                                                           FILED
 1                                                          FEB 09 2016
 2                                                      SUSAN M. SPRAUL, CLERK
                                                          U.S. BKCY. APP. PANEL
                                                          OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                          )    BAP No.      NC-15-1142-JuKuW
                                     )
 6   LUCIO CHAGOLLA; MARIA D.        )    Bk. No.      08-57523
     HERNANDEZ MURUETA,              )
 7                                   )
                    Debtors.         )
 8   ____________________________    )
                                     )
 9   LUCIO CHAGOLLA; MARIA           )
     D. HERNANDEZ MURUETA,           )
10                                   )
                                     )
11                    Appellants,    )    O P I N I O N
     v.                              )
12                                   )
     JP MORGAN CHASE BANK, N.A.,1    )
13                                   )
                    Appellee.        )
14   ____________________________    )
15                  Argued and Submitted on January 21, 2016
                          at San Francisco, California
16
                            Filed - February 9, 2016
17
                 Appeal from the United States Bankruptcy Court
18             Northern District of California, San Jose Division
19        Honorable Stephen L. Johnson, Bankruptcy Judge, Presiding
                           ________________________
20
21   Appearances:     David Boone for appellants Lucio Chagolla and
                      Maria D. Hernandez Murueta.
22
23   Before:    JURY, KURTZ, and WANSLEE, Bankruptcy Judges.
24
25
26
27
          1
28            JP Morgan Chase Bank did not participate in this appeal.
 1   JURY, Bankruptcy Judge:
 2
 3            Appellants Lucio Chagolla and Maria D. Hernandez Murueta
 4   (“Debtors”) appeal the bankruptcy court’s order denying their
 5   unopposed valuation motion under 11 U.S.C. § 506(a) and (d) and
 6   Federal Rule of Bankruptcy Procedure (“FRBP”) 3012, seeking to
 7   value real property upon which the junior lienholder, JP Morgan
 8   Chase Bank, N.A. (“JP Morgan”), is secured.2       Although the
 9   valuation motion was brought after Debtors completed their plan
10   and received a discharge, Debtors assert that the bankruptcy
11   court erred in denying the motion as untimely.       We agree with
12   Debtors.     In the absence of prejudicial delay, we find that a
13   motion to value and avoid the lien of a junior lienholder may be
14   brought after discharge if the confirmed plan called for its
15   avoidance and treated it as unsecured and if no prejudice to the
16   junior lienholder will occur.       Accordingly, for the reasons
17   stated below, we REVERSE the bankruptcy court’s order and REMAND
18   the matter to the bankruptcy court for further proceedings
19   consistent with this opinion.
20                                  I.    FACTS
21            The facts are not in dispute.    Debtors owe more money on
22   their home than it is worth.        The fair market value of their
23   home on the confirmation date was much less than the amount due
24   on the first mortgage, let alone what is owed on the second.
25   The second mortgage held by JP Morgan is the subject of the
26
          2
27          Unless otherwise indicated, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
28   “Rule” references are to the Federal Rules of Bankruptcy
     Procedure.

                                         -2-
 1   instant appeal.
 2        Debtors filed a petition and Chapter 13 plan on December
 3   23, 2008.   Pursuant to the plan, Debtors would pay zero percent
 4   to unsecured creditors and would file an adversary proceeding to
 5   avoid the junior lien of JP Morgan within ninety days of the
 6   commencement of the case.   The plan was confirmed at a hearing
 7   on February 19, 2009, with the order entered on March 2, 2009.
 8   JP Morgan did not object to its treatment at confirmation.    The
 9   confirmation hearing was held prior to the end of the ninety-day
10   period provided in the plan to file the adversary to avoid JP
11   Morgan’s lien.    However, no adversary proceeding was ever
12   commenced by Debtors.   On March 12, 2014, after completing all
13   payments required by the plan, Debtors obtained a discharge.
14   The case was closed on April 11, 2014.
15        Nearly a year after the case was closed and six years after
16   the plan was confirmed, Debtors filed a motion to reopen the
17   case for the sole purpose of filing a lien avoidance motion.
18   After the court reopened the case, on February 23, 2015, Debtors
19   filed their lien avoidance motion, which provided:   (1) the fair
20   market value of their home at confirmation was $550,000.00;
21   (2) Countrywide Home Loans Servicing, L.P. holds a senior deed
22   of trust with a principal balance of $628,804.83; and (3) JP
23   Morgan holds a junior lien with a principal balance of
24   $130,686.22.   Relying on the holding of Zimmer v. PSB Lending
25   Corporation(In re Zimmer), 313 F.3d 1220 (9th Cir. 2002),
26   Debtors argued that based on the property valuation, the wholly
27   unsecured second lien of JP Morgan should be avoided.    Although
28   the motion was properly served, JP Morgan did not file an


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 1   opposition or participate in the proceeding.
 2        On April 21, 2015, the bankruptcy court entered an order
 3   denying the motion.   Although recognizing that there is not a
 4   time limitation in the Bankruptcy Code or Rules which would
 5   prevent Debtors from bringing their valuation motion after the
 6   case was closed, the court held that (1) it lacked jurisdiction
 7   to grant the motion, (2) the motion was untimely based on case
 8   law the court reviewed, and (3) the motion was not heard in
 9   conjunction with the hearing on the plan as required by
10   § 506(a).   This timely appeal followed.
11                               II.    JURISDICTION
12        The bankruptcy court had jurisdiction over this proceeding
13   under 28 U.S.C. §§ 1334 and 157(b).            We have jurisdiction under
14   28 U.S.C. § 158.
15                                     III.    ISSUE
16        Whether the bankruptcy court erred in denying, as being
17   untimely, Debtors’ motion to value and avoid a junior lien that
18   was brought after Debtors were discharged and the case was
19   closed.
20                         IV.    STANDARD OF REVIEW
21        Questions of law are subject to de novo review.            United
22   States v. Lang, 149 F.3d 1044, 1046 (9th Cir. 1998).            Questions
23   of fact are reviewed under the clearly erroneous standard.
24   Pullman-Standard v. Swint, 456 U.S. 273, 287 (1982).
25        Based on the undisputed facts, we review the bankruptcy
26   court’s conclusions of law de novo.            Havelock v. Taxel (In re
27   Pace), 67 F.3d 187, 191 (9th Cir. 1995); United States v. Lang,
28   149 F.3d at 1046.


                                              -4-
 1                               V.   DISCUSSION
 2           The bankruptcy court denied Debtors’ valuation motion for
 3   the reasons stated above.    We will address each in turn.
 4   A. The bankruptcy court retained jurisdiction over the plan
 5   confirmation order
 6           The bankruptcy court concluded it lacked jurisdiction to
 7   grant relief on Debtors’ motion.        We disagree.   Bankruptcy
 8   courts have always been empowered to interpret and enforce their
 9   own orders, which includes an order confirming a chapter 13
10   plan.
11           The jurisdiction of bankruptcy courts, like all federal
12   courts, is created and limited by statute.       See Celotex Corp. V.
13   Edwards, 514 U.S. 300, 307 (1995).        As such, a bankruptcy court
14   retains jurisdiction over proceedings “‘arising under title 11,
15   or arising in or related to cases under title 11.’”        Wilshire
16   Courtyard v. California Franchise Tax Board (In re Wilshire
17   Courtyard), 729 F.3d 1279, 1287 (9th Cir. 2013) (quoting 28
18   U.S.C. § 157(b)(1)).
19           It is well established that a bankruptcy court retains
20   continuing jurisdiction to interpret and enforce its own orders.
21   See Travelers Indemnity Company v. Bailey, 557 U.S. 137, 151
22   (2009); see also In re Wilshire Courtyard,729 F.3d at 1287.
23   “Related to” jurisdiction is not indefinite.       Prior to a debtor
24   confirming a plan, a bankruptcy court has broad discretion
25   “related to” almost “every matter directly or indirectly related
26   to the bankruptcy.”    Sasson v. Sokoloff, 424 F.3d 864, 868 (9th
27   Cir. 2005).    However, post-confirmation, the Ninth Circuit has
28   restricted “related to” jurisdiction to matters that are


                                       -5-
 1   “closely related,” including all “matters ‘affecting the
 2   interpretation, implementation, consummation, execution, or
 3   administration of the confirmed plan.’”    In re Wilshire
 4   Courtyard,729 F.3d at 1287 (quoting Binder v. Price Waterhouse &
 5   Co. (In re Resorts Int’l, Inc.), 372 F.3d 154, 166-67 (3rd Cir.
 6   2004).
 7        Based on Debtors’ confirmed plan, which stated the junior
 8   lien of JP Morgan would be avoided and treated as unsecured, the
 9   bankruptcy court retained jurisdiction over the matter to
10   “implement” or “enforce” the plan confirmation order.     See
11   Travelers Indemnity Company, 557 U.S. at 151 (“[i]t is
12   undisputed that [a] bankruptcy court [has] continuing
13   jurisdiction to interpret and enforce its own ...orders”); see
14   also In re Wilshire Courtyard,729 F.3d at 1287.    Furthermore,
15   § 105(a) provides additional authority for the bankruptcy court
16   to implement the plan order.   Section 105(a) allows a court to
17   issue any order, process, or judgment that is necessary or
18   appropriate to carry out the provisions of the Bankruptcy Code.
19        Therefore, the bankruptcy court had jurisdiction to
20   implement and enforce Debtors’ confirmed chapter 13 plan order
21   with respect to treatment of the second lien of JP Morgan.
22   B. Debtors’ motion was not untimely under § 506(a) or Rule 3012
23        Section 506(a) provides for judicial valuation of
24   collateral in order to determine the status of a creditors’
25   claim.    See Nobelman v. American Savings Bank, 508 U.S. 324, 328
26   (1993).   The statute “divides claims into ‘secured claims’ and
27   ‘unsecured claims.’”   In re Zimmer, 313 F.3d at 1222-23 (quoting
28   11 U.S.C. § 506(a)).   Specifically, § 506(a) provides:


                                     -6-
 1        An allowed claim of a creditor secured by a lien on
          property in which the estate has an interest . . . is a
 2        secured claim to the extent of the value of such creditor’s
          interest in the estate’s interest in such property . . .
 3        and is an unsecured claim to the extent of the value of
          such creditor’s interest...is less than the amount of such
 4        allowed claim. Such value shall be determined in light of
          the purpose of the valuation and of the proposed
 5        disposition or use of such property, and in conjunction
          with any hearing on such disposition or use or on a plan
 6        affecting such creditor’s interest.
 7   As such, the “thrust of § 506(a) is to classify allowed claims
 8   as either secured or unsecured, which in turn affects how the
 9   bankruptcy code treats them.”   Woolsey v. Citibank N.A. (In re
10   Woolsey), 696 F.3d 1266, 1272 (10th Cir. 2013).
11        Rule 3012 provides the procedure for valuing collateral and
12   is to be read together with § 506(a).   It provides:
13        The court may determine the value of a claim secured by a
          lien on property in which the estate has an interest on
14        motion of any party in interest and after a hearing on
          notice to the holder of secured claim and any other entity
15        as the court may direct.
16        The bankruptcy court correctly conceded that neither
17   § 506(a) nor Rule 3012 has a time limit for filing a valuation
18   motion.   See Collier on Bankruptcy, ¶ 3012.01 (16th ed. 2012)
19   (“The timing of the determination of a particular valuation will
20   vary depending on the purpose for which it is sought.”).
21   Furthermore, we are not aware of any reported Ninth Circuit
22   cases which place a time bar on bringing a valuation motion
23   after discharge or after the case is closed.   Therefore, the
24   motion was not per se untimely.
25        In a practical sense, we see little difference between an
26   avoidance motion filed under § 506(a) and one filed under
27   § 522(f) such that only the passage of time, without prejudice to
28   a creditor, bars recovery.   Although a lien avoidance under

                                       -7-
 1   § 522(f)3 is substantively different, an analogy to the timing of
 2   such motion is appropriate.       It has been consistently held that
 3   there exists no time limit to bring a motion to avoid a lien
 4   under § 522(f).       Yazzie v. Postal Fin. Co. (In re Yazzie), 24
 5   B.R. 576, 577 (9th Cir. BAP 1982) (“No provisions of the Code or
 6   Rules (present or proposed) have established a time limit for
 7   bringing an action to avoid a lien under [] § 522(f).”); see also
 8   Goswami v. MTC Distributing (In re Goswami), 304 B.R. 386, 392
 9   (9th Cir. BAP 2003); Luna v. California National Bank (In re
10   Luna), 2007 WL 7541003, at *3 (9th Cir. BAP 2007).       Rather, the
11   key to whether the bankruptcy court will allow a § 522(f) lien
12   avoidance to be filed after a case is closed is “whether the
13   creditor is sufficiently prejudiced so that i[t] would be
14   inequitable to allow avoidance of the lien.”       ITT Financial Serv.
15   v. Ricks (In re Ricks), 89 B.R. 73, 75-6 (9th Cir. BAP 1988); see
16   also In re Goswami, 304 B.R. at 392.        This argument can be
17   applied equally in a § 506(a) lien avoidance.
18              Under both statutes, neither the Code nor the Rules
19   establish a time limitation for filing the avoidance motion.
20   Because Congress has not placed any statutory limitations, nor
21   are there any common law doctrines which draw a time bar, we are
22   persuaded that no arbitrary time limitation exists.       However,
23   this finding is not without limitation.       In order to bring a
24   motion to avoid lien under § 506(a) after a debtor has received a
25
            3
26            Section 522(f) provides: the debtor may avoid the fixing
     of a   lien on an interest of the debtor in property to the extent
27   that   such lien impairs an exemption to which the debtor would
     have   been entitled . . . if such lien is – (A) a judicial
28   lien   . . . .

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 1   discharge or the case is closed, at a minimum, the following must
 2   be satisfied:     first, the confirmed plan must call for avoiding
 3   the wholly unsecured junior lien and treat any claim as
 4   unsecured; second, the chapter 13 trustee must treat the claim as
 5   unsecured pursuant to the plan; and third, the creditor must not
 6   be sufficiently prejudiced so that is would be inequitable to
 7   allow avoidance after entry of discharge or the closing of the
 8   case.
 9            In this case, the confirmed plan provided that the wholly
10   unsecured junior lien of JP Morgan would be avoided and treated
11   as unsecured.     JP Morgan did not object to either its treatment
12   under the plan or to Debtors’ valuation motion.     The docket
13   reflects that prior to confirmation JP Morgan filed a secured
14   claim based on the second lien.     The Trustee’s Final Report
15   acknowledges the claim was schedule as secured but asserted as
16   unsecured and shows that it, like all the other unsecured claims,
17   received nothing.4     Therefore, there is nothing in the record to
18   indicate that JP Morgan has been prejudiced in any way by
19   Debtors’ delay in avoiding their lien.5
20            The record indicates Debtors gave JP Morgan adequate notice
21   of both the plan and the subsequent motion.     Consistent with the
22
23
          4
             Although neither JP Morgan’s proof of claim nor the
24   Trustee’s Final Report were included in the record, we may take
     judicial notice of the underlying bankruptcy court records
25
     relating to an appeal. See O’Rourke v. Seaboard Sur. Co. (In re
26   E.R. Fegert, Inc.), 887 F.2d 955, 957-58 (9th Cir. 1989).
          5
27           The confirmed plan paid 0% to unsecured creditors, so
     whether JP Morgan did or did not file a claim, its mandatory
28   treatment would have been the same.

                                        -9-
 1   plan, the motion set forth the proposed treatment of JP Morgan’s
 2   lien, the address of the property, the property value, and that
 3   this value was less than the amount owed on the first mortgage.
 4   As such, JP Morgan had “adequate notice” of the proceeding, yet
 5   chose not to participate.   See Mullane v. Cent. Hanover Bank &
 6   Trust Co., 339 U.S. 306, 314 (1950) (“[adequate notice is notice
 7   that is] reasonably calculated, under all circumstances, to
 8   apprise interested parties of the pendency of the action and
 9   afford them an opportunity to present their objections”).
10   Furthermore, as noted, the chapter 13 trustee made payments over
11   the life of the plan on the basis that JP Morgan’s claim was
12   unsecured.    As such, the chapter 13 plan is preclusive as to the
13   treatment of JP Morgan’s claim.   See Lomas Mortgage USA v. Wiese,
14   980 F.2d 1279, 1284 (9th Cir. 1993) (“An order confirming a
15   Chapter 13 plan is res judicata as to all justiciable issues
16   which were or could have been decided at the confirmation
17   hearing.”).
18        Based on the foregoing, we see no prejudice and therefore no
19   reason why JP Morgan’s lien could not be avoided.
20   C. Reading of § 506(a)
21        The bankruptcy court concluded that § 506(a) requires the
22   valuation determination be made in conjunction with a hearing on
23   the plan.    It reasoned that because Debtors’ motion was not heard
24   at the same time as the confirmation hearing, it was untimely.
25        We disagree with the court’s analysis.    Section 506(a)
26   requires that the “. . . value shall be determined . . . in
27   conjunction with any hearing on such disposition or use or on a
28   plan affecting such creditor’s interest.”   The language of

                                     -10-
 1   § 506(a) is disjunctive.   The hearing could in fact be in
 2   conjunction with the disposition or use.    It is not limited only
 3   to the confirmation of the plan.   Moreover, in “conjunction” does
 4   not necessarily mean “a simultaneous occurrence,” but rather
 5   could mean “a combination of circumstances.”   Merriam Webster at
 6   244 (10th Ed.).    Under this reading, the statute could allow a
 7   hearing on the value in “conjunction” with the continued use or
 8   disposition of Debtors’ property, as was the case here.   Since
 9   the confirmed plan called for avoiding the junior lien and
10   treating it as unsecured, a valuation hearing at any time could
11   be deemed “in conjunction with” the plan.
12   D. Bankruptcy court’s authority is not persuasive
13        The bankruptcy court reached its conclusion by relying on
14   three cases, which we do not find controlling or persuasive.
15        The bankruptcy court first relied on In re Wilkins, 71 B.R.
16   665 (Bankr. N.D. Ohio 1987), asserting that the Wilkins court
17   denied a valuation motion as untimely when it was filed a mere
18   month after the confirmation of the chapter 13 plan.   However, in
19   Wilkins, the confirmed plan provided for 100% payment of the
20   secured claim on a car.    Only when the debtors realized that plan
21   would not be feasible did they file their valuation motion, to
22   which the creditor objected.   Our case is different simply
23   because the plan called for JP Morgan’s treatment as unsecured
24   and it was paid as such.   Debtors here did not materially change
25   the creditor’s expected treatment under the plan, making Wilkins
26   distinguishable.
27        Secondly, it relied on McPherson v. Green Tree Servicing,
28   LLC (In re McPherson), 2013 WL 6657599 (D. Colo. December 17,

                                     -11-
 1   2013), an unpublished case out of Colorado.      The McPherson
 2   district court affirmed the bankruptcy court finding that a
 3   reasonable interpretation of § 506(a) is that it requires the
 4   valuation be made either separate from or during the confirmation
 5   hearing and in conjunction with the confirmation of the plan.
 6   However, in McPherson, the plan provided that the unsecured
 7   status of the creditor would be determined subject to the court’s
 8   order granting the valuation motion.      No hearing was held and no
 9   valuation made prior to confirmation, leaving the plan terms
10   uncertain.     Here, the plan terms were certain and the later-filed
11   valuation motion was consistent with the terms.
12            Finally, the court relied on Cal. Dif. Inc., v. Eaton (In re
13   Eaton), 2006 WL 6810924 (9th Cir. BAP February 28, 2006).        The
14   bankruptcy court relied on a footnote in Eaton, which expressed
15   “doubt” that a bankruptcy court can value a secured claim under
16   § 506(a) “in conjunction with any hearing on a plan” when the
17   valuation hearing was years after confirmation.6      Being
18   unpublished, Eaton is of no precedential value to this Panel and
19   the footnote provided no analysis.       Moreover, the plan in Eaton
20   was silent on the treatment of the secured claims, which caused
21   due process concerns not present in the instant case.
22
23        6
            Footnote 14 provided: “We doubt, but need not decide
24   under these facts, whether the bankruptcy court can, consistent
     with [506(a),] value a secured claim in conjunction with any
25   hearing on ... a plan affecting such [secured] creditor’s
26   interest when that plan was confirmed years before, and the
     debtors have completed their performance of that plan and
27   received a discharge.” In re Eaton, 2006 WL 6810924, at *8 n.
     14.
28


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 1   E. Despite § 1322(b)(2), the bankruptcy court may remove the
 2   wholly unsecured lien of JP Morgan in this case
 3        In a chapter 13, generally speaking, claims secured by a
 4   security interest in a debtor’s principal residence may not be
 5   modified.   See § 1322(b)(2) (providing a plan may “modify the
 6   rights of holders of secured claims, other than a claim secured
 7   only by a security interest in real property that is the debtor’s
 8   principal residence . . . .”).    However, despite § 1322(b)(2),
 9   such a lien may be “stripped off” and avoided under § 506(d) if
10   the bankruptcy court determined under § 506(a) that there is no
11   value in the residence to secure the claim and that the
12   creditor’s claim is rendered wholly unsecured.    In re Zimmer, 313
13   F.3d at 1222-23.
14        As the record indicates, Debtors’ valuation motion
15   established that JP Morgan held a wholly unsecured second.   Under
16   In re Zimmer, the JP Morgan second may be “stripped off” and
17   avoided under § 506(d).   Therefore, we conclude that the trial
18   court erred in denying the lien avoidance sought by Debtors.
19                             VI.    CONCLUSION
20        For the reasons stated above, we REVERSE the decision of the
21   bankruptcy court and REMAND for further proceedings consistent
22   with the opinion.
23
24
25
26
27
28


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