Unpublished Disposition, 863 F.2d 886 (9th Cir. 1988)

MEMORANDUM^* 

The appellants, Lee and Dorothy Lauritzen, are debtors appealing a decision of the district court affirming the bankruptcy judge's dismissal of their Chapter 13 plan. The Lauritzens challenge the determination that their proposed transfer of real property did not comply with 11 U.S.C. § 1325(a) (5) (B) because the value of the property was insufficient to satisfy the creditors. Because no creditor presented evidence of a lower value, and the bankruptcy judge did not hold a valuation hearing, we reverse and remand.

II

Findings of fact by the bankruptcy judge are reviewed under the clearly erroneous standard while conclusions of law are reviewed de novo. Ragsdale v. Haller, 780 F.2d 794, 795 (9th Cir. 1986). The district court's decision is reviewed de novo. In Re Woodson, 813 F.2d 266, 270 (9th Cir. 1987).

III

Section 1325(a) (5) (B) (ii) of the Bankruptcy Code states that the bankruptcy court "shall confirm a plan if ... with respect to each allowed secured claim provided for by the plan ... the value as of the effective date of the plan, of property to be distributed under the plan on account of such claim is not less than the allowed amount of such claim [.]" Coloramo Credit Union has an allowed secured claim of $28,852.96. Of that debt, $25,852.96 is secured by a second deed of trust on the debtors' Grand Junction, Colorado property. Columbia Savings has an allowed secured claim of $54,230.36, secured by a first deed of trust on the Grand Junction property. If the value of the property is less than roughly $80,000 (plus foreclosure costs), it would not satisfy the statute's requirement that the value of the property be not less than the amount of all secured claims.

The bankruptcy court never held the valuation hearing that it stated was necessary to determine the value of the property. The only evidence it received was a statement by Mr. Lauritzen that the property had been appraised at $96,000 one to two years earlier. In rejecting the plan, the bankruptcy court apparently assumed that the property value might be less than $64,000, based on statements at the conference hearing on the plan by the attorney for Columbia Savings. The statements of the Columbia Savings attorney are not evidence. See F.D. Bollinger v. Rheem Manufacturing Co., 381 F.2d 182, 185 (10th Cir. 1967). A valuation hearing should be held, as the bankruptcy court stated. See In Re Schiavoni, 19 B.R. 51, 52 (Bankr.E.D. Pa. 1982) (importance of receiving evidence on valuation for Sec. 1325 plan).

The Lauritzens claim that testimony by the property owner is presumptively reliable. They read the cases cited for that proposition too broadly. If a property owner's opinion is based on the opinions of others, in contrast to being based upon substantial familiarity with the market, it is of no probative value. See Glosband v. Watts Detective Agency, Inc., 21 B.R. 963, 980-81 (D. Mass. 1981); cf. Matter of Walters, 41 B.R. 511, 514-515 (Bankr.W.D. Mo. 1984) (expert testimony of fair market value). Mr. Lauritzen expressed no basis for his opinion other than his memory of a 1984 appraisal report. His opinion was not current or informed by personal knowledge.

The bankruptcy judge found that "Coloramo has not accepted the plan." The debtor argues that Coloramo's failure to object means that Coloramo has accepted the plan. The judge's determination is not clearly erroneous, because Sec. 1325(a) (5) (A) requires acceptance by creditors and not merely non-objection. See In Re Burrell, 25 B.R. 717, 725 (N.D. Cal. 1982).

Given the time that has elapsed, on remand the court should provide the opportunity for the plan to be confirmed based on 11 U.S.C. § 1325(a) (5) (A), which states that "the court shall confirm a plan if ... the holder of such claim has accepted the plan [.]" Coloramo did not attend the conference hearing and has not opposed the Lauritzens' appeal to this court. It may be willing to accept the plan.

REVERSED and REMANDED for a determination of value or confirmation of the plan based on 11 U.S.C. § 1325(a) (5) (A).