POST BACPA: 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) (9th 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) (9th 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) (9th
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) (9th
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).
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