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Magee v. Weller

United States District Court, Sixth Circuit

September 24, 2013

SHIRLEY L. MAGEE, Debtor-Appellee,
v.
NICHOLAS L. WELLER, Creditor-Appellant.

ORDER: (1) AFFIRMING THE ORDER OF THE BANKRUPTCY COURT; (2) CONFIRMING DEBTOR'S CHAPTER 13 PLAN; AND (3) TERMINATING THIS CASE FROM THE DOCKET OF THE COURT

TIMOTHY S. BLACK, District Judge.

This civil action is before the Court on an appeal from the United States Bankruptcy Court. Specifically before the Court is Appellant's brief (Doc. 4) and the parties' responsive memoranda (Docs. 6, 7).

I. PROCEDURAL POSTURE

Appellant appeals an Order of the Bankruptcy Court confirming the Debtor's Chapter 13 Plan and an Order denying his motion for reconsideration.

The Creditor/Appellant, Nicholas Weller, contends that the Bankruptcy Court erred when it confirmed the Debtor's Chapter 13 Plan because the Plan proposes to pay him a fraction of the amount due to him and then compel him to surrender his rights in the property. Weller claims this is a clear "taking" of property for the benefit of the Debtor.

The following three issues will be addressed by the Court in deciding this Appeal:

1. Whether the Debtor's Chapter 13 Plan violates and takes, under pretext of law, the constitutional right of the Creditor, Nicholas L. Weller, to possess, use, and control property.
2. Whether the Debtor's Chapter 13 Plan violates the requirements of 11 U.S.C. § 1325(a)(5)(B), requiring payment of the debt to the creditor.
3. Whether the Debtor's Chapter 13 Plan violates the requirements of 11 U.S.C. § 363(c)(2) and (c)(4), limiting the use of the cash collateral (rents).

II. BACKGROUND FACTS

In June 1998, Shirley L. Magee obtained a loan from Nicholas L. Weller in the amount of $85, 300.00 for the purchase of a four family apartment building located at 1500 Harvard Blvd., Dayton, Ohio. A promissory note calling for repayment of the loan in monthly installments with interest at the rate of 13 per cent per annum was executed by Magee and delivered to Weller. A mortgage deed to the property was executed and delivered by Magee to Weller to secure payment of the note. Included in the terms of the mortgage was an assignment of the rents from the property as additional security for repayment of the loan.

In August 1998, Magee obtained a loan from Weller in the amount of $43, 380.00 for the purchase of a two family dwelling located at 2734-36 Oxford Ave., Dayton, Ohio. A promissory note calling for repayment of the loan in monthly installments with interest at the rate of 13.5 per cent per annum was executed by Magee and delivered to Weller. A mortgage deed to the property was executed and delivered by Magee to Weller to secure repayment of the loan. Included in the terms of the mortgage was an assignment of the rents from the property as additional security for repayment of the loan.

In November 1998, Magee obtained a loan from Weller in the amount of $65, 000.00 for the purchase of a four family apartment building located at 518 Delaware Ave., Dayton, Ohio. A promissory note calling for repayment of the loan in monthly installments with interest at the rate of 13.5 per cent per annum was executed by Magee and delivered to Weller. A mortgage deed to the property was executed and delivered by Magee to Weller to secure repayment of the loan. Included in the terms of the mortgage was an assignment of the rents from the property as additional security for repayment of the loan.

Magee made some of the payments on each of the three mortgages, but frequently was delinquent in her payments. She completely omitted numerous payments on each of the mortgages and was often in default. Weller did not pursue mortgage foreclosure proceedings until October 2012 when American Tax Funding, LLC commenced proceedings in Montgomery County, Ohio Common Pleas Court to foreclose a property tax lien on the property at 1500 Harvard Blvd. The tax lien had been purchased from the Montgomery County Treasurer and had not been redeemed. Weller filed a cross complaint in that action for foreclosure of his mortgage on the property. Weller ...


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