       United States Bankruptcy Appellate Panel
                        For the Eighth Circuit
                    ___________________________

                            No. 13-6065
                    ___________________________

              In re: Eric James Borm; Valorie Dawn Pearson

                                  lllDebtors

                         ------------------------------

                             CitiMortgage, Inc.

                   lllllllllllllllllllllCreditor - Appellant

                                      v.

                 Eric James Borm; Valorie Dawn Pearson

                    lllllllllllllllllllllDebtors - Appellees
                                   ____________

               Appeal from United States Bankruptcy Court
                for the District of Minnesota - Minneapolis
                                ____________

                        Submitted: March 26, 2014
                           Filed: April 2, 2014
                             ____________

Before FEDERMAN, Chief Judge, SCHERMER and NAIL, Bankruptcy Judges.
                            ____________

SCHERMER, Bankruptcy Judge
       CitiMortgage, Inc. (“the Creditor”) appeals from a denial by the bankruptcy
court of its motion for relief from the automatic stay in the Chapter 13 bankruptcy
case of Eric James Borm and Valorie Dawn Pearson (the “Debtors”). We have
jurisdiction over this appeal from the final order of the bankruptcy court. See 28
U.S.C. § 158(b). We reverse.

                                      ISSUE
      The issue in this case is whether the bankruptcy court abused its discretion
when it denied the Creditor’s motion for relief from the stay.

                                   BACKGROUND
        On May 6, 2009, the Debtors filed a petition for relief under Chapter 13 of Title
11 of the United States Code (the “Bankruptcy Code”). A few months later, the
Debtors filed their modified Chapter 13 plan, which was confirmed in September,
2009. The Debtors are the owners of real property that is their homestead. It is
undisputed that the Debtors executed a promissory note and a mortgage on the
property that is held by the Creditor. With respect to the Creditor, the confirmed plan
states:

      5.     CLAIMS NOT IN DEFAULT
      Payment on the following claims are current and the debtor will pay the
      payments that come due after the date of the petition was filed directly
      to the creditors. The creditors will retain liens, if any.

      Creditor                    Description of Claim
      CitiMortgage                First mortgage on Homestead

      In 2013, the Creditor filed a motion for relief from the automatic stay, together
with supporting documents, seeking relief pursuant to 11 U.S.C. § 362(d)(1). The
Debtors did not file a written response to the motion for relief from the stay.




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      The court held a hearing on the Creditor’s stay relief motion. Debtor Valorie
Dawn Pearson appeared in person at the hearing. The court announced its ruling
denying the Creditor’s stay relief motion on the record at the hearing, and entered a
written order following the hearing.

       At the hearing, the court recognized that the Debtors were behind on their
required mortgage payments in the approximate amount of $11,000. Ms. Pearson
acknowledged the Debtors were behind in their payments when she stated “I have no
idea how far behind [I am]. I didn’t know I was $11,000 behind until I saw these
papers.” The Creditor represented at the hearing, as supported by the Affidavit and
Local Form 4001-1filed with the motion by the Creditor, that, as of the date of the
motion, the Debtors had missed fourteen of their postpetition mortgage payments (and
fifteen such payments as of the date of the hearing). However, as support for its denial
of the Creditor’s stay relief motion, the court stated that the Debtors made nine
payments for the October 1, 2012 through November 1, 2013 period, and that there
was equity in the property.1

      The court was also concerned by what it perceived to be a misrepresentation in
the Creditor’s motion that the Debtors made no payments for the period October 1,
2012 through November 1, 2013 when, in fact, they had made nine payments to the
Creditor during that time. The Creditor had applied the nine payments to earlier
postpetition months for which payment remained outstanding.2




       1
              The Creditor did not dispute the equity in the property.
       2
             We anticipate that the Creditor will modify its pleadings going forward
to avoid any confusion regarding the Creditor’s receipt of funds, and the application
of such funds.
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                            STANDARD OF REVIEW
      We review the bankruptcy court’s decision regarding whether to grant relief
from the automatic stay for an abuse of discretion. Crossroads Ford, Inc. v. Dealer
Computer Servs., Inc. (In re Crossroads Ford, Inc.), 449 B.R. 366, 367 (B.A.P. 8th
Cir. 2011) (citation omitted). “An abuse of discretion will be found if the court’s
judgment was based on clearly erroneous factual findings or erroneous legal
conclusions.” Id. at 367 (citation omitted).

                                 DISCUSSION
     Relief from the automatic stay in bankruptcy is governed by Bankruptcy
Code § 362(d). Section 362(d)(1) provides that:

      [T]he court shall grant relief from the stay provided under subsection (a)
      of this section, such as by terminating, annulling, modifying, or
      conditioning such stay - (1) for cause, including the lack of adequate
      protection of an interest in property of such party in interest.

11 U.S.C. § 362(d)(1).

       The undisputed facts show that cause existed to grant the Creditor’s request for
stay relief. The relevant facts are simple. The Debtors proposed a plan in which they
agreed to make their mortgage payments to the Creditor outside of their plan. The
plan was confirmed, but the Debtors repeatedly failed to make required payments. The
bankruptcy court recognized that the Debtors were approximately $11,000 behind in
their postpetition payments. And, Ms. Pearson acknowledged that the Debtors were
behind in their payments.

       The bankruptcy court abused its discretion by denying the Creditor’s request for
stay relief in light of the Debtors’ failure to comply with their obligations under their
plan (and therefore, the relevant loan documents), by being significantly behind in
their payments to the Creditor. See Reinbold v. Dewey Cnty. Bank, 942 F.2d 1304,
1306-07 (8th Cir. 1991) (the debtor’s “failure to comply with his chapter 12 plan

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supports the bankruptcy court’s decision to grant [the creditor] relief from the
automatic stay for cause under 11 U.S.C. § 362(d).”) (citing Production Credit Ass’n
of the Midlands v. Wieseler (In re Wieseler), 934 F.2d 965, 967 (8th Cir. 1991)).

       Rather than focusing on the Debtors’ failure to make the necessary payments,
the bankruptcy court looked to the fact that the Debtors made some payments during
the period October 1, 2012 through November 1, 2013 (which were applied to the
oldest months in which payment was due), when, according to the court, the Creditor
reported that no payments had been made. The court also stated that there appeared
to be equity in the property. Although the Debtors did make some payments during
the time from October 1, 2012 through November 1, 2013, the Debtors only made nine
payments during that time, and they did not make five payments. And, the Debtors do
not contest the Creditor’s representation that the Debtors missed fifteen of their
required postpetition payments as of the date of the hearing. Likewise, the Debtors’
equity in the property was irrelevant in light of the fact that the Debtors had missed
such a significant number and amount of payments. See Wieseler, 934 F.2d at 968
(existence of an equity cushion did not mean a lack of cause under § 362(d)(1) where
the debtor failed to honor the requirements of a stipulation by failing to make required
payments).

                                  CONCLUSION
      For the reasons stated, we reverse the decision of the bankruptcy court, and
remand this matter to the bankruptcy court to enter an appropriate order granting relief
from the automatic stay to the Creditor.




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