Fountain v. Deutsche Bank National Trust Co. (In re Fountain)

In 2006, Leiann Fountain (debtor) borrowed over $1 million to refinance a home mortgage and signed a promissory note in connection with the loan. In 2015, Fountain sold her home without paying off the loan. Deutsche Bank National Trust Company (Deutsche Bank) (creditor) sought payment from Fountain in state court. While that action was pending, Fountain filed a chapter 13 bankruptcy petition and plan. The schedules Fountain filed with the petition listed total unsecured claims of $30,443, including $1,000 owed to Deutsche Bank. Deutsche Bank objected to Fountain’s plan and moved to dismiss. Deutsche Bank asserted that Fountain was not eligible for chapter 13 bankruptcy relief under 11 U.S.C. § 109(e), which at the time limited eligibility to individuals who owed noncontingent, liquidated, unsecured debts of less than $394,725. Deutsche Bank filed a proof of claim against Fountain asserting an unsecured claim for $1,751,326.06, evidenced by Fountain’s signed note. Fountain contended that in determining her eligibility under § 109(e), the bankruptcy court was limited to the information in the schedules and could not consider Deutsche Bank’s proof of claim. Fountain further asserted that Deutsche Bank did not have an enforceable claim against her for § 109(e) eligibility purposes because Deutsche Bank’s right to enforce the note was still being disputed in state court. In the alternative, Fountain argued that Deutsche Bank’s claim was contingent and unliquidated. The bankruptcy court rejected Fountain’s arguments and dismissed the action. Fountain appealed.