Christina Sims and Christina Sims

This Memorandum Opinion constitutes my findings of fact and conclusions of law1
pursuant to Fed. Rule of Bankr. P. 7052 as made applicable in this contested matter by Fed. R.
Bankr. P. 9014.
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UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF PENNSYLVANIA
IN RE: 	CHRISTINA SIMS, 	: 	Chapter 7
:
Debtor(s) 	: 	Bky. No. 04-16783ELF
:
M E M O R A N D U M 	O P I N I O N
BY: 	ERIC L. FRANK, 	U.S. BANKRUPTCY JUDGE
I. INTRODUCTION
Before me is the objection by Christina M. Sims (“the Debtor”) to the proof of claim filed
by Citifinancial Mortgage Company, Inc. (“Citifinancial”). The proof of claim is based upon a
mortgage loan between Citifinancial and the Debtor. Resolution of this contested matter requires
the application of fundamental principles of contract interpretation to both a settlement
agreement between the parties in an adversary proceeding and the Debtor’s confirmed Chapter 13
Plan. 	For the reasons discussed below, I sustain the Debtor’s objection in part and reduce
Citifinancial’s allowed claim from $269,506.49 to $238,706.90.1
II. FACTS AND PROCEDURAL HISTORY
The facts that give rise to this claims objection are rooted in a mortgage foreclosure
judgment Citifinancial obtained against the Debtor in the Court of Common Pleas, Philadelphia
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In her objection, the Debtor contends that Citifinancial’s proofs of claim are duplicative2
and that Citifinancial makes no reference as to whether Proof of Claim No. 2 Amends Proof of
Claim No. 1. In its answer, Citifinancial admits this averment. Therefore, I will disallow Proof
of Claim No. 1, leaving Proof of Claim No. 2 as the only claim at issue.
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County on March 6, 2003 in the amount of $186,233.49. The property at issue was the residence
the Debtor jointly owned with her mother (“the Subject Property”).
This bankruptcy case is the Debtor’s third attempt to use the bankruptcy system.
Presumably, each case was filed in an attempt to prevent the foreclosure of the Subject Property.
The Debtor first filed a Chapter 13 bankruptcy case on June 2, 2003, docketed at Bky. No.
03-18454. This first case was dismissed on October 28, 2003. The Debtor’s second Chapter 13
bankruptcy case was filed on February 2, 2004, docketed as Bky. No. 04-11409. The second case
was dismissed on March 8, 2004, one month after filing, for failure to file the bankruptcy
schedules. The third filing (the present case) on May 13, 2004 did not prevent the sheriff’s sale of
the Subject Property, which took place as scheduled on May 4, 2004. At the May 4, 2004
sheriff’s sale, the Subject Property was sold to Citifinancial. See Exhibit D-5 (Civil Docket
Report, Citifinancial Mortgage Company, Inc. v. Evans et. al., No. 3107, January Term 2003
(C.P. Phila.) at Docket Entry dated May 4, 2004).
On July 26, 2004, the Debtor filed an adversary proceeding, Adv. No. 04-754, seeking to
avoid the sheriff’s sale as a preference under section 547 of the Bankruptcy Code. Shortly
thereafter, on August 27, 2004, Citifinancial filed Proof of Claim No. 1 setting forth a total claim
of $203,922.52 with an arrearage of $64,764.97. On September 2, 2004, Citifinancial filed a
Proof of Claim No. 2 setting forth the amounts identical to those listed in Proof of Claim No. 1.2
The adversary proceeding was tried on April 20, 2005. Prior to submission of post-trial
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memoranda to the court, the parties settled their dispute. The settlement was memorialized in a
Release and Settlement Agreement (“the Settlement Agreement”) approved by the court on
November 4, 2005. In essence, the Settlement Agreement provided for a second, private sale of
the property as follows:
Citifinancial agrees to market the premises for an initial listing
amount of $400,000.00, with the option to reduce the listing
amount if no activity occurs within a reasonable period of time.
Christina Sims agrees to accept any funds in excess of the full
amount needed to repay the debt owed to Citifinancial at the date
of closing.
See Exhibit D-1 (Settlement Agreement).
On November 22, 2005, within weeks of the court’s approval of the Settlement
Agreement, the court confirmed the Debtor’s Second Amended Plan (“the Confirmed Plan”).
The Confirmed Plan references the Settlement Agreement in paragraph 3:
The Debtor has filed an adversary proceeding seeking to avoid as a
preference the sheriff’s sale of the Home to the mortgagee,
Citifinancial Mortgage Co. (“Citi”). The Owners have proposed
a settlement of the proceeding which they believe would be
consistent with its outcome, i.e., that the Home be sold, that Citi’s
former mortgage balance will be paid off with the proceeds, and
that the remainder of the proceeds will be distributed to the
Debtor’s creditors and the trustees’s commissions, with the balance
to be refunded to the Owners.
See Debtor’s Confirmed Plan ¶3 (emphasis added).
The Confirmed Plan also specifically provides for Citifinancial’s proof of claim at
paragraph 4.B. as follows:
The secured claim of [Citifinancial], which was filed in the amount
of $203,992.52. This claim, as allowed, will be paid in full with
the sale of the proceeds.
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Id.
The private sale of the residence ultimately occurred and closed for $380,000 on or about
June 22, 2006 – nearly two years after this bankruptcy case was filed. On May 5, 2006, prior to
the close of the sale, the Debtor filed this objection to Citifinancial’ proof of claim, because
Citifinancial pressed for a total payoff demand of $269,506.69 (“the Payoff Demand”), an
amount the Debtor considered excessive. See Payoff Demand, Exhibit Citi-2. Citifinancial
received full payment of the Payoff Demand at the closing on June 22, 2006.
Through this claims objection, the Debtor seeks to recover the difference between the
total Payoff Demand Citifinancial received and what she believes Citifinancial was lawfully due.
On August 23, 2006, the parties submitted a Stipulation of Exhibits and Facts. On August 28,
2006, a hearing was held to complete the record. Post-trial briefing by the parties was completed
on October 23, 2006.
III. THE CONTENTIONS OF THE PARTIES
The Debtor objects to Citifinancial’s proof of claim, asserting that payment of the amount
of the Payoff Demand is inconsistent with the terms of the Confirmed Plan. In particular, based
upon paragraph 4.B of the Confirmed Plan, the Debtor argues that Citifinancial should be paid
only the amount set forth in its proof of claim – $203,922.52.
While I understand the Debtor prefers that I allow the claim in the amount listed on the
face of the proof of claim, she also concedes in her brief that Citifinancial might be entitled to
more. The Debtor offers two alternative arguments as to how the court should value the claim –
both of which provide the Debtor a refund from the payoff Citifinancial received at the closing,
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Presumably, the Debtor chooses 6% as the appropriate interest rate as it is the legal rate3
of interest on judgments in Pennsylvania. Compare 42 Pa. C.S. §8101 with 41 P.S. §202. The
Debtor also assumes that the mortgage does not provide for accrual of post-judgment interest at a
rate higher than the legal rate or that such a provision is not enforceable. But see In re Stendardo,
991 F.2d 1089, 1095 (3d Cir. 1993) (under Pennyslvania law, “[p]arties to a mortgage may rely
upon a particular provision post-judgment if the mortgage clearly evidences their intent to
preserve the effectiveness of that provision post-judgment”); In re Crane Automotive, Inc., 98
B.R. 233, 236 (Bankr. W.D. Pa. 1989) (suggesting that express contract provision providing for
post-judgment interest at a rate above the legal rate may be enforceable); Tierney v. Seidman,
1989 WL 817122 (C.P. Phila. March 13, 1989) (same).
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but allow Citifinancial more than the amount requested in its proof of claim.
First, the Debtor suggests that the “normal” method of fixing a claim should be applied
because the underlying mortgage foreclosure judgment remains valid. The Debtor proposes that
Citifinancial should be entitled to the judgment of $186,233.49 plus interest at 6% through the
date of settlement on June 22, 2006. 	This would yield a total claim of $223,061.37 and entitle3
the Debtor to a refund of $46,445.12. Under this theory, I would essentially eviscerate the
sheriff’s sale, deem the judgment valid and treat the mortgage as having merged into the
judgment under the “doctrine of merger.” See In re Stendardo, 991 F.2d 1089, 1095 (3d Cir.
1993); Hartman v. Otborn, 54 Pa. 120, 1234 (1867).
Alternatively, the Debtor proposes I apply paragraph 6 of the Mortgage to analyze
whether Citifinancial has met its burden of proof to substantiate the Payoff Demand. The amount
Citifinancial received at settlement is broken into the following seven (7) components (“the
Payoff Components”):
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In connection with the potential allowance for attorney’s fees, the Debtor cites to my4
decision In re Gordon-Brown, 340 B.R. 751 (Bankr. E.D. Pa. 2006).
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Principal Balance 	$ 120,621.45
Interest 	$ 	85,447.13
Escrow/Impound Advance 	$ 	51.94
Other Fees 	$ 	3,450.21
Expenses Paid 	$ 	35,460.43
Corporate Advances 	$ 	21,529.33
Foreclosure Costs 	$ 	3,000.00
Total Payoff 	$269,506.69
The Debtor asserts that Citifinancial has not met its burden to support the Payoff Demand
beyond the Payoff Components of (1) the Principal Balance and (2) Interest. These two Payoff
Components total $206,068.58. However, the Debtor suggests that the language of the Mortgage
may provide that Citifinancial is entitled to an additional amount of approximately $19,000:
$15,000 for advances made to pay taxes, $3,000 for costs and $700 for reasonable attorneys
fees. 	This alternative methodology proposed by the Debtor yields an allowed claim for4
Citifinancial in roughly the same amount as the Debtor’s first proposed method for fixing the
claim.
Citifinancial urges me to reject the application of the “first” method of fixing a claim
offered by the Debtor, contending that there no longer is a judgment in light of the sheriff’s sale.
Citifinancial also suggests that it was the intention of the parties to the Settlement Agreement,
which the Confirmed Plan expressly adopts, that “the debt owed to Citifinancial at the date of
closing” includes costs and fees it paid through the date of the private sale. Specifically,
Citifinancial requests that its allowed claim include amounts for payments it made toward taxes,
insurance or water and sewer payments during the pendency of the case between August 23,
2004, when Citifinancial filed its proof of claim, and June 22, 2006, the date of the private sale
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of the Subject Property. Citifinancial therefore contends that all of the Payoff Components are
proper and allowable.
IV. DISCUSSION
A.
A properly filed proof of claim is deemed allowed unless a party in interest objects. 11
U.S.C. § 501. In a contested matter involving an objection to a proof of claim, the burden of
proof rests on different parties at different times. Even after an objection is filed, a properly filed
proof of claim is prima facie evidence of the validity and amount of the claim. Fed. R. Bankr. P.
3001(f). If an objection is filed to a proof of claim, the burden of proof may shift. See United
States v. Baskin & Sears, P.C., 207 B.R. 84, 86 (E.D. Pa. 1997). The Court of Appeals has
concisely summarized the shifting burdens as follows:
[A] claim that alleges facts sufficient to support a legal liability to the claimant
satisfies the claimant's initial obligation to go forward. The burden of going
forward then shifts to the objector to produce evidence sufficient to negate the
prima facie validity of the filed claim. It is often said that the objector must
produce evidence equal in force to the prima facie case. In practice, the objector
must produce evidence which, if believed, would refute at least one of the
allegations that is essential to the claim's legal sufficiency. If the objector
produces sufficient evidence to negate one or more of the sworn facts in the proof
of claim, the burden reverts to the claimant to prove the validity of the claim by a
preponderance of the evidence.
In re Allegheny International, Inc., 954 F.2d 167, 173-74 (3d Cir. 1992) (citations omitted). 	See
also In re Gimelson, 2004 WL 2713059, at *13 (E.D. Pa. 2004); In re Galloway, 220 B.R. 236,
244 (Bankr. E.D. Pa. 1998).
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B.
In determining how to value Citifinancial’s proof of claim, I must consider its treatment
in the Confirmed Plan. See 11 U.S.C. § 1327(a); In re Szostek, 886 F.2d 1405 (3d Cir. 1989) (all
parties are bound by the terms of a confirmed plan until it either is completed or is modified by
the court); In re Bryant, 323 B.R. 635 (Bankr. E.D. Pa. 2005) (creditor who filed claim denoting
both full amount of claim and a lower arrearage amount was bound by terms of confirmed
chapter 13 plan that treated the lower sum as the amount necessary for full payment of the entire
claim).
The Confirmed Plan refers to Citifinancial’s claim in two different paragraphs. Paragraph
3 references the adversary proceeding the Debtor filed against Citifinancial and summarizes the
Settlement Agreement; specifically stating that the proceeds from the sale of the home will pay
off Citifinancial’s “former mortgage balance.” Then, paragraph 4 employs language more
commonly found in chapter 13 plans by referring to the payment of a claim “as allowed.” While
both paragraphs contemplate that Citifinancial’s claim will be paid with the proceeds from the
private sale of the Subject Property, the two paragraphs refer to different documents as reference
points for computing the proper amount to be distributed to Citifinancial.
I find that paragraphs 3 and 4, when read together, render the Confirmed Plan ambiguous
as to the treatment of Citifinancial’s claim. 	See USX Corp. v. Penn Cent. Corp., 130 F.3d 562,
566 (3d Cir.1997) (contract is ambiguous if the terms of the contract are susceptible of different
meanings). To resolve this ambiguity in the Confirmed Plan, I must apply general principles of
contract interpretation. In re Mershon, 2005 WL 4030035, *2 (Bankr. S.D. Ohio 2005) (citing
In re Harvey, 213 F.3d 318, 321 (7th Cir. 2000)) (“[a] confirmed chapter 13 plan is essentially a
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binding contract between a debtor and each creditor”).
In this case, my function is to “interpret the contract’s terms, in light of the apparent
purpose of the contract as a whole, the rules of contract construction, and extrinsic evidence of
intent and meaning.” 	Richard A. Lord, 11 Williston on Contracts §§ 30:4, 7 (West 2006)
(“Williston”). I am mindful that the Confirmed Plan makes an express reference to the
settlement of the adversary. Though imprecise, the language seemingly incorporates the
agreement the parties reached to resolve the adversary proceeding – what I have referred to as the
Settlement Agreement in this Memorandum. As explained by a leading treatise:
Where the words employed to express some particular term of a
contract are ambiguous and cannot be satisfactorily explained by
reference to other parts of the contract and the parties have made
other contracts in respect of the same subject matter, apparently in
pursuance of the same general purpose, it is always permissible to
examine all of them together in aid of the interpretation of the
particular term; and if it is found that the ambiguous words have a
plain meaning by a comparison of the several contracts and an
examination of their provisions, that meaning should be attributed
to them. When an ambiguous contract by necessary implication
refers to another document, the court may look to such document
as additional evidence to ascertain the parties' intentions.
Williston § 30:26. Accordingly, I find it necessary and appropriate to analyze the Settlement
Agreement in order to give effect to the operative language of the Confirmed Plan.
Interestingly, the Settlement Agreement also uses somewhat vague terminology. It
provides that the proceeds from the sale of the residence would repay “the debt owed to
Citifinancial at the date of closing.” However, nowhere does the Settlement Agreement clarify
what instrument, if any, controls the calculation of the “debt owed.” Therefore, I must consider
the facts and circumstances surrounding the Settlement Agreement to ascertain the parties’
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An agreement of sale needed to be signed within 150 days. Otherwise, the parties were5
entitled to exercise their “rights, claims or defenses” they had asserted at that time “in reference
to the Home or the proceeding.” See Exhibit D-1 at ¶ 1.b. Accordingly, the adversary proceeding
was held in suspense and the parties were precluded from engaging in any further litigation
unless an agreement of sale was no consummated within said time frame. Id. at ¶ ¶ 1.d. and 1.e.
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intentions. See Martin v. Monumental Life Ins. Co., 240 F.3d 223, 232 (3d Cir. 2001) ; see also
Williston § 30:2. Doing so enables me to ascertain the proper methodology for calculating
Citifinancial’s allowed claim.
The issue in the adversary proceeding was the validity of the sheriff’s sale. The parties
resolved the dispute by agreeing to a private sale of the subject property. In exchange for
Citifinancial’s agreement permitting the Debtor to realize some of the equity in the property
through a private sale, the Debtor agreed that Citifinancial should receive what it was lawfully
due under its original agreement with the Debtor – as set forth in the Mortgage and the Note.
The mechanism employed to effect a settlement – the private sale of the subject property
– made it unnecessary for the parties to address either the 2003 foreclosure judgment or the 2004
sheriff’s sale and consequently, the Settlement Agreement is silent as to both. 	The primary
contingency addressed in the Settlement Agreement was the possibility that the private sale
might not occur within a certain time frame.5
After considering the circumstances surrounding the parties’ entry into the Settlement
Agreement and the language of the document, I find that while the parties did not intend to
invalidate either the foreclosure judgment or the sheriff’s sale, they did intend for the Mortgage
and the Note to be the controlling instruments in determining the “debt owed to Citifinancial at
the date of closing.” 	Put another way, the parties intended that the Settlement Agreement result
in the virtual restoration of the Mortgage for purposes of calculating the amount due Citifinancial
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at the closing of the projected private sale while simultaneously leaving the judgment and
sheriff’s sale unimpaired but subject to further litigation in the adversary proceeding.
C.
Having resolved the threshold ambiguity under the Settlement Agreement, I now return to
the Confirmed Plan, the operative instrument in this claims objection. Appreciating the tension
between the two paragraphs referencing Citifinancial’s claim, I resolve that tension in favor of
paragraph 3 as I believe the overriding goal of the parties was to effectuate the settlement of the
adversary proceeding.
Paragraph 3 itself is not entirely free of ambiguity. I refer, in particular, to the meaning of
the term “former mortgage balance.” The Debtor would have me construe the phrase in the past
tense. In other words, the Debtor would like me to read the word “former” to modify “mortgage
balance” as though the Mortgage no longer exists by virtue of the 2003 foreclosure judgment.
Thus, the Debtor would have me apply the judgment to fix the claim, if I chose not to use the
amount on the face of the proof of claim.
The Debtor’s proffered construction clearly runs afoul to the parties intentions under
Settlement Agreement. As explained, the Settlement Agreement revived the Mortgage – not
legally, but as a means for calculating the amount of money to be distributed to Citifinancial
under the Confirmed Plan. Any doubt concerning the meaning of paragraph 3 must be construed
against the Debtor, the drafter of the Confirmed Plan. See Mershon, 2005 WL 4030035 at 2.
Therefore, as contemplated by the Confirmed Plan, the proceeds from the sale of the residence
were to be applied to pay off what Citifinancial is lawfully due under the Mortgage.
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The court’s copy of the Note was a bit fuzzy. This one word was indiscernible but I read6
the word “for” into the provision based on its context.
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D.
I will now turn to the operative remedial language in the Mortgage.
Paragraph 6 of the Mortgage provides:
In the event the Mortgagor defaults in the making of any payments
due and payable under said Note or in the keeping and performance
by Mortgagors of any of the conditions of covenants of this
Mortgage or said Note, Mortgagee shall be entitled to the rents,
issues and profits from the Mortgaged Premises and Mortgagee
may forthwith bring an Action of Mortgage Foreclosure hereon or
institute other foreclosure proceedings upon this Mortgage and
may proceed to judgment and execution to recover the balance
due on said Note and any other sums that may be due thereunder,
including reasonable attorney’s fees, costs of suit, and costs of
sale, all as allowed by law, together with interest after judgment
until the full amount due Mortgagee is paid.
Exhibit D-3 (Mortgage) (emphasis added).
The Note incorporates the Mortgage’s remedies for a default by stating:
If [Mortgagor] defaults . . . [Mortgagee] ha[s] the rights and
remedies provided for in the Mortgage that secures this loan,
including the right to require [Mortgagor] to pay any deficiency.
Exhibit D-4 (Note).
The only additional remedial provision in the Note provides for attorney’s fees, but it is
seemingly redundant:
[Mortgagor] agree[s] to pay reasonable attorney’s fees if this Note
is referred for collection to an attorney who is not [Mortgagee’s]6
salaried employee.
Id.
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For instance, recently, in In re Pitts, 2006 WL 3231287, 17 & n.22 (Bankr. E.D. Pa.7
November 8, 2006), I quoted the provision of a mortgage which provided the lender with the
authority to make advances and add the advanced sums to the mortgage debt:
If Borrower fails to perform the covenants 1and agreements
contained in this Security Instrument, or there is a legal proceeding
that may significantly affect Lender’s rights in the Property (such
as a proceeding in bankruptcy, probate, for condemnation or
forfeiture or to enforce laws or regulations), then Lender may do
and pay for whatever is necessary to protect the value of the
Property and Lender’s rights in the property. Lender’s actions
may include paying any sums secured by a lien which has priority
over this Security Instrument, appearing in court [and] paying
reasonable attorneys’ fees. . . . Any amounts disbursed by the
Lender under this paragraph 7 shall become additional debt of
Borrower secured by this Security Agreement.
(emphasis added).
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The remedies provided to Citifinancial by the Mortgage are noticeably limited in scope.
Many residential mortgages authorize mortgage lenders to make advances for delinquent taxes,
water or other charges and then add those advances to the debt secured by the mortgage.7
However, the mortgage between Citifinancial and the Debtor here contains no such provision.
Based on the plain language of the Mortgage, in calculating the amount due, I find that
Citifinancial’s entitlement is limited to four (4) components: (1) balance due on the note (i.e.,
unpaid principal and accrued interest); (2) reasonable attorneys fees; (3) costs of suit; and (4)
costs of sale.
What complicates analysis of the parties’ dispute is that the Payoff Demand of
$269,506.69 is comprised of seven (7) Payoff Components that are not easily reconciled with the
four (4) components set forth in the Mortgage. The Payoff Demand consisted of: (1) Principal
Balance; (2) Interest; (3) Escrow/Impound Advance; (4) Other Fees; (5) Expenses Paid; (6)
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These two Payoff Components total $206,068.58 (principal balance of $120,621.45 and8
accrued interest of $85,447.13).
In my review of the entries listed on the Fee Breakdown, I observed some overlap. For9
instance, there are entries for attorneys fees and costs, inspections and title searches under at least
two, if not three Payoff Components. I am not exactly clear why such overlap exists and
Citifinancial did not clarify this for me at the hearing. However, understanding the distinctions
among these separate Payoff Components is not germane for me to resolve this matter. I was
able to parse through the Fee Breakdown to evaluate the individual entries.
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Corporate Advances; and (7) Foreclosure Costs and Counsel Fees. Consequently, I must
compare the Payoff Components with the terms of the Mortgage in order to determine whether
Citifinancial has met its burden of proof and is entitled to allowance in its proof of claim of the
full amount of the Payoff Amount.
E.
To begin, the Debtor does not contest the first two Payoff Components, the Principal
Balance and Interest. 	Therefore, those amounts will be allowed.8
As to the remaining five Payoff Components, Citifinancial submitted into evidence
attorney invoices and a five (5) page document entitled “Fee Breakdown,” which provides a line-
by-line list of costs and fees associated under three Payoff Components – “Other Fees,”
“Expenses Paid,” and “Corporate Advances.” See Exhibit Citi-3 (Fee Breakdown).9
Following the general format employed in Exhibit Citi-3, I have prepared several tables
and summaries to explain the items I am allowing or disallowing and to associate those items
with the appropriate Mortgage provision authorizing Citifinancial to hold the Debtor liable for
charges other than principal and interest on the Note. After each table, I provide a brief
explanation of the reasons why the items have been allowed or disallowed.
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Citifinancial’s brief broke down the fees that comprise the total $27,614.32:10
Advertising Costs 	$ 1,596.64
Writ Rec. Pro. Service Fee 	$ 	100.00
Conduct & Proc. Sale Fee 	$ 	200.00
Commission on Sale 	$ 2,300.00
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Table I: Expense Advances
Incurred 	Description 	Cost 	Allowed/Disallowed Mor 	tgage Provision
1/26/2005 	Eviction costs 	$ 	241.50 	Disallowed 	none
1/26/2005 	Eviction attorney 	$ 	400.00 	Disallowed 	none
1/26/5005 	Sheriff's settlement 	$ 1,316.00 	Disallowed 	none
5/5/2004 	Title Search 	$ 	125.00 	Allowed 	costs of sale
5/5/2004 	FCL Attorney Fee 	$ 	300.00 	Allowed 	reasonable atty fees
5/5/2004 	FCL Attorney Costs 	$ 27,614.32 	Allowed 	costs of sale
5/5/2004 	Process Server 	$ 	607.50 	Allowed 	costs of suit
5/5/2004 	Recording Fee 	$ 	74.50 	Allowed 	costs of sale
5/5/2004 	Filing Fee 	$ 	30.00 	Allowed 	costs of suit
6/11/2003 	Title Search 	$ 	425.00 	Allowed 	costs of sale
6/11/2003 	FCL Attorney Fee 	$ 1,625.00 	Allowed, but reduced 	reasonable atty fees
6/11/2003 	FCL Attorney Costs 	$ 2,125.00 	Allowed 	costs of sale
6/11/2003 	Process Server 	$ 	392.00 	Allowed 	costs of suit
6/11/2003 	Filing Fee 	$ 	105.50 	Allowed 	costs of suit
[Blank] 	[Unexplained] 	$ 	25.61 	Disallowed 	none
Total Expenses 	$ 35,406.43
As set forth in Table I, I find that of the Expense Advances, $32,498.82 will be allowed
and $2,908.11 will be disallowed. Of the allowed expenses, $1,134.50 are attributed to costs of
suit, $30,363.82 are attributed to costs of sale, and $1,000 are attributed to reasonable attorneys
fees.
A further explanation is necessary with respect to the $27,614.32 listed in Table I as
“FCL Attorney Costs.” This charge was given detailed treatment at the hearing and in
Citifinancial’s brief. 	Based on the evidence, I conclude that the charges are not attorney’s fees,10
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Distribution Policy 	$ 	702.50
City Transfer Tax Stamps 	$ 4,006.17
Acknowledgment of Deed 	$ 	4.00
Water and Sewer Rents 	$ 7,857.63
Current City and School Taxes 	$ 3,255.35
Delinquent City and School Taxes 	$ 3,537.45
PGW 	$ 3,844.58
Deed Prep 	$ 	85.00
Total 	$27,489.32
An invoice dated June 4, 2003 indicates that the $1,625 in “counsel fees” is broken11
down as follows:
Standard Foreclosure Fee 	$1,250
Act 1560 (Act 91) Letters 	$ 	125
Title Insurance Claim 	$ 	250
Total Counsel Fees 	$1,625
In Gordon-Brown, I reduced the amount of a fixed fee for a standard foreclosure12
because the record was insufficient. I used 3.5 hours as a reasonable amount of time and $200
per hour as a reasonable rate in my application of the lodestar method to arrive at $700.
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but rather out-of-pocket foreclosure expenses advanced by Citifinancial’s attorney, paid to third
parties (primarily the sheriff) and reimbursed to counsel by Citifinancial. All such costs were
necessary to effectuate a sale and settle with the sheriff on May 4, 2005. Therefore, I am
allowing the costs, but re-categorizing them as “costs of sale,” rather than as attorney costs.
As for the attorneys fees, I find that the $1,625.00 incurred in 2003 is attributable to the
foreclosure action, which was initially stayed, after the entry of a default judgment against the
Debtor, by the filing of the Debtor’s first bankruptcy case. 	However, I will reduce those fees to11
$700.00 pursuant to my decision in Gordon-Brown. 	I will allow an additional $300.00 incurred12
in 2004 for the work performed between the second and third bankruptcy cases to effectuate the
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On the Fee Breakdown Exhibit, there were several more individual entries for items13
such as property inspections, BPOs and Corp Advances in this “Corporate Advances” Payoff
Element. For purposes of summary, I truncated those individual entries and provided the total
number of times in parentheses. The cost reflects the amount for the total number of that item.
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2004 sheriff’s sale.
I am disallowing the January 26, 2005 costs totaling $ 1,975 that pertained to an eviction
action, presumably against the Debtor. There is nothing in the language of the Mortgage or Note
that entitles Citifinancial to these costs, which were incurred after the sheriff’s sale. I also am
disallowing the charge of $25.61 because it had no date entry and was unexplained by
Citifinancial.
Table II: Corporate Advances13
Incurred 	Description 	Cost 	Allowed/Disallowed Mor 	tgage Provision
5/23/2002 	Fcl Fees 	$ 	296.00 	Disallowed 	none
5/23/2002 	Fcl Costs 	$ 	100.00 	Disallowed 	none
3/18/2002 	City of Philadelphia 	$ 	18,775.78 	none
6/23/2003-
11/29/2005
Source One Cor (BPO) 	$ 	1,430.00 	Disallowed 	none
3/11/2003 	Land American
Default Ser
(Title Bringdown)
$ 	135.00 	Allowed 	cost of suit
9/16/2002 	Title Report 	$ 	250.00 	Disallowed 	none
5/24/2002 	Corp Adv (3) 	$ 	396.00 	Disallowed 	none
9/20/2005 	unexplained 	$ 	7.75 	Disallowed 	none
4/0/2004-
12/29/2005
Inspections (17) 	$ 	139.00 	Disallowed 	none
Total Corporate
Expenses
$ 21,529.53
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See infra. n. 10. Of the $27,614.36 that was deemed allowed as a cost of sale,14
$18,493.01 was attributed to similar costs: (1) water and sewer rents: (2) current city and school
taxes; (3) delinquent city and school taxers; and (4) PGW.
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I find that of the Corporate Advances, only $135.00 will be allowed for the 2003 “Title
Bringdown” fee because it is attributable to the costs of sale. See In re McMillan, 182 B.R. 11,
15 (Bankr. E.D. Pa. 1995). I am disallowing the remaining $21,394.53.
I will first address my disallowance of the substantial payment of $18,775.78 allegedly
made to the City of Philadelphia. 	If for no other reason than the record did not explain or
corroborate the reasons for the costs, I am disallowing it. Citifinancial states only that payment
was for taxes, water and sewer payments. The Debtor rebutted this evidence by testifying that
although there was a tax delinquency, she paid her taxes through 2001 and thereafter, there was
only approximately $15,000 in tax liability. Citifinancial did not reconcile this 2002 figure with
the $18,493.01 for delinquent and current tax liability, water and sewage costs paid to settle with
the sheriff in May 2004. 	In other words, the evidence presented suggests a substantial14
possibility that the amount claimed duplicated the City charges paid to obtain the sheriff’s deed
in foreclosure.
Even if the Debtor’s testimony was inaccurate and Citifinancial advanced $18,775.78 for
unpaid real estate taxes in and prior to 2002 and then advanced additional substantial sums in
closing with the sheriff for real estate taxes accruing after 2002, I still find that this Corporate
Advance is not allowable. This Corporate Advance was not made in connection with the sale of
the property. Therefore, it cannot be characterized under the Mortgage as a cost of sale and there
is no provision in the Mortgage that permits Citifinancial to recover Corporate Advances. As
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explained above, the Mortgage does not authorize Citifinancial to advance money to pay taxes,
water or other charges because the Debtor has failed to pay such charges or because Citifinancial
deems its lien position to be insecure. While Citifinancial’s decision to make the alleged
Corporate Advances is understandable, the Mortgage does not entitle Citifinancial to add those
payments to the outstanding mortgage debt.
I am also disallowing the 2002 “Fcl Fees” and “Fcl Costs” totaling $396.00, the “Corp
Adv” costs totaling $396.00, and the 2002 Title Report for $250.00. These entries are from 2002
and have not been attributed to either the 2003 foreclosure action or the 2004 sheriff’s sale.
Citifinancial has not provided any explanation as to the nature of the costs or why they were
incurred. Nor has Citifinancial provided any invoices to substantiate these fees or costs.
Finally, I am disallowing the cost for the seventeen (17) inspections that occurred
between April 2004 and December 2005 and the eight appraisals/BPOs that occurred between
June 2003 and November 2005. 	See In re Giordano, 234 B.R. 645, 651 (Bankr. E.D. Pa. 1999)
(inspection fee disallowed); In re Galloway, 220 B.R. 236, 243-44 (Bankr. E.D. Pa. 1998)
(same); In re Rorie, 98 B.R. 215, 221 (Bankr. E.D. Pa. 1998) (appraisal fee not covered by
mortgage cost shifting provision).
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Table III: Other Fees
Incurred 	Description 	Cost 	Allowed/Disallowed Mor 	tgage Provision
3/22/2002 	NSF Fee 	$ 	20.00 	Disallowed 	none
1/29/2003 	Fax Payoff Stmt 	$ 	5.00 	Disallowed 	none
12/16/2002 	Fcl Attorney Bills 	$ 	3,309.96 	Disallowed 	none
2/19/2002
and
3/28/2002
Speed Pay Fee (2) 	$ 	30.00 	Disallowed 	none
6/18/2002-
6/13/2002
Inspections (11) 	$ 	85.25 	Disallowed 	none
Total Other Fees 	$ 	3,450.21
Next, I am disallowing the entire $3,450.21 of “Other Fees.” The items listed as “Other
Fees” in Table III appear indistinguishable from certain “Corporate Advances” in Table II (with
the exception of the line item “Fcl Attorney Bills”). 	It is not to me clear why Citifinancial
separated out these “Other Fees.” However, because I find them indistinguishable, I am
disallowing them for the same reasons stated for my disallowance of those Corporate Advances.
As for the “Fcl Attorney Bills,” these charges were incurred in 2002, prior to the initiation of the
2003 foreclosure litigation that resulted in the entry of the default judgment and, eventually, the
sheriff’s sale. I have already allowed some attorney’s fees for the 2003 foreclosure litigation.
See Table I & accompanying discussion. Citifinancial has offered no evidence explaining the
relationship between the “2002 Fcl Attorney Bills” and the later foreclosure. Therefore, I will
disallow the charges.
Finally, I address the remaining two Payoff Components that were not detailed in the Fee
Breakdown, but were included in the Payoff Demand: Escrow/Impound Advance ($51.94) and
Foreclosure Costs and Counsel Fees ($3,000). I am disallowing both of them. Once again, I
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I anticipate therefore, that Citifinancial will refund to the Debtor $30,804.59, plus15
interest running from the date of the private sale closing.
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have already determined that Citifinancial is entitled to reasonable attorneys’ fees in the amount
of $1,000 as the foreclosure attorney’s fees for work in 2003 and 2004 in connection with the
default judgment obtained in state court and the sheriff’s sale of the property. I am troubled by
the fact that Citifinancial requested a total of $35,370.28 in attorney fees and costs for 2002,
2003 and 2004 in three other Payoff Components, yet there is nothing in the record to support the
additional request for $3,000 under “Foreclosure Costs & Counsel Fees.” Citifinancial has the
burden of establishing the reasonableness of these fees under the terms of the Mortgage. Absent
any supporting evidence, I must disallow the requested fees. For similar reasons, I am
disallowing the request under “Escrow/Impound Advance.” Citifinancial has neither explained
the nature of the “Escrow/Impound Advance,” why it was incurred or the provision of the
Mortgage entitling Citifinancial to add this expenditure to the mortgage debt.
F.
In summary, Citifinancial filed a proof of claim worth $203,922.52. The Debtor objected
on the basis that at the closing of the private sale of the Debtor’s residence in June 2006,
Citifinancial received more than it requested on the face of its proof of claim (i.e., it received its
Payoff Demand of $269,506.49). Pursuant to the terms of the Mortgage, I find that Citifinancial
is entitled to an allowed claim of only $238,701.90. This constitutes a reduction of $30,804.59
from the amount Citifinancial received at the closing of the private sale.15
The allowed claim is comprised of the following:
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Balance Due on the Note 	$206,068.58
Costs of Suit 	$ 	1,139.50
Costs of Sale 	$ 30,493.82
Reasonable Attorneys Fees 	$ 	1,000.00
Total Proof of Claim 	$238,701.90
An Order consistent with this Memorandum Opinion will be entered.
Date: 	December 28, 2006
ERIC L. FRANK
U.S. BANKRUPTCY JUDGE
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UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF PENNSYLVANIA
IN RE: 	CHRISTINA SIMS, 	: 	Chapter 7
:
Debtor(s) 	: 	Bky. No. 04-16783ELF
:
O R D ER
AND NOW, upon consideration of the Debtor’s Objection to the Proof of Claim filed by
Citifinancial Mortgage Company, Inc. (“Citifinancial”), the responses thereto, and after a
hearing, and for the reasons set forth in the accompanying Memorandum Opinion, it is hereby
ORDERED that:
1. The Objection is OVERRULED IN PART AND SUSTAINED IN PART.
2. Proof of Claim No. 1 filed by Citifinancial is DISALLOWED.
3. Proof of Claim No. 2 filed by Citifinancial’s is ALLOWED in the amount of $238,701.90.
Date: 	December 28, 2006
ERIC L. FRANK
U.S. BANKRUPTCY JUDGE
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