Michael Edward Staud and Jennifer Jo Staud

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re
Michael and Jennifer Staud, Case No. 04-18556
Debtors Chapter 13 (Judge Aug)
ORDER RE: OBJECTION TO PROOF OF CLAIM
This matter is before the Court on the Debtors’ objection to the proof of
claim filed by Wells Fargo Bank Minnesota, N.A. (Doc. 22, 29) and Wells Fargo’s
response (Doc. 26). A hearing was held on May 17, 2005.
Wells Fargo, a secured creditor, filed a proof of claim for an arrearage which
includes $826.36 for fees for title examination work relative to a foreclosure
proceeding in state court. It is only this portion of the claim that is in dispute.
Specifically, the Debtors contend that any work done by an attorney is not part of
an allowed claim. Wells Fargo contends that in order to perform an effective
foreclosure, i.e., name all proper defendants, a title examination must be performed
before a foreclosure action can be filed. Thus, Wells Fargo contends that a title
examination is more akin to a court cost, especially since many title examinations
are not done by attorneys, and, even if performed by an attorney, are not charged
This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: May 25, 2005
____________________________________________________________
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at the attorney’s hourly rate.
Attorney fees are not an appropriate part of a claim for a cure amount under
11 U.S.C. §1322(e). This is because Ohio law renders void provisions in notes
and mortgages for the payment of attorney fees based on the assumption that these
provisions were not reached through free and understanding negotiation. In re
Lake, 245 B.R. 282, 287 (Bankr. N.D. Ohio 2000). See also In re Petroff, 2001
WL 34041797 (B.A.P. 6th Cir. 2001). However, it has generally been understood
that expenses, such as those associated with foreclosure actions, i.e., title report,
court costs, and sheriff’s fees, are proper. See In re Landrum, 267 B.R. 577, 583
at n.10 (Bankr. S.D. Ohio 2001); In re Bertsch, 17 B.R. 284 (Bankr. N.D. Ohio
1982).
Some state courts have local rules that require the foreclosing plaintiff to file
“evidence of the state of the record title of the premises in question” as a part of
the foreclosure procedure. See In re Bertsch, 17 B.R. at 288 (citing Summit
County Rule No. 11.01). We do not believe that a state court local rule, which may
necessarily differ from county to county, should determine whether or not a title
examination is an attorney fee or an expense. The prudent foreclosing party will
cause a title examination to be performed prior to filing any foreclosure action and
such practice is to be encouraged. Contrary to the Debtors’ contention, we do not
believe that the doctrine of lis pendens circumvents the need for a title examination.
Further, a foreclosing party should not be penalized for using an attorney to
perform a title examination, especially if the attorney is not billing for such work at
his hourly attorney rate.
In the case at hand, the parties did not know whether or not the title
examination had been performed by an attorney or a non-attorney. Accordingly,
Wells Fargo is hereby ORDERED to file a status report within 20 days from the
entry date of this order as to 1) whether the title examiner was an attorney or not;
and 2) if the title examiner was an attorney, if he or she billed the work at his or her
hourly attorney rate or at some other, lower rate.
IT IS SO ORDERED.
Distribution List:
Debtor(s)
David Kruer, Esq.
Jeffrey Laurito, Esq.
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Chapter 13 Trustee
U.S. Trustee
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