In re Demers, 511 B.R. 233 (Bankr. D. R.I. 2014) | In sum, (1) the notice was defective in that it did not mention the right to court action, (2) proper notice was a **condition precedent** to the right to accelerate and foreclose . . .
UNITED STATES BANKRUPTCY COURT DISTRICT OF RHODE ISLAND
In re: Donnalee M. Demers BK No: 13-11539 Debtor Chapter 13 ______________________________________________________________________________ MEMORANDUM AND ORDER Donnalee Demers (“Ms. Demers”) filed a Chapter 13 petition on June 7, 2013, and shortly thereafter proposed a five year plan to address the claims of her creditors. The Court confirmed a modified plan in August 2013 (the “Plan”).1 Under the Plan Ms. Demers will pay in full a pre-petition mortgage arrearage owed to America’s Servicing Company (“ASC”).2 ASC filed a proof of claim listing an arrearage owed on its mortgage of $14,181.61. Ms. Demers objected to the amount of ASC’s claim, contending that ASC included in the arrearage calculation $1,979.40 it is not entitled to be paid, consisting of counsel fees of $1,170.00, advertising costs of $534.40, and title costs of $275.00 (together the “Disputed Charges”), all of which relate to a foreclosure proceeding ASC commenced prior to the filing of Ms. Demers’ Chapter 13 petition. See Limited Objection to Allowance of Claim #4 (Doc. #28). Ms. Demers asserts that ASC is not entitled to payment of the Disputed Charges because it “failed to provide a proper notice of default prior to acceleration and the commencement of foreclosure” as required by the loan agreement. ASC counters that it complied with all contractual provisions of the loan agreement, and even if it did not strictly comply it is contractually entitled to recover the Disputed Charges from Ms. Demers. After consideration of the parties’ arguments, I conclude that ASC failed to satisfy a condition precedent to its rights to accelerate the debt and pursue its foreclosure remedy. Accordingly, it is not entitled to recover the Disputed Charges as part of its claim. [...]