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Coffin v. Malvern Federal Sav. Bank

July 29, 1996

IN RE:

TRISTAM COFFIN,

APPELLANT,

v.

MALVERN FEDERAL SAVINGS BANK



Appeal from the United States District Court for the Eastern District of Pennsylvania

(D.C. 95-cv-03143) Argued: June 6, 1996

Before: BECKER and MANSMANN, Circuit Judges, and SCHWARZER *fn*, District Judge

SCHWARZER, District Judge.

(Filed: July 29, 1996)

OPINION OF THE COURT

This is an appeal by Tristram Coffin, the debtor, from an order of the district court affirming an order of the bankruptcy court. The bankruptcy court's order denied the debtor's motion styled as one "to reconsider lien avoidance." Because we and the district court lack jurisdiction of this appeal, we remand with directions.

Coffin was the owner of three parcels of real property on which Malvern Federal Savings Bank held mortgages to secure loans it had made to Coffin. When Coffin fell in arrears, the Bank foreclosed on one of the mortgages. Coffin then filed a voluntary petition in the bankruptcy court under Chapter 13 of the Bankruptcy Code. The Bank filed a proof of claim which set forth the arrearages on the three mortgages. Coffin then filed an Amended Chapter 13 Plan which provided for some of the arrearages. Without objection from the Bank, the bankruptcy court on October 19, 1993, confirmed the Plan.

Nine months later, on June 23, 1994, the Bank moved "for an Order granting relief from the automatic stay provided by 11 U.S.C. Section 362 in order that said creditor may pursue its state foreclosure remedies to enforce its lien against real property of the debtor . . . ." On September 1, 1994, following a hearing, the court (1) directed Coffin to make payments to the Bank in addition to those made under the Plan; (2) directed Coffin to file an amended Plan to provide adequately for the Bank's secured claim; and (3) ordered the automatic stay to remain in place pending further hearing on the motion. In opposition to the Bank's motion, Coffin then filed his motion to dismiss as res judicata the Bank's motion for relief from the automatic stay. Following a hearing held on December 1, 1994, the bankruptcy court issued an opinion and order, denying the Bank's motion for relief from automatic stay and granting Coffin's motion to dismiss to that extent.

The court found that [the Bank] is bound by the Debtor's Confirmed Plan with respect to the distribution to it provided thereunder and therefore relief from stay is not appropriate, there being no default under the Plan. (Op. 7.)

The court then added:

However, we further find that [the Bank's] lien on the Gay Street Property is not discharged by this Chapter 13 proceeding and that upon lifting of the stay at the conclusion of this case or sooner, [the Bank] will be free to exercise its state law remedies under its mortgage and applicable law. (Ibid.)

The Bank did not appeal from the order denying relief from the automatic stay. Coffin, however, although the prevailing party on the motion (the court having granted his dismissal motion and having entered no order adverse to him), filed a motion styled as one "to reconsider lien avoidance." The court, describing this motion as "framed in a somewhat cryptic manner since it suggests that a motion for lien avoidance was the subject of the motions that are at the heart of this request for reconsideration" interpreted the motion as "challeng[ing] this Court's legal conclusion that the Bank's liens . . . survive the bankruptcy discharge . . . ." (Op. 1. n.1) The motion was denied. Coffin then appealed to the district court which, stating "the issue in this appeal . . . [to] concern[] whether certain liens survive a bankruptcy proceeding," (Op.1.) affirmed.

It is not necessary for present purposes to examine the bankruptcy court's reasoning that led to its "finding" that the Bank's mortgage lien had not been discharged by the confirmed Chapter 13 Plan. The threshold question is whether that "finding," and, in turn, the order denying reconsideration and the district court's order affirming it, constitute appealable orders. 28 U.S.C. Section(s) 158(a)(1), 1291, 1292(a).

While the analysis takes us outside of conventional appealable order jurisprudence, it is nonetheless firmly grounded on principles of justiciability and ripeness. The bankruptcy court's "finding" -- that the Bank's lien was not discharged and that at the end of the case it would be free to exercise its state law remedies under its mortgage -- was an advisory opinion. Its order denying Coffin's "cryptic" motion for reconsideration decided no actual controversy between the parties: Coffin had not moved for an order of lien avoidance (it is doubtful that he could have done so in any event, see 11 U.S.C. Section(s) 522(f)); the issue of whether the lien survived was not before the court for adjudication; and the "finding" it made did not determine whether the Bank would succeed in a subsequent foreclosure action in state court. If the lien survived, it survived by reason of the prior proceedings, including the confirmed Plan, not because of the court's "finding." Were the Bank to go to state court to foreclose on its mortgage, its right to do so would have to be determined by that court in light of its interpretation of the terms of the Confirmed Plan, as well as the terms of the mortgage, applicable state law and, of course, that court's findings of fact. To put it differently, had the bankruptcy court made a ...


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