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In re Miller

United States District Court, D. Colorado

September 23, 2014

IN RE: COY LEE MILLER, Chapter 13, Bankrutpcy Case No. 09-12146 ABC

ORDER AFFIRMING ORDER OF THE UNITED STATES BANKRUPTCY COURT

ROBERT E. BLACKBURN, District Judge.

The debtor filed a timely appeal of the order of the United States Bankruptcy Court for the District of Colorado dismissing his case under Chapter 13 of the United States Bankruptcy Code. The debtor filed a brief [#8][1] in support of his position. Neither the Chapter 13 Trustee nor any creditor objected to the relief sought by the debtor in the bankruptcy court, and neither the Chapter 13 Trustee nor any creditor filed a brief in opposition to the brief filed by the debtor in this appeal. I affirm the order of the bankruptcy court.

I. JURISDICTION

Under 28 U.S.C. § 1334, United States District Courts have original jurisdiction in all civil proceedings arising in cases under Title 11, United states Code. I have jurisdiction to adjudicate this bankruptcy appeal under 28 U.S.C. § 158(a)(1).

II. STANDARD OF REVIEW

I am bound by the bankruptcy court's findings of fact, unless they are clearly erroneous. FED. R. BANKR. P. 8013; In re Branding Iron Motel, Inc., 798 F.2d 396, 399 (10th Cir.1986). A finding of fact is clearly erroneous only if the appellate court has the definite and firm conviction that a mistake has been committed. United States v. United States Gypsum Co., 333 U.S. 364 (1948). It is the responsibility of an appellate court to accept the ultimate factual determination of the fact finder, i.e., the bankruptcy court, unless that determination either (1) is completely devoid of minimum evidentiary support displaying some hue of credibility, or (2) bears no rational relationship to the supportive evidentiary data. Jardine's Professional Collision Repair, Inc. v. Gamble, 232 B.R. 799, *800 (D. Utah, 1999) (citing Gillman v. Scientific Research Prods. (In re Mama D'Angelo, Inc.), 55 F.3d 552, 555 (10th Cir. 1995)(internal citations omitted)); In re Dinviney, 225 B.R. 762, *769 (10th Cir. BAP (Okla.), 1998) (internal citations omitted). I review de novo conclusions of law reached by the bankruptcy court. In re Mullet, 817 F.2d 677, 678 (10th Cir.1987).

III. BACKGROUND

The debtor, Coy Lee Miller, filed a Chapter 13 bankruptcy proceeding on February 17, 2009. An order confirming the Chapter 13 plan of the debtor was issued by the bankruptcy court on January 28, 2011. Prior to confirmation, Mr. Miller filed a Motion to Determine Secured Status of Second Mortgage in the bankruptcy court. [#7-1], CM/ECF pp. 57-68[2]. In that motion, the debtor asked the bankruptcy court to "strip off" a second lien on the primary residence of the debtor, which lien is held by HSBC Mortgage Services. On January 28, 2011, the bankruptcy court entered an order confirming the amended plan of the debtor and granting the motion to determine the secured status of the HSBC mortgage. The court held that the "secured claim of HSBC against Debtor's Residence is reduced to $0.00." Order [#7-1], CM/ECF p. 88. Under the terms of the plan, HSBC retained the lien securing its claim "until discharge under 11 U.S.C. § 1328 or payment in full." [#7-1]. CM/ECF p. 82, ¶ IV.C.1. The debtor occupied the residence with his wife, Brenda Jo Love Miller. Ms. Miller was not an obligor on the HSBC loan and was not a debtor in the bankruptcy case.

On July 29, 2012, the debtor was killed in a motorcycle accident. The debtor died slightly more than three years into his confirmed five year Chapter 13 plan. On August 30, 2012, Ms. Miller filed a motion in the bankruptcy court seeking to be appointed as a Guardian ad Litem in the case. The court denied that motion and denied a motion to reconsider on that issue. Counsel for the deceased debtor them filed a motion to modify the confirmed Chapter 13 plan. [#7-1], CM/ECF p. 98. The bankruptcy court denied the motion, holding that § 1329(a) of the Bankruptcy Code does not permit an attorney for a deceased debtor to request modification of a confirmed plan. [#7-1], CM/ECF p. 101.

On October 12, 2012, the El Paso County District Court appointed Ms. Miller as personal representative of the probate estate of the debtor. Acting on behalf of the probate estate, Ms. Miller[3] filed a motion for discharge of debtor under § 1328(b) of the Bankruptcy Code. [#7-1], CM/ECF p. 102. The debtor refers to this type of discharge as a hardship discharge. On October 23, 2013, the bankruptcy court entered an order dismissing the case and denying the motion for a discharge under 11 U.S.C. § 1328(b) as moot. [#7-1], CM/ECF p. 107-109. Noting the death of the debtor, the court found that a debtor in the circumstances of this case may not propose a modified plan and cannot request a hardship discharge. [#7-1], p. 108. Absent a discharge, the lien held by HSBC mortgage remains in effect.

In this appeal, the debtor raises two issues: (1) whether the bankruptcy court erred when it denied the motion for hardship discharge under § 1328(b); and (2) whether the bankruptcy court erred when it dismissed the bankruptcy case without the filing of a motion to dismiss and without permitting the probate estate of the debtor to be heard on the issue of dismissal.

IV. ANALYSIS

Following the death of Mr. Miller, the debtor sought a discharge under § 1328(b). Under that section, a bankruptcy court may grant a discharge in a chapter 13 case even though plan payments have not been completed.

(b) Subject to subsection (d), at any time after the confirmation of the plan and after notice and a hearing, the court may grant a discharge to a debtor that has not ...

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