Case Law Sneak Peek

Facts

In March 2011, Penny Goudelock, owner of a unit in the Sixty-01 Association of Apartment Owners, filed chapter 13 bankruptcy after vacating the unit.  As part of her chapter 13 bankruptcy plan, she surrendered the unit; however, the mortgage lender did not foreclose on the unit until February 2015.  Goudelock received a bankruptcy discharge on July 24, 2015.  In April 2015, the Association brought suit to determine the ability to discharge Goudelock's personal obligation to pay the post-petition condominium assessments. 

Holding & Reasoning

The court held that Goudelock's personal obligation for post-petition assessments constituted pre-petition debt of the kind dischargeable in her chapter 13 case.  In so holding, the court found that although the assessments in question did not accrue until after the filing of Goudelock's petition, the personal obligation to pay such assessments nonetheless constituted pre-petition debt because the debt was within the fair contemplation of the parties at the time she purchased the unit.   Further, the court noted that Congress did not include an exception from discharge for post-petition assessments in its list of discharge exceptions, suggesting that it did not intend to exclude such assessment from discharge under chapter 13.  The court disposed of the Association's argument that the Fifth Amendment's Takings Clause prohibits the government from discharging Goudelock's obligation on the basis that the Association retained its in rem interest in the debt, even after discharge of Goudelock's personal obligation. 

Significance

As stated in the opinion, this case represents the first federal Court of Appeals decision on the dischargeability of a chapter 13 debtor's personal obligation for post-petition assessments.