POST BACPA: 

VIOLATION OF AUTOMATIC STAY:

In re Anderson, (Bkrtcy.S.D.Iowa)  July 13, 2010: Debtor Protections - Creditor's conduct in repeatedly contacting debtor in violation of the stay warranted punitive damages of $10,000.00.  The Chapter 7 debtor-husband was entitled to an award of punitive damages in the amount of $10,000.00 as a result of a creditor's conduct in continuing its collection efforts postpetition, in willful violation of the automatic stay. The creditor, an entity with an extremely large volume of bankrupt accounts that was sophisticated in the industry, contacted the debtor regarding the debtors' credit card account several times, even after it was given notice of the debtors' bankruptcy filing and despite the fact that the debtors' counsel provided the creditor with written verification of the filing and with requested documentation. Although the creditor was informed repeatedly of the filing, it ignored this information without considering the possibility of computer error or initiating follow-up with the debtors' counsel, thereby engaging in egregious misconduct. The failure of the creditor to take any initiative to check the accuracy of its database's information rose to the level of total disregard of the debtor's right.

Section 362(C)(3)&(4) - Multiple Filers:

In re Brandon, 349 B.R. 130 (Bkrtcy.M.D.N.C. 2006) CATHERINE R. CARRUTHERS, Bankruptcy Judge  AUTOMATIC TERMINATION OF STAY IN CASE OF REPEAT FILER TERMINATED STAY AS TO PROPERTY OF THE DEBTOR BUT NOT AS TO PROPERTY OF THE ESTATE  §362(c)(3)(A)  Where debt had a prior case pending within a year of filing the present case. Pursuant to newly added § 362(e)(3)(A) the automatic stay automatically terminated on the 30th day following the petition filing. The court held that the stay was not terminated as to property of the estate.  The court also reiterated the rule that the stay is not terminated as to any creditor's action unless it was taken prepetition, pursuant to the language " ... with respect to any action taken."

In re Striblin, 349 B.R. 301 (Bkrtcy.M.D.Fla. 2006) JERRY A. FUNK, Bankruptcy Judge NEW EXCEPTION TO AUTOMATIC STAY APPLIES ONLY TO POSTPETITION TRANSFERS INITIATED BY THE DEBTOR  § 362(b)(24)  Third party, in ignorance of debtor's recently filed bankruptcy, purchased debtor's homestead property at a scheduled foreclosure sale. The transfer was a violation of Code § 549, unauthorized transfer of property of the estate, and was avoidable. The Reform Act added § 362(b)(24), a new exception to the automatic stay for transfers not avoidable under § 549 or 544. The court held that the transfer in this case was not initiated by the debtor and was thus avoidable. Accordingly, it did not fit under the newly enacted exception to the automatic stay, and the sale was void.

From ABI's BLOG - 7/06 Generally, where a debtor has been in one prior bankruptcy case which has been dismissed within the year prior to the current case, new 362(c)(3) provides that certain protections of the automatic stay terminate on the 30th day unless a motion to extend the stay is filed and heard before the 30th day. We mentioned in Part IV how the decision in In re Toro-Arcila, 334 B.R. 224 (Bankr. S.D. Tex. 2005) effectively found a way around the 30-day deadline for hearing a motion to extend the stay under 362(c)(3) by holding that a single repeat filer could still use the provisions of 362(c)(4) (which generally cover multiple repeat filers) to reimpose the stay after they stay had expired. Typically this situation arises where the debtor files the motion too close to the 30th day to get a hearing (there is generally no good reason for waiting so long, by the way). At least one other court has concurred with Toro-Arcila, and has ruled that a debtor who files a motion within the 30 day period, but fails to get it heard, can still pursue reimposition of the stay under 362(c)(4). In re Beasley, 339 B.R. 472 (Bankr. E.D. Ark. 3/16/06).

Judge Dalis in Georgia disagreed. In re Whitaker, 341 B.R. 336 (Bankr. S.D. Ga. 4/20/06). All was not lost for the debtor, though. Judge Dalis did not subscribe to the reasoning in Toro-Arcila that much of 362(c)(4)(D) would be rendered meaningless surplusage if that section only applied to multiple repeat filers. But since the debtor had established a case to overcome the presumptive lack of good faith, and there was no other way of granting relief, the court held that it could reimpose the stay under 11 U.S.C. s. 105, which gives the court authority to issue orders "necessary or appropriate" to carry out the provisions of the Code. In doing so, Whitaker relied on a long line of prior decisions recognizing the authority to reimpose the stay in appropriate circumstances.

While Beasley and Whitaker involved situations where stay extension motions were filed on the eve of the 30 day deadline, and consequently could not be heard before the deadline passed, creditors nonetheless should be aware that they need to be on their toes. In In re Frazier, 339 B.R. 516 (Bankr. N.D. Fla. 3/17/06), a court held that five days' notice of a hearing on a motion to impose the stay under 362(c)(4) was adequate. In Frazier, the court reports that the debtor's counsel prior to filing the motion had called the counsel who represented the creditor in the prior case, and served the motion and notice of hearing by fax and mail, and that the creditor (and counsel) did not respond to the motion or appear at the hearing. The creditor then moved for reconsideration, claiming not to have received notice, but at the hearing on the motion for reconsideration failed to provide any evidence and the lawyer appearing had minimal knowledge of the case. The Frazier court held the notice adequate, and made clear that it expected creditors to be prepared to respond to such motions on short notice: "The limited automatic stay for repeat filers is a major feature of BAPCPA which was passed by congress at the behest of the credit industry. Now that they have it, the credit industry, and especially the mortgage servicing companies and the law firms they retain to represent them, need to adapt their practices in order to deal with what they have created."

But one of the most significant - and perhaps surprising - ways in which the significance of the 362 amendments has been limited is that courts are actually taking Congress at its word. Specifically, in 362(c)(3)(A), Congress amended the Code to provide that when a debtor has been in a prior case dismissed within a year of the present filing, the stay shall terminate "with respect to the debtor" on the 30th day after the filing date unless an extension of the stay is granted. Now, bankruptcy practitioners know that "property of the debtor" is generally something different than "property of the estate". Section 362 as it existed prior to the amendments makes multiple, clear distinctions between property of the debtor and property of the estate, and the effect of the stay as to each. Moreover, Congress used different language in 362(c)(4) in describing what happens to multiple repeat filers (i.e., more than one prior case dismissed in the year prior to the current case), where it says, without any such distinctions, that "the stay under subsection (a) shall not go into effect."

Applying generally accepted principles of statutory construction -- that when particular language is used in one section but not another, it is presumed that Congress acts purposefully in using the different language to signify different meanings -- several courts have held that 362(c)(3), if triggered, terminates the automatic stay only as to actions against the debtor or against property of the debtor, but not against property of the bankruptcy estate. See, e.g., In re Harris, 342 B.R. 274 (Bankr. N.D. Ohio 5/1/06); In re Jones, 339 B.R. 360 (Bankr. E.D.N.C. 3/21/06); In re Moon, 339 B.R. 668 (Bankr. N.D. Ohio 3/28/06). Each of these courts notes that if Congress had intended to terminate the stay completely after 30 days for single repeat filers under 362(c)(3), it could have simply used similar language to that used for multiple repeat filers under 362(c)(4). Having chosen not to do so, judges must assume Congress meant what it said.

In re Ellis, 339 B.R. 136 (Bkrtcy.E.D.Pa. 2006) DIANE WEISS SIGMUND, Chief Judge  BAPCPA TREATS MOTION TO EXTEND STAY DIFFERENTLY AS BETWEEN CERTAIN CREDITOR OR ALL CREDITORS

FAILURE TO DEMONSTRATE CHANGED CIRCUMSTANCES IS GROUNDS FOR DENIAL OF MOTION TO EXTEND STAY
§ 362(c)(3)(C)(i) and 362(c)(3)(C)(ii)

Debtor's motion to extend the automatic stay brought timely with 30 days of filing the petition was denied on grounds of bad faith where debtor could not demonstrate change of circumstances from previous dismissed case.

In re Warneck, 336 B.R. 181 (Bankr. S.D.N.Y., 2006) CECELIA G. MORRIS, Bankruptcy Judge DEBTOR WAS ENTITLED TO EXTENSION OF AUTOMATIC STAY WHERE DEBTORS DEMONSTRATED GOOD FAITH FOR SECOND FILING

BAD FAITH IS PRESUMED ONLY AS TO CREDITOR WHO FALLS WITHIN § 362(c)(3)(C)(ii)

The court found the second filing was in good faith as to all creditors where:

- The Debtors' Second Filing was dismissed for failure to make payments pursuant to a proposed plan of reorganization that had not yet been confirmed, the provision in Section 362(c)(3)(C)(i)(II)(cc) — failure to "perform the terms of a plan confirmed by the court" — does not apply.

- There is no evidence that the Debtors failed to file or amend their petition, or other documents in the Second Filing. There is also no record in the Second Filing of any motion to lift the automatic stay, and no evidence that the Debtors failed to provide court-ordered adequate protection to any party.

- The Debtors have filed affidavits from their daughter, Amy Wade, and son-in-law, William Wade, stating that they are willing and able to fund the Debtors' plan in the amount necessary to complete a Chapter 13 plan.

 
In re Ziolkowski 338 B.R. 543 (Bkrtcy.Conn. 2006) LORRAINE MURPHY WEIL, Bankruptcy Judge. DEBTOR'S ATTORNEY CAN'T RELY ON COURT CLERK TO CALENDAR MOTION TO EXTEND STAY WITHIN 30-DAY DEADLINE  § 362(c)(3)

Debtor had a previous case that had been dismissed within a year of filing the second case. The debtor's attorney filed a motion pursuant to § 362(c)(3)(B) prior to the expiration of the 30-day deadline in which hearing must be held. However, the attorney relied on the court clerk to calendar the actual hearing within the 30-day period. Clerk actually set the hearing at a date beyond the 30-day deadline.

Court held error in relying on clerk was not sufficient grounds to order an extension of the stay. Motion was denied.

"However, to say that the Clerk's Office should have scheduled the Motion for a hearing to be held prior to the Hearing Deadline is not dispositive here. The Debtors were the movants and it was their ultimate burden to insure that the Motion was timely scheduled. When the Notice of Hearing was not issued timely (i.e., within three days), it was incumbent on the Debtors' counsel to take action. A telephone call to the Clerk's Office probably would have produced the necessary corrective action."

Americredit Fin. Servs., Inc. v. Nichols (03/16/06 - No. 04-2107) (6th Cir)
Denial of a creditor's motion to lift an automatic stay and grant of debtors' motion to modify their Chapter 13 bankruptcy plan pursuant to 11 U.S.C. section 1329 is affirmed where, under the circumstances of the case, there was no abuse of discretion in the decisions.
http://caselaw.lp.findlaw.com/data2/circs/6th/042107p.pdf [PDF File] - a good review of motion for relief practice and standards.

In re Stinsen, Charles E. (9th Cir. BAP 200)3 EMOTIONAL DAMAGES FOR VIOLATION OF 362 REQUIRES SUBSTANTIAL ECONOMIC LOSS
In order to receive an award for emotional damages under 11 USC 362(h), there must be significant economic loss caused by the willful violation of the automatic stay. A debtor must first show a significant economic loss caused by the stay violation and then establish that his loss caused him emotional injury.

This opinion thoroughly explores the state of case law on this issue; when is the debtor entitled to general damages for violation of the automatic stay? As demonstrated by the analysis in this case, it is an unsettled issue.

40235 WASHINGTON ST. CORP. v. LUSARDI (05/23/03 - No. 01-56644/56801) (9^th Cir) Bankruptcy Code section 549(c) does not create an exception to the automatic stay provision, section 362(a), and Cal. Rev. & Tax. Code section 3728 is preempted by the automatic stay provision.  http://caselaw.lp.findlaw.com/data2/circs/9th/0156644p.pdf

ALLEN v. ALLEN (01/11/02 - No. 00-35528) (9^th Cir. Ct App) Marital dissolution proceedings relating to spousal support are not subject to the automatic stay provisions of 11 USC 362(b)(2)(A)(ii).  http://caselaw.lp.findlaw.com/data2/circs/9th/0035528p.pdf

CATALANO v. COMM'R INTERNAL REVENUE (01/28/02 - No. 00-70998) (9^th Cir Ct Apps) A court order granting relief from an automatic stay in bankruptcy, under 11 U.S.C. Section 554, does not by itself constitute a de facto abandonment of property by the bankruptcy estate.  http://caselaw.lp.findlaw.com/data2/circs/9th/0070998p.pdf

MARRIAGE OF SPRAGUE (01/09/03 - No. G030108) (CA) A creditor must obtain relief from an automatic bankruptcy stay to pursue a family law matter in state court, when the family law matter is a core bankruptcy proceeding.  http://login.findlaw.com/scripts/callaw?dest=ca/caapp4th/slip/2002/g030108.html  http://caselaw.lp.findlaw.com/data2/californiastatecases/g030108.pdf

ESKANOS & ADLER, P.C. v. LEETIEN (11/07/02 - No. 01-56203)  (9^th Cir Ct App) 11 U.S.C. section 362(a) of the Bankruptcy Code imposes an affirmative duty to discontinue post-petition collection actions, and sanctions are appropriate under section 362(h) where a collection agent willfully violated an automatic stay after receiving notice of a bankruptcy petition.  11 U.S.C. section 362(a) of the Bankruptcy Code imposes an affirmative duty to discontinue post-petition collection actions, and sanctions are appropriate under section 362(h) where a collection agent willfully violated an automatic stay after receiving notice of a bankruptcy petition.  http://caselaw.lp.findlaw.com/data2/circs/9th/0156203p.pdf

In re Reeves, 265 B.R. 766 (Bankr. N.D. Ohio 2002) (ex-employer did not violate discharge injunction by deducting from severance payments payable to debtor under the employment agreement sums sufficient to satisfy debtor's obligations pursuant to the same employment agreement to reimburse employer for charges on company credit card)

ALLEN v. ALLEN, No. 00-35528 (9th Cir. January 11, 2002)  Marital dissolution proceedings relating to spousal support are not subject to the automatic stay provisions of 11 USC 362(b)(2)(A)(ii).  http://caselaw.lp.findlaw.com/data2/circs/9th/0035528p.pdf

In re Norman, 346 B.R. 181 (Bkrtcy.N.D.W.Va. 2006)  DEBTOR WHO FILED MOTION TO EXTEND STAY TOO LATE TO BE HEARD WITHIN 30 DAYS OF FILING PETITION COULD NOT GET EXTENSION § 362(c)(3)(B), § 362(c)4)(B).  The debtor, a one-time repeat filer, filed motion to extend the automatic stay on the 28th day following filing the petition. The court ruled this was not adequate time for notice to parties and hearing on the motion could not be had, and hence order extending stay could not be had, within the 30-day period prescribed by the Code. The debtor argued that he was only required to file the motion within the 30-day period, not obtain an order, pursuant to § 362(c)(4)(B). The court pointed out that this section pertains only to cases where the debtor is a two-time repeat filer, and provides that the stay does not take effect upon filing the petition, but the court can order the stay imposed if a motion is made within 30 days.

In re Boring, 346 B.R. 178 (Bkrtcy.N.D.W.Va. 2006)  AUTOMATIC STAY WAS TERMINATED 30 DAYS AFTER PETITION WAS FILED WHERE DEBTOR WHO WAS CURRENT ON CAR PAYMENTS DID NOT SELECT ANY AUTHORIZED OPTION ON STATEMENT OF INTENTIONS; OPTION TO RETAIN AND KEEP CURRENT WAS NOT AUTHORIZED BY THE CODE  § 362(h)(1), § 521(a)(2)(A)  The Chapter 13 debtor filed a statement of intentions with regard to her motor vehicle, but selected neither the option to redeem, nor to reaffirm, nor to surrender the vehicle, but instead to retain and keep the payments current (i.e., a "ride-through"). Court ruled that this failed to satisfy requirements of § 362(h)(1) and stay was terminated 30 days after case was filed.

The creditor asserted it had a right under § 521(d) to repossess the vehicle, notwithstanding any general policy negating the effect of a "default on filing" clause in the contract. The court held that since the automatic stay was terminated, the creditor was free to exercise whatever rights it may have under non-bankruptcy law, and declined to rule on whether the creditor in this case had the right to repossess the car where the payments are current.

In re Brown, 346 B.R. 246 (Bkrtcy.M.D.Ga. 2006)  SECURED CREDITOR WITH PMSI FOR MOTOR VEHICLE IS ENTITLED TO PAYMENT IN FULL IN CHAPTER 13 WITH INTEREST BECAUSE ANTI-CRAMDOWN PROVISION DID NOT AFFECT SECURED STATUS UNDER § 506: INTEREST WOULD BE NOT THE CONTRACT RATE BUT "TILL" FORMULA  § 506, § 1325(a)  Debtor proposed to pay PMSI claim in full but at 7% interest, and argued that language of § 1325(a) removed the claim from status as a "secured claim" as provided at § 506. Court held that § 1325 prohibits cramdown and does not remove the claim from status as a secured claim. Creditor argued interest rate should 19% as provided in PMSI contract; court rejected that argument and held that the proper interest rate is that calculated pursuant to Till v. SCS Credit Corp., 541 U.S. 465, 124 S.Ct. 1951 (2004). 
 

OPINION SUMMARIES ARCHIVE FindLaw archives case law summaries of opinion issued since September 2000 by the U.S. Supreme Court, all thirteen Federal Circuit Courts, the California Supreme Court, the California Appellate Courts, and the New York Court of Appeals.  http://caselaw.lp.findlaw.com/casesummary/index.html