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Carrington at Stonebridge Condominium Association v. Galanos

United States District Court, N.D. Indiana

January 26, 2015

GEORGE P. GALANOS, Appellee/Debtor. Bankruptcy No. 10-20144 kl.


WILLIAM C. LEE, District Judge.

This matter is before the court on an appeal from the Bankruptcy Court. The Appellant/Creditor, Carrington as Stonebridge Condominium Association, filed its brief on November 14, 2014. The Appellee/Debtor, George P. Galanos, filed his brief on November 26, 2014.

For the following reasons, the Decision of the Bankruptcy Court will be affirmed.


On January 19, 2010, the Appellee/Debtor filed a Voluntary Petition for Relief under Chapter 13 of the Bankruptcy Code. The Appellant/Creditor is a secured creditor of the Debtor in the approximate amount of $120, 000.00, and holds a secured interest in the luxury condominium owned by the Debtor at 2310 Carrington Court, Unit 103, Naples, Florida (the "Naples Condo"), which is not the Debtor's primary residence.

Although the Debtor has now filed three separate Chapter 13 Plans with the Bankruptcy Court during the past five years, the Plan has not yet been confirmed. The original confirmation hearing was scheduled for July 7, 2010 and the most recent pre-hearing on the Plan was held by the Bankruptcy Court on September 16, 2014.

The Debtor filed numerous objections to the claims of creditors, including the prepetition Proofs of Claim filed by the Appellant/Creditor. The Proofs of Claim are evidenced by a Judgment entered against the Debtor prior to the commencement of the bankruptcy case. On November 14, 2013, the Debtor stipulated that the claims of the Creditor should be treated as fully secured under the Plan. The Debtor also agreed to the principal amount due and owing, but disputed the attorney fees claimed by the Creditor.

The Creditor holds two different claims against the Debtor: (1) a fully secured claim for unpaid assessments and maintenance services for the Naples Condo, and (2) a fully secured claim for related charges and services at the Stonebridge Country Club.

The Debtor has failed to pay his post-petition obligations to the Creditor and is also in default on his payments to the Chapter 13 Trustee. As a result the secured claims have tripled in size.

In the Plan, the Debtor acknowledges the pre-petition secured claims of the Creditor and proposes to pay the Creditor $1, 157.55 per month during the life of the Plan. However, the Debtor has failed to pay the Creditor its ongoing monthly obligations during the past 58 months. Thus, the total amount now owing to the creditor is $119, 765.62.

The sole factual dispute on appeal is whether the Creditor should be allowed to assess the attorney fees and costs to its fully secured claims against the Naples Condo. The amount in controversy is $24, 020.80 and covers both the litigation before the Chapter 13 case was filed in January of 2010 and the amounts expended in defending against the Debtor's objections to the Creditor's claims and filing several objections to the Plan.

The Bankruptcy Court determined that none of the attorney fees and costs should be allowed and entered an Order to that effect on May 23, 2014. The procedure leading up to this Order is as follows.

On or about October 4, 2012, the Bankruptcy Court held a partial hearing and issued its Order where the Creditor and Debtor stipulated in open court that Creditor will file on or before November 1, 2012, an itemized statement setting out all of the attorney fees its claims and how interest on its claim is calculated. The parties further stipulated that the Debtor will within 30 days thereafter file a detailed, line-item objection as to each discrete entry on the statement that Debtor asserts is objectionable setting out a factual or legal basis for any such objection. The Bankruptcy Court ordered that the attorney fee claim by Creditor shall be a detailed chronological statement on a daily basis by the tenth of the hour of the services rendered, time expended and expenses; and, that said statement shall set out specifically who performed each item of service, and the hourly rate charged for the services of each person.

It is undisputed that the Creditor failed to comply with the stipulated November 1, 2012 deadline for the filing of its itemized statement. Thus, on December 12, 2012, the Debtor filed its "Notice of Expiration of Time to File Evidence and For Court to Rule on Matters Previously Submitted." In response, on January 17, 2013, the Bankruptcy Court filed an "Order to Show Cause Why Motion and As Assignee of Stonebridge Condo Association ("Carrington"), and As Assignee of Stonebridge Country Club ("Stonebridge") Should Not Be Dismissed For Want of Prosecution as to Attorney's Fees Only Pursuant To Order Dated October 5, 2012 (Docket No 486)" directed to Appellant/Creditor for its failure to comply ...

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