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Allowance of secured claims for fees, costs, or charges, section 506(b)

In re Solis (April 15, 2016)

In deciding the Debtor’s objection to claim, the Court had to determine the value of the Debtor’s SUV pursuant to section 506(a). The Creditor favored the NADA Guides “Clean Retail” price while the Debtor favored the Edmunds.com retail price for the SUV in “Average” condition. The Court found that the value of the SUV was between the NADA price and the Edmunds price. No evidence was introduced about the appropriate discount to the NADA Clean Retail price to reflect the actual condition of the Debtor’s SUV. In the absence of evidence about where between the Edmunds and NADA values the Debtor’s SUV fell, the value alleged by the Debtor, which was more than the Edmunds price and less than the NADA price, was the appropriate value under section 506(a) because the ultimate burden of proof fell on the Creditor.

WL Cite: In re Solis, No. 15-11181-TMD, 2016 WL 1574700, at *1 (Bankr. W.D. Tex. Apr. 15, 2016).

In re 804 Congress (Mar. 13, 2015)

On remand from the Fifth Circuit, the Court had to determine whether a foreclosure commission claimed by a substitute trustee and attorney’s fees claimed by a mortgagee, both of which the Court earlier held unreasonable under section 506, nonetheless could be allowed under section 502. The Court determined that even if a claim is disallowed as a secured claim under section 506 as being unreasonable, it can still be allowed as an unsecured claim under section 502 if it is enforceable under state law. The Court held that the substitute trustee’s claim was allowable under section 502 because the claim was enforceable under state law and did not fall within any of the section 502(b) exceptions, but held that the mortgagee’s claim for attorney’s fees was disallowed under section 502 because the mortgagee failed to prove its fees were enforceable under state law.

WL Cite: In re 804 Congress, L.L.C., 529 B.R. 213 (Bankr. W.D. Tex. 2015)