2007, I have a hard time accepting Edelson’s numbers
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21 I have previously found that LJR’s strategy was to pursue its lien rights to those of
the Total Properties for which no release of mortgage exists and seek to negotiate a buyout of
the property from the owner. 	Patterson I, 2007 WL 987306, at *1. 	While one such deal was
concluded, a September 2005 negotiation for Thompson was unsuccessful when LJR offered
$1,000, Exhibit D-4 at 3/20/07 hearing.
22 The Properties are in the same general vicinity. I take judicial notice of Debtor’s amended
Schedule A filed May 25, 2005 (Doc. No. 31). “[F]actual assertions in pleadings, which have not
been superceded by amended pleadings, are judicial admissions against the party that made them.
Larson v. Gross Bank, 204 B.R. 500, 502 (W.D. Tex. 1996) (statements in schedules). See also In re
(continued...)
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at face value. 	Absent some research into the economic conditions of the area as they
were apparent in 2005, I simply am not convinced that Edelson’s appraisal opinion was
not inflated to some extent by hindsight information. 	Indeed LJR’s abandoned offer in
September 2005 of a buyout from Debtor in the amount of $1,000 for Thompson21 represents
a de minimus investment if it truly viewed, and sought to generate an agreement to buy,
a property that was supposed to be worth $50,000 at the time.
Nor do I find these reservations to be put to rest by the comparative sales proffered
to support Edelson’s value opinions. 	While he utilized the well accepted comparative
approach to determining value of residential real estate, I find that modality less reliable
where the sales are on speculation. There are variables not addressed in the testimony or
reports, which focus only on the age, square footage, room configuration and distance from
the subject, that could make his selection of comparatives inapposite. See note 17 supra.
With respect to Myrtlewood, Edelson identified 69 comparable sales ranging from $10,500
to $130,000 in his September 2005 retrospective appraisal. One of his choices was a house
at 3030 Baltz, proximate to Debtor’s property at 3029 Baltz,22 which he reported to have sold
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(...continued)
Musgrove, 187 B.R. 808 (Bankr. N.D. Ga. 1995) (same); In re Leonard, 151 B.R. 639 (Bankr.
N.D.N.Y. 1992) (same). 	It values the Baltz property at $32,000. 	Likewise Debtor owns two
properties on 30 th Street which he values at $32,000 (1243) and $30,000 (1249).
23 The September 2004 appraisal report is also interesting in what it reveals as to historic
market activity nearby. Exhibit D-1. Two houses on Thompson Street (1433 and 1229) sold for
$24,500 and $31,000 respectively following sheriff’s sales earlier that year in which the properties
went for $5,900 and $1,000. 	A nearby house at 2414 Sharwood sold for $7,000. 	The two
Thompson properties appear occupied whereas the Sharwood is boarded up. One year later Edelson
states that a sale at 1232 Thompson for $53,000 is useful in determining the value of Myrtlewood.
Yet there is no explanation of what drives these disparate values and whether the unidentified factors
that generated the high prices on Thompson would be applicable to Myrtlewood.
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for $60,000, noting that it had been sold for $10,000 six months earlier. 23 The range in
pricing even in the sales he selected, $32,000 to the aforementioned $60,000, suggests
that there are relevant considerations affecting price that have not been identified.
Edelson chose 3029 Baltz also as a $62,500 comparable to Thompson as well as properties
which sold for $36,000 and $57,000. 	Again they were three of 69 properties that he
identified as comparable to the subject ranging from $10,500 to $130,000. His choice of
comparables has obviously driven the outcome of his appraisal, and as his report discloses,
the range of comparable values was broad. He did not enlighten me as to why he selected
the properties that he did nor do I know whether he even investigated the circumstances
surrounding the sales of those properties. 	In short, I cannot conclude that the three
“comparables” are reflective of the price that Debtor would realize if he sold Myrtlewood
and Thompson.
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Because of the subjective nature of the appraisal process, courts are given wide
latitude in determining value. “A court is not bound by values determined by appraisals but
rather may form its own opinion as to the value of the subject property after consideration
of the appraisers’ testimony and their appraisals.” In re Karakas, 2007 WL 1307906, at *6-7
(Bankr. N.D. N.Y. May 3, 2007 (quoting In re Richards, 1999 WL 14680, at *7 (Bankr. E.D.
Pa. Jan. 12, 1999)). In this case, I have considered the appraisal reports and the valuation
testimony presented by the two appraisers and Debtor and conclude that the proper values lie
between the numbers advocated by each.
In summary, I find Symanksi’s value of $2,000 for Myrtlewood so low as to have little
credibility. 	Even Debtor rendering his unprofessional opinion was willing to testify to a
higher number, i.e., $5,000-$6,000, and scheduled the property at $10,000 in his verified
Schedule A. 	By the same token, I find the Edelson value of $40,000 to be inflated.
Given his opinion that the land alone in an improving local market is worth $15,000 in 2007,
it is hard to understand how he can attribute $25,000 in value to that land plus a burned out
house in 2005. 	A review of the comparatives as examined in the context of the above
observations suggests that there is value of approximately $20,000- $22,500 in Myrtlewood.
My task with respect to fixing a precise value for Myrtlewood is rendered easier by the
fact that LJR has allocated a debt of $21,982 to that property. Since LJR’s secured claim
cannot exceed the amount of its debt, $21,982 establishes the ceiling for Myrtlewood; a value
of $50,000 as opined by Edelson, or indeed an amount greater than $21,982 will have no
bearing on LJR’s secured claim on that property. With respect to Myrtlewood, I therefore
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find that the value for purposes of this proceeding is $21,982. With respect to Thompson,
I likewise find Symanksi’s $10,500 value low based on the present development of that area.
While not fully realized in 2005, astute investor/developers presumably could anticipate
its potential and increased value would result. The comparables as examined in the context
of the above observations suggests a value in the mid range between the two appraisers,
i.e., $35,000. Edelson valued Thompson at $18,000 in 2004. My finding more accurately
reflects the doubling, not trebling as he has done, of values I observed in the comparative
properties from 2004 to 2005. As noted above, valuation is not an exact science. Where as
here, the expert testimony is less than fully developed and thus less than helpful, the Court
is left to a large degree on its own to fix a number that appears reasonable and equitable.
In the proverbial battle of the appraisers, victory is allusive.
CONCLUSION
Subtracting the City lien of $8,983.00 from the established value of $21,982 of
Myrtlewood leaves $12,999 in value to which the LJR lien attaches to the extent of its claim.
Subtracting the City lien of $15,075.70 from the established value of $35,000 for Thompson
leaves $19,525.00 in value to which the LJR lien attaches to the extent of its claim.
As Debtor’s Modified Plan has made no provision at all for these liens, the Modification
Motion shall be denied. Debtor shall have twenty (20) days to file a further modified plan
treating these claims and to file an objection to LJR’s proof of claim to the extent Debtor
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In re Tracey Patterson - Bankruptcy No. 04-32201DWS
Adversary No. 07-0023
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contends that it is owed less than the amount of the security I found attaches to these claims.
LJR’s objection to the present modification as it relates to Baltz shall be carried to the
hearing on the further modification.
An Order consistent with this Memorandum Opinion shall be entered.
DIANE WEISS SIGMUND
Chief U.S. Bankruptcy Judge
Dated: September 5, 2007
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UNITED S TATES B ANKRUPTCY COURT
FOR T HE E ASTERN DISTRICT O F PENNSYLVANIA
In re 	: 	Chapter 13
:
TRACEY PATTERSON, 	: 	Bankruptcy No. 04-32201DWS
:
Debtor. 	:
:
TRACEY PATTERSON, 	: 	Adversary No. 07-0023
:
Plaintiff, 	:
:
v. 	:
:
LJR INVESTMENTS, LLC 	:
OF BUCKS COUNTY, 	:
aka LJR Investments, LLC, 	:
:
Defendant. 	:
ORDER
AND NOW, this 5th day of September 2007, upon consideration of the Complaint
of the debtor Tracey Patterson (“Debtor”) pursuant to 11 U.S.C. § 506 to determine the
extent of the lien held by LJR Investments, LLC of Bucks County (“LJR”) on real property
owned by Debtor located at 1241 Myrtlewood Street, Philadelphia, PA (“Myrtlewood”) and
2914 Thompson Street, Philadelphia, PA (“Thompson”) (the “Adversary Proceeding”)
and (2) Debtor’s Motion to Modify Plan after Confirmation (the “Modification Motion”);
after notice and hearing;
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In re Tracey Patterson - Bankruptcy No. 04-32201DWS
Adversary No. 07-0023
1 If, as I suspect, evidence shall be required, the hearing may be set on a Tuesday at
10:30 a.m. (versus Thursday). Debtor’s counsel shall contact Ms. Godfrey for the listing.
-2-
And 	for 	the 	reasons 	stated 	in 	the 	foregoing 	Memorandum 	Opinion, 	it 	is
hereby ORDERED that:
1. LJR has a secured claim in the amount of $21,982 on Myrtlewood and a secured
claim in the amount of $35,000 on Thompson.
2. The Modification Motion is DENIED. Debtor shall file an amended modification
motion in support of a further modified plan which treats LJR’s secured claims consistent
with the ruling herein, both of which shall be filed on or before September 25, 2007. 1
The amended motion shall be served and noticed for hearing pursuant to Local Bankruptcy
Rule 9014-3.
3. 	If Debtor objects to the proof of claim filed by LJR, he shall file an objection
thereto on or before September 25, 2007 stating with specificity the nature of his objection,
and shall schedule such objection for a hearing contemporaneously with the amended
modification motion.
DIANE WEISS SIGMUND
Chief U.S. Bankruptcy Judge
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