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)